-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G+BqtGTzYbpyxcxFCzytOSx3KjsgXYSEhHcGZvnkys081Ls0aB0MCCvMic05UAQN duPDgErQuBGZWhdmR14fNQ== 0000950142-07-002798.txt : 20071214 0000950142-07-002798.hdr.sgml : 20071214 20071213184454 ACCESSION NUMBER: 0000950142-07-002798 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20071001 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Material Modifications to Rights of Security Holders ITEM INFORMATION: Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20071214 DATE AS OF CHANGE: 20071213 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENN TRAFFIC CO CENTRAL INDEX KEY: 0000077155 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 250716800 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-08858 FILM NUMBER: 071305637 BUSINESS ADDRESS: STREET 1: 1200 STATE FAIR BLVD CITY: SYRACUSE STATE: NY ZIP: 13221-4737 BUSINESS PHONE: (315) 453-7284 MAIL ADDRESS: STREET 1: 1200 STATE FAIR BLVD CITY: SYRACUSE STATE: NY ZIP: 13221-4737 8-K 1 form8k_121307.txt CURRENT REPORT =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) December 12, 2007 ------------------------- THE PENN TRAFFIC COMPANY - ------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) DELAWARE - ------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 001-9930 25-0716800 - ------------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 1200 STATE FAIR BOULEVARD SYRACUSE, NEW YORK 13221-4737 - ------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (315) 453-7284 - ------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) N/A - ------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (SEE General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) =============================================================================== ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. On December 13, 2007, The Penn Traffic Company (the "Company") entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") pursuant to which investment funds managed by Bay Harbour Management L.C., CR Intrinsic Investors, LLC and King Street Capital Management, L.L.C. (collectively, the "Purchasers"), each of whom is an existing stockholder of the Company, purchased an aggregate of 10,000 shares, par value $0.01 per share, of the Company's Series A Convertible Preferred Stock (the "Preferred Stock") at a purchase price of $1,000 per share (the "Purchase Price"). The Securities Purchase Agreement contains representations and warranties and indemnification obligations. The Preferred Stock will accrue dividends daily at a rate of 8% per annum, payable quarterly whenever funds are legally available and when and as declared by the Company's board of directors. Dividends on the Preferred Stock will be cumulative and will compound quarterly whether or not funds are legally available and whether or not declared or paid. No dividend will be declared or paid on the common stock of the Company (the "Common Stock"), or any capital stock of the Company ranking junior to the Preferred Stock, unless and until all dividends accrued through the end of the most recently-completed quarter that remain unpaid have been paid in full in cash on the Preferred Stock. In addition, holders of the Preferred Stock will be entitled to participate on an as-converted basis in any dividends declared on the Common Stock, other than dividends payable in Common Stock for which there will be an antidilution adjustment. The Preferred Stock will be convertible, at the option of the holder and at any time after December 13, 2008, into shares of Common Stock. The total number of shares of Common Stock into which the Preferred Stock may be converted initially will be determined by dividing the Purchase Price (as increased by any accrued and unpaid dividends as of the date of determination) by the conversion price. The initial conversion price is $16.12 per share. The conversion price of the Preferred Stock will be subject to adjustment under certain circumstances set out in the Certificate of Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock, as corrected pursuant to the Certificate of Correction filed on December 13, 2007 (the "Certificate of Correction") (as so corrected, the "Certificate of Designations"). In the event of a liquidation, winding up or dissolution of the Company or a Sale of the Company (as defined in the Certificate of Designations), the holders of the Preferred Stock will be entitled to receive, out of and to the extent of the Company's assets legally available therefor, the greater of (x) an amount equal to 108% of the Purchase Price therefor plus all accrued and unpaid dividends thereon and (y) the amount they would have been entitled to receive if the Preferred Stock had been converted to Common Stock before any distributions are made to holders of Common Stock and all classes of capital stock of the Company that do not expressly rank PARI PASSU with or senior to the Preferred Stock. The holders of the Preferred Stock will vote with the holders of the Common Stock on an as-converted basis and will be entitled to vote on any matters on which the holders of Common Stock are entitled to vote. In addition, consent of the holders representing two thirds of the Preferred Stock then outstanding will be required for any (i) amendment to the Company's charter or bylaws, including by way of merger, consolidation or otherwise, that would adversely affect any of the rights, preferences, powers (including without limitation, voting powers) or privileges of the Preferred Stock, (ii) alteration or change to the rights, preferences, powers (including without limitation, voting powers) or privileges of the Preferred Stock; (iii) increase or decrease of the authorized number of shares of the Preferred Stock or the issuance of any additional shares of the Preferred Stock after the closing date, (iv) authorization or issuance of any securities having any right, preference or priority ranking PARI PASSU with or senior to the Preferred Stock, other than the issue of a series of preferred stock having an aggregate initial liquidation preference not in excess of $10 million and otherwise having substantially identical terms as the Preferred Stock (other than the conversion price) which is sold pursuant to certain conditions or (v) subject to certain exceptions, the redemption, purchase or other acquisition for cash of any capital stock of the Company ranking PARI PASSU with or junior to the Preferred Stock. At the option of the Company, at any time or times after December 13, 2009, and provided that the daily closing price per share of Common Stock exceeds 130% of the initial conversion price for 20 consecutive trading days ending on the date prior to the mailing of a redemption notice, the Company may redeem all of the outstanding Preferred Stock at a price equal to 100% of the Purchase Price plus accrued and unpaid dividends on 30 days' notice (provided that the Preferred Stock shall continue to be convertible into Common Stock until the date of the redemption). The foregoing is a summary of the terms of the Securities Purchase Agreement and the Certificate of Designations. This summary is qualified in its entirety by reference to the full text of the Securities Purchase Agreement, the Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock and the Certificate of Correction, which are attached hereto as Exhibits 10.1, 3.1 and 3.2, respectively, and are incorporated herein by reference. In connection with the entry into the Securities Purchase Agreement, on December 13, 2007 the Company also entered into a Registration Rights Agreement (the "Registration Rights Agreement") with the Purchasers. Pursuant to the Registration Rights Agreement, at any time after the 20th day following the date that the Company has become current with all of its required reports under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and is otherwise eligible to file a registration statement covering the public issue of its securities, the Purchasers may request that the Company file a registration statement covering the resale of at least 25% of the total number of shares of Common Stock into which the Preferred Stock may be converted (or any lesser percentage if the anticipated aggregate offering price would exceed $5 million), and the Company will use its commercially reasonable efforts to cause such shares to be registered. The Company will not be obligated to effect more than two registrations under this demand right provision. The Registration Rights Agreement also entitles the Purchasers to "piggyback" registration rights on registrations of the Company's Common Stock, subject to the right of the Company and its underwriters, in view of market conditions, to reduce the number of shares of the Purchasers proposed to be registered. The foregoing is a summary of the terms of the Registration Rights Agreement. This summary is qualified in its entirety by reference to the full text of the Registration Rights Agreement which is attached hereto as Exhibit 10.2 and is incorporated herein by reference. ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES As discussed in "Item 1.01 Entry into a Material Definitive Agreement" above, on December 13, 2007, the Company sold to the Purchasers an aggregate of 10,000 shares of its Series A Convertible Preferred Stock for $10 million. The Preferred Stock was issued by the Company in a private placement pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), provided by Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act ("Regulation D") as the offer and sale of the Preferred Stock was made to "accredited investors" as defined by Regulation D. Appropriate restrictive legends were affixed to the certificates representing the Preferred Stock. The Preferred Stock is convertible into Common Stock as described under "Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year," below which description is incorporated herein by reference. ITEM 3.03 MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS See "Item 1.01 Entry into a Material Definitive Agreement" above for a description of the preferences of the Preferred Stock with respect to dividends, liquidation payments and "Sale of the Company" transactions and for a description of the voting rights and antidilution protection afforded to the Preferred Stock. ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR In connection with the issuance of the Preferred Stock described above, the Company's certificate of incorporation has been amended to provide for the creation and establishment of the Series A Convertible Preferred Stock pursuant to the Certificate of Designations. The Certificate of the Powers, Designations, Preferences and Rights of the Series A Preferred Stock was filed with the Secretary of State of the State of Delaware on December 12, 2007 and became effective upon filing. Copies of the Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock and the Certificate of Correction, each as filed with the Secretary of State of the State of Delaware, are attached hereto as Exhibit 3.1 and Exhibit 3.2, respectively, and are incorporated herein by reference. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS (d) The following is attached as an exhibit to this Current Report on Form 8-K: Exhibit Description ------- ----------- 3.1 Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock as filed on December 12, 2007. 3.2 Certificate of Correction, filed December 13, 2007. 10.1 Securities Purchase Agreement, dated December 13, 2007, by and among the Company and the Purchasers listed therein. 10.2 Registration Rights Agreement, dated as of December 13, 2007, by and among the Company and the Purchasers named therein. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on behalf by the undersigned hereunto duly authorized. THE PENN TRAFFIC COMPANY By: /s/ Daniel J. Mahoney --------------------------- Name: Daniel Mahoney Title: VP, General Counsel Dated: December 13, 2007 EXHIBIT INDEX Exhibit Description ------- ----------- 3.1 Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock as filed on December 12, 2007. 3.2 Certificate of Correction, filed December 13, 2007. 10.1 Securities Purchase Agreement, dated December 13, 2007, by and among the Company and the Purchasers listed therein. 10.2 Registration Rights Agreement, dated as of December 13, 2007, by and among the Company and the Purchasers named therein. EX-3.(I) 2 form8k_121307ex3-1.txt EXHIBIT 3.1 ----------- THE PENN TRAFFIC COMPANY CERTIFICATE OF THE POWERS, DESIGNATIONS, PREFERENCES AND RIGHTS OF THE SERIES A CONVERTIBLE PREFERRED STOCK, PAR VALUE $0.01 PER SHARE Pursuant to Section 151 of the Delaware General Corporation Law The undersigned officer of THE PENN TRAFFIC COMPANY, a Delaware corporation (the "CORPORATION"), DOES HEREBY CERTIFY that the following resolution, creating a series of 10,000 shares of Preferred Stock, was duly adopted by the Board of Directors as of December 11, 2007: WHEREAS, the Board of Directors is authorized, within the limitations and restrictions stated in the Second Amended and Restated Certificate of Incorporation of the Corporation (the "CERTIFICATE OF INCORPORATION"), to provide by resolution or resolutions for the issuance of shares of Preferred Stock, par value $0.01 per share, of the Corporation, in one or more series, with such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereon as shall be stated and expressed in the resolution or resolutions providing for the issuance thereof adopted by the Board of Directors, and as may be permitted by the General Corporation Law of the State of Delaware pursuant to authority vested in the Board of Directors by the Certificate of Incorporation; and WHEREAS, it is the desire of the Board of Directors, pursuant to its authority as aforesaid, to authorize and fix the terms of a series of Preferred Stock and the number of shares constituting such series. NOW, THEREFORE, BE IT RESOLVED: 1. DESIGNATION AND NUMBER OF SHARES. There shall be hereby created and established a series of Preferred Stock designated as "Series A Convertible Preferred Stock" (the "SERIES A PREFERRED STOCK"). The authorized number of shares of Series A Preferred Stock shall be 10,000. Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in Section 11. 2. RANK. The Series A Preferred Stock shall, with respect to distributions of assets and rights upon the occurrence of a Liquidation or a Sale of the Corporation and in respect of dividend rights, redemption rights and all other rights and preferences, rank senior to (i) all classes of common stock of the Corporation (including, without limitation, the Common Stock, par value $0.01 per share, of the Corporation (the "COMMON STOCK")) and (ii) each other class or series of Capital Stock of the Corporation hereafter created which does not expressly rank PARI PASSU with or senior to the Series A Preferred Stock (the stock referred to in clauses (i) and (ii) collectively, the "JUNIOR STOCK"). 3. DIVIDENDS. (a) DIVIDEND RATE. The holders of shares of Series A Preferred Stock shall be entitled to receive, out of funds legally available therefor, dividends at an annual rate equal to 8% of the Stated Amount, calculated on the basis of a 360-day year, consisting of twelve 30-day months, and shall accrue on a daily basis from the date of issuance thereof and be cumulative, whether or not funds are legally available and whether or not declared. Subject to the last sentence of this Section 3(a), dividends shall be payable on a quarterly basis on March 31st, June 30th, September 30th, and December 31st of each year (each such date, a "DIVIDEND PAYMENT DATE"). The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of such dividends, which record date shall not be more than 60 days prior to the applicable Dividend Payment Date. For the avoidance of doubt, payment of the dividends in cash will be made only in compliance with the provisions set forth in Section 6.14 of the Revolving Credit Agreement (for so long as the same remains in effect) and Section 6.14 of the Supplemental Real Estate Credit Agreement (for so long as the same remains in effect). If the Corporation does not pay dividends in cash on any Dividend Payment Date, such accrued and unpaid dividends shall instead compound and be added to the Stated Amount, whether or not declared by the Board of Directors. (b) SENIOR RANKING. No dividends shall be declared or set aside for the Junior Stock, other than a dividend payable solely in shares of Junior Stock, unless prior thereto all accrued but unpaid dividends on the Series A Preferred Stock (including any amounts added to the Stated Amount) shall be set aside and paid in cash on all of the then outstanding shares of Series A Preferred Stock. In no event shall any dividend be paid or declared, nor shall any distribution be made, on the Common Stock, unless holders of Series A Preferred Stock shall participate in such dividend on a pro rata basis with the holders of Common Stock, counting shares of Series A Preferred Stock on an as-if-converted basis. 4. LIQUIDATION AND SALE OF THE CORPORATION. (a) LIQUIDATION. Upon the occurrence of a Liquidation, the holders of shares of Series A Preferred Stock shall be paid in cash for each share of Series A Preferred Stock held thereby, out of, but only to the extent of, the assets of the Corporation legally available for distribution to its stockholders, before any payment or distribution is made to any shares of Junior Stock, an amount equal to the greater of (i) 108% of the Series A Purchase Price plus an amount equal to all accrued and unpaid dividends, if any, and (ii) the aggregate amount payable in such Liquidation with respect to the number of shares of Common Stock into which such share of Series A Preferred Stock is convertible (whether or not such shares are convertible at such time) immediately prior to such Liquidation (the greater of clause (i) and clause (ii), the "LIQUIDATION PREFERENCE"). If the assets of the Corporation available for distribution to the holders of shares of Series A Preferred Stock shall be insufficient to permit payment in full to such holders of the aggregate Liquidation Preference, then all of the assets available for distribution to holders of shares of Series A Preferred Stock shall be distributed among and paid to such holders of shares of Series A Preferred Stock ratably in proportion to the amounts that would be payable to such holders if such assets were sufficient to permit payment in full. (b) SALE OF THE CORPORATION. In connection with a Sale of the Corporation effected by the Corporation, the Corporation shall provide that the holders of the Preferred Stock will have the opportunity to receive, in respect of each outstanding share of Series A Preferred Stock, consideration or proceeds equal to the greater of (i) the 108% of the Series A Purchase Price plus an amount equal to all accrued and unpaid dividends, if any, and (ii) the aggregate consideration or proceeds payable in connection with such transaction (including, if greater, any consideration or proceeds, that a holder of Common Stock may elect to receive in connection such transaction) with respect to the number of shares of Common Stock into which such share of Series A Preferred Stock is convertible (whether or not such shares are convertible at such time) immediately prior to such transaction (the greater of clause (i) and clause (ii), the "TRANSACTION PROCEEDS"). In the event that a Sale of the Corporation is consummated which does not provide for the prompt distribution to the holders of the Series A Preferred Stock of the Transaction Proceeds, then (i) the Corporation shall deliver a written notice to each holder of Series A Preferred Stock no later than the 10th day after the Sale of the Corporation advising such holders of their right to receive the Transaction Proceeds in respect of each outstanding share of Series A Preferred Stock, and (ii) within ten days after the receiving a request by a holder of Series A Preferred Stock, the Corporation shall deliver the Transaction Proceeds to such holder in respect of each share of Series A Preferred Stock in respect of which such request is made. If the assets of the Corporation available for distribution to the holders of shares of Series A Preferred Stock shall be insufficient to permit payment in full to such holders of the aggregate Transaction Proceeds, then all of the assets available for distribution to holders of shares of Series A Preferred Stock shall be distributed among and paid to such holders of shares of Series A Preferred Stock ratably in proportion to the amounts that would be payable to such holders if such assets were sufficient to permit payment in full. (c) NO ADDITIONAL PAYMENT. After the holders of all shares of Series A Preferred Stock shall have been paid in full the amounts to which they are entitled in Section 4(a), the holders of shares of Series A Preferred Stock shall not be entitled to any further participation in any distribution of assets of the Corporation and the remaining assets of the Corporation shall be distributed to the holders of Junior Stock. (d) NOTICE. Written notice of a Liquidation, stating the amount of the Liquidation Preference payable in connection therewith and the place where such amount shall be payable, shall be delivered in person, mailed by certified mail, return receipt requested, mailed by overnight mail or sent by telecopier, not less than ten days prior to the earliest payment date stated therein, to the holders of record of shares of Series A Preferred Stock, such notice to be addressed to each such holder at its address as shown by the records of the Corporation. (e) ADDITIONAL PROVISIONS FOR SALE OF THE CORPORATION. Any securities to be delivered to the holders of shares of Series A Preferred Stock pursuant to Section 4(b) shall be valued as follows: (i) With respect to securities that do not constitute "restricted securities," as such term is defined in Rule 144(a)(3) promulgated under the Securities Act, the value shall be deemed to be the Current Market Price of such securities as of three days prior to the date of distribution. For purposes of this Section 4(e)(i), references to "Common Stock" in the definition of "Current Market Price" and "Market Price" shall be deemed to mean the securities to be delivered to the holders of shares of Series A Preferred Stock pursuant to Section 4(b). (ii) With respect to securities that constitute "restricted securities," as such term is defined in Rule 144(a)(3) promulgated under the Securities Act, and that are of the same class or series as securities that are publicly traded, the value shall be adjusted to make an appropriate discount from the value as set forth above in clause (i) to reflect the appropriate fair market value thereof, as mutually determined by the Board of Directors and the holders of the Required Majority of the shares of Series A Preferred Stock, or if there is no active public market with respect to such class or series of securities, such securities shall be valued in accordance with clause (i) above, giving appropriate weight, if any, to such restrictions as mutually determined by the Board of Directors and the holders of the Required Majority of the shares of Series A Preferred Stock. If the Board of Directors and the holders of the Required Majority of the shares of Series A Preferred Stock shall fail to agree on any of the matters referred to in the prior sentence, such matter shall be determined, at the Corporation's expense, by an appraiser chosen by the Board of Directors and reasonably acceptable to the holders of the Required Majority of the shares of Series A Preferred Stock. 5. VOTING RIGHTS. (a) In addition to the voting rights to which the holders of Series A Preferred Stock are entitled under or granted by Delaware law and pursuant to Section 5(b) and any other section hereof, the holders of shares of Series A Preferred Stock shall be entitled to vote, in person or by proxy, at a special or annual meeting of stockholders or in any written consent in lieu of meeting, on all matters entitled to be voted on by holders of shares of Common Stock, voting together as a single class with the Common Stock (and with other shares entitled to vote thereon, if any). With respect to any such vote, each share of Series A Preferred Stock shall entitle the holder thereof to cast that number of votes as is equal to the number of votes that such holder would be entitled to cast had such holder converted its shares of Series A Preferred Stock into shares of Common Stock pursuant to Section 7(a) on the record date for determining the stockholders of the Corporation eligible to vote on any such matters. (b) So long as any shares of the Series A Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of holders of the Required Super-Majority of the then outstanding shares of Series A Preferred Stock, given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting: (i) authorize or issue any additional shares of Series A Preferred Stock or any class of Capital Stock (by reclassification or otherwise) that ranks senior to or PARI PASSU with the Series A Preferred Stock with respect to dividends, distributions, liquidations, redemptions or otherwise; PROVIDED, that, without any requirement to obtain such consent, the Corporation may issue a series of preferred stock that has a different conversion price but is otherwise substantially identical to the terms of the Series A Preferred Stock and having an aggregate total initial liquidation preference that does not exceed $10,000,000 (the "PARI PASSU STOCK"), provided that any shares of Pari Passu Stock shall be issued in compliance with Section 10. (ii) amend this Certificate of Designations, the Certificate of Incorporation or the Bylaws, whether by merger, consolidation or otherwise, so as to, directly or indirectly, affect adversely any of the specified rights, preferences, privileges or voting rights of holders of the shares of Series A Preferred Stock (the issuance of the Pari Passu Stock in accordance with the provisions of clause (i) above being expressly acknowledged to not constitute such an amendment); (iii) alter or change the rights, preferences, powers (including without limitation, voting powers) or privileges, powers of the Series A Preferred Stock; (iv) increase or decrease the authorized number of shares of the Series A Preferred Stock; (v) redeem, purchase or otherwise acquire for cash any Capital Stock of the Corporation ranking PARI PASSU with or junior to the Series A Preferred Stock (other than the repurchase of unvested stock options or restricted stock for nominal consideration from employees, officers or directors, or consultants of the Corporation upon termination of employment or service); or (vi) effect any Sale of the Corporation other than in compliance with Section 4(b) or effect any Transaction other than in compliance with Section 7(g). (c) In any case in which the holders of Series A Preferred Stock shall be entitled to vote as a separate series pursuant to Delaware law and pursuant to Section 5(b) and any other section hereof, each holder of Series A Preferred Stock entitled to vote with respect to such matter shall be entitled to one vote per each share of Series A Preferred Stock held. 6. REDEMPTION. (a) REDEMPTION PERIOD. At any time following December 13, 2010, and provided that the Market Price of the shares of Common Stock equals or exceeds 130% of the initial Series A Conversion Price for at least 20 consecutive trading days (ending on the trading day prior to the Corporation's mailing of the notice of redemption described in Section 6(b)), the Corporation shall have the right, at its sole option and election, to redeem, in one transaction, all (but not less than all) of the outstanding shares of Series A Preferred Stock for cash, at a price per share (the "REDEMPTION PRICE") equal to (i) 100% of the Stated Amount plus (ii) an amount equal to all accrued and unpaid dividends to the Redemption Date (defined below), if any (to the extent they have not been added to the Stated Amount pursuant to Section 3(a)). Shares of Series A Preferred Stock may be converted into shares of Common Stock pursuant to Section 7(a) at any time prior to the Redemption Date. (b) PRIORITY OF REDEMPTION. So long as any shares of Series A Preferred Stock remain outstanding, the Corporation shall not, and shall not permit any Subsidiary to, redeem any shares of Common Stock or any other class or series of Preferred Stock not expressly identified as ranking PARI PASSU or senior to the Series A Preferred Stock with respect to redemption prior to the redemption of all outstanding shares of the Series A Preferred Stock. (c) REDEMPTION PAYMENT. Written notice of any election by the Corporation to redeem the shares of Series A Preferred Stock pursuant to Section 6(a) and the date selected for such redemption (the "REDEMPTION DATE") shall be delivered in person, mailed by certified mail, return receipt requested, mailed by overnight mail or sent by telecopier not less than 15 nor more than 30, days prior to such Redemption Date to the holders of record of the shares of Series A Preferred Stock, such notice to be addressed to each such holder at its address as shown in the records of the Corporation. The Redemption Price shall be paid on the Redemption Date with respect to each share of Series A Preferred Stock by wire transfer of immediately available funds to accounts designated in writing by the holders of such shares of Series A Preferred Stock. Upon notice from the Corporation, each holder of shares of Series A Preferred Stock shall promptly surrender to the Corporation, at any place where the Corporation shall maintain a transfer agent for its shares of Series A Preferred Stock, certificates representing the shares so redeemed, duly endorsed in blank or accompanied by proper instruments of transfer. (d) TERMINATION OF RIGHTS. After the Redemption Date (provided the applicable Redemption Price payable upon redemption of the shares of Series A Preferred Stock has been paid in full), all rights of the holder of shares of Series A Preferred Stock shall cease and terminate, and such shares shall no longer be deemed to be outstanding, whether or not the certificates representing such shares have been received by the Corporation. 7. CONVERSION. (a) OPTIONAL CONVERSION. Any holder of shares of Series A Preferred Stock shall have the right, at its option, at any time following December 13, 2008, and from time to time, to convert, subject to the terms and provisions of this Section 7, any or all of such holder's shares of Series A Preferred Stock into such number of fully paid and non-assessable shares of Common Stock as is equal to the product of the number of shares of Series A Preferred Stock being so converted multiplied by the quotient of (i) the Stated Amount plus an amount equal to all accrued and unpaid dividends, if any (to the extent they have not been added to the Stated Amount pursuant to Section 3(a)) DIVIDED BY (ii) the conversion price, which initially shall be $16.12, subject to adjustment as provided in Section 7(c) (such price in clause (ii), as so adjusted from time to time, the "SERIES A CONVERSION PRICE"). Such conversion right shall be exercised by the surrender of certificate(s) representing the shares of Series A Preferred Stock to be converted to the Corporation at any time during usual business hours at its principal place of business to be maintained by it (or such other office or agency of the Corporation as the Corporation may designate by notice in writing to the holders of shares of Series A Preferred Stock), accompanied by written notice that the holder elects to convert such shares of Series A Preferred Stock and specifying the name or names (with address(es)) in which a certificate or certificates for shares of Common Stock are to be issued and (if so required by the Corporation) by a written instrument or instruments of transfer in form reasonably satisfactory to the Corporation duly executed by the holder or its duly authorized legal representative and transfer tax stamps or funds therefor, if required pursuant to Section 7(j). All certificates representing shares of Series A Preferred Stock surrendered for conversion shall be delivered to the Corporation for cancellation and canceled by it. (b) TERMINATION OF RIGHTS. On the date of such optional conversion pursuant to Section 7(a), all rights with respect to the shares of Series A Preferred Stock so converted, including the rights, if any, to receive notices and vote, shall terminate, except only the rights of holders thereof to (i) receive certificates for the number of shares of Common Stock into which such shares of Series A Preferred Stock have been converted, (ii) the payment of dividends, if any, pursuant to Section 3 and (iii) exercise the rights to which they are entitled as holders of shares of Common Stock. (c) ANTIDILUTION ADJUSTMENTS. The Series A Conversion Price, and the number and type of securities to be received upon conversion of shares of Series A Preferred Stock, shall be subject to adjustment as follows: (i) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Corporation shall at any time or from time to time, prior to conversion of all of the shares of Series A Preferred Stock, (x) subdivide (by stock split or otherwise) the outstanding shares of Common Stock into a larger number of shares, or (y) combine the outstanding shares of Common Stock into a smaller number of shares, then (1) in the event of a subdivision, the Series A Conversion Price in effect immediately before such subdivision shall be proportionately decreased and (y) in the event of a combination, the Series A Conversion Price in effect immediately before the combination shall be proportionately increased. An adjustment made pursuant to this Section 7(c)(i) shall become effective retroactively in the case of any such subdivision or combination, to the close of business on the day upon which such corporate action becomes effective. (ii) ISSUANCE OF COMMON STOCK OR COMMON STOCK EQUIVALENT BELOW SERIES A CONVERSION PRICE. (1) If the Corporation shall at any time or from time to time, prior to conversion of all of the shares of Series A Preferred Stock, issue or sell any shares of Common Stock or Common Stock Equivalents at a price per share of Common Stock that is less than the Series A Conversion Price then in effect as of the record date or Issue Date (as defined below), as the case may be (the "RELEVANT DATE") (treating the price per share of Common Stock, in the case of the issuance of any Common Stock Equivalent, as equal to (x) the sum of the price for such Common Stock Equivalent PLUS any additional consideration payable (without regard to any anti-dilution adjustments) upon the conversion, exchange or exercise of such Common Stock Equivalent DIVIDED BY (y) the number of shares of Common Stock initially underlying such Common Stock Equivalent), other than (A) issuances or sales for which an adjustment is made pursuant to another clause of this Section 7(c) and (B) issuances pursuant to an Excluded Transaction, then, and in each such case, the Series A Conversion Price then in effect shall be adjusted by MULTIPLYING the Series A Conversion Price in effect on the day immediately prior to the Relevant Date by a fraction (I) the numerator of which shall be the sum of the number of shares of Common Stock outstanding on the Relevant Date PLUS the number of shares of Common Stock which the aggregate consideration received by the Corporation for the total number of such additional shares of Common Stock so issued would purchase at the Series A Conversion Price on the Relevant Date (or, in the case of Common Stock Equivalents, the number of shares of Common Stock which the aggregate consideration received by the Corporation upon the issuance of such Common Stock Equivalents and receivable by the Corporation upon the conversion, exchange or exercise of such Common Stock Equivalents would purchase at the Series A Conversion Price on the Relevant Date) and (II) the denominator of which shall be the sum of the number of shares of Common Stock outstanding on the Relevant Date PLUS the number of additional shares of Common Stock issued or to be issued (or, in the case of Common Stock Equivalents, the maximum number of shares of Common Stock into which such Common Stock Equivalents initially may convert, exchange or be exercised). (2) Such adjustment shall be made whenever such shares of Common Stock or Common Stock Equivalents are issued, and shall become effective retroactively on the date (the "ISSUE DATE") of such issuance; PROVIDED, HOWEVER, that the determination as to whether an adjustment is required to be made pursuant to this Section 7(c)(ii) shall only be made upon the issuance of such shares of Common Stock or Common Stock Equivalents. (3) In case at any time any shares of Common Stock or Common Stock Equivalents or any rights or options to purchase any shares of Common Stock or Common Stock Equivalents shall be issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Corporation therefor, without deduction therefrom of any expenses incurred or any underwriting commissions or concessions or discounts paid or allowed by the Corporation in connection therewith. In case any shares of Common Stock or Common Stock Equivalents or any rights or options to purchase any Common Stock or Common Stock Equivalents shall be issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Corporation shall be deemed to be the fair market value of such consideration, without deduction therefrom of any expenses incurred or any underwriting commissions or concessions or discounts paid or allowed by the Corporation in connection therewith, as determined mutually by the Board of Directors and the holders of the Required Majority of the shares of Series A Preferred Stock or, if the Board of Directors and the holders of the Required Majority of the shares of Series A Preferred Stock shall fail to agree, at the Corporation's expense, by an appraiser chosen by the Board of Directors and reasonably acceptable to the holders of the Required Majority of the shares of Series A Preferred Stock. (iii) CERTAIN DISTRIBUTIONS. In case the Corporation shall at any time or from time to time, prior to conversion of all of the Series A Preferred Stock, distribute to all holders of shares of the Common Stock (including any such distribution made in connection with a merger or consolidation in which the Corporation is the resulting or surviving Person and the Common Stock is not changed or exchanged) cash, evidences of indebtedness of the Corporation or another issuer, securities of the Corporation or another issuer or other assets (excluding dividends or distributions in which holders of shares of Series A Preferred Stock participate, in the manner provided in Section 3, and dividends payable in shares of Common Stock for which adjustment is made under another paragraph of this Section 7(c)) or rights or warrants to subscribe for or purchase of any of the foregoing, then, and in each such case, the Conversion Price then in effect shall be adjusted (and any other appropriate actions shall be taken by the Corporation) by multiplying the Conversion Price in effect immediately prior to the date of such distribution by a fraction (x) the numerator of which shall be the Conversion Price in effect immediately prior to the date of such distribution less the then fair market value (as determined by the Board of Directors) of the portion of the cash, evidences of indebtedness, securities or other assets so distributed or of such rights or warrants applicable to one share of Common Stock and (y) the denominator of which shall be the Conversion Price in effect immediately prior to the date of such distribution (but such fraction shall not be greater than one); provided, however, that no adjustment shall be made with respect to any distribution of rights or warrants to subscribe for or purchase securities of the Corporation if the holder of shares of Series A Preferred Stock would otherwise be entitled to receive such rights or warrants upon conversion at any time of shares of Series A Preferred Stock into Common Stock and such rights or warrants are set aside for the holders of Series A Preferred Stock to be delivered upon such conversion. Such adjustment shall be made whenever any such distribution is made and shall become effective retroactively to a date immediately following the close of business on the record date for the determination of stockholders entitled to receive such distribution. (iv) OTHER CHANGES. In case the Corporation at any time or from time to time, prior to the conversion of shares of Series A Preferred Stock, shall take any action affecting its Common Stock similar to or having an effect similar to any of the actions described in Sections 7(c)(i), (ii) or (iii) or Section 7(g) (but not including any action described in any such Section) and it would be equitable in the circumstances to adjust the Series A Conversion Price as a result of such action, then, and in each such case, the Series A Conversion Price shall be adjusted in such manner and at such time as the Board of Directors in good faith determines would be equitable in the circumstances (such determination to be evidenced in a resolution, a certified copy of which shall be mailed to the holders of shares of Series A Preferred Stock). (d) ABANDONMENT. If the Corporation shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a distribution, and shall thereafter and before the distribution to stockholders thereof legally abandon its plan to pay or deliver such distribution, then no adjustment in the Series A Conversion Price shall be required by reason of the taking of such record. (e) NO FRACTIONAL SHARES. No fractional shares shall be issued upon the conversion of any share or shares of Series A Preferred Stock, and the number of shares of Common Stock to be issued shall be rounded up to the nearest whole share. Whether or not fractional shares are issuable upon such conversion shall be determined on the basis of the total number of shares of Series A Preferred Stock which the holder is at the time converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion. (f) CERTIFICATE AS TO ADJUSTMENTS. Upon any adjustment in the Series A Conversion Price, the Corporation shall within a reasonable period following any of the foregoing transactions deliver to each registered holder of shares of Series A Preferred Stock a certificate, signed by (i) the Chief Executive Officer of the Corporation and (ii) the Chief Financial Officer of the Corporation, setting forth in reasonable detail the event requiring the adjustment and the method by which such adjustment was calculated and specifying the increased or decreased Series A Conversion Price then in effect following such adjustment. (g) REORGANIZATION, RECLASSIFICATION. In case of any merger or consolidation of the Corporation or any capital reorganization, reclassification or other change of outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value) (each, a "TRANSACTION"), the Corporation shall execute and deliver to each holder of shares of Series A Preferred Stock at least 20 days prior to effecting such Transaction a certificate, signed by (i) the Chief Executive Officer of the Corporation and (ii) the Chief Financial Officer of the Corporation, stating that the holder of each share of Series A Preferred Stock shall have the right to receive in such Transaction, in exchange for each share of Series A Preferred Stock, a security substantially similar to (and not less favorable to the holder than) the Series A Preferred Stock, and provision shall be made therefor in such Transaction, including in the agreement, if any, relating to such Transaction. Such security shall provide for the adjustments required by this Section 7(g). The provisions of this Section 7(g) similarly shall apply to successive transactions. (h) NOTICES. In case at any time or from time to time: (i) the Corporation shall declare a dividend (or any other distribution) on its shares of Common Stock; (ii) the Corporation shall authorize the granting to the holders of its shares of Common Stock rights or warrants to subscribe for or purchase any shares of Capital Stock of any class or of any other rights or warrants; or (iii) there shall be any Transaction; then the Corporation shall mail to each holder of shares of Series A Preferred Stock at such holder's address as it appears on the transfer books of the Corporation, as promptly as possible but in any event at least ten days prior to the applicable date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution or granting of rights or warrants or, if a record is not to be taken, the date as of which the holders of shares of Common Stock of record to be entitled to such dividend, distribution or granting of rights or warrants are to be determined, or (B) the date on which such Transaction is expected to become effective and the date as of which it is expected that holders of shares of Common Stock of record shall be entitled to exchange their shares of Common Stock for shares of stock or other securities or property or cash deliverable upon such Transaction. Notwithstanding the foregoing, in the case of any event to which Section 7(g) is applicable, the Corporation shall also deliver the certificate described in Section 7(g) to each holder of shares of Series A Preferred Stock at least 20 days prior to effecting such reorganization or reclassification as aforesaid. (i) RESERVATION OF COMMON STOCK. The Corporation shall at all times reserve and keep available for issuance upon the conversion of shares of Series A Preferred Stock, such number of its authorized but unissued shares of Common Stock as will from time to time be sufficient to permit the conversion of all outstanding shares of Series A Preferred Stock, and shall take all actions to increase the authorized number of shares of Common Stock if at any time there shall be insufficient authorized but unissued shares of Common Stock to permit such reservation or to permit the conversion of all outstanding shares of Series A Preferred Stock. (j) NO CONVERSION TAX OR CHARGE. The issuance or delivery of certificates for shares of Common Stock upon the conversion of shares of Series A Preferred Stock shall be made without charge to the converting holder of shares of Series A Preferred Stock for such certificates or for any tax in respect of the issuance or delivery of such certificates or the securities represented thereby, and such certificates shall be issued or delivered in the respective names of, or (subject to compliance with the applicable provisions of federal and state securities laws) in such names as may be directed by, the holders of the shares of Series A Preferred Stock converted; PROVIDED, HOWEVER, that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in a name other than that of the holder of the shares of Series A Preferred Stock converted, and the Corporation shall not be required to issue or deliver such certificate unless or until the Person or Persons requesting the issuance or delivery thereof shall have paid to the Corporation the amount of such tax or shall have established to the reasonable satisfaction of the Corporation that such tax has been paid. (k) Subject to compliance with Section 7(a), within one trading day after the surrender of any of the Series A Preferred Stock for conversion, the Corporation shall (subject to compliance with the applicable provisions of federal and state securities laws) deliver to the holder of such shares so surrendered certificate(s) representing the number of fully paid and non-assessable shares of Common Stock into which such shares are entitled to be converted and certificate(s) representing the number of shares of Series A Preferred Stock which were not so converted, if any. At the time of the surrender of such certificate(s), the Person in whose name any certificate(s) for shares of Common Stock shall be issuable upon such conversion shall be deemed to be the holder of record of such shares of Common Stock on such date, notwithstanding that the share register of the Corporation shall then be closed or that the certificates representing such shares of Common Stock shall not then be actually delivered to such Person. 8. WAIVER. The Required Majority may waive compliance with any of the provisions of this Certificate of Designations. 9. BUSINESS DAY. If any payment shall be required by the terms hereof to be made on a day that is not a Business Day, such payment shall be made on the immediately succeeding Business Day. 10. PREEMPTIVE RIGHTS. In case the Corporation proposes at any time to sell any shares of Pari Passu Stock (other than sales of Pari Passu Stock, on or before February 28, 2008, to any Person that is a holder of Capital Stock of the Corporation as of the date hereof (or an affiliate of such holder) of a number of shares of Pari Passu Stock that provides such holder with the same fully diluted, ownership percentage as such holder had prior to the sale of Series A Preferred Stock), the Corporation shall, no later than ten business days prior to the consummation of such sale, give notice in writing (the "PREEMPTIVE RIGHTS OFFER NOTICE") to each registered holder of Series A Preferred Stock (at the last address provided by such holder to the Corporation) of such proposed transaction. The Preemptive Rights Offer Notice shall include the terms of the proposed transaction and contain an offer to sell to each holder of Series A Preferred Stock, on the terms described in the Preemptive Rights Offer Notice, all or any part of such holder of Series A Preferred Stock's pro rata portion of the Pari Passu Stock (which shall equal to the number of shares of outstanding Series A Preferred Stock owned by such holder divided by the number of outstanding shares of Series A Preferred Stock). If any holder of Series A Preferred Stock fails to accept the offer by the tenth business day after the Corporation's delivery of the Preemptive Rights Offer Notice to purchase all of such holders pro rata share of Pari Passu Stock, the Corporation shall offer the participating holders of Series A Preferred Stock the right to buy their pro rata portion of the Pari Passu Stock which has not been subscribed for within three business days after delivery of such notice. Thereafter, for a period of 90 days, the Corporation may sell any unsubscribed shares of Pari Passu Stock to any Person or Persons on terms that are no more favorable than those set forth in the Preemptive Rights Offer Notice. 11. DEFINITIONS. As used in this Certificate of Designation, the following terms shall have the following meanings (with terms defined in the singular having comparable meanings when used in the plural and VICE VERSA), unless the context otherwise requires: "BOARD OF DIRECTORS" means the board of directors of the Corporation. "BUSINESS DAY" means any day except a Saturday, a Sunday, or other day on which commercial banks in the State of New York are authorized or required by law or executive order to close. "CAPITAL STOCK" means, with respect to any Person, any and all shares, interests, participations, rights in, or other equivalents (however designated and whether voting or non-voting) of, such Person's capital stock and any and all rights, warrants or options exchangeable for or convertible into such capital stock (but excluding any debt security whether or not it is exchangeable for or convertible into such capital stock). "COMMISSION" means the United States Securities and Exchange Commission. "COMMON STOCK" has the meaning ascribed to it in Section 2. "COMMON STOCK EQUIVALENT" means any security or obligation which is by its terms convertible or exchangeable into shares of Common Stock or another Common Stock Equivalent, and any option, warrant or other subscription or purchase right with respect to Common Stock. "CORPORATION" has the meaning ascribed to it in the first paragraph of this Certificate of Designations. "CURRENT MARKET PRICE" per share means, as of the date of determination, (a) the average of the daily Market Price under clause (a), (b) or (c) of the definition thereof of the Capital Stock during the immediately preceding 30 trading days ending on such date, and (b) if the Capital Stock is not then listed or admitted to trading on any national securities exchange or quoted in the over-the-counter market, then the Market Price under clause (d) of the definition thereof on such date. "EXCLUDED TRANSACTION" means (a) any issuance or grant of restricted stock or options to purchase shares of Common Stock to employees, consultants, officers or directors of the Corporation pursuant to a stock option plan or other employee benefit arrangement approved by the Board of Directors or (b) any issuance of Common Stock or Common Stock Equivalent issued (i) upon the conversion of shares of Series A Preferred Stock or Pari Passu Stock (but only if an adjustment has been made with respect to the issuance of the Pari Passu Stock), (ii) as a dividend on shares of Series A Preferred Stock, (iii) in connection with any debt financing which is approved by holders of the Required Super-Majority of the outstanding shares of Series A Preferred Stock, (iv) in connection with any strategic acquisition by the Corporation or any of its Subsidiaries only if such Common Stock or Common Stock Equivalents are issued in consideration of such strategic acquisition and not to fund the acquisition of consideration for such strategic acquisition or (v) in respect of claims under the Corporation's 2005 plan of reorganization. "ISSUE DATE" has the meaning ascribed to it in Section 7(c)(ii)(2). "JUNIOR STOCK" has the meaning ascribed to it in Section 2. "LIQUIDATION" means the voluntary or involuntary liquidation under applicable bankruptcy or reorganization law, or the dissolution or winding up of the Corporation. "LIQUIDATION PREFERENCE" has the meaning ascribed to it in Section 4(a). "MARKET PRICE" means, as of the date of determination, (a) if the Capital Stock is listed on a national securities exchange, the closing price per share of Capital Stock on such date published in THE WALL STREET JOURNAL (NATIONAL EDITION) or, if no such closing price on such date is published in THE WALL STREET JOURNAL (NATIONAL EDITION), the average of the closing bid and asked prices on such date, as officially reported on the principal national securities exchange on which the Capital Stock is then listed or admitted to trading; or (b) if the Capital Stock is not then listed or admitted to trading on any national securities exchange but is designated as a national market system security by the National Association of Securities Dealers, Inc., the last trading price of the Capital Stock on such date; or (c) if there shall have been no trading on such date or if the Capital Stock is not designated as a national market system security by the National Association of Securities Dealers, Inc., the average of the reported closing bid and asked prices of the Capital Stock on such date as shown by the National Market System of the National Association of Securities Dealers, Inc. Automated Quotations System and reported by any member firm of the New York Stock Exchange selected by the Corporation; or (d) if none of (a), (b) or (c) is applicable, a market price per share determined mutually by the Board of Directors and the holders of the Required Majority of the shares of Series A Preferred Stock or, if the Board of Directors and the holders of the Required Majority of the shares of Series A Preferred Stock shall fail to agree, at the Corporation's expense, by an appraiser chosen by the Board of Directors and reasonably acceptable to the holders of the Required Majority of the shares of Series A Preferred Stock. Any determination of the Market Price shall be based on a valuation of the Corporation as an entirety without regard to any discount for minority interests or disparate voting rights among classes of Capital Stock. "PARI PASSU STOCK" has the meaning ascribed to it in Section 5(b). "PERSON" means any individual, firm, corporation, partnership, limited liability company, trust, incorporated or unincorporated association, joint venture, joint stock company, governmental body or other entity of any kind. "RELEVANT DATE" has the meaning ascribed to it in Section 7(c)(ii). "REQUIRED MAJORITY" means at least 50.1% of the outstanding Series A Preferred Stock. "REQUIRED SUPER-MAJORITY" means at least 66.67% of the outstanding Series A Preferred Stock. "REVOLVING CREDIT AGREEMENT" means the Credit Agreement, dated as of April 13, 2005 (as amended, restated, supplemented or otherwise modified), by and among the Corporation, General Electric Capital Corporation, as agent and lender, the other credit parties thereto and the lenders signatory thereto from time to time. "SALE OF THE CORPORATION" means, whether in a single transaction or a series of related transactions, (i) any merger, consolidation, recapitalization, tender offer or other business combination of, for or involving the Corporation or its capital stock, unless, in any such case, the Persons that beneficially own the Common Stock of the Corporation (including Common Stock issuable upon conversion of Preferred Stock) immediately prior to such transaction or series of related transactions will beneficially own immediately after the transaction at least 66.67% of the Common Stock (including Common Stock issuable upon conversion of Preferred stock) of the Corporation or any other corporation or other entity resulting from or surviving the transaction or transactions in substantially the same proportion as their respective ownership of the Common Stock (including Common Stock issuable upon conversion of Preferred Stock) immediately before that transaction or series of related transactions or (ii) the sale, transfer or other disposition of all or substantially all of the assets of the Corporation and its Subsidiaries. For the avoidance of doubt, a "Sale of the Corporation" shall not include a private or public market transfer or sale transaction by any holders of the Corporation's capital stock, other than pursuant to a tender offer or similar transaction made available to all stockholders of the Corporation. "SALE PAYMENT" has the meaning ascribed to it in Section 4(b). "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "SERIES A CONVERSION PRICE" has the meaning ascribed to it in Section 6(a). "SERIES A PREFERRED STOCK" has the meaning ascribed to it in Section 1. "SERIES A PREFERRED PURCHASE PRICE" means $1,000.00 (subject to equitable adjustments for stock splits, stock dividends, combinations or other recapitalizations of the Series A Preferred Stock). "STATED AMOUNT" means $1,000.00 per share of Series A Preferred Stock, as the same may be increased to reflect accrued but unpaid dividends pursuant to Section 3(a) (subject to equitable adjustments for stock splits, stock dividends, combinations or other recapitalizations of the Series A Preferred Stock). "SUBSIDIARIES" means, as of the relevant date of determination, with respect to any Person, a corporation or other Person of which 50% or more of the voting power of the outstanding voting equity securities or 50% or more of the outstanding economic equity interest is held, directly or indirectly, by such Person. "SUPPLEMENTAL REAL ESTATE CREDIT AGREEMENT" means the Credit, dated as of April 13, 2005 (as amended, restated, supplemented or otherwise modified), by and among the Corporation, Kimco Capital Corp., as agent and lender, the other credit parties thereto and the lenders signatory thereto from time to time. "TRANSACTION" has the meaning ascribed to it in Section 7(f). "TRANSACTION PROCEEDS" has the meaning ascribed to it in Section 4(b). [Remainder of page intentionally left blank] IN WITNESS WHEREOF, the undersigned has executed and subscribed this certificate as of December 12, 2007. /s/ Gregory J. Young --------------------------------- Gregory J. Young Chief Executive Officer [Signature page to Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock] EX-3.(I) 3 form8k_121307ex3-2.txt EXHIBIT 3.2 EXHIBIT 3.2 ----------- STATE OF DELAWARE CERTIFICATE OF CORRECTION FILED TO CORRECT A CERTAIN ERROR IN THE CERTIFICATE OF THE POWERS, DESIGNATIONS, PREFERENCES AND RIGHTS OF THE SERIES A CONVERTIBLE PREFERRED STOCK FILED IN THE OFFICE OF THE SECRETARY OF STATE OF DELAWARE ON DECEMBER 12, 2007 The Penn Traffic Company, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware DOES HEREBY CERTIFY: 1. The name of the corporation is The Penn Traffic Company. 2. That a Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock (the "Certificate of Designations") was filed by the Secretary of State of Delaware on December 12, 2007. 3. The inaccuracy or defect of said Certificate of Designations to be corrected is as follows: The reference to "December 13, 2010" in Section 6(a) shall be deleted and replaced with the words "December 13, 2009". IN WITNESS WHEREOF, said Corporation has caused this Certificate of Correction to be signed by Daniel Mahoney, an authorized officer, this 12th day of December, 2007. The Penn Traffic Company By: /s/ Daniel J. Mahoney --------------------- Name: Daniel J. Mahoney Title: VP, General Counsel EX-10 4 form8k_121307ex10-1.txt EXHIBIT 10.1 EXHIBIT 10.1 ------------ SECURITIES PURCHASE AGREEMENT by and among THE PENN TRAFFIC COMPANY and THE PURCHASERS LISTED HEREIN Dated: December 13, 2007 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS.........................................................1 1.1 Definitions.................................................1 ARTICLE II PURCHASE AND SALE OF PREFERRED STOCK...............................5 2.1 Purchase and Sale of Preferred Stock........................5 2.2 Use of Proceeds.............................................5 2.3 Closing.....................................................6 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................6 3.1 Corporate Existence and Power...............................6 3.2 Authorization; No Contravention.............................6 3.3 Governmental Authorization; Third Party Consents............7 3.4 Binding Effect..............................................7 3.5 Litigation..................................................7 3.6 Compliance with Laws........................................7 3.7 Capitalization..............................................7 3.8 No Default or Breach; Contractual Obligations...............8 3.9 Title to Properties and Assets..............................9 3.10 Reports; Financial Statements...............................9 3.11 Taxes.......................................................9 3.12 Private Offering...........................................10 3.13 Labor Relations............................................10 3.14 Employee Benefit Plans.....................................10 3.15 Liabilities................................................11 3.16 Broker's, Finder's or Similar Fees.........................11 3.17 Related Party Transactions.................................11 3.18 Certain Business Practices.................................11 3.19 Internal Accounting Controls...............................11 3.20 Disclosure.................................................12 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS..................12 4.1 Existence and Power........................................12 4.2 Authorization; No Contravention............................12 4.3 Governmental Authorization; Third Party Consents...........12 4.4 Binding Effect.............................................13 4.5 Purchase for Own Account...................................13 4.6 Restricted Securities......................................15 4.7 Transactions in Common Stock...............................15 4.8 Accredited Investor; Acknowledgement.......................15 4.9 Broker's, Finder's or Similar Fees.........................15 (i) Page ARTICLE V CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO CLOSE............15 5.1 Certificate of Designations................................16 5.2 Sale of All of the Preferred Shares........................16 5.3 Registration Rights Agreement..............................16 5.4 Lender Consent.............................................16 ARTICLE VI CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE..............16 6.1 Payment of Purchase Price..................................16 6.2 Registration Rights Agreement..............................16 ARTICLE VII INDEMNIFICATION..................................................16 7.1 Indemnification............................................16 7.2 Notification...............................................17 7.3 Contribution...............................................18 ARTICLE VIII COVENANTS.......................................................18 8.1 Reporting Status...........................................18 8.2 Securities Laws Disclosure; Publicity......................19 8.3 Form D and Blue Sky........................................19 8.4 Reservation of Underlying Common Shares....................20 8.5 Furnishing of Information..................................20 8.6 Financial Statements.......................................20 ARTICLE IX MISCELLANEOUS.....................................................21 9.1 Survival of Representations and Warranties an Covenants....21 9.2 Notices....................................................21 9.3 Successors and Assigns; Third Party Beneficiaries..........22 9.4 Amendment and Waiver.......................................22 9.5 Counterparts...............................................23 9.6 Headings...................................................23 9.7 GOVERNING LAW..............................................23 9.8 Consent to Jurisdiction....................................23 9.9 WAIVER OF JURY TRIAL.......................................23 9.10 Severability...............................................23 9.11 Rules of Construction......................................24 9.12 Entire Agreement...........................................24 9.13 Fees.......................................................24 9.14 Further Assurances.........................................24 9.15 Specific Performance.......................................24 9.16 Acknowledgment.............................................24 (ii) EXHIBITS A Certificate of Designations B Registration Rights Agreement SCHEDULES I Purchasers 2.1 Purchased Shares and Purchase Price (iii) SECURITIES PURCHASE AGREEMENT SECURITIES PURCHASE AGREEMENT, dated as of December 13, 2007 (this "AGREEMENT"), by and among The Penn Traffic Company, a Delaware corporation (the "COMPANY"), and the Purchasers listed on SCHEDULE I hereto (the "PURCHASERS"). WHEREAS, upon the terms and conditions set forth in this Agreement, the Company proposes to issue and sell to each of the Purchasers the aggregate number of shares, par value $0.01 per share, of Series A Convertible Preferred Stock of the Company (the "PREFERRED STOCK"), set forth opposite such Purchaser's name on SCHEDULE 2.1 hereto, for the aggregate purchase price set forth opposite such Purchaser's name on SCHEDULE 2.1 hereto. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS 1.1 DEFINITIONS. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated: "AFFILIATE" shall mean any Person who is an "affiliate" as defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. "AGREEMENT" means this Agreement as the same may be amended, supplemented or modified in accordance with the terms hereof. "ASSISTANT SECRETARY" has the meaning set forth in the Company's By-laws. "BOARD OF DIRECTORS" means the Board of Directors of the Company. "BUSINESS DAY" means any day other than a Saturday, Sunday or other day on which commercial banks in the State of New York are authorized or required by law or executive order to close. "BY-LAWS" means the Amended and Restated By-laws of the Company in effect on the Closing Date. "BUY-IN" has the meaning set forth in Section 4.5 of this Agreement. "CERTIFICATE OF DESIGNATIONS" means the Certificate of Designations with respect to the Preferred Stock in the form of EXHIBIT A hereto. "CERTIFICATE OF INCORPORATION" means the Second Amended and Restated Certificate of Incorporation of the Company in effect on the Closing Date. "CLAIMS" has the meaning set forth in Section 3.5 of this Agreement. "CLOSING" has the meaning set forth in Section 2.3 of this Agreement. "CLOSING DATE" has the meaning set forth in Section 2.3 of this Agreement. "CODE" means the Internal Revenue Code of 1986, as amended, or any successor statute thereto. "COMMISSION" means the United States Securities and Exchange Commission or any similar agency then having jurisdiction to enforce the Securities Act. "COMMON STOCK" means the common stock, par value $0.01 per share, of the Company. "COMMONLY CONTROLLED ENTITY" means any entity which is under common control with the Company within the meaning of Code Section 414(b), (c), (m), (o) or (t). "COMPANY" has the meaning set forth in the preamble to this Agreement. "COMPANY PLANS" means each Plan that the Company and each of its Subsidiaries maintains or to which the Company and each of its Subsidiaries contributes. "CONDITION OF THE COMPANY" means the assets, business, properties, operations or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole. "CONSENT" means the acknowledgment and/or consent of the lenders referred to in Section 5.4. "CONTRACTUAL OBLIGATIONS" means, as to any Person, any material agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument to which such Person is a party or by which it or any of its property is bound. "CREDIT AGREEMENT" has the meaning set forth in Section 2.2 of this Agreement. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder. 2 "FINANCIAL STATEMENTS" has the meaning set forth in Section 3.10(b) of this Agreement. "GAAP" means United States generally accepted accounting principles in effect from time to time. "GOVERNMENTAL AUTHORITY" means the government of any nation, state, city, locality or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "INDEMNIFIED PARTY" has the meaning set forth in Section 7.1(a) of this Agreement. "COMPANY" has the meaning set forth in Section 7.1(a) of this Agreement. "LEGEND REMOVAL DATE" has the meaning set forth in Section 4.5(b) of this Agreement. "LIABILITIES" has the meaning set forth in Section 3.15 of this Agreement. "LIEN" means any mortgage, deed of trust, pledge, hypothecation, assignment, encumbrance, lien (statutory or other) or preference, priority, right or other security interest or preferential arrangement of any kind or nature whatsoever (excluding preferred stock and equity related preferences). "LOSSES" has the meaning set forth in Section 7.1(a) of this Agreement. "MATERIAL CONTRACTUAL OBLIGATIONS" has the meaning set forth in Section 3.8 of this Agreement. "ORDERS" has the meaning set forth in Section 3.2 of this Agreement. "PERSON" means any individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, Governmental Authority or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity. "PLAN" means any employee benefit plan, arrangement, policy, program, agreement or commitment (whether or not an employee plan within the meaning of section 3(3) of ERISA), including, without limitation, any employment, consulting or deferred compensation agreement, executive compensation, bonus, incentive, pension, profit-sharing, savings, retirement, stock option, stock purchase or severance pay plan, any life, health, disability or accident insurance plan, whether oral or written, whether or not subject to ERISA, as to which the Company or any Commonly Controlled Entity has or in the future could have any direct or indirect, actual or contingent liability. 3 "PREFERRED STOCK" has the meaning set forth in the recitals of this Agreement. "PURCHASED SHARES" has the meaning set forth in Section 2.1 of this Agreement. "PURCHASERS" has the meaning set forth in the preamble to this Agreement. "REAL ESTATE CREDIT AGREEMENT" has the meaning set forth in Section 3.3 of this Agreement. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement in the form attached hereto as EXHIBIT B. "REQUIREMENT OF LAW" means, as to any Person, any law, Environmental Law, statute, treaty, rule, regulation, right, privilege, qualification, license or franchise or determination of an arbitrator or a court or other Governmental Authority or stock exchange, in each case applicable or binding upon such Person or any of its property or to which such Person or any of its property is subject or pertaining to any or all of the transactions contemplated or referred to herein. "REVOLVING CREDIT FACILITY" has the meaning set forth in Section 2.2 of this Agreement. "SEC COMPLIANT DATE" means the date after which the Company has become eligible to file a Registration Statement on Form S-1 (including its ability to include or incorporate the financial information required therein). "SEC INVESTIGATION" has the meaning set forth in Section 4.8 of this Agreement. "SEC REPORTS" has the meaning set forth in Section 3.10(a) of this Agreement. "SECRETARY" has the meaning set forth in the Company's By-laws. "SECURITIES" means the Purchased Shares and the Underlying Common Shares. "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder. "STOCK EQUIVALENTS" means any security or obligation which is by its terms convertible into or exchangeable or exercisable for shares of Common Stock or other capital stock of the Company, and any option, warrant or other subscription or purchase right with respect to common stock or such other capital stock. "STOCK OPTION PLAN" means the Company's Incentive Stock Plan. 4 "SUBSIDIARIES" means, as of the relevant date of determination, with respect to any Person, a corporation or other Person of which 50% or more of the voting power of the outstanding voting equity securities or 50% or more of the outstanding economic equity interest is held, directly or indirectly, by such Person. Unless otherwise qualified, or the context otherwise requires, all references to a "SUBSIDIARY" or to "SUBSIDIARIES" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Company. "TAXES" means any federal, state, provincial, county, local, foreign and other taxes (including, without limitation, income, profits, windfall profits, alternative, minimum, accumulated earnings, personal holding company, capital stock, premium, estimated, excise, sales, use, occupancy, gross receipts, franchise, ad valorem, severance, capital levy, production, transfer, withholding, employment, unemployment compensation, payroll and property taxes, import duties and other governmental charges and assessments), whether or not measured in whole or in part by net income, and including deficiencies, interest, additions to tax or interest, and penalties with respect thereto, and including expenses associated with contesting any proposed adjustments related to any of the foregoing. "TRANSACTION DOCUMENTS" means, collectively, this Agreement, the Registration Rights Agreement and the Certificate of Designations. "UNDERLYING COMMON SHARES" means the shares of Common Stock issuable upon conversion of the Purchased Shares. ARTICLE II PURCHASE AND SALE OF PREFERRED STOCK 2.1 PURCHASE AND SALE OF PREFERRED STOCK. Subject to the terms and conditions herein set forth, the Company agrees to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, agrees to purchase from the Company, on the Closing Date, the aggregate number of shares of Preferred Stock set forth opposite such Purchaser's name on SCHEDULE 2.1 hereto, for the aggregate purchase price set forth opposite such Purchaser's name on SCHEDULE 2.1 hereto (all of the shares of Preferred Stock being purchased pursuant to this Section 2.1 being referred to herein as the "PURCHASED SHARES"). 2.2 USE OF PROCEEDS. The Company shall use the proceeds from the sale of the Purchased Shares to repay outstanding amounts under the Company's revolving credit facility (the "REVOLVING CREDIT FACILITY") which is governed by the Credit Agreement, dated as of April 13, 2005 among the Company, certain Subsidiaries of the Company, the lenders signatory thereto, General Electric Capital Corporation, JPMorgan Chase Bank, N.A., The Cit Group/Business Credit; and GECC Capital Markets Group, Inc., as amended (the "CREDIT AGREEMENT"), and pending such application, such proceeds may be held in the Diversion Account (as defined in the Credit Agreement) in accordance with the terms of the Credit 5 Agreement or in a separate account to be maintained by the Company in accordance with the Consent. 2.3 CLOSING. The closing of the sale and purchase of the Purchased Shares (the "CLOSING") shall take place at the offices of Paul, Weiss, Rifkind, Wharton & Garrison, at 10:00 a.m., local time, on the date hereof, or at such other time, place and date that the Company and the Purchasers may agree in writing (the "CLOSING DATE"). On the Closing Date, (a) the Company shall deliver to each of the Purchasers a certificate or certificates in definitive form and registered in the name of each such Purchaser, representing the Purchased Shares, and (b) each Purchaser will pay the aggregate purchase price for its Purchased Shares by wire transfer of immediately available funds. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to each of the Purchasers on and as of the date hereof as follows: 3.1 CORPORATE EXISTENCE AND POWER. The Company and each of its Subsidiaries (a) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation; (b) has all requisite power and authority to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently, or is proposed to be, engaged; and (c) is duly qualified as a foreign corporation, licensed and in good standing under the laws of each jurisdiction in which its ownership, lease or operation of property or the conduct of its business requires such qualification, except where the failure to be so qualified could not reasonably be expected to have a material adverse effect on the Condition of the Company. The Company has the corporate power and authority to execute, deliver and perform its obligations under this Agreement and each of the other Transaction Documents. 3.2 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and performance by the Company of this Agreement and each of the other Transaction Documents and the transactions contemplated hereby and thereby: (a)have been duly authorized by all necessary corporate action of the Company; (b) upon the filing of the Certificate of Designations, will not contravene the terms of the Certificate of Incorporation or the By-laws or the organizational documents of any of the Subsidiaries; upon the filing of the Certificate of Designations, and will not violate, conflict with or result in any breach, default or contravention of (or with due notice or lapse of time or both would result in any breach, default or contravention of), or the creation of any Lien under, any Contractual Obligation of the Company or any of its Subsidiaries or any Requirement of Law applicable to the Company or any of its Subsidiaries; and (d) upon the filing of the Certificate of Designations, and will not violate any material judgment, injunction, writ, award, decree or order of any nature (collectively, "ORDERS") of any Governmental Authority against, or binding upon, the Company or any of its Subsidiaries. 6 3.3 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS. Except for the filing of the Certificate of Designations, no material approval, consent, compliance, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority or any other Person, and no lapse of a waiting period under a Requirement of Law, is necessary or required in connection with the execution, delivery or performance (including, without limitation, the sale, issuance and delivery of the Purchased Shares) by, or enforcement against, the Company of this Agreement and the other Transaction Documents or the transactions contemplated hereby and thereby. The Company is not required under the terms of the Credit Agreement, dated as of April 13, 2005, among the Company, certain subsidiaries of the Company, the lenders signatory thereto and Kimco Capital Corp. (the "REAL ESTATE CREDIT AGREEMENT") to use the proceeds from the sale of the Preferred Shares hereunder to repay amounts owed under the Real Estate Credit Agreement, after giving effect to the SREF Intercreditor Agreement (as defined therein) and the Consent. 3.4 BINDING EFFECT. This Agreement and each of the other Transaction Documents have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity relating to enforceability (regardless of whether considered in a proceeding at law or in equity). 3.5 LITIGATION. Except as disclosed in the SEC Reports, and except as would not be reasonably expected to have a material adverse effect on the Condition of the Company, there are no actions, suits, proceedings, claims or investigations (collectively, "CLAIMS") pending or, to the Knowledge of the Company, threatened, at law, in equity, in arbitration or before any Governmental Authority against the Company or any of its Subsidiaries. No Order has been issued by any court or other Governmental Authority against the Company or any of its Subsidiaries purporting to enjoin or restrain the execution, delivery or performance of this Agreement or any of the other Transaction Documents. 3.6 COMPLIANCE WITH LAWS. The Company and each of its Subsidiaries is in compliance with all Requirements of Law and all Orders issued by any court or Governmental Authority against the Company and each of its Subsidiaries, except as would not be reasonably expected to have a material adverse effect on the Condition of the Company. 3.7 CAPITALIZATION. (a) On the Closing Date, after giving effect to the transactions contemplated by this Agreement, the authorized capital stock of the Company consists of (i) 15,000,000 shares of Common Stock, of which 8,306,755 shares are issued and outstanding and (ii) 1,000,000 shares of Preferred Stock, of which the number of shares constituting the Purchased Shares are issued and outstanding. As of the date of this 7 Agreement, the aggregate number of options to purchase shares of Common Stock which may be issued under the Stock Option Plan is 902,268, none of which are outstanding. Under the Company's phantom stock plan, the recipients are only entitled to receive a cash payment upon settlement determined by reference to either a notional number of shares of Common Stock or the appreciation in value of a notional number of shares of Common Stock, but are not entitled to receive capital stock of the Company pursuant to such plan. There are no options, warrants, conversion privileges, subscription or purchase rights or other rights presently outstanding to purchase or otherwise acquire (i) any authorized but unissued, unauthorized or treasury shares of the Company's capital stock, (ii) any Stock Equivalents or (iii) any other securities of the Company and there are no commitments, contracts, agreements, arrangements or understandings by the Company to issue any shares of the Company's capital stock or any Stock Equivalents or other securities of the Company. (b) All of the shares of capital stock of the Company's Subsidiaries owned by it are duly authorized, validly issued, fully paid and non-assessable. There are no options, warrants, conversion privileges, subscription or purchase rights or other rights presently outstanding to purchase or otherwise acquire any authorized but unissued, unauthorized or treasury shares of capital stock or other securities of, or any proprietary interest in, any of the Subsidiaries, and there is no outstanding security of any kind convertible into or exchangeable for such shares or proprietary interest. (c) The Purchased Shares are duly authorized, and when issued and sold to the Purchasers after payment therefor, will be validly issued, fully paid and non-assessable, and will be free and clear of all Liens. The Underlying Common Shares have been duly reserved for issuance upon conversion of the Preferred Shares and, when so issued, will be duly authorized, validly issued, fully paid and nonassessable shares of Common Stock and will be free and clear of all Liens. Neither the issuance, sale or delivery of the Purchased Shares nor the issuance or delivery of the Underlying Common Shares is subject to any preemptive or other purchase right of the Company's stockholders or to any right of first refusal or other right in favor of any Person. The consummation of the transactions contemplated hereunder will not result in any anti-dilution adjustment or other similar adjustment to any of the Company's outstanding securities. Any Person with any right to purchase securities of the Company, which would be triggered as a result of the transactions contemplated under this Agreement, has waived such rights. 3.8 NO DEFAULT OR BREACH; CONTRACTUAL OBLIGATIONS. All of the Contractual Obligations filed as exhibits or described in the SEC Reports or which are otherwise material to the Condition of the Company (collectively, the "MATERIAL CONTRACTUAL OBLIGATIONS") are valid, subsisting, in full force and effect and binding upon the Company or its Subsidiaries, as the case may be. Neither the Company nor any of its Subsidiaries has received notice of a default or is in default under, or with respect to, any Material Contractual Obligation nor does any condition exist that with notice or lapse of time or both would constitute a default thereunder. No other party to any such Material Contractual Obligation is in default thereunder, nor does any condition exist that with notice or lapse of time or both would constitute a default by such other party thereunder. 8 3.9 TITLE TO PROPERTIES AND ASSETS. Except as could not reasonably be expected to have a material adverse effect on the Condition of the Company, the Company and each of its Subsidiaries holds interests as lessee under leases in full force and effect in, all real property used in connection with its business or otherwise owned or leased by it. Except as could not reasonably be expected to have a material adverse effect on the Condition of the Company, the Company and each of its Subsidiaries owns and has good, valid, and marketable title to all of its properties and assets used in its business and reflected as owned on the Financial Statements or so described in any Schedule hereto, in each case free and clear of all Liens, except for Liens specifically described on the notes to the Financial Statements. 3.10 REPORTS; FINANCIAL STATEMENTS. (a) Except as described in Section 3.10(c) and except as described in each such filing, as of the respective dates of their filing with the Commission, all reports, registration statements and other filings, together with any amendments thereto, filed by the Company with the Commission since January 1, 2007 (the "SEC REPORTS"), complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act, and the rules and regulations of the Commission promulgated thereunder. The SEC Reports did not at the time they were filed with the Commission contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (b) The audited consolidated financial statements of the Company and its Subsidiaries (balance sheet and statements of operations, cash flow and stockholders' equity, together with the notes thereto) for the fiscal year ended February 3, 2007, which contains the report of Eisner LP (the "FINANCIAL STATEMENTS") set forth in the SEC Reports are complete and correct in all material respects and have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated and with each other, except as described in Section 3.10(c). The Financial Statements fairly present in all material respects the financial condition, operating results and cash flows of the Company and its Subsidiaries as of the respective dates and for the respective periods indicated in accordance with GAAP. (c) The SEC Reports do not (i) contain all of the historical financial information required to be included therein or (ii) constitute all of the reports required to be filed by the Company under the Exchange Act. 3.11 TAXES. Except as would not be reasonably expected to have a material adverse effect on the Condition of the Company, (a) the Company and each of its Subsidiaries has paid all Taxes which have come due and are required to be paid by it through the date hereof, and all deficiencies or other additions to Tax, interest and penalties owed by it in connection with any such Taxes, other than Taxes being disputed by the Company and each of its Subsidiaries in good faith for which adequate reserves have been made in accordance with GAAP; (b) the Company and each of its Subsidiaries has timely filed or caused to be filed all returns for Taxes that it is required to file on and 9 through the date hereof (including all applicable extensions), and all such Tax returns are accurate and complete in all material respects; (c) with respect to all Tax returns of the Company and each of its Subsidiaries, (i) to the knowledge of the Company, there is no material unassessed Tax deficiency proposed or, to the knowledge of the Company or any of its Subsidiaries, threatened against the Company or any of its Subsidiaries and (ii) no audit is in progress with respect to any return for Taxes, no extension of time is in force with respect to any date on which any return for Taxes was or is to be filed and no waiver or agreement is in force for the extension of time for the assessment or payment of any Tax; (d) all provisions for Tax liabilities of the Company and each of its Subsidiaries with respect to the Financial Statements have been made in accordance with GAAP consistently applied; and (e) there are no Liens for Taxes on the assets of either the Company or any of its Subsidiaries. 3.12 PRIVATE OFFERING. No form of general solicitation or general advertising was used by the Company or its representatives in connection with the offer or sale of the Purchased Shares. No registration of the Purchased Shares, pursuant to the provisions of the Securities Act or any state securities or "blue sky" laws, will be required by the offer, sale or issuance of the Purchased Shares. The Company agrees that neither it, nor anyone acting on its behalf, shall offer to sell the Purchased Shares or any other securities of the Company so as to require the registration of the Purchased Shares pursuant to the provisions of the Securities Act or any state securities or "blue sky" laws, unless such Purchased Shares or other securities are so registered. 3.13 LABOR RELATIONS. Except as would not reasonably be expected to have a material adverse effect on the Condition of the Company, (a) neither the Company nor any of its Subsidiaries is engaged in any unfair labor practice and (b) there is no strike, labor dispute, slowdown or stoppage pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries. 3.14 EMPLOYEE BENEFIT PLANS. (a) The SEC Reports disclose or describe each Company Plan that the Company and each of its Subsidiaries maintains or to which the Company and each of its Subsidiaries contributes (the "COMPANY PLANS"). The Company and each of its Subsidiaries has no liability under any Plans other than the Company Plans. Except as disclosed in the SEC Reports, neither the Company, its Subsidiaries nor any Commonly Controlled Entity maintains or contributes to, or has within the preceding six years maintained or contributed to, or may have any liability with respect to any Plan subject to Title IV of ERISA or Section 412 of the Code or any "multiple employer plan" within the meaning of the Code or ERISA. Each Company Plan (and related trust, insurance contract or fund) has been established and administered in all material respects in accordance with its terms, and complies in form and in operation in all material respects with the applicable requirements of ERISA and the Code and other applicable Requirements of Law. 10 (b) No material Claim with respect to the administration or the investment of the assets of any Company Plan (other than routine claims for benefits) is pending. (c) Each Company Plan that is intended to be qualified under Section 401(a) of the Code is so qualified and has been so qualified during the period since its adoption; and each trust created under any such Plan is exempt from tax under Section 501(a) of the Code and has been so exempt since its creation. (d) The consummation of the transactions contemplated by this Agreement will not accelerate the time of the payment or vesting of, or increase the amount of, compensation due to any employee or former employee whether or not such payment would constitute an "excess parachute payment" under section 280G of the Code. 3.15 LIABILITIES. The Company and each of its Subsidiaries do not have any direct or indirect material obligation or liability (the "LIABILITIES") other than (a) Liabilities fully and adequately reflected or reserved against on the Financial Statements, (b) Liabilities incurred since February 3, 2007 in the ordinary course of business and (c) Liabilities that would not reasonably be expected to have a material adverse effect on the Condition of the Company. 3.16 BROKER'S, FINDER'S OR SIMILAR FEES. There are no brokerage commissions, finder's fees or similar fees or commissions payable by the Company or any of its Subsidiaries in connection with the transactions contemplated hereby based on any agreement, arrangement or understanding with the Company or any of its Subsidiaries or any action taken by any such Person. 3.17 RELATED PARTY TRANSACTIONS. There are no business relationships or related-party transactions involving the Company or any Subsidiary or any other person which would be required to be disclosed pursuant to Item 404 of Regulation S-K under the Securities Act. 3.18 CERTAIN BUSINESS PRACTICES. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, or (iii) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended. 3.19 INTERNAL ACCOUNTING CONTROLS. The Company and its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to 11 maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. 3.20 DISCLOSURE. Neither this Agreement, any Schedule or Exhibit to this Agreement, nor any other statements, documents or certificates made or delivered in connection herewith or therewith contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein and therein not misleading in light of the circumstances under which such statements were made. None of the statements, documents, certificates or other items prepared or supplied by the Company or any Subsidiary with respect to the transactions contemplated hereby contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements contained therein not misleading in light of the circumstances under which such statements were made. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS Each of the Purchasers hereby represents and warrants, severally and not jointly, to the Company as follows: 4.1 EXISTENCE AND POWER. Such Purchaser (a) is a limited partnership, company with limited liability or limited liability company, as the case may be, duly organized and validly existing under the laws of the jurisdiction of its formation or incorporation and (b) has the requisite corporate, partnership, limited company or limited liability company, as the case may be, power and authority to execute, deliver and perform its obligations under this Agreement and each of the other Transaction Documents. 4.2 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and performance by such Purchaser of this Agreement and each of the other Transaction Documents to which it is a party and the transactions contemplated hereby and thereby, (a) have been duly authorized by all necessary corporate, partnership, limited company or limited liability company, as the case may be, action, (b) do not contravene the terms of such Purchaser's organizational documents, or any amendment thereof, and (c) do not violate, conflict with or result in any breach or contravention of, or the creation of any Lien under, any material Contractual Obligation of such Purchaser or any Requirement of Law applicable to such Purchaser and (d) do not violate any material Orders of any Governmental Authority against, or binding upon, such Purchaser. 4.3 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS. No approval, consent, compliance, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority or any other Person, and no lapse of a waiting period under any Requirement of Law, is necessary or required in connection with the execution, delivery or performance (including, without limitation, the purchase of the 12 Purchased Shares) by, or enforcement against, such Purchaser of this Agreement and each of the other Transaction Documents to which it is a party or the transactions contemplated hereby and thereby other than such filings required to be made after the Closing under applicable federal and state securities laws. 4.4 BINDING EFFECT. This Agreement and each of the other Transaction Documents to which it is a party have been duly executed and delivered by such Purchaser and constitutes the legal, valid and binding obligations of such Purchaser, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability (regardless of whether considered in a proceeding at law or in equity). 4.5 PURCHASE FOR OWN ACCOUNT. (a) The Purchased Shares to be acquired by such Purchaser pursuant to this Agreement are being acquired for its own account for investment only, and not with a view to, or for sale in connection with, any distribution of such Purchased Shares or any part thereof in any transaction that would be in violation of the securities laws of the United States of America, any state of the United States or any foreign jurisdiction. Such Purchaser understands and agrees that such Purchased Shares have not been registered under the Securities Act and are "restricted securities" within the meaning of Rule 144 under the Securities Act; and that the Purchased Shares cannot be sold, transferred or otherwise disposed of except in compliance with the Securities Act and applicable state and foreign securities laws, as then in effect. Such Purchaser agrees to the imprinting of a legend on certificates representing all of its Purchased Shares to the following effect: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY FOREIGN JURISDICTION. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED. (b) Certificates evidencing the Purchased Shares and the Underlying Common Shares shall not contain any legend (including the legend set forth in this Section 4.5), (a) while a registration statement covering the resale of such security is effective under the Securities Act, (b) following any sale of such Purchased Shares or Underlying Common Shares pursuant to Rule 144, (c) if such Purchased Shares or Underlying Common Shares are eligible for sale under Rule 144 and the holder of the Purchased Shares delivers to the Company a certificate stating that such holder is not an Affiliate of the Company or (d) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the Staff of the Commission). The Company agrees that following the effective 13 date of registration statement covering the resale of the Underlying Common Shares or at such time as such legend is no longer required under this Section 4.5, it will, no later than one trading day following the delivery by a Purchaser to the Company or the Company's transfer agent of a certificate representing Purchased Shares or Underlying Common Shares issued with a restrictive legend (such date, the "LEGEND REMOVAL DATE"), deliver or cause to be delivered to such Purchaser a certificate representing such Purchased Shares or Underlying Common Shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section. The Company shall request its counsel to issue a legal opinion to the Company's transfer agent if required by the Company's transfer agent to effect the removal of the legend in accordance herewith. (c) In addition to any other rights available to such Purchaser, if the Company fails to cause its transfer agent to transmit to the Purchaser a certificate or certificates free of restrictive legends by the Legend Removal Date, and if after such date the Purchaser is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Purchaser of Purchased Shares or Underlying Common Shares (a "BUY-IN"), then the Company shall pay in cash to the Purchaser the amount by which (x) the Purchaser's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Underlying Common Shares that the Company was required to deliver to the Purchaser free of legends, times (B) the price at which the sell order giving rise to such purchase obligation was executed. The Purchaser shall provide the Company written notice indicating the amounts payable to the Purchaser in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Purchaser's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates free from restrictive legends as required pursuant to the terms hereof. (d) The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Purchased Shares or Underlying Common Shares of such Purchaser to a financial institution that is an "accredited investor" as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Purchased Shares or Underlying Common Shares to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the appropriate Purchaser's expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Purchased Shares or Underlying Common Shares may reasonably request in connection with a pledge or transfer of the Purchased Shares or Underlying Common Shares, including, if the Purchased Shares or Underlying Common Shares are 14 subject to registration pursuant to this Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder. 4.6 RESTRICTED SECURITIES. Such Purchaser understands that the Purchased Shares will not be registered at the time of their issuance under the Securities Act for the reason that the sale provided for in this Agreement is exempt pursuant to Section 4(2) of the Securities Act and the so-called "Section 4(1)(1/2) exception" and that the reliance of the Company on such exemption is predicated in part on such Purchaser's representations set forth herein. 4.7 TRANSACTIONS IN COMMON STOCK. During the 20 days prior to the date of this Agreement, no Purchaser has, directly or indirectly, effected or agreed to effect any short sale, whether or not against the box, established any "put equivalent position" (as defined in Rule 16a-1(h) under the Exchange Act) with respect to the Common Stock, granted any other right (including, without limitation, any put or call option) with respect to the Common Stock or otherwise sought to hedge its position in the Preferred Stock or Common Stock. 4.8 ACCREDITED INVESTOR; ACKNOWLEDGEMENT. Such Purchaser is an "Accredited Investor" within the meaning of Rule 501 of Regulation D under the Securities Act, as presently in effect. Such Purchaser is a sophisticated investor, has had the opportunity to ask questions of and seek information from the Company, and is fully aware of the Company's financial condition. Such Purchaser (A) acknowledges that (i) the Company has not filed all of its required reports under the Exchange Act, (ii) the Staff of the Commission is currently conducting an investigation into the Company and its accounting practices as described in the SEC Reports (the "SEC INVESTIGATION"), (iii) the SEC Reports do not contain all of the historical financial information and other disclosure required to be included therein and (iv) is aware of the matters enumerated on SCHEDULE 4.8 provided to the Purchaser on the date hereof and (B) notwithstanding the foregoing, is nonetheless willing to purchase the Purchased Shares. 4.9 BROKER'S, FINDER'S OR SIMILAR FEES. There are no brokerage commissions, finder's fees or similar fees or commissions payable by such Purchaser in connection with the transactions contemplated hereby based on any agreement, arrangement or understanding with such Purchaser or any action taken by such Purchaser. ARTICLE V CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO CLOSE The obligation of the Purchasers to purchase the Purchased Shares, to pay the purchase price therefor at the Closing and to perform any obligations hereunder shall be subject to the satisfaction as determined by, or waiver by, the Purchasers of the following conditions on or before the Closing Date. 15 5.1 CERTIFICATE OF DESIGNATIONS. The Certificate of Designations shall have been filed with and accepted by the Secretary of State of the State of Delaware. 5.2 SALE OF ALL OF THE PREFERRED SHARES. The Company shall have contemporaneously consummated the sale of the Purchased Shares to all of the Purchasers under this Agreement pursuant to the terms of this Agreement and the number of Purchased Shares equals the proceeds of $10,000,000. 5.3 REGISTRATION RIGHTS AGREEMENT. The Company shall have duly executed and delivered the Registration Rights Agreement. 5.4 LENDER CONSENT. The Company shall have provided the Purchasers with an acknowledgment and/or consent, in a form which is reasonably acceptable to the Purchasers, from the required lenders under each of the Credit Agreement and the Real Estate Credit Agreement with respect to the transactions contemplated hereby. ARTICLE VI CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE The obligation of the Company to issue and sell the Purchased Shares and the obligations of the Company to perform its other obligations hereunder shall be subject to the satisfaction as determined by, or waiver by, the Company of the following conditions on or before the Closing Date: 6.1 PAYMENT OF PURCHASE PRICE. Each Purchaser shall be prepared to pay the aggregate purchase price for the Purchased Shares to be purchased by such Purchaser. 6.2 REGISTRATION RIGHTS AGREEMENT. Each Purchaser shall have duly executed and delivered the Registration Rights Agreement. ARTICLE VII INDEMNIFICATION 7.1 INDEMNIFICATION (a) The Company agrees to indemnify, defend and hold harmless each of the Purchasers and its Affiliates and their respective officers, managers, directors, agents, employees, subsidiaries, partners, members and controlling persons (each, an "INDEMNIFIED Party") to the fullest extent permitted by law from and against any and all losses, claims, or written threats thereof (including, without limitation, any claim by a third party), damages, expenses (including reasonable fees, disbursements and other charges of counsel incurred by the Indemnified Party in any action between the Company and the Indemnified Party or between the Indemnified Party and any third party or 16 otherwise in the manner described in Section 7.2 below) or other liabilities (collectively, "LOSSES") resulting from or arising out of any breach of any representation or warranty, covenant or agreement by the Company in this Agreement (without regard to any knowledge, material adverse effect or materiality qualifications); PROVIDED, HOWEVER, that the Company shall be required to indemnify, defend and hold harmless each Indemnified Party with respect to Losses only to the extent that, with respect to the Indemnified Parties related to each Purchaser, as a group, the aggregate amount of such Losses of such group exceeds $10,000. (b) Absent fraud or willful or intentional misconduct, the indemnification provided by the Company pursuant to Section 7.1(a) for breaches of any representation or warranty by the Company of this Agreement shall be the sole and exclusive remedy for any Losses. (c) In connection with the obligation of the Company to indemnify for expenses as set forth in clause (a) of this Section 7.1, the Company shall, upon presentation of appropriate invoices containing reasonable detail, reimburse each Indemnified Party for all such expenses (including reasonable fees, disbursements and other charges of counsel incurred by the Indemnified Party in any action between the Company and the Indemnified Party or between the Indemnified Party and any third party) as they are incurred by such Indemnified Party; PROVIDED, HOWEVER, that if such expenses arise out of any action, investigation or other proceeding commenced by an Indemnified Party (other than as a result of any action, claim or written threat by a third party against the Indemnified Party), the Company shall reimburse such Indemnified Party for all such expenses only (x) after the final resolution or disposition of such action, investigation or other proceeding and (y) if such Indemnified Party prevails in such action, investigation or other proceeding; and PROVIDED, FURTHER that if an Indemnified Party is reimbursed under this Article VII for any expenses, such reimbursement of expenses shall be refunded to the extent it is finally judicially determined that such expenses resulted or arose solely from the breach by such Indemnified Party of any representation, warranty, covenant or other agreement of such Indemnified Party contained in this Agreement or the gross negligence, recklessness, willful or intentional misconduct of the Indemnified Party. 7.2 NOTIFICATION. Each Indemnified Party under this Article VII shall, promptly after the receipt of notice of the commencement of any claim against such Indemnified Party in respect of which indemnity may be sought from the Company under this Article VII, notify the Company in writing of the commencement thereof. The omission of any Indemnified Party to so notify the Company of any such action shall not relieve the Company from any liability which it may have to such Indemnified Party under this Article VII unless, and only to the extent that, such omission results in such Company's material prejudice or forfeiture of substantive rights or defenses. In case any such claim shall be brought against any Indemnified Party, and it shall notify the Company of the commencement thereof, the Company shall be entitled to assume the defense thereof at its own expense, with counsel satisfactory to such Indemnified Party in its reasonable judgment; provided that any Indemnified Party may, at its own expense, retain separate counsel to participate in such defense at its own expense. 17 Notwithstanding the foregoing, in any claim in which both the Company, on the one hand, and an Indemnified Party, on the other hand, are, or are reasonably likely to become, a party, such Indemnified Party shall have the right to employ separate counsel and to control its own defense of such claim if, in the reasonable opinion of counsel to such Indemnified Party, either (x) one or more defenses are available to the Indemnified Party that are not available to the Company or (y) a conflict or potential conflict exists between the Company, on the one hand, and such Indemnified Party, on the other hand, that would make such separate representation advisable; PROVIDED, HOWEVER, that (i) the Company shall not be liable for the fees and expenses of more than one counsel to all Indemnified Parties, (ii) in any action between the Company and the Indemnified Parties, the Company shall reimburse the Indemnified Parties for such fees and expenses only (x) after the final resolution or disposition of such action and (y) if the Indemnified Party prevails in such action and (iii) in any action between the Indemnified Parties and any third party, the Company shall reimburse the Indemnified Parties for such fees and expenses as such fees and expenses are incurred. The Company agree that they will not, without the prior written consent of the Purchasers, settle, compromise or consent to the entry of any judgment in any pending or threatened claim relating to the matters contemplated hereby (if any Indemnified Party is a party thereto or has been actually threatened to be made a party thereto) unless such settlement, compromise or consent includes an unconditional release of each Indemnified Party from all liability arising or that may arise out of such claim. 7.3 CONTRIBUTION. If the indemnification provided for in this Article VII from the Company is unavailable to an Indemnified Party hereunder in respect of any Losses for which the Company would otherwise be required to indemnify the Indemnified Party under this Article VII, then the Company, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Company and Indemnified Party in connection with the actions which resulted in such Losses, as well as any other relevant equitable considerations. The relative faults of the Company and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, the Company or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the Losses referred to above shall be deemed to include any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. ARTICLE VIII COVENANTS 8.1 REPORTING STATUS. Following the SEC Compliant Date, as long as any Purchaser owns Purchased Shares or Underlying Common Shares, the Company 18 agrees to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. Subject to SCHEDULE 4.8, following the SEC Compliant Date, the Company shall use its reasonable best efforts not to terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would otherwise permit such termination. If such termination shall occur, the Company shall use its reasonable best efforts to take such actions as shall be required to cause the Company to promptly become required to file reports under the Exchange Act. Subject to Section 4.8, the Company shall use its reasonable best efforts take such further action as the Purchasers may reasonably request, all to the extent required to enable the Purchasers to sell the Purchased Shares or Underlying Common Shares pursuant to and in accordance with Rule 144. Subject to Section 4.8, such action shall include, but not be limited to, making available adequate current public information meeting the requirements of paragraph (c) of Rule 144. 8.2 SECURITIES LAWS DISCLOSURE; PUBLICITY. The Company shall, promptly following the occurrence of the Closing, issue a press release substantially in the form approved by the Purchasers. On the Closing Date, the Company shall file a Current Report on Form 8-K with the Commission (the "8-K FILING") describing the terms of the transactions contemplated by the Transaction Documents substantially in the form approved by the Purchasers and including as exhibits to such Current Report on Form 8-K the Transaction Documents, in the form required by the Exchange Act. Thereafter, the Company shall timely file any filings and notices required by the Commission or applicable law with respect to the transactions contemplated hereby and provide copies thereof to the Purchasers promptly after filing. Except as set forth in the previous sentence, neither of the Company, nor the Purchasers will issue any press release or make any public statements with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other parties hereto, except to the extent such party reasonably believes such press release or public statement is required by applicable law or stock market regulations in which case the disclosing party shall promptly provide the other party with reasonable prior notice of such public statement, filing or other communication and an opportunity to review and comment on such public statement, filing or other communication. The Company shall not, and shall cause each of its respective officers, directors, employees and agents not to, provide any Purchaser with any material nonpublic information regarding the Company from and after the issuance of the above referenced press release without the express written consent of such Purchaser; PROVIDED, that the foregoing shall not apply with respect to any Purchaser that has a representative on the Company's Board of Directors. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any press release without the prior written consent of such Purchaser. 8.3 FORM D AND BLUE SKY. The Company agrees to file a Form D with respect to the Purchased Shares as required under Regulation D and to provide a copy thereof to each Purchaser promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is 19 necessary in order to obtain an exemption for or to qualify the Purchased Shares for sale to the Purchasers at the Closing pursuant to this Agreement under applicable securities or "Blue Sky" laws of the states of the United States (or to obtain an exemption from such qualification). The Company shall make all filings and reports relating to the offer and sale of the Purchased Shares required under applicable securities or "Blue Sky" laws of the states of the United States following the Closing Date. 8.4 RESERVATION OF UNDERLYING COMMON SHARES. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, for the purpose of effecting the conversion of the Purchased Shares and otherwise complying with the terms of this Agreement, such number of its duly authorized shares of Common Stock as shall be sufficient to effect the conversion of the Purchased Shares from time to time outstanding or otherwise to comply with the terms of this Agreement. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of the Purchased Shares or otherwise to comply with the terms of this Agreement, the Company will forthwith take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes. The Company will obtain any authorization, consent, approval or other action by or make any filing with any court or governmental or administrative body that may be required under applicable state securities laws in connection with the issuance of shares of Common Stock upon conversion of the Purchased Shares. 8.5 FURNISHING OF INFORMATION. The Company will use commercially reasonable efforts to cause the financial statements of the Company included in any documents filed with the Commission (i) to be prepared in accordance with accounting principles generally accepted in the United States, consistently applied (except (x) as may be otherwise indicated in such financial statements or the notes thereto, or (y) in the case of unaudited interim statements, to the extent they may not include footnotes, may be condensed or summary statements or may otherwise conform to the Commission's rules and instructions for Reports on Form 10-Q), and (ii) to fairly present in all material respects the consolidated financial position of the Company and consolidated results of its operations and cash flows as of, and for the periods covered by, such financial statements (subject, in the case of unaudited statements, to normal and recurring year-end audit adjustments). 8.6 FINANCIAL STATEMENTS. From and after the date hereof, the Company shall (x) file with the Commission (if such filing would be accepted by the Commission, whether or not the Company is required to make such filing) and (y) if such filing would not be accepted by the Commission, post on the Company's website and deliver to each holder of the Purchased Shares the following financial statements: (a) Within 100 days after the end of the Company's fiscal year, a balance sheet and statements of operations, stockholders equity and cash flows of the Company and its Subsidiaries consolidated as of the end of and for such fiscal year, accompanied by an audit report of an independent certified public accounting firm and all 20 other information (excluding statements of operation and cash flows for the 2005 fiscal year and periods prior to April 15, 2005 and Managements Discussion and Analysis information with respect to such year and period and any financial information with respect to prior years) that would be required to be included in an Annual Report on Form 10-K filed by the Company with the Commission. (b) Within 45 days after the end of each quarter, other than the fourth fiscal quarter, an unaudited balance sheet and statements of operations, stockholders equity and cash flows of the Company and its Subsidiaries consolidated as of the end of and for such fiscal quarter and, after the SEC Compliant Date, all other information that would be required to be included in a Quarterly Report on Form 10-Q filed by the Company with the Commission. (c) Within the time periods required by the Commission for filing Current Reports on Form 8-K, all required Current Reports on Form 8-K that would be required to be filed by the Company if it were required to file reports on Form 8-K, which reports shall include all information and exhibits required to be included in the Current Report on Form 8-K. The financial statements shall be prepared in accordance with accounting principles generally accepted in the United States, consistently applied (except as may be otherwise indicated in such financial statements or the notes thereto, or in the case of unaudited interim statements, to the extent they may not include footnotes, may be condensed or summary statements and fairly present in all material respects the consolidated financial position of the Company and consolidated results of its operations and cash flows as of, and for the periods covered by, such financial statements (subject, in the case of unaudited statements, to normal and recurring year-end audit adjustments). ARTICLE IX MISCELLANEOUS 9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AN COVENANTS. All of the representations and warranties made herein shall survive the execution and delivery of this Agreement until December 10, 2008, except for Sections 3.1, 3.2, 3.4, 3.7, 3.12, 4.1, 4.2, 4.4, 4.5 and 4.8, which shall survive indefinitely. All of the covenants contained herein shall survive the execution and delivery of this Agreement indefinitely, unless such covenants expire by their terms. 9.2 NOTICES. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, telecopier, courier service or personal delivery: if to the Company: The Penn Traffic Company 1200 State Fair Boulevard Syracuse, NY 13221 Telecopy: 315-461-2645 Attention: with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, NY 10019 21 Telecopy: (212) 757-3990 Attention: Douglas A. Cifu, Esq. if to the Purchasers, at its addresses on the signature pages hereof: All such notices, demands and other communications shall be deemed to have been duly given (i) when delivered by hand, if personally delivered; (ii) one Business Day after being sent, if sent via a reputable nationwide overnight courier service guaranteeing next business day delivery; (iii) five Business Days after being sent, if sent by registered or certified mail, return receipt requested, postage prepaid; and (iv) when receipt is mechanically acknowledged, if telecopied. Any party may by notice given in accordance with this Section 9.2 designate another address or Person for receipt of notices hereunder. Any party may give any notice, request, consent or other communication under this Agreement using any other means (including, without limitation, personal delivery, messenger service, first class mail or electronic mail), but no such notice, request, consent or other communication shall be deemed to have been duly given unless and until it is actually received by the party to whom it is given. 9.3 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto. Subject to applicable securities laws and the terms and conditions thereof, the Purchasers may assign any of their rights under this Agreement or the other Transaction Documents to any of their respective Affiliates or to one or more transferees or assignees of such Purchased Shares. Except as provided in Article VII with respect to Indemnified Parties (who are third party beneficiaries of this Agreement), no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement. 9.4 AMENDMENT AND WAIVER. (a) No failure or delay on the part of the Company or the Purchasers in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. (b) Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by the Company or the Purchasers from the terms of any provision of this Agreement, shall be effective (i) only if it is made or given in writing and signed by the Company and the Purchasers, and (ii) only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances. 9.5 COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so 22 executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 9.6 HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 9.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. 9.8 CONSENT TO JURISDICTION. Each party hereto further agrees that service of any process, summons, notice or document by U.S. registered mail to such party's address set forth on the signature pages hereof shall be effective service of process for any claim, action or proceeding with respect to any matters to which it has submitted to jurisdiction in this Section 9.8 or otherwise. As an alternative method of service, each such party also irrevocably consents to the service of any and all process in any manner permitted by or under the laws of the State of New York. 9.9 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, OR RELATING TO, ANY TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) OR ANY COUNTERCLAIM RELATED THERETO. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY SUIT, ACTION OR OTHER LEGAL PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.9. 9.10 SEVERABILITY. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof. 9.11 RULES OF CONSTRUCTION. Unless the context otherwise requires, references to sections or subsections refer to sections or subsections of this Agreement. 9.12 ENTIRE AGREEMENT. This Agreement, together with the exhibits and schedules hereto, and the other Transaction Documents are intended by the parties as a 23 final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, representations, warranties or undertakings, other than those set forth or referred to herein or therein. This Agreement, together with the exhibits and schedules hereto, and the other Transaction Documents supersede all prior agreements and understandings between the parties with respect to such subject matter. 9.13 FEES. Upon the Closing, the Company shall reimburse each of the Purchasers for their fees, disbursements and other charges of counsel incurred in connection with the transactions contemplated by this Agreement. 9.14 FURTHER ASSURANCES. Each of the parties shall execute such documents and perform such further acts (including, without limitation, obtaining any consents, exemptions, authorizations or other actions by, or giving any notices to, or making any filings with, any Governmental Authority or any other Person) as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement. 9.15 SPECIFIC PERFORMANCE. The Company acknowledges and agrees that the Purchasers would be damaged irreparably if any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached. Accordingly, the Purchasers will be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and its provisions in any action or proceeding instituted in any state or federal court sitting in the State of New York, having jurisdiction over the parties and the matter, in addition to any other remedy to which they may be entitled, at law or in equity. Except as expressly provided herein, the rights, obligations and remedies created by this Agreement are cumulative and in addition to any other rights, obligations or remedies otherwise available at law or in equity. Except as expressly provided herein, nothing herein will be considered an election of remedies. 9.16 ACKNOWLEDGMENT. The Company hereby acknowledges and agrees that it shall not have any recourse for any payment or indemnification obligation under this Agreement or the Registration Rights Agreement, or for any claim based on this Agreement or the Registration Rights Agreement, or otherwise in respect of this Agreement Registration Rights Agreement, to or against any Purchaser's investment manager or any incorporator, subscriber, promoter, stockholder, partner, member, director, officer or employee, past, present or future, as such, of the Purchaser or its investment manager or any other entity for whom such investment manager acts as manager or investment manager, or any predecessor or successor thereof, and its recourse shall be limited solely to the Purchasers. [Remainder of page intentionally left blank] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Securities Purchase Agreement on the date first written above. THE PENN TRAFFIC COMPANY By: ---------------------------------- Name: Title: Address for notices: The Penn Traffic Company 1200 State Fair Boulevard P.O. Box 4737 Syracuse, NY 13221 With copies to: Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, NY 10019 Attn: Douglas A. Cifu, Esq. [Signature Page to Securities Purchase Agreement] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Securities Purchase Agreement on the date first written above. KING STREET CAPITAL, L.P. By: King Street Capital Management, L.L.C. Its Investment Manager By: --------------------------------------- Name: Title: Address for notices: King Street Capital, L.P. King Street Capital, LTD. 65 East 55th Street, 30th Floor New York, NY 10022 Tel: 212-812-3117 Fax: 212-812-3118 With copies of all correspondence and delivery of certificates to: King Street Capital Management, L.L.C. 65 East 55th Street, 30th Floor New York, NY 10022 Fax: 212-812-3118 Attention: General Counsel With copies of all correspondence (which shall not constitute notice): Fried, Frank, Harris, Shriver & Jacobson LLP One New York Plaza New York, New York 10004 Fax: (212) 859-4000 Attention: Philip Richter, Esq. [Signature Page to Securities Purchase Agreement] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Securities Purchase Agreement on the date first written above. KING STREET CAPITAL, LTD. By: King Street Capital Management, L.L.C. Its Investment Manager By: ------------------------------------- Name: Title: Address for notices: King Street Capital, L.P. King Street Capital, LTD. 65 East 55th Street, 30th Floor New York, NY 10022 Tel: 212-812-3117 Fax: 212-812-3118 With copies of all correspondence and delivery of certificates to: King Street Capital Management, L.L.C. 65 East 55th Street, 30th Floor New York, NY 10022 Fax: 212-812-3118 Attention: General Counsel With copies of all correspondence (which shall not constitute notice): Fried, Frank, Harris, Shriver & Jacobson LLP One New York Plaza New York, New York 10004 Fax: (212) 859-4000 Attention: Philip Richter, Esq. [Signature Page to Securities Purchase Agreement] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Securities Purchase Agreement on the date first written above. CR INTRINSIC INVESTMENTS, LLC By: ------------------------------------ Name: Title: Address for notices: CR Intrinsic Investments, LLC PO Box 174, Mitchell House The Valley, Anguilla, British West Indies With copies of all correspondence and delivery of certificates to: CR Intrinsic Investments, LLC c/o CR Intrinsic Investors, LLC 72 Cummings Point Road Stamford, CT 06902 Attention: General Counsel With copies of all correspondence (which shall not constitute notice): Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, New York 10019 Attention: Adam M. Turteltaub [Signature Page to Securities Purchase Agreement] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Securities Purchase Agreement on the date first written above. TROPHY HUNTER INVESTMENTS LTD. By: -------------------------------------- Name: Title: Address for notices: Trophy Hunter Investments Ltd. 885 Third Avenue, 34th Floor New York, NY 10022 With copies of all correspondence (which shall not constitute notice): Akin Gump Strauss Hauer & Feld LLP 590 Madison Avenue New York, NY 10022 Attention: Ira Dizengoff BAY HARBOUR MASTER FUND LTD. By: -------------------------------------- Name: Title: Address for notices: Bay Harbour Master Fund Ltd. 885 Third Avenue, 34th Floor New York, NY 10022 With copies of all correspondence (which shall not constitute notice): Akin Gump Strauss Hauer & Feld LLP 590 Madison Avenue New York, NY 10022 Attention: Ira Dizengoff [Signature Page to Securities Purchase Agreement] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Securities Purchase Agreement on the date first written above. INSTITUTIONAL BENCHMARKS SERIES ` (MASTER FEEDER) LIMITED By: ------------------------------------ Name: Title: Address for notices: Institutional Benchmarks Series (Master Feeder) Limited 885 Third Avenue, 34th Floor New York, NY 10022 With copies of all correspondence (which shall not constitute notice): Akin Gump Strauss Hauer & Feld LLP 590 Madison Avenue New York, NY 10022 Attention: Ira Dizengoff MSS DISTRESSED & OPPORTUNITY 2 By: ------------------------------------ Name: Title: Address for notices: MSS Distressed & Opportunity 2 885 Third Avenue, 34th Floor New York, NY 10022 With copies of all correspondence (which shall not constitute notice): Akin Gump Strauss Hauer & Feld LLP 590 Madison Avenue New York, NY 10022 Attention: Ira Dizengoff [Signature Page to Securities Purchase Agreement] SCHEDULE 1 PURCHASERS King Street Capital, L.P. King Street Capital, LTD. CR Intrinsic Investments, LLC Trophy Hunter Investments LTD. Bay Harbour Master Fund LTD. Institutional Benchmarks Series (Master Feeder) Limited MSS Distressed & Opportunity 2 SCHEDULE 2.1 PURCHASED SHARES AND PURCHASE PRICE ================================================================================ PURCHASER PURCHASED SHARES AGGREGATE PURCHASE PRICE - -------------------------------------------------------------------------------- King Street Capital, L.P. 955.50 $955,500.00 - -------------------------------------------------------------------------------- King Street Capital, Ltd. 2,044.50 $2,044,500.00 - -------------------------------------------------------------------------------- CR Intrinsic Investments, LLC 2,000.00 $2,000,000.00 - -------------------------------------------------------------------------------- Trophy Hunter Investments Ltd. 1,169.26 $1,169,258.27 - -------------------------------------------------------------------------------- Bay Harbour Master Fund Ltd. 3,506.55 $3,506,548.68 - -------------------------------------------------------------------------------- Institutional Benchmarks Series (Master Feeder) Limited 283.84 $283,843.01 - -------------------------------------------------------------------------------- MSS Distressed & Opportunity 2 40.35 $40,350.04 - -------------------------------------------------------------------------------- Total: 10,000.00 $10,000,000.00 ================================================================================ EX-10 5 form8k_121307ex10-2.txt EXHIBIT 10.2 ------------ REGISTRATION RIGHTS AGREEMENT BY AND AMONG THE PENN TRAFFIC COMPANY AND THE PURCHASERS NAMED HEREIN TABLE OF CONTENTS PAGE Article I DEFINITIONS......................................................1 Section 1.01 Definitions.............................................1 Article II REGISTRATION RIGHTS..............................................3 Section 2.01 Demand Registration Rights..............................3 Section 2.02 Piggyback Rights........................................5 Section 2.03 Underwritten Offering...................................7 Section 2.04 Form S-3 Registration...................................8 Section 2.05 Sale Procedures.........................................9 Section 2.06 Cooperation by Holders.................................13 Section 2.07 Restrictions on Public Sale by Holders of Registrable Securities.................................13 Section 2.08 Expenses...............................................13 Section 2.09 Indemnification........................................14 Section 2.10 Rule 144 Reporting.....................................16 Section 2.11 Transfer or Assignment of Registration Rights..........17 Article III MISCELLANEOUS..................................................17 Section 3.01 Communications....................................17 Section 3.02 Successor and Assigns.............................17 Section 3.03 Limitations on Subsequent Registration Rights.....18 Section 3.04 Recapitalization, Exchanges, Etc. Affecting the Common Stock..................................18 Section 3.05 Specific Performance..............................18 Section 3.06 Counterparts......................................18 Section 3.07 Headings..........................................18 Section 3.08 Governing Law.....................................18 Section 3.09 Consent to Jurisdiction...........................18 Section 3.10 WAIVER OF JURY TRIAL..............................19 Section 3.11 Severability of Provisions........................19 Section 3.12 Entire Agreement..................................19 Section 3.13 Amendment.........................................19 Section 3.14 No Presumption....................................19 Section 3.15 Obligations Limited to Parties to Agreement.......19 Section 3.16 No Required Sale..................................20 Section 3.17 Acknowledgment....................................20 (i) REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and entered into as of December 13, 2007 by and among The Penn Traffic Company, a Delaware limited liability company ("PENN TRAFFIC"), and each of the Purchasers set forth in EXHIBIT A (each, a "PURCHASER" and, collectively, the "PURCHASERS"). WHEREAS, this Agreement is made in connection with the issuance and sale of the Series A Convertible Preferred Stock, par value $0.01 per share, of Penn Traffic (the "PREFERRED STOCK") pursuant to the Securities Purchase Agreement, dated as of the date hereof, by and among Penn Traffic and the Purchasers (the "PURCHASE AGREEMENT"); WHEREAS, Penn Traffic has agreed to provide the registration and other rights set forth in this Agreement for the benefit of the Purchasers pursuant to the Purchase Agreement; and WHEREAS, it is a condition to the obligations of each Purchaser and Penn Traffic under the Purchase Agreement that this Agreement be executed and delivered. NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each party hereto, the parties hereby agree as follows: ARTICLE I DEFINITIONS Section 1.01 DEFINITIONS. Capitalized terms used herein without definition shall have the meanings given to them in the Purchase Agreement. The terms set forth below are used herein as so defined: "AGREEMENT" has the meaning specified therefor in the preamble. "COMMON STOCK" means the common stock, par value $0.01 per share, of Penn Traffic. "COMPANY UNDERWRITTEN OFFERING" has the meaning specified therefor in Section 2.02(a) of this Agreement. "DEMAND REGISTRATION" has the meaning specified therefor in Section 2.01(a) of this Agreement. "DEMAND REQUEST" has the meaning specified therefor in Section 2.01(a) of this Agreement. 1 "FORM S-3 DEMAND" has the meaning specified therefor in Section 2.04 of this Agreement. "HOLDER" means the record holder of any Registrable Securities. "INCLUDED REGISTRABLE SECURITIES" has the meaning specified therefor in Section 2.02(a) of this Agreement. "INITIATING FORM S-3 HOLDER" has the meaning specified therefor in Section 2.04 of this Agreement. "INITIATING HOLDERS" has the meaning specified therefor in Section 2.01(a) of this Agreement. "LOSSES" has the meaning specified therefor in Section 2.09 of this Agreement. "MANAGING UNDERWRITER" means, with respect to any Underwritten Offering, the book-running lead manager of such Underwritten Offering. "OPT OUT NOTICE" has the meaning specified therefor in Section 2.02(a) of this Agreement. "OTHER DEMAND PERSON" has the meaning specified therefor in Section 2.02(a) of this Agreement. "PENN TRAFFIC" has the meaning specified therefor in the preamble. "PREFERRED STOCK" has the meaning specified therefor in the recitals of this Agreement. "PURCHASE AGREEMENT" has the meaning specified therefor in the recitals of this Agreement. "PURCHASED SHARES" means the shares of Preferred Stock purchased by the Purchasers under the Purchase Agreement. "PURCHASER" and "PURCHASERS" have the meanings specified therefor in the preamble of this Agreement. "REGISTRABLE SECURITIES" means any shares of Common Stock owned at any time by the Purchasers and the shares of Common Stock issuable upon conversion of the Purchased Shares. Any Registrable Security will cease to be a Registrable Security when: (a) a registration statement covering such Registrable Security is effective and such Registrable Security has been sold or disposed of pursuant to such effective registration statement; (b) five years after the SEC Compliant Date; (c) such Registrable Security is held by Penn Traffic or one of its Subsidiaries; or (d) such Registrable Security has 2 been sold in a private transaction in which the transferor's rights under this Agreement are not assigned to the transferee of such securities. "REGISTRATION EXPENSES" has the meaning specified therefor in Section 2.08(a) of this Agreement. "REGISTRATION STATEMENT" means a registration statement filed pursuant to the Securities Act. "REQUEST NOTICE" has the meaning specified therefor in Section 2.01(a) of this Agreement. "SEC COMPLIANT DATE" means the date after which the Company has become eligible to file a Registration Statement on Form S-1 (including its ability to include or incorporate the financial information required therein). "SELLING EXPENSES" has the meaning specified therefor in Section 2.08(a) of this Agreement. "SELLING HOLDER" means a Holder who is selling Registrable Securities pursuant to a registration statement. "SELLING HOLDER INDEMNIFIED PERSONS" has the meaning specified therefor in Section 2.09(a) of this Agreement. "UNDERWRITTEN OFFERING" means an offering (including an offering pursuant to a Registration Statement) in which Common Stock is sold to an underwriter on a firm commitment basis for reoffering to the public or an offering that is a "bought deal" with one or more investment banks. "VALID BUSINESS REASON" has the meaning specified therefor in Section 2.01(b) of this Agreement. ARTICLE II REGISTRATION RIGHTS Section 2.01 DEMAND REGISTRATION RIGHTS. (a) DEMAND REGISTRATION. At any time following the 20th day following the SEC Compliant Date, Holders collectively holding greater than 25% of the Registrable Securities (or at least $5.0 million of Registrable Securities (the party or the parties making the request shall be referred to as the "INITIATING HOLDERS"), may make a written request to Penn Traffic to register, and Penn Traffic shall register, under the Securities Act (other than pursuant to a Registration Statement on Form S-4 or S-8 or any successor form thereto), in accordance with the terms of this Agreement (a "DEMAND Registration"), the number of Registrable Securities stated in such request (a "DEMAND REQUEST") then the Company shall, within ten (10) days after receipt of such Demand Request, give written notice of such request ("REQUEST NOTICE") to 3 all Holders. Each Demand Request shall (x) specify the number of Registrable Securities that the Initiating Holders intend to sell or dispose of, (y) state the intended method or methods of sale or disposition of the Registrable Securities and (z) specify the expected price range (net of underwriting discounts and commissions) acceptable to the Requesting Holders to be received for such Registrable Securities. Penn Traffic shall not be obligated to effect more than two such Demand Registrations. The Registration Statement when effective (including the documents incorporated therein by reference) shall comply as to form with all applicable requirements of the Securities Act and the Exchange Act and shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Following receipt of a request for a Demand Registration, the Company shall: (i) cause to be filed, as soon as practicable, but in any event within 60 days of the date of delivery to the Company of the Demand Request, a Registration Statement covering such Registrable Securities which the Company has been so requested to register by the Initiating Holders and other Holders who request to the Company that their Registrable Securities be registered within 20 days of the mailing of the Request Notice, providing for the registration under the Securities Act of such Registrable Securities to the extent necessary to permit the disposition of such Registrable Securities in accordance with the intended method of distribution specified in such Demand Request; (ii) use its commercially reasonable efforts to have such Registration Statement declared effective by the SEC as soon as practicable thereafter; and (iii) refrain from filing any other Registration Statements, other than pursuant to a Registration Statement on Form S-4 or S-8 (or similar or successor forms), with respect to any other securities of the Company until such date which is 180 days following effectiveness of the Registration Statement filed in response to the Demand Request. (b) DELAY RIGHTS. If the Company provides a written certificate signed by the Chief Executive Officer and Chief Financial Officer of the Company to the Initiating Holders, prior to the time it would otherwise have been required to file such Registration Statement or take such action pursuant to this Section 2.01, stating that the Board has determined, in its good faith judgment, that any registration of Registrable Securities should not be made or continued because it would materially interfere with any material financing, acquisition, corporate reorganization or merger or other material transaction involving Penn Traffic (a "VALID BUSINESS REASON"), (x) Penn Traffic may postpone filing a Registration Statement relating to a Demand Registration until such Valid Business Reason no longer exists, but in no event for more than 60 days after the date when the Demand Registration was requested and during such time the Company may not file a Registration Statement for securities to be issued and sold for its own account or for that of anyone other than the Holders and (y) in case a Registration Statement has been filed relating to a Demand Registration, if the Valid Business Reason has not resulted from actions taken by Penn Traffic, upon the approval of a majority of 4 the Board of Directors, may postpone amending or supplementing such Registration Statement (in which case, if the Valid Business Reason no longer exists or if more than 60 days have passed since such postponement, the Initiating Holders may request the prompt amendment or supplement of such Registration Statement or request a new Demand Registration (which request shall not be counted as an additional Demand Registration for purposes of Section 2.01(a)). Penn Traffic shall give written notice to all Holders of its determination to postpone a Registration Statement and of the fact that the Valid Business Reason for such postponement no longer exists, in each case, promptly after the occurrence thereof. Notwithstanding anything to the contrary contained herein, Penn Traffic may not postpone or withdraw a filing under this Section 2.01(b) due to a Valid Business Reason more than once in any 12 month period. The request for a Demand Registration by the Initiating Holders shall state the amount of the Registrable Securities proposed to be sold and the intended method of disposition thereof. (c) EFFECTIVE DEMAND REGISTRATION. Penn Traffic shall use its commercially reasonable efforts to cause any such Demand Registration to become effective as promptly as practicable but in no event later than 90 days after it receives a request under Section 2.01(a) hereof , and to remain continuously effective for the lesser of (i) the period during which all Registrable Securities registered in the Demand Registration are sold and (ii) 180 days; PROVIDED, HOWEVER, that a registration shall not constitute a Demand Registration if (A) a Registration Statement with respect thereto has not become effective and/or remained effective in compliance with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Registration Statement until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the Holders thereof set forth in such Registration Statement; (B) after such Demand Registration has become effective, such registration or the related offer, sale or distribution of Registrable Securities thereunder is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason not attributable to the Initiating Holders and such interference is not thereafter eliminated, (C) if the offering of Registrable Securities is not consummated for any reason not attributable to the Initiating Holders, including, without limitation, if the underwriters of an underwritten public offering advise the Initiating Holders that the Registrable Securities cannot be sold at a net price per share equal to or above the minimum net price disclosed in the preliminary prospectus; (D) if the conditions to closing specified in the underwriting agreement, if any, entered into in connection with such Demand Registration are not satisfied or waived, other than by reason of a failure by the Initiating Holder or (E) if the amount of Registrable Securities of the Initiating Holders included in the registration are cut back from the amount of the Registrable Securities originally requested to be registered. Section 2.02 PIGGYBACK RIGHTS. (a) PARTICIPATION. If at any time Penn Traffic proposes to file a Registration Statement for the sale of Common Stock in an Underwritten Offering (such offering, the "COMPANY UNDERWRITTEN OFFERING"), for its own account and/or another Person (an "OTHER DEMAND PERSON"), then as soon as practicable but not less than 20 days prior to the filing of such Registration Statement, 5 Penn Traffic shall give notice (including, but not limited to, notification by electronic mail) of such proposed Company Underwritten Offering to the Holders and such notice shall offer the Holders the opportunity to include in such Company Underwritten Offering such number of Registrable Securities (the "INCLUDED REGISTRABLE Securities") as each such Holder may request in writing; PROVIDED, HOWEVER, that if Penn Traffic has been advised by the Managing Underwriter that the inclusion of Registrable Securities for sale for the benefit of the Holders will have a material adverse effect on the price, timing or distribution of the Common Stock in the Company Underwritten Offering, then the amount of Registrable Securities to be offered for the accounts of Holders shall be determined based on the provisions of Section 2.02(b) of this Agreement. The notice required to be provided in this Section 2.02(a) to Holders shall be provided on a Business Day pursuant to Section 3.01 hereof and receipt of such notice shall be confirmed by such Holder. Each such Holder shall then have three Business Days after receiving such notice to request inclusion of Registrable Securities in the Company Underwritten Offering. If no request for inclusion from a Holder is received within the specified time, such Holder shall have no further right to participate in such Company Underwritten Offering. If, at any time after giving written notice of its intention to undertake an Company Underwritten Offering and prior to the closing of such Company Underwritten Offering, Penn Traffic shall determine for any reason not to undertake or to delay such Company Underwritten Offering, Penn Traffic may, at its election, give written notice of such determination to the Selling Holders and, (x) in the case of a determination not to undertake such Company Underwritten Offering, shall be relieved of its obligation to sell any Included Registrable Securities in connection with such terminated Company Underwritten Offering, and (y) in the case of a determination to delay such Company Underwritten Offering, shall be permitted to delay offering any Included Registrable Securities for the same period as the delay in the Company Underwritten Offering. Any Selling Holder shall have the right to withdraw such Selling Holder's request for inclusion of such Selling Holder's Registrable Securities in such offering by giving written notice to Penn Traffic of such withdrawal up to and including the time of pricing of such offering. Notwithstanding the foregoing, any Holder may deliver written notice (an "OPT OUT NOTICE") to Penn Traffic requesting that such Holder not receive notice from Penn Traffic of any proposed Company Underwritten Offering; provided, that such Holder may later revoke any such notice. Any holder of Registrable Securities that exercises piggyback rights following receipt of a Request Notice shall be treated as an Initiating Holder for purposes of Sections 2.01(c) and 2.03(d). (b) PRIORITY OF RIGHTS IN A COMPANY UNDERWRITTEN OFFERING. If the Managing Underwriter or Underwriters of any proposed Company Underwritten Offering of Common Stock included in an Company Underwritten Offering involving Included Registrable Securities advises Penn Traffic that the total amount of Registrable Securities that the Selling Holders and any other Persons intend to include in such offering exceeds the number that can be sold in such offering without being likely to have a material adverse effect on the price, timing or distribution of the Common Stock offered or the market for the Common Stock, then the Registrable Securities to be included in such Company Underwritten Offering shall include the number of Registrable Securities that such Managing Underwriter or Underwriters advises Penn Traffic can be sold without having 6 such adverse effect, with such number to be allocated (i) first, to Penn Traffic, (ii) second, to the Other Demand Person (if any), but only if such offering is being effected pursuant to the demand rights of such Other Demand Person, and (iii) third, pro rata among the Selling Holders who have requested participation in such Company Underwritten Offering. The pro rata allocations for each such Selling Holder shall be the product of (a) the aggregate number of Registrable Securities proposed to be sold by all Selling Holders in such Company Underwritten Offering multiplied by (b) the fraction derived by dividing (x) the number of Registrable Securities owned on the date of this Agreement by such Selling Holder by (y) the aggregate number of Registrable Securities owned on the date of this Agreement by all Selling Holders participating in the Company Underwritten Offering. All participating Selling Holders shall have the opportunity to share pro rata that portion of such priority allocable to any Selling Holder(s) not so participating. Section 2.03 UNDERWRITTEN OFFERING. (a) REQUEST FOR UNDERWRITTEN OFFERING. In the event that one or more Holders collectively holding greater than $5.0 million of Registrable Securities elect to dispose of Registrable Securities under the Registration Statement pursuant to an Underwritten Offering, Penn Traffic shall retain underwriters, effect such sale though an Underwritten Offering, including entering into an underwriting agreement in customary form with the Managing Underwriter or Underwriters, which shall include, among other provisions, indemnities to the effect and to the extent provided in Section 2.09 and take all reasonable actions as are requested by the Managing Underwriter or Underwriters to expedite or facilitate the disposition of such Registrable Securities. (b) LIMITATION ON UNDERWRITTEN OFFERINGS. In connection with any and all rights granted hereunder to the Holders to cause Penn Traffic to engage underwriters to conduct an Underwritten Offering on behalf of the Holders, in no event shall Penn Traffic be required to do more than two such Underwritten Offerings. (c) GENERAL PROCEDURES. In connection with any Underwritten Offering under this Agreement, the managing underwriter for such underwriting shall be one or more reputable nationally recognized investment banks selected by Selling Holders owning a majority of the Registrable Securities included in such Registration Statement, subject to the approval of the Company, which approval shall not be unreasonably withheld, delayed or conditioned. In connection with an Underwritten Offering contemplated by this Agreement in which a Selling Holder participates, each Selling Holder and Penn Traffic shall be obligated to enter into an underwriting agreement that contains such representations, covenants, indemnities and other rights and obligations as are customary in underwriting agreements for firm commitment offerings of securities. No Selling Holder may participate in such Underwritten Offering unless such Selling Holder agrees to sell its Registrable Securities on the basis provided in such underwriting agreement and completes and executes all questionnaires, powers of attorney, indemnities and other documents reasonably required under the terms of such underwriting agreement. Each Selling Holder may, at its option, require that any or all of the representations and 7 warranties by, and the other agreements on the part of, Penn Traffic to and for the benefit of such underwriters also be made to and for such Selling Holder's benefit and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement also be conditions precedent to its obligations. No Selling Holder shall be required to make any representations or warranties to or agreements with Penn Traffic or the underwriters other than representations, warranties or agreements regarding such Selling Holder and its ownership of the securities being registered on its behalf, its intended method of distribution and any other representation required by Law. If any Selling Holder disapproves of the terms of an underwriting, such Selling Holder may elect to withdraw therefrom by notice to Penn Traffic and the Managing Underwriter; PROVIDED, HOWEVER, that such withdrawal must be made at a time up to and including the time of pricing of such Underwritten Offering. No such withdrawal or abandonment shall affect Penn Traffic's obligation to pay Registration Expenses. (d) PRIORITY OF RIGHTS IN A DEMAND REGISTRATION. If the Managing Underwriter or Underwriters of any proposed Underwritten Offering of Common Stock included in an Underwritten Offering involving Included Registrable Securities advises Penn Traffic that the total amount of Registrable Securities that the Selling Holders and any other Persons intend to include in such offering exceeds the number that can be sold in such offering without being likely to have a material adverse effect on the price, timing or distribution of the Common Stock offered or the market for the Common Stock, then the Registrable Securities to be included in such Underwritten Offering shall include the number of Registrable Securities that such Managing Underwriter or Underwriters advises Penn Traffic can be sold without having such adverse effect, with such number to be allocated (i) first, pro rata among the Initiating Holders, (ii) second, to Penn Traffic, and (iii) third, the Other Demand Person (if any), but only if such offering is being effected pursuant to the demand rights of such Other Demand Person. The pro rata allocations for each such Selling Holder shall be the product of (a) the aggregate number of Registrable Securities proposed to be sold by all Selling Holders in such Company Underwritten Offering multiplied by (b) the fraction derived by dividing (x) the number of Registrable Securities owned on the date of this Agreement by such Selling Holder by (y) the aggregate number of Registrable Securities owned on the date of this Agreement by all Selling Holders participating in the Company Underwritten Offering. All participating Selling Holders shall have the opportunity to share pro rata that portion of such priority allocable to any Selling Holder(s) not so participating. Section 2.04 FORM S-3 REGISTRATION. Any Holder (an "INITIATING FORM S-3 HOLDER") may request at any time following the SEC Compliant Date that the Company file a Registration Statement under the Securities Act on Form S-3 (or similar or successor form) covering the sale or other distribution of all or any portion of the Registrable Securities held by such Initiating Form S-3 Holder pursuant to Rule 415 under the Securities Act ("FORM S-3 DEMAND") if (i) the reasonably anticipated aggregate gross proceeds from the sale of such Registrable Securities would equal or exceed $1,000,000, (ii) the Company is a registrant qualified to use Form S-3 (or any similar or successor form) to register such Registrable Securities and (iii) the plan of distribution of the Registrable Securities is other than pursuant to an underwritten public 8 offering. If such conditions are met, the Company shall use commercially reasonable efforts to register under the Securities Act on Form S-3 (or any similar or successor form) at the earliest practicable date, for sale in accordance with the method of disposition specified in the Form S-3 Demand, the number of Registrable Securities specified in such Form S-3 Demand. In connection with a Form S-3 Demand, the Company agrees to include in the prospectus included in any Registration Statement on Form S-3, such material describing the Company and intended to facilitate the sale of securities being so registered as is reasonably requested for inclusion therein by the Initiating Form S-3 Holders, whether or not the rules applicable to preparation of Form S-3 require the inclusion of such information. Notwithstanding the foregoing, the Company may delay making a filing of a Registration Statement or taking action in connection therewith by not more than 60 days after receipt of the Form S-3 Demand Request if the Company provides a written certificate signed by the Chief Executive Officer and Chief Financial Officer of the Company to the Initiating Form S-3 Holders, prior to the time it would otherwise have been required to file such Registration Statement or take such action pursuant to this Section 2.04, stating that the Board has determined in good faith that a Valid Business Reason exists to defer the filing of the Registration Statement; provided, however, that such right to delay a Form S-3 Demand Request shall be exercised by the Company not more than once in any 12 month period and the Company shall only have the right to delay a Form S-3 Demand Request so long as such Valid Business Reason exists, and during such time, the Company may not file a Registration Statement for securities to be issued and sold for its own account or for that of anyone other than the Holders. Form S-3 Demands will not be deemed to be Demand Requests as described in Section 2.01 hereof and Holders shall have the right to request an unlimited number of Form S-3 Demands. Section 2.05 SALE PROCEDURES. In connection with its obligations under this Article II, Penn Traffic will, as expeditiously as possible: (a) prepare and file with the SEC such amendments and supplements to each Registration Statement as may be necessary to comply with the provisions of the Securities Act, including post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective for the applicable time period required hereunder and if applicable, file any Registration Statements pursuant to Rule 462(b) under the Securities Act; (ii) cause the related prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the Securities Act; (iii) comply with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement as so amended or in such prospectus as so supplemented; and (iv) if the Selling Holders so request, request acceleration of effectiveness of the Registration Statement from the SEC and any post-effective amendments thereto, if any are filed; provided, however, that at the time of such request, the Company does not in good faith believe that it is necessary to amend further the Registration Statement in order to comply with the provisions of this 9 subparagraph and, provided, further, if the Company wishes to further amend the Registration Statement prior to requesting acceleration, it shall have five days to so amend prior to requesting acceleration; (b) furnish to each Selling Holder (i) as far in advance as reasonably practicable before filing the Registration Statement or any other registration statement contemplated by this Agreement or any supplement or amendment thereto, upon request, copies of reasonably complete drafts of all such documents proposed to be filed (including exhibits and each document incorporated by reference therein to the extent then required by the rules and regulations of the Commission), and provide each such Selling Holder the opportunity to object to any information pertaining to such Selling Holder and its plan of distribution that is contained therein and make the corrections reasonably requested by such Selling Holder with respect to such information prior to filing the Registration Statement or such other registration statement or supplement or amendment thereto, and (ii) such number of copies of the Registration Statement or such other registration statement and the prospectus included therein and any supplements and amendments thereto as such Persons may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such Registration Statement or other registration statement; (c) if applicable, use its commercially reasonable efforts to register or qualify the Registrable Securities covered by the Registration Statement or any other registration statement contemplated by this Agreement under the securities or blue sky laws of such jurisdictions as the Selling Holders or, in the case of an Underwritten Offering, the Managing Underwriter, shall reasonably request; PROVIDED, HOWEVER, that Penn Traffic will not be required to qualify generally to transact business in any jurisdiction where it is not then required to so qualify or to take any action which would subject it to general service of process in any such jurisdiction where it is not then so subject; (d) promptly notify each Selling Holder and each underwriter of Registrable Securities, at any time when a prospectus relating thereto is required to be delivered by any of them under the Securities Act, of (i) the filing of the Registration Statement or any other registration statement contemplated by this Agreement or any prospectus to be used in connection therewith, or any amendment or supplement thereto, and, with respect to such Registration Statement or any other registration statement or any post-effective amendment thereto, when the same has become effective; and (ii) any written comments from the Commission with respect to any filing referred to in clause (i) and any written request by the Commission for amendments or supplements to the Registration Statement or any other registration statement or any prospectus or prospectus supplement thereto; (e) immediately notify each Selling Holder and each underwriter of Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of (i) the happening of any event as a result of which the prospectus or prospectus supplement contained in the Registration Statement or any other registration statement contemplated by this Agreement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; (ii) the issuance or threat of issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any other registration statement contemplated by this Agreement, or the initiation of any proceedings for that purpose; or (iii) the receipt by Penn Traffic of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction. Following the provision of such notice, Penn Traffic agrees to as promptly as practicable amend or supplement the prospectus or prospectus supplement or take other appropriate action so that the prospectus or prospectus supplement does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and to take such other action as is necessary to remove a stop order, suspension, threat thereof or proceedings related thereto; (f) upon request and subject to appropriate confidentiality obligations, furnish to each Selling Holder copies of any and all transmittal letters or other correspondence with the Commission or any other governmental agency or self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering of Registrable Securities; (g) furnish upon request, (i) an opinion of counsel for Penn Traffic dated the effective date of the applicable registration statement or the date of any amendment or supplement thereto, and a letter of like kind dated the date of the closing under the underwriting agreement, and (ii) a "cold comfort" letter, dated the date of the applicable registration statement or the date of any amendment or supplement thereto and a letter of like kind dated the date of the closing under the underwriting agreement, in each case, signed by the independent public accountants who have certified Penn Traffic's financial statements included or incorporated by reference into the applicable registration statement, and each of the opinion and the "cold comfort" letter shall be in customary form and covering substantially the same matters with respect to such registration statement (and the prospectus and any prospectus supplement included therein) as are customarily covered in opinions of issuer's counsel and in accountants' letters delivered to the underwriters in Underwritten Offerings of securities and such other matters as such underwriters or Selling Holders may reasonably request; (h) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder; (i) make available to the appropriate representatives of the Managing Underwriter and Selling Holders access to such information and Penn Traffic personnel as is reasonable and customary to enable such parties to establish a due diligence defense under the Securities Act; PROVIDED, HOWEVER, 11 that Penn Traffic need not disclose any such information to any such representative unless and until such representative has entered into or is otherwise subject to a confidentiality agreement with Penn Traffic satisfactory to Penn Traffic (including any confidentiality agreement referenced in Section 8.06 of the Purchase Agreement); (j) cause all such Registrable Securities registered pursuant to this Agreement to be listed on each securities exchange or nationally recognized quotation system on which similar securities issued by Penn Traffic are then listed and if not so listed, to be authorized for quotation on the FINRA automated quotation system; (k) use its commercially reasonable efforts to cause the Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of Penn Traffic to enable the Selling Holders to consummate the disposition of such Registrable Securities; (l) cooperate with each Selling Holder and each underwriter participating in the disposition of such Registrable Securities and underwriters' counsel in connection with any filings required to be made with FINRA; (m) cause appropriate officers as are requested by a managing underwriter to participate in a "road show" or similar marketing effort being conducted by such underwriter with respect to an underwritten public offering; (n) provide a transfer agent and registrar for all Registrable Securities covered by such registration statement and a CUSIP number for all such Registrable Securities, in each case, no later than the effective date of such registration statement; (o) enter into customary agreements and take such other actions as are reasonably requested by the Selling Holders or the underwriters, if any, in order to expedite or facilitate the disposition of such Registrable Securities; (p) each Selling Holder, upon receipt of notice from Penn Traffic of the happening of any event of the kind described in Section 2.05(e) of this Agreement, shall forthwith discontinue disposition of the Registrable Securities until such Selling Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 2.05(e) of this Agreement or until it is advised in writing by Penn Traffic that the use of the prospectus may be resumed and has received copies of any additional or supplemental filings incorporated by reference in the prospectus, and, if so directed by Penn Traffic, such Selling Holder will, or will request the managing underwriter or underwriters, if any, to deliver to Penn Traffic (at Penn Traffic's expense) all copies in their possession or control, other than permanent file copies then in such Selling Holder's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice; (q) if requested by a Purchaser, Penn Traffic shall: (i) as soon as practicable incorporate in a prospectus supplement or post-effective 12 amendment such information as such Purchaser reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) as soon as practicable make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) as soon as practicable, supplement or make amendments to any Registration Statement; (r) take all such other actions as are customary, necessary or advisable in order to expedite or facilitate the disposition of the Registrable Securities. Section 2.06 COOPERATION BY HOLDERS. Penn Traffic shall have no obligation to include in the Registration Statement Registrable Securities of a Holder, or in an Underwritten Offering pursuant to Section 2.02 Registrable Securities of a Selling Holder, who has failed to timely furnish such information that Penn Traffic determines, after consultation with counsel, is reasonably required to be furnished or conformed in order for the registration statement or prospectus supplement, as applicable, to comply with the Securities Act. Section 2.07 RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTRABLE SECURITIES. Each Holder of Registrable Securities that sells Registrable Securities in an Underwritten Offering agrees not to effect any public sale or distribution of the Registrable Securities for a period of up to 30 days following completion of such Underwritten Offering of equity securities by Penn Traffic (except as provided in this Section 2.07); PROVIDED, HOWEVER, that the duration of the foregoing restrictions shall be no longer than the duration of the shortest restriction generally imposed by the underwriters on the officers or directors or any other stockholder of Penn Traffic on whom a restriction is imposed in connection with such public offering. In addition, the provisions of this Section 2.07 shall not apply with respect to a Holder that (A) owns less than $2.5 million, in aggregate, of Registrable Securities or (B) has delivered an Opt Out Notice to Penn Traffic pursuant to Section 2.02(a) hereof; PROVIDED, HOWEVER, the above shall not apply, in the case of a Purchaser that is a large multi-unit investment or commercial banking organization, to activities in the normal course of trading of units of such Purchaser other than the unit participating in this transaction so long as such other units are not acting on behalf of the unit participating in this transaction and have not been provided with confidential information regarding Penn Traffic by the unit participating in this transaction. Section 2.08 EXPENSES. (a) CERTAIN DEFINITIONS. "REGISTRATION EXPENSES" means all expenses incident to Penn Traffic's performance under or compliance with this Agreement to effect the registration of Registrable Securities on the Registration Statement pursuant to Article II hereof, and the disposition of such securities, including, without limitation, all registration, filing, securities exchange listing fees, all registration, filing, qualification and other fees and expenses of complying with securities or blue sky laws, fees of 13 the National Association of Securities Dealers, Inc., transfer taxes and fees of transfer agents and registrars, all word processing, duplicating and printing expenses, all reasonable fees and disbursements of counsel to Penn Traffic and the reasonable fees and disbursements of one counsel to the Holders and independent public accountants for Penn Traffic, including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance. "SELLING EXPENSES" means all underwriting fees, discounts and selling commissions allocable to the sale of the Registrable Securities. (b) EXPENSES. Penn Traffic will pay all Registration Expenses, including, in the case of an Underwritten Offering, whether or not any sale is made pursuant to such Underwritten Offering. In addition, except as otherwise provided in Section 2.09 hereof, Penn Traffic shall not be responsible for legal fees incurred by Holders in connection with the exercise of such Holders' rights hereunder. Each Selling Holder shall pay its pro rata share of all Selling Expenses in connection with any sale of its Registrable Securities hereunder. Section 2.09 INDEMNIFICATION. (a) BY PENN TRAFFIC. In the event of an offering of any Registrable Securities under the Securities Act pursuant to this Agreement, Penn Traffic will indemnify and hold harmless each Selling Holder thereunder, its Affiliates that own Registrable Securities and their respective directors and officers, and each underwriter, pursuant to the applicable underwriting agreement with such underwriter, of Registrable Securities thereunder and each Person, if any, who controls such Selling Holder or underwriter within the meaning of the Securities Act and the Exchange Act, and its directors and officers (collectively, the "SELLING HOLDER INDEMNIFIED PERSONS"), against any losses, claims, damages, expenses or liabilities (including reasonable attorneys' fees and expenses) (collectively, "LOSSES"), joint or several, to which such Selling Holder Indemnified Person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus, free writing prospectus or final prospectus contained therein, or any amendment or supplement thereof, arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in light of the circumstances under which they were made) not misleading or arise out of or are based upon a Selling Holder being deemed to be an "underwriter," as defined in Section 2(a)(11) of the Securities Act, in connection with the registration statement in respect of any registration of Penn Traffic's securities, and will reimburse each such Selling Holder Indemnified Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss or actions or proceedings; PROVIDED, HOWEVER, that Penn Traffic will not be liable in any such case if and to the extent that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in strict conformity with information furnished by such Selling Holder Indemnified Person in writing specifically for use in the 14 Registration Statement or such other registration statement, or prospectus supplement, as applicable. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Selling Holder or any such Selling Holder, its directors or officers or any underwriter or controlling Person, and shall survive the transfer of such securities by such Selling Holder. (b) BY EACH SELLING HOLDER. Each Selling Holder agrees severally and not jointly to indemnify and hold harmless Penn Traffic, its directors and officers, and each Person, if any, who controls Penn Traffic within the meaning of the Securities Act or of the Exchange Act, and its directors and officers, to the same extent as the foregoing indemnity from Penn Traffic to the Selling Holders, but only with respect to information regarding such Selling Holder furnished in writing by or on behalf of such Selling Holder expressly for inclusion in the Registration Statement or any preliminary prospectus or final prospectus included therein, or any amendment or supplement thereto; PROVIDED, HOWEVER, that the liability of each Selling Holder shall not be greater in amount than the dollar amount of the proceeds (net of any Selling Expenses) received by such Selling Holder from the sale of the Registrable Securities giving rise to such indemnification. (c) NOTICE. Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party other than under this Section 2.09. In any action brought against any indemnified party, it shall notify the indemnifying party of the commencement thereof. The indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 2.09 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; PROVIDED, HOWEVER, that, (i) if the indemnifying party has failed to assume the defense or employ counsel reasonably acceptable to the indemnified party or (ii) if the defendants in any such action include both the indemnified party and the indemnifying party and counsel to the indemnified party shall have concluded that there may be reasonable defenses available to the indemnified party that are different from or additional to those available to the indemnifying party, or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, then the indemnified party shall have the right to select a separate counsel and to assume such legal defense and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other reasonable expenses related to such participation to be reimbursed by the indemnifying party as incurred. Notwithstanding any other provision of this Agreement, no indemnified party shall settle any action brought against it with respect to which it is entitled to indemnification hereunder without the consent of the 15 indemnifying party, unless the settlement thereof imposes no liability or obligation on, and includes a complete and unconditional release from all liability of, the indemnifying party. (d) CONTRIBUTION. If the indemnification provided for in this Section 2.09 is held by a court or government agency of competent jurisdiction to be unavailable to any indemnified party or is insufficient to hold them harmless in respect of any Losses, then each such indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of such indemnified party on the other in connection with the statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations; PROVIDED, HOWEVER, that in no event shall such Selling Holder be required to contribute an aggregate amount in excess of the dollar amount of proceeds (net of Selling Expenses) received by such Selling Holder from the sale of Registrable Securities giving rise to such indemnification. The relative fault of the indemnifying party on the one hand and the indemnified party on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact has been made by, or relates to, information supplied by such party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this paragraph were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to herein. The amount paid by an indemnified party as a result of the Losses referred to in the first sentence of this paragraph shall be deemed to include any legal and other expenses reasonably incurred by such indemnified party in connection with investigating or defending any Loss which is the subject of this paragraph. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation. (e) OTHER INDEMNIFICATION. The provisions of this Section 2.09 shall be in addition to any other rights to indemnification or contribution which an indemnified party may have pursuant to law, equity, contract or otherwise. Section 2.10 RULE 144 REPORTING. With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Registrable Securities to the public without registration, Penn Traffic agrees to: (a) make and keep public information regarding Penn Traffic available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times from and after the date hereof; (b) file with the Commission in a timely manner all reports and other documents required of Penn Traffic under the Securities Act and the Exchange Act at all times from and after the date hereof; and 16 (c) so long as a Holder owns any Registrable Securities, furnish, unless otherwise not available at no charge by access electronically to the Commission's EDGAR filing system, to such Holder forthwith upon request a copy of the most recent annual or quarterly report of Penn Traffic, and such other reports and documents so filed as such Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such Holder to sell any such securities without registration. Section 2.11 TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause Penn Traffic to register Registrable Securities granted to the Purchasers by Penn Traffic under this Article II may be transferred or assigned by any Purchaser to one or more transferee(s) or assignee(s) of such Registrable Securities or by total return swap; PROVIDED, HOWEVER, that, except with respect to a total return swap, (a) unless such transferee is an Affiliate of such Purchaser or another Purchaser, each such transferee or assignee holds Registrable Securities in the amount of $2.5 million, based on the Purchase Price, (b) Penn Traffic is given written notice prior to any said transfer or assignment, stating the name and address of each such transferee and identifying the securities with respect to which such registration rights are being transferred or assigned, and (c) each such transferee assumes in writing responsibility for its portion of the obligations of such Purchaser under this Agreement. ARTICLE III MISCELLANEOUS Section 3.01 COMMUNICATIONS. All notices and other communications provided for or permitted hereunder shall be made in writing by facsimile, electronic mail, courier service or personal delivery: (a) if to Penn Traffic, to the address set forth on its signature page; (b) if to a Purchaser, to the address set forth on Exhibit A; and (c) if to a transferee of Purchaser, to such Holder at the address provided pursuant to Section 2.11 hereof. All such notices and communications shall be deemed to have been received: at the time delivered by hand, if personally delivered; when receipt acknowledged, if sent via facsimile or electronic mail; and when actually received, if sent by courier service or any other means. Section 3.02 SUCCESSOR AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including subsequent Holders of Registrable Securities to the extent permitted herein. 17 Section 3.03 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. The Company represents and warrants that it has not granted registration rights prior to the date hereof and agrees that from and after the date of this Agreement, it shall not, without the prior written consent of the Holders of at least 50% of the Registrable Securities then outstanding, enter into any agreement (or amendment or waiver of the provisions of any agreement) with any holder or prospective holder of any securities of the Company that would grant such holder registration rights that are more favorable, pari passu or senior to those granted to the Purchasers hereunder. Section 3.04 RECAPITALIZATION, EXCHANGES, ETC. AFFECTING THE COMMON STOCK. The provisions of this Agreement shall apply to the full extent set forth herein with respect to any and all shares of stock of Penn Traffic or any successor or assign of Penn Traffic (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for or in substitution of, the Registrable Securities, and shall be appropriately adjusted for combinations, stock splits, recapitalizations and the like occurring after the date of this Agreement. Section 3.05 SPECIFIC PERFORMANCE. Damages in the event of breach of this Agreement by a party hereto may be difficult, if not impossible, to ascertain, and it is therefore agreed that each such Person, in addition to and without limiting any other remedy or right it may have, will have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach, and enforcing specifically the terms and provisions hereof, and each of the parties hereto hereby waives any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief. The existence of this right will not preclude any such Person from pursuing any other rights and remedies at law or in equity which such Person may have. Section 3.06 COUNTERPARTS. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. Section 3.07 HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Section 3.08 GOVERNING LAW. The laws of the State of New York shall govern this Agreement without regard to principles of conflict of laws. Section 3.09 CONSENT TO JURISDICTION. Each party hereto further agrees that service of any process, summons, notice or document by U.S. registered mail to such party's address set forth on the signature pages hereof shall be effective service of process for any claim, action or proceeding with respect to any matters to which it has submitted to jurisdiction in this Section 3.09 or otherwise. As an alternative method of service, each such party also irrevocably consents to the service of any and all process in any manner permitted by or under the laws of the State of New York. 18 Section 3.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, OR RELATING TO, ANY TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) OR ANY COUNTERCLAIM RELATED THERETO. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY SUIT, ACTION OR OTHER LEGAL PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 3.10. Section 3.11 SEVERABILITY OF PROVISIONS. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting or impairing the validity or enforceability of such provision in any other jurisdiction. Section 3.12 ENTIRE AGREEMENT. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the rights granted by Penn Traffic set forth herein. This Agreement and the Purchase Agreement supersede all prior agreements and understandings between the parties with respect to such subject matter. Section 3.13 AMENDMENT. This Agreement may be amended only by means of a written amendment signed by Penn Traffic and the Holders of a majority of the then outstanding Registrable Securities; PROVIDED, HOWEVER, that no such amendment shall materially and adversely affect the rights of any Holder hereunder without the consent of such Holder. Section 3.14 NO PRESUMPTION. If any claim is made by a party relating to any conflict, omission or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular party or its counsel. Section 3.15 OBLIGATIONS LIMITED TO PARTIES TO AGREEMENT. Each of the Parties hereto covenants, agrees and acknowledges that no Person other than the Purchasers (and their permitted assignees) and Penn Traffic shall have any obligation hereunder and that, notwithstanding that one or more of the Purchasers may be a corporation, partnership or limited liability company, no recourse under this Agreement or the Purchase Agreement or under any documents 19 or instruments delivered in connection herewith or therewith shall be had against any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the Purchasers or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the Purchasers or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, as such, for any obligations of the Purchasers under this Agreement or the Purchase Agreement or any documents or instruments delivered in connection herewith or therewith or for any claim based on, in respect of or by reason of such obligation or its creation. Section 3.16 NO REQUIRED SALE. Nothing in this Agreement shall be deemed to create an independent obligation on the part of any of the Purchasers to sell any Registrable Securities pursuant to any effective registration statement. Section 3.17 ACKNOWLEDGMENT. Penn Traffic hereby acknowledges and agrees that it shall not have any recourse for any payment or indemnification obligation under this Agreement, or for any claim based on this Agreement, or otherwise in respect of this Agreement, to or against any Purchaser's investment manager or any incorporator, subscriber, promoter, stockholder, partner, member, director, officer or employee, past, present or future, as such, of the Purchaser or its investment manager or any other entity for whom such investment manager acts as manager or investment manager, or any predecessor or successor thereof, and its recourse shall be limited solely to the Purchasers. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 20 IN WITNESS WHEREOF, the Parties hereto execute this Agreement, effective as of the date first above written. THE PENN TRAFFIC COMPANY By: ------------------------------------------------- Name: Title: Address for notices: The Penn Traffic Company 1200 State Fair Boulevard Syracuse, NY 13221 Telecopy: 315-461-2645 Attention: Gregory J. Young With copies to: Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, NY 10019 Telecopy: (212) 492-0436 Attention: Douglas A. Cifu, Esq. [Signature Page to Registration Rights Agreement] IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written. KING STREET CAPITAL, L.P. By: King Street Capital Management, L.L.C. Its Investment Manager By: ------------------------------------------------ Name: Title: Address for notices: King Street Capital, L.P. King Street Capital, LTD. 65 East 55th Street, 30th Floor New York, NY 10022 Tel: 212-812-3117 Fax: 212-812-3118 With copies of all correspondence and delivery of certificates to: King Street Capital Management, L.L.C. 65 East 55th Street, 30th Floor New York, NY 10022 Fax: 212-812-3118 Attention: General Counsel With copies of all correspondence (which shall not constitute notice): Fried, Frank, Harris, Shriver & Jacobson LLP One New York Plaza New York, New York 10004 Fax: (212) 859-4000 Attention: Philip Richter, Esq. [Signature Page to Registration Rights Agreement] IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written. KING STREET CAPITAL, LTD. By: King Street Capital Management, L.L.C. Its Investment Manager By: ------------------------------------------------ Name: Title: Address for notices: King Street Capital, L.P. King Street Capital, LTD. 65 East 55th Street, 30th Floor New York, NY 10022 Tel: 212-812-3117 Fax: 212-812-3118 With copies of all correspondence and delivery of certificates to: King Street Capital Management, L.L.C. 65 East 55th Street, 30th Floor New York, NY 10022 Fax: 212-812-3118 Attention: General Counsel With copies of all correspondence (which shall not constitute notice): Fried, Frank, Harris, Shriver & Jacobson LLP One New York Plaza New York, New York 10004 Fax: (212) 859-4000 Attention: Philip Richter, Esq. [Signature Page to Registration Rights Agreement] IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written. CR INTRINSIC INVESTMENTS, LLC By: -------------------------------------------------- Name: Title: Address for notices: CR Intrinsic Investments, LLC PO Box 174, Mitchell House The Valley, Anguilla, British West Indies With copies of all correspondence and delivery of certificates to: CR Intrinsic Investments, LLC c/o CR Intrinsic Investors, LLC 72 Cummings Point Road Stamford, CT 06902 Attention: General Counsel With copies of all correspondence (which shall not constitute notice): Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, New York 10019 Attention: Adam M. Turteltaub [Signature Page to Registration Rights Agreement] IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written. TROPHY HUNTER INVESTMENTS LTD. By: -------------------------------------------------- Name: Title: Address for notices: Trophy Hunter Investments Ltd. 885 Third Avenue, 34th Floor New York, NY 10022 With copies of all correspondence (which shall not constitute notice): Akin Gump Strauss Hauer & Feld LLP 590 Madison Avenue New York, NY 10022 Attention: Ira Dizengoff BAY HARBOUR MASTER FUND LTD. By: -------------------------------------------------- Name: Title: Address for notices: Bay Harbour Master Fund Ltd. 885 Third Avenue, 34th Floor New York, NY 10022 With copies of all correspondence (which shall not constitute notice): Akin Gump Strauss Hauer & Feld LLP 590 Madison Avenue New York, NY 10022 Attention: Ira Dizengoff [Signature Page to Registration Rights Agreement] IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written. INSTITUTIONAL BENCHMARKS SERIES (MASTER FEEDER) LIMITED By: -------------------------------------------------- Name: Title: Address for notices: Institutional Benchmarks Series (Master Feeder) Limited 885 Third Avenue, 34th Floor New York, NY 10022 With copies of all correspondence (which shall not constitute notice): Akin Gump Strauss Hauer & Feld LLP 590 Madison Avenue New York, NY 10022 Attention: Ira Dizengoff MSS DISTRESSED & OPPORTUNITY 2 By: -------------------------------------------------- Name: Title: Address for notices: MSS Distressed & Opportunity 2 885 Third Avenue, 34th Floor New York, NY 10022 With copies of all correspondence (which shall not constitute notice): Akin Gump Strauss Hauer & Feld LLP 590 Madison Avenue New York, NY 10022 Attention: Ira Dizengoff EXHIBIT A PURCHASERS King Street Capital, L.P. King Street Capital, LTD. CR Intrinsic Investments, LLC Trophy Hunter Investments LTD. Bay Harbour Master Fund LTD. Institutional Benchmarks Series (Master Feeder) Limited MSS Distressed & Opportunity 2 -----END PRIVACY-ENHANCED MESSAGE-----