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

December 12, 2006


Mr. Robert Panasuk
Co-Chief Operating Officer
The Penn Traffic Company
P.O. Box 4737 Syracuse, NY 13221

Dear Bob:

On behalf of The Penn Traffic Company Board of Directors,  it is my pleasure to
offer you the  position  of Chief  Executive  Officer and  President  reporting
directly to the Board. Your employment in this capacity will begin immediately.
While this letter is not a  contractual  agreement,  it does  contain the major
elements of our offer to you.

     1.    SALARY:  Your  starting  salary  will be  $500,000  per year  with a
           performance  and  salary  review  within  the  first  six  months of
           employment in this role.

     2.    SIGN-ON BONUS:  That bonus which was defined in your offer letter of
           October 2, 2006  shall  remain in force  with  payments  on or about
           January 4, 2007 and April 4, 2007.

     3.    MANAGEMENT  PERFORMANCE  INCENTIVE PROGRAM (BONUS): 75% of your base
           salary at 100% of Plan and  increasing  to twice  (150%) that amount
           for exceeding Plan.

     4.    RELOCATION  PLAN:  That plan  offered to you as part of our offer of
           employment on October 2, 2006 shall remain in force.

     5.    BENEFITS:  Thos benefits for which you are currently  eligible shall
           remain in place.
           These include:
                Medical, Dental, Vision and Prescription Drug
                Coverage Term Life Insurance (company paid)
                Supplemental Life Insurance
                Short-Term Disability
                Long Term Disability

     6.    VACATION: Four weeks paid vacation each year.





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Robert Panasuk
December 12, 2006

     7.    401(K)PLAN:  Effective after 6 months of employment.  Subject to the
           limits  required  by law and the Plan;  (a) may defer  from 1-25% of
           salary, taxed deferred;  (b) Company to match 50% of the first 3% of
           employee deferral after 1 year of employment.  In addition,  Company
           to contribute 3% of your earned total  compensation  after 1 year of
           service and 1000 hours and must be on payroll on the last day of the
           year.

     8.    PENN TRAFFIC  HOLIDAYS:  As per Company Plan,  currently six (6) per
           year.

     9.    5% EMPLOYEE DISCOUNT

     10.   SEVERANCE PLAN: 52 weeks of Severance

     11.   CHANGE IN CONTROL: See attached document.

     12.   EQUITY:  You will  participate in the Company plan and receive stock
           commensurate with your position at the time the plan is executed for
           the management team.  Additionally,  you will receive 100,000 Shares
           of Phantom  Stock based on the Stock  Price on the day you  formally
           accept the Board of Directors  offer of this  position  (e.g. if the
           100,000  Shares  are  trading  at $15.00 on the  effective  date and
           increase to $20.00 per share on May 1, 2009,  the Company  would pay
           you $500,000 ($5.00 per share x 100,000 shares).

     13.   BOARD OF DIRECTORS:  a seat on the Board of Directors is included in
           this offer.

It is important to reiterate  that this letter is an offer of employment and in
no way should be construed to be an  employment  contract for a definite  term.
Employment at The Penn Traffic  Company is at will,  subject to  termination by
the Company or you at any time.

Bob, we look forward to working with you in your new capacity.  If you have any
questions regarding this offer or the position, please contact me directly.



Sincerely,
/s/ John Burke
John Burke
Chairman, Compensation Committee
Member, Board of Directors
The Penn Traffic Company

Enclosure: Change in Control Agreement
Cc: Robert Kelly, Chairman, Board of Directors




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Robert Panasuk
December 12, 2006


As agreement with the terms of this letter, please sign one copy of this letter
and retain a second  copy for your  files.  Please  return the  original  to my
attention________________________, 2006,

I,  Robert  Panasuk,  accept  this  offer of  employment  on this  12th date of
December 2006.



/s/ Robert Panasuk
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(Signature)