The
Penn Traffic Company

       

      May 27,
2009

      


      Dear
_____:

       

      As
determined as of March 30, 2009, and recognizing its previous decision to
rescind annual grants of $25,000.00 in compensation to non-management members of
the Board of Directors, The Penn Traffic Company is providing you the
opportunity to receive a cash award (“Award”) in
recognition of your service to the Company.

       

      1.           Definitions.

       

      The
following definitions shall be applicable throughout this
agreement:

       

      (a)           “Agreement” means this
agreement between you and the Company.

       

      (b)           “Board” means the
Board of Directors of the Company.

       

      (c)           “Change in Control”
means a “change in control”, as defined in the Omnibus Award Plan.

       

      (d)           “Code” means the
Internal Revenue Code of 1986, as amended, and applicable regulations
promulgated thereunder.

       

      (e)           “Committee” shall have
the meaning set forth in section 2(g) of the Omnibus Award Plan.

       

      (f)           “Company” means The
Penn Traffic Company.

       

      (g)           “Omnibus Award Plan”
means The Penn Traffic Company 2006 Omnibus Award Plan.

       

      2.           Award.

       

      (a)           Performance Based
Conditions. Provided the Company’s cash balance, as measured on January
30, 2010, equals no less than $34,434,000.00, the Company will pay you a cash
Award in the amount of $25,000.00. However, so long as the requirements of the
preceding sentence have been satisfied, if you are separated from service with
the Company before January 30, 2010, you shall receive a pro rata portion of
such $25,000.00 Award at the same time all other Awards are paid to members of
the Board under Section 2(b) below, based upon the proportion of the Company’s
Fiscal Year 2010 you served as a Board member.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (b)           Timing.  Subject
to Section 2(a) above and Section 2(c) below, the Company will pay you a cash
Award no later than February 28, 2010.

       

      


      (c)           Change in
Control.  If a Change in Control is consummated before January
30, 2010, and (i) if you are serving the Company as a Board member at that time,
you will receive a $25,000.00 cash Award upon the consummation of the Change in
Control in complete satisfaction of this Agreement, and no additional payment
will be due you under Section 2(a) above, or (ii) if you are no longer serving
the Company as a Board member at that time, you will receive a pro rata portion
of such $25,000.00 Award upon the consummation of the Change in Control, based
upon the proportion of the Company’s Fiscal Year 2010 you served as a Board
member, and no additional payment will be due you under Section 2(a)
above.

       

      (d)           Compliance With Section
409A.  Payments under this Agreement are intended not to
constitute deferred compensation subject to the requirements of Section 409A of
the Code (“Section
409A”).  If and to the extent that the provisions of this
Agreement are subject to Section 409A, all provisions of the Agreement shall be
construed and interpreted in a manner consistent with the requirements for
avoiding taxes or penalties under Section 409A.  If the Committee
determines that any amounts payable hereunder will be taxable to you under
Section 409A, the Committee may (i) adopt such amendments to this Agreement and
appropriate policies and procedures, including amendments and policies with
retroactive effect, that the Committee determines necessary or appropriate to
preserve the intended tax treatment of the benefits provided by the Agreement
and/or (ii) take such other actions as the Committee determines necessary or
appropriate to avoid or limit the imposition of an additional tax under Section
409A; provided, that the Committee shall have no liability to you with respect
to the tax imposed by Section 409A.  Each payment made under the
Agreement shall be designated as a “separate payment” within the meaning of
Section 409A, if and to the extent Section 409A is
applicable.  Notwithstanding anything in this Plan to the contrary,
the following special rule shall apply, if and to the extent required by Section
409A, in the event that (i) you are deemed to be a “specified employee” within
the meaning of Section 409A(a)(2)(B)(i), (ii) amounts are payable on account of
“separation from service” within the meaning of Treasury Regulations Section
1.409A-1(h) and (iii) you are employed by a public company or a controlled group
affiliate thereof: no payments hereunder that are “deferred compensation”
subject to Section 409A shall be made to you prior to the date that is six (6)
months after the date of your separation from service or, if earlier, your date
of death; following any applicable six (6) month delay, all such delayed
payments will be paid in a single lump sum on the earliest permissible payment
date.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      3.           Miscellaneous.

       

      Your
eligibility for payment of a Award is in addition to, and not in lieu of, your
right to participate in any other compensation or benefit programs currently
made available to you and shall not be deemed in any way to limit or restrict
the Company from making any other payments to you under any other plan or
agreement, whether now existing or hereinafter in effect.

       

      4.           Administration.  The
Committee shall administer this Agreement.

       

      (a)           Subject
to the provisions of this Agreement and applicable law, the Committee shall have
the power, in addition to other express powers and authorizations conferred on
the Committee by this Agreement, to: (i) determine the terms and conditions of
any Award; (ii) interpret, administer and reconcile any inconsistency, correct
any default and/or supply any omission in this Agreement and any instrument or
agreement relating to the Award granted under this Agreement; and (iii) make any
other determination and take any other action that the Committee deems necessary
or desirable for the administration of this Agreement.

       

      (b)           Unless
otherwise expressly provided in this Agreement, all designations,
determinations, interpretations, and other decisions under or with respect to
this Agreement shall be within the sole discretion of the Committee, may be made
at any time pursuant to this Agreement and shall be final, conclusive, and
binding upon all parties, including, without limitation, the Company, an
affiliate, you, your beneficiary, and any shareholder.

       

      (c)           No
member of the Committee shall be liable for any action or determination made in
good faith with respect to this Agreement or any Award hereunder.

       

      5.           No Rights to
Service.  Nothing contained in this Agreement shall be
construed as giving Participant any right to be retained, in any position, as a
consultant or director of the Company or shall interfere with or restrict in any
way the right of the Company, which are hereby expressly reserved, to remove,
terminate or discharge Participant at any time for any reason
whatsoever.

       

      6.           Withholding
Taxes.  The Company may withhold from any amounts payable under
the Agreement such federal, state and local taxes as may be required to be
withheld pursuant to any applicable law or regulation.

       

      7.           Governing
Law.  The interpretation, construction and performance of this
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of New York without regard to the principle of conflicts of
laws.

       

      8.           Entire Agreement;
Amendments.  The Agreement states the entire agreement and
understanding of the parties on the subject matter of the Agreement and
supersedes all previous agreements, arrangements, communications, and
understandings relating to that subject matter.  The Agreement may be
amended, modified, superseded, or canceled, and any of the terms thereof may be
waived, only by a written document signed by each party to the Agreement or, in
the case of waiver, by the party or parties waiving compliance.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      9.           Counterparts.  The
Agreement may be signed in counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument.

       

      
        
          
            
              	 	
                      The
      Penn Traffic Company

                    
	 	 
	 	
                      By:

                    	 
      
	 	 
      	
                      Name:

                    
	 	 
      	
                      Title:
      President and Chief Executive
Officer

                    


            

          

        

      

      


      AGREED
TO AND ACCEPTED BY:

       

      
        
          
            	 
      	 
      
	 
      	 
      
	
                    Dated:  __________,
      2009