FIFTH AMENDMENT, ACKNOWLEDGMENT
AND CONSENT AND WAIVER TO CREDIT AGREEMENT
 
This Fifth Amendment, Acknowledgment and Consent and Waiver to Credit Agreement,
dated as of December 18, 2008 to the Credit Agreement referred to below (this
“Amendment”) among (a) THE PENN TRAFFIC COMPANY, a Delaware corporation, PENNY
CURTISS BAKING COMPANY, INC., a New York corporation, and BIG M SUPERMARKETS,
INC., a New York corporation (collectively referred to herein as “Borrowers” and
individually as “Borrower”); (b) the other Credit Parties signatory hereto; (c)
KIMCO CAPITAL CORP., a Delaware corporation (in its individual capacity,
“Kimco”), for itself, as Lender, and as Agent for Lenders (in such capacity, the
“Agent”); and (d) the other Lenders signatory hereto from time to time
(collectively, the “Lenders”).
 
WITNESSETH:
 
WHEREAS, the Borrowers, Agent and Lenders are parties to that certain Credit
Agreement, dated as of April 13, 2005 (including all annexes, exhibits and
schedules thereto, and as amended, restated, supplemented or otherwise modified
prior to the date hereof, the “Credit Agreement”);

WHEREAS, Penn Traffic and Big M (together, the “Seller Companies”) desire to
sell their wholesale grocery business (the “Wholesale Business”) pursuant to the
terms of (i) that certain Asset Purchase Agreement (in substantially the form
annexed hereto as Exhibit A), dated as of December 17, 2008, among C&S Wholesale
Grocers, Inc. and the Seller Companies, (ii)  a Transition Services Agreement
(in substantially the form annexed hereto as Exhibit B) among C&S Wholesale
Grocers, Inc. and the Seller Companies and (iii) a Third Party Logistics
Agreement (in substantially the form annexed hereto as Exhibit C) between C&S
Wholesale Grocers, Inc. and Penn Traffic (the documents referenced in clauses
(i), (ii) and (iii) together with all annexes, exhibits and schedules thereto
are hereinafter referred to as the “Asset Purchase Agreement”); and

WHEREAS, on December 16, 2008, $519,000 of Net Proceeds (the “Escrow Amount”)
from the sale of the store located at 137 State Route 104, Oswego, New York to
Price Chopper Operating Company, Inc. (the “Oswego Sale”) was wired into the
escrow account of Bond, Schoeneck & King, PLLC (“Escrow Agent”) pursuant to the
terms of that certain Escrow Agreement, dated as of December 15, 2008, among
Agent, Supplemental Real Estate Facility Agent and Escrow Agent;

WHEREAS, Agent and Lenders have agreed to waive, pursuant to and in accordance
with the terms of the Credit Agreement, a certain Event of Default, in the
manner and on the terms and conditions provided for herein;

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WHEREAS, the Borrowers have requested that Agent and Lenders consent to the
Seller Companies entry into the Asset Purchase Agreement and to the transactions
contemplated thereby (the “Wholesale Business Sale”) on the terms and conditions
provided for herein; and

WHEREAS, Agent and Lenders have agreed to consent to the Wholesale Business Sale
and amend the Credit Agreement on the terms and conditions, provided for herein.

NOW THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

1. Definitions.  Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Credit Agreement or Annex A thereto.
 
2. Waiver.  As of the Fifth Amendment Effective Date (as hereinafter defined),
Agent and Lenders hereby waive the Event of Default under Section 8.1(o) of the
Credit Agreement arising as a result of an event of default under the GE Credit
Agreement resulting solely from the failure of a Net Proceeds Reserve to be
implemented pursuant to Section 6.8(e)(vii) of the GE Credit Agreement in
connection with the 2006 sale of BiLo Store #9210 located at 1225 Scalp Avenue,
Richland, Pennsylvania.
 
3. Acknowledgment and Consent.  Notwithstanding the provisions of Sections
1.2(b)(ii) and 6.8 of the Credit Agreement and the terms of the Intercreditor
Agreement, Agent and Lenders hereby consent to the Wholesale Business Sale
pursuant to the Asset Purchase Agreement (it being understood that any
amendments or modifications to the Asset Purchase Agreement following the
effectiveness of this Amendment that in the reasonable discretion of the Agent
could adversely affect any of the rights or remedies of the Agent or any Lender
must be acceptable to the Agent in its sole discretion) for an aggregate
purchase price of (i) not less than $27,000,000 in cash, plus (ii) not less than
$11,000,000 for the accounts receivable of the Wholesale Business (the “Purchase
Price”), provided that: (a) Borrowers shall use the Escrow Amount, plus up to
$10,000,000 of the Net Proceeds from the Wholesale Business Sale to prepay the
Loans (without penalty or premium) in an amount that would result in the
remaining outstanding principal amount of the Loans being no less than
$10,000,000 (the “Prepayment ”) and (b) the remaining amount of the Net Proceeds
from the Wholesale Business Sale after the payment of the Prepayment (the
“Diverted Amount”) shall be deposited in the Diversion Account and used in
accordance with Section 3 of the GE Sixth Amendment (as hereinafter
defined).  In addition, Agent and Lenders hereby acknowledge and agree that the
sale of the Wholesale Business as contemplated by the Asset Purchase Agreement
shall be free and clear of all existing and future liens, claims and
encumbrances of Agent and Lenders, and Agent and Lenders hereby release
effective as of the payment of the Purchase Price by the buyer, any and all
liens, claims or encumbrances any of them has or may have on the assets being
transferred pursuant to the Asset Purchase Agreement.  With respect to the
immediately preceding sentence of this Section 3 only, C&S Wholesale Grocers,
Inc. shall be deemed a third party beneficiary of this Consent, coupled with the
power of enforcement thereof.
 
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4. Amendments to the Credit Agreement.  The Credit Agreement is hereby amended
as of the Fifth Amendment Effective Date as follows:
 
(a) Section 1.6(c) is hereby amended by deleting such section in its entirety.
 
(b) The second sentence of Section 1.11 of the Credit Agreement is hereby
amended by deleting “at Agent’s discretion” where it appears in such sentence.
 
(c) Section 6.8(e) of the Credit Agreement is hereby amended by (i) deleting
“and” at the end of subsection (ix) thereof, (ii) inserting “and” at the end of
subsection (x) thereof, and (iii) inserting the new subsection (xi) as follows:
 
“(xi)                      upon any such sale, there shall be established under
the GE Credit Agreement a Reserve in an amount equal to (i) for any owned Real
Estate of the Credit Parties located in the state of New York, 74% of the Net
Proceeds from such sale, or (ii) for any other owned Real Estate of the Credit
Parties, 45% of the Net Proceeds from such sale (the “Net Proceeds Reserve”);
provided, that, the amount of any such Reserve shall not exceed the then
outstanding principal amount of the Loans.”

(d) Section 6.8(e) of the Credit Agreement is hereby further amended by deleting
the last paragraph of such Section 6.8(e) in its entirety and inserting the
following new paragraph in place thereof:
 
“provided, further, that Borrowers may (x) upon written notice to Agent, sell
and transfer, close or otherwise dispose of assets in connection with the sale
or other disposition of any owned Real Estate locations so long as such sale,
closure or other disposition otherwise complies with each of the conditions set
forth in clauses (iii), (iv), (vi), (viii), (ix), (x) and (xi) of this Section
6.8(e), as reasonably determined by Agent and Borrowers provide Agent with a
detailed closing statement for any such sale and (y) upon written notice to
Agent, sell and transfer, close or otherwise dispose of assets in connection
with the sale of the “Minor Lease” and “Major Lease” locations listed on
Schedule 1 to the Fifth Amendment, so long as (I) such sale or other disposition
otherwise complies with each of the conditions set forth in clauses (iii), (iv),
(viii), (ix) and (x) of Section 6.8(e), as reasonably determined by the Agent,
(II) Borrowers provide Agent with a detailed closing statement for any such
sale, (III) notwithstanding anything to the contrary set forth in the
Intercreditor Agreement, upon the sale or other disposition of any such lease,
the Borrowers shall make a payment to Agent in an amount equal to 75% of the Net
Proceeds from the sale or disposition of such lease (in the case of a lease
identified as a  “Minor Lease” on Schedule 1 to the Fifth Amendment) or 100% of
the Net Proceeds from the sale or disposition of such lease (in the case of a
lease identified as a “Major Lease” on Schedule 1 to the Fifth Amendment) and
(IV) in the case of a lease identified as a “Major Lease” on Schedule 1 to the
Fifth Amendment, the purchase price for such Lease is equal to or greater than
the amount listed next to the applicable location in Schedule 1 to the Fourth
Amendment, it being understood that such location dispositions referred to in
clauses (x) and (y) above shall not be included in clause (i) of this Section
6.8(e) for any purpose.”

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(e) Section 6.8 of the Credit Agreement is hereby amended by inserting “and”
after subsection (h), deleting “and” at the end of subsection (i) and deleting
subsection (j).
 
(f) Section 11.7 of the Credit Agreement is hereby amended by amending and
restating the parenthetical in such Section 11.7 in its entirety as follows:
 
“(other than the SREF Intercreditor Agreement and the Trade Lien Intercreditor
Agreement, which notwithstanding anything to the contrary contained herein,
shall govern and control in case of any such conflict (except any conflict with
Section 6.8(e) of this Agreement for which such Section 6.8(e) shall control))”

(g) Annex A of the Credit Agreement is hereby amended by:
 
(i) amending the definition of “Commitment Termination Date” by deleting such
definition in its entirety and replacing it with the following:
 
“‘Commitment Termination Date’ means the earliest of (a) April 13, 2010, (b) the
date the Loans are declared due and payable pursuant to Section 8.2(b) of the
Credit Agreement and (c) the date of payment or prepayment in full in cash by
Borrowers of the Loans.”

(ii) amending the definition of “Material Contracts” by deleting such definition
in its entirety and substituting in lieu thereof the following new definition:
 
“‘Material Contracts’ means (a) the Asset Purchase Agreement as defined in the
Fifth Amendment, and (b) the agreements set forth in Disclosure Schedule
(3.22(a)).”

(iii) adding the following new definitions in the appropriate alphabetical
order:
 
‘Fifth Amendment’ means the Fifth Amendment to Credit Agreement, dated as of
December 18, 2008, among Agent, Lenders and Borrowers, and acknowledged and
agreed to by each of the other Credit Parties.

‘Fifth Amendment Effective Date’ means the date on which the conditions
precedent to the effectiveness of the Fifth Amendment are satisfied, which date
is December 18, 2008.”

(h) Schedule 6.8(e) to the Credit Agreement is hereby amended by replacing such
Schedule 6.8(e) in its entirety with the Schedule 6.8(e)  attached as Schedule 2
hereto.
 
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5. Amendments to the Credit Agreement.  The Credit Agreement is hereby amended
as of the date upon which the Diverted Amount is applied to the outstanding
Revolving Loans under the GE Credit Agreement in accordance with Section 3(c) of
the GE Sixth Amendment as follows:
 
(a)           Subsection (g) of Annex C to the Credit Agreement is hereby
amended by deleting “Minimum Revolving Outstanding Loan Balance (as defined in
the GE Credit Agreement) as prohibited by Section 5.15 of the GE Credit
Agreement” where it appears in subsection (g) and substituting in lieu thereof
“$0”.

(b)           Subsection (h) of Annex C to the Credit Agreement is hereby
amended by deleting such subsection (h) in its entirety and inserting the
following new subsection (h) in place thereof:

“Agent agrees, that to the extent the GE Credit Agreement Agent receives funds
in the Collection Account, whether through daily sweeps of the applicable
Concentration Accounts or through payments made by the Borrowers pursuant to
Sections 1.3 and 1.10 or otherwise, which funds (or any portion thereof), if
applied to the outstanding balance of the Loans, would cause the outstanding
principal amount of the Revolving Loan to be less than $0, the GE Credit
Agreement Agent, at the direction of the Borrower Representative, shall use
reasonable efforts to immediately forward such funds (or the applicable portion
thereof) to the Diversion Account.  For the avoidance of doubt, the amount of
funds which shall be forwarded to the Diversion Account shall be limited to the
amount which, if applied to the outstanding balance of the Loans, would cause
the outstanding amount of the Revolving Loan to be less than $0 (the “Diverted
Funds”), with any excess remaining after such forwarding of the Diverted Funds
to the Diversion Account to be applied by the GE Credit Agreement Agent to the
GE Loans in accordance with the GE Credit Agreement.  Each of the Credit Parties
expressly acknowledges and agrees that neither the Agent, the GE Credit
Agreement Agent nor any Lender shall have any liability to such Credit Party or
any other Person in the event the GE Credit Agreement Agent applies funds in
contravention of this clause (h). Except as permitted in this clause (h), the
Third Amendment and the Fifth Amendment, no Credit Party shall, or shall cause
or permit any Person thereof to, deposit, accumulate or maintain cash in the
Diversion Account in an amount in excess of the Diverted Funds, and if at any
time the then aggregate outstanding principal amount of the Revolving Loans
exceeds $0, the excess shall be transferred to the Collection Account for
application to the Obligations in accordance with clause (k) below.”
 
6. Representations and Warranties.  To induce Agent and Lenders to enter into
this Amendment, each of the Credit Parties, jointly and severally, makes the
following representations and warranties to Agent and Lenders:
 
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(a) The execution, delivery and performance of this Amendment and the
performance of the Credit Agreement after giving effect to this Amendment by
such Credit Party thereto: (i) are within such Person’s corporate or limited
liability company power, as applicable; (ii) have been duly authorized by all
necessary corporate or limited liability company; (iii) do not contravene any
provision of such Person’s charter, bylaws or operating agreement as applicable;
(iv) do not violate any law or regulation, or any order or decree of any court
or Governmental Authority by which such Person or its assets are bound; (v) do
not conflict with or result in the breach or termination of, constitute a
default under or accelerate or permit the acceleration of any performance
required by, any indenture, mortgage, deed of trust, material lease, material
agreement or other material instrument to which such Person is a party or by
which such Person or any of its property is bound; (vi) do not result in the
creation or imposition of any Lien upon any of the property of such Person other
than those in favor of Agent, on behalf of itself and Lenders, pursuant to the
Loan Documents; and (vii) other than the consents being obtained on or prior to
the date hereof, do not require the consent or approval of any Governmental
Authority or any other Person.
 
(b) This Amendment has been duly executed and delivered by or on behalf of such
Credit Party.
 
(c) This Amendment constitutes a legal, valid and binding obligation of such
Credit Party, enforceable against such Credit Party in accordance with its
terms.
 
(d) No Default or Event of Default has occurred and is continuing after giving
effect to this Amendment.
 
(e) After giving effect to this Amendment, the representations and warranties of
such Credit Party contained in the Credit Agreement and each other Loan Document
shall be true and correct on and as of the date hereof with the same effect as
if such representations and warranties had been made on and as of such date,
except that any such representation or warranty which is expressly made only as
of a specified date need be true only as of such date and except for changes
therein expressly permitted by the Credit Agreement.
 
7. No Other Amendments/Waivers.  Except as expressly amended herein, the Credit
Agreement and the other Loan Documents shall be unmodified and shall continue to
be in full force and effect in accordance with their terms.  In addition, except
as expressly set forth herein, this Amendment shall not be deemed a waiver of
any term or condition of any Loan Document and shall not be deemed to prejudice
any right or rights which Agent, for itself and Lenders, may now have or may
have in the future under or in connection with any Loan Document or any of the
instruments or agreements referred to therein, as the same may be amended from
time to time.
 
8. Waiver of Claims.  The Credit Parties hereby acknowledge and agree that as of
December 15, 2008, the aggregate outstanding principal amount of the Loans was
$20,405,000 and, after giving effect to the payment of the Purchase Price as
provided in section 3 hereof, is $10,000,000, and that such aggregate
outstanding principal amount is payable pursuant to the Credit Agreement without
defense, offset, withholding, cancellation or reduction of any kind.  Each of
the Credit Parties hereby waives, releases, remises and forever discharges
Agent, Lenders and each other Indemnified Person from any and all claims, suits,
actions, investigations, proceedings or demands arising out of or in connection
with the Credit Agreement (collectively, “Claims”), whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute
or common law of any kind or character, known or unknown, which such Credit
Party ever had, now has or might hereafter have against Agent or Lenders which
relates, directly or indirectly, to any acts or omissions of Agent, Lenders or
any other Indemnified Person on or prior to the date hereof; provided that, such
Credit Party does not waive any Claim solely to the extent such Claim relates to
the Agent’s or any Lender’s gross negligence or willful misconduct.
 
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9. Expenses.  (a) In connection with this Amendment, the Borrowers shall pay to
Agent for the benefit of the Lenders an amendment fee (the “Amendment Fee”) in
the amount of $300,000, which amount shall be fully earned on the Fifth
Amendment Effective Date but payable in two installments as follows: $150,000 to
Agent for the benefit of the Lenders on the Fifth Amendment Effective Date; and
$150,000 to Agent for the benefit of the Lenders on April 13, 2009.
 
(b) Each Borrower hereby reconfirms its respective obligations pursuant to
Section 11.3 of the Credit Agreement to pay and reimburse Agent, for all
reasonable costs and expenses (including, without limitation, reasonable fees of
counsel) incurred in connection with the negotiation, preparation, execution and
delivery of this Amendment and all other documents and instruments delivered in
connection herewith.
 
10. Effectiveness.  This Amendment shall become effective as of the date hereof
(the “Fifth Amendment Effective Date”) only upon satisfaction in full in the
reasonable judgment of Agent of each of the following conditions:
 
(a) Payment of the Amendment Fee.  The Borrowers shall have paid to the Agent
that portion of the Amendment Fee that is required to be paid on the Fifth
Amendment Effective Date pursuant to section 9 hereof.
 
(b) Amendment.  The Agent shall have received counterpart signature pages of
this Amendment duly executed and delivered by each of Agent, Lenders and the
Borrowers.
 
(c) Amendment to the GE Credit Agreement.  The Agent shall have received
evidence that Borrowers have received a duly executed amendment to the GE Credit
Agreement, in substantially the form attached hereto as Exhibit D (the “GE Sixth
Amendment”).
 
(d) Amendment to Intercreditor Agreement.  The Agent shall have received
counterpart signature pages of the amendment to the Intercreditor Agreement
attached hereto as Exhibit E duly executed and delivered by each of Agent, GE
Credit Agreement Agent and the Borrowers.
 
(e) Representations and Warranties.  The representations and warranties of the
Credit Parties in this Amendment shall be true and correct on and as of the date
hereof, except that any such representation or warranty which is expressly made
only as of a specified date need be true only as of such date.
 
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11. GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
 
12. Counterparts.  This Amendment may be executed by the parties hereto on any
number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
 

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the day and year first above written.

 
BORROWERS
     
THE PENN TRAFFIC COMPANY
     
By:  ___________________________
Name:    ________________________
 
Title:   _________________________
     
PENNY CURTISS BAKING COMPANY, INC.
     
By:  ___________________________
Name:    ________________________
 
Title:   _________________________
     
BIG M SUPERMARKETS, INC.
     
By:  ___________________________
Name: _________________________
 
Title:   _________________________

[SIGNATURE PAGE TO AMENDMENT]

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LENDERS
     
KIMCO CAPITAL CORP., as Agent and Lender
     
By:  ___________________________
Name:  _________________________
 
Title:  __________________________
         
JUBILEE-VI LLC, a Delaware limited liability company),
 
As successor-in-interest to
 
JUBILEE LIMITED PARTNERSHIP V,
 
as Lender
     
By:  ___________________________
Name: _________________________
 
Title: __________________________

 

 
[SIGNATURE PAGE TO AMENDMENT]

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The following Persons are signatories to this Amendment in their capacity as
Credit Parties and not as Borrowers.
     
SUNRISE PROPERTIES, INC.
     
By:  ___________________________
Name: _________________________
 
Title: __________________________
         
PENNWAY EXPRESS, INC.
     
By:  ___________________________
Name: _________________________
 
Title: __________________________
         
COMMANDER FOODS INC.
     
By:  ___________________________
Name: _________________________
 
Title: __________________________
         
P AND C FOOD MARKETS INC. OF VERMONT
     
By:  ___________________________
Name: ______________________
 
Title: __________________________
         
P.T. DEVELOPMENT, LLC
     
By:  ___________________________
Name: _________________________
 
Title: __________________________

[SIGNATURE PAGE TO AMENDMENT]

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P.T. FAYETTEVILLE/UTICA, LLC
     
By:  ___________________________
Name: _________________________
 
Title:  _________________________

[SIGNATURE PAGE TO AMENDMENT]

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The following Persons are signatories to this Amendment in their capacity as
Credit Parties and not as Borrowers.
 

 
SUNRISE PROPERTIES, INC.
     
By:  ___________________________
Name: _________________________
 
Title: __________________________
         
PENNWAY EXPRESS, INC.
     
By:  ___________________________
Name: _________________________
 
Title: __________________________
         
COMMANDER FOODS INC.
     
By:  ___________________________
Name: _________________________
 
Title:   _________________________
         
P AND C FOOD MARKETS INC. OF VERMONT
     
By:  ___________________________
Name: _________________________
 
Title: __________________________
         
P.T. DEVELOPMENT, LLC
     
By:  ___________________________
Name: _________________________
 
Title: __________________________

[SIGNATURE PAGE TO AMENDMENT]

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P.T. FAYETTEVILLE/UTICA, LLC
     
By:  ___________________________
Name: _________________________
 
Title: __________________________

 
 
[SIGNATURE PAGE TO AMENDMENT]

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Schedule 1
 
 
 

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Schedule 2

 

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Exhibit A

Asset Purchase Agreement

 
 
 

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Exhibit B

Transition Services Agreement

 
 
 

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Exhibit C

Third Party Logistics Agreement

 
 
 

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Exhibit D

Amendment to the GE Credit Agreement

 
 
 

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Exhibit E

Amendment to Intercreditor Agreement

 

 
 
 

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