Document:

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                                                                   Exhibit 10.2c

                                                                  EXECUTION COPY

                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

            This Amended and Restated Employment Agreement ("AGREEMENT") is
entered into as of this 31st day of January, 2000, by and between The Penn
Traffic Company (the "COMPANY") and Joseph V. Fisher ("EXECUTIVE").

            WHEREAS, Executive entered into an Employment Agreement (the
"Employment AGREEMENT") with the Company on October 30, 1998;

            WHEREAS, as part of the Company's reorganization, which was
completed on June 29, 1999, Executive and the Company entered into an Amendment
to Employment Agreement on June 29, 1999 ("AMENDMENT NO. 1");

            WHEREAS, Executive and the Company entered into Amendment No. 2 to
Employment Agreement on December 2, 1999 ("AMENDMENT NO. 2", and together with
the Employment Agreement and Amendment No. 1, the "AMENDED AGREEMENT"); and

            WHEREAS, Executive and the Company desire to further amend the
Amended Agreement and, for clarity, to amend and restate it in its entirety.

            NOW, THEREFORE, the parties hereby amend and restate the Employment
Agreement as follows:

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            1.    Employment.

                  (a) The Company hereby agrees that Executive shall, during the
Term (as defined), continue to act as President and Chief Executive Officer of
the Company.

                  (b) Executive hereby accepts his continued employment as the
President and Chief Executive Officer of the Company and agrees to continue to
provide to the Company his full-time services as President and Chief Executive
Officer of the Company, performing such duties as shall reasonably be required
of a President and Chief Executive Officer and otherwise on the terms and
subject to the conditions set forth in this Agreement. In such capacity,
Executive will report to, and serve under the direction of, the Board of
Directors of the Company (the "BOARD"). Throughout the Term (as hereinafter
defined), Executive shall devote his full working time and energy exclusively to
performing the services and duties of his employment hereunder to the best of
his ability and utilizing all of his skills, experience and knowledge. In
addition, Executive shall be a member of the Board. Other than services to be
rendered in connection with charitable activities and trade association
activities which do not interfere with Executive's day-to-day responsibilities
to the Company, without limiting the generality of Paragraph 6, Executive shall
not, directly or indirectly, engage in or participate in the operation or
management of, or render any services to, any other business, enterprise or
individual.

            2. Term. Executive's term of employment became effective on November
23, 1998 under the Employment Agreement (the "EFFECTIVE DATE") and will

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continue under this Agreement until the earlier of (i) January 31, 2002, (ii)
the date that Executive or the Company terminates his employment pursuant to
Paragraph 7, 8 or 9 or (iii) the occurrence of a Section 12 Change of Control
(as hereinafter defined) (the "TERM").

            3. Location of Employment. Executive shall render services primarily
at the Company's offices that are located in Syracuse, New York. Notwithstanding
the foregoing, Executive acknowledges and agrees that Executive's duties
hereunder will include travel outside the Syracuse, New York area, including
frequent travel to such geographic locations where the Company owns or operates
supermarkets or retail grocery stores, as well as other locations within and
outside the United States, to attend meetings and other functions as the
performance of Executive's duties hereunder may require.

            4.    Compensation.

                  (a) Base Salary. The Company shall increase Executive's base
salary as of the date of this Agreement to $1,000,000 per annum ("BASE SALARY")
for the period commencing on the date hereof and ending on the date this
Agreement is terminated in accordance with Paragraph 2. Executive's Base Salary
will be reviewed periodically by the Board and may be increased (but not
decreased) at such times if the Board, in its sole discretion, determines that
an increase is warranted. The Base Salary shall be paid in accordance with the
Company's standard payroll practices and will be subject to withholding and
other applicable taxes.

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                  (b) Discretionary Bonus. The Executive may receive, at the
sole discretion of the Board, a cash bonus (the "BONUS") as the Board shall
determine. The Board is not obligated to pay any Bonuses at any time to the
Executive. Notwithstanding the foregoing, the Company shall pay Executive on the
date hereof $250,000 in respect of the Bonus Executive is entitled to receive
for the fiscal year ending January 29, 2000. Such payment shall be made by wire
transfer to an account designated by Executive on the date hereof.

                  (c) Loan. The Company, on the Effective Date, provided the
Executive with a loan in the amount of $1,000,000 (the "LOAN"). The Loan is
evidenced by a non-negotiable full recourse 6% promissory note (the "NOTE") in
the form attached hereto as Exhibit A. As of the date hereof, the Loan and the
Note (and all interest accrued thereunder) are forgiven in their entirety, and
the Company shall have no claim whatsoever in relation to, and releases
Executive entirely from any payments or other obligations under, the Note and in
respect of the Loan (inclusive of accrued interest) and the Note shall be
returned to Executive marked "paid in full" promptly after the date hereof.
Executive shall be solely responsible for the payment of any taxes in connection
with forgiving such Loan.

                  (d) Options. Subject to the terms of the Company's 1999 Equity
Incentive Plan (the "EQUITY PLAN"), Executive was granted as of June 29, 1999,
fully-vested options to purchase 280,000 shares of the Common Stock, $.01 par
value per share (the "COMMON STOCK"), of the Company with an exercise price
equal to $18.30 per share. Such options are fully vested and generally must be
exercised on or

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before the tenth anniversary of the Effective Date. In addition, Executive was
granted as of September 22, 1999 options to purchase 140,000 shares of the
Common Stock with an exercise price equal to $8.75 per share. Such options shall
vest 20% as of September 22, 1999, and 20% on each of the four anniversaries
thereof. Such options generally must be exercised on or before the tenth
anniversary of such date. A copy of the Award Agreement for such options is
attached hereto as EXHIBIT B. To the extent permitted by the Internal Revenue
Code ("IRC"), such options qualify as incentive stock options under the IRC.

            5.    Fringe Benefits.

                  (a) Executive shall, from and after the Effective Date, have
the right to participate in the Company's medical, dental, disability, life and
other insurance plans maintained during the Term by the Company for executives
of the stature and rank of Executive, and any other plans and benefits, if any,
generally maintained by the Company for executives of the stature and rank of
Executive during the Term, in each case in accordance with the terms and
conditions of such plan as from time-to-time in effect (collectively referred to
herein as "FRINGE BENEFITS").

                  (b) Subject to the requirements of Executive's office,
Executive shall be entitled to four weeks annual vacation to be taken in
accordance with the vacation policy of the Company.

                  (c) The Company will, upon being provided with reasonable
supporting documentation thereof, promptly reimburse Executive for (i) actual,
ordinary and necessary travel and accommodation cost, entertainment and other

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business expenses incurred as a necessary part of discharging Executive's duties
hereunder, including, without limitation, allowance for one-time initiation fees
and annual dues for a membership in a country club of Executive's choice and
(ii) all legal fees and expenses incurred in connection with the negotiation of
this Agreement in the amount of $35,000.

            6.    No Competition; Confidentiality.

                  (a) Executive agrees that while this Agreement is in effect
and for a period of 12 months (with respect to the matters referred to in clause
(i) below) and 18 months (with respect to the matters referred to in clauses
(ii) and (iii) below) after the termination of this Agreement pursuant to
Paragraph 2 (the "TERMINATION DATE"), the Executive will not without the prior
written consent of the Company, as principal, agent, employee, employer,
consultant, stockholder (other than as the holder of shares of capital stock of
the Company or of not more than 2% of the shares of any other corporation),
director or co-partner, or in any other individual or representative capacity
whatsoever, directly or indirectly:

                        (i) engage in any way in any wholesale and/or retail
food business which operates in any state in the United States in which the
Company operates during the Term;

                        (ii) induce or attempt to induce any person who is in
the employ of the Company or any subsidiary thereof to leave the employ of the
Company or such subsidiary, or employ or attempt to employ any such person or
any person who

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at any time during the preceding twelve (12) months was in the employ of the
Company or any subsidiary thereof; or

                        (iii) induce or attempt to induce or assist any other
person, firm or corporation to do any of the actions referred to in (i) or (ii)
above (provided, that this Paragraph 6 shall not be interpreted so as to
prohibit the Executive from providing references for employees of the Company or
its subsidiaries or affiliates who have been solicited by an employee or
prospective employer without violation of (ii) above).

            Notwithstanding the foregoing, the provisions of this Section 6(a)
shall not apply if this Agreement is terminated by the Executive for Good
Reason.

                  (b) Executive agrees that while this Agreement is in effect
and for a period of three years following the Termination Date, he will not at
any time from and after the date hereof, divulge, furnish or make accessible to
any person, or himself make use of other than for the sole benefit of the
Company, any confidential or proprietary information of the Company obtained by
him while in the employ of the Company other than in connection with his
employment with the Company as provided hereunder, including, without
limitation, information with respect to any products, services, improvements,
formulas, designs, styles, processes, research, analyses, suppliers, customers,
methods of distribution or manufacture, contract terms and conditions, pricing,
financial condition, organization, personnel, business activities, budgets,
plans, objectives or strategies of the Company or its proprietary products or of
any subsidiary or affiliate of the Company and that he will, prior to or upon
the termination of his employment with the Company, return to the Company all
such confidential or non-public information, whether in written or other
physical form or stored electronically on computer disks or tapes or any other
storage medium, and all

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copies thereof, in his possession or custody or under his control; PROVIDED,
HOWEVER, that (x) the restrictions of this paragraph shall not apply to publicly
available information or information known generally to the public (without any
action on the part of the Executive prohibited by the restrictions of this
Paragraph), and (y) the Executive may disclose such information as may be
required pursuant to any subpoena or other lawful process issued pursuant to any
applicable law, rule or regulation.

            Notwithstanding the foregoing, in the event that Executive receives
a subpoena or other process or order which may require him to disclose any
confidential information, the Executive agrees (i) to notify the Company
promptly of the existence, terms and circumstances surrounding such process or
order, and (ii) to cooperate with the Company, at the Company's request and at
its expense, including, but not limited to, attorneys' fees and expenses, in
taking legally available steps to resist or narrow such process or order and to
obtain an order (or other reliable assurance reasonably satisfactory to the
Company) that confidential treatment will be given to such information as is
required to be disclosed.

                  (c) In view of the services which the Executive will perform
for the Company and its subsidiaries and affiliates, which are special, unique,
extraordinary and intellectual in character and will place him in a position of
confidence and trust with the customers and employees of the Company and its
subsidiaries and affiliates and will provide him with access to confidential
financial information, trade secrets, "know-how" and other confidential and
proprietary information of the Company and its subsidiaries and affiliates, and
recognizing the substantial sums paid and to be paid to the Executive pursuant
to the terms hereof, the Executive expressly acknowledges that the restrictive
covenants set forth in this Paragraph 6 are necessary in order to protect and
maintain the proprietary interests and other legitimate business

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interests of the Company and its subsidiaries and affiliates and that the
enforcement of such restrictive covenants will not prevent Executive from
earning a livelihood. The Executive acknowledges that the remedy at law for any
breach or threatened breach of this Paragraph 6 will be inadequate and,
accordingly, that the Company shall, in addition to all other available remedies
(including, without limitation, seeking damages sustained by reason of such
breach), be entitled to specific performance or injunctive relief without being
required to post bond or other security and without having to prove the
inadequacy of the available remedies at law.

            7. Grounds for Termination by Company. The Company may terminate
this Agreement and Executive's employment hereunder for "Cause". "Cause" shall
mean the termination of Executive because of (i) his willful and continued
failure (other than by reason of incapacity due to physical or mental illness)
to perform the material duties of his employment after notice from the Company
of such failure and his inability or unwillingness to correct such failure
(prospectively) within 30 days following such notice, (ii) his conviction of a
felony or plea of no contest to a felony or (iii) perpetration by Executive of a
material dishonest act of fraud against the Company or any subsidiary thereof;
PROVIDED, HOWEVER, that, before the Company may terminate the Executive for
Cause, the Board shall deliver to him a written notice of the Company's intent
to terminate him for Cause, including the reasons for such termination, and the
Company must provide him an opportunity to meet once with the Board prior to
such termination.

            8. Grounds for Termination by Executive. Executive may terminate
this Agreement and his employment hereunder for Good Reason (as

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hereinafter defined) by written notice to the Company setting forth the grounds
for termination with specificity. "Good Reason" shall mean (a) the failure to
elect or appoint the Executive as President and Chief Executive Officer and to
continue to elect or appoint Executive to the Board of Directors of the Company
or (b) the failure by the Company to pay any compensation or other amount due to
the Executive under this Agreement, which failure is not remedied within ten
(10) business days after written notice thereof is delivered to the Company by
Executive. Any termination for Good Reason shall be effective as of the business
day immediately following the date upon which the Company was required to (but
did not) remedy such failure.

            9.    Termination For Death or Disability.

                  (a) If during the Term, Executive should die, Executive's
employment shall be deemed to have terminated as of the date of death.

                  (b) If during the Term, Executive should suffer a disability
which, in fact, prevents Executive from substantially performing his duties
hereunder for a period of 180 consecutive days or 230 or more days in the
aggregate, in any period of 12 consecutive months, then and in any such event
the Company may terminate Executive's services hereunder by a written notice to
Executive setting forth the grounds for such termination with specificity, which
termination will take effect 30 days after such notice is given. Executive may
only be terminated for disability if the Company's termination notice is given
within 60 days following the end of the aforementioned 180- or 230-day period,
whichever the Company relies upon. The existence of Executive's disability for
the purposes of this Agreement shall be

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determined by a physician mutually selected by the Company and Executive, and
Executive agrees to submit to an examination by such physician for purposes of
such determination.

            10. Designation of Beneficiary or Beneficiaries. As to any payment
to be made under this Agreement to a beneficiary designated by Executive, it is
agreed that Executive shall designate such beneficiary (or beneficiaries) or
change his designation of such beneficiary (or beneficiaries) from time-to-time
by written notice to the Company. In the event Executive fails to designate a
beneficiary (or beneficiaries) as herein provided, any payments which are to be
made to Executive's designated beneficiary (or beneficiaries) under this
Agreement shall be made to Executive's widow, if any, during her lifetime,
thereafter to his issue, if any, including legally adopted children, and then to
Executive's personal representative.

            11. Effect of Company's Termination Other Than Under Paragraph 7 or
9 OR EFFECT OF EXECUTIVE'S TERMINATION UNDER PARAGRAPH 8. If (i) the Company
terminates Executive's employment under this Agreement for any reason other than
Cause, or other than due to his death or disability or (ii) Executive terminates
Executive's employment under this Agreement for Good Reason, then:

                  (a) The Company shall continue to pay to Executive his Base
Salary then in effect (in the manner in which Base Salary payments have
theretofore been paid) for a period equal to the number of months remaining from
the effective date of termination until January 31, 2002; PROVIDED, that if such
termination occurs between January 31, 2001 and January 31, 2002, such Base
Salary payments shall

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continue for 12 months from the date of termination. In addition, if a Section
12 Change of Control (as defined below) occurs prior to the Determination Date
(as defined below) but following such termination, then in the case of and
notwithstanding (i) the termination of this Agreement by the Company for any
reason other than Cause or (ii) the termination of this Agreement by the
Executive for Good Reason, the Company shall make the Change of Control Payment
as provided in Section 12 on the dates provided in such Section, LESS the amount
of Base Salary to be paid by the Company to Executive pursuant to this Section
11(a) with respect to any period following the date the Change of Control
Payment is made until the end of the Term.

                  (b) The Company shall continue to provide to the Executive the
benefits described in Paragraph 5(a) hereof for a period of 12 months from the
date of termination. If during Executive's employment hereunder a Change of
Control (as defined) (other than a Section 12 Change of Control) occurs, and
following such Change of Control, Executive resigns from his position with the
Company or, is terminated from employment with the Company within six months
from the date of such Change of Control, Executive shall be entitled to enter
into a consulting agreement with the Company providing for the Executive to
receive a lump sum payment in an amount equal to 24 months of Base Salary. For
purposes of this Agreement, "Change of Control" shall mean the occurrence of any
event where (i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person
shall be deemed to have "beneficial ownership" of all

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shares that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of 50% or more of the outstanding shares of common stock of the
Company or securities representing 50% or more of the combined voting power of
the Company's voting stock, (ii) the Company consolidates with or merges into
another person or conveys, transfers, sells or leases all or substantially all
of its assets to any person, or any person consolidates with or merges into the
Company, in either event pursuant to a transaction in which the outstanding
voting stock of the Company is changed into or exchanged for cash, securities or
other property, other than any such transaction between the Company and its
wholly owned subsidiaries (which wholly owned subsidiaries are United States
corporations), with the effect that any "person" becomes the "beneficial owner,"
directly or indirectly, of 50% or more of the outstanding shares of common stock
of the Company or securities representing 50% or more of the combined voting
power of the Company's voting stock or (iii) during any consecutive two-year
period, individuals who at the beginning of such period constituted the Board
(together with any new directors whose election by the Board, or whose
nomination for election by the Company's stockholders, was approved by a vote of
at least a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the directors then in office.

            12. Effect of Specified Change of Control Events. (a) If at any time
prior to the "Determination Date" (as defined below) the Company shall have
entered

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into a definitive agreement in respect of a "Section 12 Change of Control" (as
defined below) or a Section 12 Change of Control shall have occurred, then
Executive shall (assuming Executive has not voluntarily terminated this
Agreement for other than Good Reason or the Company has terminated this
Agreement for Cause, in either case prior to consummation) be entitled to
receive the "Change of Control Payment" (as defined below) on the date of the
occurrence or consummation of a Section 12 Change of Control irrespective of
whether the Term has expired or would have expired but for his termination
without Cause or for Good Reason in accordance with Section 2(i) hereof prior to
such date. If a Change of Control Payment is made to Executive, Executive shall
not be entitled to the payments described in Section 11(b) above. Upon
Executive's receipt of the Change of Control Payment in full (subject to offset
as set forth in Section 11(a)), this Agreement shall be terminated automatically
and Executive shall no longer be entitled to any further payments described
herein except for reimbursement of expenses contemplated by Section 5(c).

            For purposes of this Agreement, the following terms shall have the
following meanings:

                        (i) "Determination Date" shall mean the later of (x)
March 31, 2001 or (y) the date set forth in any engagement or similar agreement
entered into between the Company and an investment bank retained for purposes of
advising the Company in connection with any transaction that would constitute a
Change of Control for payment by the Company of a success or so-called "tail"
fee for any such transaction.

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                        (ii) "Section 12 Change of Control" shall have the same
meaning as clauses (i) and (ii) of the definition of "Change of Control" in
Section 11(b) above and shall also include an event that results in Byron
Allumbaugh, Kevin Collins, Thomas Harberts, Gabriel Nechamkin, Lief Rosenblatt,
Mark Sonnino and Peter Zurkow who, as of June 29, 1999, constituted the
independent directors of the Board, ceasing to constitute a majority of the
independent directors then in office.

                        (iii) "Change of Control Payment" shall mean an amount
equal to the greater of (I) Base Salary for the remainder of the Term (but not
less than one-year's Base Salary) and (II) $4,900,000, MINUS the SUM of (A) the
"in-the-money" value on the date of the occurrence of a Section 12 Change of
Control of the options granted to Executive on June 29, 1999 under Section 4(d)
hereof (I.E., 280,000 options MULTIPLIED by the DIFFERENCE between the (1)
closing price of the Common Stock on the Nasdaq National Market on the last
trading date immediately prior to the date of the occurrence of a Section 12
Change of Control (or if the transaction which triggers the Section 12 Change of
Control is a cash tender offer, the cash tender offer per share price) AND (2)
$18.30) PLUS (B) the "in-the-money" value on the date of the occurrence of a
Section 12 Change of Control of Executive's options granted on September 22,
1999 under Section 4(d) hereof that are vested and exercisable (I.E., up to
140,000 options MULTIPLIED by the DIFFERENCE between (1) the closing price of
the Common Stock on the Nasdaq National Market on the last trading date
immediately prior to the date of the occurrence of a Section 12 Change of
Control (or if the transaction which triggers

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the Section 11(c) Change of Control is a cash tender offer, the cash tender
offer per share price) AND (2) $8.75).

                  (b) GROSS-UP PAYMENT. In the event it shall be determined that
any payment or distribution of any type to or for the benefit of the Executive,
by the Company, any of its affiliates, any Person who acquires ownership or
effective control of the Company or ownership of a substantial portion of the
Company's assets (within the meaning of IRC ss. 280G and the regulations
thereunder) or any affiliate of such Person, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (the "TOTAL PAYMENTS"), would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "CODE"), or
any interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are collectively referred to as
the "EXCISE TAX"), then the Executive shall be entitled to receive an additional
payment (a "GROSS-UP PAYMENT") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Total Payments.

            13. EFFECT OF COMPANY'S TERMINATION FOR CAUSE, EXECUTIVE'S
Termination WITHOUT GOOD REASON, TERMINATION UPON DEATH OR DISABILITY. If the
Company terminates Executive's employment under this Agreement for Cause or
Executive terminates his employment under this Agreement other than for

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Good Reason, or if Executive's employment is terminated due to his death or
disability, then the Company shall continue to pay Executive (or his designated
beneficiary) his Base Salary through the effective date of termination.

            14. EXECUTIVE'S REPRESENTATIONS AND WARRANTIES. Executive represents
and warrants to the Company as follows:

                  (a) Executive has the unfettered right to enter into this
Agreement on the terms and subject to the conditions hereof, and Executive has
not done or permitted to be done anything which may curtail or impair any of the
rights granted to the Company herein.

                  (b) Neither the execution and delivery of this Agreement by
Executive nor the performance by Executive of any of Executive's obligations
hereunder constitute or will constitute a violation or breach of, or a default
under, any agreement, arrangement or understanding, or any other restriction of
any kind, to which Executive is a party or by which Executive is bound.

            15. INDEMNIFICATION, ETC. The Company agrees to hold harmless and
promptly indemnify Executive to the fullest extent permitted by law against all
damages and/or losses which Executive may suffer as a result of Executive's
services as, and/or for activities engaged in by Executive while Executive is,
an officer and/or employee and/or member of the Board of Directors of the
Company or any affiliate thereof, including either paying or reimbursing
Executive, promptly after request, for any reasonable and documented expenses
and all attorneys' fees and costs actually incurred by Executive in connection
with defending, or himself instituting and/or

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maintaining, any claim, action, suit or proceeding arising from circumstances to
which the Company's above indemnification relates; PROVIDED, HOWEVER, that no
such indemnification shall be paid for damages or losses incurred by Executive
that result from actions by Executive that Delaware law explicitly prohibits an
employer from indemnifying its directors or employees against, including,
without limitation, to the extent any such damages or losses arise through the
gross negligence, bad faith or misconduct of Executive or the breach by
Executive of any of Executive's obligations under or representations and
warranties made pursuant to this Agreement. This indemnity shall survive the
termination of this Agreement. The Company represents and warrants that it has
$30 million of director's and officer's insurance available on the date hereof
and that it will use its reasonable commercial efforts to maintain such policy
throughout the Term. The Company has obtained "tail" coverage under its existing
director's and officer's policy covering its current directors and officers for
any claims brought against them, which coverage extends for a period of not less
than six (6) years from June 29, 1999.

            16. Notices. Any notice, consent, termination or other communication
under this Agreement shall be in writing and shall be considered given on the
date when hand delivered or, if sent by registered or certified mail, on the
fifth day after such notice is mailed or, if sent by overnight courier
guaranteeing overnight delivery, on the day after such notice is so sent, in
each case to the parties at the following addresses (or at such other address as
a party may specify by notice in accordance with the provisions hereof to the
other):

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                        If to Executive, to Executive at:

                        Mr. Joseph V. Fisher
                        7654 Linkside Drive
                        Manlius, New York 13104

                        If to the Company:

                        The Penn Traffic Company
                        1200 State Fair Boulevard
                        Syracuse, New York 13221
                        Attn: Francis D. Price, General Counsel

            17. Complete Agreement and Modification. This Agreement contains a
complete statement of all the arrangements between the parties with respect to
Executive's employment by the Company, supersedes all existing agreements or
arrangements between them concerning Executive's employment (including the
Amended Agreement), and can only be amended or modified by a written instrument
signed by the Company and Executive.

            18. Severability Provisions. If any provision of this Agreement is
declared invalid, illegal or incapable of being enforced by any court of
competent jurisdiction, all of the remaining provisions of this Agreement shall
nevertheless continue in full force and effect and no provisions shall be deemed
dependent upon any other provision unless expressly set forth herein.

            19. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
entered into and performed entirely within such State.

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            20. Waiver. The failure of a party to insist upon strict adherence
to any term of this Agreement shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to that term or
any other term of this Agreement.

            21. Heading. The headings in this Agreement are solely for the
convenience of reference and shall not affect its interpretation.

            22. Withholding. Any amount payable under this Agreement shall be
reduced by any amount that the Company is obligated by law or regulation to
withhold in respect of any such payment.

            23. Heirs, Successors and Assigns. This Agreement will inure to the
benefit of, and be enforceable by, Executive's heirs and the Company's
successors and assigns. The Company shall have the right to assign this
Agreement or any part hereof or any rights hereunder to any
successor-in-interest to the Company and to any affiliate of the Company;
PROVIDED, HOWEVER, that in the event of any such assignment the assignee shall
expressly agree in writing to assume all of the Company's obligations under this
Agreement, and Company shall remain secondarily liable to Executive for the
performance of all such obligations.

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            WHEREFORE, the parties hereto have executed this Agreement as of the
day and year first above written.

THE PENN TRAFFIC COMPANY

By:_________________________        _____________________________
   Name:                                  Joseph V. Fisher
   Title:<PAGE>

                                                                   Exhibit 10.3b

                                                                  EXECUTION COPY

                            THE PENN TRAFFIC COMPANY
                            1200 State Fair Boulevard
                            Syracuse, New York 13209

                                                    January 31, 2000

Hirsch & Fox, LLC
411 Theodore Fremd Avenue
Rye, New York 10580
Attention: Gary D. Hirsch

Dear Mr. Hirsch:

            Reference is hereby made to that certain Amended and Restated
Management Agreement dated as of December 2, 1999 (the "MANAGEMENT AGREEMENT")
among Hirsch & Fox LLC (the "MANAGER") Gary D. Hirsch ("HIRSCH"), Martin A. Fox
("FOX" and together with Hirsch, the "EXECUTIVES") and The Penn Traffic Company,
a Delaware corporation (the "COMPANY").

            The Company, the Manager and the Executives each desire to terminate
the Management Agreement and the engagement by the Company of the Manager for
the provisions of the services of Hirsch and Fox thereunder, subject to the
terms and upon the conditions set forth below. The effective date of termination
of the Management Agreement and such engagement thereunder shall be as of
January 31, 2000 (the "EFFECTIVE DATE"). Simultaneously with the execution of
this Letter Agreement, the Company is entering into an Employment Agreement
dated as of the date hereof with Fox (the "FOX EMPLOYMENT AGREEMENT").

            Capitalized terms used in this Letter Agreement but not otherwise
defined shall have the respective meanings given to them in the Management
Agreement.

1. TERMINATION OF MANAGEMENT AGREEMENT. Each of the Company, the Manager and the
Executives hereby acknowledge and agree that the Management Agreement, shall be
deemed terminated, and of no further force and effect, effective as of the
Effective Date; PROVIDED, HOWEVER, that it is expressly agreed and understood
that with respect to the Manager and Hirsch, Sections 7, 9, 13, 14 and 15 of the
Management Agreement shall survive beyond the Effective Date in accordance with
the terms of those Sections (except in the case of Section 7 of the Management
Agreement, which shall survive in accordance with Section 3 hereof); and with
<PAGE>

                                                                               2

respect to Fox, Section 9 of the Management Agreement shall survive beyond the
Effective Date in accordance with the terms thereof.

2. COMPENSATION AND PAYMENT. (a) Subject to the terms and conditions set forth
in this Letter Agreement, and in lieu of any amounts that otherwise would be
payable to the Manager and the Executives pursuant to (i) the Management
Agreement, including all Management Fees, Annual Bonus or Change of Control
Payments, or (ii) any other agreement or understanding between the Manager or
the Executives, on the one hand and the Company on the other hand, the Manager
shall be entitled to receive a cash payment equal to $4,600,000 (the "CASH
PAYMENT") and (b) the Executives shall be entitled to reimbursement for all
documented expenses incurred by the Executives through the Effective Date
pursuant to Section 5 of the Management Agreement (the Cash Payment and any
payments received pursuant to clause (b), the "MANAGEMENT AGREEMENT TERMINATION
PAYMENT"). The Cash Payment shall be allocated between the Executives as
follows: (i) $1,554,166.67 to Fox in full satisfaction of Fox's Management Fees
and Annual Bonus due under the Management Agreement, (ii) $1,700,000 to Hirsch
in full satisfaction of Hirsch's rights in respect of the Change of Control
Payment contemplated by the Management Agreement, and (iii) $1,345,833.33 to
Hirsch in full satisfaction of Hirsch's Management Fees due under the Management
Agreement. In addition, Hirsch shall be entitled to receive a cash payment equal
to $300,000 in exchange for the cancellation of his currently exercisable
options to purchase 360,000 shares (the "HIRSCH VESTED OPTIONS") of the
Company's common stock, par value $.01 per share ("COMMON STOCK"), issued
pursuant to the Award Agreement dated June 29, 1999 between the Company and
Hirsch (the "HIRSCH VESTED OPTION PAYMENT"; and together with the Management
Agreement Termination Payment, the "TERMINATION AMOUNT"). Subject to Section 5
hereof, the Termination Amount shall be paid to the Manager via wire transfer on
the date hereof.

            (b) Notwithstanding anything to the contrary set forth herein, each
of the (i) the Fox Employment Agreement, (ii) the Award Agreement dated June 29,
1999 between the Company and Fox relating to the grant of options to acquire
130,000 shares of Common Stock, (iii) the Award Agreement dated June 29, 1999
between the Company and Fox relating to the grant of options to acquire 87,000
shares of Common Stock and (iv) the Award Agreement dated September 22, 1999
between the Company and Fox relating to the grant of options to acquire 87,000
shares of Common Stock (clauses (ii-iv) referred to as the "FOX OPTION
AGREEMENTS") shall remain in full force and effect, shall not be terminated and
shall not be deemed amended or modified by this Letter Agreement. Any payments
contemplated by the Fox Employment Agreement shall be in addition to any
payments Fox receives hereunder in respect of the Termination Amount; and in the
event of any conflicts or inconsistencies between this Agreement, on the one
hand, and either the Fox Employment Agreement or the Fox Option Agreements, on
the other hand, the provisions of the Fox Employment Agreement and the Fox
Option Agreements shall govern.
<PAGE>

                                                                               3

3. BENEFITS. From and after the Effective Date until June 30, 2001, the Company
shall continue to provide the benefits provided by the Company to Hirsch on the
date hereof, in accordance with Section 7 of the Management Agreement or
reimburse Hirsch for the cost of such benefits at an annual cost not to exceed
$25,000; PROVIDED, THAT, in the case of the Supplemental Retirement Plan
referred to in Section 7 of the Management Agreement, any benefits Hirsch has
accrued thereunder shall, notwithstanding the termination of the Management
Agreement, be paid to Hirsch in lump sum on the date provided for in such plan.
In addition, from the Effective Date until the earlier of (i) 60 days following
a Change of Control, or (ii) June 30, 2001, Hirsch will be entitled to continue
to utilize his current office, free of charge, at the Company's office located
in Rye, New York and Hirsch will be provided at the Company's expense with the
use of his current secretary (or one that has similar qualifications to be
determined in his discretion) at such office, and shall be permitted to avail
himself, free of charge, of the offices products, services and technology to the
same extent provided to Fox, through such date.

4. RESIGNATIONS; FULL SATISFACTION.

            4.1 Hirsch hereby resigns, effective as of the Effective Date, from
Hirsch's positions as Chairman of the Executive Committee and as a Director of
the Company and from all other positions (including that of officer or director)
that the Executive holds with the Company or any of its respective subsidiaries
or Affiliates (each, a "PT ENTITY"). Fox hereby resigns, effective as of the
Effective Date as Vice Chairman of the Executive Committee of the Company.

            4.2 The Manager and the Executives each acknowledge and agree that,
except as expressly set forth in this Letter Agreement, the Fox Employment
Agreement or the Fox Option Agreements, neither the Manager nor the Executives
shall be entitled (other than in their capacities as security holders of the
Company) to any other payments, compensation or benefits, including, without
limitation, any amounts relating to any Management Fees, Annual Bonus, Change of
Control Payments, sick pay, termination pay, severance pay, vacation pay, health
and welfare benefits, stock grants, restricted stock or stock options (whether
vested or unvested) from any PT Entity, whether by way of the Management
Agreement or otherwise; PROVIDED, HOWEVER, that the foregoing in this Section
4.2 shall not apply with respect to payments, compensation or benefits that may
be payable pursuant to agreements entered into after the date hereof between the
Company and either Executive. In addition, Hirsch hereby expressly acknowledges
that all options to acquire shares of Common Stock held by Hirsch on the
Effective Date, whether vested or unvested (including the Hirsch Vested Options,
the unvested options to acquire 240,000 shares of the Common Stock granted on
June 29, 1999 and unvested options to acquire 240,000 shares of Common Stock
granted on September 22, 1999), shall be deemed cancelled, terminated and no
longer outstanding and exercisable. The Manager and the Executives each
acknowledge and agree that the Termination Amount, as and when received, and the
benefits provided for herein, represent payment in full of all
<PAGE>

                                                                               4

sums that were heretofore and may be hereafter due and owing to the Manager in
respect of the services to the Company under the Management Agreement. Nothing
in this Letter Agreement or in the Executive Release executed pursuant hereto
shall be deemed to release, discharge, limit or otherwise affect any rights of
indemnification to which the Manager or the Executives may be entitled against
any PT Entity pursuant to Section 9 of the Management Agreement, any statute,
the common law or otherwise.

5. WITHHOLDING AND TAXES. The Manager and the Executives acknowledge and agree
that they shall be exclusively liable for the payment of all Federal, state,
local and foreign taxes that may be due as a result of the payments to be made
to the Manager and the Executives hereunder (including the Termination Amount)
and the benefits to be received by the Manager and the Executives hereunder. The
Executives shall deliver to the Company reasonable proof demonstrating
compliance with the foregoing at the Company's request. Further, the Executives
agree to indemnify and hold harmless the Company from and against any claims,
liabilities, or expenses in respect of any such taxes, including reasonable
attorney's fees and disbursements, relating to such compensation, tax, insurance
and/or benefit matters.

6.    RELEASE AND PAYMENT.

            6.1 As a material inducement for the Company to enter into this
Letter Agreement and in consideration of the monies agreed to be paid to the
Manager and the Executives and the benefits contemplated to be provided to the
Manager and the Executives hereunder, the Manager and each of the Executives
hereby acknowledge that they are each executing simultaneously herewith and
delivering to the Company on the date hereof a release, dated such date and in
the form of EXHIBIT A hereto (the "EXECUTIVE RELEASE").

            6.2 As a material inducement for the Manager and the Executives to
enter into this Letter Agreement, the Company acknowledges that it is executing
simultaneously herewith and delivering to the Manager and the Executives a
release, dated the date hereof and in the form of EXHIBIT B hereto (the "COMPANY
RELEASE").

7.    NON-DISPARAGEMENT.

            7.1 The Manager and the Executives hereby agree that they shall not
at any time make any written or oral statements, representations or other
communications that are false or materially misleading AND are intended to be
disparaging or damaging to the business or reputation of any PT Entity or any
officer, director or employee of any PT Entity other than to the extent
reasonably necessary in order (x) to assert a bona fide claim that is not a
Released Executives Claim (as defined in the Executive Release attached as
EXHIBIT A hereto) or (y) to respond in an appropriate manner to any legal
process or give appropriate testimony in a legal or regulatory proceeding.
Hirsch further agrees that without the prior consent of the
<PAGE>

                                                                               5

Company's Board of Directors he shall not intentionally or recklessly act in a
manner that is reasonably likely to interfere with or influence the management,
policies and operations of any PT Entity; provided, that, the sole and exclusive
remedy for a violation of the foregoing agreement in this sentence shall be
limited solely to his loss of use of the Rye, New York office as contemplated in
Section 3 hereof.

            7.2 The Company agrees that it shall not at any time make and shall
not suffer or permit any employee, officer or director of the Company to make
any written or oral statements, representations or other communications that are
false or materially misleading and are intended to be disparaging or damaging to
the reputation of the Manager or to either of the Executives, other than to the
extent reasonably necessary in order (x) to assert a bona fide claim that is not
a Released Company Claim (as defined in the Company Release attached as EXHIBIT
B hereto) or (y) to respond in an appropriate manner to any legal process or
give appropriate testimony in a legal or regulatory proceeding.

            7.3 Each of the Manager and the Executives and the Company
acknowledges and agrees that the remedies available to the Company on the one
hand and the Manager and the Executives on the other hand, at law for a breach
or threatened breach of any of the provisions of this Agreement (including
Section 7.1 and Section 7.2, respectively), would be inadequate and, in
recognition of this fact, the Manager and the Executives on the one hand and the
Company on the other hand agree that, in the event of a breach or threatened
breach, in addition to any remedies at law, each of the Company on the one hand
and the Manager and the Executives on the other hand shall be entitled to obtain
equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction or any other equitable remedy that may
then be available; provided that the foregoing shall not expand the Company's
remedies for a violation by Hirsch of his agreement as set forth in the last
sentence of Section 7.1, as set forth therein.

8.    ADDITIONAL AGREEMENTS.

            8.1 The Company, on the one hand, and the Manager and the
Executives, on the other hand, represent, covenant and agree to the other that
neither they, nor their agents, assignees, successors, heirs or executors (as
applicable) have commenced, continued, encouraged, joined in or assisted, and
will not hereafter commence, continue, encourage, join in or assist, any
lawsuit, arbitration or other action or proceeding asserting any Released
Company Claim or Released Executives Claim, respectively, against the other or
in any other manner attempt to assert any Released Company Claim or Released
Executive Claim, respectively, against the other.

            8.2 In consideration of the payments agreed to be paid to the
Manager and the Executives and the benefits contemplated to be provided to the
Manager and the Executives hereunder, from and after the date hereof, the
Manager
<PAGE>

                                                                               6

and the Executives agree to cooperate with the Company and any other PT Entity,
as reasonably requested by the Company, in the handling or investigation of any
action, suit, proceeding, arbitration, investigation or dispute against or
affecting the Company or any other PT Entity or any of their respective
properties, assets or operations that relate to matters that arose while the
Executives were officers of the Company (or officer or director of any other PT
Entity) and to consult with the Company, any other PT Entity and their
respective advisors, as reasonably requested, on any inquiry related to any such
matters. In making any such requests, the Company shall take all reasonable
steps so as to avoid (i) placing unreasonable travel or time burdens on an
Executive or (ii) materially interfering with such Executive's obligations to
his then-current employer, it being expressly understood that such Executive
will not be obligated to comply with any request which would result in the
consequences described in either clause (i) or (ii) of this sentence. The
Company shall reimburse the Executive for any reasonable out-of-pocket expenses
(including, without limita tion, reasonable attorneys' fees) incurred by the
Executives by reason of such cooperation and consultation and shall pay each
Executive $1000 for each day over two days that such Executive is required to
provide oral testimony in a deposition, trial or other legal proceeding.

            8.3 Each of the Manager, the Executives and the Company hereby agree
to execute such further documents or take such further actions as may be
reasonably required or desirable to carry out the provisions hereof, including,
without limitation, any documents necessary to effect the resignations
contemplated under Section 4.1 hereof.

9. AUTHORIZATION. The Company represents that (i) its execution of this
Agreement and the Company Release have been duly authorized by all requisite
corporate action on the part of the Company and when executed and delivered,
will be binding obligations on the part of the Company and (ii) it has the
authority to execute the Company Release on behalf of the other PT Entities.

10. LEGAL FEES. The Company shall reimburse the fees and expenses of McDermott,
Will & Emery, counsel to the Manager, in connection with the negotiation and
execution of this Letter Agreement in the amount of $35,000.

11. ENTIRE AGREEMENT; AMENDMENT. This Letter Agreement (including the provisions
of the Management Agreement referred to in Section 1 hereof, the Executive
Release and the Company Release) sets forth the entire understanding of the
Company on the one hand and the Manager and the Executives with respect to the
subject matter hereof and, except as set forth herein, supersedes all prior
agreements and understandings, both written and oral, between the parties with
respect thereto. This Letter Agreement cannot be amended or modified except by a
writing signed by the Company, the Manager and the Executives.
<PAGE>

                                                                               7

12. GOVERNING LAW; SEVERABILITY. This Letter Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York, without giving
effect to the choice-of-law provisions thereof. If, under such law, any portion
of this Letter Agreement is at any time deemed to be in conflict with any
applicable statute, rule, regulation or ordinance, such portion shall be deemed
to be modified or altered to conform thereto or, if that is not possible, to be
omitted from this Letter Agreement, and the invalidity of such portion shall not
affect the force, effect and validity of the remaining portion hereof.

13. JURISDICTION; VENUE; ATTORNEYS FEES.

            13.1 The Company on the one hand, and the Manager and the Executives
on the other hand, agree that any action, suit or proceeding arising under or
relating in any way to this Letter Agreement or the transactions contemplated
hereby may only be brought in the Supreme Court of the State of New York, New
York County, or in the United States District Court for the Southern District of
New York, and each of the parties hereto irrevocably consents to the
jurisdiction of each such court in respect of any such action, suit or
proceeding. Each of the Company, the Manager and the Executives further
irrevocably consent to the service of process in any such action, suit or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, return receipt requested to such party at its address as
provided for notices hereunder.

            13.2 Each of the Company, the Manager and the Executives hereby
irrevocably waive any objection that it or he may have on the basis of venue to
any action, suit or proceeding brought in the courts set forth in Section 13.1
hereof, and hereby further irrevocably waives any claim that such courts are not
convenient forums for any such action, suit or proceeding.

14. NOTICES. Any and all notices or consents required or permitted to be given
under any of the provisions of this Letter Agreement shall be in writing or by
written telecommunication and delivered either by hand delivery or by registered
or certified mail, return receipt requested, to the relevant addresses set out
below (or such other address as shall be specified by like notice), in which
event they shall be deemed to have been duly given upon receipt.

            If to the Manager or to the Executives, to:

                  Hirsch & Fox, LLC
                  411 Theodore Fremd Avenue
                  Rye, New York 10580
<PAGE>

                                                                               8

                  with a copy to:

                  C. David Goldman, Esq.
                  McDermott, Will & Emory
                  50 Rockefeller Plaza
                  New York, NY 10020

            If to the Company, to:

                  Peter T. Zurkow
                  Chairman
                  The Penn Traffic Company
                  411 Theodore Fremd Avenue
                  Rye, New York 10580

                  with a copy to:

                  Francis D. Price, Esq.
                  Vice President, General Counsel and Secretary
                  The Penn Traffic Company
                  P.O. Box 4737
                  1200 State Fair Boulevard
                  Syracuse, New York 13221-4737

                  and a copy to:

                  Douglas A. Cifu, Esq.
                  James M. Dubin, Esq.
                  Paul, Weiss, Rifkind, Wharton & Garrison
                  1285 Avenue of the Americas
                  New York, New York, 10019-6064
<PAGE>

                                                                               9

15. COUNTERPARTS. This Letter Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.

                                Very truly yours,

                                THE PENN TRAFFIC COMPANY

                                By:___________________________
                                   Name:  Peter Zurkow
                                   Title: Chairman

Agreed to and accepted this
31st day of January, 2000

--------------------------
Gary D. Hirsch

--------------------------
Martin A. Fox

Hirsch & Fox, LLC

By: ________________________
Name:
Title:
<PAGE>

                                                                       EXHIBIT A

                                 FORM OF RELEASE

            TO ALL WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW that the
undersigned, on their own behalf and on behalf of their affiliates, members,
managers, directors, officers, employees, agents, representatives, attorneys,
insurers, heirs, executors and administrators, agree to and do hereby fully and
completely forever release, absolve and discharge, The Penn Traffic Company, a
Delaware corporation (the "COMPANY"), and its subsidiaries, affiliates,
predecessors and successors and all of their respective past and/or present
directors, officers, shareholders, employees, agents, representatives,
administrators, attorneys, insurers and fiduciaries in their representative
capacities (hereinafter collectively referred to as the "PT RELEASEES"), with
respect to and from any and all causes of actions, claims, demands, agreements,
promises, damages, disputes, controversies, contracts, covenants, actions,
suits, accounts, wages, obligations, debts, expenses, attorneys' fees,
judgments, orders and liabilities of any kind whatsoever (other than pursuant to
Section 9 of the Management Agreement) (hereinafter collectively referred to as
"CLAIMS"), which the undersigned or their affiliates, members, managers,
directors, officers, employees, agents, representatives, attorneys, insurers,
heirs, executors and administrators, as applicable, ever had, now have or may
have against the PT RELEASEES or any of them, in law, equity or otherwise (other
than in their capacity as security holders of the Company and solely with
respect to Claims related thereto), whether known or unknown to the undersigned,
for, upon, or by reason of, any matter, course or thing whatsoever from the
beginning of time to the effective date of this Release, including specifically,
but not exclusively and without limiting the generality of the foregoing, based
upon, arising out of or related in any way to (i) the Company's obligations
under the Management Agreement (as defined in the Letter Agreement hereinafter
referred to), (ii) any transaction, occurrence, act or omission related to the
undersigned's employment by or provision of management services to the Company
or the termination of that employment or provision of management services,
including, but not limited to, any claims of management fees, bonuses, severance
pay, bonus, sick leave, disability pay, vacation pay, life insurance, health and
medical insurance, or any other fringe benefits, workers' compensation or
disability benefits and (iii) all matters referred to in the Management
Agreement and any applicable employment, compensatory or equity arrangement with
the Company or any other PT Entity (as defined in the Letter Agreement);
PROVIDED, HOWEVER, that nothing herein shall release the Company from (i) any
obligations arising under or referred to or described in the Letter Agreement
dated as of January 31, 2000 (as amended, modified or otherwise supplemented
from time to time, the "LETTER AGREEMENT") between the Company and the
undersigned (or any claims or rights expressly reserved therein), or impair the
right or ability of the undersigned to enforce the Letter Agreement, (ii) any
obligations arising under the Fox Employment Agreement (as defined in the Letter
Agreement) or the Fox Option Agreements (as
<PAGE>

defined in the Letter Agreement) or (iii) any Claims that the Executives may
have in respect of rights to indemnification pursuant to Section 9 of the
Management Agreement or under any statute, the common law or otherwise for
actions taken in connection with the Management Agreement or in their capacities
as employees, officers or directors of the Company or any PT Entity, including
Section 145 of the Delaware General Corporation Law. All Claims released by the
undersigned pursuant to this Release shall collectively be referred to herein as
the "RELEASED EXECUTIVES CLAIMS".

            Notwithstanding the generality of the foregoing, the Released
Executives Claims shall include, without limitation, (i) any and all claims
under Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act of 1967, the Civil Rights Act of 1971, the Civil Rights Act of
1991, the Fair Labor Standards Act, the Employee Retirement Income Security Act
of 1974, the Americans with Disabilities Act, the Family and Medical Leave Act
of 1993, and any and all other federal, state or local laws, statutes, rules and
regulations pertaining to employment or otherwise, and (ii) except as expressly
excluded in the proviso of the immediately preceding paragraph, any claims for
wrongful discharge, breach of contract, or any compensation claims, or any other
claims under any statute, rule or regulation or under the common law (other than
relating to fraud or misrepresentation), including compensatory damages,
punitive damages, attorney's fees, costs, expenses and all claims for any other
type of damage or relief.

            The undersigned hereby represent and warrant that (i) they are the
sole owners of the Released Executives Claims and have not sold, assigned or
otherwise transferred or disposed of (or agreed to do any of the same) the
Released Executives Claims to any other party and (ii) they own the Released
Executives Claims free and clear of any rights, claims, interests, liens or
encumbrances of or in favor of any other party and have the unconditional right,
power and authority, without the consent of any third party to fully and finally
release the Released Executives Claims as provided herein.

            This Release shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be
performed solely within such State.

            This Release shall not be amended, altered, modified, changed or
rescinded except by an instrument in writing signed by the undersigned.

            This Release shall be binding upon the undersigned and their legal
representatives, executors and administrators.

            This Release shall become effective on the date hereof on the moment
Manager receives the Termination Amount (as defined in the Letter Agreement) and
the Fox Employment Agreement is executed by both Martin Fox and the Company.
<PAGE>

            IN WITNESS WHEREOF, the undersigned have executed this RELEASE on
this 31st day of January, 2000.

                                    -----------------------------
                                           Gary D. Hirsch

                                    -----------------------------
                                           Martin A. Fox

                                    HIRSCH & FOX LLC

                                    By:__________________________
                                       Name:
                                       Title:
<PAGE>

                                                                       EXHIBIT B

                                 FORM OF RELEASE

            TO ALL WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW that The
Penn Traffic Company, a Delaware corporation (the "COMPANY"), on its own behalf
and on behalf of the other PT Entities (as defined in the Letter Agreement
hereinafter referred to), agrees to and does hereby fully and completely forever
release, absolve and discharge, Hirsch & Fox LLC, Gary D. Hirsch ("HIRSCH") and
Martin A. Fox ("FOX"), and their heirs, executors, attorneys and administrators
(hereinafter collectively referred to as the "EXECUTIVE RELEASEES"), with
respect to and from any and all causes of actions, claims, demands, agreements,
promises, disputes, controversies, contracts, covenants, actions, suits,
accounts, wages, obligations, debts, expenses, attorneys' fees, damages,
judgments, orders and liabilities of any kind whatsoever (hereinafter
collectively referred to as "CLAIMS"), which the Company or the other PT
Entities ever had, now have or may have against the EXECUTIVE RELEASEES or any
of them, in law, equity or otherwise, whether known or unknown to the Company,
for, upon, or by reason of, any matter, course or thing whatsoever from the
beginning of time to the effective date of this Release, including specifically,
but not exclusively and without limiting the generality of the foregoing, based
upon, arising out of or related in any way to (i) the Manager's, Hirsch's and
Fox's obligations under the Management Agreement (as defined in the Letter
Agreement), (ii) any transaction, occurrence, act or omission related to the
provision of management services by the Manager or either Executive to the
Company or any other PT Entity or the termination of the provision of those
services and (iii) all matters referred to in the Management Agreement and any
applicable employment, compensatory or equity arrangement with the Company or
any other PT Entity; PROVIDED, HOWEVER, that nothing herein shall release the
Manager or either Executive from any obligations arising under or referred to or
described in the Letter Agreement dated January __, 2000 (as amended, modified
or otherwise supplemented from time to time, the "LETTER AGREEMENT") among the
Company, the Manager and the Executives (including, without limitation, (i) the
provisions of the Management Agreement that have expressly been made to survive
the termination of the Management Agreement pursuant to Section 1 of the Letter
Agreement and (ii) any claims or rights expressly reserved in the Letter
Agreement), or impair the right or ability of the undersigned to enforce the
Letter Agreement (or such provisions or rights that so survive or are so
reserved; PROVIDED, FURTHER, that nothing herein shall release Fox from any
obligations under the Fox Employment Agreement (as defined in the Letter
Agreement) or the Fox Option Agreements (as defined in the Letter Agreements).
All claims released by the undersigned pursuant to this Release shall
collectively be referred to herein as the "RELEASED COMPANY CLAIMS".

            The Released Company Claims shall include, without limitation, any
Claims for breach of contract or any other claims under any statute, rule or
regulation
<PAGE>

or under the common law, including compensatory damages, punitive damages,
attorneys fees, costs, expenses, and all claims for any other type of damage or
relief.

            The undersigned hereby represents and warrants that (i) it and the
other PT Entities are the sole owners of the Released Company Claims and have
not sold, assigned or otherwise transferred or disposed of (or agreed to do any
of the same) the Released Company Claims to any other party and (ii) it and the
other PT Entities own the Released Company Claims free and clear of any rights,
claims, interests, liens or encumbrances of or in favor of any other party
(other than the rights of Fleet Bank pursuant to that certain Loan and Security
Agreement, dated June 29, 1999, as amended) and have the unconditional right,
power and authority, without the consent of any third party (including, without
limitation, Fleet Bank) to fully and finally release the Released Company Claims
as provided herein.

            The Release shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be
performed solely within such State.

            This Release shall not be amended, altered, modified, changed or
rescinded except by an instrument in writing signed by the undersigned.

            This Release shall be binding upon the undersigned and its
successors and assigns.

            This Release shall become effective on the date that the Executive
Release (as defined in the Letter Agreement) becomes effective pursuant to its
terms.

            IN WITNESS WHEREOF, the undersigned has caused this RELEASE to be
executed on this __ day of January, 2000.

                                      THE PENN TRAFFIC COMPANY

                                      -----------------------------
                                      Name:  Peter Zurkow
                                      Title: Chairman

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