EXHIBIT 99.1
                                                                    ------------



                            FLEET CAPITAL CORPORATION
                              200 Glastonbury Blvd
                              Glastonbury, CT 06033


                                        August 9, 2002


The Penn Traffic Company
411 Theodore Fremd Avenue
Rye, NY 10580

Attn:    Martin A. Fox, CFO

                  RE:      REVOLVING CREDIT AND TERM LOAN AGREEMENT DATED AS OF
                           JUNE 29, 1999, AS AMENDED TO DATE ("CREDIT
                           AGREEMENT"), AMONG THE PENN TRAFFIC COMPANY AND THE
                           OTHER BORROWERS NAMED THEREIN, THE LENDERS NAMED
                           THEREIN, FLEET CAPITAL CORPORATION, AS ADMINISTRATIVE
                           AGENT (THE "AGENT"), GMAC BUSINESS CREDIT, LLC, AS
                           DOCUMENTATION AGENT AND AMSOUTH BANK AND BANC OF
                           AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, AS
                           CO-AGENTS.

Ladies and Gentlemen:

                  Reference is hereby made to the Credit Agreement. Capitalized
terms used herein but not defined shall have the meaning set forth in the Credit
Agreement.

                  You have advised us that on account of an inventory
overstatement continuing for approximately three years in your Penny Curtiss
baking operation, certain Events of Default have occurred and are continuing
under the Credit Agreement (I) on account of violations of ss. 6.4, ss. 7.1(a),
(b) and (d), ss. 7.2(a), (b) and (d), and (II) under ss. 9.1(b) (the "Subject
Events of Default").

                  This letter will confirm that the Required Lenders have agreed
(A) to waive the Subject Events of Default from the date hereof through the
close of business on August 30, 2002 (the "Waiver Period"), (B) to forebear
during the Waiver Period from exercising rights and remedies under the Loan
Documents on account of the Subject Events of Default, and (C) that during the
Waiver Period the Borrowers may borrow, prepay and reborrow Revolving Loans. The
waivers herein and agreement to forebear are subject to the agreement of the
Borrowers as follows: (I) nothing in this letter shall be deemed a waiver or
amendment of any of the terms or conditions of the Credit Agreement except as
herein specifically provided; (II) the making of any Revolving Loans to the
Borrowers after the date hereof by the Lenders shall not in any way modify the
terms and conditions of the Credit Agreement; (III) all rights and remedies of
the Agents and the Lenders are expressly reserved (X) with respect to any Events
of Default other than the Subject Events of Default, and (Y) following the end
of the Waiver Period.

                  This letter may be executed by the parties hereto individually
or in combination, in one or more counterparts, each of which shall be an
original and all of which shall constitute



                                                                               2


one and the same agreement. A facsimile signature page shall constitute an
original for the purposes hereof.


                                   Sincerely,

                                   FLEET CAPITAL CORPORATION as Agent and
                                   as Lender

                                   By:  /s/ Kim Bushey
                                        ---------------------------------------
                                        Name:   Kim Bushey
                                        Title:  Vice President

Acknowledged as of the Date
First Written Above:

THE PENN TRAFFIC COMPANY


By:  /s/ Martin A. Fox
     -------------------------------
     Name:   Martin A. Fox
     Title:  Executive Vice President and
             Chief Financial Officer



DAIRY DELL, INC.


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



BIG M SUPERMARKETS INC.


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



PENNY CURTISS BAKING COMPANY INC.


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