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                                                                   EXHIBIT 10.27


                          REGISTRATION RIGHTS AGREEMENT


         REGISTRATION RIGHTS AGREEMENT dated as of June 29, 1999 (this
"Agreement"), by and among THE PENN TRAFFIC COMPANY, a Delaware corporation (the
"Company"), and the Holders (as hereinafter defined) of Registrable Securities
(as hereinafter defined) who are parties to this Agreement.

         This Agreement is being entered into in accordance with the Plan (as
hereinafter defined) in connection with the acquisition of Securities (as
hereinafter defined) by certain holders named on the signature page to this
Agreement (the "Original Holders") pursuant to the Plan. Each Original Holder
owns the aggregate amounts of Securities specified with respect to such Original
Holder in Schedule A hereto as such Schedule A may be amended from time to time.

         To induce the holders of Registrable Securites (as hereinafter defined)
to vote in favor of the Plan, the Company has undertaken to register the
Registrable Securities under the Securities Act (as hereinafter defined) and to
take certain other actions with respect to the Registrable Securities. This
Agreement sets forth the terms and conditions of such undertaking.

         In consideration of the premises and the mutual agreements set forth
herein, the parties hereto hereby agree as follows:

         1. Definitions. Unless otherwise defined herein, capitalized terms used
herein and in the recitals above shall have the following meanings:

         "Affiliate" of a Person means any Person that controls, is under common
control with, or is controlled by, such other Person. For purposes of this
definition, "control" means the ability of one Person to direct the management
and policies of another Person.

         "Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to be
closed.

         "Commission" means the United States Securities and Exchange
Commission, or any successor agency.

         "Common Stock" means the Common Stock, $0.01 par value, of the Company,
to

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be issued pursuant to the Plan, and includes any securities of the Company
issued or issuable with respect to such securities by way of a stock split,
recapitalization, merger, consolidation or other reorganization or otherwise.

         "Effective Date" means the effective date of the Plan pursuant to the
terms thereof.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder, or any similar or successor statute.

         "Expenses" means all expenses incident to the Company's performance of
or compliance with its obligations under this Agreement, including, without
limitation, all registration, filing, listing, securities exchange and NASD
fees, all fees and expenses of complying with state securities or blue sky laws
(including fees, disbursements and other charges of counsel for the underwriters
in connection with blue sky filings), all word processing, duplicating and
printing expenses, messenger and delivery expenses, all rating agency fees, the
fees, disbursements and other charges of counsel for the Company and of its
independent public accountants, including the expenses incurred in connection
with "comfort" letters required by or incident to such performance and
compliance, any fees and disbursements of underwriters customarily paid by
issuers and sellers of securities and the reasonable fees and disbursements of
one firm of counsel (per registration prepared) chosen by the Holders of a
majority of the outstanding Registrable Securities included in such Registration
Statement with respect to disclosure matters, but excluding underwriting
discounts and commissions and applicable transfer taxes, if any, which
discounts, commissions and transfer taxes shall be borne by the seller or
sellers of Registrable Securities in all cases.

         "Holders" means (i) the Original Holders and (ii) any transferees of
the Registrable Securities whose Securities continue to be Registrable
Securities, each of whom will be bound by the terms of this Agreement.

         "Initial Shelf Registration" has the meaning set forth in Section 2
hereof.

         "NASD" means the National Association of Securities Dealers, Inc.

         "Person" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint stock company, trust,
unincorporated organization, governmental or regulatory body or subdivision
thereof or other entity.

         "Plan" means the Joint Plan of Reorganization of The Penn Traffic
Company, Dairy Dell, Inc., Big M Supermarkets, Inc. and Penny Curtiss Baking
Company, Inc. under Chapter 11 of the United States Bankruptcy Code filed with
the United States Bankruptcy Court for the District of Delaware and confirmed by
such court on May 27, 1999, as the same may be

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amended, modified or supplemented from time to time in accordance with the terms
thereof.

         "Public Offering" means a public offering and sale of securities
pursuant to an effective registration statement under the Securities Act.

         "Registrable Securities" means the Securities held by the Original
Holders (and Transferees of such Securities which are "Holders" hereunder);
provided, however , that Registrable Securities shall cease to be Registrable
Securities (i) upon any sale or distribution thereof pursuant to a registration
statement; (ii) if the Holder thereof is permitted to sell such securities
without volume restriction under the Securities Act and any state securities
laws; or (iii) upon the receipt by a Holder of Securities of an opinion,
reasonably satisfactory in form and substance to such Holder, by legal counsel
reasonably acceptable to such Holder, to the effect that the public sale of such
Securities without restriction under the Securities Act and any state securities
laws does not require the registration of such Securities under the Securities
Act and any state securities laws.

         "Registration Statement" means a registration statement filed with the
Commission under the Securities Act.

         "Securities" means each of the following: (1) a class comprising shares
of Common Stock held as of the date hereof by the stockholders party hereto; (2)
a class comprising (a) Senior Notes held as of the date hereof by the
noteholders party hereto and (b) securities issued or issuable in respect of the
Senior Notes issued, issuable or held pursuant to clause (2)(a) above by way of
interest payments or otherwise; and (3) a class comprising (a) Warrants held as
of the date hereof by the warrantholders party hereto and (b) securities issued
or issuable in respect of the Warrants issued, issuable or held pursuant to
clause (3)(a) above by way of exercise or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise.

         "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder, or any similar or successor statute.

         "Senior Notes" means the 11% Senior Notes due June 29, 2009 of the
Company.

         "Subsequent Shelf Registration" has the meaning set forth in Section 2
hereof.

         "Transfer" means any transfer, sale, assignment, pledge, hypothecation
or other disposition of any interest. "Transferor" and "Transferee" have
correlative meanings.

         "Warrants" means the Warrants of the Company with an exercise price of
$18.30 per share of Common Stock issued pursuant to the Warrant Agreement dated
as of the date

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hereof between the Company and Harris Trust and Savings Bank, as warrant agent.

         2. Registration Under the Securities Act.

                  (a) Initial Shelf Registration. The Company shall (i) cause to
         be filed as soon as practicable, but not later than 45 days after the
         Effective Date (or such longer time up to 90 days after the Effective
         Date as may be required for the Company to prepare the necessary
         financial statements), a Registration Statement for an offering to be
         made on a continuous basis pursuant to Rule 415 under the Securities
         Act (the "Initial Shelf Registration") covering all of the Registrable
         Securities and providing for the sale of the Registrable Securities by
         the Holders thereof and (ii) use its commercially reasonable best
         efforts to have such Initial Shelf Registration declared effective by
         the Commission as promptly as practicable thereafter.

                  (b) Subsequent Shelf Registrations. If the Company determines
         to terminate the effectiveness of the Initial Shelf Registration prior
         to the end of the Effectiveness Period (as defined in Section 2(d)
         hereof), then, subject to the provisions of this Agreement, prior to
         such termination the Company shall file, and shall use its commercially
         reasonable best efforts to cause the Commission to declare effective, a
         subsequent Registration Statement for an offering to be made on a
         continuous basis pursuant to Rule 415 under the Securities Act (a
         "Subsequent Shelf Registration") covering all of the Registrable
         Securities which then remain outstanding. The Subsequent Shelf
         Registration shall be filed by the Company at such time, subject to the
         provisions of this Agreement, prior to the termination of the
         effectiveness of the Initial Shelf Registration which is reasonably
         calculated to cause the Subsequent Shelf Registration to become
         effective on or before the date on which the effectiveness of the
         Initial Shelf Registration terminates.

                  (c) Amendments to Initial Shelf Registration or Subsequent
         Shelf Registrations. If the Initial Shelf Registration (except as
         provided in Section 2(b)) or any Subsequent Shelf Registration ceases
         to be effective for any reason at any time during the Effectiveness
         Period (as defined in Section 2(d) hereof) for any reason (other than
         because of the sale of all of the Registrable Securities covered
         thereby or all of such Securities no longer constituting Registrable
         Securities), the Company shall use its commercially reasonable best
         efforts to obtain the prompt withdrawal of any order suspending the
         effectiveness thereof or take such other actions as may be necessary to
         reinstate the effectiveness thereof, and in any event shall, within 60
         days of such cessation of effectiveness, either (i) amend such Initial
         Shelf Registration or Subsequent Shelf Registration in a manner
         reasonably calculated to obtain the withdrawal of the order suspending
         the effectiveness thereof, or (ii) file a Subsequent Shelf Registration
         covering all Registrable Securities which remain unsold. (Each of the
         Initial Shelf Registration

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         and any Subsequent Shelf Registration filed pursuant to paragraph 2(b)
         or this paragraph 2(c) are referred to individually herein as a "Shelf
         Registration" and collectively as the "Shelf Registrations").

                  (d) Effectiveness Period. Subject to Section 3 hereof, the
         Company shall use its best efforts to keep the Shelf Registration
         (including the Initial Shelf Registration and/or any Subsequent Shelf
         Registration) continuously effective under the Securities Act for a
         period of five (5) years following the date on which the Initial Shelf
         Registration became effective (the "Effectiveness Period"), or such
         shorter period ending when all Registrable Securities covered by the
         Initial Shelf Registration have been sold; provided, however , that the
         Effectiveness Period shall be extended by any period during which a
         Shelf Registration is not in effect or during which sales have been
         suspended, whether pursuant to Section 3, Section 5(g) hereof or
         otherwise. If a Subsequent Shelf Registration is filed, pursuant to
         Section 2(b) or 2(c) hereof, the Company shall use its commercially
         reasonable best efforts to cause the Subsequent Shelf Registration to
         be declared effective as soon as practicable after such filing and to
         keep such Registration Statement continuously effective for a period
         after such effectiveness equal to the Effectiveness Period, less the
         aggregate number of days during which the Initial Shelf Registration or
         any Subsequent Shelf Registration was previously in effect. The intent
         of this provision is that the Shelf Registration (including the Initial
         Shelf Registration and/or any Subsequent Shelf Registration) shall be
         in effect for a number of days, in aggregate, equal to five (5) years;
         provided, however, that a Shelf Registration shall not be required to
         be maintained in effect after none of the Securities eligible to be
         included in a Shelf Registration are Registrable Securities.

                  (e) Supplements and Amendments. The Company shall supplement
         or amend the Shelf Registration if (i) required by the rules,
         regulations or instructions applicable to the registration form used
         for such Shelf Registration, (ii) otherwise required by the Commission,
         or (iii) requested to do so in writing by any Holder of Registrable
         Securities to the extent necessary to list such Holder as a selling
         securityholder in such registration statement.

         3. Blackout Periods. With respect to a Shelf Registration filed or to
be filed pursuant to Section 2 hereof, if a majority of the Board of Directors
of the Company shall determine, in its good faith reasonable judgment, that to
maintain the continued effectiveness of such Shelf Registration or to permit
such Shelf Registration to become effective (or if a Subsequent Shelf
Registration is otherwise required to be filed, to file such Shelf Registration)
would be significantly disadvantageous to the Company's financial condition,
business, operations or prospects (a "Disadvantageous Condition") in light of
the existence, or in anticipation, of (i) any acquisition or financing activity
involving the Company, or any subsidiary of the Company, including a proposed
public offering of debt or equity securities, (ii) an

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undisclosed material event, the public disclosure of which would have a material
adverse effect on the Company, (iii) a proposed material transaction involving
the Company or a substantial amount of its assets, or (iv) any other
circumstance or condition the disclosure of which would materially disadvantage
the Company, and the existence of which renders a Subsequent Shelf Registration
to be filed, or any Shelf Registration then filed or effective, inadequate as
failing to include material information, then the Company may, until such
Disadvantageous Condition no longer exists (but not with respect to more than
four occasions nor for more than 180 days in the aggregate nor involving more
than 60 days in the aggregate during any continuous 12-month period) cause such
Shelf Registration to be withdrawn and/or cause the right of Holders to make
dispositions of Registrable Securities pursuant to such Shelf Registration to be
suspended, or, in the case of a Subsequent Shelf Registration that has not yet
been filed, elect not to file such Subsequent Shelf Registration; provided,
however, that the Company may not take any such action until the elapse of 120
days following the commencement of the Effectiveness Period; and provided,
further, that the Company may not take any such action unless it simultaneously
takes similar action with respect to any other Registration Statements of the
Company that are then effective or that are contemplated or required to be
filed. If the Company determines to take any action pursuant to the preceding
sentence, the Company shall deliver a notice to each Holder of Registrable
Securities covered or to be covered under such Shelf Registration, which
indicates that the Shelf Registration is no longer effective or usable or will
not be filed. Upon the receipt of any such notice, such Persons shall forthwith
discontinue any sale of Registrable Securities pursuant to such Shelf
Registration and any use of the prospectus contained in such Shelf Registration.
If any Disadvantageous Condition shall cease to exist, the Company shall
promptly notify any Holders who shall have ceased selling Registrable Securities
pursuant to an effective Shelf Registration as a result of such Disadvantageous
Condition, indicating such cessation and disclosing in reasonable detail the
nature and outcome of such Disadvantageous Condition. The Company shall, if any
Shelf Registration required to be filed or maintained under this Agreement has
been withdrawn or not filed, file promptly, at such time as it in good faith
deems the earliest practicable time, a new Shelf Registration covering the
Registrable Securities that were covered by such withdrawn Shelf Registration or
to be covered by such unfiled Shelf Registration.

         4. Expenses. The Company shall promptly pay all Expenses in connection
with any registration initiated pursuant to Section 2 or Section 3 hereof,
whether or not such registration becomes effective.

         5. Registration Procedures. If and whenever the Company is required to
effect any registration under the Securities Act as provided in Section 2
hereof, the Company shall, as expeditiously as possible (subject to Section 3
hereof):

                  (a) promptly prepare and file with the Commission the
         requisite registration statement to effect such registration and,
         subject to the provisions of this Agreement, thereafter use its
         commercially reasonable best efforts to cause such registration
         statement

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         to become effective; provided, however, that the Company may
         discontinue any registration of its securities that are not Registrable
         Securities at any time prior to the effective date of the registration
         statement relating thereto;

                  (b) prepare and file with the Commission such amendments and
         supplements to such registration statement and the prospectus used in
         connection therewith as may be necessary to keep such registration
         statement effective and to comply with the provisions of the Securities
         Act with respect to the offering of all Registrable Securities covered
         by such registration statement until the end of the Effectiveness
         Period, subject to the provisions of this Agreement, or, if earlier,
         such time as all of such Registrable Securities have been disposed of
         in accordance with the method of disposition set forth in such
         registration statement;

                  (c) furnish to each seller of Registrable Securities covered
         by such registration statement such number of copies of such
         registration statement and of each amendment and supplement thereto (in
         each case including all exhibits and any documents incorporated by
         reference), such number of copies of the prospectus contained in such
         registration statement (including each preliminary prospectus, each
         final prospectus and any supplement to any prospectus) and any other
         prospectus filed under Rule 424 under the Securities Act, in conformity
         with the requirements of the Securities Act, and such other documents,
         as such seller may reasonably request in writing;

                  (d) use its commercially reasonable best efforts (i) to
         register or qualify all Registrable Securities and other securities
         covered by such registration statement under such other securities or
         blue sky laws of such states or other jurisdictions of the United
         States of America as the Holders of a majority of the Registrable
         Securities covered by such registration statement shall reasonably
         request in writing, (ii) to keep such registration or qualification in
         effect for so long as such registration statement remains in effect and
         (iii) to take any other action that may be reasonably necessary or
         advisable to enable the sellers of Registrable Securities to consummate
         the disposition in such jurisdictions of the securities to be sold by
         such sellers, except that the Company shall not for any such purpose be
         required to qualify generally to do business as a foreign corporation
         in any jurisdiction wherein it would not but for the requirements of
         this subsection (d) be obligated to be so qualified, to subject itself
         to taxation in such jurisdiction or to consent to general service of
         process in any such jurisdiction;

                  (e) use its commercially reasonable best efforts to cause all
         Registrable Securities covered by such registration statement to be
         registered with or approved by such other federal or state governmental
         agencies or authorities as may be necessary in the opinion of counsel
         to the Company and counsel to the sellers of Registrable Securities to
         enable such sellers to consummate the offering of such Registrable
         Securities;

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                  (f) use its good faith efforts to obtain and, if obtained,
         furnish a copy to each seller of Registrable Securities of

                                    (i) an opinion of counsel for the Company,
                  dated the effective date of such registration statement,
                  reasonably satisfactory in form and substance to counsel to
                  the Holders chosen by Holders of a majority of the Registrable
                  Securities being registered, and

                                    (ii) a "comfort" letter, dated the effective
                  date of such registration statement, signed by the independent
                  public accountants who have certified the Company's financial
                  statements included or incorporated by reference in such
                  registration statement, reasonably satisfactory in form and
                  substance to counsel to the Holders chosen by Holders of a
                  majority of the Registrable Securities being registered,

         in each case, covering substantially the same matters with respect to
         such registration statement (and the prospectus included therein) and,
         in the case of the accountants' comfort letter, with respect to events
         subsequent to the date of such financial statements and matters
         contained in such registration statement, as are customarily covered in
         opinions of issuer's counsel and in accountants' comfort letters
         delivered to selling securityholders in connection with the sale of
         securities pursuant to "shelf" registration statements;

                  (g) notify the sellers of Registrable Securities under the
         Shelf Registration (providing, if requested by any such Persons,
         confirmation in writing) as soon as practicable after becoming aware
         of: (A) the filing of any prospectus or prospectus supplement or the
         filing or effectiveness (or anticipated date of effectiveness) of such
         registration statement or any post-effective amendment thereto; (B) any
         request by the Commission for amendments or supplements to such
         registration statement or the related prospectus or for additional
         information; (C) the issuance by the Commission of any stop order
         suspending the effectiveness of such registration statement or the
         initiation of any proceedings for the purpose; (D) the receipt by the
         Company of any notification with respect to the suspension of the
         qualification or registration (or exemption therefrom) of any
         Registrable Securities for sale in any jurisdiction in the United
         States or the initiation or threatening of any proceeding for such
         purposes; or (E) the happening of any event that makes any statement
         made in such registration statement or in any related prospectus,
         prospectus supplement, amendment or document incorporated therein by
         reference untrue in any material respect or that requires the making of
         any changes in such registration statement or in any such prospectus,
         supplement, amendment or other such document so that it will not
         contain any untrue statement of a material fact or omit to state any

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         material fact required to be stated therein or necessary to make the
         statements therein (in the case of any prospectus in the light of the
         circumstances under which they were made) not misleading;

                  (h) otherwise comply with all applicable rules and regulations
         of the Commission and any other governmental agency or authority having
         jurisdiction over the offering, and make available to its security
         holders, as soon as reasonably practicable, an earnings statement
         covering the period of at least twelve months, but not more than
         eighteen months, beginning with the first full calendar month after the
         effective date of such registration statement, which earnings statement
         shall satisfy the provisions of Section 11(a) of the Securities Act and
         Rule 158 promulgated thereunder;

                  (i) enter into customary agreements and take all such other
         reasonable actions in connection therewith in order to expedite or
         facilitate the disposition of the Registrable Securities included in
         such registration statement;

                  (j) make every reasonable effort to obtain the withdrawal of
         any order or other action suspending the effectiveness of any such
         registration statement or suspending the qualification or registration
         (or exemption therefrom) of the Registrable Securities for sale in any
         jurisdiction;

                  (k) if any event described in subsection (g) hereof occurs,
         use its best efforts (subject to Section 3 hereof) to cooperate with
         the Commission to prepare, as soon as practicable, any amendment or
         supplement to such registration statement or such related prospectus in
         order that such registration statement and prospectus, as so amended or
         supplemented, shall not include any 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, in light of the circumstances
         under which they were made, not misleading, or to take other action
         that may have been requested by the Commission; and

                  (l) use its commercially reasonable best efforts to cause all
         such Registrable Securities covered by such registration statement to
         be listed on any national securities exchange or included in any
         automated quotation system on which securities of the same class issued
         by the Company are then listed or included (if the listing or inclusion
         of such Registrable Securities is then permitted under the rules of
         such exchange or interdealer quotation system).

         It shall be a condition precedent to the obligations of the Company to
take action pursuant to this Agreement that the selling Holders shall furnish to
the Company in writing such information regarding themselves and the Registrable
Securities held by them, and the intended method of disposition of such
securities, as shall be required to effect the registration of their Registrable
Securities.

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         Following a registration pursuant to Section 2 hereof, each Holder
agrees that as of the date that a final prospectus is made available to it for
distribution to prospective purchasers of Registrable Securities it shall cease
to distribute copies of any preliminary prospectus prepared in connection with
the offer and sale of such Registrable Securities. Each Holder further agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in subsection (g) of this Section 5, such Holder shall
forthwith discontinue such Holder's disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable Securities
until such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by subsection (k) of this Section 5 and, if so directed
by the Company, shall deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in such Holder's possession of
the prospectus relating to such Registrable Securities current at the time of
receipt of such notice.

         6. Preparation; Reasonable Investigation.

                  (a) Registration Statements. In connection with the
         preparation and filing of each registration statement under the
         Securities Act pursuant to this Agreement, the Company shall give a
         representative designated by Holders of a majority of the Registrable
         Securities registered under such registration statement (the
         "Representative"), the underwriters, if any, and its respective counsel
         and accountants the reasonable opportunity to participate in the
         preparation of such registration statement, each prospectus included
         therein or filed with the Commission, and each amendment thereof or
         supplement thereto, and shall give each of them such reasonable access
         to its books and records and such reasonable opportunities to discuss
         the business of the Company with its officers and the independent
         public accountants who have certified its financial statements as shall
         be necessary, in the reasonable opinion of any such Representative's
         and such underwriters' respective counsel, to conduct a reasonable
         investigation within the meaning of the Securities Act.

                  (b) Confidentiality. Each Holder of Registrable Securities
         shall maintain the confidentiality of any confidential information
         received from or otherwise made available by the Company to such Holder
         of Registrable Securities pursuant to this Agreement and identified in
         writing by the Company as confidential and shall enter into such
         confidentiality agreements as the Company shall reasonably request.
         Information that (i) is or becomes available to a Holder of Registrable
         Securities from a public source, (ii) is disclosed to a Holder of
         Registrable Securities by a third-party source whom the Holder of
         Registrable Securities reasonably believes has the right to disclose
         such information or (iii) is or becomes required to be disclosed by a
         Holder of Registrable Securities by law, including, but not limited to,
         administrative or court orders, shall not be deemed to be confidential

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         information for purposes of this Agreement; provided, however, that to
         the extent sufficient time is available prior to such disclosure being
         required to be made pursuant to clause (iii) hereof, the Holders of
         Registrable Securities shall (to the extent not legally prohibited from
         doing so) promptly notify the Company of any request for disclosure and
         any proposed disclosure pursuant to such clause (iii). The Holders of
         Registrable Securities shall not grant access, and the Company shall
         not be required to grant access, to information under this Section 6 to
         any Person who will not agree to maintain the confidentiality (to the
         same extent a Holder is required to maintain the confidentiality) of
         any confidential information received from or otherwise made available
         to it by the Company or the holders of Registrable Securities under
         this Agreement and identified in writing by the Company as
         confidential.

         7. Indemnification.

                  (a) Indemnification by the Company. In connection with any
         registration statement filed by the Company pursuant to Section 2
         hereof, the Company shall, and hereby agrees to, indemnify and hold
         harmless, each Holder and seller of any Registrable Securities covered
         by such registration statement and each other Person, if any, who
         controls such Holder or seller for purposes of the Securities Act or
         the Exchange Act, and their respective directors, officers, partners,
         agents and Affiliates (each, a "Company Indemnitee" for purposes of
         this Section 7(a)), against any losses, claims, damages, liabilities
         (or actions or proceedings, whether commenced or threatened, in respect
         thereof and whether or not such Company Indemnitee is a party thereto),
         joint or several, and expenses, including, without limitation, the
         reasonable fees, disbursements and other charges of legal counsel and
         reasonable out-of-pocket costs of investigation, to which such Company
         Indemnitee may become subject under the Securities Act or otherwise
         (collectively, a "Loss" or "Losses"), insofar as such Losses arise out
         of or are based upon any untrue statement or alleged untrue statement
         of any material fact contained in any registration statement under
         which Registrable Securities were registered pursuant to this
         Agreement, any preliminary prospectus, final prospectus or summary
         prospectus contained therein, or any amendment or supplement thereto,
         including any documents incorporated by reference in any of the
         foregoing (collectively, "Offering Documents"), or any omission or
         alleged omission to state therein a material fact required to be stated
         therein or necessary to make the statements therein in the light of the
         circumstances in which they were made not misleading; provided,
         however, that the Company shall not be liable in any such case 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
         made in such Offering Documents in reliance upon and in conformity with
         written information furnished to the Company in writing by or on behalf
         of such Company

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         Indemnitee specifically stating that it is expressly for use therein.
         Such indemnity shall remain in full force and effect regardless of any
         investigation made by or on behalf of such Company Indemnitee and shall
         survive the transfer of such securities by such Company Indemnitee. The
         Company shall also indemnify any underwriters of the Registrable
         Securities, their officers, directors and employees, and each Person
         who controls any such underwriter (within the meaning of the Securities
         Act and the Exchange Act) to the same extent as provided above with
         respect to the indemnification of the Holders of Registrable
         Securities.

                  (b) Indemnification by the Sellers. In connection with any
         registration statement filed by the Company pursuant to Section 2
         hereof in which a Holder has registered for sale Registrable
         Securities, each such Holder or seller of Registrable Securities,
         severally and not jointly, shall, and hereby agrees to, indemnify and
         hold harmless the Company and each of its directors, officers,
         employees and agents, each other Person who participates as an
         underwriter in the offering or sale of such securities, each other
         Person, if any, who controls the Company, any such underwriter and each
         other seller (within the meaning of the Securities Act) and such
         underwriter's or other seller's directors, officers, stockholders,
         partners, employees, agents and affiliates (each a "Holder Indemnitee"
         for purposes of this Section 7(b)), against all Losses insofar as such
         Losses arise out of or are based upon any untrue statement or alleged
         untrue statement of a material fact contained in any Offering Documents
         or any omission or alleged omission to state therein a material fact
         required to be stated therein or necessary to make the statements
         therein in the light of circumstances in which they were made not
         misleading, if such untrue statement or alleged untrue statement or
         omission or alleged omission was made in reliance upon and in
         conformity with written information furnished to the Company by or on
         behalf of such Holder or seller of Registrable Securities specifically
         stating that it is expressly for use therein; provided, however, that
         the liability of such indemnifying party under this Section 7(b) shall
         be limited to the amount of the net proceeds received by such
         indemnifying party in the offering giving rise to such liability. Such
         indemnity shall remain in full force and effect, regardless of any
         investigation made by or on behalf of the Holder Indemnitee and shall
         survive the transfer of such securities by such Holder.

                  (c) Notices of Losses, etc. Promptly after receipt by an
         indemnified party of notice of the commencement of any action or
         proceeding involving a Loss referred to in the preceding subsections of
         this Section 7, such indemnified party will, if a claim in respect
         thereof is to be made against an indemnifying party, give written
         notice to the latter of the commencement of such action; provided,
         however, that the failure of any indemnified party to give notice as
         provided herein shall not relieve the indemnifying party of its
         obligations under the preceding subsections of this Section 7, except
         to the extent that the indemnifying party is actually prejudiced by
         such failure to give notice. In case any such action is brought against
         an indemnified party, the indemnifying party shall be entitled to
         participate in and, unless in such indemnified party's counsel's

                                       12
<PAGE>

         reasonable judgment a conflict of interest between such indemnified and
         indemnifying parties may exist in respect of such Loss, to assume and
         control the defense thereof, in each case at its own expense, jointly
         with any other indemnifying party similarly notified, to the extent
         that it may wish, with counsel reasonably satisfactory to such
         indemnified party, and after notice from such indemnifying party of its
         assumption of the defense thereof, the indemnifying party shall not be
         liable to such indemnified party for any legal or other expenses
         subsequently incurred by the latter in connection with the defense
         thereof other than reasonable costs of investigation. No indemnifying
         party shall be liable for any settlement of any such action or
         proceeding effected without its written consent, which shall not be
         unreasonably withheld, delayed or conditioned. No indemnifying party
         shall, without the consent of the indemnified party, consent to entry
         of any judgment or enter into any settlement which does not include as
         an unconditional term thereof the giving by the claimant or plaintiff
         to such indemnified party of a release from all liability in respect of
         such Loss or which requires action on the part of such indemnified
         party or otherwise subjects the indemnified party to any obligation or
         restriction to which it would not otherwise be subject.

                  (d) Contribution. If the indemnification provided for in this
         Section 7 shall for any reason be unavailable to an indemnified party
         under subsection (a) or (b) of this Section 7 in respect of any Loss,
         then, in lieu of the amount paid or payable under subsection (a) or (b)
         of this Section 7, the indemnified party and the indemnifying party
         under subsection (a) or (b) of this Section 7 shall contribute to the
         aggregate Losses (including legal or other expenses reasonably incurred
         in connection with investigating the same) in such proportion as is
         appropriate to reflect the relative fault of the Company and the
         sellers of Registrable Securities covered by the registration statement
         which resulted in such Loss or action in respect thereof, with respect
         to the statements, omissions or action which resulted in such Loss or
         action in respect thereof, as well as any other relevant equitable
         considerations. The relative fault 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 relates to information supplied by the indemnifying party or the
         indemnified party and the parties' relative intent, knowledge, access
         to information and opportunity to correct or prevent such untrue
         statement or omission. The parties hereto agree that it would not be
         just and equitable if contributions were to be determined by any method
         of allocation which does not take account of the equitable
         considerations referred to in this paragraph. 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 investigation 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
         was not guilty of such fraudulent

                                       13
<PAGE>

         misrepresentation. In addition, no Person shall be obligated to
         contribute hereunder any amounts in payment for any settlement of any
         action or Loss effected without such Person's consent.

                  (e) Indemnification Payments. The indemnification and
         contribution required by this Section 7 shall be made by periodic
         payments of the amount thereof during the course of any investigation
         or defense, as and when bills are received or any Loss is incurred.

         8. Registration Rights to Others. If the Company shall at any time
hereafter provide to any holder of any securities of the Company rights with
respect to the registration of such securities under the Securities Act or the
Exchange Act, such rights shall not be in conflict with or adversely affect any
of the rights provided in this Agreement to the holders of Registrable
Securities.

         9. Adjustments Affecting Registrable Securities.

         The Company shall not effect or permit to occur any combination,
subdivision or reclassification of Registrable Securities that would materially
adversely affect the ability of the Holders to include such Registrable
Securities in any registration of its securities under the Securities Act
contemplated by this Agreement or the marketability of such Registrable
Securities under any such registration or other offering.

         10. Rule 144 and Rule 144A. Prior to the expiration of the
Effectiveness Period, the Company shall take all actions reasonably necessary to
enable Holders to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
under the Securities Act, as such Rule may be amended from time to time, (b)
Rule 144A under the Securities Act, as such Rule may be amended from time to
time, or (c) any similar rules or regulations hereafter adopted by the
Commission, including, without limiting the generality of the foregoing, filing
on a timely basis all reports required to be filed under the Exchange Act. Upon
the request of any Holder, the Company shall deliver to such Holder a written
statement as to whether it has complied with such requirements. This paragraph
is in addition to and not in derogation of any rights the Holders may have under
any other agreement.

         11. Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company shall have obtained the prior written consent of the Holders
of at least a majority of the Registrable Securities affected by such amendment,
modification or waiver.

                                       14
<PAGE>

         12. Nominees for Beneficial Owners. In the event that any Registrable
Security is held by a nominee for the beneficial owner thereof, the beneficial
owner thereof may, at its election in writing delivered to the Company, be
treated as the Holder of such Registrable Security for purposes of any request
or other action by any Holder or Holders pursuant to this Agreement or any
determination of the number or percentage of Registrable Securities held by any
Holder or Holders contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.

         13. Assignment. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
successors and assigns including any successor by merger to the Company. Any
Holder may assign to any permitted Transferee of its Registrable Securities
holding Registrable Securities its rights and obligations under this Agreement,
provided that such Transferee shall deliver to the Company prior to such
assignment a written instrument in which such Transferee agrees to be bound by
this Agreement as if it were an original party hereto, whereupon such Transferee
shall for all purposes be deemed to be a Holder under this Agreement.

         14. Calculation of Percentage of Outstanding Registrable Securities.
For purposes of this Agreement, all references to an aggregate number of
Registrable Securities or a percentage thereof shall be calculated based upon
the aggregate number of Registrable Securities of such class outstanding at the
time such calculation is made and shall exclude any Registrable Securities or
shares of Common Stock, as the case may be, owned by the Company or any
subsidiary of the Company.

         15. Miscellaneous.

                  (a) Further Assurances. Each of the parties hereto shall
         execute such documents and other papers and perform such further acts
         as may be reasonably required or desirable to carry out the provisions
         of this Agreement and the transactions contemplated hereby.

                  (b) Headings. The headings in this Agreement are for
         convenience of reference only and shall not control or affect the
         meaning or construction of any provisions hereof.

                  (c) Remedies. Each Holder, in addition to being entitled to
         exercise all rights granted by law, including recovery of damages, will
         be entitled to specific performance of its rights under this Agreement.
         The Company agrees that monetary damages would not be adequate
         compensation for any loss incurred by reason of a breach by it of the
         provisions of this Agreement and the Company hereby agrees to waive the
         defense in any

                                       15
<PAGE>

         action for specific performance that a remedy at law would be adequate.

                  (d) Entire Agreement. This Agreement constitutes the entire
         agreement and understanding of the parties hereto in respect of the
         subject matter contained herein, and there are no restrictions,
         promises, representations, warranties, covenants, or undertakings with
         respect to the subject matter hereof, other than those expressly set
         forth or referred to herein. This Agreement supersedes all prior
         agreements and understandings between the parties hereto with respect
         to the subject matter hereof.

                  (e) Notices. Any notices or other communications to be given
         hereunder by any party to another party shall be in writing, shall be
         delivered personally, by telecopy, by certified or registered mail,
         postage prepaid, return receipt requested, or by Federal Express or
         other comparable delivery service, to the address of the party set
         forth on Schedule B hereto or to such other address as the party to
         whom notice is to be given may provide in a written notice to the other
         parties hereto, a copy of which shall be on file with the Secretary of
         the Company. Notice shall be effective when delivered if given
         personally, when receipt is acknowledged if telecopied, three days
         after mailing if given by registered or certified mail as described
         above, and one business day after deposit if given by Federal Express
         or comparable overnight delivery service.

                  (f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
         CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
         APPLICABLE TO AGREEMENTS MADE TO BE PERFORMED ENTIRELY IN SUCH STATE,
         WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY AND THE
         PARTIES EACH HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW
         YORK STATE COURT SITTING IN THE CITY OF NEW YORK OR ANY FEDERAL COURT
         SITTING IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
         PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH
         IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
         GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
         COURTS, IN EACH CASE SOLELY IN RESPECT OF ANY SUIT, ACTION OR
         PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. NOTHING HEREIN
         SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY MANNER
         PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
         AGAINST THE COMPANY IN ANY OTHER JURISDICTION.

                  (g) Severability. If one or more of the provisions contained
         herein, or the application thereof in any circumstance, is held
         invalid, illegal or unenforceable in any

                                       16
<PAGE>

         respect, for any reason, the validity, legality and enforceability of
         the remaining provisions contained herein shall not be in any way
         affected or impaired thereby, and the provision held to be invalid,
         illegal or unenforceable shall be reformed to the minimum extent
         necessary, and in a manner as consistent with the purposes thereof as
         is practicable, so as to render it valid, legal and enforceable, it
         being intended that all rights and obligations of the parties hereunder
         shall be enforceable to the fullest extent permitted by law.

                  (h) Counterparts. This Agreement may be executed in two or
         more counterparts, each of which shall be deemed an original but all of
         which shall constitute one and the same Agreement.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

                                         THE PENN TRAFFIC COMPANY


                                         By: /s/ Martin A. Fox
                                             -----------------
                                             Name:
                                             Title:


                                         HOLDERS:

                                         QUANTUM PARTNERS LDC


                                         By: /s/ Mark Sonnino
                                             ----------------
                                             Name:
                                             Title:


                                         QUOTA FUND NV


                                         By: /s/ Mark Sonnino
                                             ----------------
                                             Name:
                                             Title:

                                       17

<PAGE>

                                   SCHEDULE A
                                   ----------

<TABLE>
<CAPTION>

                         Number of
                         Shares of          Principal Amount        Number of
Name                     Common Stock       of Senior Notes         Warrants
----                     ------------       ---------------         --------
<S>                      <C>                  <C>                      <C>
Quantum Partners LDC     7,854,032            41,335,109               0

Quota Fund NV            1,178,736             6,203,607               0
</TABLE>

                                       18

<PAGE>

                                   SCHEDULE B
                                   ----------

To the Company:

The Penn Traffic Company
1200 State Fair Boulevard
Syracuse, NY 13221-4737
Attention: Mr. Francis D. Price, Jr.
Telephone Number:   (315) 461-2347
Facsimile Number:   (315) 461-2532


To the Holders:

c/o  Satellite Fund Management, LLC
888 Seventh Avenue
33rd Floor
New York, New York  10106
Attention : Mr. Mark Sonnino
Telephone Number:  (212) 397-5541
Facsimile Number:  (212) 586-4537