8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities

Exchange Act of 1934

December 12, 2007

Date of Report (Date of earliest event reported):

THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.

(Exact name of registrant as specified in its charter)

Maryland	1-4141	13-1890974
(State or other jurisdiction of incorporation or organization)	(Commission file number)	(I.R.S. Employer Identification No.)

Two Paragon Drive

Montvale, New Jersey 07645

(Address of principal executive offices)

(201) 573-9700

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01.   Entry into a Material Definitive Agreement.

Convertible Notes Offering

On December 12, 2007, The Great Atlantic & Pacific Tea Company, Inc. (the “Company”) entered into an underwriting agreement (the “Convertible Notes Underwriting Agreement”) with Banc of America Securities LLC and Lehman Brothers Inc. (together, the “Convertible Notes Underwriters”) and Friedman, Billings, Ramsey & Co., Inc., as qualified independent underwriter, relating to the sale by the Company of $150 million aggregate principal amount of 5.125% Convertible Senior Notes due 2011 (the “2011 Notes”) and $230 million aggregate principal amount of 6.75% Convertible Senior Notes due 2012 (the “2012 Notes,” and together with the 2011 Notes, the “Notes”). Pursuant to the Convertible Notes Underwriting Agreement, the Company granted the Convertible Notes Underwriters options to purchase up to an additional $15 million aggregate principal amount of 2011 Notes and $25 million aggregate principal amount of 2012 Notes solely to cover over-allotments, which options were exercised in full on December 14, 2007. The Notes will be issued under a senior indenture, to be dated as of December 18, 2007, between the Company and Wilmington Trust Company, as trustee (the “Trustee”), supplemented by a first supplemental indenture with respect to the 2011 Notes, to be dated as of December 18, 2007, between the Company and the Trustee and a second supplemental indenture with respect to the 2012 Notes, to be dated as of December 18, 2007, between the Company and the Trustee.

The foregoing description of the Convertible Notes Underwriting Agreement is qualified in its entirety by reference to the Convertible Notes Underwriting Agreement, which is attached hereto as Exhibit 1.1 and is incorporated herein by reference.

Common Stock Offering and Share Lending Agreements

Concurrently with the Notes offering, on December 12, 2007, the Company entered into share lending agreements (the “Share Lending Agreements”) with Bank of America, N.A. (the “BANA Borrower”) and Lehman Brothers International (Europe) Limited (the “Lehman Borrower” and, together with the BANA Borrower, the “Share Borrowers”), pursuant to which the Company will lend up to 11,278,988 shares of common stock, par value $1.00 per share, of the Company (the “Common Stock”) to the Share Borrowers, subject to certain adjustments set forth in the Share Lending Agreements for a period ending on the later of (A) the earliest of (i) December 15, 2012, (ii) the date as of which the Company has notified the Share Borrowers in writing of its intention to terminate the agreements at any time after the later of (x) the date on which the entire principal amount of the Notes ceases to be outstanding and (y) the date on which the entire principal amount of additional convertible securities that the Company may issue and that the Company agrees can be hedged under the Share Lending Agreements ceases to be outstanding, in each case, as a result of conversion, redemption, repurchase, cancellation or otherwise, and (iii) the date on which the Share Lending Agreements terminate in accordance with their terms and (B) the later of the final settlement date with respect to the final expiration date or final termination date of the warrant transactions described below.

On December 12, 2007, the Company entered into an underwriting agreement (the “Equity Underwriting Agreement”) with the BANA Borrower, the Lehman Borrower, Banc

of America Securities LLC (“BAS”) and Lehman Brothers Inc. (“Lehman”). Pursuant to and upon the terms of the Share Lending Agreements, the Company will issue and lend to the BANA Borrower and the Lehman Borrower 8,134,002 shares of Common Stock (the “Borrowed Shares”) as a share loan. BAS and Lehman (the “Equity Underwriters”) are also acting as underwriters with respect to the Borrowed Shares, which are being offered to the public. 6,300,752 of the Borrowed Shares will be initially offered at $28.00 per share and the remaining 1,833,250 Borrowed Shares will subsequently be sold at prevailing market prices at the time of sale or at negotiated prices.

The Company will not receive any proceeds from the sale of the Borrowed Shares pursuant to the Share Lending Agreements but will receive a nominal lending fee of $0.001 per share for each share of Common Stock that it loans pursuant to the Share Lending Agreements. The Share Borrowers, which are affiliates of the Convertible Notes Underwriters and the Equity Underwriters, will receive all of the proceeds from the sale of Borrowed Shares pursuant to the Share Lending Agreements.

Borrowed Shares may also be used in connection with hedging the Convertible Note Hedge and Warrant Transactions described below.

The foregoing description of the Equity Underwriting Agreement and the Share Lending Agreements is qualified in its entirety by reference to the Equity Underwriting Agreement and the Share Lending Agreements, which are attached hereto as Exhibits 1.2, 10.9 and 10.10 and are incorporated herein by reference.

Convertible Note Hedge and Warrant Transactions

In connection with the Notes offering, on December 12, 2007, the Company entered into convertible note hedge and warrant transactions (the “Convertible Note Hedge and Warrant Transactions”) with Bank of America, N.A. and Lehman Brothers Inc. and Lehman Brothers OTC Derivatives Inc. (the “Counterparties”). The Convertible Note Hedge and Warrant Transactions are designed to reduce the Company’s exposure to potential dilution of its Common Stock upon any conversion of the Notes. The convertible note hedge transactions, which are structured as call options, allow the Company to purchase from the Counterparties shares of Common Stock in connection with a conversion of the Notes. The warrant transactions allow the Counterparties to require the Company to sell to them shares of Common Stock. The cost to the Company of the hedge transactions will be approximately $66.1 million, and the proceeds received by the Company for the warrant transactions will be approximately $33.3 million, resulting in a net incremental cost to the Company of approximately $32.8 million.

The Company and the Counterparties entered into confirmation letters (collectively, the “Confirmations”) setting forth the terms and conditions of the Convertible Note Hedge and Warrant Transactions. The Confirmations relating to the warrant transactions were amended as of December 14, 2007 in connection with the exercise of the over-allotment options by the Convertible Notes Underwriters. The foregoing description of the Convertible Note Hedge and Warrant Transactions is qualified in its entirety by reference to the Confirmations, which are attached hereto as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.7 and 10.8 and are incorporated herein by reference.

Relationships

The Convertible Notes Underwriters, the Equity Underwriters, the Share Borrowers, the Counterparties and their respective affiliates have provided, and may in the future provide, various investment banking, commercial banking and other financial services for the Company and its affiliates for which services they have received, and may in the future receive, customary fees. BAS is the sole lead arranger under the Company’s senior secured revolving credit facility (the “ABL facility”). In addition, affiliates of the Convertible Notes Underwriters, the Equity Underwriters, the Share Borrowers and the Counterparties are the lead arrangers under the Company’s bridge facility which was entered into with the Company’s acquisition of Pathmark and which will be repaid in full in connection with the Notes offering. The net proceeds of the Notes offering, together with cash on hand and borrowings under the Company’s ABL facility, will be used to repay the bridge loan and to pay the cost of the Convertible Note Hedge and Warrant Transactions and, accordingly, affiliates of the Convertible Notes Underwriters, the Equity Underwriters, the Share Borrowers and the Counterparties will receive substantially all of the proceeds of the Notes offering.

Item 3.02.    Unregistered Sale of Equity Securities.

On December 12, 2007, pursuant to the Convertible Note Hedge and Warrant Transactions, the Company sold warrants to acquire, subject to specified terms and conditions and customary anti-dilution adjustments, an aggregate of 10,205,526 million shares of Common Stock, 4,120,876 shares at a strike price of $46.20 per share and 6,084,650 shares at a strike price of $49.00 per share, in each case in reliance on the exemption from registration provided by Section 4(2) of the Securities Act.

Additional information included in Item 1.01 above regarding the Convertible Note Hedge and Warrant Transactions is incorporated by reference into this Item 3.02.

The warrants have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This report on Form 8-K does not constitute an offer to sell, or a solicitation of an offer to buy, any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering would be unlawful.

Item 9.01.    Exhibits.

(d) Exhibits. The following exhibits are filed herewith:

Exhibit No.	Description
1.1	Underwriting Agreement, dated December 12, 2007, among The Great Atlantic & Pacific Tea Company, Inc. and Banc of America Securities LLC, Lehman Brothers Inc. and Friedman Billings, Ramsey & Co., Inc.
1.2	Underwriting Agreement, dated December 12, 2007, among The Great Atlantic & Pacific Tea Company, Inc. and Bank of America, N.A., Banc of America Securities LLC, Lehman Brothers International (Europe) Limited and Lehman Brothers Inc.

10.1	Confirmation of Issuer Warrant Transaction for 2011 Notes, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Bank of America, N.A.
10.2	Confirmation of Issuer Warrant Transaction for 2012 Notes, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Bank of America, N.A.
10.3	Confirmation of Issuer Warrant Transaction for 2011 Notes, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Lehman Brothers OTC Derivatives Inc.
10.4	Confirmation of Issuer Warrant Transaction for 2012 Notes, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Lehman Brothers OTC Derivatives Inc.
10.5	Confirmation of Convertible Bond Hedge Transaction for 2011 Notes, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Bank of America, N.A.
10.6	Confirmation of Convertible Bond Hedge Transaction for 2012 Notes, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Bank of America, N.A.
10.7	Confirmation of Convertible Bond Hedge Transaction for 2011 Notes, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Lehman Brothers OTC Derivatives Inc.
10.8	Confirmation of Convertible Bond Hedge Transaction for 2012 Notes, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Lehman Brothers OTC Derivatives Inc.
10.9	Share Lending Agreement, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Bank of America, N.A.
10.10	Share Lending Agreement, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc., Lehman Brothers International (Europe) Limited and Lehman Brothers Inc.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: December 18, 2007

THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
By:	/s/ Allan Richards
	Name:	Allan Richards
	Title:	Senior Vice President, Human Resources, Labor Relations, Legal Services & Secretary

EXHIBIT INDEX

Exhibit No.	Description
1.1	Underwriting Agreement, dated December 12, 2007, among The Great Atlantic & Pacific Tea Company, Inc. and Banc of America Securities LLC, Lehman Brothers Inc. and Friedman Billings, Ramsey & Co., Inc.
1.2	Underwriting Agreement, dated December 12, 2007, among The Great Atlantic & Pacific Tea Company, Inc. and Bank of America, N.A., Banc of America Securities LLC, Lehman Brothers International (Europe) Limited and Lehman Brothers Inc.
10.1	Confirmation of Issuer Warrant Transaction for 2011 Notes, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Bank of America, N.A.
10.2	Confirmation of Issuer Warrant Transaction for 2012 Notes, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Bank of America, N.A.
10.3	Confirmation of Issuer Warrant Transaction for 2011 Notes, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Lehman Brothers OTC Derivatives Inc.
10.4	Confirmation of Issuer Warrant Transaction for 2012 Notes, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Lehman Brothers OTC Derivatives Inc.
10.5	Confirmation of Convertible Bond Hedge Transaction for 2011 Notes, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Bank of America, N.A.
10.6	Confirmation of Convertible Bond Hedge Transaction for 2012 Notes, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Bank of America, N.A.
10.7	Confirmation of Convertible Bond Hedge Transaction for 2011 Notes, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Lehman Brothers OTC Derivatives Inc.
10.8	Confirmation of Convertible Bond Hedge Transaction for 2012 Notes, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Lehman Brothers OTC Derivatives Inc.
10.9	Share Lending Agreement, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc. and Bank of America, N.A.
10.10	Share Lending Agreement, dated December 12, 2007, by and between The Great Atlantic & Pacific Tea Company, Inc., Lehman Brothers International (Europe) Limited and Lehman Brothers Inc.

EX-1.1

Exhibit 1.1

The Great Atlantic & Pacific Tea Company, Inc.

5.125% CONVERTIBLE SENIOR NOTES DUE 2011

6.75% CONVERTIBLE SENIOR NOTES DUE 2012

UNDERWRITING AGREEMENT

dated December 12 , 2007

Banc of America Securities LLC
Lehman Brothers Inc.

Table of Contents

		Page
SECTION 1.      Representations and Warranties		2
(a)	Registration Statement on Form S-3	2
(b)	Compliance with Registration and Exchange Act Requirements	3
(c)	Disclosure Package	4
(d)	Company Not Ineligible Issuer	4
(e)	Company is a Well-Known Seasoned Issuer	4
(f)	Issuer Free Writing Prospectuses	5
(g)	The Underwriting Agreement	5
(h)	Authorization of the Notes	5
(i)	Authorization of the Indenture	5
(j)	Authorization of the Share Lending Agreements	5
(k)	No Applicable Registration or Other Similar Rights	5
(l)	Accuracy of Statements in Prospectus	6
(m)	No Material Adverse Effect	6
(n)	Independent Accountants	6
(o)	Preparation of the Financial Statements	6
(p)	Incorporation and Good Standing of the Company and its Subsidiaries	7
(q)	Capitalization and Other Capital Stock Matters	8
(r)	Stock Exchange Listing	8
(s)	Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required	8
(t)	No Material Actions or Proceedings	9
(u)	Intellectual Property Rights	9
(v)	All Necessary Permits, etc	10
(w)	Title to Properties	10
(x)	Tax Law Compliance	10
(y)	“Investment Company”	10
(z)	Insurance	10
(aa)	No Restrictions on Distributions	11
(bb)	No Price Stabilization or Manipulation	11
(cc)	Solvency	11
(dd)	Compliance with Sarbanes-Oxley	11
(ee)	Stock Options	11
(ff)	Compliance with Section 7 of the Exchange Act	12
(gg)	Company’s Internal Controls and Accounting Systems	12
(hh)	No Material Weakness in Internal Controls	12
(ii)	Disclosure Controls and Procedures	12
(jj)	Compliance with Environmental Laws	12
(kk)	ERISA Compliance	13
(ll)	Brokers	14
(mm)	Compliance with Labor Laws	14
(nn)	Related Party Transactions	14
(oo)	Compliance with Money Laundering Laws	14
(pp)	OFAC	14
(qq)	Foreign Corrupt Practices Act	15
(rr)	Lending Relationship	15

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(ss)	Statistical and Market Related Data	15
(tt)	Company Sales and Other Financial Data	15
SECTION 2.      Purchase, Sale and Delivery of the Notes		15
(a)	The Firm Notes	15
(b)	The Optional Notes; the Subsequent Closing Date	16
(c)	The Closing Date	16
(d)	Public Offering of the Notes	16
(e)	Payment for the Notes	17
(f)	Delivery of the Notes	17
(g)	Delivery of Prospectus to the Underwriters	17
SECTION 3.      Additional Covenants		17
(a)	The Representatives’ Review of Proposed Amendments and Supplements	17
(b)	Compliance with Securities Regulations and Commission Requests	17
(c)	Amendments and Supplements to the Registration Statement, Disclosure Package and
	Prospectus and Other Securities Act Matters	18
(d)	Final Term Sheet	19
(e)	Permitted Free Writing Prospectuses	19
(f)	Copies of any Amendments and Supplements to the Prospectus	19
(g)	Copies of the Registration Statement and Prospectus	19
(h)	Blue Sky Compliance	20
(i)	Reservation of Common Stock	20
(j)	NYSE Listing	20
(k)	Use of Proceeds	20
(l)	Transfer Agent	20
(m)	The Depositary	20
(n)	Earnings Statement	20
(o)	Agreement Not To Offer or Sell Additional Securities	21
(p)	Notice of Inability to Use Automatic Shelf Registration Statement Form	21
(q)	No Manipulation of Price	22
(r)	No Adjustment of Conversion Price	22
(s)	Subsidiaries	22
SECTION 4.      Payment of Expenses		22
SECTION 5.      Conditions of the Obligations of the Underwriters		23
(a)	Accountants’ Comfort Letters	23
(b)	Effectiveness of Registration Statement	23
(c)	No Objection	23
(d)	No Material Adverse Effect or Ratings Agency Change	24
(e)	Opinions of Counsel for the Company	24
(f)	Opinion of Counsel for the Underwriters	24
(g)	Officers’ Certificate	24
(h)	The Depositary	25
(i)	Indenture	25
(j)	Transactions	25
(k)	Lock-up Agreements	25
(l)	Additional Documents	25

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SECTION 6.      Reimbursement of Underwriters’ Expenses		25
SECTION 7.      Indemnification		26
(a)	Indemnification of the Underwriters	26
(b)	Indemnification of the Company, its Directors and Officers	26
(c)	Notifications and Other Indemnification Procedures	27
(d)	Settlements	28
(e)	Indemnification of the QIU	28
SECTION 8.      Contribution		29
SECTION 9.      Termination of this Agreement		30
SECTION 10.      Research Analyst Independence		30
SECTION 11.      Representations and Indemnities to Survive Delivery		31
SECTION 12.      Notices		31
SECTION 13.      Successors and Assigns		32
SECTION 14.      Partial Unenforceability		33
SECTION 15.      Governing Law Provisions		33
SECTION 16.      Default of One or More of the Several Underwriters		33
SECTION 17.      No Advisory or Fiduciary Responsibility		34
SECTION 18.      General Provisions		34

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UNDERWRITING AGREEMENT

December 12, 2007

BANC OF AMERICA SECURITIES LLC
LEHMAN BROTHERS INC.

      As Representatives of the several Underwriters

c/o Banc of America Securities LLC
9 West 57th Street
New York, New York 10019

and

c/o Lehman Brothers Inc.
745 Seventh Ave.
New York, New York 10019

FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
1001 Nineteenth Street North
Arlington, VA 22209

Ladies and Gentlemen:

     Introductory. The Great Atlantic & Pacific Tea Company, Inc., a Maryland corporation (the “Company”), proposes to issue and sell to the several underwriters named in Schedule A (the “Underwriters”), acting severally and not jointly, the respective amounts set forth in such Schedule A of $150.0 million in aggregate principal amount of the Company’s 5.125% Convertible Senior Notes due 2011 (the “2011 Notes”) and $230.0 million in aggregate principal amount of the Company’s 6.75% Convertible Senior Notes due 2012 (the “2012 Notes” and, together with the 2011 Notes, the “Firm Notes”). In addition, the Company has granted to the Underwriters an option to purchase up to an additional $15.0 million in aggregate principal amount of its 5.125% Convertible Senior Notes due 2011 and an additional $25.0 million in aggregate principal amount of its 6.75% Convertible Senior Notes due 2012 (the “Optional Notes” and, together with the Firm Notes, the “Notes”). Banc of America Securities LLC and Lehman Brothers Inc. have agreed to act as representatives (the “Representatives”) of the several Underwriters named in Schedule A hereto in connection with the offering and sale of the Notes.

     The Notes will be convertible on the terms, and subject to the conditions, set forth in the indenture, to be dated as of December 18, 2007, by and between the Company and Wilmington Trust Company, as trustee (the “Trustee”), and, with respect to the 2011 Notes, the First Supplemental Indenture, to be dated as of December 18, 2007, by and between the Company and the Trustee (as supplemented, the “2011 Indenture”), and, with respect to the 2012 Notes, the Second Supplemental Indenture, to be dated as of December 18, 2007, by and between the Company and the Trustee (as supplemented, the “2012 Indenture” and, together with the 2011 Indenture, the “Indenture”). As used herein, “Underlying Shares” means the shares of common stock, par value $1.00 per share, of the Company (the “Common Stock”) that may be issued to

the holders of the Notes upon conversion of the Notes pursuant to the terms of the Notes and the Indenture. Notes in book-entry form will be issued in the name of Cede & Co., as nominee of The Depository Trust Company (the “Depositary”) pursuant to a blanket issuer letter of representations, to be dated on or before the Initial Closing Date (as defined in Section 2 hereof) (the “DTC Agreement”) between the Company and the Depositary.

     The Company hereby confirms its engagement of Friedman, Billings, Ramsay & Co. (“FBR”) as, and FBR hereby confirms its agreement with the Company to render services as, a “qualified independent underwriter”, within the meaning of NASD Conduct Rule 2720(b)(15) of the National Association of Securities Dealers, Inc. (the “NASD”) with respect to the offering and sale of the Notes. Friedman, Billings, Ramsay & Co., Inc, solely in its capacity as the qualified independent underwriter and not otherwise, is referred to herein as the “QIU.” As compensation for the services of the QIU hereunder, the Company agree to pay the QIU $250,000 on the Initial Closing Date. The yield at which the Notes will be sold to the public shall not be lower than the yield recommended by the QIU.

     Concurrently with the offering of the Notes, the Company is offering up to an aggregate of 8,134,002 shares of Common Stock pursuant to share lending agreements with affiliates of the Underwriters, pursuant to which the Company will lend shares of its common stock to such affiliates (the “Share Lending Agreements”) and the Company is entering into one or more convertible note hedge transactions with affiliates of the Underwriters (the “Hedge Transactions”) (the offering of the Notes, the transactions pursuant to the Share Lending Agreements and the transactions pursuant to the Hedge Transactions are referred to as the “Transactions”).

     The Company hereby confirms its agreements with the Underwriters and the QIU as follows:

     SECTION 1.Representations and Warranties. The Company hereby represents, warrants and covenants to each Underwriter and the QIU that, as of the date hereof, as of the Applicable Time (as defined below), as of the Initial Closing Date (as defined below) and as of the Subsequent Closing Date (as defined below):

     (a)Registration Statement on Form S-3. The Company has prepared and filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (File No. 333-147935), which contains a base prospectus (the “Base Prospectus”), to be used in connection with the public offering and sale of the Notes. Such registration statement, as amended, including the financial statements, exhibits and schedules thereto, in the form in which it became effective under the Securities Act of 1933 and the rules and regulations promulgated thereunder (collectively, the “Securities Act”), including any required information deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A or 430B under the Securities Act or the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder (collectively, the “Exchange Act”), is called the “Registration Statement.” Any registration statement filed by the Company pursuant to Rule 462(b) under the Securities Act is called the “Rule 462(b) Registration Statement”, and from and after the date and time of filing of the Rule 462(b) Registration Statement the term “Registration Statement” shall include the Rule 462(b) Registration Statement. Any preliminary prospectus included in the Registration Statement,

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including any preliminary prospectus supplement relating to the Notes, together with the Base Prospectus, that is first filed with the Commission pursuant to Rule 424(b), is hereinafter called a “preliminary prospectus.” The term “Prospectus” shall mean the final prospectus supplement relating to the Notes, together with the Base Prospectus, that is first filed pursuant to Rule 424(b) after the date and time that this Agreement is executed and delivered by the parties hereto (the “Execution Time”). Any reference herein to the Registration Statement, any preliminary prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act; any reference to any amendment or supplement to any preliminary prospectus or the Prospectus shall be deemed to refer to and include any documents filed after the date of such preliminary prospectus or Prospectus, as the case may be, under the Exchange Act, and incorporated by reference in such preliminary prospectus or Prospectus, as the case may be; and any reference to any amendment to the Registration Statement shall be deemed to refer to and include any annual report of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement. All references in this Agreement to the Registration Statement, the Rule 462(b) Registration Statement, a preliminary prospectus, the Prospectus or any amendments or supplements to any of the foregoing, shall include any copy thereof filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”).

     (b)Compliance with Registration and Exchange Act Requirements. The Registration Statement has become effective under the Securities Act. The Company has complied to the Commission’s satisfaction with all requests of the Commission for additional or supplemental information. No stop order suspending the effectiveness of the Registration Statement is in effect, the Commission has not issued any order or notice preventing or suspending the use of the Registration Statement, any preliminary prospectus or the Prospectus and no proceedings for such purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated or threatened by the Commission.

      Each preliminary prospectus included in the Disclosure Package and the Prospectus when filed complied in all material respects with the Securities Act. Each of the Registration Statement and any post-effective amendment thereto, at each time of effectiveness and at the date hereof, complied and will comply in all material respects with the Securities Act and the Trust Indenture Act and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading. The Prospectus, as amended or supplemented, as of its date, at the date hereof, at the time of any filing pursuant to Rule 424(b), at the Initial Closing Date (as defined herein) and at the Subsequent Closing Date (as defined herein) in respect of the Optional Notes, did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties set forth in the two immediately preceding sentences do not apply to statements in or omissions from the Registration Statement or any post-effective amendment thereto, or the Prospectus, or any amendments or supplements thereto, based upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives expressly for use therein, it being understood and agreed that the only such information furnished by the Representatives consists of the information described as such in Section 7(b) hereof. There is no

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contract or other document required to be described in the Prospectus or to be filed as an exhibit to the Registration Statement that has not been described or filed as required.

      The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and as of the date thereof, at the date hereof, at the Initial Closing Date and at the Subsequent Closing Date in respect of the Optional Notes, did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading.

     (c)Disclosure Package. The term “Disclosure Package” shall mean (i) the preliminary prospectus supplement, dated December 10, 2007, including the Base Prospectus, dated December 7, 2007, in each case as amended or supplemented (ii) the issuer free writing prospectuses as defined in Rule 433 of the Securities Act (each, an “Issuer Free Writing Prospectus”), if any, identified in Schedule B hereto, and (iii) any other free writing prospectus that the parties hereto shall hereafter expressly agree in writing to treat as part of the Disclosure Package. As of 5:45 p.m. (Eastern time) on the date of execution and delivery of this Agreement (the “Applicable Time”), the Disclosure Package did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from the Disclosure Package based upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives specifically for use therein, it being understood and agreed that the only such information furnished by or on behalf of any Underwriter consists of the information described as such in Section 7(b) hereof.

     (d)Company Not Ineligible Issuer. (i) At the time of filing the Registration Statement and (ii) as of the Execution Time of this Agreement (with such date being used as the determination date for purposes of this clause (ii)), the Company was not and is not an Ineligible Issuer (as defined in Rule 405 under the Securities Act), without taking account of any determination by the Commission pursuant to Rule 405 under the Securities Act that it is not necessary that the Company be considered an Ineligible Issuer.

     (e)Company is a Well-Known Seasoned Issuer. (i) At the time of the initial filing of the Registration Statement, (ii) at the time of the most recent amendment thereto, if any, for the purposes of complying with Section 10(a)(3) of the Securities Act (whether such amendment was by post-effective amendment, incorporated report filed pursuant to Section 13 or 15(d) of the Exchange Act or form of prospectus) and (iii) at the time the Company or any person acting on its behalf (within the meaning, for this clause only, of Rule 163(c) of the Securities Act) made any offer relating to the Notes in reliance on the exemption of Rule 163 of the Securities Act, the Company was a “well known seasoned issuer” as defined in Rule 405 of the Securities Act. The Registration Statement is an “automatic shelf registration statement,” as defined in Rule 405 of the Securities Act, that automatically became effective not more than three years prior to the Execution Time; the Company has not received from the Commission any notice pursuant to Rule 401(g)(2) of the Securities Act objecting to use of the automatic shelf registration statement

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form and the Company has not otherwise ceased to be eligible to use the automatic shelf registration form.

     (f)Issuer Free Writing Prospectuses. Each Issuer Free Writing Prospectus, as of its issue date, did not include any information that conflicted, conflicts or will conflict with the information then contained in the Registration Statement, including any prospectus or prospectus supplement that is or becomes part of the Registration Statement. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information then contained in the Registration Statement, the Company has promptly notified or will promptly notify the Representatives and has promptly amended or supplemented or will promptly amend or supplement such Issuer Free Writing Prospectus to eliminate or correct such conflict. The foregoing two sentences do not apply to statements in or omissions from any Issuer Free Writing Prospectus set forth on Schedule B based upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives expressly for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 7(b) hereof.

     (g)The Underwriting Agreement. This Agreement has been duly authorized, executed and delivered by the Company.

     (h)Authorization of the Notes. The Notes have been duly authorized by the Company and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters, will have been duly executed and delivered by the Company and will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms and entitled to the benefits of the Indenture (except as the enforcement thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles) and will be convertible into Common Stock or settled for cash in accordance with their terms.

     (i)Authorization of the Indenture. The Indenture has been duly authorized by the Company and, at the Initial Closing Date, will have been duly executed and delivered by the Company and will constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.

     (j)Authorization of the Share Lending Agreements. The Share Lending Agreements have been duly authorized, executed and delivered by the Company and are valid and binding agreements of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.

     (k)No Applicable Registration or Other Similar Rights. There are no persons with registration or other similar rights to have any equity or debt securities registered for sale under

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the Registration Statement or included in the offering contemplated by this Agreement, other than such rights as have been duly waived or satisfied.

     (l)Accuracy of Statements in Prospectus. The statements in the Base Prospectus under the caption “Description of Securities We May Offer -- Capital Stock-Common Stock” and the statements in the Disclosure Package and the Prospectus under the captions “Descriptions of the Notes,” “Description of the Debt Securities,” and “Certain U.S. Federal Income Tax Consequences,” in each case insofar as such statements summarize certain provisions of the Notes, the Indenture or the statutes or regulations referred to therein, are accurate and fair summaries of the matters described therein in all material respects.

     (m)No Material Adverse Effect. Except as otherwise disclosed in the Disclosure Package and the Prospectus, subsequent to the respective dates as of which information is given in the Disclosure Package: (i) there has been no material adverse change, or any development that could reasonably be expected to result in a material adverse change, in the condition, financial or otherwise, or in the business, properties, operations or prospects, whether or not arising from transactions in the ordinary course of business, of the Company and its subsidiaries, considered as one entity (any such change is called a “Material Adverse Effect”); (ii) the Company and its subsidiaries, considered as one entity, have not incurred any material liability or obligation, indirect, direct or contingent, not in the ordinary course of business nor entered into any material transaction or agreement not in the ordinary course of business; and (iii) there has been no dividend or distribution of any kind declared, paid or made by the Company or, except for dividends paid to the Company or other subsidiaries, any of its subsidiaries on any class of capital stock or repurchase or redemption by the Company or any of its subsidiaries of any class of capital stock.

      (n)Independent Accountants.

     (1)PricewaterhouseCoopers LLP, which expressed its opinion with respect to the Company’s financial statements (which term as used in this Agreement includes the related notes thereto) and supporting schedules (the “Company Financial Statements”) filed with the Commission and incorporated by reference in the Registration Statement and included in the Disclosure Package and the Prospectus, are independent public or certified public accountants within the meaning of Regulation S-X under the Securities Act and the Exchange Act.

     (2)Deloitte & Touche LLP, which expressed its opinion with respect to the financial statements of Pathmark Stores, Inc. (“Pathmark”) (which term as used in this Agreement includes the related notes thereto) and supporting schedules (the “Pathmark Financial Statements”) filed with the Commission and incorporated by reference in the Registration Statement and included in the Disclosure Package and the Prospectus, are independent public or certified public accountants within the meaning of Regulation S-X under the Securities Act and the Exchange Act.

     (o)Preparation of the Financial Statements. The Company Financial Statements and the Pathmark Financial Statements, in each case, together with the related schedules and notes, filed with the Commission and incorporated by reference in the Registration Statement and/or

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included in the Disclosure Package and the Prospectus present fairly in all material respects the consolidated financial position of the entities to which they relate as of and at the dates indicated and the results of their operations and cash flows for the periods specified on the basis stated therein. Such financial statements comply as to form with the applicable accounting requirements of the Securities Act and have been prepared in conformity with generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto. No other financial statements or supporting schedules are required to be included or incorporated by reference in the Registration Statement. The financial data set forth in the preliminary prospectus and the Prospectus under the captions “Summary–Summary Financial Data for A&P”, “Summary–Summary Financial Data for Pathmark”, “Selected Historical Financial Data of A&P” and “Selected Historical Financial Data of Pathmark” fairly present in all material respects the information set forth therein on a basis consistent with that of the audited financial statements contained in the Registration Statement. The unaudited pro forma condensed combined financial statements of the Company and its subsidiaries and the related notes thereto included under the captions “Prospectus Summary–Summary Unaudited Pro Forma Consolidated Financial Data” and “Unaudited Pro Forma Condensed Combined Financial Information” and elsewhere in the preliminary prospectus, the Prospectus and the Registration Statement or incorporated by reference in the preliminary prospectus, the Prospectus and the Registration Statement have been prepared in accordance with the Commission’s rules and guidelines with respect to pro forma financial statements, and the assumptions used in the preparation thereof are believed by management to be reasonable at the time such assumptions were made (it being understood that management’s belief is based, in part, on representations made by Pathmark to the Company in the acquisition documents) and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein in all material respects.

     (p)Incorporation and Good Standing of the Company and its Subsidiaries. Each of the Company and its subsidiaries, except for the subsidiaries listed on Exhibit B hereto, has been duly incorporated or formed and is validly existing as a corporation or limited liability company in good standing under the laws of the jurisdiction of its incorporation or formation and has corporate or limited liability company power and authority to own, lease and operate its properties and to conduct its business as described in the Disclosure Package and the Prospectus and, in the case of the Company, to enter into and perform its obligations under each of this Agreement, the DTC Agreement, the Notes, the Indenture and the Share Lending Agreements, each to the extent a party thereto. Each of the Company and its subsidiaries, except for the subsidiaries listed on Exhibit B hereto, is duly qualified as a foreign corporation or limited liability company to transact business and is in good standing or equivalent status in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except for such jurisdictions where the failure to so qualify or to be in good standing would not result in a Material Adverse Effect. All of the issued and outstanding capital stock of each subsidiary has been duly authorized and validly issued, is fully paid and nonassessable and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim, except as otherwise described in the Disclosure Package and the Prospectus (including without limitation liens under or permitted by the Company’s five year asset-based senior secured revolving credit facility, dated as of December 3, 2007 (the “ABL Credit Agreement”)

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and the Indenture). The Company does not own or control, directly or indirectly, any corporation, association or other entity other than the subsidiaries listed in Exhibit A hereto.

     (q)Capitalization and Other Capital Stock Matters. At September 8, 2007, on an actual basis, and on an adjusted basis after giving pro forma effect to the acquisition of Pathmark and the other adjustments identified in the Disclosure Package and the Prospectus and the issuance and sale of the Notes pursuant hereto, the Company would have had an authorized and outstanding capitalization as set forth in the Disclosure Package and the Prospectus under the caption “Capitalization” (other than for subsequent issuances of capital stock, if any, pursuant to employee benefit plans described in the Disclosure Package and the Prospectus or upon exercise of outstanding options described in the Disclosure Package and the Prospectus). The common stock of the Company (the “Common Stock”) conforms in all material respects to the description thereof in the Disclosure Package and the Prospectus. All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and nonassessable and have been issued in compliance with federal and state securities laws. None of the outstanding shares of Common Stock were issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company. Except for the Notes, there are no authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company other than those described in the Disclosure Package and the Prospectus. The description of the Company’s stock option, stock bonus and other stock plans or arrangements, and the options or other rights granted thereunder, set forth or incorporated by reference in the Disclosure Package and the Prospectus accurately and fairly presents in all material respects the information required to be shown with respect to such plans, arrangements, options and rights.

     (r)Stock Exchange Listing. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is listed on the New York Stock Exchange (the “NYSE”), and the Company has taken no action designed to terminate the registration of the Common Stock under the Exchange Act or delist the Common Stock from the NYSE, nor has the Company received any notification that the Commission or the NYSE is contemplating terminating such registration or listing.

     (s)Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required. Neither the Company nor any of its subsidiaries is (i) in violation of, or is in default under, (or, with the giving of notice or lapse of time, would be in default) (“Default”) its charter or bylaws or limited liability company agreement; (ii) in Default under any indenture, mortgage, loan or credit agreement, note, contract, franchise, lease or other agreement, obligation, condition, covenant or instrument to which either the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries may be bound (including, without limitation, the Share Lending Agreements, the Notes, the ABL Credit Agreement and the indenture governing the Company’s 9 3/8% Senior Quarterly Interest Bonds due 2039) or to which any of the property or assets of the Company or any of its subsidiaries is subject (each, an “Existing Instrument”); or (iii) in violation of any statute, law, rule, regulation, judgment, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or such subsidiary or any of its properties, as applicable, except, with respect to clauses (ii) and (iii) only, for such

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Defaults as would not result in a Material Adverse Effect. The execution, delivery and performance of this Agreement, the DTC Agreement, the Indenture and the Share Lending Agreements by the Company, the issuance and delivery of the Notes, the issuance of the Underlying Shares upon conversion of the Notes and consummation of the Transactions and the other transactions contemplated hereby and thereby and by the Disclosure Package and the Prospectus (i) have been duly authorized by all necessary corporate action and will not result in any violation of the provisions of the charter or bylaws of the Company or any of its subsidiaries (except, as disclosed in the Prospectus, the Company will not have sufficient shares of Common Stock authorized to settle the Notes by the issuance of Underlying Shares until the Company shall have amended its organizational documents to increase the number of authorized Shares of the Company), (ii) will not conflict with or constitute a breach of, or Default or a Debt Repayment Triggering Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, or require the consent of any other party to, any Existing Instrument, except for such conflicts, breaches, Defaults, liens, charges or encumbrances as would not result in a Material Adverse Effect, and (iii) will not result in any violation of any statute, law, administrative regulation or administrative or court decree applicable to the Company or any of its subsidiaries. No consent, approval, authorization or other order of, or registration or filing with, any court or other governmental or regulatory authority or agency, is required for the execution, delivery and performance by the Company of this Agreement, the Indenture or the Share Lending Agreements, the issuance and delivery of the Notes, the issuance of the Underlying Shares upon conversion of the Notes, or consummation of the Transactions and the other transactions contemplated hereby and thereby and by the Disclosure Package and the Prospectus, except such as have been obtained or made by the Company and are in full force and effect under the Securities Act and applicable securities laws of the several states of the United States or provinces of Canada. As used herein, a “Debt Repayment Triggering Event” means any event or condition which gives, or with the giving of notice or lapse of time would give, the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries.

     (t)No Material Actions or Proceedings. There are no legal or governmental actions, suits or proceedings pending or, to the Company’s knowledge, threatened (i) against or affecting the Company or any of its subsidiaries or (ii) which has as the subject thereof any property owned or leased by the Company or any of its subsidiaries and any such action, suit or proceeding, if determined adversely to the Company or any such subsidiary, is reasonably likely to result in a Material Adverse Effect or adversely affect the consummation of the transactions contemplated by this Agreement. Except for any labor dispute that would not result in a Material Adverse Effect, no material labor dispute with the employees of the Company or any of its subsidiaries or to the Company’s knowledge, with the employees of any principal supplier of the Company exists or, to the Company’s knowledge, is threatened or imminent.

     (u)Intellectual Property Rights. Except as would not result in a Material Adverse Effect, each of the Company and its subsidiaries own or possess valid rights to use all trademarks, trade names, trade dress, patent rights, copyrights, licenses, approvals, trade secrets and other similar rights (collectively, “Intellectual Property Rights”) reasonably necessary to conduct their businesses as now conducted; and the expected expiration (to the extent not subject

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to renewal or extension) of any of such Intellectual Property Rights would not result in a Material Adverse Effect. Neither the Company nor any of its subsidiaries has received any written notice of infringement or conflict with asserted Intellectual Property Rights of others, which infringement or conflict, if the subject of an unfavorable decision, is reasonably likely to result in a Material Adverse Effect.

     (v)All Necessary Permits, etc. Except as would not result in a Material Adverse Effect, the Company and its subsidiaries possess such valid and current licenses, certificates, authorizations or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct their respective businesses (including pharmacy licenses, Medicare and Medicaid provider agreements, accreditations and other similar documentation, or approvals of any health departments), and neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such certificate, authorization or permit which, if the subject of an unfavorable decision, ruling or finding, is reasonably likely to result in a Material Adverse Effect.

     (w)Title to Properties. The Company and each of its subsidiaries has good and valid title to all the properties and assets material to its business reflected as owned in the financial statements referred to in Section 1(n) hereof (or elsewhere in the Disclosure Package and the Prospectus), in each case free and clear of any security interests, mortgages, liens, encumbrances, equities, claims and other defects, except those described in the Disclosure Package and the Prospectus (including without limitation liens under or permitted by the Company’s existing credit facility) or as could not reasonably be expected to result in a Material Adverse Effect. The real property, improvements, equipment and personal property held under lease by the Company or any of its subsidiaries are held under valid and enforceable leases, with such exceptions as are not material.

     (x)Tax Law Compliance. Except as would not result in a Material Adverse Effect, the Company and its subsidiaries have filed all necessary federal, state and foreign income and franchise tax returns or have properly requested extensions thereof and have paid all taxes required to be paid by any of them and, if due and payable, any related or similar assessment, fine or penalty levied against any of them, other than those being contested in good faith and by appropriate proceedings. Except as would not result in a Material Adverse Effect, each of the Company and its subsidiaries has made adequate charges, accruals and reserves in the applicable financial statements referred to in Section 1(n) hereof in respect of all federal, state and foreign income and franchise taxes for all periods as to which the tax liability of the Company or any of its subsidiaries has not been finally determined.

     (y)“Investment Company”. Each of the Company and its subsidiaries is not, and after receipt of payment for the Notes will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended (the “Investment Company Act,” which term, as used herein, includes the rules and regulations of the Commission promulgated thereunder).

     (z)Insurance. Except as would not result in a Material Adverse Effect, each of the Company and its subsidiaries is insured by recognized, financially sound institutions with policies in such amounts and with such deductibles and covering such risks as the Company’s

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management reasonably believes are adequate and customary for their businesses including, without limitation, policies covering real and personal property owned or leased by the Company and its subsidiaries against theft, damage, destruction, acts of vandalism and earthquakes.

     (aa)No Restrictions on Distributions. No subsidiary of the Company is currently prohibited, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such subsidiary’s capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s property or assets to the Company or any other subsidiary of the Company, except as described in or contemplated by the Disclosure Package and the Prospectus and except as would not materially inhibit the ability of the Company to perform its obligations under the Notes.

     (bb)No Price Stabilization or Manipulation. None of the Company or any of its subsidiaries has taken any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of the Notes.

     (cc)Solvency. The Company and its subsidiaries on a consolidated basis are, and immediately after the Initial Closing Date and the Subsequent Closing Date will be, Solvent. As used herein, the term “Solvent” means, with respect to any person on a particular date, that on such date (i) the fair market value of the assets of such person is greater than the total amount of liabilities (including contingent liabilities) of such person, (ii) the present fair salable value of the assets of such person is greater than the amount that will be required to pay the probable liabilities of such person on its debts as they become absolute and matured, (iii) such person is able to realize upon its assets and pay its debts and other liabilities, including contingent obligations, as they mature and (iv) such person does not have unreasonably small capital with which to conduct its business as it is proposed to be conducted on such date.

     (dd)Compliance with Sarbanes-Oxley. The Company and its subsidiaries and their respective officers and directors are in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act,” which term, as used herein, includes the rules and regulations of the Commission promulgated thereunder).

     (ee)Stock Options. With respect to stock options (the “Stock Options”) granted pursuant to the stock-based compensation plans of the Company (the “Company Stock Plans”), (i) each grant of a Stock Option was duly authorized no later than the date on which the grant of such Stock Option was by its terms to be effective (the “Grant Date”) by all necessary corporate action, including, as applicable, approval by the board of directors of the Company (or a duly constituted and authorized committee thereof) and any required stockholder approval by the necessary number of votes or written consents, and the award agreement governing such grant (if any) was duly executed and delivered by each party thereto, (ii) each such grant was made in accordance with the terms of the Company Stock Plans, the Exchange Act and all other applicable laws and regulatory rules or requirements, including the rules of the NYSE and any other exchange on which the securities of the Company are traded, and (iii) each such grant was properly accounted for in accordance with GAAP in the consolidated financial statements (including the related notes) of the Company and disclosed in the Company’s filings with the Commission in accordance with the Exchange Act and all other applicable laws. The

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Company’s subsidiaries do not have any stock-based compensation plans and have not granted any Stock Options.

     (ff)Compliance with Section 7 of the Exchange Act. None of the transactions contemplated by this Agreement (including, without limitation, the use of the proceeds from the sale of the Notes) will violate or result in a violation of Section 7 of the Exchange Act, or any regulation promulgated thereunder, including, without limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System.

     (gg)Company’s Internal Controls and Accounting Systems. The Company and its subsidiaries maintain (i) effective internal control over financial reporting as defined in Rule 13a-15 of the Exchange Act and (ii) a system of accounting controls that is in compliance in all material respects with the Sarbanes-Oxley Act and is sufficient to provide reasonable assurances that: (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; and (D) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

     (hh)No Material Weakness in Internal Controls. Except as disclosed in the Disclosure Package and the Prospectus, or in any document incorporated by reference therein, since the end of the Company’s most recent audited fiscal year, there has been (i) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (ii) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

     (ii)Disclosure Controls and Procedures. The Company and its subsidiaries maintain an effective system of “disclosure controls and procedures” (as defined in Rule 13a-15 under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure. The Company and its subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and procedures as required by Rule 13a-15 under the Exchange Act.

     (jj)Compliance with Environmental Laws. Except as would not result in a Material Adverse Effect: (i) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign law or regulation relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum and petroleum products (collectively, “Materials of Environmental Concern”), or otherwise relating to the manufacture, processing,

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distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern (collectively, “EnvironmentalLaws”), which violation includes, without limitation, noncompliance with any permits or other governmental authorizations required for the operation of the business of the Company or its subsidiaries under applicable Environmental Laws, or noncompliance with the terms and conditions thereof, nor has the Company or any of its subsidiaries received any written communication, whether from a governmental authority, citizens group, employee or otherwise, that alleges that either the Company or any of its subsidiaries is in violation of any Environmental Law; (ii) there is no claim, action or cause of action filed with a court or governmental authority, there is no investigation with respect to which the Company or any of its subsidiaries has received written notice, and no written notice has been received by any person or entity alleging potential liability for investigatory costs, cleanup costs, governmental responses costs, natural resources damages, property damages, personal injuries, attorneys’ fees or penalties, in each case arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at any location owned, leased or operated by the Company or any of its subsidiaries, now or in the past (collectively, “Environmental Claims”); and (iii) to the Company’s knowledge, there are no past, present or anticipated future actions, activities, circumstances, conditions, events or incidents, including, without limitation, the release, emission, discharge, presence or disposal of any Material of Environmental Concern, that would result in a violation of any Environmental Law, require material expenditures to be incurred pursuant to an Environmental Law or form the basis of a potential Environmental Claim against the Company or any of its subsidiaries or against any person or entity whose liability for any Environmental Claim the Company or any of its subsidiaries has retained or assumed either contractually or by operation of law. Neither the Company nor any of its subsidiaries is subject to any pending or threatened proceeding under Environmental Law to which a governmental authority is a party and which is reasonably likely to result in monetary sanctions of $100,000 or more.

     (kk)ERISA Compliance. Except as would not result in a Material Adverse Effect, the Company and its subsidiaries and any “employee benefit plan” (as defined under the Employee Retirement Income Security Act of 1974 (as amended, “ERISA,” which term, as used herein, includes the regulations and published interpretations thereunder)) established or maintained by the Company, its subsidiaries or their “ERISA Affiliates” (as defined below) are in compliance with ERISA. “ERISA Affiliate” means, with respect to the Company or a subsidiary, any member of any group of organizations described in Section 414 of the Code of which the Company or such subsidiary is a member. No “reportable event” (as defined under ERISA) has occurred or is reasonably expected to occur with respect to any “employee benefit plan” established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates. No “employee benefit plan” established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates, if such “employee benefit plan” were terminated, would have any material “amount of unfunded benefit liabilities” (as defined under ERISA). Neither the Company, its subsidiaries nor any of their ERISA Affiliates has incurred or reasonably expects to incur any material liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “employee benefit plan” or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each “employee benefit plan” established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates that is intended to be qualified under Section 401 of the Code is so qualified and nothing has occurred, whether by action or failure to act, which would cause the loss of such qualification.

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     (ll)Brokers. Except as otherwise disclosed in the Disclosure Package and the Prospectus, to the Company’s knowledge, there is no broker, finder or other party that is entitled to receive from the Company any brokerage or finder’s fee or other fee or commission as a result of any transactions contemplated by this Agreement.

     (mm)Compliance with Labor Laws. Except as would not result in a Material Adverse Effect, (i) there is (A) no unfair labor practice complaint pending or, to the Company’s knowledge, threatened against the Company or any of its subsidiaries before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under collective bargaining agreements pending, or to the Company’s knowledge, threatened, against the Company or any of its subsidiaries, (B) no strike, labor dispute, slowdown or stoppage pending or, to the Company’s knowledge, threatened against the Company or any of its subsidiaries and (C) no union representation question existing with respect to the employees of the Company or any of its subsidiaries and, to the Company’s knowledge, no union organizing activities taking place and (ii) there has been no violation of any federal, state or local law relating to discrimination in hiring, promotion or pay of employees or of any applicable wage or hour laws.

     (nn)Related Party Transactions. No relationship, direct or indirect, exists between or among the Company or any of its affiliates, on the one hand, and any director, officer, member, stockholder, customer or supplier of the Company or any of its affiliates, on the other hand, which is required by the Securities Act to be disclosed in a registration statement on Form S-3 which is not so disclosed in the Disclosure Package and the Prospectus. There are no outstanding loans, advances (except advances for business expenses in the ordinary course of business) or guarantees of indebtedness by the Company or any of its affiliates to or for the benefit of any of the officers or directors of the Company or any of its affiliates or any of their respective family members.

     (oo)Compliance with Money Laundering Laws. The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company threatened, except, in each case, as would not reasonably be expected to have a Material Adverse Effect.

     (pp)OFAC. Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company and its subsidiaries will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC (it being understood that the Company makes no representation

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or warranty herein as to any Underwriter or its affiliates that will receive proceeds from the Offering).

     (qq)Foreign Corrupt Practices Act. Neither the Company nor any of its subsidiaries, nor, to the knowledge of the Company, any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any of its subsidiaries, has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

     (rr)Lending Relationship. Except as disclosed in the Disclosure Package and the Prospectus, the Company does not intend to use any of the proceeds from the sale of the Notes hereunder to repay any outstanding debt owed to any affiliate of any Underwriter.

     (ss)Statistical and Market Related Data. Nothing has come to the attention of the Company that has caused the Company to believe that the statistical and market-related data included in the Disclosure Package and the Prospectus is not based on or derived from sources that are reliable and accurate in all material respects.

     (tt)Company Sales and Other Financial Data. Nothing has come to the Company's attention that causes the Company to believe that (1) during the period from September 9, 2007 to December 1, 2007 there was any material decrease in sales, income (loss) from operations, income from continuing operations or net income (loss) as compared to the corresponding period in fiscal 2006 (after adjusting the fiscal 2006 period to reflect the reclassification of the Company's stores in the Greater New Orleans area and the Midwest as discontinued operations) or that (2) during the period from September 9, 2007 to the date of this Agreement there was any material decrease in sales, income (loss) from operations, income from continuing operations or net income (loss) as compared to the corresponding period in fiscal 2006 (after adjusting the fiscal 2006 period to reflect the reclassification of the Company's stores in the Greater New Orleans area and the Midwest as discontinued operations).

     Any certificate signed by an officer of the Company and delivered to the Underwriters or to counsel for the Underwriters shall be deemed to be a representation and warranty by the Company to each Underwriter as to the matters set forth therein to the extent set forth or referred to in such certificate.

      SECTION 2.Purchase, Sale and Delivery of the Notes.

     (a)The Firm Notes. The Company agrees to issue and sell to the several Underwriters, severally and not jointly, all of the Firm Notes, and each Underwriter agrees, severally and not jointly, to purchase from the Company the aggregate principal amount of Firm Notes set forth opposite its name on Schedule A, at a purchase price of 97.00% of the principal amount thereof, plus accrued interest, if any, from December 18, 2007, payable on the Initial Closing Date, in each case, on the basis of the representations, warranties and agreements herein contained, and upon the terms, and subject to the conditions, herein set forth.

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     (b)The Optional Notes; the Subsequent Closing Date. In addition, on the basis of the representations, warranties and agreements herein contained, and upon the terms and subject to the conditions herein set forth, the Company hereby grants an option to the several Underwriters to purchase, severally and not jointly, the Optional Notes from the Company at the purchase price per note of 100% of the principal amount thereof to be paid by the Underwriters, plus accrued interest, if any, from December 18, 2007 to the settlement date for the Optional Notes (the “settlement date”). The option granted hereunder may be exercised once upon notice by the Representatives to the Company, which notice may be given at any time within 13 days from the Initial Closing Date (as defined below). Such notice shall set forth the aggregate principal amount of Optional Notes as to which the Underwriters are exercising the option and the settlement date. Delivery of the Optional Notes, and payment therefor, shall be made as provided in Sections 2(c), 2(e) and 2(f) hereof. The principal amount of Optional Notes to be purchased by each Underwriter shall be the same percentage as such Underwriter is purchasing of the Firm Notes, subject to such adjustments as the Representatives shall deem advisable.

     (c)The Closing Date. Delivery of and payment for the Firm Notes and the Optional Notes (if the option provided for in Section 2(b) hereof shall have been exercised on or before the Initial Closing Date) shall be made at the offices of Fried, Frank, Harris, Shriver & Jacobson LLP, One New York Plaza, New York, New York 10004 (or such other place as may be agreed to by the Company and the Representatives) at 10:00 A.M., New York City time, on December 18, 2007, or at such time on such later date (not later than December 28, 2007) as the Representatives shall designate, which date and time may be postponed by agreement between the Representatives and the Company (such date and time of delivery and payment for the Notes being herein called the “Initial Closing Date”). Delivery of the Notes shall be made to the Representatives for the respective accounts of the several Underwriters against payment by the several Underwriters through the Representatives of the purchase price thereof to or upon the order of the Company by wire transfer payable in same-day funds to the account specified by the Company. The certificates for the Notes shall be in such denominations and registered in the name of Cede & Co., as nominee of the Depositary, pursuant to the DTC Agreement, and shall be made available for inspection on the business day preceding the Initial Closing Date at a location in New York City, as the Representatives may designate. If the option provided for in Section 2(b) hereof is exercised on or after the third Business Day prior to the Initial Closing Date, the Company will deliver the Optional Notes (at the expense of the Company) to the Representatives on the date specified by the Representatives (which shall be not fewer than three, but no more than five, Business Days after exercise of said option), for the respective accounts of the several Underwriters, against payment by the several Underwriters through the Representatives of the purchase price thereof to or upon the order of the Company by wire transfer payable in same-day funds to the account specified by the Company. If settlement for the Optional Notes occurs after the Initial Closing Date (the “Subsequent Closing Date”), the Company will deliver to the Representatives on the settlement date, and the obligation of the Underwriters to purchase the Optional Notes shall be conditioned upon receipt of, supplemental opinions, certificates and letters confirming as of such date the opinions, certificates and letters delivered on the Initial Closing Date pursuant to Section 5 hereof.

     (d)Public Offering of the Notes. The Representatives hereby advise the Company that the Underwriters intend to offer for sale to the public, as described in the Prospectus, their

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respective portions of the Notes as soon after this Agreement has been executed as the Representatives, in their sole judgment, have determined is advisable and practicable.

     (e)Payment for the Notes. Payment for the Notes shall be made at the Initial Closing Date (and, if applicable, at the Subsequent Closing Date) by wire transfer of immediately available funds to the order of the Company.

     It is understood that the Representatives have been authorized, for their own account and the accounts of the several Underwriters, to accept delivery of and receipt for, and make payment of the purchase price for, the Firm Notes and any Optional Notes the Underwriters have agreed to purchase. The Representatives, individually and not as Representatives of the Underwriters, may (but shall not be obligated to) make payment for any Notes to be purchased by any Underwriter whose funds shall not have been received by the Representatives by the Initial Closing Date or the Subsequent Closing Date, as the case may be, for the account of such Underwriter, but any such payment shall not relieve such Underwriter from any of its obligations under this Agreement.

     (f)Delivery of the Notes. Delivery of the Notes and the Optional Notes shall be made through the facilities of The Depository Trust Company unless the Representatives shall otherwise instruct. Time shall be of the essence, and delivery at the time and place specified in this Agreement is a further condition to the obligations of the Underwriters.

     (g)Delivery of Prospectus to the Underwriters. Not later than 3:00 p.m. on the second business day in New York City following the date of this Agreement, the Company shall deliver or cause to be delivered, copies of the Prospectus in such quantities and at such places as the Representatives shall reasonably request.

     SECTION 3.Additional Covenants. The Company further covenants and agrees with each Underwriter and the QIU as follows:

     (a)The Representatives’ Review of Proposed Amendments and Supplements. During the period beginning on the date of this Agreement and ending on the later of the (i) Initial Closing Date or the Subsequent Closing Date, as applicable, or (ii) such date the Prospectus is no longer required by law to be delivered in connection with sales by an Underwriter or dealer, including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act (the “Prospectus Delivery Period”) (but in no event more than one year after the date of the Prospectus), prior to filing any amendment or supplement to the Registration Statement (including any filing under Rule 462(b) under the Securities Act), or any amendment, supplement or revision to the Disclosure Package or the Prospectus, whether pursuant to the Securities Act, the Exchange Act or otherwise, the Company will furnish the Representatives with copies of any such documents a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file or use any such proposed amendment or supplement to which the Representatives shall reasonably object.

     (b)Compliance with Securities Regulations and Commission Requests. The Company, subject to Section 3(a), will promptly notify the Representatives in writing pursuant to Section 12 hereof of (i) the filing or effectiveness during the Prospectus Delivery Period of any

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post-effective amendment to the Registration Statement or the filing of any supplement or amendment to the preliminary prospectus or the Prospectus, (ii) the receipt of any comments regarding such Registration Statement from the Commission during the Prospectus Delivery Period, (iii) any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the preliminary prospectus or the Prospectus or for additional information regarding the Registration Statement or Prospectus, and (iv) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of the preliminary prospectus or the Prospectus, the suspension of the qualification of the Notes for offering or sale in any jurisdiction or of the initiation or, to the Company’s knowledge, threatening of any proceedings for any such purposes or of any proceedings to remove, suspend or terminate from listing or quotation the Common Stock from any securities exchange upon which it is listed for trading or included or designated for quotation, or of the threatening or initiation of any proceedings for any such purpose. If the Company receives sufficient notice prior to the issuance of such order or notice, the Company shall use its commercially reasonable efforts to prevent the issuance of any such stop order or notice of prevention or suspension of such use. If the Commission shall enter any such stop order or issue any such notice at any time, the Company will use its commercially reasonable efforts to obtain the lifting or reversal of such order or notice as soon as practicable, or, subject to Section 3(a), will file an amendment to the Registration Statement or will file a new registration statement and use its commercially reasonable efforts to have such amendment or new registration statement declared effective as soon as practicable. The Company will promptly effect the filings necessary pursuant to Rule 424 and 430A or 430B, as applicable, under the Securities Act and will take such steps as it deems necessary to ascertain promptly whether the preliminary prospectus and the Prospectus transmitted for filing under Rule 424 was received for filing by the Commission and, in the event that it was not, it will promptly file such document.

     (c)Amendments and Supplements to the Registration Statement, Disclosure Package and Prospectus and Other Securities Act Matters. If at any time during the Prospectus Delivery Period (but in no event more than six months after the date of the Prospectus), any event or development shall occur or condition exist as a result of which the Disclosure Package or the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein in the light of the circumstances under which they were made not misleading, or if it shall be necessary to amend or supplement the Disclosure Package or the Prospectus, or to file under the Exchange Act any document incorporated by reference in the Disclosure Package or the Prospectus, in order to make the statements therein, in the light of the circumstances under which they were made not misleading, in any material respect or if in the reasonable judgment of the Representatives it is otherwise necessary or advisable to amend or supplement the Registration Statement, the Disclosure Package or the Prospectus, or to file under the Exchange Act any document incorporated by reference in the Disclosure Package or the Prospectus, or to file a new registration statement containing the Prospectus, in order to comply with law, including in connection with the delivery of the Prospectus, the Company agrees to (i) notify the Representatives of any such event or condition and (ii) promptly prepare (subject to Section 3(a) and 3(e) hereof), file with the Commission (and use its commercially reasonable efforts to have any amendment to the Registration Statement or any new registration statement to be declared effective) and furnish at its own expense to the Underwriters and to dealers, amendments or supplements to the Registration Statement, the Disclosure Package or the Prospectus, or any new

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registration statement, necessary in order to make the statements in the Disclosure Package or the Prospectus as so amended or supplemented, in the light of the circumstances under which they were made not misleading in any material respect or so that the Registration Statement, the Disclosure Package or the Prospectus, as amended or supplemented, will comply with all applicable law.

     The Company hereby expressly acknowledges that the indemnification and contribution provisions of Sections 7 and 8 hereof are specifically applicable and relate to each registration statement, preliminary prospectus, prospectus, amendment or supplement referred to in this Section 3.

     (d)Final Term Sheet. The Company will prepare a final term sheet in a form approved by the Representatives and attached as Schedule C hereto, and will file such term sheet pursuant to Rule 433(d) under the Securities Act within the time required by such rule (such term sheet, the “Final Term Sheet”). Any such Final Term Sheet will be an Issuer Free Writing Prospectus for purposes of this Agreement.

     (e)Permitted Free Writing Prospectuses. The Company represents that it has not made, and agrees that, unless it obtains the prior written consent of the Representatives, it will not make, any offer relating to the Notes that constitutes or would constitute an Issuer Free Writing Prospectus or that otherwise constitutes or would constitute a “free writing prospectus” (as defined in Rule 405 under the Securities Act) or a portion thereof required to be filed by the Company with the Commission or retained by the Company under Rule 433 under the Securities Act; provided that the prior written consent of the Representatives hereto shall be deemed to have been given in respect of the Free Writing Prospectuses included in Schedule B hereto and any electronic road show. Any such free writing prospectus consented to by the Representatives is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company agrees that (i) it has treated and will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, and (ii) it has complied and will comply, as the case may be, with the requirements of Rules 164 and 433 under the Securities Act applicable to any Permitted Free Writing Prospectus, including in respect of timely filing with the Commission, legending and record keeping.

     (f)Copies of any Amendments and Supplements to the Prospectus. The Company agrees to furnish the Representatives, without charge, during the Prospectus Delivery Period, as many copies of the Prospectus and any amendments and supplements thereto (including any documents incorporated or deemed incorporated by reference therein) and the Disclosure Package as the Representatives may request.

     (g)Copies of the Registration Statement and Prospectus. The Company will furnish to the Representatives and counsel for the Underwriters upon request signed copies of the Registration Statement (including exhibits thereto) and, during the Prospectus Delivery Period, so long as delivery of a prospectus by an Underwriter or dealer may be required by the Act, as many copies of each preliminary prospectus, the Prospectus and any supplement thereto and the Disclosure Package as the Representatives may reasonably request.

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     (h)Blue Sky Compliance. The Company shall cooperate with the Underwriters and counsel for the Underwriters to qualify or register (or to obtain exemptions from qualifying or registering) all or any part of the Notes for offer and sale under the securities laws of the several states of the United States, the provinces of Canada or any other jurisdictions designated by the Representatives, shall comply with such laws and shall continue such qualifications, registrations and exemptions in effect so long as required for the distribution of the Notes. The Company shall not be required to qualify as a foreign corporation or to take any action that would subject it to general service of process in any such jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation. The Company will advise the Underwriters promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Notes for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company shall use commercially reasonable efforts to obtain the withdrawal thereof at the earliest possible moment.

     (i)Reservation of Common Stock. The Company will use its commercially reasonable efforts to increase the number of shares of Common Stock authorized for issuance under its charter and, upon such increase of authorized shares, will reserve and keep available at all times, free of preemptive rights, the full number of shares of Common Stock issuable upon conversion of the Notes (it being acknowledged that the Company cannot compel the approval of such increase by its stockholders).

     (j)NYSE Listing. The Company will use its commercially reasonable efforts to increase the number of shares of Common Stock authorized for issuance under its charter and, upon such increase of authorized shares, will use its commercially reasonable efforts to cause the Underlying Shares to be approved for listing on the New York Stock Exchange, subject only to notice of issuance.

     (k)Use of Proceeds. The Company shall apply the net proceeds from the sale of the Notes sold by it in the manner described under the caption “Use of Proceeds” in the Disclosure Package and the Prospectus.

     (l)Transfer Agent. The Company shall engage and maintain, at its expense, a registrar and transfer agent for the Common Stock.

     (m)The Depositary. The Company will cooperate with the Underwriters and use its commercially reasonable best efforts to permit the Notes to be eligible for clearance and settlement through the facilities of the Depositary.

     (n)Earnings Statement. As soon as reasonably practicable, the Company will make generally available to its security holders and to the Representatives an earnings statement (which need not be audited) that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act for the fiscal year during which this Agreement was executed. For the avoidance of doubt, if the Company has made such earnings statement available to the public on EDGAR, the Company will have no obligation to otherwise furnish such earnings statement to its security holders or to the Representatives.

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     (o)Agreement Not To Offer or Sell Additional Securities. During the period commencing on the date hereof and ending on the 90th day following the date of the Prospectus, the Company and its subsidiaries will not, without the prior written consent of the Representatives, directly or indirectly, sell, offer, contract or grant any option to sell, pledge, transfer or establish an open “put equivalent position” or liquidate or decrease a “call equivalent position” within the meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or transfer (or enter into any transaction that is designed to, or might reasonably be expected to, result in the disposition of), or announce the offering of, or file any registration statement under the Securities Act in respect of, any (A) debt securities convertible into Common Stock, (B) shares of Common Stock, (C) options or warrants to acquire shares of the Common Stock or (D) securities exchangeable or exercisable for or convertible into debt securities convertible into Common Stock or shares of Common Stock (other than as contemplated by this Agreement with respect to the Notes and the transactions pursuant to the Share Lending Agreement); provided, however, that the Company may (i) file a registration statement on Form S-8, (ii) enter into and consummate the Hedge Transactions, (iii) issue shares of its Common Stock upon exercise of warrants described in the Prospectus and (iv) issue shares of its Common Stock or options to purchase its Common Stock upon exercise of options, in each case pursuant to any stock option, stock bonus or other stock plan or arrangement currently in effect described in the Prospectus, but only if the holders of such shares, options, or shares issued upon exercise of such options or warrants, agree in writing not to sell, offer, dispose of or otherwise transfer any such shares or options during such 90-day period without the prior written consent of the Representatives (which consent may be withheld at the sole discretion of the Representatives), subject to the exceptions contained in the Lock-Up Agreement (as defined below). Notwithstanding the foregoing, if (x) during the last 17 days of the 90-day restricted period, the Company issues an earnings release, or (y) prior to the expiration of the 90-day restricted period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the 90-day period, the restrictions imposed in this clause shall continue to apply until the expiration of the 18-day period beginning on the date of the issuance of the earnings release. The Company will provide the Representatives and any co-managers and each individual subject to the restricted period pursuant to the lockup letters described in Section 5(k) with prior notice of any such announcement that gives rise to an extension of the restricted period.

     (p)Notice of Inability to Use Automatic Shelf Registration Statement Form. If at any time during the Prospectus Delivery Period, the Company receives from the Commission a notice pursuant to Rule 401(g)(2) under the Securities Act or otherwise ceases to be eligible to use the automatic shelf registration statement form, the Company will (i) promptly notify the Representatives, (ii) promptly file a new registration statement or post-effective amendment on the proper form relating to the Notes, in a form satisfactory to the Representatives, (iii) use its commercially reasonable efforts to cause such registration statement or post-effective amendment to be declared effective and (iv) promptly notify the Representatives of such effectiveness. The Company will take all other action necessary or appropriate to permit the public offering and sale of the Notes to continue as contemplated in the registration statement that was the subject of the Rule 401(g)(2) notice or for which the Company has otherwise become ineligible. References herein to the Registration Statement shall include such new registration statement or post-effective amendment, as the case may be.

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     (q)No Manipulation of Price. Prior to the Initial Closing Date, the Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, cause or result in under the Exchange Act or otherwise, the stabilization or manipulation of the price of any securities of the Company to facilitate the sale or resale of the Notes.

     (r)No Adjustment of Conversion Price. Between the date hereof and the Initial Closing Date, the Company will not do or authorize any act or thing that would result in an adjustment of the conversion price.

     (s)Subsidiaries. The Company shall use its commercially reasonable efforts, and shall file all documents required by the laws of the relevant jurisdiction, to ensure that the subsidiaries listed in Exhibit B (except if any such subsidiary is immaterial) are in good standing in such jurisdiction, unless, as to any subsidiary, that subsidiary has been dissolved or merged into the Company or another subsidiary.

     The Representatives, on behalf of the several Underwriters, may, in their sole discretion, waive in writing the performance by the Company of one or more of the foregoing covenants or extend the time for its performance.

     SECTION 4.Payment of Expenses. The Company agrees to pay all costs, fees and expenses incurred in connection with the performance of its obligations hereunder and in connection with the transactions contemplated hereby, including, without limitation, (i) all expenses incident to the issuance and delivery of the Notes (including all printing and engraving costs), (ii) all necessary issue, transfer and other stamp taxes in connection with the issuance and offering and sale of the Notes to the Underwriters, (iii) all fees and expenses of the Company’s counsel, independent public or certified public accountants and other advisors, (iv) all costs and expenses incurred in connection with the preparation, printing, filing, shipping and distribution or reproduction of the Registration Statement (including financial statements, exhibits, schedules, consents and certificates of experts), each Issuer Free Writing Prospectus, each preliminary prospectus and the Prospectus (including financial statements and exhibits), and all amendments and supplements thereto, this Agreement, the Indenture, the DTC Agreement, the Share Lending Agreements and the Notes, (v) all filing fees, attorneys’ fees and expenses incurred by the Company or the Underwriters in connection with qualifying or registering (or obtaining exemptions from the qualification or registration of) all or any part of the Notes for offer and sale under the securities laws of the several states of the United States, the provinces of Canada or other jurisdictions designated by the Representatives (including, without limitation, the cost of preparing, printing and mailing preliminary and final blue sky or legal investment memoranda and any related supplements, including a Canadian “wrapper,” to the Disclosure Package or the Prospectus), (vi) the fees and expenses of the Trustee, including the fees and disbursements of counsel for the Trustee in connection with the Indenture and the Notes, (vii) the fees and expenses associated with listing of the Underlying Shares on the NYSE, (viii) any fees payable in connection with the rating of the Notes with the ratings agencies, (ix) any filing fees incident to, and any reasonable fees and disbursements of counsel to the Underwriters in connection with the review by the FINRA, if any, of the terms of the sale of the Notes, (x) all fees and expenses (including reasonable fees and expenses of counsel) of the Company in connection with approval of the Notes by the Depositary for “book-entry” transfer, and the

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performance by the Company of its other obligations under this Agreement, (xi) all reasonable and documented fees and out-of-pocket disbursements of counsel to the Underwriters, (xii) all reasonable, documented out-of-pocket expenses associated with the “road show” undertaken in connection with the marketing of the Notes, including the cost of any chartered airplane or other transportation, (xiii) all other fees, costs and expenses referred to in Part II of the Registration Statement and (xiv) the fees and expenses of the QIU.

     SECTION 5.Conditions of the Obligations of the Underwriters. The obligations of the several Underwriters to purchase and pay for the Firm Notes as provided herein on the Initial Closing Date and, with respect to the Optional Notes, on the Subsequent Closing Date and of the QIU to serve as QIU shall be subject to the accuracy of the representations and warranties on the part of the Company set forth in Section 1 hereof as of the date hereof and as of the Initial Closing Date as though then made and, with respect to the Optional Notes, as of the Subsequent Closing Date as though then made, to the accuracy of the statements of the Company made in any certificates pursuant to the provisions hereof, to the timely performance by the Company of its covenants and other obligations hereunder, and to each of the following additional conditions:

     (a)Accountants’ Comfort Letters. On the date hereof, the Underwriters and the QIU shall have received from each of PricewaterhouseCoopers LLP, independent public or certified public accountants for the Company, and Deloitte & Touche LLP, independent public or certified public accountants for Pathmark, a “comfort letter” dated the date hereof addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives, covering the financial information in the General Disclosure Package and the Prospectus of the Company and Pathmark, as applicable, and other customary matters. In addition, on the Initial Closing Date and the Subsequent Closing Date, the Underwriters and the QIU shall have received from each such accountant, a “bring-down comfort letter” dated the Initial Closing Date or such Subsequent Closing Date addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives, in the form of the “comfort letters” delivered on the date hereof, except that (i) it shall cover the financial information in the Prospectus and any amendment or supplement thereto and (ii) procedures shall be brought down to a date no more than three business days prior to the Initial Closing Date or such Subsequent Closing Date.

     (b)Effectiveness of Registration Statement. No stop order suspending the effectiveness of the Registration Statement shall be in effect and no proceedings for that purpose shall have been instituted or be pending or threatened by the Commission and the Company shall not have received from the Commission any notice pursuant to Rule 401(g)(2) under the Securities Act objecting to use of the automatic shelf registration statement form. The preliminary prospectus and the Prospectus shall have been filed with the Commission in accordance with Rule 424(b) (or any required post-effective amendment providing such information shall have been filed and declared effective in accordance with the requirements of Rule 430A or 430B). All material required to be filed by the Company pursuant to Rule 433(d) under the Securities Act shall have been filed with the Commission within the applicable time periods prescribed for such filings under such Rule 433 under the Securities Act.

     (c)No Objection. Either (1) no filing of the Registration Statement with FINRA shall be required or (2) if the Registration Statement and/or the offering of the Notes has been filed

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with the FINRA for review, the FINRA shall not have raised any objection with respect to the fairness and reasonableness of the underwriting terms and arrangements.

     (d)No Material Adverse Effect or Ratings Agency Change. For the period from and after the date of this Agreement and prior to the Initial Closing Date and, with respect to any Optional Notes, the Subsequent Closing Date:

     (i)in the judgment of the Representatives there shall not have occurred any Material Adverse Effect; and

     (ii)there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded any securities or indebtedness of the Company or any of its subsidiaries by any “nationally recognized statistical rating organization” as such term is defined for purposes of Rule 436(g) under the Securities Act.

     (e)Opinions of Counsel for the Company. On the Initial Closing Date and the Subsequent Closing Date, the Underwriters and the QIU shall have received (a) the opinions and the negative assurance letter of Cahill Gordon & Reindel LLP, counsel for the Company, (b) the opinions of thegeneral counsel for the Company, and (c) the opinions of McGuireWoods LLP, special Maryland counsel for the Company, each dated as of such Initial Closing Date and the Subsequent Closing Date and substantially in the form of Exhibits C-1, C-2 and C-3 (with customary qualifications and exceptions).

     (f)Opinion of Counsel for the Underwriters. On the Initial Closing Date and, if applicable, the Subsequent Closing Date, the Underwriters and the QIU shall have received the favorable opinion of Fried, Frank, Harris, Shriver & Jacobson LLP, counsel for the Underwriters, dated as of such Initial Closing Date and, if applicable, the Subsequent Closing Date, with respect to such matters as may be reasonably requested by the Representatives.

     (g)Officers’ Certificate. On the Initial Closing Date and, if applicable, the Subsequent Closing Date the Underwriters and the QIU shall have received a written certificate executed by the Chairman of the Board, Chief Executive Officer or President of the Company and the Chief Financial Officer or Chief Accounting Officer of the Company, dated as of the Initial Closing Date or such Subsequent Closing Date, to the effect that the signers of such certificate have examined the Registration Statement, the Prospectus and any amendment or supplement thereto, any Issuer Free Writing Prospectus and any amendment or supplement thereto and this Agreement and to the effect that:

     (i)no stop order suspending the effectiveness of the Registration Statement shall have been issued under the Securities Act and the Company is not aware of, and has not received any, notice from the Commission that any proceedings for that purpose shall have been instituted or be pending or threatened by the Commission;

     (ii)for the period from and after the date of this Agreement and prior to the Initial Closing Date or Subsequent Closing Date there has not occurred any Material Adverse Effect;

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     (iii)the representations, warranties and covenants of the Company set forth in Section 1 hereof were true and correct in all material respects (except that any representation and warranty that is qualified as to materiality shall be true and correct in all respects) as of the date hereof and are true and correct as of the Initial Closing Date or Subsequent Closing Date with the same force and effect as though expressly made on and as of the Initial Closing Date or Subsequent Closing Date (except that representations and warranties made as of a particular date were true and correct on and as of such particular date); and

     (iv)the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Initial Closing Date or Subsequent Closing Date, in each case in all material respects (except that any agreement or condition that is qualified as to materiality shall be performed or satisfied in all respects).

     (h)The Depositary. The Notes shall be eligible for clearance and settlement through the Depositary.

     (i)Indenture. As of the Initial Closing Date, the Company and the Trustee shall have entered into the Indenture and the Underwriters shall have received executed counterparts thereof.

     (j)Transactions. At the Initial Closing Date, the Transactions shall have been consummated on the terms and conditions described in the Disclosure Package and the Prospectus.

     (k)Lock-up Agreements. At the date of this Agreement, the Representatives shall have received an agreement (a “Lock-up Agreement”) substantially in the form of Exhibit D hereto signed by each of the persons listed on Schedule D hereto.

     (l)Additional Documents. On or before the Initial Closing Date and the Subsequent Closing Date, the Underwriters and counsel for the Underwriters shall have received such information, documents and opinions as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of the Notes as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or agreements, herein contained.

     If any condition specified in this Section 5 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Underwriters by notice to the Company at any time on or prior to the Initial Closing Date and, with respect to the Optional Notes, at any time prior to the Subsequent Closing Date, which termination shall be without liability on the part of any party to any other party, except that Sections 4, 6, 7 and 8 hereof shall at all times be effective and shall survive such termination.

     SECTION 6.Reimbursement of Underwriters’ Expenses. If this Agreement is terminated by the Underwriters pursuant to Section 5 (other than 5(f)) or 9 hereof, the Company agrees to reimburse the Representatives and the other Underwriters (or such Underwriters as have terminated this Agreement with respect to themselves) and the QIU, severally, upon

25

demand for all reasonable and documented out-of-pocket expenses that shall have been reasonably incurred by the Representatives and the Underwriters and the QIU in connection with the proposed purchase and the offering and sale of the Notes, including, without limitation, reasonable and documented fees and disbursements of counsel.

     SECTION 7.Indemnification.

     (a)Indemnification of the Underwriters. The Company agrees to indemnify and hold harmless each Underwriter and the QIU, their respective directors, officers, employees and agents and each person, if any, who controls any Underwriter or the QIU within the meaning of the Securities Act and the Exchange Act against any loss, claim, damage, liability or expense, as incurred, to which such Underwriter, QIU, director, officer, employee, agent or controlling person may become subject, insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based: (i) upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or any amendment thereto, including any information deemed to be a part thereof pursuant to Rule 430A, Rule 430B or Rule 430C under the Securities Act, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading; or (ii) upon any untrue statement or alleged untrue statement of a material fact contained in any Issuer Free Writing Prospectus, any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) or any “road show” (as defined in Rule 433 under the Securities Act) not constituting an Issuer Free Writing Prospectus (a “Non-IFWP Road Show”), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and to reimburse each Underwriter or QIU and each such director, officer, employee, agent or controlling person for any and all expenses (including the fees and disbursements of one firm of counsel and local counsel, as appropriate, chosen by the Representatives) as such expenses are reasonably incurred by such Underwriter or QIU or such director, officer, employee or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission based upon and in conformity with written information furnished to the Company by the Underwriters or the QIU through the Representatives expressly for use in the Registration Statement, the Disclosure Package, any preliminary prospectus, the Prospectus or any Issuer Free Writing Prospectus (or any amendment or supplement to any of the foregoing). The indemnity agreement set forth in this Section 7(a) shall be in addition to any liabilities that the Company may otherwise have.

     (b)Indemnification of the Company, its Directors and Officers. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act against any loss, claim, damage, liability or expense, as incurred, to which the Company or any such director, officer or controlling person may become subject, insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration

26

Statement, the Disclosure Package, any preliminary prospectus, the Prospectus or any Issuer Free Writing Prospectus (or any amendment or supplement to any of the foregoing), or the Marketing Materials, or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Disclosure Package, any preliminary prospectus, the Prospectus or any Issuer Free Writing Prospectus (or any amendment or supplement to any of the foregoing), or the Marketing Materials in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives expressly for use therein; and to reimburse the Company and each such director, officer or controlling person for any and all expenses (including the fees and disbursements of one firm of counsel and local counsel, as appropriate) as such expenses are reasonably incurred by the Company or such director, officer or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. The Company hereby acknowledges that the only information that the Underwriters have furnished to the Company expressly for use in the Disclosure Package, the preliminary prospectus or the Prospectus (or any amendment or supplement thereto) or the Marketing Materials are the statements set forth in the third sentence of the second paragraph, the third sentence of the sixth paragraph, and the fifteenth and the sixteenth paragraphs under the caption “Underwriting” in the preliminary prospectus and the Prospectus. The indemnity agreement set forth in this Section 7(b) shall be in addition to any liabilities that each Underwriter may otherwise have.

     (c)Notifications and Other Indemnification Procedures. Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 7, notify the indemnifying party in writing of the commencement thereof, but the failure to so notify the indemnifying party (i) will not relieve it from any liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in and, to the extent that it shall elect, jointly with all other indemnifying parties similarly notified, by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that a conflict may arise between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying party’s election so to assume the defense of such action and approval by the

27

indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 7 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (together with local counsel), reasonably approved by the indemnifying party (the Representatives in the case of Sections 7(b) and 8 hereof), representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party, provided, however, that if indemnity may be sought pursuant to Section 7(a) by the QIU in respect of any such proceeding in which the QIU has defenses or claims materially different than the Underwriters, then in addition to any separate firm of the Underwriters, their officers, directors, affiliates and such control persons of the Underwriters, the indemnifying person shall be liable for the fees and expenses of not more than one separate firm (in addition to any local counsel) for the QIU, its affiliates and all persons, if any, who control the QIU within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act.

     (d)Settlements. The indemnifying party under this Section 7 shall not be liable for any settlement of any proceeding effected without its written consent, which shall not be withheld unreasonably, but, if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party against any loss, claim, damage, liability or expense by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by this Section 7, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld), effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement, compromise or consent (i) includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding and (ii) does not include any statements as to or any findings of fault, culpability or failure to act by or on behalf of any indemnified party.

     (e)Indemnification of the QIU. Without limitation and in addition to its obligation under the other subsections of this Section 7, the Company agrees to indemnify and hold harmless the QIU, its officers and employees and each person, if any, who controls the QIU within the meaning of the Securities Act or the Exchange Act from and against any loss, claim, damage, liabilities or expense, as incurred, arising out of or based upon the QIU’s acting as a “qualified independent underwriter” (within the meaning of NASD Conduct Rule 2720) in connection with the offering contemplated by this Agreement, and agrees to reimburse each such

28

indemnified person for any legal or other expense reasonably incurred by them in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action as such expenses are incurred, other than, in each case, any loss, claim, damage, liability, expense (legal or other) that are found by a court of competent jurisdiction in a final, non-appealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of the QIU, or any of its officers, employees or any person who so controls the QIU, in performing the services as QIU.

     SECTION 8.Contribution. If the indemnification provided for in Section 7 hereof is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified party, as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to therein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriters or the QIU, on the other hand, from the offering of the Notes pursuant to this Agreement or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and the Underwriters or the QIU, on the other hand, in connection with the statements or omissions or inaccuracies in the representations and warranties herein which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters or the QIU, on the other hand, in connection with the offering of the Notes pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Notes pursuant to this Agreement (before deducting expenses) received by the Company, and the total discount received by the Underwriters or the fee to be received by the QIU, as the case may be, bear to the aggregate initial offering price of the Notes. The relative fault of the Company, on the one hand, and the Underwriters or the QIU, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact or any such inaccurate or alleged inaccurate representation or warranty relates to information supplied by the Company, on the one hand, or the Underwriters, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission or inaccuracy.

     The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 7 hereof, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in Section 7 hereof with respect to notice of commencement of any action shall apply if a claim for contribution is to be made under this Section 8; provided, however, that no additional notice shall be required with respect to any action for which notice has been given under Section 7 hereof for purposes of indemnification.

     The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation (even if the

29

Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 8.

     Notwithstanding the provisions of this Section 8, no Underwriter shall be required to contribute any amount in excess of the discount received by such Underwriter in connection with the Notes underwritten by it and distributed by it to the public. No person guilty of fraudulent misrepresentation (within the meaning of Section 11 of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations to contribute pursuant to this Section 8 are several, and not joint, in proportion to their respective commitments as set forth opposite their names in Schedule A. For purposes of this Section 8, each director, officer and employee of an Underwriter and each person, if any, who controls an Underwriter within the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as such Underwriter, and each director of the Company, and each person, if any, who controls the Company, within the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as the Company.

     SECTION 9.Termination of this Agreement. Prior to the Initial Closing Date and, with respect to any Optional Notes, the Subsequent Closing Date, this Agreement may be terminated by the Underwriters by notice given to the Company if at any time: (i) trading or quotation in any of the Company’s securities shall have been suspended or limited by the Commission or by the NYSE, or trading in securities generally on either the Nasdaq Stock Market or the NYSE shall have been suspended or limited, or minimum or maximum prices shall have been generally established by the Commission or the FINRA or on either such stock exchange; (ii) a general banking moratorium shall have been declared by federal or New York authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States has occurred; or (iii) there shall have occurred any outbreak or escalation of national or international hostilities or declaration of a national emergency or war by the United States or any crisis or calamity, or any change in the United States or international financial markets, or any substantial change or development involving a prospective substantial change in United States’ or international political, financial or economic conditions, in each case, as in the judgment of the Representatives is material and adverse and makes it impracticable or inadvisable to market the Notes in the manner and on the terms described in the Prospectus or to enforce contracts for the sale of securities. Any termination pursuant to Sections 5, 9 or 16 shall be without liability on the part of (i) the Company, to any Underwriter, except that the Company shall be obligated to reimburse the expenses of the Representatives and the Underwriters pursuant to Sections 4 and 6 hereof, (ii) any Underwriter to the Company, or (iii) any party hereto to any other party except that the provisions of Sections 7 and 8 hereof shall at all times be effective and shall survive such termination.

     SECTION 10.Research Analyst Independence. The Company acknowledges that the Underwriters’ research analysts and research departments are required to be independent from their respective investment banking divisions and are subject to certain regulations and internal policies, and that such Underwriters’ research analysts may hold views and make statements or investment recommendations and/or publish research reports with respect to the Company and/or the offering that differ from the views of their respective investment banking divisions. The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the Underwriters with respect to any conflict of interest that may

30

arise from the fact that the views expressed by their independent research analysts and research departments may be different from or inconsistent with the views or advice communicated to the Company by such Underwriters’ investment banking divisions. The Company acknowledges that each of the Underwriters is a full service securities firm and as such from time to time, subject to applicable securities laws, may effect transactions for its own account or the account of its customers and hold long or short positions in debt or equity securities of the Company that may be the subject of the transactions contemplated by this Agreement.

     SECTION 11.Representations and Indemnities to Survive Delivery. The respective indemnities, agreements, representations, warranties and other statements of the Company, of its officers and of the several Underwriters and the QIU set forth in or made pursuant to this Agreement (i) will remain operative and in full force and effect, regardless of any (A) investigation, or statement as to the results thereof, made by or on behalf of any Underwriter, the QIU, the officers or employees of any Underwriter or the QIU, or any person controlling the Underwriter or the QIU, the Company, the officers or employees of the Company or any person controlling the Company, as the case may be or (B) acceptance of the Notes and payment for them hereunder and (ii) will survive delivery of and payment for the Notes sold hereunder and any termination of this Agreement.

     SECTION 12.Notices. All communications hereunder shall be in writing and shall be mailed, hand delivered, couriered or facsimiled and confirmed to the parties hereto as follows:

If to the Underwriters:

     Banc of America Securities LLC
     9 West 57^th Street
     New York, New York 10019
     Attention: ECM Legal

     Lehman Brothers Inc.
     745 Seventh Ave.
     New York, New York 10019
     Facsimile: (636) 834-8133
     Attention: Syndicate Registration

with a copy, in the case of any notice pursuant to Section 7(c), to:

     Lehman Brothers Inc.
     399 Park Avenue, Tenth Floor
     New York, New York 10022
     Facsimile: (212) 520-0421
     Attention: Director of Litigation, Office of the General Counsel

     Friedman, Billings, Ramsey & Co., Inc.
     1001 Nineteenth Street North
     Arlington, VA 22209
     Facsimile: (703) 312-9501

31

     Attention: General Counsel

with a copy to:

     Fried, Frank, Harris, Shriver & Jacobson LLP
     One New York Plaza
     New York, New York 10004
     Facsimile: (212) 859-4000
     Attention: Valerie Ford Jacob, Esq. and Michael Levitt, Esq.

with a copy to:

     The Great Atlantic & Pacific Tea Company
     2 Paragon Drive
     Montvale, New Jersey 07645
     Facsimile: (201) 571-8715
     Attention: Brenda Galgano,
       Senior Vice President and
       Chief Financial Officer

with a copy to:

     Cahill Gordon & Reindel LLP
     80 Pine Street
     New York, New York 10005
     Facsimile: (212) 378-2324
     Attention: Kenneth W. Orce, Esq.

     Any notice to an Underwriter pursuant to Section 7(c) shall be delivered or sent by hand delivery, mail, telex or facsimile transmission to such Underwriter at its address set forth in its acceptance telex to the Representatives, which address will be supplied to any other party hereto by the Representatives upon request. Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof.

     Any party hereto may change the address or facsimile number for receipt of communications by giving written notice to the others.

     SECTION 13.Successors and Assigns. This Agreement will inure to the benefit of and be binding upon the parties hereto, including any substitute Underwriters pursuant to Section 16 hereof, and to the benefit of (i) the Company, its directors, any person who controls the Company within the meaning of the Securities Act or the Exchange Act and any officer of the Company who signs the Registration Statement, (ii) the Underwriters, the officers, directors, employees and agents of the Underwriters, and each person, if any, who controls any Underwriter within the meaning of the Securities Act or the Exchange Act , (iii) the QIU, the QIU’s officers, directors, employees and agents, and each person, if any, who controls the QIU within the meaning of the Securities Act or the Exchange Act, and (iv) the respective successors and assigns of any of the above, all as and to the extent provided in this Agreement, and no other

32

person shall acquire or have any right under or by virtue of this Agreement. The term “successors and assigns” shall not include a purchaser of any of the Notes from any of the several Underwriters merely because of such purchase.

     SECTION 14.Partial Unenforceability. The invalidity or unenforceability of any section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other section, paragraph or provision hereof. If any section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

     SECTION 15.Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.

     Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby (“Related Proceedings”) may be instituted in the federal courts of the United States of America located in the City and County of New York or the courts of the State of New York in each case located in the City and County of New York (collectively, the “Specified Courts”), and each party irrevocably submits to the exclusive jurisdiction (except for suits, actions, or proceedings instituted in regard to the enforcement of a judgment of any Specified Court in a Related Proceeding, as to which such jurisdiction is non-exclusive) of the Specified Courts in any Related Proceeding. Service of any process, summons, notice or document by mail to such party’s address set forth above shall be effective service of process for any Related Proceeding brought in any Specified Court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any Specified Proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any Specified Court that any Related Proceeding brought in any Specified Court has been brought in an inconvenient forum.

     SECTION 16.Default of One or More of the Several Underwriters. If any one or more of the several Underwriters shall fail or refuse to purchase Notes that it or they have agreed to purchase hereunder on the Initial Closing Date or a Subsequent Closing Date, as the case may be, and the aggregate number of Notes which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase does not exceed 10% of the aggregate number of the Notes to be purchased on such date, the other Underwriters shall be obligated, severally, in the proportions that the number of Firm Notes set forth opposite their respective names on Schedule A bears to the aggregate number of Firm Notes set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as may be specified by the Underwriters with the consent of the non-defaulting Underwriters, to purchase the Notes which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on the Initial Closing Date or a Subsequent Closing Date, as the case may be. If any one or more of the Underwriters shall fail or refuse to purchase Notes and the aggregate number of Notes with respect to which such default occurs exceeds 10% of the aggregate number of Notes to be purchased on the Initial Closing Date or a Subsequent Closing Date, as the case may be, and arrangements satisfactory to

33

the Underwriters and the Company for the purchase of such Notes are not made within 48 hours after such default, this Agreement shall terminate without liability of any party to any other party except that the provisions of Sections 4, 6, 7 and 8 hereof shall at all times be effective and shall survive such termination. In any such case either the Underwriters or the Company shall have the right to postpone the Initial Closing Date or a Subsequent Closing Date, as the case may be, as the case may be, but in no event for longer than seven days in order that the required changes, if any, to the Registration Statement or the Prospectus or any other documents or arrangements may be effected.

     As used in this Agreement, the term “Underwriter” shall be deemed to include any person substituted for a defaulting Underwriter under this Section 16. Any action taken under this Section 16 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.

     SECTION 17.No Advisory or Fiduciary Responsibility. The Company acknowledges and agrees that: (i) the purchase and sale of the Notes pursuant to this Agreement, including the determination of the offering price of the Notes and any related discounts and commissions, is an arm’s-length commercial transaction between the Company, on the one hand, and the several Underwriters, on the other hand, and the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement; (ii) in connection with each transaction contemplated hereby and the process leading to such transaction each Underwriter is and has been acting solely as a principal and is not the agent or fiduciary of the Company or its respective affiliates, stockholders, creditors or employees or any other party; (iii) no Underwriter has assumed or will assume an advisory or fiduciary responsibility in favor of the Company with respect to any of the transactions contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company on other matters) or any other obligation to the Company, except the obligations expressly set forth in this Agreement; (iv) the several Underwriters and their affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company and that the several Underwriters have no obligation to disclose any of such interests by virtue of any fiduciary or advisory relationship; and (v) the Underwriters have not provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent the Company deemed appropriate.

     This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company and the several Underwriters, or any of them, with respect to the subject matter hereof. The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the several Underwriters with respect to any breach or alleged breach of fiduciary duty.

     SECTION 18.General Provisions. This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no

34

condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit. The section headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.

     Each of the parties hereto acknowledges that it is a sophisticated business person who was adequately represented by counsel during negotiations regarding the provisions hereof, including, without limitation, the indemnification provisions of Section 7 and the contribution provisions of Section 8, and is fully informed regarding said provisions. Each of the parties hereto further acknowledges that the provisions of Sections 7 and 8 hereto fairly allocate the risks in light of the ability of the parties to investigate the Company, its affairs and its business in order to assure that adequate disclosure has been made in the Registration Statement, any preliminary prospectus and the Prospectus (and any amendments and supplements thereto), as required by the Securities Act and the Exchange Act.

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     If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company the enclosed copies hereof, whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms.

Very truly yours,
THE GREAT ATLANTIC &
PACIFIC TEA COMPANY, INC.
By:	/s/ William Moss
	Name: William Moss
	Title: Vice President and Treasurer

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     The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representatives as of the date first above written.

BANC OF AMERICA SECURITIES LLC
LEHMAN BROTHERS INC.
	Acting as Representatives of the
	Several Underwriters named in
	the attached Schedule A.
By:	Banc of America Securities LLC
By:	/s/ Craig W. McCracken
	Name: Craig W. McCracken
	Title: Managing Director
By:	Lehman Brothers Inc.
By:	/s/ Michael Hrynuik
	Name: Michael Hrynuik
	Title: Senior Vice President
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.,
	as QIU
By: /s/ James R. Kleeblatt
Name: James R. Kleeblatt
Title: Executive Vice President

37

EX-1.2

EX-1.2

The Great Atlantic & Pacific Tea Company, Inc.

8,134,002 SHARES OF COMMON STOCK

UNDERWRITING AGREEMENT

dated December 12 , 2007

Bank of America, N.A.
Banc of America Securities LLC
Lehman Brothers International (Europe) Limited
Lehman Brothers Inc.

Table of Contents

		Page
SECTION 1.           Representations and Warranties		2
(a)	Registration Statement on Form S-3	2
(b)	Compliance with Registration and Exchange Act Requirements	3
(c)	Disclosure Package	4
(d)	Company Not Ineligible Issuer	4
(e)	Company is a Well-Known Seasoned Issuer	4
(f)	Issuer Free Writing Prospectuses	4
(g)	The Underwriting Agreement	5
(h)	Authorization of the Shares	5
(i)	No Transfer Taxes	5
(j)	Authorization of the Share Lending Agreements	5
(k)	No Applicable Registration or Other Similar Rights	5
(l)	Accuracy of Statements in Prospectus	5
(m)	No Material Adverse Effect	6
(n)	Independent Accountants	6
(o)	Preparation of the Financial Statements	6
(p)	Incorporation and Good Standing of the Company and its Subsidiaries	7
(q)	Capitalization and Other Capital Stock Matters	7
(r)	Stock Exchange Listing	8
(s)	Non-Contravention of Existing Instruments; No Further Authorizations or Approvals
	Required	8
(t)	No Material Actions or Proceedings	9
(u)	Intellectual Property Rights	9
(v)	All Necessary Permits, etc	9
(w)	Title to Properties	10
(x)	Tax Law Compliance	10
(y)	“Investment Company”	10
(z)	Insurance	10
(aa)	No Restrictions on Distributions	10
(bb)	No Price Stabilization or Manipulation	11
(cc)	Solvency	11
(dd)	Compliance with Sarbanes-Oxley	11
(ee)	Stock Options	11
(ff)	Company’s Internal Controls and Accounting Systems	11
(gg)	No Material Weakness in Internal Controls	12
(hh)	Disclosure Controls and Procedures	12
(ii)	Compliance with Environmental Laws	12
(jj)	ERISA Compliance	13
(kk)	Brokers	13
(ll)	Compliance with Labor Laws	13
(mm)	Related Party Transactions	14
(nn)	Compliance with Money Laundering Laws	14
(oo)	OFAC	14
(pp)	Foreign Corrupt Practices Act	14
(qq)	Lending Relationship	14

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(rr)	Statistical and Market Related Data	14
(ss)	Company Sales and Other Financial Data	15
SECTION 2.           Issuance, Offering and Delivery of the Shares		15
(a)	Issuance of the Shares	15
(b)	The Closing Date	15
(c)	Public Offering of the Shares	16
(d)	Payment of Loan Fee	16
(e)	Delivery of the Shares	16
(f)	Delivery of Prospectus to the Underwriters	17
(g)	Delivery of Documents to the Underwriters and Borrowers	17
SECTION 3.            Additional Covenants		17
(a)	The Underwriters’ and Borrowers’ Review of Proposed Amendments and Supplements	17
(b)	Availability of Registration Statement; Compliance with Securities Regulations and
	Commission Requests	17
(c)	Amendments and Supplements to the Registration Statement, Disclosure Package and
	Prospectus and Other Securities Act Matters	18
(d)	Final Term Sheet	19
(e)	Effectiveness of Registration Statement	19
(f)	Permitted Free Writing Prospectuses	19
(g)	Amendments in Connection with Subsequent Loan Shares or Sold Loan Shares	19
(h)	Copies of any Amendments and Supplements to the Prospectus	20
(i)	Copies of the Registration Statement and Prospectus	20
(j)	Blue Sky Compliance	20
(k)	Reservation of Common Stock	21
(l)	Transfer Agent	21
(m)	Earnings Statement	21
(n)	Agreement Not To Offer or Sell Additional Securities	21
(o)	Notice of Inability to Use Automatic Shelf Registration Statement Form	22
(p)	No Manipulation of Price	22
(q)	Use of Personnel and Documents	22
(r)	Subsidiaries	22
SECTION 4.            Payment of Expenses		22
SECTION 5.            Conditions of the Obligations of the Underwriters and Borrowers		23
(a)	Accountants’ Comfort Letters	24
(b)	Effectiveness of Registration Statement	24
(c)	No Objection	24
(d)	No Material Adverse Effect or Ratings Agency Change	25
(e)	Opinions of Counsel for the Company	25
(f)	Opinion of Counsel for the Underwriters and Borrowers	25
(g)	Officers’ Certificate	25
(h)	NYSE Listing	26
(i)	Transactions	26
(j)	Lock-up Agreements	26
(k)	Share Lending Agreements	26
(l)	Additional Documents	26

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SECTION 6.            Reimbursement of Underwriters’ and Borrowers’ Expenses		27
SECTION 7.            Indemnification		27
(a)	Indemnification of the Underwriters and Borrowers	27
(b)	Indemnification of the Company, its Directors and Officers	28
(c)	Notifications and Other Indemnification Procedures	28
(d)	Settlements	29
SECTION 8.            Contribution		30
SECTION 9.            Termination of this Agreement		31
SECTION 10.          Research Analyst Independence		31
SECTION 11.          Representations and Indemnities to Survive Delivery		32
SECTION 12.          Notices		32
SECTION 13.          Successors and Assigns		33
SECTION 14.          Partial Unenforceability		34
SECTION 15.          Governing Law Provisions		34
SECTION 16.          No Advisory or Fiduciary Responsibility		34
SECTION 17.          General Provisions		35

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UNDERWRITING AGREEMENT

December 12, 2007

BANK OF AMERICA, N.A.

LEHMAN BROTHERS
      INTERNATIONAL (EUROPE) LIMITED

BANC OF AMERICA SECURITIES LLC

LEHMAN BROTHERS INC.

As Representatives of the several Underwriters

c/o Banc of America Securities LLC
9 West 57th Street
New York, New York 10019

and

c/o Lehman Brothers Inc.
745 Seventh Ave.
New York, New York 10019

Ladies and Gentlemen:

          Introductory. The Great Atlantic & Pacific Tea Company, Inc., a Maryland corporation (the “Company”), subject to the terms and conditions stated herein and pursuant to (i) the Share Lending Agreement (the “BANA Share Lending Agreement”), dated December 12, 2007, between the Company and Bank of America, N.A. (the “BANA Borrower”) and (ii) the Share Lending Agreement (the “Lehman Share Lending Agreement” and, together with the BANA Share Lending Agreement, the “Share Lending Agreements”), dated December 12, 2007, between the Company and Lehman Brothers International (Europe) Limited (“Lehman Borrower”), proposes to issue and lend to the BANA Borrower and the Lehman Borrower (collectively, the “Borrowers”), affiliates of Banc of America Securities LLC (“BAS”) and Lehman Brothers Inc. (“Lehman”), respectively, acting severally and not jointly, as a share loan pursuant to and upon the terms of the respective Share Lending Agreements, the respective amounts set forth in Schedule A of up to 8,134,002 shares of common stock (the “Shares”), par value $1.00 per share, of the Company (the “Common Stock”). The BANA Borrower and the Lehman Borrower will transfer or sell the borrowed Shares to BAS and Lehman, respectively, who will each sell the borrowed Shares to the public as an underwriter (each, an “Underwriter” and collectively, the “Underwriters”). BAS and Lehman have agreed to act as representatives (the “Representatives”) of the several Underwriters in connection with the offering and sale of the Shares.

          Concurrently with the issuances of the Shares (the “Offering”), the Company, in an offering registered under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Act”) by means of a prospectus supplement, is offering (the “Notes Offering”) up to $150.0 million in aggregate principal amount of the Company’s 5.125% Convertible Senior Notes due 2011 (the “2011 Notes”) and $230.0 million in aggregate principal amount of the Company’s 6.75% Convertible Senior Notes due 2012 (the “2012 Notes” and, together with the 2011 Notes, the “Notes”). Banc of America Securities LLC, an affiliate of the BANA Borrower, and Lehman Brothers, Inc., an affiliate of the Lehman Borrower, are acting as representatives of the several underwriters in the Notes Offering. The Company has granted the underwriters in the Notes Offering an option to purchase up to an additional $15.0 million in aggregate principal amount of its 5.125% Convertible Senior Notes due 2011 and an additional $25.0 million in aggregate principal amount of its 6.75% Convertible Senior Notes due 2012 aggregate principal amount of the Notes to cover over-allotments, if any. The Company is also entering into one or more convertible note hedge transactions with affiliates of the underwriters for the Notes Offering (the “Hedge Transactions”) (the transactions hereunder, the Notes Offering and the transactions pursuant to the Hedge Transactions are referred to as the “Transactions”).

          The Company hereby confirms its agreements with the Underwriters and the Borrowers as follows:

          SECTION 1.      Representations and Warranties. The Company hereby represents, warrants and covenants to each Underwriter and Borrower that, as of the date hereof, as of the Applicable Time (as defined below), as of the Initial Closing Date (as defined below):

          (a)      Registration Statement on Form S-3. The Company has prepared and filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (File No. 333-147935), which contains a base prospectus (the “Base Prospectus”), to be used in connection with the public offering and sale of the Shares. Such registration statement, as amended, including the financial statements, exhibits and schedules thereto, in the form in which it became effective under the Act, including any required information deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A or 430B under the Securities Act or the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder (collectively, the “Exchange Act”), is called the “Registration Statement.” Any registration statement filed by the Company pursuant to Rule 462(b) under the Securities Act is called the “Rule 462(b) Registration Statement”, and from and after the date and time of filing of the Rule 462(b) Registration Statement the term “Registration Statement” shall include the Rule 462(b) Registration Statement. Any preliminary prospectus included in the Registration Statement, including any preliminary prospectus supplement relating to the Shares, together with the Base Prospectus, that is first filed with the Commission pursuant to Rule 424(b), is hereinafter called a “preliminary prospectus.” The term “Prospectus” shall mean the final prospectus supplement relating to the Shares, together with the Base Prospectus, that is first filed pursuant to Rule 424(b) after the date and time that this Agreement is executed and delivered by the parties hereto (the “Execution Time”). Any reference herein to the Registration Statement, any preliminary prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act; any reference to any amendment or supplement to any preliminary prospectus or the Prospectus shall be deemed

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to refer to and include any documents filed after the date of such preliminary prospectus or Prospectus, as the case may be, under the Exchange Act, and incorporated by reference in such preliminary prospectus or Prospectus, as the case may be; and any reference to any amendment to the Registration Statement shall be deemed to refer to and include any annual report of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement. All references in this Agreement to the Registration Statement, the Rule 462(b) Registration Statement, a preliminary prospectus, the Prospectus or any amendments or supplements to any of the foregoing, shall include any copy thereof filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”).

          (b)      Compliance with Registration and Exchange Act Requirements. The Registration Statement has become effective under the Securities Act. The Company has complied to the Commission’s satisfaction with all requests of the Commission for additional or supplemental information. No stop order suspending the effectiveness of the Registration Statement is in effect, the Commission has not issued any order or notice preventing or suspending the use of the Registration Statement, any preliminary prospectus or the Prospectus and no proceedings for such purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated or threatened by the Commission.

          Each preliminary prospectus included in the Disclosure Package and the Prospectus when filed complied in all material respects with the Securities Act. Each of the Registration Statement and any post-effective amendment thereto, at each time of effectiveness and at the date hereof, complied and will comply in all material respects with the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading. The Prospectus, as amended or supplemented, as of its date, at the date hereof, at the time of any filing pursuant to Rule 424(b), at the Initial Closing Date (as defined herein), at any Subsequent Closing Date (as defined herein), in respect of the Subsequent Loan Shares, and at any Loan Shares Date of Sale (as defined herein) in respect of the Sold Loan Shares, did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties set forth in the two immediately preceding sentences do not apply to statements in or omissions from the Registration Statement or any post-effective amendment thereto, or the Prospectus, or any amendments or supplements thereto, based upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives or any Borrower expressly for use therein, it being understood and agreed that the only such information furnished by the Representatives or any Borrower consists of the information described as such in Section 7(b) hereof. There is no contract or other document required to be described in the Prospectus or to be filed as an exhibit to the Registration Statement that has not been described or filed as required.

          The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and as of the date thereof, at the date hereof, at the Initial Closing Date, at the Subsequent Closing Date in respect of the Subsequent Loan Shares and at the Loan Shares Date of Sale in respect of the Sold Loan Shares

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did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading.

          (c)      Disclosure Package. The term “Disclosure Package” shall mean (i) the preliminary prospectus supplement, dated December 10, 2007, including the Base Prospectus, dated December 7, 2007, in each case as amended or supplemented (ii) the issuer free writing prospectuses as defined in Rule 433 of the Securities Act (each, an “Issuer Free Writing Prospectus”), if any, identified in Schedule B hereto, and (iii) any other free writing prospectus that the parties hereto shall hereafter expressly agree in writing to treat as part of the Disclosure Package. As of 5:45 p.m. (Eastern time) on the date of execution and delivery of this Agreement, 9:30 a.m. (Eastern time) on the date specified in the applicable Borrowing Notice (as defined in the respective Share Lending Agreement), with respect to any Subsequent Closing Date, and 12:00 p.m. (Eastern time) on any Loan Shares Date of Sale (in each case, the “Applicable Time”), the Disclosure Package did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from the Disclosure Package based upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives or any Borrower specifically for use therein, it being understood and agreed that the only such information furnished by or on behalf of any Underwriter or any Borrower consists of the information described as such in Section 7(b) hereof.

          (d)      Company Not Ineligible Issuer. (i) At the time of filing the Registration Statement and (ii) as of the Execution Time of this Agreement (with such date being used as the determination date for purposes of this clause (ii)), the Company was not and is not an Ineligible Issuer (as defined in Rule 405 under the Securities Act), without taking account of any determination by the Commission pursuant to Rule 405 under the Securities Act that it is not necessary that the Company be considered an Ineligible Issuer.

          (e)      Company is a Well-Known Seasoned Issuer. (i) At the time of the initial filing of the Registration Statement, (ii) at the time of the most recent amendment thereto, if any, for the purposes of complying with Section 10(a)(3) of the Securities Act (whether such amendment was by post-effective amendment, incorporated report filed pursuant to Section 13 or 15(d) of the Exchange Act or form of prospectus) and (iii) at the time the Company or any person acting on its behalf (within the meaning, for this clause only, of Rule 163(c) of the Securities Act) made any offer relating to the Shares in reliance on the exemption of Rule 163 of the Securities Act, the Company was a “well known seasoned issuer” as defined in Rule 405 of the Securities Act. The Registration Statement is an “automatic shelf registration statement,” as defined in Rule 405 of the Securities Act, that automatically became effective not more than three years prior to the Execution Time; the Company has not received from the Commission any notice pursuant to Rule 401(g)(2) of the Securities Act objecting to use of the automatic shelf registration statement form and the Company has not otherwise ceased to be eligible to use the automatic shelf registration form.

          (f)      Issuer Free Writing Prospectuses. Each Issuer Free Writing Prospectus, as of its issue date, did not include any information that conflicted, conflicts or will conflict with the information then contained in the Registration Statement, including any prospectus or prospectus

4

supplement that is or becomes part of the Registration Statement. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information then contained in the Registration Statement, the Company has promptly notified or will promptly notify the Representatives and the Borrowers and has promptly amended or supplemented or will promptly amend or supplement such Issuer Free Writing Prospectus to eliminate or correct such conflict. The foregoing two sentences do not apply to statements in or omissions from any Issuer Free Writing Prospectus set forth on Schedule B based upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives or any Borrower expressly for use therein, it being understood and agreed that the only such information furnished by any Underwriter or any Borrower consists of the information described as such in Section 7(b) hereof.

          (g)      The Underwriting Agreement. This Agreement has been duly authorized, executed and delivered by the Company.

          (h)Authorization of the Shares. The Shares have been duly authorized and reserved by the Company pursuant to this Agreement and the Share Lending Agreements and, when issued and delivered in accordance with the provisions of the respective Share Lending Agreement and this Agreement on the Initial Closing Date, any Subsequent Closing Date or any Loan Shares Date of Sale, will be validly issued, fully paid and nonassessable.

          (i)      No Transfer Taxes. There are no material transfer taxes or other similar fees or charges under federal law or the laws of any state, or any political subdivision thereof, required to be paid in connection with the execution and delivery of this Agreement and the Share Lending Agreements, the issuance from time to time of the Shares by the Company pursuant to the Share Lending Agreements or sale of the Shares from time to time pursuant to this Agreement.

          (j)      Authorization of the Share Lending Agreements. The Share Lending Agreements have been duly authorized, executed and delivered by the Company and are valid and binding agreements of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.

          (k)      No Applicable Registration or Other Similar Rights. There are no persons with registration or other similar rights to have any equity or debt securities registered for sale under the Registration Statement or included in the offering contemplated by this Agreement, other than such rights as have been duly waived or satisfied.

          (l)      Accuracy of Statements in Prospectus. The statements in the Base Prospectus under the caption “Description of Securities We May Offer -- Capital Stock-Common Stock” and the statements in the Disclosure Package and the Prospectus under the captions “Description of Capital Stock,” “Description of Share Lending Agreements,” “Description of Concurrent Offering of Convertible Senior Notes and Convertible Note Hedge and Warrant Transactions” and “Certain U.S. Federal Income Tax Consequences,” in each case insofar as such statements

5

summarize the statutes or regulations referred to, the agreements or documents discussed therein, are accurate and fair summaries of the matters described therein in all material respects.

          (m)      No Material Adverse Effect. Except as otherwise disclosed in the Disclosure Package and the Prospectus, subsequent to the respective dates as of which information is given in the Disclosure Package: (i) there has been no material adverse change, or any development that could reasonably be expected to result in a material adverse change, in the condition, financial or otherwise, or in the business, properties, operations or prospects, whether or not arising from transactions in the ordinary course of business, of the Company and its subsidiaries, considered as one entity (any such change is called a “Material Adverse Effect”); (ii) the Company and its subsidiaries, considered as one entity, have not incurred any material liability or obligation, indirect, direct or contingent, not in the ordinary course of business nor entered into any material transaction or agreement not in the ordinary course of business; and (iii) there has been no dividend or distribution of any kind declared, paid or made by the Company or, except for dividends paid to the Company or other subsidiaries, any of its subsidiaries on any class of capital stock or repurchase or redemption by the Company or any of its subsidiaries of any class of capital stock.

          (n)     Independent Accountants.

          (1)PricewaterhouseCoopers LLP, which expressed its opinion with respect to the Company’s financial statements (which term as used in this Agreement includes the related notes thereto) and supporting schedules (the “Company Financial Statements”) filed with the Commission and incorporated by reference in the Registration Statement and included in the Disclosure Package and the Prospectus, are independent public or certified public accountants within the meaning of Regulation S-X under the Securities Act and the Exchange Act.

          (2)      Deloitte & Touche LLP, which expressed its opinion with respect to the financial statements of Pathmark Stores, Inc. (“Pathmark”) (which term as used in this Agreement includes the related notes thereto) and supporting schedules (the “Pathmark Financial Statements”) filed with the Commission and incorporated by reference in the Registration Statement and included in the Disclosure Package and the Prospectus, are independent public or certified public accountants within the meaning of Regulation S-X under the Securities Act and the Exchange Act.

          (o)      Preparation of the Financial Statements. The Company Financial Statements and the Pathmark Financial Statements, in each case, together with the related schedules and notes, filed with the Commission and incorporated by reference in the Registration Statement and/or included in the Disclosure Package and the Prospectus present fairly in all material respects the consolidated financial position of the entities to which they relate as of and at the dates indicated and the results of their operations and cash flows for the periods specified on the basis stated therein. Such financial statements comply as to form with the applicable accounting requirements of the Securities Act and have been prepared in conformity with generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto. No other financial statements or supporting schedules are required to be included or incorporated by reference in the Registration

6

Statement. The financial data set forth in the preliminary prospectus and the Prospectus under the captions “Summary–Summary Financial Data for A&P”, “Summary–Summary Financial Data for Pathmark”, “Selected Historical Financial Data of A&P” and “Selected Historical Financial Data of Pathmark” fairly present in all material respects the information set forth therein on a basis consistent with that of the audited financial statements contained in the Registration Statement. The unaudited pro forma condensed combined financial statements of the Company and its subsidiaries and the related notes thereto included under the captions “Prospectus Summary–Summary Unaudited Pro Forma Consolidated Financial Data” and “Unaudited Pro Forma Condensed Combined Financial Information” and elsewhere in the preliminary prospectus, the Prospectus and the Registration Statement or incorporated by reference in the preliminary prospectus, the Prospectus and the Registration Statement have been prepared in accordance with the Commission’s rules and guidelines with respect to pro forma financial statements, and the assumptions used in the preparation thereof are believed by management to be reasonable at the time such assumptions were made (it being understood that management’s belief is based, in part, on representations made by Pathmark to the Company in the acquisition documents) and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein in all material respects.

          (p)Incorporation and Good Standing of the Company and its Subsidiaries. Each of the Company and its subsidiaries, except for the subsidiaries listed on Exhibit B hereto, has been duly incorporated or formed and is validly existing as a corporation or limited liability company in good standing under the laws of the jurisdiction of its incorporation or formation and has corporate or limited liability company power and authority to own, lease and operate its properties and to conduct its business as described in the Disclosure Package and the Prospectus and, in the case of the Company, to enter into and perform its obligations under each of this Agreement and the Share Lending Agreements, each to the extent a party thereto. Each of the Company and its subsidiaries, except for the subsidiaries listed on Exhibit B hereto, is duly qualified as a foreign corporation or limited liability company to transact business and is in good standing or equivalent status in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except for such jurisdictions where the failure to so qualify or to be in good standing would not result in a Material Adverse Effect. All of the issued and outstanding capital stock of each subsidiary has been duly authorized and validly issued, is fully paid and nonassessable and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim, except as otherwise described in the Disclosure Package and the Prospectus (including without limitation liens under or permitted by the Company’s five year asset-based senior secured revolving credit facility, dated as of December 3, 2007 (the “ABL Credit Agreement”) and the Indenture). The Company does not own or control, directly or indirectly, any corporation, association or other entity other than the subsidiaries listed in Exhibit A hereto.

          (q)      Capitalization and Other Capital Stock Matters. At September 8, 2007, on an actual basis, and on an adjusted basis after giving pro forma effect to the acquisition of Pathmark and the other adjustments identified in the Disclosure Package and the Prospectus and the issuance and delivery of the Shares pursuant hereto, the Company would have had an authorized and outstanding capitalization as set forth in the Disclosure Package and the Prospectus under the caption “Capitalization” (other than for subsequent issuances of capital stock, if any, pursuant to

7

employee benefit plans described in the Disclosure Package and the Prospectus or upon exercise of outstanding options described in the Disclosure Package and the Prospectus). The Common Stock conforms in all material respects to the description thereof in the Disclosure Package and the Prospectus. All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and nonassessable and have been issued in compliance with federal and state securities laws. None of the outstanding shares of Common Stock were issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company. Except for the Notes, there are no authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company other than those described in the Disclosure Package and the Prospectus. The description of the Company’s stock option, stock bonus and other stock plans or arrangements, and the options or other rights granted thereunder, set forth or incorporated by reference in the Disclosure Package and the Prospectus accurately and fairly presents in all material respects the information required to be shown with respect to such plans, arrangements, options and rights.

          (r)      Stock Exchange Listing. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is listed on the New York Stock Exchange (the “NYSE”), and the Company has taken no action designed to terminate the registration of the Common Stock under the Exchange Act or delist the Common Stock from the NYSE, nor has the Company received any notification that the Commission or the NYSE is contemplating terminating such registration or listing.

          (s)      Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required. Neither the Company nor any of its subsidiaries is (i) in violation of, or is in default under, (or, with the giving of notice or lapse of time, would be in default) (“Default”) its charter or bylaws or limited liability company agreement; (ii) in Default under any indenture, mortgage, loan or credit agreement, note, contract, franchise, lease or other agreement, obligation, condition, covenant or instrument to which either the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries may be bound (including, without limitation, the Share Lending Agreements, the Notes, the ABL Credit Agreement and the indenture governing the Company’s 9 3/8% Senior Quarterly Interest Bonds due 2039) or to which any of the property or assets of the Company or any of its subsidiaries is subject (each, an “Existing Instrument”); or (iii) in violation of any statute, law, rule, regulation, judgment, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or such subsidiary or any of its properties, as applicable, except, with respect to clauses (ii) and (iii) only, for such Defaults as would not result in a Material Adverse Effect. The execution, delivery and performance of this Agreement and the Share Lending Agreements by the Company, the issuance and delivery of the Shares and consummation of the Transactions and the other transactions contemplated hereby and thereby and by the Disclosure Package and the Prospectus (i) have been duly authorized by all necessary corporate action and will not result in any violation of the provisions of the charter or bylaws of the Company or any of its subsidiaries, (ii) will not conflict with or constitute a breach of, or Default or a Debt Repayment Triggering Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to,

8

or require the consent of any other party to, any Existing Instrument, except for such conflicts, breaches, Defaults, liens, charges or encumbrances as would not result in a Material Adverse Effect, and (iii) will not result in any violation of any statute, law, administrative regulation or administrative or court decree applicable to the Company or any of its subsidiaries. No consent, approval, authorization or other order of, or registration or filing with, any court or other governmental or regulatory authority or agency, is required for the execution, delivery and performance by the Company of this Agreement or the Share Lending Agreements, the issuance and delivery of the Shares or the consummation of the Transactions and the other transactions contemplated hereby and thereby and by the Disclosure Package and the Prospectus, except such as have been obtained or made by the Company and are in full force and effect under the Securities Act and applicable securities laws of the several states of the United States or provinces of Canada. As used herein, a “Debt Repayment Triggering Event” means any event or condition which gives, or with the giving of notice or lapse of time would give, the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries.

          (t)      No Material Actions or Proceedings. There are no legal or governmental actions, suits or proceedings pending or, to the Company’s knowledge, threatened (i) against or affecting the Company or any of its subsidiaries or (ii) which has as the subject thereof any property owned or leased by the Company or any of its subsidiaries and any such action, suit or proceeding, if determined adversely to the Company or any such subsidiary, is reasonably likely to result in a Material Adverse Effect or adversely affect the consummation of the transactions contemplated by this Agreement and the Share Lending Agreements. Except for any labor dispute that would not result in a Material Adverse Effect, no material labor dispute with the employees of the Company or any of its subsidiaries or to the Company’s knowledge, with the employees of any principal supplier of the Company exists or, to the Company’s knowledge, is threatened or imminent.

          (u)      Intellectual Property Rights. Except as would not result in a Material Adverse Effect, each of the Company and its subsidiaries own or possess valid rights to use all trademarks, trade names, trade dress, patent rights, copyrights, licenses, approvals, trade secrets and other similar rights (collectively, “Intellectual Property Rights”) reasonably necessary to conduct their businesses as now conducted; and the expected expiration (to the extent not subject to renewal or extension) of any of such Intellectual Property Rights would not result in a Material Adverse Effect. Neither the Company nor any of its subsidiaries has received any written notice of infringement or conflict with asserted Intellectual Property Rights of others, which infringement or conflict, if the subject of an unfavorable decision, is reasonably likely to result in a Material Adverse Effect.

          (v)      All Necessary Permits, etc. Except as would not result in a Material Adverse Effect, the Company and its subsidiaries possess such valid and current licenses, certificates, authorizations or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct their respective businesses (including pharmacy licenses, Medicare and Medicaid provider agreements, accreditations and other similar documentation, or approvals of any health departments), and neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any

9

such certificate, authorization or permit which, if the subject of an unfavorable decision, ruling or finding, is reasonably likely to result in a Material Adverse Effect.

          (w)      Title to Properties. The Company and each of its subsidiaries has good and valid title to all the properties and assets material to its business reflected as owned in the financial statements referred to in Section 1(n) hereof (or elsewhere in the Disclosure Package and the Prospectus), in each case free and clear of any security interests, mortgages, liens, encumbrances, equities, claims and other defects, except those described in the Disclosure Package and the Prospectus (including without limitation liens under or permitted by the Company’s existing credit facility) or as could not reasonably be expected to result in a Material Adverse Effect. The real property, improvements, equipment and personal property held under lease by the Company or any of its subsidiaries are held under valid and enforceable leases, with such exceptions as are not material.

          (x)      Tax Law Compliance. Except as would not result in a Material Adverse Effect, the Company and its subsidiaries have filed all necessary federal, state and foreign income and franchise tax returns or have properly requested extensions thereof and have paid all taxes required to be paid by any of them and, if due and payable, any related or similar assessment, fine or penalty levied against any of them, other than those being contested in good faith and by appropriate proceedings. Except as would not result in a Material Adverse Effect, each of the Company and its subsidiaries has made adequate charges, accruals and reserves in the applicable financial statements referred to in Section 1(n) hereof in respect of all federal, state and foreign income and franchise taxes for all periods as to which the tax liability of the Company or any of its subsidiaries has not been finally determined.

          (y)      “Investment Company”. Each of the Company and its subsidiaries is not, and after receipt of payment of the Loan Fee for the Shares will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended (the “Investment Company Act,” which term, as used herein, includes the rules and regulations of the Commission promulgated thereunder).

          (z)      Insurance. Except as would not result in a Material Adverse Effect, each of the Company and its subsidiaries is insured by recognized, financially sound institutions with policies in such amounts and with such deductibles and covering such risks as the Company’s management reasonably believes are adequate and customary for their businesses including, without limitation, policies covering real and personal property owned or leased by the Company and its subsidiaries against theft, damage, destruction, acts of vandalism and earthquakes.

          (aa)      No Restrictions on Distributions. No subsidiary of the Company is currently prohibited, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such subsidiary’s capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s property or assets to the Company or any other subsidiary of the Company, except as described in or contemplated by the Disclosure Package and the Prospectus and except as would not materially inhibit the ability of the Company to perform its obligations under the Notes.

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          (bb)      No Price Stabilization or Manipulation. None of the Company or any of its subsidiaries has taken any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of the Shares.

          (cc)      Solvency. The Company and its subsidiaries on a consolidated basis are, and immediately after the Initial Closing Date, any Subsequent Closing Date and any Loan Shares Date of Sale will be, Solvent. As used herein, the term “Solvent” means, with respect to any person on a particular date, that on such date (i) the fair market value of the assets of such person is greater than the total amount of liabilities (including contingent liabilities) of such person, (ii) the present fair salable value of the assets of such person is greater than the amount that will be required to pay the probable liabilities of such person on its debts as they become absolute and matured, (iii) such person is able to realize upon its assets and pay its debts and other liabilities, including contingent obligations, as they mature and (iv) such person does not have unreasonably small capital with which to conduct its business as it is proposed to be conducted on such date.

          (dd)      Compliance with Sarbanes-Oxley. The Company and its subsidiaries and their respective officers and directors are in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act,” which term, as used herein, includes the rules and regulations of the Commission promulgated thereunder).

          (ee)      Stock Options. With respect to stock options (the “Stock Options”) granted pursuant to the stock-based compensation plans of the Company (the “Company Stock Plans”), (i) each grant of a Stock Option was duly authorized no later than the date on which the grant of such Stock Option was by its terms to be effective (the “Grant Date”) by all necessary corporate action, including, as applicable, approval by the board of directors of the Company (or a duly constituted and authorized committee thereof) and any required stockholder approval by the necessary number of votes or written consents, and the award agreement governing such grant (if any) was duly executed and delivered by each party thereto, (ii) each such grant was made in accordance with the terms of the Company Stock Plans, the Exchange Act and all other applicable laws and regulatory rules or requirements, including the rules of the NYSE and any other exchange on which the securities of the Company are traded, and (iii) each such grant was properly accounted for in accordance with GAAP in the consolidated financial statements (including the related notes) of the Company and disclosed in the Company’s filings with the Commission in accordance with the Exchange Act and all other applicable laws. The Company’s subsidiaries do not have any stock-based compensation plans and have not granted any Stock Options.

          (ff)      Company’s Internal Controls and Accounting Systems. The Company and its subsidiaries maintain (i) effective internal control over financial reporting as defined in Rule 13a-15 of the Exchange Act and (ii) a system of accounting controls that is in compliance in all material respects with the Sarbanes-Oxley Act and is sufficient to provide reasonable assurances that: (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; and (D) the recorded accountability for assets is compared with

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existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

          (gg)      No Material Weakness in Internal Controls. Except as disclosed in the Disclosure Package and the Prospectus, or in any document incorporated by reference therein, since the end of the Company’s most recent audited fiscal year, there has been (i) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (ii) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

          (hh)Disclosure Controls and Procedures. The Company and its subsidiaries maintain an effective system of “disclosure controls and procedures” (as defined in Rule 13a-15 under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure. The Company and its subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and procedures as required by Rule 13a-15 under the Exchange Act.

          (ii)      Compliance with Environmental Laws. Except as would not result in a Material Adverse Effect: (i) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign law or regulation relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum and petroleum products (collectively, “Materials of Environmental Concern”), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern (collectively, “EnvironmentalLaws”), which violation includes, without limitation, noncompliance with any permits or other governmental authorizations required for the operation of the business of the Company or its subsidiaries under applicable Environmental Laws, or noncompliance with the terms and conditions thereof, nor has the Company or any of its subsidiaries received any written communication, whether from a governmental authority, citizens group, employee or otherwise, that alleges that either the Company or any of its subsidiaries is in violation of any Environmental Law; (ii) there is no claim, action or cause of action filed with a court or governmental authority, there is no investigation with respect to which the Company or any of its subsidiaries has received written notice, and no written notice has been received by any person or entity alleging potential liability for investigatory costs, cleanup costs, governmental responses costs, natural resources damages, property damages, personal injuries, attorneys’ fees or penalties, in each case arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at any location owned, leased or operated by the Company or any of its subsidiaries, now or in the past (collectively, “Environmental Claims”); and (iii) to the Company’s knowledge, there are no past, present or anticipated future actions, activities, circumstances, conditions, events or incidents, including, without limitation, the release, emission, discharge, presence or disposal of

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any Material of Environmental Concern, that would result in a violation of any Environmental Law, require material expenditures to be incurred pursuant to an Environmental Law or form the basis of a potential Environmental Claim against the Company or any of its subsidiaries or against any person or entity whose liability for any Environmental Claim the Company or any of its subsidiaries has retained or assumed either contractually or by operation of law. Neither the Company nor any of its subsidiaries is subject to any pending or threatened proceeding under Environmental Law to which a governmental authority is a party and which is reasonably likely to result in monetary sanctions of $100,000 or more.

          (jj)      ERISA Compliance. Except as would not result in a Material Adverse Effect, the Company and its subsidiaries and any “employee benefit plan” (as defined under the Employee Retirement Income Security Act of 1974 (as amended, “ERISA,” which term, as used herein, includes the regulations and published interpretations thereunder)) established or maintained by the Company, its subsidiaries or their “ERISA Affiliates” (as defined below) are in compliance with ERISA. “ERISA Affiliate” means, with respect to the Company or a subsidiary, any member of any group of organizations described in Section 414 of the Code of which the Company or such subsidiary is a member. No “reportable event” (as defined under ERISA) has occurred or is reasonably expected to occur with respect to any “employee benefit plan” established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates. No “employee benefit plan” established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates, if such “employee benefit plan” were terminated, would have any material “amount of unfunded benefit liabilities” (as defined under ERISA). Neither the Company, its subsidiaries nor any of their ERISA Affiliates has incurred or reasonably expects to incur any material liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “employee benefit plan” or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each “employee benefit plan” established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates that is intended to be qualified under Section 401 of the Code is so qualified and nothing has occurred, whether by action or failure to act, which would cause the loss of such qualification.

          (kk)      Brokers. Except as otherwise disclosed in the Disclosure Package and the Prospectus, to the Company’s knowledge, there is no broker, finder or other party that is entitled to receive from the Company any brokerage or finder’s fee or other fee or commission as a result of any transactions contemplated by this Agreement or the Share Lending Agreements.

          (ll)      Compliance with Labor Laws. Except as would not result in a Material Adverse Effect, (i) there is (A) no unfair labor practice complaint pending or, to the Company’s knowledge, threatened against the Company or any of its subsidiaries before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under collective bargaining agreements pending, or to the Company’s knowledge, threatened, against the Company or any of its subsidiaries, (B) no strike, labor dispute, slowdown or stoppage pending or, to the Company’s knowledge, threatened against the Company or any of its subsidiaries and (C) no union representation question existing with respect to the employees of the Company or any of its subsidiaries and, to the Company’s knowledge, no union organizing activities taking place and (ii) there has been no violation of any federal, state or local law relating to discrimination in hiring, promotion or pay of employees or of any applicable wage or hour laws.

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          (mm)      Related Party Transactions. No relationship, direct or indirect, exists between or among the Company or any of its affiliates, on the one hand, and any director, officer, member, stockholder, customer or supplier of the Company or any of its affiliates, on the other hand, which is required by the Securities Act to be disclosed in a registration statement on Form S-3 which is not so disclosed in the Disclosure Package and the Prospectus. There are no outstanding loans, advances (except advances for business expenses in the ordinary course of business) or guarantees of indebtedness by the Company or any of its affiliates to or for the benefit of any of the officers or directors of the Company or any of its affiliates or any of their respective family members.

          (nn)Compliance with Money Laundering Laws. The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company threatened, except, in each case, as would not reasonably be expected to have a Material Adverse Effect.

          (oo)      OFAC. Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company and its subsidiaries will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC (it being understood that the Company makes no representation or warranty herein as to any Underwriter or its affiliates that will receive proceeds from the Offering).

          (pp)      Foreign Corrupt Practices Act. Neither the Company nor any of its subsidiaries, nor, to the knowledge of the Company, any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any of its subsidiaries, has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

          (qq)      Lending Relationship. Except as disclosed in the Disclosure Package and the Prospectus, the Company does not intend to use any of the proceeds from the sale of the Notes hereunder to repay any outstanding debt owed to any affiliate of any Underwriter.

          (rr)      Statistical and Market Related Data. Nothing has come to the attention of the Company that has caused the Company to believe that the statistical and market-related data

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included in the Disclosure Package and the Prospectus is not based on or derived from sources that are reliable and accurate in all material respects.

          (ss)      Company Sales and Other Financial Data. Nothing has come to the Company's attention that causes the Company to believe that (1) during the period from September 9, 2007 to December 1, 2007 there was any material decrease in sales, income (loss) from operations, income from continuing operations or net income (loss) as compared to the corresponding period in fiscal 2006 (after adjusting the fiscal 2006 period to reflect the reclassification of the Company's stores in the Greater New Orleans area and the Midwest as discontinued operations) or that (2) during the period from September 9, 2007 to the date of this Agreement there was any material decrease in sales, income (loss) from operations, income from continuing operations or net income (loss) as compared to the corresponding period in fiscal 2006 (after adjusting the fiscal 2006 period to reflect the reclassification of the Company's stores in the Greater New Orleans area and the Midwest as discontinued operations).

          Any certificate signed by an officer of the Company and delivered to the Underwriters or Borrowers or to counsel for the Underwriters and Borrowers shall be deemed to be a representation and warranty by the Company to each Underwriter and Borrower as to the matters set forth therein to the extent set forth or referred to in such certificate.

          SECTION 2.Issuance, Offering and Delivery of the Shares.

          (a)      Issuance of the Shares. The Company agrees to (i) issue to the BANA Borrower in exchange for payment of the Loan Fee (as defined in the BANA Share Lending Agreement) and the BANA Borrower agrees to borrow from the Company from time to time pursuant to one or more Borrowing Notices (as defined in the BANA Share Lending Agreement), up to the number of Shares set forth opposite its name on Schedule A and as specified in such Borrowing Notice, and BAS, upon such issuance to the BANA Borrower, agrees to purchase such Shares from the BANA Borrower and (ii) issue to the Lehman Borrower in exchange for payment of the Loan Fee (as defined in the Lehman Share Lending Agreement) and the Lehman Borrower agrees to borrow from the Company from time to time pursuant to one or more Borrowing Notices (as defined in the Lehman Share Lending Agreement), up to the number of Shares set forth opposite its name on Schedule A and as specified in such Borrowing Notice, and Lehman, upon such issuance to the Lehman Borrower, agrees to purchase such Shares from the Lehman Borrower, in each case, on the basis of the representations, warranties and agreements herein contained, and upon the terms, subject to the conditions thereto, set forth herein and in the Share Lending Agreements. This Agreement constitutes a “Borrowing Notice” pursuant to Section 2(b) of the Share Lending Agreements for 4,927,944 and 3,206,058 of the Shares to be delivered to the BANA Borrower and the Lehman Borrower, respectively, on the Initial Loan Shares Delivery Date (as defined below).

          (b)      The Closing Date. In accordance with the Share Lending Agreements, delivery of 4,927,944 of the Shares to the BANA Borrower and 3,206,058 of the Shares to the Lehman Borrower (such shares being collectively referred to herein as, the “Initial Loan Shares”) shall, in each case, be made during the Delivery Time (as defined in the respective Share Lending Agreement) on the date specified in the respective Borrowing Notice (the “Initial Loan Shares Delivery Date”). The closing of the transactions under this Agreement with respect to the Initial

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Loan Shares shall be made at the offices of Fried, Frank, Harris, Shriver & Jacobson LLP, One New York Plaza, New York, New York 10004 (or such other place as may be agreed to by the Company and the Borrowers) shall occur at 10:00 A.M., New York City time, on December 18, 2007, or at such time on such later date (not later than December 28, 2007) as the Underwriters, Borrowers and the Company shall agree in writing, which date and time may be postponed by agreement between the Borrowers and the Company (such date and time of closing being herein called the “Initial Closing Date”). From time to time on or before the Facility Termination Date (as defined in the Share Lending Agreements), the BANA Borrower and/or the Lehman Borrower may give one or more Borrowing Notices with respect to a number of Shares (the “Subsequent Loan Shares”) specified in such Borrowing Notice. In accordance with each Share Lending Agreement, delivery of the Shares specified shall be made during the Delivery Time (as defined in the respective Share Lending Agreement) to the BANA Borrower or Lehman Borrower, as applicable, on the date specified in the applicable Borrowing Notice, or at such other time on the same or such other date as the BANA Borrower or Lehman Borrower, as applicable, shall designate. The time and date of each such delivery are herein referred to as a “Subsequent Closing Date.” In addition, from time to time on or before the Facility Termination Date (as defined in the respective Share Lending Agreement), in accordance with Section 2(c) hereof, the Underwriters may offer for sale to the public the Shares (the “Sold Loan Shares”) and the time and date of each sale of such shares by the Underwriters are herein referred to as a “Loan Shares Date of Sale.” Delivery of the Sold Loan Shares on each Subsequent Closing Date and each Loan Shares Date of Sale shall be conditioned upon receipt of, supplemental opinions, certificates and letters confirming as of such date the opinions, certificates and letters delivered on the Initial Closing Date to the extent required pursuant to Section 5 hereof.

          (c)      Public Offering of the Shares. The Representatives hereby advise the Company that the Underwriters intend to offer for sale to the public, as described in the Prospectus, the Shares from time to time.

          (d)      Payment of Loan Fee. Payment of the applicable Loan Fee by the Borrowers for the relevant Shares shall be made at the Initial Closing Date (and, if applicable, at any Subsequent Closing Date) by wire transfer of immediately available funds to the order of the Company. The Underwriters agree to make any payment due to the respective Borrower in respect of the Shares in the manner agreed between the Representatives and the respective Borrower.

          It is understood that the Representatives have been authorized, for their own account and the accounts of the several Underwriters, to accept delivery of and receipt for, and to make all necessary payments for, the Shares the Underwriters have agreed to sell. The Representatives, individually and not as Representatives of the Underwriters may (but shall not be obligated to) make any such payment on behalf of any Underwriter whose funds shall not have been received by the Representatives by the Initial Closing Date or any Subsequent Closing Date, as the case may be, for the account of such Underwriter, but any such payment shall not relieve such Underwriter from any of its obligations under this Agreement.

          (e)      Delivery of the Shares. In accordance with the Share Lending Agreements, delivery of the Shares to the Borrowers shall be made through the facilities of The Depository Trust Company (the “Depositary”), on the Initial Loan Shares Delivery Date or any Subsequent

16

Closing Date, as applicable, unless otherwise agreed to by the Borrowers and the Company in accordance with the terms of their respective Share Lending Agreements. Time shall be of the essence, and delivery at the time and place specified in this Agreement is a further condition to the obligations of the Underwriters.

          (f)Delivery of Prospectus to the Underwriters. Not later than 3:00 p.m. on the second business day in New York City following the date of this Agreement, the Company shall deliver or cause to be delivered, copies of the Prospectus in such quantities and at such places as the Representatives shall reasonably request.

          (g)Delivery of Documents to the Underwriters and Borrowers. The documents to be delivered on the Initial Closing Date, any Subsequent Closing Date and any Loan Shares Date of Sale on behalf of the parties hereto pursuant to Section 5 of this Agreement shall be delivered at the offices of Fried, Frank, Harris, Shriver & Jacobson at One New York Plaza, New York, New York 10004 (or such other place as may be agreed by the Company, the Borrowers and the Representatives).

          SECTION 3.Additional Covenants. The Company further covenants and agrees with each Underwriter and Borrower as follows:

          (a)The Underwriters’ and Borrowers’ Review of Proposed Amendments and Supplements. During the period beginning on the date of this Agreement and ending on the later of the (i) Initial Closing Date, any Subsequent Closing Date or any Loan Shares Date of Sale, as applicable, or (ii) such date the Prospectus is no longer required by law to be delivered in connection with sales of the Shares (including, without limitation, sales of any Subsequent Loan Shares or any Sold Loan Shares that have not yet been loaned to the Borrowers by the Company) by an Underwriter, Borrower or dealer as contemplated by the Prospectus, including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act (the “Prospectus Delivery Period”), prior to filing any amendment or supplement to the Registration Statement (including any filing under Rule 462(b) under the Securities Act), or any amendment, supplement or revision to the Disclosure Package or the Prospectus, whether pursuant to the Securities Act, the Exchange Act or otherwise, the Company will furnish the Representatives and the Borrowers with copies of any such documents a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file or use any such proposed amendment or supplement to which the Representatives or the Borrowers shall reasonably object.

          (b)Availability of Registration Statement; Compliance with Securities Regulations and Commission Requests. The Company will keep available the Registration Statement for the sale of the Shares through the Facility Termination Date and will keep available under the Registration Statement a number of Shares equal to 8,134,002 Shares. The Company, subject to Section 3(a), will promptly notify the Representatives and the Borrowers in writing pursuant to Section 12 hereof of (i) the filing or effectiveness during the Prospectus Delivery Period of any post-effective amendment to the Registration Statement or the filing of any supplement or amendment to the preliminary prospectus or the Prospectus, (ii) the receipt of any comments regarding such Registration Statement from the Commission during the Prospectus Delivery Period, (iii) any request by the Commission for any amendment to the Registration Statement or

17

any amendment or supplement to the preliminary prospectus or the Prospectus or for additional information regarding the Registration Statement or Prospectus, and (iv) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of the preliminary prospectus or the Prospectus or of any proceedings to remove, suspend or terminate from listing or quotation the Common Stock from any securities exchange upon which it is listed for trading or included or designated for quotation, or of the threatening or initiation of any proceedings for any such purpose. If the Company receives sufficient notice prior to the issuance of such order or notice, the Company shall use its commercially reasonable efforts to prevent the issuance of any such stop order or notice of prevention or suspension of such use. If the Commission shall enter any such stop order or issue any such notice at any time, the Company will use its commercially reasonable efforts to obtain the lifting or reversal of such order or notice as soon as practicable or, subject to Section 3(a), will file an amendment to the Registration Statement or will file a new registration statement and use its commercially reasonable efforts to have such amendment or new registration statement declared effective as soon as practicable. The Company will promptly effect the filings necessary pursuant to Rule 424 and 430A or 430B, as applicable, under the Securities Act and will take such steps as it deems necessary to ascertain promptly whether the preliminary prospectus and the Prospectus transmitted for filing under Rule 424 was received for filing by the Commission and, in the event that it was not, it will promptly file such document.

          (c)Amendments and Supplements to the Registration Statement, Disclosure Package and Prospectus and Other Securities Act Matters. If at any time during the Prospectus Delivery Period, any event or development shall occur or condition exist as a result of which the Disclosure Package or the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein in the light of the circumstances under which they were made not misleading, or if it shall be necessary to amend or supplement the Disclosure Package or the Prospectus, or to file under the Exchange Act any document incorporated by reference in the Disclosure Package or the Prospectus, in order to make the statements therein, in the light of the circumstances under which they were made not misleading, in any material respect or if in the reasonable judgment of the Representatives it is otherwise necessary or advisable to amend or supplement the Registration Statement, the Disclosure Package or the Prospectus, or to file under the Exchange Act any document incorporated by reference in the Disclosure Package or the Prospectus, or to file a new registration statement containing the Prospectus, in order to comply with law, including in connection with the delivery of the Prospectus, or in order to make any statements therein in light of the circumstances under which they were made not misleading, the Company agrees to (i) notify the Representatives and the Borrowers of any such event or condition and (ii) promptly prepare (subject to Section 3(a) and 3(f) hereof), file with the Commission (and use its commercially reasonable efforts to have any amendment to the Registration Statement or any new registration statement to be declared effective) and furnish at its own expense to the Underwriters and the Borrowers and to dealers, amendments or supplements to the Registration Statement, the Disclosure Package or the Prospectus, or any new registration statement, necessary in order to make the statements in the Disclosure Package or the Prospectus as so amended or supplemented, in the light of the circumstances under which they were made not misleading in any material respect or so that the Registration Statement, the Disclosure Package or the Prospectus, as amended or supplemented, will comply with all applicable law.

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          The Company hereby expressly acknowledges that the indemnification and contribution provisions of Sections 7 and 8 hereof are specifically applicable and relate to each registration statement, preliminary prospectus, prospectus, amendment or supplement referred to in this Section 3.

          (d)Final Term Sheet. If requested by the Representatives, the Company will prepare a final term sheet in a form approved by the Representatives and attached as Schedule C hereto, and will file such term sheet pursuant to Rule 433(d) under the Securities Act within the time required by such rule (such term sheet, the “Final Term Sheet”). Any such Final Term Sheet will be an Issuer Free Writing Prospectus for purposes of this Agreement.

          (e)Effectiveness of Registration Statement. If, immediately prior to the third anniversary of the initial effective date of the Registration Statement, and on each subsequent three-year anniversary through the Facility Termination Date, any of the Shares remain unsold by the Underwriters and the Borrowers, the Company will (subject to Section 3(a) and 3(f) hereof), prior to that third anniversary, file, if it has not already done so, a new shelf registration statement on Form S-3 relating to the Shares, in a form reasonably satisfactory to the Underwriters and the Borrowers, will use its commercially reasonable efforts to cause such registration statement to be declared effective either automatically (if the Company is a well-known seasoned issuer at such time) or within 90 days after that third anniversary, and will take all other action necessary or appropriate to permit the public offering and sale of the Shares to continue as contemplated in the expired registration statement relating to the Shares from and after the date of effectiveness thereof. References herein to the Registration Statement shall include such new shelf registration statement.

          (f)Permitted Free Writing Prospectuses. The Company represents that it has not made, and agrees that, unless it obtains the prior written consent of the Representatives and the Borrowers, it will not make, any offer relating to the Shares that constitutes or would constitute an Issuer Free Writing Prospectus or that otherwise constitutes or would constitute a “free writing prospectus” (as defined in Rule 405 under the Securities Act) or a portion thereof required to be filed by the Company with the Commission or retained by the Company under Rule 433 under the Securities Act; provided that the prior written consent of the Representatives and the Borrowers hereto shall be deemed to have been given in respect of the Free Writing Prospectuses included in Schedule B hereto and any electronic road show. Any such free writing prospectus consented to by the Representatives and the Borrowers is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company agrees that (i) it has treated and will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, and (ii) it has complied and will comply, as the case may be, with the requirements of Rules 164 and 433 under the Securities Act applicable to any Permitted Free Writing Prospectus, including in respect of timely filing with the Commission, legending and record keeping.

          (g)Amendments in Connection with Subsequent Loan Shares or Sold Loan Shares. The Company agrees to promptly file any amendment or supplement, including pricing supplements, requested by the Representatives in order to offer and sell the Shares in one or more of the manners contemplated by the Prospectus. Notwithstanding anything contained herein, the Company may defer filing of, or delay effectiveness of, an amendment or supplement

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or suspend the use of the Registration Statement and any related prospectus for a maximum of 15 business days in any fiscal quarter of the Company, and not to exceed an aggregate of 30 days in any 12-month period, if (i) the Company, in its reasonable judgment, believes it may possess material non-public information the disclosure of which would have a material adverse effect on the Company and its subsidiaries taken as a whole or (ii) any Registration Statement and related prospectus would, in the Company’s reasonable judgment, contain a material misstatement or omission as a result of an event that has occurred or is continuing. However, if the disclosure relates to a proposed or pending material business transaction, the disclosure of which the Company determines in good faith would be reasonably likely to impede its ability to consummate such transaction, or would otherwise have a material adverse effect on the Company and its subsidiaries taken as a whole, the Company may extend the suspension period from 15 days to 30 days. Any suspension period described in this subsection (g) shall be referred to herein as the “Black-out Period.” The Company shall give notice to the Underwriters of any Black-out Period. During a Black-out Period, the Company shall not be required to comply with Section 3(a), 3(b) (except for the second sentence), 3(c), 3(d), 3(e), 3(f), 3(h), 3(i) or 3(q).

          (h)Copies of any Amendments and Supplements to the Prospectus. The Company agrees to furnish the Representatives and the Borrowers, without charge, during the Prospectus Delivery Period, as many copies of the Prospectus and any amendments and supplements thereto (including any documents incorporated or deemed incorporated by reference therein) and the Disclosure Package as the Representatives and the Borrowers may request.

          (i)Copies of the Registration Statement and Prospectus. The Company will furnish to the Representatives and the Borrowers and counsel for the Underwriters and the Borrowers upon request signed copies of the Registration Statement (including exhibits thereto) and, during the Prospectus Delivery Period so long as delivery of a prospectus by an Underwriter or Borrower or dealer may be required by the Act, as many copies of each preliminary prospectus, the Prospectus and any supplement thereto and the Disclosure Package as the Representatives and the Borrowers may reasonably request.

          (j)Blue Sky Compliance. The Company shall cooperate with the Underwriters and the Borrowers and counsel for the Underwriters and the Borrowers to qualify or register (or to obtain exemptions from qualifying or registering) all or any part of the Shares for offer and sale under the securities laws of the several states of the United States, the provinces of Canada or any other jurisdictions designated by the Representatives and the Borrowers, shall comply with such laws and shall continue such qualifications, registrations and exemptions in effect so long as required for the distribution of the Shares. The Company shall not be required to qualify as a foreign corporation or to take any action that would subject it to general service of process in any such jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation. The Company will advise the Representatives and the Borrowers promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Shares for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company shall use commercially reasonable efforts to obtain the withdrawal thereof at the earliest possible moment.

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          (k)Reservation of Common Stock. The Company will reserve and keep available at all times, free of preemptive rights, the full number of Shares equal to the then applicable Maximum Number of Shares.

          (l)Transfer Agent. The Company shall engage and maintain, at its expense, a registrar and transfer agent for the Common Stock.

          (m)Earnings Statement. As soon as reasonably practicable, the Company will make generally available to its security holders and to the Representatives an earnings statement (which need not be audited) that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act for the fiscal year during which this Agreement was executed. For the avoidance of doubt, if the Company has made such earnings statement available to the public on EDGAR, the Company will have no obligation to otherwise furnish such earnings statement to its security holders or to the Representatives.

          (n)Agreement Not To Offer or Sell Additional Securities. During the period commencing on the date hereof and ending on the 90th day following the date of the Prospectus, the Company and its subsidiaries will not, without the prior written consent of the Representatives and the Borrowers, directly or indirectly, sell, offer, contract or grant any option to sell, pledge, transfer or establish an open “put equivalent position” or liquidate or decrease a “call equivalent position” within the meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or transfer (or enter into any transaction that is designed to, or might reasonably be expected to, result in the disposition of), or announce the offering of, or file any registration statement under the Securities Act in respect of, any (A) debt securities convertible into Common Stock, (B) shares of Common Stock, (C) options or warrants to acquire shares of the Common Stock or (D) securities exchangeable or exercisable for or convertible into debt securities convertible into Common Stock or shares of Common Stock (other than as contemplated by this Agreement with respect to the Shares and the transactions pursuant to the Share Lending Agreement); provided, however, that the Company may (i) file a registration statement on Form S-8, (ii) issue shares of its Common Stock pursuant to the Share Lending Agreements, (iii) enter into and consummate the Hedge Transactions, (iii) issue shares of its Common Stock upon exercise of warrants described in the Prospectus and (iv) issue shares of its Common Stock or options to purchase its Common Stock upon exercise of options, in each case pursuant to any stock option, stock bonus or other stock plan or arrangement currently in effect described in the Prospectus, but only if the holders of such shares, options, or shares issued upon exercise of such options or warrants, agree in writing not to sell, offer, dispose of or otherwise transfer any such shares or options during such 90-day period without the prior written consent of the Representatives and the Borrowers (which consent may be withheld at the sole discretion of the Representatives and the Borrowers), subject to the exceptions contained in the Lock-Up Agreement (as defined below). Notwithstanding the foregoing, if (x) during the last 17 days of the 90-day restricted period, the Company issues an earnings release, or (y) prior to the expiration of the 90-day restricted period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the 90-day period, the restrictions imposed in this clause shall continue to apply until the expiration of the 18-day period beginning on the date of the issuance of the earnings release. The Company will provide the Representatives and the Borrowers and any co-managers and each individual subject to the

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restricted period pursuant to the lockup letters described in Section 5(j) with prior notice of any such announcement that gives rise to an extension of the restricted period.

          (o)Notice of Inability to Use Automatic Shelf Registration Statement Form. If at any time during the Prospectus Delivery Period, the Company receives from the Commission a notice pursuant to Rule 401(g)(2) under the Securities Act or otherwise ceases to be eligible to use the automatic shelf registration statement form, the Company will (i) promptly notify the Representatives and the Borrowers, (ii) promptly file a new registration statement or post-effective amendment on the proper form relating to the Shares, in a form satisfactory to the Representatives and the Borrowers, (iii) use its commercially reasonable efforts to cause such registration statement or post-effective amendment to be declared effective and (iv) promptly notify the Representatives and the Borrowers of such effectiveness. The Company will take all other action necessary or appropriate to permit the public offering and sale of the Shares to continue as contemplated in the registration statement that was the subject of the Rule 401(g)(2) notice or for which the Company has otherwise become ineligible. References herein to the Registration Statement shall include such new registration statement or post-effective amendment, as the case may be.

          (p)No Manipulation of Price. Prior to the Initial Closing Date, the Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, cause or result in under the Exchange Act or otherwise, the stabilization or manipulation of the price of any securities of the Company to facilitate the sale or resale of the Shares.

          (q)Use of Personnel and Documents. From time to time during the Loan Availability Period, but not more often than once a calendar week, if the Underwriters and the Borrowers notify the Company that they propose to sell any of the Shares, the Company shall use its commercially reasonable efforts to make available to the Borrowers and the Underwriters such personnel and documents of the Company and/or its subsidiaries as the Borrowers and/or the Underwriters shall reasonably request to conduct due diligence (including, without limitation, the availability of the chief financial officer to respond to questions regarding the business and financial condition of the Company and the right to have made available to them for inspection such records and other information as they may request).

          (r)Subsidiaries. The Company shall use its commercially reasonable efforts, and shall file all documents required by the laws of the relevant jurisdiction, to ensure that the subsidiaries listed in Exhibit B (except if any such subsidiary is immaterial) are in good standing in such jurisdiction, unless, as to any subsidiary, that subsidiary has been dissolved or merged into the Company or another subsidiary.

          The Representatives, on behalf of the several Underwriters, and the Borrowers may, in their sole discretion, waive in writing the performance by the Company of one or more of the foregoing covenants or extend the time for its performance.

          SECTION 4.Payment of Expenses. The Company agrees to pay all costs, fees and expenses incurred in connection with the performance of its obligations hereunder and in connection with the transactions contemplated hereby, including, without limitation, (i) all

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expenses incident to the issuance and delivery of the Shares (including all printing and engraving costs), (ii) all fees and expenses of the registrar and transfer agent of the Common Stock, (iii) all necessary issue, transfer and other stamp taxes in connection with the issuance and offering and sale of the Shares to the Underwriters and the Borrowers pursuant to the Prospectus and any delivery of Shares under the Share Lending Agreements, (iv) all fees and expenses of the Company’s counsel, independent public or certified public accountants and other advisors, (v) all costs and expenses incurred in connection with the preparation, printing, filing, shipping and distribution or reproduction of the Registration Statement (including financial statements, exhibits, schedules, consents and certificates of experts), each Issuer Free Writing Prospectus, each preliminary prospectus and the Prospectus (including financial statements and exhibits), and all amendments and supplements thereto, this Agreement and the Share Lending Agreements, (vi) all filing fees, attorneys’ fees and expenses incurred by the Company, the Underwriters or the Borrowers in connection with qualifying or registering (or obtaining exemptions from the qualification or registration of) all or any part of the Shares for offer and sale under the securities laws of the several states of the United States, the provinces of Canada or other jurisdictions designated by the Representatives and the Borrowers (including, without limitation, the cost of preparing, printing and mailing preliminary and final blue sky or legal investment memoranda and any related supplements, including a Canadian “wrapper,” to the Disclosure Package or the Prospectus), (vii) the fees and expenses associated with listing of the Shares on the NYSE, (viii) any filing fees incident to, and any reasonable fees and disbursements of counsel to the Underwriters and the Borrowers in connection with the review by the FINRA, if any, of the terms of the sale of the Shares, (ix) all fees and expenses (including reasonable fees and expenses of counsel) of the Company in connection with approval of the Shares by the Depositary for “book-entry” transfer, and the performance by the Company of its other obligations under this Agreement, (x) all reasonable and documented fees and out-of-pocket disbursements of counsel to the Underwriters and the Borrowers, (xi) all reasonable, documented out-of-pocket expenses associated with the “road show” undertaken in connection with the marketing of the Shares, including the cost of any chartered airplane or other transportation and (xii) all other fees, costs and expenses referred to in Part II of the Registration Statement.

          This Section 4 shall not affect or modify any separate, valid agreement relating to the allocation of payment of expenses between the Company, on the one hand, and the Borrowers, on the other hand.

          SECTION 5.Conditions of the Obligations of the Underwriters and Borrowers. The obligations of the several Underwriters and Borrowers hereunder on the Initial Closing Date and on any Subsequent Closing Date or any Loan Shares Date of Sale shall be subject to the accuracy of the representations and warranties on the part of the Company set forth in Section 1 hereof as of the date hereof and as of the Initial Closing Date as though then made and, with respect to Shares to be sold as of any Subsequent Closing Date or any Loan Shares Date of Sale, as of any Subsequent Closing Date or any Loan Shares Date of Sale as though then made, to the accuracy of the statements of the Company made in any certificates pursuant to the provisions hereof, to the timely performance by the Company of its covenants and other obligations hereunder, and to each of the additional conditions set forth below. The Company shall be required to provide the Underwriters and the Borrowers on the Initial Closing Date, any Subsequent Closing Date and on any Loan Shares Date of Sale the supplemental opinions, certificates and letters confirming as of such date the opinions, certificates and letters delivered on the Initial Closing Date as required

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pursuant to this Section 5. Notwithstanding anything contained in this Section 5, the Underwriters and the Borrowers may request the opinions, certificate and letters referred to in clauses (a), (e), (f) and (g) of this Section 5 with respect to any Loan Shares Date of Sale or Subsequent Closing Date only if, since the date such opinions, certificate and letters were last delivered to them, either (A) 30 days has passed or (B) the Registration Statement or the Prospectus has been amended or supplemented, including by the filing of documents by the Company under the Exchange Act that are incorporated by reference into the Registration Statement or the Prospectus.

          (a)Accountants’ Comfort Letters. On the date hereof, the Underwriters and the Borrowers shall have received from each of PricewaterhouseCoopers LLP, independent public or certified public accountants for the Company, and Deloitte & Touche LLP, independent public or certified public accountants for Pathmark, a “comfort letter” dated the date hereof addressed to the Underwriters and Borrowers, in form and substance reasonably satisfactory to the Representatives and the Borrowers, covering the financial information in the General Disclosure Package and the Prospectus of the Company and Pathmark, as applicable, and other customary matters. In addition, on the Initial Closing Date and any Subsequent Closing Date or any Loan Shares Date of Sale (unless the Representatives have requested that a letter pursuant to the first sentence of this Section 5(a) be delivered on such Subsequent Closing Date or any Loan Shares Date of Sale), the Underwriters and the Borrowers shall have received from each such accountant, a “bring-down comfort letter” dated the Initial Closing Date or such Subsequent Closing Date or Loan Shares Date of Sale addressed to the Underwriters and the Borrowers, in form and substance reasonably satisfactory to the Representatives and the Borrowers, in the form of the “comfort letters” delivered on the date hereof, except that (i) it shall cover the financial information in the Prospectus and any amendment or supplement thereto and (ii) procedures shall be brought down to a date no more than three business days prior to the Initial Closing Date or such Subsequent Closing Date or Loan Shares Date of Sale. Notwithstanding the foregoing, with respect to any Subsequent Closing Date or Loan Shares Date of Sale, a “bring-down comfort letter” from Deloitte & Touche LLP shall be required to be delivered unless the Representatives, in their sole discretion, determine that such “comfort letter” covering the financial information of Pathmark is not required.

          (b)Effectiveness of Registration Statement. No stop order suspending the effectiveness of the Registration Statement shall be in effect and no proceedings for that purpose shall have been instituted or be pending or threatened by the Commission and the Company shall not have received from the Commission any notice pursuant to Rule 401(g)(2) under the Securities Act objecting to use of the automatic shelf registration statement form. The preliminary prospectus and the Prospectus shall have been filed with the Commission in accordance with Rule 424(b) (or any required post-effective amendment providing such information shall have been filed and declared effective in accordance with the requirements of Rule 430A or 430B). All material required to be filed by the Company pursuant to Rule 433(d) under the Securities Act shall have been filed with the Commission within the applicable time periods prescribed for such filings under such Rule 433 under the Securities Act.

          (c)No Objection. Either (1) no filing of the Registration Statement with FINRA shall be required or (2) if the Registration Statement and/or the offering of the Shares has been filed

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with the FINRA for review, the FINRA shall not have raised any objection with respect to the fairness and reasonableness of the underwriting terms and arrangements.

          (d)No Material Adverse Effect or Ratings Agency Change. For the period from and after the date of this Agreement and the Share Lending Agreements and prior to the Initial Closing Date and, with respect to any Subsequent Loan Shares, the Subsequent Closing Date, and, with respect to any Sold Loan Shares, the Loan Shares Date of Sale:

          (i)in the judgment of the Representatives and the Borrowers there shall not have occurred any Material Adverse Effect; and

          (ii)      there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded any securities or indebtedness of the Company or any of its subsidiaries by any “nationally recognized statistical rating organization” as such term is defined for purposes of Rule 436(g) under the Securities Act.

          (e)Opinions of Counsel for the Company. On the (a) Initial Closing Date and (b) any Subsequent Closing Date and any Loan Shares Date of Sale, if requested by the Underwriters and the Borrowers, the Underwriters and the Borrowers shall have received (i) the opinions and the negative assurance letter of Cahill Gordon & Reindel LLP, counsel for the Company, (ii) the opinions of thegeneral counsel for the Company, and (iii) the opinions of McGuireWoods LLP, special Maryland counsel for the Company, each dated as of such Initial Closing Date, Subsequent Closing Date and any Loan Shares Date of Sale and substantially in the form of Exhibit C-1, Exhibit C-2 and Exhibit C-3 (with customary qualifications and exceptions).

          (f)Opinion of Counsel for the Underwriters and Borrowers. On (a) the Initial Closing Date and (b) any Subsequent Closing Date and any Loan Shares Date of Sale, if requested by the Underwriters and the Borrowers, the Underwriters and the Borrowers shall have received the favorable opinion of Fried, Frank, Harris, Shriver & Jacobson LLP, counsel for the Underwriters and the Borrowers, dated as of such Initial Closing Date, Subsequent Closing Date and any Loan Shares Date of Sale with respect to such matters as may be reasonably requested by the Representatives and the Borrowers.

          (g)Officers’ Certificate. On the Initial Closing Date, any Subsequent Closing Date and any Loan Shares Date of Sale the Underwriters and the Borrowers shall have received a written certificate executed by the Chairman of the Board, Chief Executive Officer or President of the Company and the Chief Financial Officer or Chief Accounting Officer of the Company, dated as of the Initial Closing Date, the Subsequent Closing Date or such Loan Shares Date of Sale, to the effect that the signers of such certificate have examined the Registration Statement, the Prospectus and any amendment or supplement thereto, any Issuer Free Writing Prospectus and any amendment or supplement thereto and this Agreement and to the effect that:

          (i)      no stop order suspending the effectiveness of the Registration Statement shall have been issued under the Securities Act and the Company is not aware of, and has

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not received any, notice from the Commission that any proceedings for that purpose shall have been instituted or be pending or threatened by the Commission;

          (ii)for the period from and after the date of this Agreement and prior to the Initial Closing Date, Subsequent Closing Date or Loan Shares Date of Sale there has not occurred any Material Adverse Effect;

          (iii)      the representations, warranties and covenants of the Company set forth in Section 1 hereof were true and correct in all material respects (except that any representation and warranty that is qualified as to materiality shall be true and correct in all respects) as of the date hereof and are true and correct as of the Initial Closing Date, Subsequent Closing Date or Loan Shares Date of Sale with the same force and effect as though expressly made on and as of the Initial Closing Date, Subsequent Closing Date or Loan Shares Date of Sale (except that representations and warranties made as of a particular date were true and correct on and as of such particular date); and

          (iv)      the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Initial Closing Date, Subsequent Closing Date or Loan Shares Date of Sale, in each case in all material respects (except that any agreement or condition that is qualified as to materiality shall be performed or satisfied in all respects).

          (h)NYSE Listing. By the Initial Closing Date, the Shares shall have been approved for listing on the New York Stock Exchange, subject only to notice of issuance, and satisfactory evidence of such actions shall have been provided to the Borrowers and the Representatives.

          (i)Transactions. At the Initial Closing Date, the Transactions shall have been consummated on the terms and conditions described in the Disclosure Package and the Prospectus.

          (j)Lock-up Agreements. At the date of this Agreement, the Representatives and the Borrowers shall have received an agreement (a “Lock-up Agreement”) substantially in the form of Exhibit D hereto signed by each of the persons listed on Schedule D hereto.

          (k)Share Lending Agreements. The Company shall have complied with all of its obligations under the respective Share Lending Agreements in all material respects; no event or circumstance shall exist that would permit, with the giving of notice, the lapse of time or both, the early termination of the Share Lending Agreements by the Company or Borrowers; and the Share Lending Agreements shall be in full force and effect.

          (l)Additional Documents. On or before the Initial Closing Date, any Subsequent Closing Date and any Loan Shares Date of Sale, the Underwriters and the Borrowers and counsel for the Underwriters and the Borrowers shall have received such information, documents and opinions as they may reasonably require for the purposes of enabling them to pass upon the issuance and delivery of the Shares as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or agreements, herein contained.

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          If any condition specified in this Section 5 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Underwriters and the Borrowers by notice to the Company at any time on or prior to the Initial Closing Date and, with respect to the Subsequent Loan Shares, at any time prior to the applicable Subsequent Closing Date, and with respect to the Sold Loan Shares, at any time prior to the applicable Loan Shares Date of Sale, which termination shall be without liability on the part of any party to any other party, except that Sections 4, 6, 7 and 8 hereof shall at all times be effective and shall survive such termination.

          SECTION 6.Reimbursement of Underwriters’ and Borrowers’ Expenses. If this Agreement is terminated by the Underwriters or the Borrowers pursuant to Section 5 (other than 5(f)) or 9 hereof, the Company agrees to reimburse the Representatives and the other Underwriters and the Borrowers (or such Underwriter or Borrower as have terminated this Agreement with respect to themselves), severally, upon demand for all reasonable and documented out-of-pocket expenses that shall have been reasonably incurred by the Representatives, the Underwriters and the Borrowers in connection with the proposed issuance and the offering of the Shares and the delivery of the Shares under the Share Lending Agreements, including, without limitation, reasonable and documented fees and disbursements of counsel.

          SECTION 7.Indemnification.

          (a)Indemnification of the Underwriters and Borrowers. The Company agrees to indemnify and hold harmless each Borrower, Underwriter and each of their respective directors, officers, employees and agents and each person, if any, who controls any Borrower or Underwriter within the meaning of the Securities Act and the Exchange Act against any loss, claim, damage, liability or expense, as incurred, to which such Borrower, Underwriter, director, officer, employee, agent or controlling person may become subject, insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based: (i) upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or any amendment thereto, including any information deemed to be a part thereof pursuant to Rule 430A, Rule 430B or Rule 430C under the Securities Act, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading; or (ii) upon any untrue statement or alleged untrue statement of a material fact contained in any Issuer Free Writing Prospectus, any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) or any “road show” (as defined in Rule 433 under the Securities Act) not constituting an Issuer Free Writing Prospectus (a “Non-IFWP Road Show”), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and to reimburse each Borrower or Underwriter and each such director, officer, employee, agent or controlling person for any and all expenses (including the fees and disbursements of one firm of counsel and local counsel, as appropriate, chosen by the Representatives or Borrowers) as such expenses are reasonably incurred by such Borrower or Underwriter or such director, officer, employee or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the extent, arising

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out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission based upon and in conformity with written information furnished to the Company by the Underwriters through the Representatives and the Borrowers expressly for use in the Registration Statement, the Disclosure Package, any preliminary prospectus, the Prospectus or any Issuer Free Writing Prospectus (or any amendment or supplement to any of the foregoing). The indemnity agreement set forth in this Section 7(a) shall be in addition to any liabilities that the Company may otherwise have.

          (b)Indemnification of the Company, its Directors and Officers. Each Underwriter and Borrower agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act against any loss, claim, damage, liability or expense, as incurred, to which the Company or any such director, officer or controlling person may become subject, insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Disclosure Package, any preliminary prospectus, the Prospectus or any Issuer Free Writing Prospectus (or any amendment or supplement to any of the foregoing), or the Marketing Materials, or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Disclosure Package, any preliminary prospectus, the Prospectus or any Issuer Free Writing Prospectus (or any amendment or supplement to any of the foregoing), or the Marketing Materials in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives or by the Borrowers expressly for use therein; and to reimburse the Company and each such director, officer or controlling person for any and all expenses (including the fees and disbursements of one firm of counsel and local counsel, as appropriate) as such expenses are reasonably incurred by the Company or such director, officer or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. The Company hereby acknowledges that the only information that the Underwriters and Borrowers have furnished to the Company expressly for use in the Disclosure Package, the preliminary prospectus or the Prospectus (or any amendment or supplement thereto) or the Marketing Materials are the statements set forth in the second paragraph, the first, third, fourth, fifth, sixth and seventh sentences of the third paragraph, the fourth paragraph, the first, third, fourth, fifth, sixth and seventh sentences of the fifth paragraph, and the fourteenth and fifteenth paragraphs under the caption “Underwriting” in the preliminary prospectus and the Prospectus. The indemnity agreement set forth in this Section 7(b) shall be in addition to any liabilities that each Underwriter or Borrower may otherwise have.

          (c)Notifications and Other Indemnification Procedures. Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 7, notify the indemnifying party in writing of the commencement thereof, but the failure to so notify the indemnifying party (i) will not relieve it from any liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and

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such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in and, to the extent that it shall elect, jointly with all other indemnifying parties similarly notified, by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that a conflict may arise between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying party’s election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 7 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (together with local counsel), reasonably approved by the indemnifying party (the Representatives in the case of Sections 7(b) and 8 hereof), representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party.

          (d)Settlements. The indemnifying party under this Section 7 shall not be liable for any settlement of any proceeding effected without its written consent, which shall not be withheld unreasonably, but, if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party against any loss, claim, damage, liability or expense by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by this Section 7, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld), effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement, compromise or consent (i) includes an unconditional release of such indemnified

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party from all liability on claims that are the subject matter of such action, suit or proceeding and (ii) does not include any statements as to or any findings of fault, culpability or failure to act by or on behalf of any indemnified party.

          SECTION 8.Contribution. If the indemnification provided for in Section 7 hereof is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified party, as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to therein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriters and the Borrowers, on the other hand, from the offering of the Shares pursuant to this Agreement or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and the Borrowers and the Underwriters, on the other hand, in connection with the statements or omissions or inaccuracies in the representations and warranties herein which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and by the Underwriters and the Borrowers, on the other hand, shall be deemed to be in the same respective proportions as the total net proceeds from such offering (before deducting expenses) bears to the total underwriting discounts and commissions received by such Underwriters in connection with the offering of the Shares. The relative fault of the Company, on the one hand, and the Borrowers and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact or any such inaccurate or alleged inaccurate representation or warranty relates to information supplied by the Company, on the one hand, or the Borrowers or the Underwriters, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission or inaccuracy.

          The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 7 hereof, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in Section 7 hereof with respect to notice of commencement of any action shall apply if a claim for contribution is to be made under this Section 8; provided, however, that no additional notice shall be required with respect to any action for which notice has been given under Section 7 hereof for purposes of indemnification.

          The Company and the Borrowers and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation (even if the Underwriters and Borrowers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 8.

          Notwithstanding the provisions of this Section 8, no Underwriter or Borrower shall be required to contribute, individually or in the aggregate, any amount in excess of the amount by

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which the total price at which the Shares underwritten by it and distributed to the public exceeds the amount of any damages that such Underwriter or Borrower has otherwise been required to pay be reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11 of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ and Borrowers’ obligations to contribute pursuant to this Section 8 are several, and not joint, in proportion to their respective commitments as set forth opposite their names on Schedule A. For purposes of this Section 8, each director, officer and employee of an Underwriter or Borrower and each person, if any, who controls an Underwriter or Borrower within the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as such Underwriter or Borrower, and each director of the Company, and each person, if any, who controls the Company, within the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as the Company.

          SECTION 9.Termination of this Agreement. Prior to the Initial Closing Date and, with respect to any Subsequent Loan Shares, any Subsequent Closing Date, and with respect to any Sold Loan Shares, any Loan Shares Date of Sale, this Agreement may be terminated by the Underwriters and the Borrowers by notice given to the Company if at any time: (i) trading or quotation in any of the Company’s securities shall have been suspended or limited by the Commission or by the NYSE, or trading in securities generally on either the Nasdaq Stock Market or the NYSE shall have been suspended or limited, or minimum or maximum prices shall have been generally established by the Commission or the FINRA or on either such stock exchange; (ii) a general banking moratorium shall have been declared by federal or New York authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States has occurred; or (iii) there shall have occurred any outbreak or escalation of national or international hostilities or declaration of a national emergency or war by the United States or any crisis or calamity, or any change in the United States or international financial markets, or any substantial change or development involving a prospective substantial change in United States’ or international political, financial or economic conditions in each case, as in the judgment of the Representatives and the Borrowers is material and adverse and makes it impracticable or inadvisable to market the Shares in the manner and on the terms described in the Prospectus or to enforce contracts for the sale of securities. Any termination pursuant to Sections 5 or 9 shall be without liability on the part of (i) the Company, to any Underwriter or Borrower, except that the Company shall be obligated to reimburse the expenses of the Representatives, the Underwriters and Borrowers pursuant to Sections 4 and 6 hereof, (ii) any Underwriter or Borrower to the Company, or (iii) any party hereto to any other party except that the provisions of Sections 7 and 8 hereof shall at all times be effective and shall survive such termination.

          SECTION 10.Research Analyst Independence. The Company acknowledges that the Underwriters’ research analysts and research departments are required to be independent from their respective investment banking divisions and are subject to certain regulations and internal policies, and that such Underwriters’ research analysts may hold views and make statements or investment recommendations and/or publish research reports with respect to the Company and/or the offering that differ from the views of their respective investment banking divisions. The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the Underwriters with respect to any conflict of interest that may

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arise from the fact that the views expressed by their independent research analysts and research departments may be different from or inconsistent with the views or advice communicated to the Company by such Underwriters’ investment banking divisions. The Company acknowledges that each of the Underwriters is a full service securities firm and as such from time to time, subject to applicable securities laws, may effect transactions for its own account or the account of its customers and hold long or short positions in debt or equity securities of the Company that may be the subject of the transactions contemplated by this Agreement.

          SECTION 11.Representations and Indemnities to Survive Delivery. The respective indemnities, agreements, representations, warranties and other statements of the Company and its officers, of the Borrowers and of the several Underwriters set forth in or made pursuant to this Agreement (i) will remain operative and in full force and effect, regardless of any (A) investigation, or statement as to the results thereof, made by or on behalf of any Underwriter or Borrower, the officers or employees of any Underwriter or Borrower, or any person controlling the Underwriter or Borrower, the Company, the officers or employees of the Company or any person controlling the Company, as the case may be or (B) acceptance of the Shares and payment for them hereunder and (ii) will survive delivery of and payment for the Shares sold hereunder and any termination of this Agreement.

          SECTION 12.Notices. All communications hereunder shall be in writing and shall be mailed, hand delivered, couriered or facsimiled and confirmed to the parties hereto as follows:

          If to the Underwriters or the Borrowers:

Banc of America Securities LLC 9 West 57th Street New York, New York 10019 Attention: ECM Legal Lehman Brothers Inc. 745 Seventh Ave. New York, New York 10019 Facsimile: (636) 834-8133 Attention: Syndicate Registration with a copy, in the case of any notice pursuant to Section 7(c), to:
	Lehman Brothers Inc. 399 Park Avenue, Tenth Floor New York, New York 10022 Facsimile: (212) 520-0421 Attention: Director of Litigation, Office of the General Counsel

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with a copy to:
	Fried, Frank, Harris, Shriver & Jacobson LLP One New York Plaza New York, New York 10004 Facsimile: (212) 859-4000 Attention: Valerie Ford Jacob, Esq. and Michael Levitt, Esq.
with a copy to:
	The Great Atlantic & Pacific Tea Company 2 Paragon Drive Montvale, New Jersey 07645 Facsimile: (201) 571-8715 Attention: Brenda Galgano,    Senior Vice President and    Chief Financial Officer
with a copy to:
	Cahill Gordon & Reindel LLP 80 Pine Street New York, New York 10005 Facsimile: (212) 378-2324 Attention: Kenneth W. Orce, Esq.

          Any notice to an Underwriter pursuant to Section 7(c) shall be delivered or sent by hand delivery, mail, telex or facsimile transmission to such Underwriter at its address set forth in its acceptance telex to the Representatives, which address will be supplied to any other party hereto by the Representatives upon request. Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof.

          Any party hereto may change the address or facsimile number for receipt of communications by giving written notice to the others.

          SECTION 13.Successors and Assigns. This Agreement will inure to the benefit of and be binding upon the parties hereto and to the benefit of (i) the Company, its directors, any person who controls the Company within the meaning of the Securities Act or the Exchange Act and any officer of the Company who signs the Registration Statement, (ii) the Underwriters, Borrowers, the officers, directors, employees and agents of the Underwriters and Borrowers and each person, if any, who controls any Underwriter or Borrower within the meaning of the Securities Act or the Exchange Act and (iii) the respective successors and assigns of any of the above, all as and to the extent provided in this Agreement, and no other person shall acquire or have any right under or by virtue of this Agreement. The term “successors and assigns” shall not include a purchaser of any of the Shares from any of the several Underwriters merely because of such purchase.

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          SECTION 14.Partial Unenforceability. The invalidity or unenforceability of any section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other section, paragraph or provision hereof. If any section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

          SECTION 15.Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.

          Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby (“Related Proceedings”) may be instituted in the federal courts of the United States of America located in the City and County of New York or the courts of the State of New York in each case located in the City and County of New York (collectively, the “Specified Courts”), and each party irrevocably submits to the exclusive jurisdiction (except for suits, actions, or proceedings instituted in regard to the enforcement of a judgment of any Specified Court in a Related Proceeding, as to which such jurisdiction is non-exclusive) of the Specified Courts in any Related Proceeding. Service of any process, summons, notice or document by mail to such party’s address set forth above shall be effective service of process for any Related Proceeding brought in any Specified Court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any Specified Proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any Specified Court that any Related Proceeding brought in any Specified Court has been brought in an inconvenient forum.

          SECTION 16.No Advisory or Fiduciary Responsibility. The Company acknowledges and agrees that: (i) the purchase and sale of the Shares pursuant to this Agreement, including the determination of the offering price of the Shares and any related discounts and commissions, is an arm’s-length commercial transaction between the Company, on the one hand, and the several Underwriters and Borrowers, on the other hand, and the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement; (ii) in connection with each transaction contemplated hereby and the process leading to such transaction each Underwriter or Borrower is and has been acting solely as a principal and is not the agent or fiduciary of the Company or its respective affiliates, stockholders, creditors or employees or any other party; (iii) no Underwriter or Borrower has assumed or will assume an advisory or fiduciary responsibility in favor of the Company with respect to any of the transactions contemplated hereby or the process leading thereto (irrespective of whether such Underwriter or Borrower has advised or is currently advising the Company on other matters) or any other obligation to the Company, except the obligations expressly set forth in this Agreement and the Share Lending Agreements; (iv) the several Underwriters and Borrowers and their affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company and that the several Underwriters and Borrowers have no obligation to disclose any of such interests by virtue of any fiduciary or advisory relationship; and (v) the Underwriters and Borrowers have not provided any legal,

34

accounting, regulatory or tax advice with respect to the offering contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent the Company deemed appropriate.

          This Agreement, together with the Share Lending Agreements, supersedes all prior agreements and understandings (whether written or oral) between the Company and the several Underwriters and Borrowers, or any of them, with respect to the subject matter hereof. The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the several Underwriters and Borrowers with respect to any breach or alleged breach of fiduciary duty.

          SECTION 17.General Provisions. This Agreement, together with the Share Lending Agreements, constitutes the entire agreement of the parties to this Agreement and the Share Lending Agreements and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit. The section headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.

          Each of the parties hereto acknowledges that it is a sophisticated business person who was adequately represented by counsel during negotiations regarding the provisions hereof, including, without limitation, the indemnification provisions of Section 7 and the contribution provisions of Section 8, and is fully informed regarding said provisions. Each of the parties hereto further acknowledges that the provisions of Sections 7 and 8 hereto fairly allocate the risks in light of the ability of the parties to investigate the Company, its affairs and its business in order to assure that adequate disclosure has been made in the Registration Statement, any preliminary prospectus and the Prospectus (and any amendments and supplements thereto), as required by the Securities Act and the Exchange Act.

35

          If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company the enclosed copies hereof, whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms.

Very truly yours,
THE GREAT ATLANTIC &
PACIFIC TEA COMPANY, INC.
By	/s/ William Moss
	Name: William Moss
	Title: Vice President and Treasurer

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          The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representatives as of the date first above written.

BANC OF AMERICA SECURITIES LLC

LEHMAN BROTHERS INC.

          Acting as Representatives of the

          Several Underwriters.

By: Banc of America Securities LLC

By: /s/ Craig McCracken

           Name: Craig McCracken

           Title: Managing Director

By: Lehman Brothers Inc.

By: /s/ Michael Hrynuik

           Name: Michael Hrynuik

           Title: Senior Vice President

BANK OF AMERICA, N.A.

By: /s/ Michael Voris

           Name: Michael Voris

           Title: Vice President

LEHMAN BROTHERS

         INTERNATIONAL (EUROPE) LIMITED

By: /s/ Piers Le Marchant

           Name: Piers Le Marchant

           Title: European Legal Director

37

EX-10.1

Exhibit 10.1

	December 12, 2007
To:	The Great Atlantic and Pacific Tea Company, Inc.
	2 Paragon Drive
	Montvale, NJ 07645
	Attn:
	Telephone:   201-573-9700
	Facsimile:    201-937-4079
From:	Bank of America, N.A.
	c/o Banc of America Securities LLC
	9 West 57th Street
	New York, NY 10019
	Attn:	John Servidio
	Telephone:	212-847-6527
	Facsimile:	212-230-8610
Re:	Issuer Warrant Transaction (2011)
	(Transaction Reference Number: NY-32865)

Ladies and Gentlemen:

          The purpose of this communication (this “Confirmation”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “Transaction”) between Bank of America, N.A. (“Dealer”) and The Great Atlantic and Pacific Tea Company, Inc. (“Issuer”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.

          1. This Confirmation is subject to, and incorporates, the definitions and provisions of the 2000 ISDA Definitions (including the Annex thereto) (the “2000 Definitions”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and together with the 2000 Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc. (“ISDA”). In the event of any inconsistency between the 2000 Definitions and the Equity Definitions, the Equity Definitions will govern. For purposes of the Equity Definitions, each reference herein to a Warrant shall be deemed to be a reference to a Call Option or an Option, as context requires.

          This Confirmation evidences a complete and binding agreement, and supersedes any prior agreements, written or oral, between Dealer and Issuer as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the 2002 ISDA Master Agreement (the “ISDA Master Agreement”) as if Dealer and Issuer had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.

          All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern.

          2. The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:

General Terms:

Trade Date:	December 12, 2007
Effective Date:	December 18, 2007, or such other date as agreed between the parties, subject to Section 8(n) below

	Components:	The Transaction will be divided into individual Components, each with the terms set forth in this Confirmation, and, in particular, with the Number of Warrants and Expiration Date set forth in this Confirmation. The payments and deliveries to be made upon settlement of the Transaction will be determined separately for each Component as if each Component were a separate Transaction under the Agreement.
	Warrant Style:	European
	Warrant Type:	Call
	Seller:	Issuer
	Buyer:	Dealer
	Shares:	The Common Stock of Issuer, par value USD 1.00 per share (Ticker Symbol: “GAP”).
	Number of Warrants:	For each Component, as provided in Annex A to this Confirmation.
	Warrant Entitlement:	One Share per Warrant
	Strike Price:	USD 46.20
	Premium:	USD 5,992,500.00
	Premium Payment Date:	The Effective Date
	Exchange:	New York Stock Exchange
	Related Exchange:	All Exchanges
Procedures for Exercise:
	Expiration Time:	Valuation Time
	Expiration Date:	As provided in Annex A to this Confirmation (or, if such date is not a Scheduled Trading Day, the next following Scheduled Trading Day that is not already an Expiration Date for another Component); provided that if that date is a Disrupted Day, the Expiration Date for such Component shall be the first succeeding Scheduled Trading Day that is not a Disrupted Day and is not or is not deemed to be an Expiration Date in respect of any other Component of the Transaction hereunder; and provided further that if the Expiration Date has not occurred pursuant to the preceding proviso as of the Final Disruption Date, the Final Disruption Date shall be the Expiration Date (irrespective of whether such date is an Expiration Date occurring on the Final Disruption Date in respect of any other Component for the Transaction) and, notwithstanding anything to the contrary in this Confirmation or the Definitions, the Relevant Price for the Expiration Date shall be the prevailing market value per Share determined in good faith by the Calculation Agent in a commercially reasonable manner. “Final Disruption Date” means ten Exchange Business Days after January 24, 2012. Notwithstanding the foregoing and anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Expiration Date, the Calculation Agent may determine that such Expiration Date is a Disrupted Day only in part, in which case the Calculation Agent shall make adjustments to the number of Warrants for the relevant Component for which such day shall be the Expiration Date and shall designate the

2

		Scheduled Trading Day determined in the manner described in the immediately preceding sentence as the Expiration Date for the remaining Warrants for such Component. Section 6.6 of the Equity Definitions shall not apply to any Valuation Date occurring on an Expiration Date.
	Market Disruption Event:	Section 6.3(a) of the Equity Definitions is hereby amended by deleting the words “during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be,” in clause (ii) thereof.
	Automatic Exercise:	Applicable; and means that the Number of Warrants for each Component will be deemed to be automatically exercised at the Expiration Time on the Expiration Date for such Component unless Dealer notifies Seller (by telephone or in writing) prior to the Expiration Time on the Expiration Date that it does not wish Automatic Exercise to occur, in which case Automatic Exercise will not apply.
	Issuer’s Telephone Number and Telex and/or Facsimile Number and Contact Details for purpose of Giving Notice:	To be provided by Issuer.
Settlement Terms:
In respect of any Component:
	Settlement Currency:	USD
	Settlement Method Election:	Applicable; provided that the same Settlement Method shall apply to all Components; and provided further that references in the Equity Definitions to “Physical Settlement” shall be deemed to be references to “Net Share Settlement” as defined herein. If the Issuer elects Cash Settlement or Cash Settlement becomes the Default Settlement Method, the Issuer shall use its reasonable best efforts to provide Dealer with a written statement that the representations contained in paragraphs (a)(i) and (a)(iv) of “Representations, Warranties and Agreements” below are true and correct as of and as if made on the date of such election.
	Electing Party:	Issuer
	Settlement Method Election Date:	Five Scheduled Trading Days prior to, and including, the scheduled Expiration Date for the Component with the earliest scheduled Expiration Date.
	Default Settlement Method:	Net Share Settlement; provided that, unless on the Settlement Method Election Date, the number of Reserved Shares, as defined in Section 8(e), is at least equal to the Capped Number, as defined in Section 8(e), the Default Settlement Method shall be Cash Settlement; provided further that if the default settlement method applicable to warrant transactions entered into between the Issuer and Lehman Brothers OTC Derivatives Inc. (“Lehman OTC”) on the Trade Date becomes cash settlement pursuant to a proviso identical to the proceeding proviso, the Default Settlement Method hereunder shall be Cash Settlement.
	VWAP Price:	For any Valuation Date, the Rule 10b-18 dollar volume weighted average price per Share for such Valuation Date based on

3

		transactions executed during such Valuation Date, as reported on Bloomberg Page “GAP<Equity> AQR SEC” (or any successor thereto) or, in the event such price is not so reported on such Valuation Date for any reason, as reasonably determined by the Calculation Agent.
Cash Settlement Terms:
In respect of any Component:
	Settlement Currency:	USD
	Cash Settlement Payment Date:	With respect to each Valuation Date, three (3) full Exchange Business Days after the final Valuation Date.
Net Share Settlement Terms:
In respect of any Component:
	Net Share Settlement:	On each Settlement Date, Issuer shall deliver to Dealer a number of Shares equal to the Number of Shares to be Delivered for such Settlement Date to the account specified by Dealer and cash in lieu of any fractional shares valued at the Relevant Price on the Valuation Date corresponding to such Settlement Date.
	Number of Shares to be Delivered:	In respect of any Exercise Date, subject to the last sentence of Section 9.5 of the Equity Definitions, the product of (i) the number of Warrants exercised or deemed exercised on such Exercise Date, (ii) the Warrant Entitlement and (iii) (A) the excess of the VWAP Price on the Valuation Date occurring on such Exercise Date over the Strike Price divided by (B) such VWAP Price.
		The Number of Shares to be Delivered shall be delivered by Issuer to Dealer no later than 4:00 P.M. (local time in New York City) on the relevant Settlement Date.
	Other Applicable Provisions:	The provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws as a result of the fact that Seller is the Issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
Adjustments:
In respect of any Component:
	Method of Adjustment:	Calculation Agent Adjustment
	Extraordinary Dividend:	Any dividend or distribution (i) that has an ex-dividend date occurring on or after the Trade Date and on or prior to the Expiration Date and (ii) the amount or value of which exceeds the Ordinary Dividend Amount for such dividend or distribution, as determined by the Calculation Agent.
	Ordinary Dividend Amount:	USD 0.00.
Extraordinary Events:
	Consequences of Merger Events:

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(a) Share-for-Share:	Modified Calculation Agent Adjustment
(b) Share-for-Other:	Cancellation and Payment (Calculation Agent Determination)
(c) Share-for-Combined:	Cancellation and Payment (Calculation Agent Determination)
Tender Offer:	Applicable
Consequences of Tender Offers:
(a) Share-for-Share:	Modified Calculation Agent Adjustment
(b) Share-for-Other:	Cancellation and Payment (Calculation Agent Determination) on that portion of the Other Consideration that consists of cash; Modified Calculation Agent Adjustment on the remainder of the Other Consideration.
(c) Share-for-Combined:	Modified Calculation Agent Adjustment
Modified Calculation Agent Adjustment:	If, in respect of any Merger Event or Tender Offer to which Modified Calculation Agent Adjustment applies, the adjustments to be made in accordance with Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions would result in Issuer being different from the issuer of the Shares, then with respect to such Merger Event or Tender Offer, as a condition precedent to the adjustments contemplated in Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions, Issuer and the issuer of the Shares shall, prior to the Merger Date or Tender Offer, as the case may be, have entered into such documentation containing representations, warranties and agreements relating to securities law and other issues as requested by Dealer that Dealer has determined, in its commercially reasonable discretion, to be reasonably necessary or appropriate to allow Dealer to continue as a party to the Transaction, as adjusted under Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions, and to preserve its hedging or hedge unwind activities in connection with the Transaction in a manner compliant with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer, and if such conditions are not met or if the Calculation Agent determines that no adjustment that it could make under Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions will produce a commercially reasonable result, then the consequences set forth in Section 12.2(e)(ii) or Section 12.3(d)(ii), as the case may be, of the Equity Definitions shall apply.
Nationalization, Insolvency or Delisting:	Cancellation and Payment (Calculation Agent Determination); provided that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the American Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation

5

	system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
Additional Disruption Events:
(a) Change in Law:	Applicable
(b) Failure to Deliver:	Applicable
(c) Insolvency Filing:	Applicable
(d) Hedging Disruption:	Applicable
(e) Increased Cost of Hedging:	Applicable
(f) Loss of Stock Borrow:	Applicable
Maximum Stock Loan Rate:	100 basis points
(g) Increased Cost of Stock Borrow:	Applicable
Initial Stock Loan Rate:	50 basis points
Hedging Party:	Dealer for all applicable Additional Disruption Events
Determining Party:	Dealer for all applicable Extraordinary Events
Non-Reliance:	Applicable
Agreements and Acknowledgments Regarding Hedging Activities:	Applicable
Additional Acknowledgments:	Applicable
3. Calculation Agent:	Dealer, which shall at all times act in good faith and in a commercially reasonable manner. In addition, Dealer shall use commercially reasonable efforts under the circumstances to consult with Issuer on decisions it makes in its capacity as Calculation Agent; provided that Dealer shall not be required to take into account or be bound by any considerations raised by Issuer.
4. Account Details:
Dealer Payment Instructions:	Bank of America New York, NY SWIFT: BOFAUS65
	Bank Routing: 026–009–593 Account Name: Bank of America
	Account No. : 0012333–34172
Issuer Payment Instructions:	To be provided by Issuer.

5. Offices:
The Office of Dealer for the Transaction is: New York
	Bank of America, N.A. c/o Banc of America Securities LLC 9 West 57th Street, 40th Floor New York, NY 10019
	Attention:	John Servidio
	Telephone:	212-847-6527
	Facsimile:	212-230-8610
The Office of Issuer for the Transaction is: Not applicable

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6. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Issuer:
	To: Attn: Telephone: Facsimile:	The Great Atlantic & Pacific Tea Company 2 Paragon Drive Montvale, New Jersey 07645 Brenda Galgano, Senior Vice President and Chief Financial Officer 201-571-4363 201-571-8715
(b) Address for notices or communications to Dealer:
	To: Attn:    Telephone: Facsimile:	Bank of America, N.A. c/o Banc of America Securities LLC 9 West 57th Street, 40th Floor New York, NY 10019 John Servidio 212-847-6527 212-230-8610

          7. Representations, Warranties and Agreements:

(a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Issuer represents and warrants to and for the benefit of, and agrees with, Dealer as follows:
	(i) On the Trade Date, (A) none of Issuer and its officers and directors is aware of any material nonpublic information regarding Issuer or the Shares and (B) all reports and other documents filed by Issuer with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of 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.
	(ii) Without limiting the generality of Section 13.1 of the Equity Definitions, Issuer acknowledges that Dealer is not making any representations or warranties with respect to the treatment of the Transaction under FASB Statements 133, as amended, or 150, EITF Issue No. 00-19 (or any successor issue statements) or under FASB’s Liabilities & Equity Project.
	(iii) Prior to the Trade Date, Issuer shall deliver to Dealer a resolution of Issuer’s board of directors authorizing the Transaction and such other certificate or certificates as Dealer shall reasonably request.
	(iv) Issuer is not entering into this Confirmation to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.
	(v) Issuer is not, and after giving effect to the transactions contemplated hereby will not be, an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
	(vi) On the Trade Date (A) the assets of Issuer at their fair valuation exceed the liabilities of Issuer, including contingent liabilities, (B) the capital of Issuer is adequate to conduct the business of Issuer and (C) Issuer has the ability to pay its debts and obligations as such debts mature and does not intend to, or does not believe that it will, incur debt beyond its ability to pay as such debts mature.
	(vii) Issuer shall not take any action to decrease the number of Available Shares below the Capped Number (each as defined below).
	(viii) The representations and warranties of Issuer set forth in Section 3 of the Agreement and Sections 1 and 3 of the Underwriting Agreement (the “Underwriting Agreement”) dated as of December 12,

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2007 between Bank of America, N.A. and Lehman Brothers Inc., as representatives of the underwriters party thereto are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.

          (ix) Issuer understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any Affiliate of Dealer or any governmental agency.

          (x) (A) During the period starting on the first Expiration Date and ending on the last Expiration Date (the “Settlement Period”), the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“Regulation M”) and (B) Issuer shall not engage in any “distribution,” as such term is defined in Regulation M, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day immediately following the Settlement Period.

          (xi) During the Settlement Period, neither Issuer nor any “affiliate” or “affiliated purchaser” (each as defined in Rule 10b-18 of the Exchange Act (“Rule 10b-18”)) shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except through Dealer.

          (xii) As of the Trade Date, the Issuer has not entered into any obligation that would contractually limit it from effecting Cash Settlement or Net Share Settlement under the Transaction.

          (b) Each of Dealer and Issuer agrees and represents that it is an “eligible contract participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended.

          (c) Each of Dealer and Issuer acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) thereof. Accordingly, Dealer represents and warrants to Issuer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.

          (d) Each of Dealer and Issuer agrees and acknowledges that Dealer is a “financial institution,” “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of Title 11 of the United States Code (the “Bankruptcy Code”). The parties hereto further agree and acknowledge (A) that this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “settlement payment,” as such term is defined in Section 741(8) of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code, and (B) that Dealer is entitled to the protections afforded by, among other sections, Section 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code.

          (e) Issuer shall deliver to Dealer an opinion of counsel, dated as of the Trade Date and reasonably acceptable to Dealer in form and substance (subject to customary qualifications, assumptions and exceptions), with respect to the matters set forth in Section 3(a) of the Agreement.

          8. Other Provisions:

          (a) Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events. If, subject to Section 8(l) below, Issuer shall owe Dealer any amount pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions (except in the event of an Insolvency, a Nationalization, a Tender Offer or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (except in the event of an Event of Default in which Issuer is the Defaulting Party or a Termination Event in which Issuer is the Affected Party, that resulted from an event or events within Issuer’s control) (a “Payment Obligation”), Issuer shall have the right, in its sole discretion, to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing

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within one Scheduled Trading Day, between the hours of 9:00 A.M. and 4:00 P.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date or Early Termination Date, as applicable (“Notice of Share Termination”). Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the Merger Date, the Tender Offer Date, Announcement Date or Early Termination Date, as applicable:

Share Termination Alternative:	Applicable and means that Issuer shall deliver to Dealer the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, in satisfaction of the Payment Obligation.
Share Termination Delivery Property:	A number of Share Termination Delivery Units, as calculated by the Calculation Agent in good faith, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
Share Termination Unit Price:	The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Issuer at the time of notification of the Payment Obligation.
Share Termination Delivery Unit:	In the case of a Termination Event, Event of Default or Delisting, one Share or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization, Merger Event or Tender Offer. If such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
Failure to Deliver:	Applicable
Other applicable provisions:	If Share Termination Alternative is applicable, the provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws as a result of the fact that Seller is the Issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units”.

          (b) Registration/Private Placement Procedures. (i) If, in the commercially reasonable judgment of Dealer, for any reason, any Shares or any securities of Issuer or its affiliates comprising any Share Termination Delivery Units deliverable to Dealer hereunder (any such Shares or securities, “Delivered Securities”) would not be immediately freely transferable by Dealer under the provisions of Rule 144 of the Securities Act, as may be amended from time to time (including the amendment adopted on November 15, 2007 pursuant to Release No. 33-8869) applicable to sales of restricted securities by non-affiliates of an issuer, then the provisions set forth in this Section 8(b) shall apply. At the election of Issuer by notice to Dealer within one Exchange Business Day after the relevant delivery obligation arises, but in any event at least one Exchange Business Day prior to the date on which such delivery obligation is due, either (A) all Delivered Securities delivered by Issuer to Dealer shall be, at the time of such delivery, covered by an effective registration statement of Issuer for immediate resale by Dealer (such registration statement and the corresponding prospectus (the “Prospectus”) (including, without limitation, any sections describing the plan of distribution) in form and content commercially reasonably satisfactory to Dealer) or (B) Issuer shall deliver additional Delivered Securities so that the value of such Delivered Securities, as determined by the Calculation Agent to reflect an appropriate liquidity

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discount, equals the value of the number of Delivered Securities that would otherwise be deliverable if such Delivered Securities were freely tradeable (without prospectus delivery) upon receipt by Dealer (such value, the “Freely Tradeable Value”); provided that Issuer may not make the election described in this clause (B) if, on the date of its election, it has taken, or caused to be taken, any action that would make unavailable either the exemption pursuant to Section 4(2) of the Securities Act for the delivery by Issuer to Dealer (or any affiliate designated by Dealer) of the Delivered Securities or the exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of the Delivered Securities by Dealer (or any such affiliate of Dealer). (For the avoidance of doubt, as used in this paragraph (b) only, the term “Issuer” shall mean the issuer of the relevant securities, as the context shall require.)
	(ii) If Issuer makes the election described in clause (b)(i)(A) above:
	(A) Dealer (or an Affiliate of Dealer designated by Dealer) shall be afforded a reasonable opportunity to conduct a due diligence investigation with respect to Issuer that is customary in scope for underwritten offerings of equity securities and that yields results that are commercially reasonably satisfactory to Dealer or such Affiliate, as the case may be, in its commercially reasonable discretion; and
	(B) Dealer (or an Affiliate of Dealer designated by Dealer) and Issuer shall enter into an agreement (a “Registration Agreement”) on commercially reasonable terms in connection with the public resale of such Delivered Securities by Dealer or such Affiliate substantially similar to underwriting agreements customary for underwritten offerings of equity securities, in form and substance commercially reasonably satisfactory to Dealer or such Affiliate and Issuer, which Registration Agreement shall include, without limitation, provisions substantially similar to those contained in such underwriting agreements relating to the indemnification of, and contribution in connection with the liability of, Dealer and its Affiliates and Issuer, shall provide for the payment by Issuer of all reasonable expenses in connection with such resale, including all registration costs and all reasonable fees and expenses of counsel for Dealer, and shall provide for the delivery of accountants’ “comfort letters” to Dealer or such Affiliate with respect to the financial statements and certain financial information contained in or incorporated by reference into the Prospectus.
	(iii) If Issuer makes the election described in clause (b)(i)(B) above:
	(A) Dealer (or an Affiliate of Dealer designated by Dealer) and any potential institutional purchaser of any such Delivered Securities from Dealer or such Affiliate identified by Dealer shall be afforded a commercially reasonable opportunity to conduct a due diligence investigation in compliance with applicable law with respect to Issuer customary in scope for private placements of equity securities (including, without limitation, the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them);
	(B) Dealer (or an Affiliate of Dealer designated by Dealer) and Issuer shall enter into an agreement (a “Private Placement Agreement”) on commercially reasonable terms in connection with the private placement of such Delivered Securities by Issuer to Dealer or such Affiliate and the private resale of such shares by Dealer or such Affiliate, substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance commercially reasonably satisfactory to Dealer and Issuer, which Private Placement Agreement shall include, without limitation, provisions substantially similar to those contained in such private placement purchase agreements relating to the indemnification of, and contribution in connection with the liability of, Dealer and its Affiliates and Issuer, shall provide for the payment by Issuer of all reasonable expenses in connection with such resale, including all reasonable fees and expenses of counsel for Dealer, shall contain representations, warranties and agreements of Issuer reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resales, and shall use best efforts to provide for the delivery of accountants’ “comfort letters” to Dealer or such Affiliate with respect to the financial statements and certain financial information contained in or incorporated by reference into the offering memorandum prepared for the resale of such Shares; and
	(C) Issuer agrees that any Delivered Securities so delivered to Dealer, (i) may be transferred by and among Dealer and its Affiliates, and Issuer shall effect such transfer without any further action by Dealer and (ii) after the minimum “holding period” within the meaning of Rule 144(d) under the Securities Act has elapsed with respect to such Delivered Securities, Issuer shall promptly remove, or cause the transfer agent for such Shares or securities to remove, any legends referring to any such restrictions or requirements from such Delivered Securities upon delivery by Dealer (or such Affiliate of Dealer) to Issuer or such transfer agent of

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seller’s and broker’s representation letters customarily delivered by Dealer in connection with resales of restricted securities pursuant to Rule 144 under the Securities Act, without any further requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer).

          (D) Issuer shall not take, or cause to be taken, any action that would make unavailable either the exemption pursuant to Section 4(2) of the Securities Act for the sale by Issuer to Dealer (or any affiliate designated by Dealer) of the Shares or Share Termination Delivery Units, as the case may be, or the exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of the Shares or Share Termination Delivery Units, as the case may be, by Dealer (or any such affiliate of Dealer).

          (c) Make-whole. If Issuer makes the election described in clause (b)(i)(B) of paragraph (b) of this Section 8, then Dealer or its affiliate may sell such Shares or Share Termination Delivery Units, as the case may be, during a period (the “Resale Period”) commencing on the Exchange Business Day following delivery of such Shares or Share Termination Delivery Units, as the case may be, and ending on the Exchange Business Day on which Dealer completes the sale of all such Shares or Share Termination Delivery Units, as the case may be, or a sufficient number of Shares or Share Termination Delivery Units, as the case may be, so that the realized net proceeds of such sales exceed the Freely Tradeable Value (such amount of the Freely Tradeable Value, the “Required Proceeds”). If any of such delivered Shares or Share Termination Delivery Units remain after such realized net proceeds exceed the Required Proceeds, Dealer shall return such remaining Shares or Share Termination Delivery Units to Issuer. If the Required Proceeds exceed the realized net proceeds from such resale, Issuer shall transfer to Dealer by the open of the regular trading session on the Exchange on the Exchange Business Day immediately following the last day of the Resale Period the amount of such excess (the “Additional Amount”) in cash or in a number of additional Shares (“Make-whole Shares”) in an amount that, based on the Relevant Price on the last day of the Resale Period (as if such day was the “Valuation Date” for purposes of computing such Relevant Price), has a dollar value equal to the Additional Amount. The Resale Period shall continue to enable the sale of the Make-whole Shares in the manner contemplated by this Section 8(c). This provision shall be applied successively until the Additional Amount is equal to zero, subject to Section 8(e).

          (d) Beneficial Ownership. Notwithstanding anything to the contrary in the Agreement or this Confirmation, in no event shall Dealer be entitled to receive, or shall be deemed to receive, any Shares if, upon such receipt of such Shares, the “beneficial ownership” (within the meaning of Section 13 of the Exchange Act and the rules promulgated thereunder) of Shares by Dealer or any affiliate of Dealer or other person subject to aggregation with Dealer under such Section 13 and rules (collectively, “Buyer Group”) would be equal to or greater than 8.5% or more of the outstanding Shares. If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of this provision, Issuer’s obligation to make such delivery shall not be extinguished and Issuer shall make such delivery as promptly as practicable after, but in no event later than one Exchange Business Day after, Dealer gives notice to Issuer that such delivery would not result in Buyer Group directly or indirectly so beneficially owning in excess of 8.5% of the outstanding Shares.

(e) Limitations on Settlement by Issuer. Notwithstanding anything herein or in the Agreement to the contrary, in no event shall Issuer be required to deliver Shares in connection with the Transaction in excess of a number of Shares equal to 1.2 times the aggregate Number of Shares for all Components (the “Capped Number”). If at any time the Issuer does not have a number of authorized but unissued Shares that are not reserved for future issuance in connection with other transactions in the Shares (the “Available Shares”) that is greater than the Capped Number, Issuer agrees to use its reasonable best efforts to seek approval from its shareholders at the next meeting of shareholders, or, if necessary, a subsequent meeting of shareholders, to increase the number of authorized but unissued Shares and to reserve a number of Shares at least equal to the Capped Number for settlement of this Transaction (the “Reserved Shares”). If Issuer does not succeed in obtaining shareholder approval for such an increase and so increasing the number of Reserved Shares at or prior to its second annual meeting of shareholders following the Trade Date, (i) the Number of Shares for each Component shall be automatically increased by 10% and (ii) an Additional Termination Event shall occur with respect to which the Transaction shall be the sole Affected Transaction and Issuer shall be the sole Affected Party; provided however that if such shareholder approval is obtained and such increase in the number of Reserved Shares occurs after Issuer’s second annual meeting of shareholders but before the earlier of the Expiration Date for such Component and any earlier date that Dealer has designated as an Early Termination Date or other date for cancellation or termination of the Transaction, the Additional Termination Event arising from such prior failure to obtain shareholder approval or failure to increase the number of Reserved Shares shall cease to exist. For the avoidance of doubt Dealer shall have no obligation to exercise its right pursuant to such Additional Termination Event, such right will be an ongoing right until Issuer has

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obtained such approval from its shareholders for such an increase in the number of Available Shares and has so increased the number of Reserved Shares, and such right will automatically terminate upon Issuer obtaining such shareholder approval for such an increase and so increasing the number of Reserved Shares. Unless the number of Reserved Shares is at least equal to the Capped Number, Issuer shall not retire any Shares that are repurchased, acquired or otherwise received by Issuer or any of its subsidiaries from any persons (whether or not in exchange for cash, fair value or any other consideration, and including, for the avoidance of doubt, any Shares received in settlement of any option or other derivative transaction) (such Shares, “Acquired Shares”) or issue or deliver or agree to issue or deliver any Acquired Shares to any person other than Issuer except that such Acquired Shares may be used to settle this Transaction and any other warrant transactions entered into between Issuer and Dealer or Lehman OTC on the Trade Date.

          (f) Right to Extend. Dealer may postpone any Exercise Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Number of Shares to be Delivered with respect to one or more Components), if Dealer determines, in its commercially reasonable discretion, that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions or (ii) to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer.

          (g) Equity Rights. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Issuer’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Issuer’s bankruptcy to any claim arising as a result of a breach by Issuer of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Issuer herein under or pursuant to any other agreement.

          (h) Amendments to Equity Definitions and the Agreement. The following amendments shall be made to the Equity Definitions and to the Agreement:

          (i) The first sentence of Section 11.2(c) of the Equity Definitions, prior to clause (A) thereof, is hereby amended to read as follows: ‘(c) If “Calculation Agent Adjustment” is specified as the Method of Adjustment in the related Confirmation of a Share Option Transaction, then following the announcement or occurrence of any Potential Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment Event has a material effect on the theoretical value of the relevant Shares or options on the Shares and, if so, will (i) make appropriate adjustment(s), if any, to any one or more of:’ and, the portion of such sentence immediately preceding clause (ii) thereof is hereby amended by deleting the words “diluting or concentrative” and the words “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing such latter phrase with the words “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)”;

          (ii) Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “diluting or concentrative” and replacing them with “material”;

          (iii) Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that Issuer.”.

          (iv) Section 12.9(b)(v) of the Equity Definitions is hereby amended by:

                    (A) adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and

                    (B) (1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C) and (3) deleting the final two sentences in its entirety and replacing it with the sentence “The Hedging Party will determine (in a manner consistent, for such purposes, with Section 3

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hereunder governing the conduct of the Calculation Agent) the Cancellation Amount payable by one party to the other.”

          (i) Transfer and Assignment. Dealer may transfer or assign its rights and obligations under the Transaction with the prior written consent of the Issuer, such consent not to be unreasonably withheld. Notwithstanding the foregoing, Dealer may transfer or assign its rights and obligations hereunder and under the Agreement, in whole or in part, without the consent of the Issuer to (i) any of its affiliates or (ii) any entities sponsored or organized by, or on behalf of or for the benefit of Dealer.

          (j) Disclosure. Effective from the date of commencement of discussions concerning the Transaction, Issuer and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Issuer relating to such tax treatment and tax structure.

          (k) Designation by Dealer. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Issuer, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such shares or other securities and otherwise to perform Dealer obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Issuer to the extent of any such performance.

          (l) Additional Termination Events. The occurrence of any of the following shall constitute an Additional Termination Event with respect to which the Transaction shall be the sole Affected Transaction and Issuer shall be the sole Affected Party; provided that with respect to any Additional Termination Event, Dealer may choose to treat part of the Transaction as the sole Affected Transaction, and, upon the termination of the Affected Transaction, a Transaction with terms identical to those set forth herein except with a Number of Warrants equal to the unaffected number of Warrants shall be treated for all purposes as the Transaction, which shall remain in full force and effect:

(i) Dealer reasonably determines that it is advisable to terminate a portion of the Transaction so that Dealer’s related hedging activities will comply with applicable securities laws, rules or regulations;
(ii) any Person (as defined below) acquires beneficial ownership (determined in accordance with Rule 13d-3 under the Exchange Act), directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of Shares entitling the Person to exercise 50% or more of the total voting power of all shares of Issuer’s capital stock entitled to vote generally in elections of directors, other than an acquisition by Issuer, any of Issuer’s subsidiaries or any of Issuer’s employee benefit plans;
(iii) Issuer (x) merges or consolidates with or into any other Person, other than a subsidiary of Issuer, another Person merges with or into Issuer, or Issuer conveys, sells, transfers or leases all or substantially all of its assets to another Person or (y) engages in any recapitalization, reclassification or other transaction in which all or substantially all Shares are exchanged for or converted into cash, securities or other property, in each case, other than any merger or consolidation:
	(A)	that does not result in a reclassification, conversion, exchange or cancellation of the outstanding Shares;
	(B)	pursuant to which the consideration received by holders of Shares immediately prior to the transaction entitles such holders to exercise, directly or indirectly, 50% or more of the voting power of all shares of capital stock entitled to vote generally in the election of directors of either (x) the continuing or surviving corporation or (y) a corporation that directly or indirectly owns 100% of the capital stock of such continuing or surviving corporation, in either case, immediately after such transaction;
	(C)	which is effected solely to change Issuer’s jurisdiction of incorporation and results in a reclassification, conversion or exchange of the outstanding Shares solely into shares of common stock of the surviving entity; or

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          (iv) at any time Issuer’s Continuing Directors (as defined below) do not constitute a majority of Issuer’s board of directors (or, if applicable, a successor Person to Issuer);

          (v) if less than 25% of the outstanding shares of common stock is beneficially owned by persons other than a Permitted      Holder (as discussed below); or

          (vi) an Additional Termination Event which arises as provided and subject to cessation as described in
Section 8(e).

          Notwithstanding the foregoing, a transaction set forth in clause (ii), (iii) or (iv) above will not constitute an Additional Termination Event if at least 90% of the consideration paid for the Shares (excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights and cash dividends) in such merger or consolidation or such other transaction otherwise constituting an Additional Termination Event under clause (iii) above consists of shares of capital stock or American Depositary Receipts in respect of shares of capital stock traded on any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market (or any of their respective successors) (or will be so traded or quoted immediately following the completion of the merger or consolidation or such other transaction).

          “Person” includes any syndicate or group that would be deemed to be a “person” under Section 13(d)(3) of the Exchange Act.

          “Continuing Directors” means a directors who either were members of the Issuer’s board of directors on the date hereof or who become members of the Issuer’s board of directors subsequent to the date hereof and whose appointment, election or nomination for election by the Issuer’s shareholders is duly approved by a majority of the Continuing Directors on the Issuer’s board of directors at the time of such approval, either by specific vote or by approval of the proxy statement issued by the Issuer on behalf of the board of directors in which such individuals are named as nominees for director.

           “Permitted Holder” means (1) Tengelmann Warenhandelsgesellschaft, a partnership organized under the laws of Germany (“Tengelmann”), (2) each Affiliate of Tengelmann, (3) each partner of Tengelmann and the respective members of their immediate families and (4) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a majority or more controlling interest of which consist of any one or more of the Persons described in the preceding clauses (1), (2) and (3).

          (m) Netting and Set-off.

          (i) If on any date cash would otherwise be payable or Shares or other property would otherwise be deliverable hereunder or pursuant to the Agreement or pursuant to any other agreement between the parties by Issuer to Dealer and cash would otherwise be payable or Shares or other property would otherwise be deliverable hereunder or pursuant to the Agreement or pursuant to any other agreement between the parties by Dealer to Issuer and the type of property required to be paid or delivered by each such party on such date is the same, then, on such date, each such party’s obligation to make such payment or delivery will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable or deliverable by one such party exceeds the aggregate amount that would otherwise have been payable or deliverable by the other such party, replaced by an obligation of the party by whom the larger aggregate amount would have been payable or deliverable to pay or deliver to the other party the excess of the larger aggregate amount over the smaller aggregate amount.

          (ii) In addition to and without limiting any rights of set-off that a party hereto may have as a matter of law, pursuant to contract or otherwise, upon the occurrence of an Early Termination Date, Dealer shall have the right to terminate, liquidate and otherwise close out the Transaction and to set off any obligation or right that Dealer or any affiliate of Dealer may have to or against Issuer hereunder or under the Agreement against any right or obligation Dealer or any of its affiliates may have against or to Issuer, including without limitation any right to receive a payment or delivery pursuant to any provision of the Agreement or hereunder. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of the same type, such obligation and right shall be set off in kind. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of any other type, the value of each of such obligation and such right shall be determined by the Calculation Agent and the result of such set-off shall be that the net

14

obligor shall pay or deliver to the other party an amount of cash or assets, at the net obligor’s option, with a value (determined, in the case of a delivery of assets, by the Calculation Agent) equal to that of the net obligation. In determining the value of any obligation to release or deliver Shares or any right to receive Shares, the value at any time of such obligation or right shall be determined by reference to the market value of the Shares at such time, as determined in good faith by the Calculation Agent. If an obligation or right is unascertained at the time of any such set-off, the Calculation Agent may in good faith estimate the amount or value of such obligation or right, in which case set-off will be effected in respect of that estimate, and the relevant party shall account to the other party at the time such obligation or right is ascertained.

          (iii) Issuer shall not net or set off its obligations, if any, under the Transaction against its rights against Dealer under any other transaction or instrument. Dealer shall not net or set off its obligations, if any, under the Transaction against its rights against Issuer under any other transaction or instrument.

          (n) Effectiveness. If, prior to the Effective Date, Dealer reasonably determines that it is advisable to cancel the Transaction because of concerns that Dealer’s related hedging activities could be viewed as not complying with applicable securities laws, rules or regulations, the Transaction shall be cancelled and shall not become effective, and neither party shall have any obligation to the other party in respect of the Transaction.

          (o) Waiver of Trial by Jury. EACH OF ISSUER AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF ISSUER OR DEALER OR THEIR RESPECTIVE AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

          (p) Governing Law. THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

15

          Issuer hereby agrees (a) to check this Confirmation carefully and promptly upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Issuer with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and promptly returning an executed copy to John Servidio, Facsimile No. 212-230-8610.

Yours faithfully,
BANK OF AMERICA, N.A.
By:	/s/ Michael Voris
	Name: Michael Voris
	Authorized Signatory

Agreed and Accepted By:

THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.

By:	/s/ William Moss
	Name: William Moss Title: Vice President and Treasurer

16

Annex A

For each Component of the Transaction, the Number of Warrants and Expiration Date is set forth below.

Component Number	Number of Warrants	Expiration Date
1.	22,893.00	Thu-15-Sep-2011
2.	22,893.00	Fri-16-Sep-2011
3.	22,893.00	Mon-19-Sep-2011
4.	22,893.00	Tue-20-Sep-2011
5.	22,893.00	Wed-21-Sep-2011
6.	22,893.00	Thu-22-Sep-2011
7.	22,893.00	Fri-23-Sep-2011
8.	22,893.00	Mon-26-Sep-2011
9.	22,893.00	Tue-27-Sep-2011
10.	22,893.00	Wed-28-Sep-2011
11.	22,893.00	Thu-29-Sep-2011
12.	22,893.00	Fri-30-Sep-2011
13.	22,893.00	Mon-3-Oct-2011
14.	22,893.00	Tue-4-Oct-2011
15.	22,893.00	Wed-5-Oct-2011
16.	22,893.00	Thu-6-Oct-2011
17.	22,893.00	Fri-7-Oct-2011
18.	22,893.00	Mon-10-Oct-2011
19.	22,893.00	Tue-11-Oct-2011
20.	22,893.00	Wed-12-Oct-2011
21.	22,893.00	Thu-13-Oct-2011
22.	22,893.00	Fri-14-Oct-2011
23.	22,893.00	Mon-17-Oct-2011
24.	22,893.00	Tue-18-Oct-2011
25.	22,893.00	Wed-19-Oct-2011
26.	22,893.00	Thu-20-Oct-2011
27.	22,893.00	Fri-21-Oct-2011
28.	22,893.00	Mon-24-Oct-2011
29.	22,893.00	Tue-25-Oct-2011
30.	22,893.00	Wed-26-Oct-2011
31.	22,893.00	Thu-27-Oct-2011
32.	22,893.00	Fri-28-Oct-2011
33.	22,893.00	Mon-31-Oct-2011
34.	22,893.00	Tue-1-Nov-2011
35.	22,893.00	Wed-2-Nov-2011
36.	22,893.00	Thu-3-Nov-2011
37.	22,893.00	Fri-4-Nov-2011
38.	22,893.00	Mon-7-Nov-2011
39.	22,893.00	Tue-8-Nov-2011
40.	22,893.00	Wed-9-Nov-2011
41.	22,893.00	Thu-10-Nov-2011
42.	22,893.00	Fri-11-Nov-2011
43.	22,893.00	Mon-14-Nov-2011
44.	22,893.00	Tue-15-Nov-2011
45.	22,893.00	Wed-16-Nov-2011
46.	22,893.00	Thu-17-Nov-2011
47.	22,893.00	Fri-18-Nov-2011
48.	22,893.00	Mon-21-Nov-2011
49.	22,893.00	Tue-22-Nov-2011
50.	22,893.00	Wed-23-Nov-2011
51.	22,893.00	Fri-25-Nov-2011
52.	22,893.00	Mon-28-Nov-2011
53.	22,893.00	Tue-29-Nov-2011
54.	22,893.00	Wed-30-Nov-2011
55.	22,893.00	Thu-1-Dec-2011
56.	22,893.00	Fri-2-Dec-2011

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57.	22,893.00	Mon-5-Dec-2011
58.	22,893.00	Tue-6-Dec-2011
59.	22,893.00	Wed-7-Dec-2011
60.	22,893.00	Thu-8-Dec-2011
61.	22,893.00	Fri-9-Dec-2011
62.	22,893.00	Mon-12-Dec-2011
63.	22,893.00	Tue-13-Dec-2011
64.	22,893.00	Wed-14-Dec-2011
65.	22,893.00	Thu-15-Dec-2011
66.	22,893.00	Fri-16-Dec-2011
67.	22,893.00	Mon-19-Dec-2011
68.	22,893.00	Tue-20-Dec-2011
69.	22,893.00	Wed-21-Dec-2011
70.	22,893.00	Thu-22-Dec-2011
71.	22,893.00	Fri-23-Dec-2011
72.	22,893.00	Tue-27-Dec-2011
73.	22,893.00	Wed-28-Dec-2011
74.	22,893.00	Thu-29-Dec-2011
75.	22,893.00	Fri-30-Dec-2011
76.	22,893.00	Tue-3-Jan-2012
77.	22,893.00	Wed-4-Jan-2012
78.	22,893.00	Thu-5-Jan-2012
79.	22,893.00	Fri-6-Jan-2012
80.	22,893.00	Mon-9-Jan-2012
81.	22,893.00	Tue-10-Jan-2012
82.	22,893.00	Wed-11-Jan-2012
83.	22,893.00	Thu-12-Jan-2012
84.	22,893.00	Fri-13-Jan-2012
85.	22,893.00	Tue-17-Jan-2012
86.	22,893.00	Wed-18-Jan-2012
87.	22,893.00	Thu-19-Jan-2012
88.	22,893.00	Fri-20-Jan-2012
89.	22,893.00	Mon-23-Jan-2012
90.	22,961.00	Tue-24-Jan-2012

18

EX-10.2

Exhibit 10.2

	December 12, 2007
To:	The Great Atlantic and Pacific Tea Company, Inc.
	2 Paragon Drive
	Montvale, NJ 07645
	Attn:
	Telephone:	201-573-9700
	Facsimile:	201-937-4079
From:	Bank of America, N.A.
	c/o Banc of America Securities LLC
	9 West 57th Street
	New York, NY 10019
	Attn:		John Servidio
	Telephone:		212-847-6527
	Facsimile:		212-230-8610
Re:	Issuer Warrant Transaction (2012)
	(Transaction Reference Number: NY-32868)

Ladies and Gentlemen:

          The purpose of this communication (this “Confirmation”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “Transaction”) between Bank of America, N.A. (“Dealer”) and The Great Atlantic and Pacific Tea Company, Inc. (“Issuer”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.

          1. This Confirmation is subject to, and incorporates, the definitions and provisions of the 2000 ISDA Definitions (including the Annex thereto) (the “2000 Definitions”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and together with the 2000 Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc. (“ISDA”). In the event of any inconsistency between the 2000 Definitions and the Equity Definitions, the Equity Definitions will govern. For purposes of the Equity Definitions, each reference herein to a Warrant shall be deemed to be a reference to a Call Option or an Option, as context requires.

          This Confirmation evidences a complete and binding agreement, and supersedes any prior agreements, written or oral, between Dealer and Issuer as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the 2002 ISDA Master Agreement (the “ISDA Master Agreement”) as if Dealer and Issuer had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.

          All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern.

          2. The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:

General Terms:

Trade Date:	December 12, 2007
Effective Date:	December 18, 2007, or such other date as agreed between the parties, subject to Section 8(n) below

	Components:	The Transaction will be divided into individual Components, each with the terms set forth in this Confirmation, and, in particular, with the Number of Warrants and Expiration Date set forth in this Confirmation. The payments and deliveries to be made upon settlement of the Transaction will be determined separately for each Component as if each Component were a separate Transaction under the Agreement.
	Warrant Style:	European
	Warrant Type:	Call
	Seller:	Issuer
	Buyer:	Dealer
	Shares:	The Common Stock of Issuer, par value USD 1.00 per share (Ticker Symbol: “GAP”).
	Number of Warrants:	For each Component, as provided in Annex A to this Confirmation.
	Warrant Entitlement:	One Share per Warrant
	Strike Price:	USD 49.00
	Premium:	USD 10,637,500.00
	Premium Payment Date:	The Effective Date
	Exchange:	New York Stock Exchange
	Related Exchange:	All Exchanges
Procedures for Exercise:
	Expiration Time:	Valuation Time
	Expiration Date:	As provided in Annex A to this Confirmation (or, if such date is not a Scheduled Trading Day, the next following Scheduled Trading Day that is not already an Expiration Date for another Component); provided that if that date is a Disrupted Day, the Expiration Date for such Component shall be the first succeeding Scheduled Trading Day that is not a Disrupted Day and is not or is not deemed to be an Expiration Date in respect of any other Component of the Transaction hereunder; and provided further that if the Expiration Date has not occurred pursuant to the preceding proviso as of the Final Disruption Date, the Final Disruption Date shall be the Expiration Date (irrespective of whether such date is an Expiration Date occurring on the Final Disruption Date in respect of any other Component for the Transaction) and, notwithstanding anything to the contrary in this Confirmation or the Definitions, the Relevant Price for the Expiration Date shall be the prevailing market value per Share determined in good faith by the Calculation Agent in a commercially reasonable manner. “Final Disruption Date” means ten Exchange Business Days after July 24, 2013. Notwithstanding the foregoing and anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Expiration Date, the Calculation Agent may determine that such Expiration Date is a Disrupted Day only in part, in which case the Calculation Agent shall make adjustments to the number of Warrants for the relevant Component for which such day shall be the Expiration Date and shall designate the

2

		Scheduled Trading Day determined in the manner described in the immediately preceding sentence as the Expiration Date for the remaining Warrants for such Component. Section 6.6 of the Equity Definitions shall not apply to any Valuation Date occurring on an Expiration Date.
	Market Disruption Event:	Section 6.3(a) of the Equity Definitions is hereby amended by deleting the words “during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be,” in clause (ii) thereof.
	Automatic Exercise:	Applicable; and means that the Number of Warrants for each Component will be deemed to be automatically exercised at the Expiration Time on the Expiration Date for such Component unless Dealer notifies Seller (by telephone or in writing) prior to the Expiration Time on the Expiration Date that it does not wish Automatic Exercise to occur, in which case Automatic Exercise will not apply.
	Issuer’s Telephone Number and Telex and/or Facsimile Number and Contact Details for purpose of Giving Notice:	To be provided by Issuer.
Settlement Terms:
In respect of any Component:
	Settlement Currency:	USD
	Settlement Method Election:	Applicable; provided that the same Settlement Method shall apply to all Components; and provided further that references in the Equity Definitions to “Physical Settlement” shall be deemed to be references to “Net Share Settlement” as defined herein. If the Issuer elects Cash Settlement or Cash Settlement becomes the Default Settlement Method, the Issuer shall use its reasonable best efforts to provide Dealer with a written statement that the representations contained in paragraphs (a)(i) and (a)(iv) of “Representations, Warranties and Agreements” below are true and correct as of and as if made on the date of such election.
	Electing Party:	Issuer
	Settlement Method Election Date:	Five Scheduled Trading Days prior to, and including, the scheduled Expiration Date for the Component with the earliest scheduled Expiration Date.
	Default Settlement Method:	Net Share Settlement; provided that, unless on the Settlement Method Election Date, the number of Reserved Shares, as defined in Section 8(e), is at least equal to the Capped Number, as defined in Section 8(e), the Default Settlement Method shall be Cash Settlement; provided further that if the default settlement method applicable to warrant transactions entered into between the Issuer and Lehman Brothers OTC Derivatives Inc. (“Lehman OTC”) on the Trade Date becomes cash settlement pursuant to a proviso identical to the proceeding proviso, the Default Settlement Method hereunder shall be Cash Settlement.
	VWAP Price:	For any Valuation Date, the Rule 10b-18 dollar volume weighted average price per Share for such Valuation Date based on

3

		transactions executed during such Valuation Date, as reported on Bloomberg Page “GAP<Equity> AQR SEC” (or any successor thereto) or, in the event such price is not so reported on such Valuation Date for any reason, as reasonably determined by the Calculation Agent.
Cash Settlement Terms:
In respect of any Component:
	Settlement Currency:	USD
	Cash Settlement Payment Date:	With respect to each Valuation Date, three (3) full Exchange Business Days after the final Valuation Date.
Net Share Settlement Terms:
In respect of any Component:
	Net Share Settlement:	On each Settlement Date, Issuer shall deliver to Dealer a number of Shares equal to the Number of Shares to be Delivered for such Settlement Date to the account specified by Dealer and cash in lieu of any fractional shares valued at the Relevant Price on the Valuation Date corresponding to such Settlement Date.
	Number of Shares to be Delivered:	In respect of any Exercise Date, subject to the last sentence of Section 9.5 of the Equity Definitions, the product of (i) the number of Warrants exercised or deemed exercised on such Exercise Date, (ii) the Warrant Entitlement and (iii) (A) the excess of the VWAP Price on the Valuation Date occurring on such Exercise Date over the Strike Price divided by (B) such VWAP Price.
		The Number of Shares to be Delivered shall be delivered by Issuer to Dealer no later than 4:00 P.M. (local time in New York City) on the relevant Settlement Date.
	Other Applicable Provisions:	The provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws as a result of the fact that Seller is the Issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
Adjustments:
In respect of any Component:
	Method of Adjustment:	Calculation Agent Adjustment
	Extraordinary Dividend:	Any dividend or distribution (i) that has an ex-dividend date occurring on or after the Trade Date and on or prior to the Expiration Date and (ii) the amount or value of which exceeds the Ordinary Dividend Amount for such dividend or distribution, as determined by the Calculation Agent.
	Ordinary Dividend Amount:	USD 0.00.
Extraordinary Events:
	Consequences of Merger Events:

4

(a) Share-for-Share:	Modified Calculation Agent Adjustment
(b) Share-for-Other:	Cancellation and Payment (Calculation Agent Determination)
(c) Share-for-Combined:	Cancellation and Payment (Calculation Agent Determination)
Tender Offer:	Applicable
Consequences of Tender Offers:
(a) Share-for-Share:	Modified Calculation Agent Adjustment
(b) Share-for-Other:	Cancellation and Payment (Calculation Agent Determination) on that portion of the Other Consideration that consists of cash; Modified Calculation Agent Adjustment on the remainder of the Other Consideration.
(c) Share-for-Combined:	Modified Calculation Agent Adjustment
Modified Calculation Agent Adjustment:	If, in respect of any Merger Event or Tender Offer to which Modified Calculation Agent Adjustment applies, the adjustments to be made in accordance with Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions would result in Issuer being different from the issuer of the Shares, then with respect to such Merger Event or Tender Offer, as a condition precedent to the adjustments contemplated in Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions, Issuer and the issuer of the Shares shall, prior to the Merger Date or Tender Offer, as the case may be, have entered into such documentation containing representations, warranties and agreements relating to securities law and other issues as requested by Dealer that Dealer has determined, in its commercially reasonable discretion, to be reasonably necessary or appropriate to allow Dealer to continue as a party to the Transaction, as adjusted under Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions, and to preserve its hedging or hedge unwind activities in connection with the Transaction in a manner compliant with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer, and if such conditions are not met or if the Calculation Agent determines that no adjustment that it could make under Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions will produce a commercially reasonable result, then the consequences set forth in Section 12.2(e)(ii) or Section 12.3(d)(ii), as the case may be, of the Equity Definitions shall apply.
Nationalization, Insolvency or Delisting:	Cancellation and Payment (Calculation Agent Determination); provided that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the American Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation

5

			system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
Additional Disruption Events:
(a) Change in Law:			Applicable
(b) Failure to Deliver:			Applicable
(c) Insolvency Filing:			Applicable
(d) Hedging Disruption:			Applicable
(e) Increased Cost of Hedging:			Applicable
(f) Loss of Stock Borrow:			Applicable
Maximum Stock Loan Rate:			100 basis points
(g) Increased Cost of Stock Borrow:			Applicable
Initial Stock Loan Rate:			50 basis points
Hedging Party:			Dealer for all applicable Additional Disruption Events
Determining Party:			Dealer for all applicable Extraordinary Events
Non-Reliance:			Applicable
Agreements and Acknowledgments Regarding Hedging Activities:			Applicable
Additional Acknowledgments:			Applicable
3. Calculation Agent:			Dealer, which shall at all times act in good faith and in a commercially reasonable manner. In addition, Dealer shall use commercially reasonable efforts under the circumstances to consult with Issuer on decisions it makes in its capacity as Calculation Agent; provided that Dealer shall not be required to take into account or be bound by any considerations raised by Issuer.
4. Account Details:
Dealer Payment Instructions:			Bank of America
			New York, NY
			SWIFT: BOFAUS65
			Bank Routing: 026-009-593
			Account Name: Bank of America
			Account No. : 0012333-34172
Issuer Payment Instructions:			To be provided by Issuer.
5. Offices:
The Office of Dealer for the Transaction is: New York
	Bank of America, N.A. c/o Banc of America Securities LLC 9 West 57th Street, 40th Floor New York, NY 10019
	Attention:	John Servidio
	Telephone:	212-847-6527
	Facsimile:	212-230-8610
The Office of Issuer for the Transaction is: Not applicable

6

6. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Issuer:
	To:	The Great Atlantic & Pacific Tea Company
		2 Paragon Drive
		Montvale, New Jersey 07645
	Attn:	Brenda Galgano, Senior Vice President and Chief Financial Officer
	Telephone:	201-571-4363
	Facsimile:	201-571-8715
(b) Address for notices or communications to Dealer:
	To:	Bank of America, N.A.
		c/o Banc of America Securities LLC
		9 West 57th Street, 40th Floor
		New York, NY 10019
	Attn:	John Servidio
	Telephone:	212-847-6527
	Facsimile:	212-230-8610

          7. Representations, Warranties and Agreements:

(a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Issuer represents and warrants to and for the benefit of, and agrees with, Dealer as follows:
	(i) On the Trade Date, (A) none of Issuer and its officers and directors is aware of any material nonpublic information regarding Issuer or the Shares and (B) all reports and other documents filed by Issuer with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of 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.
	(ii) Without limiting the generality of Section 13.1 of the Equity Definitions, Issuer acknowledges that Dealer is not making any representations or warranties with respect to the treatment of the Transaction under FASB Statements 133, as amended, or 150, EITF Issue No. 00-19 (or any successor issue statements) or under FASB’s Liabilities & Equity Project.
	(iii) Prior to the Trade Date, Issuer shall deliver to Dealer a resolution of Issuer’s board of directors authorizing the Transaction and such other certificate or certificates as Dealer shall reasonably request.
	(iv) Issuer is not entering into this Confirmation to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.
	(v) Issuer is not, and after giving effect to the transactions contemplated hereby will not be, an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
	(vi) On the Trade Date (A) the assets of Issuer at their fair valuation exceed the liabilities of Issuer, including contingent liabilities, (B) the capital of Issuer is adequate to conduct the business of Issuer and (C) Issuer has the ability to pay its debts and obligations as such debts mature and does not intend to, or does not believe that it will, incur debt beyond its ability to pay as such debts mature.
	(vii) Issuer shall not take any action to decrease the number of Available Shares below the Capped Number (each as defined below).
	(viii) The representations and warranties of Issuer set forth in Section 3 of the Agreement and Sections 1 and 3 of the Underwriting Agreement (the “Underwriting Agreement”) dated as of December 12,

7

	2007 between Bank of America, N.A. and Lehman Brothers Inc., as representatives of the underwriters party thereto are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.
	(ix) Issuer understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any Affiliate of Dealer or any governmental agency.
	(x) (A) During the period starting on the first Expiration Date and ending on the last Expiration Date (the “Settlement Period”), the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“Regulation M”) and (B) Issuer shall not engage in any “distribution,” as such term is defined in Regulation M, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day immediately following the Settlement Period.
	(xi) During the Settlement Period, neither Issuer nor any “affiliate” or “affiliated purchaser” (each as defined in Rule 10b-18 of the Exchange Act (“Rule 10b-18”)) shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except through Dealer.
	(xii) As of the Trade Date, the Issuer has not entered into any obligation that would contractually limit it from effecting Cash Settlement or Net Share Settlement under the Transaction.
(b) Each of Dealer and Issuer agrees and represents that it is an “eligible contract participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended.
(c) Each of Dealer and Issuer acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) thereof. Accordingly, Dealer represents and warrants to Issuer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.
(d) Each of Dealer and Issuer agrees and acknowledges that Dealer is a “financial institution,” “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of Title 11 of the United States Code (the “Bankruptcy Code”). The parties hereto further agree and acknowledge (A) that this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “settlement payment,” as such term is defined in Section 741(8) of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code, and (B) that Dealer is entitled to the protections afforded by, among other sections, Section 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code.
(e) Issuer shall deliver to Dealer an opinion of counsel, dated as of the Trade Date and reasonably acceptable to Dealer in form and substance (subject to customary qualifications, assumptions and exceptions), with respect to the matters set forth in Section 3(a) of the Agreement.
	8. Other Provisions:
(a) Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events. If, subject to Section 8(l) below, Issuer shall owe Dealer any amount pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions (except in the event of an Insolvency, a Nationalization, a Tender Offer or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (except in the event of an Event of Default in which Issuer is the Defaulting Party or a Termination Event in which Issuer is the Affected Party, that resulted from an event or events within Issuer’s control) (a “Payment Obligation”), Issuer shall have the right, in its sole discretion, to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing

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within one Scheduled Trading Day, between the hours of 9:00 A.M. and 4:00 P.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date or Early Termination Date, as applicable (“Notice of Share Termination”). Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the Merger Date, the Tender Offer Date, Announcement Date or Early Termination Date, as applicable:

Share Termination Alternative:	Applicable and means that Issuer shall deliver to Dealer the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, in satisfaction of the Payment Obligation.
Share Termination Delivery Property:	A number of Share Termination Delivery Units, as calculated by the Calculation Agent in good faith, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
Share Termination Unit Price:	The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Issuer at the time of notification of the Payment Obligation.
Share Termination Delivery Unit:	In the case of a Termination Event, Event of Default or Delisting, one Share or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization, Merger Event or Tender Offer. If such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
Failure to Deliver:	Applicable
Other applicable provisions:	If Share Termination Alternative is applicable, the provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws as a result of the fact that Seller is the Issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units”.
(b) Registration/Private Placement Procedures. (i) If, in the commercially reasonable judgment of Dealer, for any reason, any Shares or any securities of Issuer or its affiliates comprising any Share Termination Delivery Units deliverable to Dealer hereunder (any such Shares or securities, “Delivered Securities”) would not be immediately freely transferable by Dealer under the provisions of Rule 144 of the Securities Act, as may be amended from time to time (including the amendment adopted on November 15, 2007 pursuant to Release No. 33-8869) applicable to sales of restricted securities by non-affiliates of an issuer, then the provisions set forth in this Section 8(b) shall apply. At the election of Issuer by notice to Dealer within one Exchange Business Day after the relevant delivery obligation arises, but in any event at least one Exchange Business Day prior to the date on which such delivery obligation is due, either (A) all Delivered Securities delivered by Issuer to Dealer shall be, at the time of such delivery, covered by an effective registration statement of Issuer for immediate resale by Dealer (such registration statement and the corresponding prospectus (the “Prospectus”) (including, without limitation, any sections describing the plan of distribution) in form and content commercially reasonably satisfactory to Dealer) or (B) Issuer shall deliver additional Delivered Securities so that the value of such Delivered Securities, as determined by the Calculation Agent to reflect an appropriate liquidity

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discount, equals the value of the number of Delivered Securities that would otherwise be deliverable if such Delivered Securities were freely tradeable (without prospectus delivery) upon receipt by Dealer (such value, the “Freely Tradeable Value”); provided that Issuer may not make the election described in this clause (B) if, on the date of its election, it has taken, or caused to be taken, any action that would make unavailable either the exemption pursuant to Section 4(2) of the Securities Act for the delivery by Issuer to Dealer (or any affiliate designated by Dealer) of the Delivered Securities or the exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of the Delivered Securities by Dealer (or any such affiliate of Dealer). (For the avoidance of doubt, as used in this paragraph (b) only, the term “Issuer” shall mean the issuer of the relevant securities, as the context shall require.)
	(ii) If Issuer makes the election described in clause (b)(i)(A) above:
	(A) Dealer (or an Affiliate of Dealer designated by Dealer) shall be afforded a reasonable opportunity to conduct a due diligence investigation with respect to Issuer that is customary in scope for underwritten offerings of equity securities and that yields results that are commercially reasonably satisfactory to Dealer or such Affiliate, as the case may be, in its commercially reasonable discretion; and
	(B) Dealer (or an Affiliate of Dealer designated by Dealer) and Issuer shall enter into an agreement (a “Registration Agreement”) on commercially reasonable terms in connection with the public resale of such Delivered Securities by Dealer or such Affiliate substantially similar to underwriting agreements customary for underwritten offerings of equity securities, in form and substance commercially reasonably satisfactory to Dealer or such Affiliate and Issuer, which Registration Agreement shall include, without limitation, provisions substantially similar to those contained in such underwriting agreements relating to the indemnification of, and contribution in connection with the liability of, Dealer and its Affiliates and Issuer, shall provide for the payment by Issuer of all reasonable expenses in connection with such resale, including all registration costs and all reasonable fees and expenses of counsel for Dealer, and shall provide for the delivery of accountants’ “comfort letters” to Dealer or such Affiliate with respect to the financial statements and certain financial information contained in or incorporated by reference into the Prospectus.
	(iii) If Issuer makes the election described in clause (b)(i)(B) above:
	(A) Dealer (or an Affiliate of Dealer designated by Dealer) and any potential institutional purchaser of any such Delivered Securities from Dealer or such Affiliate identified by Dealer shall be afforded a commercially reasonable opportunity to conduct a due diligence investigation in compliance with applicable law with respect to Issuer customary in scope for private placements of equity securities (including, without limitation, the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them);
	(B) Dealer (or an Affiliate of Dealer designated by Dealer) and Issuer shall enter into an agreement (a “Private Placement Agreement”) on commercially reasonable terms in connection with the private placement of such Delivered Securities by Issuer to Dealer or such Affiliate and the private resale of such shares by Dealer or such Affiliate, substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance commercially reasonably satisfactory to Dealer and Issuer, which Private Placement Agreement shall include, without limitation, provisions substantially similar to those contained in such private placement purchase agreements relating to the indemnification of, and contribution in connection with the liability of, Dealer and its Affiliates and Issuer, shall provide for the payment by Issuer of all reasonable expenses in connection with such resale, including all reasonable fees and expenses of counsel for Dealer, shall contain representations, warranties and agreements of Issuer reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resales, and shall use best efforts to provide for the delivery of accountants’ “comfort letters” to Dealer or such Affiliate with respect to the financial statements and certain financial information contained in or incorporated by reference into the offering memorandum prepared for the resale of such Shares; and
	(C) Issuer agrees that any Delivered Securities so delivered to Dealer, (i) may be transferred by and among Dealer and its Affiliates, and Issuer shall effect such transfer without any further action by Dealer and (ii) after the minimum “holding period” within the meaning of Rule 144(d) under the Securities Act has elapsed with respect to such Delivered Securities, Issuer shall promptly remove, or cause the transfer agent for such Shares or securities to remove, any legends referring to any such restrictions or requirements from such Delivered Securities upon delivery by Dealer (or such Affiliate of Dealer) to Issuer or such transfer agent of

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	seller’s and broker’s representation letters customarily delivered by Dealer in connection with resales of restricted securities pursuant to Rule 144 under the Securities Act, without any further requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer).
	(D) Issuer shall not take, or cause to be taken, any action that would make unavailable either the exemption pursuant to Section 4(2) of the Securities Act for the sale by Issuer to Dealer (or any affiliate designated by Dealer) of the Shares or Share Termination Delivery Units, as the case may be, or the exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of the Shares or Share Termination Delivery Units, as the case may be, by Dealer (or any such affiliate of Dealer).
(c) Make-whole. If Issuer makes the election described in clause (b)(i)(B) of paragraph (b) of this Section 8, then Dealer or its affiliate may sell such Shares or Share Termination Delivery Units, as the case may be, during a period (the “Resale Period”) commencing on the Exchange Business Day following delivery of such Shares or Share Termination Delivery Units, as the case may be, and ending on the Exchange Business Day on which Dealer completes the sale of all such Shares or Share Termination Delivery Units, as the case may be, or a sufficient number of Shares or Share Termination Delivery Units, as the case may be, so that the realized net proceeds of such sales exceed the Freely Tradeable Value (such amount of the Freely Tradeable Value, the “Required Proceeds”). If any of such delivered Shares or Share Termination Delivery Units remain after such realized net proceeds exceed the Required Proceeds, Dealer shall return such remaining Shares or Share Termination Delivery Units to Issuer. If the Required Proceeds exceed the realized net proceeds from such resale, Issuer shall transfer to Dealer by the open of the regular trading session on the Exchange on the Exchange Business Day immediately following the last day of the Resale Period the amount of such excess (the “Additional Amount”) in cash or in a number of additional Shares (“Make-whole Shares”) in an amount that, based on the Relevant Price on the last day of the Resale Period (as if such day was the “Valuation Date” for purposes of computing such Relevant Price), has a dollar value equal to the Additional Amount. The Resale Period shall continue to enable the sale of the Make-whole Shares in the manner contemplated by this Section 8(c). This provision shall be applied successively until the Additional Amount is equal to zero, subject to Section 8(e).
(d) Beneficial Ownership. Notwithstanding anything to the contrary in the Agreement or this Confirmation, in no event shall Dealer be entitled to receive, or shall be deemed to receive, any Shares if, upon such receipt of such Shares, the “beneficial ownership” (within the meaning of Section 13 of the Exchange Act and the rules promulgated thereunder) of Shares by Dealer or any affiliate of Dealer or other person subject to aggregation with Dealer under such Section 13 and rules (collectively, “Buyer Group”) would be equal to or greater than 8.5% or more of the outstanding Shares. If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of this provision, Issuer’s obligation to make such delivery shall not be extinguished and Issuer shall make such delivery as promptly as practicable after, but in no event later than one Exchange Business Day after, Dealer gives notice to Issuer that such delivery would not result in Buyer Group directly or indirectly so beneficially owning in excess of 8.5% of the outstanding Shares.
(e) Limitations on Settlement by Issuer. Notwithstanding anything herein or in the Agreement to the contrary, in no event shall Issuer be required to deliver Shares in connection with the Transaction in excess of a number of Shares equal to 1.2 times the aggregate Number of Shares for all Components (the “Capped Number”). If at any time the Issuer does not have a number of authorized but unissued Shares that are not reserved for future issuance in connection with other transactions in the Shares (the “Available Shares”) that is greater than the Capped Number, Issuer agrees to use its reasonable best efforts to seek approval from its shareholders at the next meeting of shareholders, or, if necessary, a subsequent meeting of shareholders, to increase the number of authorized but unissued Shares and to reserve a number of Shares at least equal to the Capped Number for settlement of this Transaction (the “Reserved Shares”). If Issuer does not succeed in obtaining shareholder approval for such an increase and so increasing the number of Reserved Shares at or prior to its second annual meeting of shareholders following the Trade Date, (i) the Number of Shares for each Component shall be automatically increased by 10% and (ii) an Additional Termination Event shall occur with respect to which the Transaction shall be the sole Affected Transaction and Issuer shall be the sole Affected Party; provided however that if such shareholder approval is obtained and such increase in the number of Reserved Shares occurs after Issuer’s second annual meeting of shareholders but before the earlier of the Expiration Date for such Component and any earlier date that Dealer has designated as an Early Termination Date or other date for cancellation or termination of the Transaction, the Additional Termination Event arising from such prior failure to obtain shareholder approval or failure to increase the number of Reserved Shares shall cease to exist. For the avoidance of doubt Dealer shall have no obligation to exercise its right pursuant to such Additional Termination Event, such right will be an ongoing right until Issuer has

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obtained such approval from its shareholders for such an increase in the number of Available Shares and has so increased the number of Reserved Shares, and such right will automatically terminate upon Issuer obtaining such shareholder approval for such an increase and so increasing the number of Reserved Shares. Unless and the number of Reserved Shares is at least equal to the Capped Number, Issuer shall not retire any Shares that are repurchased, acquired or otherwise received by Issuer or any of its subsidiaries from any persons (whether or not in exchange for cash, fair value or any other consideration, and including, for the avoidance of doubt, any Shares received in settlement of any option or other derivative transaction) (such Shares, “Acquired Shares”) or issue or deliver or agree to issue or deliver any Acquired Shares to any person other than Issuer except that such Acquired Shares may be used to settle this Transaction and any other warrant transactions entered into between Issuer and Dealer or Lehman OTC on the Trade Date.

          (f) Right to Extend. Dealer may postpone any Exercise Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Number of Shares to be Delivered with respect to one or more Components), if Dealer determines, in its commercially reasonable discretion, that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions or (ii) to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer.

          (g) Equity Rights. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Issuer’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Issuer’s bankruptcy to any claim arising as a result of a breach by Issuer of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Issuer herein under or pursuant to any other agreement.

          (h) Amendments to Equity Definitions and the Agreement. The following amendments shall be made to the Equity Definitions and to the Agreement:

(i) The first sentence of Section 11.2(c) of the Equity Definitions, prior to clause (A) thereof, is hereby amended to read as follows: ‘(c) If “Calculation Agent Adjustment” is specified as the Method of Adjustment in the related Confirmation of a Share Option Transaction, then following the announcement or occurrence of any Potential Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment Event has a material effect on the theoretical value of the relevant Shares or options on the Shares and, if so, will (i) make appropriate adjustment(s), if any, to any one or more of:’ and, the portion of such sentence immediately preceding clause (ii) thereof is hereby amended by deleting the words “diluting or concentrative” and the words “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing such latter phrase with the words “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)”;
(ii) Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “diluting or concentrative” and replacing them with “material”;
(iii) Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that Issuer.”.
(iv) Section 12.9(b)(v) of the Equity Definitions is hereby amended by:
	(A) adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and
	(B) (1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C) and (3) deleting the final two sentences in its entirety and replacing it with the sentence “The Hedging Party will determine (in a manner consistent, for such

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		purposes, with Section 3 hereunder governing the conduct of the Calculation Agent) the Cancellation Amount payable by one party to the other.”
(i) Transfer and Assignment. Dealer may transfer or assign its rights and obligations under the Transaction with the prior written consent of the Issuer, such consent not to be unreasonably withheld. Notwithstanding the foregoing, Dealer may transfer or assign its rights and obligations hereunder and under the Agreement, in whole or in part, without the consent of the Issuer to (i) any of its affiliates or (ii) any entities sponsored or organized by, or on behalf of or for the benefit of Dealer.
(j) Disclosure. Effective from the date of commencement of discussions concerning the Transaction, Issuer and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Issuer relating to such tax treatment and tax structure.
(k) Designation by Dealer. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Issuer, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such shares or other securities and otherwise to perform Dealer obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Issuer to the extent of any such performance.
(l) Additional Termination Events. The occurrence of any of the following shall constitute an Additional Termination Event with respect to which the Transaction shall be the sole Affected Transaction and Issuer shall be the sole Affected Party; provided that with respect to any Additional Termination Event, Dealer may choose to treat part of the Transaction as the sole Affected Transaction, and, upon the termination of the Affected Transaction, a Transaction with terms identical to those set forth herein except with a Number of Warrants equal to the unaffected number of Warrants shall be treated for all purposes as the Transaction, which shall remain in full force and effect:
	(i) Dealer reasonably determines that it is advisable to terminate a portion of the Transaction so that Dealer’s related hedging activities will comply with applicable securities laws, rules or regulations;
	(ii) any Person (as defined below) acquires beneficial ownership (determined in accordance with Rule 13d-3 under the Exchange Act), directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of Shares entitling the Person to exercise 50% or more of the total voting power of all shares of Issuer’s capital stock entitled to vote generally in elections of directors, other than an acquisition by Issuer, any of Issuer’s subsidiaries or any of Issuer’s employee benefit plans;
	(iii) Issuer (x) merges or consolidates with or into any other Person, other than a subsidiary of Issuer, another Person merges with or into Issuer, or Issuer conveys, sells, transfers or leases all or substantially all of its assets to another Person or (y) engages in any recapitalization, reclassification or other transaction in which all or substantially all Shares are exchanged for or converted into cash, securities or other property, in each case, other than any merger or consolidation:
		(A)	that does not result in a reclassification, conversion, exchange or cancellation of the outstanding Shares;
		(B)	pursuant to which the consideration received by holders of Shares immediately prior to the transaction entitles such holders to exercise, directly or indirectly, 50% or more of the voting power of all shares of capital stock entitled to vote generally in the election of directors of either (x) the continuing or surviving corporation or (y) a corporation that directly or indirectly owns 100% of the capital stock of such continuing or surviving corporation, in either case, immediately after such transaction;
		(C)	which is effected solely to change Issuer’s jurisdiction of incorporation and results in a reclassification, conversion or exchange of the outstanding Shares solely into shares of common stock of the surviving entity; or

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          (iv) at any time Issuer’s Continuing Directors (as defined below) do not constitute a majority of Issuer’s board of directors (or, if applicable, a successor Person to Issuer);

          (v) if less than 25% of the outstanding shares of common stock is beneficially owned by persons other than a Permitted Holder (as discussed below);

          (vi) Issuer elects to redeem, in whole or in part, the senior notes issued by the Issuer pursuant to the terms of the Second Supplemental Indenture, to be dated as of December 18, 2007, at any time during the Issuer Redemption Period (as defined in the Second Supplemental Indenture); provided, however, that (i) redemption of senior notes by the Issuer shall not be treated as an Additional Termination Event with respect to the entire Transaction but only with respect to a number of Warrants that corresponds with the senior notes that are redeemed by the Issuer during the Issuer Redemption Period; and (ii) Warrants subject to early termination pursuant to this paragraph shall be terminated no sooner than 90 days following the related redemption of senior notes by the Issuer; or

          (vii) an Additional Termination Event which arises as provided and subject to cessation as described in
Section 8(e).

          Notwithstanding the foregoing, a transaction set forth in clause (ii), (iii) or (iv) above will not constitute an Additional Termination Event if at least 90% of the consideration paid for the Shares (excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights and cash dividends) in such merger or consolidation or such other transaction otherwise constituting an Additional Termination Event under clause (iii) above consists of shares of capital stock or American Depositary Receipts in respect of shares of capital stock traded on any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market (or any of their respective successors) (or will be so traded or quoted immediately following the completion of the merger or consolidation or such other transaction).

          “Person” includes any syndicate or group that would be deemed to be a “person” under Section 13(d)(3) of the Exchange Act.

          “Continuing Directors” means a directors who either were members of the Issuer’s board of directors on the date hereof or who become members of the Issuer’s board of directors subsequent to the date hereof and whose appointment, election or nomination for election by the Issuer’s shareholders is duly approved by a majority of the Continuing Directors on the Issuer’s board of directors at the time of such approval, either by specific vote or by approval of the proxy statement issued by the Issuer on behalf of the board of directors in which such individuals are named as nominees for director.

           “Permitted Holder” means (1) Tengelmann Warenhandelsgesellschaft, a partnership organized under the laws of Germany (“Tengelmann”), (2) each Affiliate of Tengelmann, (3) each partner of Tengelmann and the respective members of their immediate families and (4) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a majority or more controlling interest of which consist of any one or more of the Persons described in the preceding clauses (1), (2) and (3).

          (m) Netting and Set-off.

          (i) If on any date cash would otherwise be payable or Shares or other property would otherwise be deliverable hereunder or pursuant to the Agreement or pursuant to any other agreement between the parties by Issuer to Dealer and cash would otherwise be payable or Shares or other property would otherwise be deliverable hereunder or pursuant to the Agreement or pursuant to any other agreement between the parties by Dealer to Issuer and the type of property required to be paid or delivered by each such party on such date is the same, then, on such date, each such party’s obligation to make such payment or delivery will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable or deliverable by one such party exceeds the aggregate amount that would otherwise have been payable or deliverable by the other such party, replaced by an obligation of the party by whom the larger aggregate amount would have been payable or deliverable to pay or deliver to the other party the excess of the larger aggregate amount over the smaller aggregate amount.

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          (ii) In addition to and without limiting any rights of set-off that a party hereto may have as a matter of law, pursuant to contract or otherwise, upon the occurrence of an Early Termination Date, Dealer shall have the right to terminate, liquidate and otherwise close out the Transaction and to set off any obligation or right that Dealer or any affiliate of Dealer may have to or against Issuer hereunder or under the Agreement against any right or obligation Dealer or any of its affiliates may have against or to Issuer, including without limitation any right to receive a payment or delivery pursuant to any provision of the Agreement or hereunder. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of the same type, such obligation and right shall be set off in kind. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of any other type, the value of each of such obligation and such right shall be determined by the Calculation Agent and the result of such set-off shall be that the net obligor shall pay or deliver to the other party an amount of cash or assets, at the net obligor’s option, with a value (determined, in the case of a delivery of assets, by the Calculation Agent) equal to that of the net obligation. In determining the value of any obligation to release or deliver Shares or any right to receive Shares, the value at any time of such obligation or right shall be determined by reference to the market value of the Shares at such time, as determined in good faith by the Calculation Agent. If an obligation or right is unascertained at the time of any such set-off, the Calculation Agent may in good faith estimate the amount or value of such obligation or right, in which case set-off will be effected in respect of that estimate, and the relevant party shall account to the other party at the time such obligation or right is ascertained.

          (iii) Issuer shall not net or set off its obligations, if any, under the Transaction against its rights against Dealer under any other transaction or instrument. Dealer shall not net or set off its obligations, if any, under the Transaction against its rights against Issuer under any other transaction or instrument.

          (n) Effectiveness. If, prior to the Effective Date, Dealer reasonably determines that it is advisable to cancel the Transaction because of concerns that Dealer’s related hedging activities could be viewed as not complying with applicable securities laws, rules or regulations, the Transaction shall be cancelled and shall not become effective, and neither party shall have any obligation to the other party in respect of the Transaction.

          (o) Waiver of Trial by Jury. EACH OF ISSUER AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF ISSUER OR DEALER OR THEIR RESPECTIVE AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

          (p) Governing Law. THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

15

          Issuer hereby agrees (a) to check this Confirmation carefully and promptly upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Issuer with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and promptly returning an executed copy to John Servidio, Facsimile No. 212-230-8610.

Yours faithfully,
BANK OF AMERICA, N.A.
By:	/s/ Michael Voris
	Name: Michael Voris
	Authorized Signatory

Agreed and Accepted By:

THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.

By: /s/ William Moss

      Name: William Moss

      Title: Vice President and Treasurer

16

Annex A

For each Component of the Transaction, the Number of Warrants and Expiration Date is set forth below.

Component Number	Number of Warrants	Expiration Date
1.	33,803.00	Mon-18-Mar-2013
2.	33,803.00	Tue-19-Mar-2013
3.	33,803.00	Wed-20-Mar-2013
4.	33,803.00	Thu-21-Mar-2013
5.	33,803.00	Fri-22-Mar-2013
6.	33,803.00	Mon-25-Mar-2013
7.	33,803.00	Tue-26-Mar-2013
8.	33,803.00	Wed-27-Mar-2013
9.	33,803.00	Thu-28-Mar-2013
10.	33,803.00	Mon-1-Apr-2013
11.	33,803.00	Tue-2-Apr-2013
12.	33,803.00	Wed-3-Apr-2013
13.	33,803.00	Thu-4-Apr-2013
14.	33,803.00	Fri-5-Apr-2013
15.	33,803.00	Mon-8-Apr-2013
16	33,803.00	Tue-9-Apr-2013
17.	33,803.00	Wed-10-Apr-2013
18.	33,803.00	Thu-11-Apr-2013
19.	33,803.00	Fri-12-Apr-2013
20.	33,803.00	Mon-15-Apr-2013
21.	33,803.00	Tue-16-Apr-2013
22.	33,803.00	Wed-17-Apr-2013
23.	33,803.00	Thu-18-Apr-2013
24.	33,803.00	Fri-19-Apr-2013
25.	33,803.00	Mon-22-Apr-2013
26.	33,803.00	Tue-23-Apr-2013
27.	33,803.00	Wed-24-Apr-2013
28.	33,803.00	Thu-25-Apr-2013
29.	33,803.00	Fri-26-Apr-2013
30.	33,803.00	Mon-29-Apr-2013
31.	33,803.00	Tue-30-Apr-2013
32.	33,803.00	Wed-1-May-2013
33.	33,803.00	Thu-2-May-2013
34.	33,803.00	Fri-3-May-2013
35.	33,803.00	Mon-6-May-2013
36.	33,803.00	Tue-7-May-2013
37.	33,803.00	Wed-8-May-2013
38.	33,803.00	Thu-9-May-2013
39.	33,803.00	Fri-10-May-2013
40.	33,803.00	Mon-13-May-2013
41.	33,803.00	Tue-14-May-2013
42.	33,803.00	Wed-15-May-2013
43.	33,803.00	Thu-16-May-2013
44.	33,803.00	Fri-17-May-2013
45.	33,803.00	Mon-20-May-2013
46.	33,803.00	Tue-21-May-2013
47.	33,803.00	Wed-22-May-2013
48.	33,803.00	Thu-23-May-2013
49.	33,803.00	Fri-24-May-2013
50.	33,803.00	Tue-28-May-2013
51.	33,803.00	Wed-29-May-2013

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52.	33,803.00	Thu-30-May-2013
53.	33,803.00	Fri-31-May-2013
54.	33,803.00	Mon-3-Jun-2013
55.	33,803.00	Tue-4-Jun-2013
56.	33,803.00	Wed-5-Jun-2013
57.	33,803.00	Thu-6-Jun-2013
58.	33,803.00	Fri-7-Jun-2013
59.	33,803.00	Mon-10-Jun-2013
60.	33,803.00	Tue-11-Jun-2013
61.	33,803.00	Wed-12-Jun-2013
62.	33,803.00	Thu-13-Jun-2013
63.	33,803.00	Fri-14-Jun-2013
64.	33,803.00	Mon-17-Jun-2013
65.	33,803.00	Tue-18-Jun-2013
66.	33,803.00	Wed-19-Jun-2013
67.	33,803.00	Thu-20-Jun-2013
68.	33,803.00	Fri-21-Jun-2013
69.	33,803.00	Mon-24-Jun-2013
70.	33,803.00	Tue-25-Jun-2013
71.	33,803.00	Wed-26-Jun-2013
72.	33,803.00	Thu-27-Jun-2013
73.	33,803.00	Fri-28-Jun-2013
74.	33,803.00	Mon-1-Jul-2013
75.	33,803.00	Tue-2-Jul-2013
76.	33,803.00	Wed-3-Jul-2013
77.	33,803.00	Fri-5-Jul-2013
78.	33,803.00	Mon-8-Jul-2013
79.	33,803.00	Tue-9-Jul-2013
80.	33,803.00	Wed-10-Jul-2013
81.	33,803.00	Thu-11-Jul-2013
82.	33,803.00	Fri-12-Jul-2013
83.	33,803.00	Mon-15-Jul-2013
84.	33,803.00	Tue-16-Jul-2013
85.	33,803.00	Wed-17-Jul-2013
86.	33,803.00	Thu-18-Jul-2013
87.	33,803.00	Fri-19-Jul-2013
88.	33,803.00	Mon-22-Jul-2013
89.	33,803.00	Tue-23-Jul-2013
90.	33,858.00	Wed-24-Jul-2013

18

EX-10.3

Exhibit 10.3

	December 12, 2007
To:	The Great Atlantic and Pacific Tea Company, Inc. 2 Paragon Drive Montvale, NJ 07645
	Attn:
	Telephone:	201-573-9700
	Facsimile:	201-937-4079
From:	Lehman Brothers Inc., acting as Agent Lehman Brothers OTC Derivatives Inc., acting as Principal 745 Seventh Avenue New York, NY 10019
	Telephone:		212-526-9986
	Facsimile:		646-885-9546 (United States of America)
Re:	Issuer Warrant Transaction (2011)
	(Global ID: 3534790)

Ladies and Gentlemen:

          The purpose of this communication (this “Confirmation”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “Transaction”) between Lehman Brothers OTC Derivatives Inc. (“Dealer”) and The Great Atlantic and Pacific Tea Company, Inc. (“Issuer”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below. This Confirmation is sent on behalf of both Dealer and Lehman Brothers Inc. (“LBI”). Lehman Brothers OTC Derivatives Inc. is not a member of the Securities Investor Protection Corporation.

          1. This Confirmation is subject to, and incorporates, the definitions and provisions of the 2000 ISDA Definitions (including the Annex thereto) (the “2000 Definitions”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and together with the 2000 Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc. (“ISDA”). In the event of any inconsistency between the 2000 Definitions and the Equity Definitions, the Equity Definitions will govern. For purposes of the Equity Definitions, each reference herein to a Warrant shall be deemed to be a reference to a Call Option or an Option, as context requires.

          This Confirmation evidences a complete and binding agreement, and supersedes any prior agreements, written or oral, between Dealer and Issuer as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the 2002 ISDA Master Agreement (the “ISDA Master Agreement”) as if Dealer and Issuer had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.

          All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern.

          2. The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:

General Terms:

Trade Date: December 12, 2007

	Effective Date:	December 18, 2007, or such other date as agreed between the parties, subject to Section 8(n) below
	Components:	The Transaction will be divided into individual Components, each with the terms set forth in this Confirmation, and, in particular, with the Number of Warrants and Expiration Date set forth in this Confirmation. The payments and deliveries to be made upon settlement of the Transaction will be determined separately for each Component as if each Component were a separate Transaction under the Agreement.
	Warrant Style:	European
	Warrant Type:	Call
	Seller:	Issuer
	Buyer:	Dealer
	Shares:	The Common Stock of Issuer, par value USD 1.00 per share (Ticker Symbol: “GAP”).
	Number of Warrants:	For each Component, as provided in Annex A to this Confirmation.
	Warrant Entitlement:	One Share per Warrant
	Strike Price:	USD 46.20
	Premium:	USD 5,992,500.00
	Premium Payment Date:	The Effective Date
	Exchange:	New York Stock Exchange
	Related Exchange:	All Exchanges
Procedures for Exercise:
	Expiration Time:	Valuation Time
	Expiration Date:	As provided in Annex A to this Confirmation (or, if such date is not a Scheduled Trading Day, the next following Scheduled Trading Day that is not already an Expiration Date for another Component); provided that if that date is a Disrupted Day, the Expiration Date for such Component shall be the first succeeding Scheduled Trading Day that is not a Disrupted Day and is not or is not deemed to be an Expiration Date in respect of any other Component of the Transaction hereunder; and provided further that if the Expiration Date has not occurred pursuant to the preceding proviso as of the Final Disruption Date, the Final Disruption Date shall be the Expiration Date (irrespective of whether such date is an Expiration Date occurring on the Final Disruption Date in respect of any other Component for the Transaction) and, notwithstanding anything to the contrary in this Confirmation or the Definitions, the Relevant Price for the Expiration Date shall be the prevailing market value per Share determined in good faith by the Calculation Agent in a commercially reasonable manner. “Final Disruption Date” means ten Exchange Business Days after January 24, 2012. Notwithstanding the foregoing and anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Expiration Date, the Calculation Agent may determine that such Expiration Date is a Disrupted Day only in part, in which case the Calculation Agent shall make adjustments

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		to the number of Warrants for the relevant Component for which such day shall be the Expiration Date and shall designate the Scheduled Trading Day determined in the manner described in the immediately preceding sentence as the Expiration Date for the remaining Warrants for such Component. Section 6.6 of the Equity Definitions shall not apply to any Valuation Date occurring on an Expiration Date.
	Market Disruption Event:	Section 6.3(a) of the Equity Definitions is hereby amended by deleting the words “during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be,” in clause (ii) thereof.
	Automatic Exercise:	Applicable; and means that the Number of Warrants for each Component will be deemed to be automatically exercised at the Expiration Time on the Expiration Date for such Component unless Dealer notifies Seller (by telephone or in writing) prior to the Expiration Time on the Expiration Date that it does not wish Automatic Exercise to occur, in which case Automatic Exercise will not apply.
	Issuer’s Telephone Number and Telex and/or Facsimile Number and Contact Details for purpose of Giving Notice:	To be provided by Issuer.
Settlement Terms:
In respect of any Component:
	Settlement Currency:	USD
	Settlement Method Election:	Applicable; provided that the same Settlement Method shall apply to all Components; and provided further that references in the Equity Definitions to “Physical Settlement” shall be deemed to be references to “Net Share Settlement” as defined herein. If the Issuer elects Cash Settlement or Cash Settlement becomes the Default Settlement Method, the Issuer shall use its reasonable best efforts to provide Dealer with a written statement that the representations contained in paragraphs (a)(i) and (a)(iv) of “Representations, Warranties and Agreements” below are true and correct as of and as if made on the date of such election.
	Electing Party:	Issuer
	Settlement Method Election Date:	Five Scheduled Trading Days prior to, and including, the scheduled Expiration Date for the Component with the earliest scheduled Expiration Date.
	Default Settlement Method:	Net Share Settlement; provided that, unless on the Settlement Method Election Date, the number of Reserved Shares, as defined in Section 8(e), is at least equal to the Capped Number, as defined in Section 8(e), the Default Settlement Method shall be Cash Settlement; provided further that if the default settlement method applicable to warrant transactions entered into between the Issuer and Bank of America, N.A. (“Bank of America”) on the Trade Date becomes cash settlement pursuant to a proviso identical to the proceeding proviso, the Default Settlement Method hereunder shall be Cash Settlement.

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	VWAP Price:	For any Valuation Date, the Rule 10b-18 dollar volume weighted average price per Share for such Valuation Date based on transactions executed during such Valuation Date, as reported on Bloomberg Page “GAP<Equity> AQR SEC” (or any successor thereto) or, in the event such price is not so reported on such Valuation Date for any reason, as reasonably determined by the Calculation Agent.
Cash Settlement Terms:
In respect of any Component:
	Settlement Currency:	USD
	Cash Settlement Payment Date:	With respect to each Valuation Date, three (3) full Exchange Business Days after the final Valuation Date.
Net Share Settlement Terms:
In respect of any Component:
	Net Share Settlement:	On each Settlement Date, Issuer shall deliver to Dealer a number of Shares equal to the Number of Shares to be Delivered for such Settlement Date to the account specified by Dealer and cash in lieu of any fractional shares valued at the Relevant Price on the Valuation Date corresponding to such Settlement Date.
	Number of Shares to be Delivered:	In respect of any Exercise Date, subject to the last sentence of Section 9.5 of the Equity Definitions, the product of (i) the number of Warrants exercised or deemed exercised on such Exercise Date, (ii) the Warrant Entitlement and (iii) (A) the excess of the VWAP Price on the Valuation Date occurring on such Exercise Date over the Strike Price divided by (B) such VWAP Price.
		The Number of Shares to be Delivered shall be delivered by Issuer to Dealer no later than 4:00 P.M. (local time in New York City) on the relevant Settlement Date.
	Other Applicable Provisions:	The provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws as a result of the fact that Seller is the Issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
Adjustments:
In respect of any Component:
	Method of Adjustment:	Calculation Agent Adjustment
	Extraordinary Dividend:	Any dividend or distribution (i) that has an ex-dividend date occurring on or after the Trade Date and on or prior to the Expiration Date and (ii) the amount or value of which exceeds the Ordinary Dividend Amount for such dividend or distribution, as determined by the Calculation Agent.
	Ordinary Dividend Amount:	USD 0.00.

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Extraordinary Events:
	Consequences of Merger Events:
	(a) Share-for-Share:	Modified Calculation Agent Adjustment
	(b) Share-for-Other:	Cancellation and Payment (Calculation Agent Determination)
	(c) Share-for-Combined:	Cancellation and Payment (Calculation Agent Determination)
	Tender Offer:	Applicable
	Consequences of Tender Offers:
	(a) Share-for-Share:	Modified Calculation Agent Adjustment
	(b) Share-for-Other:	Cancellation and Payment (Calculation Agent Determination) on that portion of the Other Consideration that consists of cash; Modified Calculation Agent Adjustment on the remainder of the Other Consideration.
	(c) Share-for-Combined:	Modified Calculation Agent Adjustment
	Modified Calculation Agent Adjustment:	If, in respect of any Merger Event or Tender Offer to which Modified Calculation Agent Adjustment applies, the adjustments to be made in accordance with Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions would result in Issuer being different from the issuer of the Shares, then with respect to such Merger Event or Tender Offer, as a condition precedent to the adjustments contemplated in Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions, Issuer and the issuer of the Shares shall, prior to the Merger Date or Tender Offer, as the case may be, have entered into such documentation containing representations, warranties and agreements relating to securities law and other issues as requested by Dealer that Dealer has determined, in its commercially reasonable discretion, to be reasonably necessary or appropriate to allow Dealer to continue as a party to the Transaction, as adjusted under Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions, and to preserve its hedging or hedge unwind activities in connection with the Transaction in a manner compliant with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer, and if such conditions are not met or if the Calculation Agent determines that no adjustment that it could make under Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions will produce a commercially reasonable result, then the consequences set forth in Section 12.2(e)(ii) or Section 12.3(d)(ii), as the case may be, of the Equity Definitions shall apply.
	Nationalization, Insolvency or Delisting:	Cancellation and Payment (Calculation Agent Determination); provided that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the American Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market

5

			(or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
Additional Disruption Events:
(a) Change in Law:			Applicable
(b) Failure to Deliver:			Applicable
(c) Insolvency Filing:			Applicable
(d) Hedging Disruption:			Applicable
(e) Increased Cost of Hedging:			Applicable
(f) Loss of Stock Borrow:			Applicable
Maximum Stock Loan Rate:			100 basis points
(g) Increased Cost of Stock Borrow:			Applicable
Initial Stock Loan Rate:			50 basis points
Hedging Party:			Dealer for all applicable Additional Disruption Events
Determining Party:			Dealer for all applicable Extraordinary Events
Non-Reliance:			Applicable
Agreements and Acknowledgments Regarding Hedging Activities:			Applicable
Additional Acknowledgments:			Applicable
3. Calculation Agent:			LBI is acting as agent on behalf of Dealer and Issuer for the Transaction. LBI has no obligations, by guarantee, endorsement or otherwise, with respect to the performance of the Transaction by either party. LBI shall at all times act in good faith and in a commercially reasonable manner. In addition, LBI shall use commercially reasonable efforts under the circumstances to consult with Issuer on decisions it makes in its capacity as Calculation Agent; provided that LBI shall not be required to take into account or be bound by any considerations raised by Issuer.
4. Account Details:
Dealer Payment Instructions:			To be provided by Dealer.
Issuer Payment Instructions:			To be provided by Issuer.
5. Offices:
The Office of Dealer for the Transaction is: New York
	Lehman Brothers Inc., acting as Agent Lehman Brothers OTC Derivatives Inc., acting as Principal 745 Seventh Avenue New York, NY 10019
	Attn:	Transaction Management Group
	Telephone:	212-526-9986
	Facsimile:	646-885-9546 (United States of America)
The Office of Issuer for the Transaction is: Not applicable

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6. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Issuer:
	To:	The Great Atlantic & Pacific Tea Company 2 Paragon Drive Montvale, New Jersey 07645
	Attn:	Brenda Galgano, Senior Vice President and Chief Financial Officer
	Telephone:	201-571-4363
	Facsimile:	201-571-8715
(b) Address for notices or communications to Dealer:
	To:	Lehman Brothers Inc., acting as Agent Lehman Brothers OTC Derivatives Inc., acting as Principal 745 Seventh Avenue New York, New York 10019
	Attn:	Transaction Management Group
	Telephone No.:	(212) 526-9986
	Facsimile No.:	(646) 885-9546
with a copy:
	To:	Lehman Brothers Inc., acting as Agent Lehman Brothers OTC Derivatives Inc., acting as Principal 745 Seventh Avenue New York, New York 10019
	Attn:	Steve Roti – US Equity Linked
	Telephone No.:	(212) 526-0055
	Facsimile No.:	(917) 552-0561

          7. Representations, Warranties and Agreements:

          (a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Issuer represents and warrants to and for the benefit of, and agrees with, Dealer as follows:

          (i) On the Trade Date, (A) none of Issuer and its officers and directors is aware of any material nonpublic information regarding Issuer or the Shares and (B) all reports and other documents filed by Issuer with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of 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.

          (ii) Without limiting the generality of Section 13.1 of the Equity Definitions, Issuer acknowledges that Dealer is not making any representations or warranties with respect to the treatment of the Transaction under FASB Statements 133, as amended, or 150, EITF Issue No. 00-19 (or any successor issue statements) or under FASB’s Liabilities & Equity Project.

          (iii) Prior to the Trade Date, Issuer shall deliver to Dealer a resolution of Issuer’s board of directors authorizing the Transaction and such other certificate or certificates as Dealer shall reasonably request.

          (iv) Issuer is not entering into this Confirmation to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.

          (v) Issuer is not, and after giving effect to the transactions contemplated hereby will not be, an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

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          (vi) On the Trade Date (A) the assets of Issuer at their fair valuation exceed the liabilities of Issuer, including contingent liabilities, (B) the capital of Issuer is adequate to conduct the business of Issuer and (C) Issuer has the ability to pay its debts and obligations as such debts mature and does not intend to, or does not believe that it will, incur debt beyond its ability to pay as such debts mature.

          (vii) Issuer shall not take any action to decrease the number of Available Shares below the Capped Number (each as defined below).

          (viii) The representations and warranties of Issuer set forth in Section 3 of the Agreement and Sections 1 and 3 of the Underwriting Agreement (the “Underwriting Agreement”) dated as of December 12, 2007 between Bank of America, N.A. and Lehman Brothers Inc., as representatives of the underwriters party thereto are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.

          (ix) Issuer understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any Affiliate of Dealer or any governmental agency.

          (x) (A) During the period starting on the first Expiration Date and ending on the last Expiration Date (the “Settlement Period”), the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“Regulation M”) and (B) Issuer shall not engage in any “distribution,” as such term is defined in Regulation M, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day immediately following the Settlement Period.

          (xi) During the Settlement Period, neither Issuer nor any “affiliate” or “affiliated purchaser” (each as defined in Rule 10b-18 of the Exchange Act (“Rule 10b-18”)) shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except through Dealer.

          (xii) As of the Trade Date, the Issuer has not entered into any obligation that would contractually limit it from effecting Cash Settlement or Net Share Settlement under the Transaction.

          (xiii) Issuer has received and read and understands the Notice of Regulatory Treatment and OTC Option Risk Disclosure Statement.

          (b) Each of Dealer and Issuer agrees and represents that it is an “eligible contract participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended.

          (c) Each of Dealer and Issuer acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) thereof. Accordingly, Dealer represents and warrants to Issuer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.

          (d) Each of Dealer and Issuer agrees and acknowledges that Dealer is a “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of Title 11 of the United States Code (the “Bankruptcy Code”). The parties hereto further agree and acknowledge (A) that this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “settlement payment,” as such term is defined in Section 741(8) of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code, and (B) that Dealer is entitled to the protections afforded by, among other sections, Section 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code.

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          (e) Issuer shall deliver to Dealer an opinion of counsel, dated as of the Trade Date and reasonably acceptable to Dealer in form and substance (subject to customary qualifications, assumptions and exceptions), with respect to the matters set forth in Section 3(a) of the Agreement.

          (f) LBI will furnish Issuer, upon written request, a statement as to the source and amount of any remuneration received or to be received by the Agent in connection with the Transactions evidenced hereby.

          8. Other Provisions:

          (a) Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events. If, subject to Section 8(l) below, Issuer shall owe Dealer any amount pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions (except in the event of an Insolvency, a Nationalization, a Tender Offer or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (except in the event of an Event of Default in which Issuer is the Defaulting Party or a Termination Event in which Issuer is the Affected Party, that resulted from an event or events within Issuer’s control) (a “Payment Obligation”), Issuer shall have the right, in its sole discretion, to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, between the hours of 9:00 A.M. and 4:00 P.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date or Early Termination Date, as applicable (“Notice of Share Termination”). Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the Merger Date, the Tender Offer Date, Announcement Date or Early Termination Date, as applicable:

Share Termination Alternative:	Applicable and means that Issuer shall deliver to Dealer the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, in satisfaction of the Payment Obligation.
Share Termination Delivery Property:	A number of Share Termination Delivery Units, as calculated by the Calculation Agent in good faith, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
Share Termination Unit Price:	The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Issuer at the time of notification of the Payment Obligation.
Share Termination Delivery Unit:	In the case of a Termination Event, Event of Default or Delisting, one Share or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization, Merger Event or Tender Offer. If such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
Failure to Deliver:	Applicable
Other applicable provisions:	If Share Termination Alternative is applicable, the provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws as a result of the fact that Seller is the Issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement”

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applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units”.

          (b) Registration/Private Placement Procedures. (i) If, in the commercially reasonable judgment of Dealer, for any reason, any Shares or any securities of Issuer or its affiliates comprising any Share Termination Delivery Units deliverable to Dealer hereunder (any such Shares or securities, “Delivered Securities”) would not be immediately freely transferable by Dealer under the provisions of Rule 144 of the Securities Act, as may be amended from time to time (including the amendment adopted on November 15, 2007 pursuant to Release No. 33-8869) applicable to sales of restricted securities by non-affiliates of an issuer, then the provisions set forth in this Section 8(b) shall apply. At the election of Issuer by notice to Dealer within one Exchange Business Day after the relevant delivery obligation arises, but in any event at least one Exchange Business Day prior to the date on which such delivery obligation is due, either (A) all Delivered Securities delivered by Issuer to Dealer shall be, at the time of such delivery, covered by an effective registration statement of Issuer for immediate resale by Dealer (such registration statement and the corresponding prospectus (the “Prospectus”) (including, without limitation, any sections describing the plan of distribution) in form and content commercially reasonably satisfactory to Dealer) or (B) Issuer shall deliver additional Delivered Securities so that the value of such Delivered Securities, as determined by the Calculation Agent to reflect an appropriate liquidity discount, equals the value of the number of Delivered Securities that would otherwise be deliverable if such Delivered Securities were freely tradeable (without prospectus delivery) upon receipt by Dealer (such value, the “Freely Tradeable Value”); provided that Issuer may not make the election described in this clause (B) if, on the date of its election, it has taken, or caused to be taken, any action that would make unavailable either the exemption pursuant to Section 4(2) of the Securities Act for the delivery by Issuer to Dealer (or any affiliate designated by Dealer) of the Delivered Securities or the exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of the Delivered Securities by Dealer (or any such affiliate of Dealer). (For the avoidance of doubt, as used in this paragraph (b) only, the term “Issuer” shall mean the issuer of the relevant securities, as the context shall require.)

(ii) If Issuer makes the election described in clause (b)(i)(A) above:

          (A) Dealer (or an Affiliate of Dealer designated by Dealer) shall be afforded a reasonable opportunity to conduct a due diligence investigation with respect to Issuer that is customary in scope for underwritten offerings of equity securities and that yields results that are commercially reasonably satisfactory to Dealer or such Affiliate, as the case may be, in its commercially reasonable discretion; and

          (B) Dealer (or an Affiliate of Dealer designated by Dealer) and Issuer shall enter into an agreement (a “Registration Agreement”) on commercially reasonable terms in connection with the public resale of such Delivered Securities by Dealer or such Affiliate substantially similar to underwriting agreements customary for underwritten offerings of equity securities, in form and substance commercially reasonably satisfactory to Dealer or such Affiliate and Issuer, which Registration Agreement shall include, without limitation, provisions substantially similar to those contained in such underwriting agreements relating to the indemnification of, and contribution in connection with the liability of, Dealer and its Affiliates and Issuer, shall provide for the payment by Issuer of all reasonable expenses in connection with such resale, including all registration costs and all reasonable fees and expenses of counsel for Dealer, and shall provide for the delivery of accountants’ “comfort letters” to Dealer or such Affiliate with respect to the financial statements and certain financial information contained in or incorporated by reference into the Prospectus.

(iii) If Issuer makes the election described in clause (b)(i)(B) above:

          (A) Dealer (or an Affiliate of Dealer designated by Dealer) and any potential institutional purchaser of any such Delivered Securities from Dealer or such Affiliate identified by Dealer shall be afforded a commercially reasonable opportunity to conduct a due diligence investigation in compliance with applicable law with respect to Issuer customary in scope for private placements of equity securities (including, without limitation, the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them);

          (B) Dealer (or an Affiliate of Dealer designated by Dealer) and Issuer shall enter into an agreement (a “Private Placement Agreement”) on commercially reasonable terms in connection with the private placement of such Delivered Securities by Issuer to Dealer or such Affiliate and the private resale of such shares by Dealer or such Affiliate, substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance commercially reasonably satisfactory to Dealer and Issuer, which Private Placement Agreement shall include, without limitation,

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provisions substantially similar to those contained in such private placement purchase agreements relating to the indemnification of, and contribution in connection with the liability of, Dealer and its Affiliates and Issuer, shall provide for the payment by Issuer of all reasonable expenses in connection with such resale, including all reasonable fees and expenses of counsel for Dealer, shall contain representations, warranties and agreements of Issuer reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resales, and shall use best efforts to provide for the delivery of accountants’ “comfort letters” to Dealer or such Affiliate with respect to the financial statements and certain financial information contained in or incorporated by reference into the offering memorandum prepared for the resale of such Shares; and

          (C) Issuer agrees that any Delivered Securities so delivered to Dealer, (i) may be transferred by and among Dealer and its Affiliates, and Issuer shall effect such transfer without any further action by Dealer and (ii) after the minimum “holding period” within the meaning of Rule 144(d) under the Securities Act has elapsed with respect to such Delivered Securities, Issuer shall promptly remove, or cause the transfer agent for such Shares or securities to remove, any legends referring to any such restrictions or requirements from such Delivered Securities upon delivery by Dealer (or such Affiliate of Dealer) to Issuer or such transfer agent of seller’s and broker’s representation letters customarily delivered by Dealer in connection with resales of restricted securities pursuant to Rule 144 under the Securities Act, without any further requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer).

          (D) Issuer shall not take, or cause to be taken, any action that would make unavailable either the exemption pursuant to Section 4(2) of the Securities Act for the sale by Issuer to Dealer (or any affiliate designated by Dealer) of the Shares or Share Termination Delivery Units, as the case may be, or the exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of the Shares or Share Termination Delivery Units, as the case may be, by Dealer (or any such affiliate of Dealer).

          (c) Make-whole. If Issuer makes the election described in clause (b)(i)(B) of paragraph (b) of this Section 8, then Dealer or its affiliate may sell such Shares or Share Termination Delivery Units, as the case may be, during a period (the “Resale Period”) commencing on the Exchange Business Day following delivery of such Shares or Share Termination Delivery Units, as the case may be, and ending on the Exchange Business Day on which Dealer completes the sale of all such Shares or Share Termination Delivery Units, as the case may be, or a sufficient number of Shares or Share Termination Delivery Units, as the case may be, so that the realized net proceeds of such sales exceed the Freely Tradeable Value (such amount of the Freely Tradeable Value, the “Required Proceeds”). If any of such delivered Shares or Share Termination Delivery Units remain after such realized net proceeds exceed the Required Proceeds, Dealer shall return such remaining Shares or Share Termination Delivery Units to Issuer. If the Required Proceeds exceed the realized net proceeds from such resale, Issuer shall transfer to Dealer by the open of the regular trading session on the Exchange on the Exchange Business Day immediately following the last day of the Resale Period the amount of such excess (the “Additional Amount”) in cash or in a number of additional Shares (“Make-whole Shares”) in an amount that, based on the Relevant Price on the last day of the Resale Period (as if such day was the “Valuation Date” for purposes of computing such Relevant Price), has a dollar value equal to the Additional Amount. The Resale Period shall continue to enable the sale of the Make-whole Shares in the manner contemplated by this Section 8(c). This provision shall be applied successively until the Additional Amount is equal to zero, subject to Section 8(e).

          (d) Beneficial Ownership. Notwithstanding anything to the contrary in the Agreement or this Confirmation, in no event shall Dealer be entitled to receive, or shall be deemed to receive, any Shares if, upon such receipt of such Shares, the “beneficial ownership” (within the meaning of Section 13 of the Exchange Act and the rules promulgated thereunder) of Shares by Dealer or any affiliate of Dealer or other person subject to aggregation with Dealer under such Section 13 and rules (collectively, “Buyer Group”) would be equal to or greater than 8.5% or more of the outstanding Shares. If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of this provision, Issuer’s obligation to make such delivery shall not be extinguished and Issuer shall make such delivery as promptly as practicable after, but in no event later than one Exchange Business Day after, Dealer gives notice to Issuer that such delivery would not result in Buyer Group directly or indirectly so beneficially owning in excess of 8.5% of the outstanding Shares.

          (e) Limitations on Settlement by Issuer. Notwithstanding anything herein or in the Agreement to the contrary, in no event shall Issuer be required to deliver Shares in connection with the Transaction in excess of a number of Shares equal to 1.2 times the aggregate Number of Shares for all Components (the “Capped Number”). If at any time the Issuer does

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not have a number of authorized but unissued Shares that are not reserved for future issuance in connection with other transactions in the Shares (the “Available Shares”) that is greater than the Capped Number, Issuer agrees to use its reasonable best efforts to seek approval from its shareholders at the next meeting of shareholders, or, if necessary, a subsequent meeting of shareholders, to increase the number of authorized but unissued Shares and to reserve a number of Shares at least equal to the Capped Number for settlement of this Transaction (the “Reserved Shares”). If Issuer does not succeed in obtaining shareholder approval for such an increase and so increasing the number of Reserved Shares at or prior to its second annual meeting of shareholders following the Trade Date, (i) the Number of Shares for each Component shall be automatically increased by 10% and (ii) an Additional Termination Event shall occur with respect to which the Transaction shall be the sole Affected Transaction and Issuer shall be the sole Affected Party; provided however that if such shareholder approval is obtained and such increase in the number of Reserved Shares occurs after Issuer’s second annual meeting of shareholders but before the earlier of the Expiration Date for such Component and any earlier date that Dealer has designated as an Early Termination Date or other date for cancellation or termination of the Transaction, the Additional Termination Event arising from such prior failure to obtain shareholder approval or failure to increase the number of Reserved Shares shall cease to exist. For the avoidance of doubt Dealer shall have no obligation to exercise its right pursuant to such Additional Termination Event, such right will be an ongoing right until Issuer has obtained such approval from its shareholders for such an increase in the number of Available Shares and has so increased the number of Reserved Shares, and such right will automatically terminate upon Issuer obtaining such shareholder approval for such an increase and so increasing the number of Reserved Shares. Unless the number of Reserved Shares is at least equal to the Capped Number, Issuer shall not retire any Shares that are repurchased, acquired or otherwise received by Issuer or any of its subsidiaries from any persons (whether or not in exchange for cash, fair value or any other consideration, and including, for the avoidance of doubt, any Shares received in settlement of any option or other derivative transaction) (such Shares, “Acquired Shares”) or issue or deliver or agree to issue or deliver any Acquired Shares to any person other than Issuer except that such Acquired Shares may be used to settle this Transaction and any other warrant transactions entered into between Issuer and Dealer or Bank of America on the Trade Date.

          (f) Right to Extend. Dealer may postpone any Exercise Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Number of Shares to be Delivered with respect to one or more Components), if Dealer determines, in its commercially reasonable discretion, that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions or (ii) to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer.

          (g) Equity Rights. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Issuer’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Issuer’s bankruptcy to any claim arising as a result of a breach by Issuer of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Issuer herein under or pursuant to any other agreement.

          (h) Amendments to Equity Definitions and the Agreement. The following amendments shall be made to the Equity Definitions and to the Agreement:

          (i) The first sentence of Section 11.2(c) of the Equity Definitions, prior to clause (A) thereof, is hereby amended to read as follows: ‘(c) If “Calculation Agent Adjustment” is specified as the Method of Adjustment in the related Confirmation of a Share Option Transaction, then following the announcement or occurrence of any Potential Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment Event has a material effect on the theoretical value of the relevant Shares or options on the Shares and, if so, will (i) make appropriate adjustment(s), if any, to any one or more of:’ and, the portion of such sentence immediately preceding clause (ii) thereof is hereby amended by deleting the words “diluting or concentrative” and the words “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing such latter phrase with the words “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)”;

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          (ii) Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “diluting or concentrative” and replacing them with “material”;

          (iii) Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that Issuer.”.

          (iv) Section 12.9(b)(v) of the Equity Definitions is hereby amended by:

                    (A) adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and

                    (B) (1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C) and (3) deleting the final two sentences in its entirety and replacing it with the sentence “The Hedging Party will determine (in a manner consistent, for such purposes, with Section 3 hereunder governing the conduct of the Calculation Agent) the Cancellation Amount payable by one party to the other.”

          (i) Transfer and Assignment. Dealer may transfer or assign its rights and obligations under the Transaction with the prior written consent of the Issuer, such consent not to be unreasonably withheld. Notwithstanding the foregoing, Dealer may transfer or assign its rights and obligations hereunder and under the Agreement, in whole or in part, without the consent of the Issuer to (i) any of its affiliates or (ii) any entities sponsored or organized by, or on behalf of or for the benefit of Dealer.

          (j) Disclosure. Effective from the date of commencement of discussions concerning the Transaction, Issuer and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Issuer relating to such tax treatment and tax structure.

          (k) Designation by Dealer. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Issuer, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such shares or other securities and otherwise to perform Dealer obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Issuer to the extent of any such performance.

          (l) Additional Termination Events. The occurrence of any of the following shall constitute an Additional Termination Event with respect to which the Transaction shall be the sole Affected Transaction and Issuer shall be the sole Affected Party; provided that with respect to any Additional Termination Event, Dealer may choose to treat part of the Transaction as the sole Affected Transaction, and, upon the termination of the Affected Transaction, a Transaction with terms identical to those set forth herein except with a Number of Warrants equal to the unaffected number of Warrants shall be treated for all purposes as the Transaction, which shall remain in full force and effect:

          (i) Dealer reasonably determines that it is advisable to terminate a portion of the Transaction so that Dealer’s related hedging activities will comply with applicable securities laws, rules or regulations;

          (ii) any Person (as defined below) acquires beneficial ownership (determined in accordance with Rule 13d-3 under the Exchange Act), directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of Shares entitling the Person to exercise 50% or more of the total voting power of all shares of Issuer’s capital stock entitled to vote generally in elections of directors, other than an acquisition by Issuer, any of Issuer’s subsidiaries or any of Issuer’s employee benefit plans;

          (iii) Issuer (x) merges or consolidates with or into any other Person, other than a subsidiary of Issuer, another Person merges with or into Issuer, or Issuer conveys, sells, transfers or leases all or substantially all of its assets to another Person or (y) engages in any recapitalization, reclassification or other transaction in which all or substantially all Shares are exchanged for or converted into cash, securities or other property, in each case, other than any merger or consolidation:

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	(A)	that does not result in a reclassification, conversion, exchange or cancellation of the outstanding Shares;
	(B)	pursuant to which the consideration received by holders of Shares immediately prior to the transaction entitles such holders to exercise, directly or indirectly, 50% or more of the voting power of all shares of capital stock entitled to vote generally in the election of directors of either (x) the continuing or surviving corporation or (y) a corporation that directly or indirectly owns 100% of the capital stock of such continuing or surviving corporation, in either case, immediately after such transaction;
	(C)	which is effected solely to change Issuer’s jurisdiction of incorporation and results in a reclassification, conversion or exchange of the outstanding Shares solely into shares of common stock of the surviving entity; or
(iv) at any time Issuer’s Continuing Directors (as defined below) do not constitute a majority of Issuer’s board of      directors (or, if applicable, a successor Person to Issuer);
(v) if less than 25% of the outstanding shares of common stock is beneficially owned by persons other than a      Permitted Holder (as discussed below); or
(vi) an Additional Termination Event which arises as provided and subject to cessation as described in      Section 8(e).

          Notwithstanding the foregoing, a transaction set forth in clause (ii), (iii) or (iv) above will not constitute an Additional Termination Event if at least 90% of the consideration paid for the Shares (excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights and cash dividends) in such merger or consolidation or such other transaction otherwise constituting an Additional Termination Event under clause (iii) above consists of shares of capital stock or American Depositary Receipts in respect of shares of capital stock traded on any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market (or any of their respective successors) (or will be so traded or quoted immediately following the completion of the merger or consolidation or such other transaction).

          “Person” includes any syndicate or group that would be deemed to be a “person” under Section 13(d)(3) of the Exchange Act.

          “Continuing Directors” means a directors who either were members of the Issuer’s board of directors on the date hereof or who become members of the Issuer’s board of directors subsequent to the date hereof and whose appointment, election or nomination for election by the Issuer’s shareholders is duly approved by a majority of the Continuing Directors on the Issuer’s board of directors at the time of such approval, either by specific vote or by approval of the proxy statement issued by the Issuer on behalf of the board of directors in which such individuals are named as nominees for director.

          “Permitted Holder” means (1) Tengelmann Warenhandelsgesellschaft, a partnership organized under the laws of Germany (“Tengelmann”), (2) each Affiliate of Tengelmann, (3) each partner of Tengelmann and the respective members of their immediate families and (4) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a majority or more controlling interest of which consist of any one or more of the Persons described in the preceding clauses (1), (2) and (3).

(m) Netting and Set-off.

          (i) If on any date cash would otherwise be payable or Shares or other property would otherwise be deliverable hereunder or pursuant to the Agreement or pursuant to any other agreement between the parties by Issuer to Dealer and cash would otherwise be payable or Shares or other property would otherwise be deliverable hereunder or pursuant to the Agreement or pursuant to any other agreement between the parties by Dealer to Issuer and the type of property required to be paid or delivered by each such party on such date is the same, then, on such date, each such party’s obligation to make such payment or delivery will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable or deliverable by

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one such party exceeds the aggregate amount that would otherwise have been payable or deliverable by the other such party, replaced by an obligation of the party by whom the larger aggregate amount would have been payable or deliverable to pay or deliver to the other party the excess of the larger aggregate amount over the smaller aggregate amount.

          (ii) In addition to and without limiting any rights of set-off that a party hereto may have as a matter of law, pursuant to contract or otherwise, upon the occurrence of an Early Termination Date, Dealer shall have the right to terminate, liquidate and otherwise close out the Transaction and to set off any obligation or right that Dealer or any affiliate of Dealer may have to or against Issuer hereunder or under the Agreement against any right or obligation Dealer or any of its affiliates may have against or to Issuer, including without limitation any right to receive a payment or delivery pursuant to any provision of the Agreement or hereunder. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of the same type, such obligation and right shall be set off in kind. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of any other type, the value of each of such obligation and such right shall be determined by the Calculation Agent and the result of such set-off shall be that the net obligor shall pay or deliver to the other party an amount of cash or assets, at the net obligor’s option, with a value (determined, in the case of a delivery of assets, by the Calculation Agent) equal to that of the net obligation. In determining the value of any obligation to release or deliver Shares or any right to receive Shares, the value at any time of such obligation or right shall be determined by reference to the market value of the Shares at such time, as determined in good faith by the Calculation Agent. If an obligation or right is unascertained at the time of any such set-off, the Calculation Agent may in good faith estimate the amount or value of such obligation or right, in which case set-off will be effected in respect of that estimate, and the relevant party shall account to the other party at the time such obligation or right is ascertained.

          (iii) Issuer shall not net or set off its obligations, if any, under the Transaction against its rights against Dealer under any other transaction or instrument. Dealer shall not net or set off its obligations, if any, under the Transaction against its rights against Issuer under any other transaction or instrument.

          (n) Effectiveness. If, prior to the Effective Date, Dealer reasonably determines that it is advisable to cancel the Transaction because of concerns that Dealer’s related hedging activities could be viewed as not complying with applicable securities laws, rules or regulations, the Transaction shall be cancelled and shall not become effective, and neither party shall have any obligation to the other party in respect of the Transaction.

          (o) Waiver of Trial by Jury. EACH OF ISSUER AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF ISSUER OR DEALER OR THEIR RESPECTIVE AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

          (p) Governing Law. THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

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          Issuer hereby agrees (a) to check this Confirmation carefully and promptly upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Issuer with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and promptly returning an executed copy to us at facsimile number 646-885-9545 (United States of America), Attention: Documentation.

Yours faithfully,
LEHMAN BROTHERS OTC DERIVATIVES INC.
By:	/s/ Anatoly Kozlov
	Name: Anatoly Kozlov
	Authorized Signatory

Agreed and Accepted By:
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
By:	/s/ William Moss
	Name: William Moss
	Title: Vice President and Treasurer

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Annex A

For each Component of the Transaction, the Number of Warrants and Expiration Date is set forth below.

Component Number	Number of Warrants	Expiration Date
1.	22,893.00	Thu-15-Sep-2011
2.	22,893.00	Fri-16-Sep-2011
3.	22,893.00	Mon-19-Sep-2011
4.	22,893.00	Tue-20-Sep-2011
5.	22,893.00	Wed-21-Sep-2011
6.	22,893.00	Thu-22-Sep-2011
7.	22,893.00	Fri-23-Sep-2011
8.	22,893.00	Mon-26-Sep-2011
9.	22,893.00	Tue-27-Sep-2011
10.	22,893.00	Wed-28-Sep-2011
11.	22,893.00	Thu-29-Sep-2011
12.	22,893.00	Fri-30-Sep-2011
13.	22,893.00	Mon-3-Oct-2011
14.	22,893.00	Tue-4-Oct-2011
15.	22,893.00	Wed-5-Oct-2011
16.	22,893.00	Thu-6-Oct-2011
17.	22,893.00	Fri-7-Oct-2011
18.	22,893.00	Mon-10-Oct-2011
19.	22,893.00	Tue-11-Oct-2011
20.	22,893.00	Wed-12-Oct-2011
21.	22,893.00	Thu-13-Oct-2011
22.	22,893.00	Fri-14-Oct-2011
23.	22,893.00	Mon-17-Oct-2011
24.	22,893.00	Tue-18-Oct-2011
25.	22,893.00	Wed-19-Oct-2011
26.	22,893.00	Thu-20-Oct-2011
27.	22,893.00	Fri-21-Oct-2011
28.	22,893.00	Mon-24-Oct-2011
29.	22,893.00	Tue-25-Oct-2011
30.	22,893.00	Wed-26-Oct-2011
31.	22,893.00	Thu-27-Oct-2011
32.	22,893.00	Fri-28-Oct-2011
33.	22,893.00	Mon-31-Oct-2011
34.	22,893.00	Tue-1-Nov-2011
35.	22,893.00	Wed-2-Nov-2011
36.	22,893.00	Thu-3-Nov-2011
37.	22,893.00	Fri-4-Nov-2011
38.	22,893.00	Mon-7-Nov-2011
39.	22,893.00	Tue-8-Nov-2011
40.	22,893.00	Wed-9-Nov-2011
41.	22,893.00	Thu-10-Nov-2011
42.	22,893.00	Fri-11-Nov-2011
43.	22,893.00	Mon-14-Nov-2011
44.	22,893.00	Tue-15-Nov-2011
45.	22,893.00	Wed-16-Nov-2011
46.	22,893.00	Thu-17-Nov-2011
47.	22,893.00	Fri-18-Nov-2011
48.	22,893.00	Mon-21-Nov-2011
49.	22,893.00	Tue-22-Nov-2011
50.	22,893.00	Wed-23-Nov-2011
51.	22,893.00	Fri-25-Nov-2011
52.	22,893.00	Mon-28-Nov-2011
53.	22,893.00	Tue-29-Nov-2011
54.	22,893.00	Wed-30-Nov-2011
55.	22,893.00	Thu-1-Dec-2011
56.	22,893.00	Fri-2-Dec-2011

17

57.	22,893.00	Mon-5-Dec-2011
58.	22,893.00	Tue-6-Dec-2011
59.	22,893.00	Wed-7-Dec-2011
60.	22,893.00	Thu-8-Dec-2011
61.	22,893.00	Fri-9-Dec-2011
62.	22,893.00	Mon-12-Dec-2011
63.	22,893.00	Tue-13-Dec-2011
64.	22,893.00	Wed-14-Dec-2011
65.	22,893.00	Thu-15-Dec-2011
66.	22,893.00	Fri-16-Dec-2011
67.	22,893.00	Mon-19-Dec-2011
68.	22,893.00	Tue-20-Dec-2011
69.	22,893.00	Wed-21-Dec-2011
70.	22,893.00	Thu-22-Dec-2011
71.	22,893.00	Fri-23-Dec-2011
72.	22,893.00	Tue-27-Dec-2011
73.	22,893.00	Wed-28-Dec-2011
74.	22,893.00	Thu-29-Dec-2011
75.	22,893.00	Fri-30-Dec-2011
76.	22,893.00	Tue-3-Jan-2012
77.	22,893.00	Wed-4-Jan-2012
78.	22,893.00	Thu-5-Jan-2012
79.	22,893.00	Fri-6-Jan-2012
80.	22,893.00	Mon-9-Jan-2012
81.	22,893.00	Tue-10-Jan-2012
82.	22,893.00	Wed-11-Jan-2012
83.	22,893.00	Thu-12-Jan-2012
84.	22,893.00	Fri-13-Jan-2012
85.	22,893.00	Tue-17-Jan-2012
86.	22,893.00	Wed-18-Jan-2012
87.	22,893.00	Thu-19-Jan-2012
88.	22,893.00	Fri-20-Jan-2012
89.	22,893.00	Mon-23-Jan-2012
90.	22,961.00	Tue-24-Jan-2012

18

EX-10.4

Exhibit 10.4

	December 12, 2007
To:	The Great Atlantic and Pacific Tea Company, Inc.
	2 Paragon Drive
	Montvale, NJ 07645
	Attn:
	Telephone:	201-573-9700
	Facsimile:	201-937-4079
From:	Lehman Brothers Inc., acting as Agent
	Lehman Brothers OTC Derivatives Inc., acting as Principal
	745 Seventh Avenue
	New York, NY 10019
	Telephone:	212-526-9986
	Facsimile:	646-885-9546 (United States of America)
Re:	Issuer Warrant Transaction (2012)
	(Global ID: 3534964)

Ladies and Gentlemen:

          The purpose of this communication (this “Confirmation”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “Transaction”) between Lehman Brothers OTC Derivatives Inc. (“Dealer”) and The Great Atlantic and Pacific Tea Company, Inc. (“Issuer”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below. This Confirmation is sent on behalf of both Dealer and Lehman Brothers Inc. (“LBI”). Lehman Brothers OTC Derivatives Inc. is not a member of the Securities Investor Protection Corporation.

          1. This Confirmation is subject to, and incorporates, the definitions and provisions of the 2000 ISDA Definitions (including the Annex thereto) (the “2000 Definitions”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and together with the 2000 Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc. (“ISDA”). In the event of any inconsistency between the 2000 Definitions and the Equity Definitions, the Equity Definitions will govern. For purposes of the Equity Definitions, each reference herein to a Warrant shall be deemed to be a reference to a Call Option or an Option, as context requires.

          This Confirmation evidences a complete and binding agreement, and supersedes any prior agreements, written or oral, between Dealer and Issuer as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the 2002 ISDA Master Agreement (the “ISDA Master Agreement”) as if Dealer and Issuer had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.

          All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern.

          2. The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:

General Terms:

Trade Date: December 12, 2007

	Effective Date:	December 18, 2007, or such other date as agreed between the parties, subject to Section 8(n) below
	Components:	The Transaction will be divided into individual Components, each with the terms set forth in this Confirmation, and, in particular, with the Number of Warrants and Expiration Date set forth in this Confirmation. The payments and deliveries to be made upon settlement of the Transaction will be determined separately for each Component as if each Component were a separate Transaction under the Agreement.
	Warrant Style:	European
	Warrant Type:	Call
	Seller:	Issuer
	Buyer:	Dealer
	Shares:	The Common Stock of Issuer, par value USD 1.00 per share (Ticker Symbol: “GAP”).
	Number of Warrants:	For each Component, as provided in Annex A to this Confirmation.
	Warrant Entitlement:	One Share per Warrant
	Strike Price:	USD 49.00
	Premium:	USD 10,637,500.00
	Premium Payment Date:	The Effective Date
	Exchange:	New York Stock Exchange
	Related Exchange:	All Exchanges
Procedures for Exercise:
	Expiration Time:	Valuation Time
	Expiration Date:	As provided in Annex A to this Confirmation (or, if such date is not a Scheduled Trading Day, the next following Scheduled Trading Day that is not already an Expiration Date for another Component); provided that if that date is a Disrupted Day, the Expiration Date for such Component shall be the first succeeding Scheduled Trading Day that is not a Disrupted Day and is not or is not deemed to be an Expiration Date in respect of any other Component of the Transaction hereunder; and provided further that if the Expiration Date has not occurred pursuant to the preceding proviso as of the Final Disruption Date, the Final Disruption Date shall be the Expiration Date (irrespective of whether such date is an Expiration Date occurring on the Final Disruption Date in respect of any other Component for the Transaction) and, notwithstanding anything to the contrary in this Confirmation or the Definitions, the Relevant Price for the Expiration Date shall be the prevailing market value per Share determined in good faith by the Calculation Agent in a commercially reasonable manner. “Final Disruption Date” means ten Exchange Business Days after July 24, 2013. Notwithstanding the foregoing and anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Expiration Date, the Calculation Agent may determine that such Expiration Date is a Disrupted Day only in part, in which case the Calculation Agent shall make adjustments

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		to the number of Warrants for the relevant Component for which such day shall be the Expiration Date and shall designate the Scheduled Trading Day determined in the manner described in the immediately preceding sentence as the Expiration Date for the remaining Warrants for such Component. Section 6.6 of the Equity Definitions shall not apply to any Valuation Date occurring on an Expiration Date.
	Market Disruption Event:	Section 6.3(a) of the Equity Definitions is hereby amended by deleting the words “during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be,” in clause (ii) thereof.
	Automatic Exercise:	Applicable; and means that the Number of Warrants for each Component will be deemed to be automatically exercised at the Expiration Time on the Expiration Date for such Component unless Dealer notifies Seller (by telephone or in writing) prior to the Expiration Time on the Expiration Date that it does not wish Automatic Exercise to occur, in which case Automatic Exercise will not apply.
	Issuer’s Telephone Number and Telex and/or Facsimile Number and Contact Details for purpose of Giving Notice:	To be provided by Issuer.
Settlement Terms:
In respect of any Component:
	Settlement Currency:	USD
	Settlement Method Election:	Applicable; provided that the same Settlement Method shall apply to all Components; and provided further that references in the Equity Definitions to “Physical Settlement” shall be deemed to be references to “Net Share Settlement” as defined herein. If the Issuer elects Cash Settlement or Cash Settlement becomes the Default Settlement Method, the Issuer shall use its reasonable best efforts to provide Dealer with a written statement that the representations contained in paragraphs (a)(i) and (a)(iv) of “Representations, Warranties and Agreements” below are true and correct as of and as if made on the date of such election.
	Electing Party:	Issuer
	Settlement Method Election Date:	Five Scheduled Trading Days prior to, and including, the scheduled Expiration Date for the Component with the earliest scheduled Expiration Date.
	Default Settlement Method:	Net Share Settlement; provided that, unless on the Settlement Method Election Date, the number of Reserved Shares, as defined in Section 8(e), is at least equal to the Capped Number, as defined in Section 8(e), the Default Settlement Method shall be Cash Settlement; provided further that if the default settlement method applicable to warrant transactions entered into between the Issuer and Bank of America, N.A. (“Bank of America”) on the Trade Date becomes cash settlement pursuant to a proviso identical to the proceeding proviso, the Default Settlement Method hereunder shall be Cash Settlement.

3

	VWAP Price:	For any Valuation Date, the Rule 10b-18 dollar volume weighted average price per Share for such Valuation Date based on transactions executed during such Valuation Date, as reported on Bloomberg Page “GAP<Equity> AQR SEC” (or any successor thereto) or, in the event such price is not so reported on such Valuation Date for any reason, as reasonably determined by the Calculation Agent.
Cash Settlement Terms:
In respect of any Component:
	Settlement Currency:	USD
	Cash Settlement Payment Date:	With respect to each Valuation Date, three (3) full Exchange Business Days after the final Valuation Date.
Net Share Settlement Terms:
In respect of any Component:
	Net Share Settlement:	On each Settlement Date, Issuer shall deliver to Dealer a number of Shares equal to the Number of Shares to be Delivered for such Settlement Date to the account specified by Dealer and cash in lieu of any fractional shares valued at the Relevant Price on the Valuation Date corresponding to such Settlement Date.
	Number of Shares to be Delivered:	In respect of any Exercise Date, subject to the last sentence of Section 9.5 of the Equity Definitions, the product of (i) the number of Warrants exercised or deemed exercised on such Exercise Date, (ii) the Warrant Entitlement and (iii) (A) the excess of the VWAP Price on the Valuation Date occurring on such Exercise Date over the Strike Price divided by (B) such VWAP Price.
		The Number of Shares to be Delivered shall be delivered by Issuer to Dealer no later than 4:00 P.M. (local time in New York City) on the relevant Settlement Date.
	Other Applicable Provisions:	The provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws as a result of the fact that Seller is the Issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
Adjustments:
In respect of any Component:
	Method of Adjustment:	Calculation Agent Adjustment
	Extraordinary Dividend:	Any dividend or distribution (i) that has an ex-dividend date occurring on or after the Trade Date and on or prior to the Expiration Date and (ii) the amount or value of which exceeds the Ordinary Dividend Amount for such dividend or distribution, as determined by the Calculation Agent.
	Ordinary Dividend Amount:	USD 0.00.

4

Extraordinary Events:
	Consequences of Merger Events:
	(a) Share-for-Share:	Modified Calculation Agent Adjustment
	(b) Share-for-Other:	Cancellation and Payment (Calculation Agent Determination)
	(c) Share-for-Combined:	Cancellation and Payment (Calculation Agent Determination)
	Tender Offer:	Applicable
	Consequences of Tender Offers:
	(a) Share-for-Share:	Modified Calculation Agent Adjustment
	(b) Share-for-Other:	Cancellation and Payment (Calculation Agent Determination) on that portion of the Other Consideration that consists of cash; Modified Calculation Agent Adjustment on the remainder of the Other Consideration.
	(c) Share-for-Combined:	Modified Calculation Agent Adjustment
	Modified Calculation Agent Adjustment:	If, in respect of any Merger Event or Tender Offer to which Modified Calculation Agent Adjustment applies, the adjustments to be made in accordance with Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions would result in Issuer being different from the issuer of the Shares, then with respect to such Merger Event or Tender Offer, as a condition precedent to the adjustments contemplated in Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions, Issuer and the issuer of the Shares shall, prior to the Merger Date or Tender Offer, as the case may be, have entered into such documentation containing representations, warranties and agreements relating to securities law and other issues as requested by Dealer that Dealer has determined, in its commercially reasonable discretion, to be reasonably necessary or appropriate to allow Dealer to continue as a party to the Transaction, as adjusted under Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions, and to preserve its hedging or hedge unwind activities in connection with the Transaction in a manner compliant with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer, and if such conditions are not met or if the Calculation Agent determines that no adjustment that it could make under Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions will produce a commercially reasonable result, then the consequences set forth in Section 12.2(e)(ii) or Section 12.3(d)(ii), as the case may be, of the Equity Definitions shall apply.
	Nationalization, Insolvency or Delisting:	Cancellation and Payment (Calculation Agent Determination); provided that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the American Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market

5

			(or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
Additional Disruption Events:
(a) Change in Law:			Applicable
(b) Failure to Deliver:			Applicable
(c) Insolvency Filing:			Applicable
(d) Hedging Disruption:			Applicable
(e) Increased Cost of Hedging:			Applicable
(f) Loss of Stock Borrow:			Applicable
Maximum Stock Loan Rate:			100 basis points
(g) Increased Cost of Stock Borrow:			Applicable
Initial Stock Loan Rate:			50 basis points
Hedging Party:			Dealer for all applicable Additional Disruption Events
Determining Party:			Dealer for all applicable Extraordinary Events
Non-Reliance:			Applicable
Agreements and Acknowledgments Regarding Hedging Activities:			Applicable
Additional Acknowledgments:			Applicable
3. Calculation Agent:			LBI is acting as agent on behalf of Dealer and Issuer for the Transaction. LBI has no obligations, by guarantee, endorsement or otherwise, with respect to the performance of the Transaction by either party. LBI shall at all times act in good faith and in a commercially reasonable manner. In addition, LBI shall use commercially reasonable efforts under the circumstances to consult with Issuer on decisions it makes in its capacity as Calculation Agent; provided that LBI shall not be required to take into account or be bound by any considerations raised by Issuer.
4. Account Details:
Dealer Payment Instructions:			To be provided by Dealer.
Issuer Payment Instructions:			To be provided by Issuer.
5. Offices:
The Office of Dealer for the Transaction is: New York
	Lehman Brothers Inc., acting as Agent
	Lehman Brothers OTC Derivatives Inc., acting as Principal
	745 Seventh Avenue
	New York, NY 10019
	Attention:	Transaction Management Group
	Telephone:	212-526-9986
	Facsimile:	646-885-9546 (United States of America)
The Office of Issuer for the Transaction is: Not applicable

6

6. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Issuer:
	To:	The Great Atlantic & Pacific Tea Company
		2 Paragon Drive
		Montvale, New Jersey 07645
	Attn:	Brenda Galgano, Senior Vice President and Chief Financial Officer
	Telephone:	201-571-4363
	Facsimile:	201-571-8715
(b) Address for notices or communications to Dealer:
	To:	Lehman Brothers Inc., acting as Agent
		Lehman Brothers OTC Derivatives Inc., acting as Principal
		745 Seventh Avenue
		New York, New York 10019
	Attn:	Transaction Management Group
	Telephone No.:	(212) 526-9986
	Facsimile No.:	(646) 885-9546
with a copy:
	To:	Lehman Brothers Inc., acting as Agent
		Lehman Brothers OTC Derivatives Inc., acting as Principal
		745 Seventh Avenue
		New York, New York 10019
	Attn:	Steve Roti – US Equity Linked
	Telephone No.:	(212) 526-0055
	Facsimile No.:	(917) 552-0561

          7. Representations, Warranties and Agreements:

          (a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Issuer represents and warrants to and for the benefit of, and agrees with, Dealer as follows:

          (i) On the Trade Date, (A) none of Issuer and its officers and directors is aware of any material nonpublic information regarding Issuer or the Shares and (B) all reports and other documents filed by Issuer with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of 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.

          (ii) Without limiting the generality of Section 13.1 of the Equity Definitions, Issuer acknowledges that Dealer is not making any representations or warranties with respect to the treatment of the Transaction under FASB Statements 133, as amended, or 150, EITF Issue No. 00-19 (or any successor issue statements) or under FASB’s Liabilities & Equity Project.

          (iii) Prior to the Trade Date, Issuer shall deliver to Dealer a resolution of Issuer’s board of directors authorizing the Transaction and such other certificate or certificates as Dealer shall reasonably request.

          (iv) Issuer is not entering into this Confirmation to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.

          (v) Issuer is not, and after giving effect to the transactions contemplated hereby will not be, an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

7

          (vi) On the Trade Date (A) the assets of Issuer at their fair valuation exceed the liabilities of Issuer, including contingent liabilities, (B) the capital of Issuer is adequate to conduct the business of Issuer and (C) Issuer has the ability to pay its debts and obligations as such debts mature and does not intend to, or does not believe that it will, incur debt beyond its ability to pay as such debts mature.

          (vii) Issuer shall not take any action to decrease the number of Available Shares below the Capped Number (each as defined below).

          (viii) The representations and warranties of Issuer set forth in Section 3 of the Agreement and Sections 1 and 3 of the Underwriting Agreement (the “Underwriting Agreement”) dated as of December 12, 2007 between Bank of America, N.A. and Lehman Brothers Inc., as representatives of the underwriters party thereto are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.

          (ix) Issuer understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any Affiliate of Dealer or any governmental agency.

          (x) (A) During the period starting on the first Expiration Date and ending on the last Expiration Date (the “Settlement Period”), the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“Regulation M”) and (B) Issuer shall not engage in any “distribution,” as such term is defined in Regulation M, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day immediately following the Settlement Period.

          (xi) During the Settlement Period, neither Issuer nor any “affiliate” or “affiliated purchaser” (each as defined in Rule 10b-18 of the Exchange Act (“Rule 10b-18”)) shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except through Dealer.

          (xii) As of the Trade Date, the Issuer has not entered into any obligation that would contractually limit it from effecting Cash Settlement or Net Share Settlement under the Transaction.

          (xiii) Issuer has received and read and understands the Notice of Regulatory Treatment and OTC Option Risk Disclosure Statement.

          (b) Each of Dealer and Issuer agrees and represents that it is an “eligible contract participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended.

          (c) Each of Dealer and Issuer acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) thereof. Accordingly, Dealer represents and warrants to Issuer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.

          (d) Each of Dealer and Issuer agrees and acknowledges that Dealer is a “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of Title 11 of the United States Code (the “Bankruptcy Code”). The parties hereto further agree and acknowledge (A) that this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “settlement payment,” as such term is defined in Section 741(8) of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code, and (B) that Dealer is entitled to the protections afforded by, among other sections, Section 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code.

8

          (e) Issuer shall deliver to Dealer an opinion of counsel, dated as of the Trade Date and reasonably acceptable to Dealer in form and substance (subject to customary qualifications, assumptions and exceptions), with respect to the matters set forth in Section 3(a) of the Agreement.

          (f) LBI will furnish Issuer, upon written request, a statement as to the source and amount of any remuneration received or to be received by the Agent in connection with the Transactions evidenced hereby.

          8. Other Provisions:

          (a) Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events. If, subject to Section 8(l) below, Issuer shall owe Dealer any amount pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions (except in the event of an Insolvency, a Nationalization, a Tender Offer or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (except in the event of an Event of Default in which Issuer is the Defaulting Party or a Termination Event in which Issuer is the Affected Party, that resulted from an event or events within Issuer’s control) (a “Payment Obligation”), Issuer shall have the right, in its sole discretion, to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, between the hours of 9:00 A.M. and 4:00 P.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date or Early Termination Date, as applicable (“Notice of Share Termination”). Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the Merger Date, the Tender Offer Date, Announcement Date or Early Termination Date, as applicable:

Share Termination Alternative:	Applicable and means that Issuer shall deliver to Dealer the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, in satisfaction of the Payment Obligation.
Share Termination Delivery Property:	A number of Share Termination Delivery Units, as calculated by the Calculation Agent in good faith, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
Share Termination Unit Price:	The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Issuer at the time of notification of the Payment Obligation.
Share Termination Delivery Unit:	In the case of a Termination Event, Event of Default or Delisting, one Share or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization, Merger Event or Tender Offer. If such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
Failure to Deliver:	Applicable
Other applicable provisions:	If Share Termination Alternative is applicable, the provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws as a result of the fact that Seller is the Issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement”

9

applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units”.

          (b) Registration/Private Placement Procedures. (i) If, in the commercially reasonable judgment of Dealer, for any reason, any Shares or any securities of Issuer or its affiliates comprising any Share Termination Delivery Units deliverable to Dealer hereunder (any such Shares or securities, “Delivered Securities”) would not be immediately freely transferable by Dealer under the provisions of Rule 144 of the Securities Act, as may be amended from time to time (including the amendment adopted on November 15, 2007 pursuant to Release No. 33-8869) applicable to sales of restricted securities by non-affiliates of an issuer, then the provisions set forth in this Section 8(b) shall apply. At the election of Issuer by notice to Dealer within one Exchange Business Day after the relevant delivery obligation arises, but in any event at least one Exchange Business Day prior to the date on which such delivery obligation is due, either (A) all Delivered Securities delivered by Issuer to Dealer shall be, at the time of such delivery, covered by an effective registration statement of Issuer for immediate resale by Dealer (such registration statement and the corresponding prospectus (the “Prospectus”) (including, without limitation, any sections describing the plan of distribution) in form and content commercially reasonably satisfactory to Dealer) or (B) Issuer shall deliver additional Delivered Securities so that the value of such Delivered Securities, as determined by the Calculation Agent to reflect an appropriate liquidity discount, equals the value of the number of Delivered Securities that would otherwise be deliverable if such Delivered Securities were freely tradeable (without prospectus delivery) upon receipt by Dealer (such value, the “Freely Tradeable Value”); provided that Issuer may not make the election described in this clause (B) if, on the date of its election, it has taken, or caused to be taken, any action that would make unavailable either the exemption pursuant to Section 4(2) of the Securities Act for the delivery by Issuer to Dealer (or any affiliate designated by Dealer) of the Delivered Securities or the exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of the Delivered Securities by Dealer (or any such affiliate of Dealer). (For the avoidance of doubt, as used in this paragraph (b) only, the term “Issuer” shall mean the issuer of the relevant securities, as the context shall require.)

(ii) If Issuer makes the election described in clause (b)(i)(A) above:

          (A) Dealer (or an Affiliate of Dealer designated by Dealer) shall be afforded a reasonable opportunity to conduct a due diligence investigation with respect to Issuer that is customary in scope for underwritten offerings of equity securities and that yields results that are commercially reasonably satisfactory to Dealer or such Affiliate, as the case may be, in its commercially reasonable discretion; and

          (B) Dealer (or an Affiliate of Dealer designated by Dealer) and Issuer shall enter into an agreement (a “Registration Agreement”) on commercially reasonable terms in connection with the public resale of such Delivered Securities by Dealer or such Affiliate substantially similar to underwriting agreements customary for underwritten offerings of equity securities, in form and substance commercially reasonably satisfactory to Dealer or such Affiliate and Issuer, which Registration Agreement shall include, without limitation, provisions substantially similar to those contained in such underwriting agreements relating to the indemnification of, and contribution in connection with the liability of, Dealer and its Affiliates and Issuer, shall provide for the payment by Issuer of all reasonable expenses in connection with such resale, including all registration costs and all reasonable fees and expenses of counsel for Dealer, and shall provide for the delivery of accountants’ “comfort letters” to Dealer or such Affiliate with respect to the financial statements and certain financial information contained in or incorporated by reference into the Prospectus.

(iii) If Issuer makes the election described in clause (b)(i)(B) above:

          (A) Dealer (or an Affiliate of Dealer designated by Dealer) and any potential institutional purchaser of any such Delivered Securities from Dealer or such Affiliate identified by Dealer shall be afforded a commercially reasonable opportunity to conduct a due diligence investigation in compliance with applicable law with respect to Issuer customary in scope for private placements of equity securities (including, without limitation, the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them);

          (B) Dealer (or an Affiliate of Dealer designated by Dealer) and Issuer shall enter into an agreement (a “Private Placement Agreement”) on commercially reasonable terms in connection with the private placement of such Delivered Securities by Issuer to Dealer or such Affiliate and the private resale of such shares by Dealer or such Affiliate, substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance commercially reasonably satisfactory to Dealer and Issuer, which Private Placement Agreement shall include, without limitation,

10

provisions substantially similar to those contained in such private placement purchase agreements relating to the indemnification of, and contribution in connection with the liability of, Dealer and its Affiliates and Issuer, shall provide for the payment by Issuer of all reasonable expenses in connection with such resale, including all reasonable fees and expenses of counsel for Dealer, shall contain representations, warranties and agreements of Issuer reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resales, and shall use best efforts to provide for the delivery of accountants’ “comfort letters” to Dealer or such Affiliate with respect to the financial statements and certain financial information contained in or incorporated by reference into the offering memorandum prepared for the resale of such Shares; and

          (C) Issuer agrees that any Delivered Securities so delivered to Dealer, (i) may be transferred by and among Dealer and its Affiliates, and Issuer shall effect such transfer without any further action by Dealer and (ii) after the minimum “holding period” within the meaning of Rule 144(d) under the Securities Act has elapsed with respect to such Delivered Securities, Issuer shall promptly remove, or cause the transfer agent for such Shares or securities to remove, any legends referring to any such restrictions or requirements from such Delivered Securities upon delivery by Dealer (or such Affiliate of Dealer) to Issuer or such transfer agent of seller’s and broker’s representation letters customarily delivered by Dealer in connection with resales of restricted securities pursuant to Rule 144 under the Securities Act, without any further requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer).

          (D) Issuer shall not take, or cause to be taken, any action that would make unavailable either the exemption pursuant to Section 4(2) of the Securities Act for the sale by Issuer to Dealer (or any affiliate designated by Dealer) of the Shares or Share Termination Delivery Units, as the case may be, or the exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of the Shares or Share Termination Delivery Units, as the case may be, by Dealer (or any such affiliate of Dealer).

          (c) Make-whole. If Issuer makes the election described in clause (b)(i)(B) of paragraph (b) of this Section 8, then Dealer or its affiliate may sell such Shares or Share Termination Delivery Units, as the case may be, during a period (the “Resale Period”) commencing on the Exchange Business Day following delivery of such Shares or Share Termination Delivery Units, as the case may be, and ending on the Exchange Business Day on which Dealer completes the sale of all such Shares or Share Termination Delivery Units, as the case may be, or a sufficient number of Shares or Share Termination Delivery Units, as the case may be, so that the realized net proceeds of such sales exceed the Freely Tradeable Value (such amount of the Freely Tradeable Value, the “Required Proceeds”). If any of such delivered Shares or Share Termination Delivery Units remain after such realized net proceeds exceed the Required Proceeds, Dealer shall return such remaining Shares or Share Termination Delivery Units to Issuer. If the Required Proceeds exceed the realized net proceeds from such resale, Issuer shall transfer to Dealer by the open of the regular trading session on the Exchange on the Exchange Business Day immediately following the last day of the Resale Period the amount of such excess (the “Additional Amount”) in cash or in a number of additional Shares (“Make-whole Shares”) in an amount that, based on the Relevant Price on the last day of the Resale Period (as if such day was the “Valuation Date” for purposes of computing such Relevant Price), has a dollar value equal to the Additional Amount. The Resale Period shall continue to enable the sale of the Make-whole Shares in the manner contemplated by this Section 8(c). This provision shall be applied successively until the Additional Amount is equal to zero, subject to Section 8(e).

          (d) Beneficial Ownership. Notwithstanding anything to the contrary in the Agreement or this Confirmation, in no event shall Dealer be entitled to receive, or shall be deemed to receive, any Shares if, upon such receipt of such Shares, the “beneficial ownership” (within the meaning of Section 13 of the Exchange Act and the rules promulgated thereunder) of Shares by Dealer or any affiliate of Dealer or other person subject to aggregation with Dealer under such Section 13 and rules (collectively, “Buyer Group”) would be equal to or greater than 8.5% or more of the outstanding Shares. If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of this provision, Issuer’s obligation to make such delivery shall not be extinguished and Issuer shall make such delivery as promptly as practicable after, but in no event later than one Exchange Business Day after, Dealer gives notice to Issuer that such delivery would not result in Buyer Group directly or indirectly so beneficially owning in excess of 8.5% of the outstanding Shares.

          (e) Limitations on Settlement by Issuer. Notwithstanding anything herein or in the Agreement to the contrary, in no event shall Issuer be required to deliver Shares in connection with the Transaction in excess of a number of Shares equal to 1.2 times the aggregate Number of Shares for all Components (the “Capped Number”). If at any time the Issuer does

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not have a number of authorized but unissued Shares that are not reserved for future issuance in connection with other transactions in the Shares (the “Available Shares”) that is greater than the Capped Number, Issuer agrees to use its reasonable best efforts to seek approval from its shareholders at the next meeting of shareholders, or, if necessary, a subsequent meeting of shareholders, to increase the number of authorized but unissued Shares and to reserve a number of Shares at least equal to the Capped Number for settlement of this Transaction (the “Reserved Shares”). If Issuer does not succeed in obtaining shareholder approval for such an increase and so increasing the number of Reserved Shares at or prior to its second annual meeting of shareholders following the Trade Date, (i) the Number of Shares for each Component shall be automatically increased by 10% and (ii) an Additional Termination Event shall occur with respect to which the Transaction shall be the sole Affected Transaction and Issuer shall be the sole Affected Party; provided however that if such shareholder approval is obtained and such increase in the number of Reserved Shares occurs after Issuer’s second annual meeting of shareholders but before the earlier of the Expiration Date for such Component and any earlier date that Dealer has designated as an Early Termination Date or other date for cancellation or termination of the Transaction, the Additional Termination Event arising from such prior failure to obtain shareholder approval or failure to increase the number of Reserved Shares shall cease to exist. For the avoidance of doubt Dealer shall have no obligation to exercise its right pursuant to such Additional Termination Event, such right will be an ongoing right until Issuer has obtained such approval from its shareholders for such an increase in the number of Available Shares and has so increased the number of Reserved Shares, and such right will automatically terminate upon Issuer obtaining such shareholder approval for such an increase and so increasing the number of Reserved Shares. Unless the number of Reserved Shares is at least equal to the Capped Number, Issuer shall not retire any Shares that are repurchased, acquired or otherwise received by Issuer or any of its subsidiaries from any persons (whether or not in exchange for cash, fair value or any other consideration, and including, for the avoidance of doubt, any Shares received in settlement of any option or other derivative transaction) (such Shares, “Acquired Shares”) or issue or deliver or agree to issue or deliver any Acquired Shares to any person other than Issuer except that such Acquired Shares may be used to settle this Transaction and any other warrant transactions entered into between Issuer and Dealer or Bank of America on the Trade Date.

          (f) Right to Extend. Dealer may postpone any Exercise Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Number of Shares to be Delivered with respect to one or more Components), if Dealer determines, in its commercially reasonable discretion, that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions or (ii) to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer.

          (g) Equity Rights. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Issuer’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Issuer’s bankruptcy to any claim arising as a result of a breach by Issuer of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Issuer herein under or pursuant to any other agreement.

          (h) Amendments to Equity Definitions and the Agreement. The following amendments shall be made to the Equity Definitions and to the Agreement:

          (i) The first sentence of Section 11.2(c) of the Equity Definitions, prior to clause (A) thereof, is hereby amended to read as follows: ‘(c) If “Calculation Agent Adjustment” is specified as the Method of Adjustment in the related Confirmation of a Share Option Transaction, then following the announcement or occurrence of any Potential Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment Event has a material effect on the theoretical value of the relevant Shares or options on the Shares and, if so, will (i) make appropriate adjustment(s), if any, to any one or more of:’ and, the portion of such sentence immediately preceding clause (ii) thereof is hereby amended by deleting the words “diluting or concentrative” and the words “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing such latter phrase with the words “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)”;

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          (ii) Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “diluting or concentrative” and replacing them with “material”;

          (iii) Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that Issuer.”.

          (iv) Section 12.9(b)(v) of the Equity Definitions is hereby amended by:

                    (A) adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and

                    (B) (1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C) and (3) deleting the final two sentences in its entirety and replacing it with the sentence “The Hedging Party will determine (in a manner consistent, for such purposes, with Section 3 hereunder governing the conduct of the Calculation Agent) the Cancellation Amount payable by one party to the other.”

          (i) Transfer and Assignment. Dealer may transfer or assign its rights and obligations under the Transaction with the prior written consent of the Issuer, such consent not to be unreasonably withheld. Notwithstanding the foregoing, Dealer may transfer or assign its rights and obligations hereunder and under the Agreement, in whole or in part, without the consent of the Issuer to (i) any of its affiliates or (ii) any entities sponsored or organized by, or on behalf of or for the benefit of Dealer.

          (j) Disclosure. Effective from the date of commencement of discussions concerning the Transaction, Issuer and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Issuer relating to such tax treatment and tax structure.

          (k) Designation by Dealer. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Issuer, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such shares or other securities and otherwise to perform Dealer obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Issuer to the extent of any such performance.

          (l) Additional Termination Events. The occurrence of any of the following shall constitute an Additional Termination Event with respect to which the Transaction shall be the sole Affected Transaction and Issuer shall be the sole Affected Party; provided that with respect to any Additional Termination Event, Dealer may choose to treat part of the Transaction as the sole Affected Transaction, and, upon the termination of the Affected Transaction, a Transaction with terms identical to those set forth herein except with a Number of Warrants equal to the unaffected number of Warrants shall be treated for all purposes as the Transaction, which shall remain in full force and effect:

          (i) Dealer reasonably determines that it is advisable to terminate a portion of the Transaction so that Dealer’s related hedging activities will comply with applicable securities laws, rules or regulations;

          (ii) any Person (as defined below) acquires beneficial ownership (determined in accordance with Rule 13d-3 under the Exchange Act), directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of Shares entitling the Person to exercise 50% or more of the total voting power of all shares of Issuer’s capital stock entitled to vote generally in elections of directors, other than an acquisition by Issuer, any of Issuer’s subsidiaries or any of Issuer’s employee benefit plans;

          (iii) Issuer (x) merges or consolidates with or into any other Person, other than a subsidiary of Issuer, another Person merges with or into Issuer, or Issuer conveys, sells, transfers or leases all or substantially all of its assets to another Person or (y) engages in any recapitalization, reclassification or other transaction in which all or substantially all Shares are exchanged for or converted into cash, securities or other property, in each case, other than any merger or consolidation:

13

	(A)	that does not result in a reclassification, conversion, exchange or cancellation of the outstanding Shares;
	(B)	pursuant to which the consideration received by holders of Shares immediately prior to the transaction entitles such holders to exercise, directly or indirectly, 50% or more of the voting power of all shares of capital stock entitled to vote generally in the election of directors of either (x) the continuing or surviving corporation or (y) a corporation that directly or indirectly owns 100% of the capital stock of such continuing or surviving corporation, in either case, immediately after such transaction;
	(C)	which is effected solely to change Issuer’s jurisdiction of incorporation and results in a reclassification, conversion or exchange of the outstanding Shares solely into shares of common stock of the surviving entity; or
(iv) at any time Issuer’s Continuing Directors (as defined below) do not constitute a majority of Issuer’s board of directors (or, if applicable, a successor Person to Issuer);
(v) if less than 25% of the outstanding shares of common stock is beneficially owned by persons other than a Permitted Holder (as discussed below);
(vi) Issuer elects to redeem, in whole or in part, the senior notes issued by the Issuer pursuant to the terms of the Second Supplemental Indenture, dated as of December 18, 2007, at any time during the Issuer Redemption Period (as defined in the Second Supplemental Indenture); provided, however, that (i) redemption of senior notes by the Issuer shall not be treated as an Additional Termination Event with respect to the entire Transaction but only with respect to a number of Warrants that corresponds with the senior notes that are redeemed by the Issuer during the Issuer Redemption Period; and (ii) Warrants subject to early termination pursuant to this paragraph shall be terminated no sooner than 90 days following the related redemption of senior notes by the Issuer; or
(vii) an Additional Termination Event which arises as provided and subject to cessation as described in Section 8(e).

          Notwithstanding the foregoing, a transaction set forth in clause (ii), (iii) or (iv) above will not constitute an Additional Termination Event if at least 90% of the consideration paid for the Shares (excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights and cash dividends) in such merger or consolidation or such other transaction otherwise constituting an Additional Termination Event under clause (iii) above consists of shares of capital stock or American Depositary Receipts in respect of shares of capital stock traded on any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market (or any of their respective successors) (or will be so traded or quoted immediately following the completion of the merger or consolidation or such other transaction).

          “Person” includes any syndicate or group that would be deemed to be a “person” under Section 13(d)(3) of the Exchange Act.

          “Continuing Directors” means a directors who either were members of the Issuer’s board of directors on the date hereof or who become members of the Issuer’s board of directors subsequent to the date hereof and whose appointment, election or nomination for election by the Issuer’s shareholders is duly approved by a majority of the Continuing Directors on the Issuer’s board of directors at the time of such approval, either by specific vote or by approval of the proxy statement issued by the Issuer on behalf of the board of directors in which such individuals are named as nominees for director.

           “Permitted Holder” means (1) Tengelmann Warenhandelsgesellschaft, a partnership organized under the laws of Germany (“Tengelmann”), (2) each Affiliate of Tengelmann, (3) each partner of Tengelmann and the respective members of their immediate families and (4) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a majority or more controlling interest of which consist of any one or more of the Persons described in the preceding clauses (1), (2) and (3).

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          (m) Netting and Set-off.

          (i) If on any date cash would otherwise be payable or Shares or other property would otherwise be deliverable hereunder or pursuant to the Agreement or pursuant to any other agreement between the parties by Issuer to Dealer and cash would otherwise be payable or Shares or other property would otherwise be deliverable hereunder or pursuant to the Agreement or pursuant to any other agreement between the parties by Dealer to Issuer and the type of property required to be paid or delivered by each such party on such date is the same, then, on such date, each such party’s obligation to make such payment or delivery will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable or deliverable by one such party exceeds the aggregate amount that would otherwise have been payable or deliverable by the other such party, replaced by an obligation of the party by whom the larger aggregate amount would have been payable or deliverable to pay or deliver to the other party the excess of the larger aggregate amount over the smaller aggregate amount.

          (ii) In addition to and without limiting any rights of set-off that a party hereto may have as a matter of law, pursuant to contract or otherwise, upon the occurrence of an Early Termination Date, Dealer shall have the right to terminate, liquidate and otherwise close out the Transaction and to set off any obligation or right that Dealer or any affiliate of Dealer may have to or against Issuer hereunder or under the Agreement against any right or obligation Dealer or any of its affiliates may have against or to Issuer, including without limitation any right to receive a payment or delivery pursuant to any provision of the Agreement or hereunder. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of the same type, such obligation and right shall be set off in kind. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of any other type, the value of each of such obligation and such right shall be determined by the Calculation Agent and the result of such set-off shall be that the net obligor shall pay or deliver to the other party an amount of cash or assets, at the net obligor’s option, with a value (determined, in the case of a delivery of assets, by the Calculation Agent) equal to that of the net obligation. In determining the value of any obligation to release or deliver Shares or any right to receive Shares, the value at any time of such obligation or right shall be determined by reference to the market value of the Shares at such time, as determined in good faith by the Calculation Agent. If an obligation or right is unascertained at the time of any such set-off, the Calculation Agent may in good faith estimate the amount or value of such obligation or right, in which case set-off will be effected in respect of that estimate, and the relevant party shall account to the other party at the time such obligation or right is ascertained.

          (iii) Issuer shall not net or set off its obligations, if any, under the Transaction against its rights against Dealer under any other transaction or instrument. Dealer shall not net or set off its obligations, if any, under the Transaction against its rights against Issuer under any other transaction or instrument.

          (n) Effectiveness. If, prior to the Effective Date, Dealer reasonably determines that it is advisable to cancel the Transaction because of concerns that Dealer’s related hedging activities could be viewed as not complying with applicable securities laws, rules or regulations, the Transaction shall be cancelled and shall not become effective, and neither party shall have any obligation to the other party in respect of the Transaction.

          (o) Waiver of Trial by Jury. EACH OF ISSUER AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF ISSUER OR DEALER OR THEIR RESPECTIVE AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

          (p) Governing Law. THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

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          Issuer hereby agrees (a) to check this Confirmation carefully and promptly upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Issuer with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and promptly returning an executed copy to us at facsimile number 646-885-9545 (United States of America), Attention: Documentation.

Yours faithfully,
LEHMAN BROTHERS OTC DERIVATIVES INC.
By:	/s Anatoly Kozlov
	Name: Anatoly Kozlov
	Authorized Signatory

Agreed and Accepted By:

THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.

By:	/s/ William Moss
	Name: William Moss
	Title: Vice President and Treasurer

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Annex A

For each Component of the Transaction, the Number of Warrants and Expiration Date is set forth below.

Component Number	Number of Warrants	Expiration Date
1.	33,803.00	Mon-18-Mar-2013
2.	33,803.00	Tue-19-Mar-2013
3.	33,803.00	Wed-20-Mar-2013
4.	33,803.00	Thu-21-Mar-2013
5.	33,803.00	Fri-22-Mar-2013
6.	33,803.00	Mon-25-Mar-2013
7.	33,803.00	Tue-26-Mar-2013
8.	33,803.00	Wed-27-Mar-2013
9.	33,803.00	Thu-28-Mar-2013
10.	33,803.00	Mon-1-Apr-2013
11.	33,803.00	Tue-2-Apr-2013
12.	33,803.00	Wed-3-Apr-2013
13.	33,803.00	Thu-4-Apr-2013
14.	33,803.00	Fri-5-Apr-2013
15.	33,803.00	Mon-8-Apr-2013
16	33,803.00	Tue-9-Apr-2013
17.	33,803.00	Wed-10-Apr-2013
18.	33,803.00	Thu-11-Apr-2013
19.	33,803.00	Fri-12-Apr-2013
20.	33,803.00	Mon-15-Apr-2013
21.	33,803.00	Tue-16-Apr-2013
22.	33,803.00	Wed-17-Apr-2013
23.	33,803.00	Thu-18-Apr-2013
24.	33,803.00	Fri-19-Apr-2013
25.	33,803.00	Mon-22-Apr-2013
26.	33,803.00	Tue-23-Apr-2013
27.	33,803.00	Wed-24-Apr-2013
28.	33,803.00	Thu-25-Apr-2013
29.	33,803.00	Fri-26-Apr-2013
30.	33,803.00	Mon-29-Apr-2013
31.	33,803.00	Tue-30-Apr-2013
32.	33,803.00	Wed-1-May-2013
33.	33,803.00	Thu-2-May-2013
34.	33,803.00	Fri-3-May-2013
35.	33,803.00	Mon-6-May-2013
36.	33,803.00	Tue-7-May-2013
37.	33,803.00	Wed-8-May-2013
38.	33,803.00	Thu-9-May-2013
39.	33,803.00	Fri-10-May-2013
40.	33,803.00	Mon-13-May-2013
41.	33,803.00	Tue-14-May-2013
42.	33,803.00	Wed-15-May-2013
43.	33,803.00	Thu-16-May-2013
44.	33,803.00	Fri-17-May-2013
45.	33,803.00	Mon-20-May-2013
46.	33,803.00	Tue-21-May-2013
47.	33,803.00	Wed-22-May-2013
48.	33,803.00	Thu-23-May-2013
49.	33,803.00	Fri-24-May-2013
50.	33,803.00	Tue-28-May-2013
51.	33,803.00	Wed-29-May-2013

17

52.	33,803.00	Thu-30-May-2013
53.	33,803.00	Fri-31-May-2013
54.	33,803.00	Mon-3-Jun-2013
55.	33,803.00	Tue-4-Jun-2013
56.	33,803.00	Wed-5-Jun-2013
57.	33,803.00	Thu-6-Jun-2013
58.	33,803.00	Fri-7-Jun-2013
59.	33,803.00	Mon-10-Jun-2013
60.	33,803.00	Tue-11-Jun-2013
61.	33,803.00	Wed-12-Jun-2013
62.	33,803.00	Thu-13-Jun-2013
63.	33,803.00	Fri-14-Jun-2013
64.	33,803.00	Mon-17-Jun-2013
65.	33,803.00	Tue-18-Jun-2013
66.	33,803.00	Wed-19-Jun-2013
67.	33,803.00	Thu-20-Jun-2013
68.	33,803.00	Fri-21-Jun-2013
69.	33,803.00	Mon-24-Jun-2013
70.	33,803.00	Tue-25-Jun-2013
71.	33,803.00	Wed-26-Jun-2013
72.	33,803.00	Thu-27-Jun-2013
73.	33,803.00	Fri-28-Jun-2013
74.	33,803.00	Mon-1-Jul-2013
75.	33,803.00	Tue-2-Jul-2013
76.	33,803.00	Wed-3-Jul-2013
77.	33,803.00	Fri-5-Jul-2013
78.	33,803.00	Mon-8-Jul-2013
79.	33,803.00	Tue-9-Jul-2013
80.	33,803.00	Wed-10-Jul-2013
81.	33,803.00	Thu-11-Jul-2013
82.	33,803.00	Fri-12-Jul-2013
83.	33,803.00	Mon-15-Jul-2013
84.	33,803.00	Tue-16-Jul-2013
85.	33,803.00	Wed-17-Jul-2013
86.	33,803.00	Thu-18-Jul-2013
87.	33,803.00	Fri-19-Jul-2013
88.	33,803.00	Mon-22-Jul-2013
89.	33,803.00	Tue-23-Jul-2013
90.	33,858.00	Wed-24-Jul-2013

18

EX-10.5

Exhibit 10.5

	December 12, 2007
To:	The Great Atlantic and Pacific Tea Company, Inc.
	2 Paragon Drive
	Montvale, NJ 07645
	Attn: Brenda Galgano, Senior Vice President and Chief Financial Officer
	Telephone:	201-573-4363
	Facsimile:	201-937-8715
From:	Bank of America, N.A.
	c/o Banc of America Securities LLC
	9 West 57th Street
	New York, NY 10019
	Attn:	John Servidio
	Telephone:	212-847-6527
	Facsimile:	212-230-8610
Re:	Convertible Bond Hedge Transaction (2011)
	(Transaction Reference Number: NY-32864)

Ladies and Gentlemen:

          The purpose of this communication (this “Confirmation”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “Transaction”) between Bank of America, N.A. (“Dealer”) and The Great Atlantic and Pacific Tea Company, Inc. (“Counterparty”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.

          1. This Confirmation is subject to, and incorporates, the definitions and provisions of the 2000 ISDA Definitions (including the Annex thereto) (the “2000 Definitions”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and together with the 2000 Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc. (“ISDA”). In the event of any inconsistency between the 2000 Definitions and the Equity Definitions, the Equity Definitions will govern. Certain defined terms used herein have the meanings assigned to them in the Indenture to be dated as of December 18, 2007 between Counterparty and Wilmington Trust Company, as trustee and the first supplemental indenture to such indenture to be date as of December 18, 2007 (such indenture, together with such supplemental indenture, the “Supplemental Indenture”) relating to the USD 150 million principal amount of 5.125% convertible senior notes due 2011 (the “Convertible Securities”). In the event of any inconsistency between the terms defined in the Supplemental Indenture and this Confirmation, this Confirmation shall govern. For the avoidance of doubt, references herein to sections of the Supplemental Indenture are based on the draft of the Supplemental Indenture most recently reviewed by the parties at the time of execution of this Confirmation. If any relevant sections of the Supplemental Indenture are changed, added or renumbered following execution of this Confirmation but prior to the execution of the Supplemental Indenture, the parties will amend this Confirmation in good faith to preserve the economic intent of the parties. The parties further acknowledge that references to the Supplemental Indenture herein are references to the Supplemental Indenture as in effect on the date of its execution and if the Supplemental Indenture is amended following its execution any such amendment will be disregarded for purposes of this Confirmation unless the parties agree otherwise in writing.

          This Confirmation evidences a complete and binding agreement and supersedes any prior agreements, written or oral, between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the 2002 ISDA Master Agreement (the “ISDA Master Agreement”) as if Dealer and Counterparty had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.

          All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the

Definitions or the Agreement, this Confirmation shall govern.

          2. The Transaction constitutes a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:

General Terms:

Trade Date:	December 12, 2007
Effective Date:	The closing date of the offering of the Convertible Securities.
Option Type:	Call
Seller:	Dealer
Buyer:	Counterparty
Shares:	The Common Stock of Counterparty, par value USD 1.00 per share (Ticker Symbol: “GAP”).
Number of Options:	The number of Convertible Securities in denominations of USD 1,000 principal amount issued by Counterparty on the closing date for the initial issuance of the Convertible Securities; provided that the Number of Options shall be automatically increased as of the date of exercise by Banc of America Securities LLC, and Lehman Brothers Inc., as Representatives of the Underwriters (as defined in the Underwriting Agreement), of their option pursuant to Section 2(b) of the Underwriting Agreement dated as of December 12, 2007, between the Counterparty and Banc of America Securities LLC, Lehman Brothers Inc. and Friedman, Billings, Ramsay & Co., as a “qualified independent underwriter”, (the “Underwriting Agreement”), by the number of Convertible Securities in denominations of USD 1,000 principal amount issued pursuant to such exercise (such Convertible Securities, the “Additional Convertible Securities”).
Applicable Percentage:	50%
Number of Shares:	As of any date, the product of the Number of Options and the Option Entitlement.
Option Entitlement:	As of any date, a number equal to the product of the Conversion Rate as of such date and the Applicable Percentage.
Strike Price:	USD 36.40
Conversion Rate:	As of any date, the Conversion Rate, as defined in the Supplemental Indenture, but without regard to any adjustments to the Conversion Rate pursuant to the Conversion Rate Adjustment Sections (as defined in the Supplemental Indenture) (except as set forth under the “Delivery Obligation”).
Premium:	USD 12,000,000 (Premium per Option USD 5.824); provided that if the Number of Options is increased pursuant to the proviso to the definition of “Number of Options” above, an additional Premium equal to the product of the number of Options by which the Number of Options is so increased and the Premium per Option shall be paid on the Additional Premium Payment Date.
Premium Payment Date:	The Effective Date

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	Additional Premium Payment Date:	The closing date for the purchase and sale of the Additional Convertible Securities.
	Exchange:	New York Stock Exchange
	Related Exchange:	All Exchanges
Procedures for Exercise:
	Potential Exercise Dates:	Each Conversion Date.
	Conversion Date:	Each “Conversion Date” as defined in the Supplemental Indenture.
	Required Exercise on Conversion Dates:	On each Conversion Date, a number of Options equal to the number of Convertible Securities in denominations of USD 1,000 principal amount submitted for conversion on such Conversion Date in accordance with the terms of the Supplemental Indenture shall be automatically exercised, subject to “Notice of Exercise” below.
	Expiration Date:	June 15, 2011
	Automatic Exercise:	Not applicable (as provided above under “Required Exercise on Conversion Dates”).
	Notice of Exercise:	Notwithstanding anything to the contrary in the Equity Definitions, in order to exercise any Options, Counterparty must notify Dealer in writing before 5:00 p.m. (New York City time) on the Scheduled Valid Day prior to the scheduled first day of the applicable Settlement Averaging Period for the Options, which notice shall specify (i) the number of Options being exercised and the scheduled Settlement Date, (ii) the scheduled first day of the applicable Settlement Averaging Period, (iii) the applicable Settlement Method and (iv) the applicable Specified Cash Amount (as defined in the Supplemental Indenture); provided that in respect of Options relating to Convertible Securities with a Conversion Date occurring on or after the Final Conversion Period, such notice (except for notice of the Settlement Method, which shall be provided as specified above) may be given on or prior to the second Scheduled Valid Day immediately preceding the Expiration Date and need only specify the number of such Options and the applicable Specified Cash Amount.
	Final Conversion Period:	With respect to any Conversion Date occurring on or after the 32nd Scheduled Valid Day immediately preceding the Expiration Date, the 30 consecutive Valid Day period beginning on, and including, the 32nd Scheduled Valid Day immediately prior to the Expiration Date, subject to any extension due to a Market Disruption Event.
	Specified Cash Amount:	“Specified Cash Amount” (defined in the Supplemental Indenture) applicable to such conversion.
	Valuation Time:	At the close of trading of the regular trading session on the Exchange; provided that if the principal trading session is extended, the Calculation Agent shall determine the Valuation Time in its reasonable discretion.
	Market Disruption Event:	Section 6.3(a) of the Equity Definitions is hereby replaced in its entirety by the following:

3

		“‘Market Disruption Event’ means, in respect of a Share, (i) a failure by the primary United States national or regional securities exchange or market on which the Shares are listed or admitted to trading to open for trading during its regular trading session or (ii) the occurrence or existence prior to 1:00 p.m., New York City time, on any Valid Day for the Shares for an aggregate one half hour period of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Shares or in any options, contracts or future contracts relating to the Shares.”
Settlement Terms:
	Settlement Method:	Net Share Extended Settlement, Net Share Regular Settlement, Combination Settlement or Cash Settlement consistent with the settlement method elected by Counterparty for the corresponding Convertible Securities; provided that, if Counterparty does not provide a notice of Settlement Method to Dealer pursuant to Notice of Exercise above, Net Share Extended Settlement shall be deemed to apply to the relevant Options.
	Net Share Extended Settlement:	Net Share Extended Settlement shall apply if either (i) Counterparty has elected to deliver only Shares to satisfy the Conversion Obligation (as defined in the Supplemental Indenture) in connection with the conversion of the relevant Convertible Securities or (ii) Counterparty has elected to deliver a combination of Shares and cash to satisfy the Conversion Obligation in connection with the conversion of the relevant Convertible Securities and the Specified Cash Amount with respect to such conversion is less than $1,000.
	Net Share Regular Settlement:	Net Share Regular Settlement shall apply if (i) Counterparty has elected to deliver a combination of Shares and cash to satisfy the Conversion Obligation in connection with the conversion of the relevant Convertible Securities and (ii) the Specified Cash Amount with respect to such conversion is equal to $1,000.
	Combination Settlement:	Combination Settlement shall apply if (i) Counterparty has elected to deliver a combination of Shares and cash to satisfy the Conversion Obligation in connection with the conversion of the relevant Convertible Securities and (ii) the Specified Cash Amount with respect to such conversion is greater than $1,000.
	Cash Settlement:	Cash Settlement shall apply if Counterparty has elected to deliver only cash to satisfy the Conversion Obligation in connection with the conversion of the relevant Convertible Securities.
	Delivery Obligation:	Dealer will deliver to Counterparty, on the relevant Settlement Date,
		(a) if Net Share Extended Settlement applies, a number of Shares equal to the Net Shares (calculated based on a Settlement Averaging Period for a Net Share Extended Settlement) in respect

4

	of any Option exercised or deemed exercised hereunder. In no event will the Net Shares be less than zero.
	(b) if Net Share Regular Settlement applies, a number of Shares equal to the Net Shares (calculated based on a Settlement Averaging Period for a Net Share Regular Settlement) in respect of any Option exercised or deemed exercised hereunder. In no event will the Net Shares be less than zero.
	(c) if Combination Settlement applies, an amount of cash and a number of Shares, if any, equal to the Combination Amount.
	(d) if Cash Settlement applies, an amount of cash equal to the Conversion Value in excess of $1,000.
	If such exercise relates to the conversion of Convertible Securities in connection with which holders thereof are entitled to receive additional Shares and/or cash pursuant to the adjustments to the Conversion Rate pursuant to Section 5.20 of the Supplemental Indenture, then, notwithstanding the foregoing, the Delivery Obligation shall include such additional Shares and/or cash, except that the Delivery Obligation shall be capped so that the value of the Delivery Obligation per Option (with the value of any Shares included in the Delivery Obligation determined by the Calculation Agent using the VWAP Price on the last day of the relevant Settlement Averaging Period) does not exceed the amount as determined by the Calculation Agent that would be payable by Dealer pursuant to Section 6 of the Agreement if such Conversion Date were an Early Termination Date resulting from an Additional Termination Event with respect to which the Transaction (except that, for purposes of determining such amount (x) the Number of Options shall be deemed to be equal to the number of Options exercised on such Exercise Date and (y) such amount payable will be determined as if Section 5.20 of the Supplemental Indenture were deleted) was the sole Affected Transaction and Counterparty was the sole Affected Party (determined without regard to Section 8(b) of this Confirmation).
	Dealer will deliver cash in lieu of any fractional Shares to be delivered with respect to any Net Shares or Combination Amount valued at the VWAP Price for the last Valid Day of the relevant Settlement Averaging Period.
Net Shares:	In respect of any Option exercised or deemed exercised, a number of Shares equal to (i) the Option Entitlement on the Conversion Date multiplied by (ii) the sum of the quotients, for each Valid Day during the applicable Settlement Averaging Period for such Option, of (A) the VWAP Price on such Valid Day less the Strike Price, divided by (B) such VWAP Price, divided by (iii) the number of Valid Days in such Settlement Averaging Period; provided, however, that if the calculation contained in clause (A) above results in a negative number, such number shall be replaced with the number “zero”.

5

Valid Day:	A day on which (i) trading in the Shares generally occurs on the Exchange or, if the Shares are not then listed on the Exchange, on the principal other U.S. national or regional securities exchange on which the Shares are then listed or, if the Shares are not then listed on a U.S. national or regional securities exchange, in the principal other market on which the Shares are then traded and (ii) there is no Market Disruption Event.
Scheduled Valid Day:	A day on which trading in the Shares is scheduled to occur on the principal U.S. national or regional securities exchange or market on which the Shares are listed or admitted for trading. If the Shares are not so listed or admitted for trading, “Scheduled Valid Day” means a “Business Day.”
VWAP Price:	On any Valid Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page GAP <equity> VAP (or any successor thereto) in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such Valid Day (or if such volume-weighted average price is unavailable, the market value of one Share on such Valid Day, as determined by the Calculation Agent using a volume-weighted method).
Settlement Averaging Period:	For any Option, (x) if Counterparty has, on or prior to the first Valid Day of the Final Conversion Period, delivered a Notice of Exercise to Dealer with respect to such Option with a Conversion Date occurring prior to the first Valid Day of the Final Conversion Period, (i) if Net Share Extended Settlement applies, the ninety (90) consecutive Valid Days commencing on and including the second Valid Day following such Conversion Date or (ii) if Net Share Regular Settlement, Combination Settlement or Cash Settlement applies, the thirty (30) consecutive Valid Days commencing on and including the second Valid Day following such Conversion Date, or
	(y) if Counterparty has, on or following the first Valid Day of the Final Conversion Period, delivered a Notice of Exercise to Dealer with respect to such Option with a Conversion Date occurring on or following the first Valid Day of the Final Conversion Period, (i) if Net Share Extended Settlement applies, the ninety (90) consecutive Valid Days commencing on, and including, the ninety second (92nd) Scheduled Valid Day immediately prior to the Expiration Date or (ii) if Net Share Regular Settlement, Combination Settlement or Cash Settlement applies, the thirty (30) consecutive Valid Days commencing on, and including, the thirty second (32nd) Scheduled Valid Day immediately prior to the Expiration Date.
Combination Amount:	In respect of any Option exercised or deemed exercised, (A) an amount of cash equal to the difference between (i) the lesser of (x) the Specified Cash Amount and (y) the Conversion Value and (ii) $1,000, and (B) to the extent the Conversion Value exceeds the Specified Cash Amount, a number of Shares equal to the sum of the Daily Share Amounts for each of the Valid Days during the applicable Settlement Averaging Period; provided, however, that if

6

		the calculation contained in clause (A) above results in a negative number, such number shall be replaced with the number “zero”.
	Daily Share Amount:	Means, for each Valid Day during the applicable Settlement Averaging Period, (A) the greater of (i) zero and (ii) the Option Entitlement on the Conversion Date minus the quotient of (x) the product of (1) the Applicable Percentage and (2) the Specified Cash Amount divided by (y) the VWAP Price on such Valid Day divided by (B) 30.
	Conversion Value:	Means the product of (i) the Option Entitlement on the Conversion Date and (ii) the average of the VWAP Prices on each of the Valid Days during the applicable Settlement Averaging Period.
	Settlement Date:	For any Option, the date Shares will be delivered with respect to the Convertible Securities related to such Options, under the terms of the Supplemental Indenture; provided that if Net Share Extended Settlement applies, the Settlement Date shall be the date Shares and/or cash would have been required to be delivered if Combination Settlement or Cash Settlement applied to the settlement of such Relevant Convertible Securities.
	Other Applicable Provisions:	To the extent Dealer is obligated to deliver Shares hereunder, the provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
	Restricted Certificated Shares:	Notwithstanding anything to the contrary in the Equity Definitions, Dealer may, in whole or in part, deliver Shares in certificated form representing the Number of Shares to be Delivered to Counterparty in lieu of delivery through the Clearance System. With respect to such certificated Shares, the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by deleting the remainder of the provision after the word “encumbrance” in the fourth line thereof.
Share Adjustments:
	Method of Adjustment:	Notwithstanding Section 11.2 of the Equity Definitions, upon the occurrence of any event or condition set forth in the Dilution Adjustment Sections (as defined in the Supplemental Indenture), the Calculation Agent shall make a corresponding adjustment, if necessary, to the terms relevant to the exercise, settlement or payment of the Transaction, subject to the definition of Conversion Rate. Promptly (but in no event later than the close of business on the following New York Business Day) upon the occurrence of any “Adjustment Event” (as defined in the Supplemental Indenture) Counterparty shall notify the Calculation Agent of such Adjustment Event; and once the adjustments to be made to the terms of the Supplemental Indenture and the Convertible Securities in respect of such Adjustment Event have been determined, Counterparty shall promptly (but in no event later than the close of

7

		business on the following New York Business Day) notify the Calculation Agent in writing of the details of such adjustment necessary to make such corresponding adjustment hereunder.
Extraordinary Events:
	Merger Events:	Notwithstanding Section 12.1(b) of the Equity Definitions, a “Merger Event” means the occurrence of any event or condition set forth in the Consequences of Merger Section (as defined in the Supplemental Indenture).
	Tender Offer:	Applicable. Notwithstanding Section 12.1(d) of the Equity Definitions, a “Tender Offer” means the occurrence of any event or condition set forth in the Consequences of Tender Offer Section (as defined in the Supplemental Indenture).
	Consequences of Merger Events and Tender Offers:	Notwithstanding Sections 12.2 and 12.3 of the Equity Definitions, upon the occurrence of a Merger Event or Tender Offer, the Calculation Agent shall make the corresponding adjustment in respect of any adjustment under the Supplemental Indenture to any one or more of the nature of the Shares, the Number of Options, the Option Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction; provided that such adjustment shall be made without regard to any adjustment to the Conversion Rate pursuant to the Conversion Rate Adjustment Sections and the election, if any, by Counterparty to adjust the Conversion Rate; and provided further that the Calculation Agent may limit or alter any such adjustment referenced in this paragraph so that the fair value of the Transaction to Dealer is not reduced as a result of such adjustment.
	Notice of Merger Consideration:	Upon the occurrence of a Merger Event that causes the Shares to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), Counterparty shall reasonably promptly (but, in any event prior to the Merger Date) notify the Calculation Agent of (i) the weighted average of the types and amounts of consideration received by the holders of Shares entitled to receive cash, securities or other property or assets with respect to or in exchange for such Shares in any Merger Event who affirmatively make such an election and (ii) the details of the adjustment made under the Supplemental Indenture in respect of such Merger Event.
	Nationalization, Insolvency or Delisting:	Cancellation and Payment (Calculation Agent Determination); provided that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it will also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the American Stock Exchange the NASDAQ Global Select Market or the NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
	Additional Disruption Events:
	(a) Change in Law:	Applicable

8

(b) Failure to Deliver:			Applicable
(c) Insolvency Filing:			Applicable
(d) Hedging Disruption:			Applicable
(e) Increased Cost of Hedging:			Applicable
Hedging Party:			For all applicable Additional Disruption Events, Dealer
Determining Party:			For all applicable Extraordinary Events, Dealer
Non-Reliance:			Applicable
Agreements and Acknowledgments Regarding Hedging Activities:			Applicable
Additional Acknowledgments:			Applicable
3. Calculation Agent:			Dealer, which shall at all times act in good faith and in a commercially reasonable manner. In addition, Dealer shall use commercially reasonable efforts under the circumstances to consult with Counterparty on decisions it makes in its capacity as Calculation Agent; provided that Dealer shall not be required to take into account or be bound by any considerations raised by Counterparty.
4. Account Details:
Dealer Payment Instructions:			Bank of America New York, NY SWIFT: BOFAUS65
			Bank Routing: 026- 009- 593
			Account Name: Bank of America
			Account No. : 0012333- 34172
Counterparty Payment Instructions:			To be provided by Counterparty.
5. Offices:
The Office of Dealer for the Transaction is: New York
	Bank of America, N.A.
	c/o Banc of America Securities LLC
	9 West 57th Street, 40th Floor
	New York, NY 10019
	Attention:	John Servidio
	Telephone:	212-847-6527
	Facsimile:	212-230-8610
The Office of Counterparty for the Transaction is: Not applicable
6. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Counterparty:
	To:	The Great Atlantic & Pacific Tea Company
		2 Paragon Drive
		Montvale, New Jersey 07645
	Attn:	Brenda Galgano, Senior Vice President & Chief Financial Officer
	Telephone:	201-571-4363
	Facsimile:	201-571-8715

9

(b) Address for notices or communications to Dealer:
	To:	Bank of America, N.A.
		c/o Banc of America Securities LLC
		9 West 57th Street, 40th Floor
		New York, NY 10019
	Attn:	John Servidio
	Telephone:	212-847-6527
	Facsimile:	212-230-8610

          7. Representations, Warranties and Agreements:

          (a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Counterparty represents and warrants to and for the benefit of, and agrees with, Dealer as follows:

          (i) On the Trade Date, (A) none of Counterparty and its officers and directors is aware of any material nonpublic information regarding Counterparty or the Shares and (B) all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of 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.

          (ii) (A) On the Trade Date, the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“Regulation M”) and (B) Counterparty shall not engage in any “distribution,” as such term is defined in Regulation M, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day immediately following the Trade Date.

          (iii) On the Trade Date, neither Counterparty nor any “affiliate” or “affiliated purchaser” (each as defined in Rule 10b-18 of the Exchange Act) shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except through Dealer.

          (iv) Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Dealer is not making any representations or warranties with respect to the treatment of the Transaction under FASB Statements 133, as amended, or 150, EITF Issue No. 00-19 (or any successor issue statements) or under FASB’s Liabilities & Equity Project.

          (v) Without limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.

          (vi) Prior to the Trade Date, Counterparty shall deliver to Dealer a resolution of Counterparty’s board of directors authorizing the Transaction and such other certificate or certificates as Dealer shall reasonably request.

          (vii) Counterparty is not entering into this Confirmation to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.

          (viii) Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

10

          (ix) On each of the Trade Date, the Premium Payment Date and the Additional Premium Payment Date, if any, Counterparty would be able to purchase the Shares hereunder in compliance with the laws of the jurisdiction of its incorporation.

          (x) The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Sections 1 and 3 of the Underwriting Agreement are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.

          (xi) Counterparty understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any affiliate of Dealer or any governmental agency.

          (b) Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended.

          (c) Each of Dealer and Counterparty acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) thereof. Accordingly, Counterparty represents and warrants to Dealer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof, and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.

          (d) Each of Dealer and Counterparty agrees and acknowledges that Dealer is a “financial institution,” “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of Title 11 of the United States Code (the “Bankruptcy Code”). The parties hereto further agree and acknowledge (A) that this Confirmation is (i) intended to be a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “settlement payment,” as such term is defined in Section 741(8) of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code, and (B) that Dealer is intended to be entitled to the protections afforded by, among other sections, Section 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code.

          (e) Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Trade Date and reasonably acceptable to Dealer in form and substance (subject to customary qualifications, assumptions and exceptions), with respect to the matters set forth in Section 3(a) of the Agreement.

          8. Other Provisions:

          (a) Additional Termination Events. The occurrence of (i) an event of default with respect to Counterparty under the terms of the Convertible Securities as set forth in the Default Events (as defined in the Supplemental Indenture), (ii) an Amendment Event, or (iii) a Repayment Event and shall be an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction and Counterparty is the sole Affected Party and Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(a) of the Agreement; provided that in the case of a Repayment Event the Transaction shall be subject to termination only in respect of the number of Convertible Securities that cease to be outstanding in connection with or as a result of such Repayment Event.

          “Amendment Event” means that Counterparty amends, modifies, supplements or waives any term of the Supplemental Indenture or the Convertible Securities governing the principal amount, coupon, maturity, repurchase obligation of Counterparty, redemption right of Counterparty, any term relating to conversion of the Convertible Securities (including changes to the conversion price, conversion settlement dates or conversion conditions), or any term that would require consent of the holders of not less than 100% of the principal amount of the Convertible Securities to amend.

          “Repayment Event” means that (A) any Convertible Securities are repurchased (whether in connection with or as a result of a change of control, howsoever defined, or for any other reason) by Counterparty or any of its subsidiaries, (B) any Convertible Securities are delivered to Counterparty in exchange for delivery of any property or assets of Counterparty or any of its subsidiaries (howsoever described), (C) any principal of any of the Convertible Securities is repaid prior to the final maturity date of the Convertible Securities (whether following acceleration of the Convertible Securities or otherwise), or (D) any

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Convertible Securities are exchanged by or for the benefit of the holders thereof for any other securities of Counterparty or any of its affiliates (or any other property, or any combination thereof) pursuant to any exchange offer or similar transaction; provided that, in the case of clause (B) and clause (D), conversions of the Convertible Securities pursuant to the terms of the Supplemental Indenture as in effect on the date hereof shall not be Repayment Events.

          (b) Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events. If, subject to Section 8(k) below, Dealer shall owe Counterparty any amount pursuant to Section 12.2 or 12.3 of the Equity Definitions and “Consequences of Merger Events and Tender Offers” above, or Sections 12.6, 12.7 or 12.9 of the Equity Definitions (except in the event of an Insolvency, a Nationalization, a Tender Offer or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (except in the event of an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party, that resulted from an event or events within Counterparty’s control) (a “Payment Obligation”), Counterparty shall have the right, in its sole discretion, to require Dealer to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, between the hours of 9:00 A.M. and 4:00 P.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date or Early Termination Date, as applicable (“Notice of Share Termination”). Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the Merger Date, the Tender Offer Date, Announcement Date or Early Termination Date, as applicable:

Share Termination Alternative:	Applicable and means that Dealer shall deliver to Counterparty the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, in satisfaction of the Payment Obligation.
Share Termination Delivery
Property:	A number of Share Termination Delivery Units, as calculated by the Calculation Agent in good faith, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
Share Termination Unit Price:	The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer at the time of notification of the Payment Obligation.
Share Termination Delivery Unit:	In the case of a Termination Event, Event of Default or Delisting, one Share or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization, Merger Event or Tender Offer. If such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
Failure to Deliver:	Applicable
Other applicable provisions:	If Share Termination Alternative is applicable, the provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical

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Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units.”

          (c) Disposition of Hedge Shares. Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, any Shares (the “Hedge Shares”) acquired by Dealer for the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall, at its election: (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement, in form and substance commercially reasonably satisfactory to Dealer and Counterparty, substantially in the form of an underwriting agreement for a registered offering, (B) provide accountant’s “comfort” letters in customary form for registered offerings of equity securities, (C) provide disclosure opinions of nationally recognized outside counsel to Counterparty reasonably acceptable to Dealer, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities and (E) afford Dealer a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities; provided, however, that if Dealer, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this Section 8(c) shall apply at the election of Counterparty; (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance commercially reasonably satisfactory to Dealer and Counterparty, including customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Hedge Shares from Dealer), opinions and certificates and such other documentation as is customary for private placements agreements, all reasonably acceptable to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its reasonable judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from Dealer at the VWAP Price on such Exchange Business Days, and in the amounts, requested by Dealer. For the avoidance of doubt, unless Counterparty elects to purchase Hedge Shares from Dealer pursuant to clause (iii) above, under no circumstances shall Counterparty be required to pay cash to purchase Hedge Shares from Dealer.

          (d) Amendment to Equity Definitions. The following amendment shall be made to the Equity Definitions:

          Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that Issuer.”

          Section 12.9(b)(i) of the Equity Definitions is hereby amended by (1) replacing “either party may elect” with “Dealer may elect” and (2) replacing “notice to the other party” with “notice to the Counterparty” in the first sentence of such section.

          (e) Repurchase Notices. Counterparty shall, on any day on which Counterparty effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “Repurchase Notice”) on such day if, following such repurchase, the Notice Percentage as determined on such day is (i) greater than 6% and (ii) greater by 0.5% than the Notice Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater than the Notice Percentage as of the date hereof). The “Notice Percentage” as of any day is the fraction, expressed as a percentage, the numerator of which is the Number of Shares and the denominator of which is the number of Shares outstanding on such day. In the event that Counterparty fails to provide Dealer with a Repurchase Notice when and in the manner specified in this Section 8(e) then Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective directors, officers, employees, agents and controlling persons (Dealer and each such person being an “Indemnified Party”) from and against any and all losses, claims, damages and liabilities (or actions in respect thereof), joint or several, to which such Indemnified Party may become subject under applicable securities laws, including without limitation, Section 16 of the Exchange Act, solely relating to or arising out of such failure. If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability. In addition, Counterparty will reimburse any Indemnified Party for all reasonable expenses (including reasonable counsel fees and expenses) as they

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are incurred (after notice to Counterparty) in connection with the investigation of, preparation for or defense or settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on behalf of Counterparty. This indemnity shall survive the completion of the Transaction contemplated by this Confirmation and any assignment and delegation of the Transaction made pursuant to this Confirmation or the Agreement shall inure to the benefit of any permitted assignee of Dealer.

          (f) Transfer and Assignment. Either party may transfer any of its rights or obligations under the Transaction with the prior written consent of the non-transferring party, such consent not to be unreasonably withheld. In addition, Dealer may transfer or assign without any consent of the Counterparty its rights and obligations hereunder and under the Agreement, in whole or in part, to (i) any of its affiliates (ii) any entities sponsored or organized by, or on behalf of or for the benefit of Dealer or (iii) any person of credit quality equivalent to Dealer; provided further that at any time at which the Equity Percentage exceeds 8.5% (an “Excess Ownership Position”) or a Hedging Disruption has occurred and is continuing, if Dealer, in its commercially reasonable discretion, is unable to effect a transfer or assignment to a third party in accordance with the requirements set forth above after using its commercially reasonable efforts on pricing terms commercially reasonably acceptable to Dealer such that an Excess Ownership Position or a Hedging Disruption, as the case may be, no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “Terminated Portion”) of the Transaction, such that such Excess Ownership Position or Hedging Disruption, as the case may be, no longer exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Counterparty shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction. The “Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer, for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act (collectively, “Dealer Group”), beneficially own (within the meaning of Section 13 of the Exchange Act) on such day and (B) the denominator of which is the number of Shares outstanding on such day.

          (g) Staggered Settlement. Dealer may, by notice to Counterparty prior to any Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares on two or more dates (each, a “Staggered Settlement Date”) or at two or more times on the Nominal Settlement Date as follows:

          (i) in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to such Nominal Settlement Date, but not prior to the beginning of the related Conversion Reference Period (as defined in the Supplemental Indenture) or delivery times and how it will allocate the Shares it is required to deliver under “Delivery Obligation” (above) among the Staggered Settlement Dates or delivery times; and

          (ii) the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement Date.

          (h) Right to Extend. Dealer may postpone any Potential Exercise Date or any other date of valuation or delivery by Dealer, with respect to some or all of the relevant Options (in which event the Calculation Agent shall make appropriate adjustments to the Delivery Obligation), if Dealer determines, in its commercially reasonable discretion, that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions or (ii) to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer.

          (i) Disclosure. Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure.

          (j) Designation by Dealer. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty,

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Dealer may designate any of its affiliates to purchase, sell, receive or deliver such shares or other securities and otherwise to perform Dealer obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance.

          (k) Netting and Set-off.

          (i) If on any date cash would otherwise be payable or Shares or other property would otherwise be deliverable hereunder or pursuant to the Agreement or pursuant to any other agreement between the parties by Counterparty to Dealer and cash would otherwise be payable or Shares or other property would otherwise be deliverable hereunder or pursuant to the Agreement or pursuant to any other agreement between the parties by Dealer to Counterparty and the type of property required to be paid or delivered by each such party on such date is the same, then, on such date, each such party’s obligation to make such payment or delivery will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable or deliverable by one such party exceeds the aggregate amount that would otherwise have been payable or deliverable by the other such party, replaced by an obligation of the party by whom the larger aggregate amount would have been payable or deliverable to pay or deliver to the other party the excess of the larger aggregate amount over the smaller aggregate amount.

          (ii) In addition to and without limiting any rights of set-off that a party hereto may have as a matter of law, pursuant to contract or otherwise, upon the occurrence of an Early Termination Date, Dealer shall have the right to terminate, liquidate and otherwise close out the Transaction and to set off any obligation or right that Dealer or any affiliate of Dealer may have to or against Counterparty hereunder or under the Agreement against any right or obligation Dealer or any of its affiliates may have against or to Counterparty, including without limitation any right to receive a payment or delivery pursuant to any provision of the Agreement or hereunder. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of the same type, such obligation and right shall be set off in kind. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of any other type, the value of each of such obligation and such right shall be determined by the Calculation Agent and the result of such set-off shall be that the net obligor shall pay or deliver to the other party an amount of cash or assets, at the net obligor’s option, with a value (determined, in the case of a delivery of assets, by the Calculation Agent) equal to that of the net obligation. In determining the value of any obligation to release or deliver Shares or any right to receive Shares, the value at any time of such obligation or right shall be determined by reference to the market value of the Shares at such time, as determined in good faith by the Calculation Agent. If an obligation or right is unascertained at the time of any such set-off, the Calculation Agent may in good faith estimate the amount or value of such obligation or right, in which case set-off will be effected in respect of that estimate, and the relevant party shall account to the other party at the time such obligation or right is ascertained.

          (iii) Counterparty shall not net or set off its obligations, if any, under the Transaction against its rights against Dealer under any other transaction or instrument.

          Dealer shall not net or set off its obligations, if any, under the Transaction against its rights against Counterparty under any other transaction or instrument.

          (l) Equity Rights. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Counterparty’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Counterparty’s bankruptcy to any claim arising as a result of a breach by Counterparty of any of its obligations under this Confirmation or the Agreement.

          (m) Early Unwind. In the event the sale by Counterparty of the Convertible Securities is not consummated with the underwriters pursuant to the Underwriting Agreement for any reason by the close of business in New York on December 18, 2007 (or such later date as agreed upon by the parties, which in no event shall be later than December 28, 2007) (December 18, 2007 or such later date being the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”) on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Counterparty thereunder shall be cancelled and terminated and (ii) Counterparty shall pay to Dealer an amount in cash equal to the aggregate amount of the reasonable costs and expenses relating to the unwinding of Dealer’s hedging activities in respect of the Transaction (including market losses incurred in reselling any Shares purchased by Dealer or its affiliates in connection with such hedging activities). Following such termination, cancellation and payment, each party shall be released and discharged by the other party from and agrees not to make

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any claim against the other party with respect to any obligations or liabilities of either party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Dealer and Counterparty represent and acknowledge to the other that upon an Early Unwind and following the payment referred to above, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

          (n) Waiver of Trial by Jury. EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF COUNTERPARTY OR DEALER OR THEIR RESPECTIVE AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

          (o) Governing Law. THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

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          Counterparty hereby agrees (a) to check this Confirmation carefully and promptly upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Counterparty with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and promptly returning an executed copy to John Servidio, Facsimile No. 212-230-8610.

	Yours faithfully,
	BANK OF AMERICA, N.A.
	By:	/s/ Michael Voris
		Name: Michael Voris
		Authorized Signatory
Agreed and Accepted By:
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.

By:	/s/ William Moss
	Name: William Moss
	Title: Vice President and Treasurer

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EX-10.6

Exhibit 10.6

	December 12, 2007
To:	The Great Atlantic and Pacific Tea Company, Inc.
	2 Paragon Drive
	Montvale, NJ 07645
	Attn: Brenda Galgano, Senior Vice President and Chief Financial Officer
	Telephone: 201-573-4363
	Facsimile:   201-937-8715
From:	Bank of America, N.A.
	c/o Banc of America Securities LLC
	9 West 57th Street
	New York, NY 10019
	Attn:	John Servidio
	Telephone:	212-847-6527
	Facsimile:	212-230-8610
Re:	Convertible Bond Hedge Transaction (2012)
	(Transaction Reference Number: NY-32867)

Ladies and Gentlemen:

          The purpose of this communication (this “Confirmation”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “Transaction”) between Bank of America, N.A. (“Dealer”) and The Great Atlantic and Pacific Tea Company, Inc. (“Counterparty”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.

          1. This Confirmation is subject to, and incorporates, the definitions and provisions of the 2000 ISDA Definitions (including the Annex thereto) (the “2000 Definitions”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and together with the 2000 Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc. (“ISDA”). In the event of any inconsistency between the 2000 Definitions and the Equity Definitions, the Equity Definitions will govern. Certain defined terms used herein have the meanings assigned to them in the Indenture to be dated as of December 18, 2007 between Counterparty and Wilmington Trust Company, as trustee and the second supplemental indenture to such indenture to be dated as of December 18, 2007 (such indenture, together with such supplemental indenture, the “Supplemental Indenture”) relating to the USD 230 million principal amount of 6.75% convertible senior notes due 2012 (the “Convertible Securities”). In the event of any inconsistency between the terms defined in the Supplemental Indenture and this Confirmation, this Confirmation shall govern. For the avoidance of doubt, references herein to sections of the Supplemental Indenture are based on the draft of the Supplemental Indenture most recently reviewed by the parties at the time of execution of this Confirmation. If any relevant sections of the Supplemental Indenture are changed, added or renumbered following execution of this Confirmation but prior to the execution of the Supplemental Indenture, the parties will amend this Confirmation in good faith to preserve the economic intent of the parties. The parties further acknowledge that references to the Supplemental Indenture herein are references to the Supplemental Indenture as in effect on the date of its execution and, if the Supplemental Indenture is amended following its execution, any such amendment will be disregarded for purposes of this Confirmation unless the parties agree otherwise in writing.

          This Confirmation evidences a complete and binding agreement and supersedes any prior agreements, written or oral, between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the 2002 ISDA Master Agreement (the “ISDA Master Agreement”) as if Dealer and Counterparty had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.

          All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the

Definitions or the Agreement, this Confirmation shall govern.

          2. The Transaction constitutes a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:

General Terms:
	Trade Date:	December 12, 2007
	Effective Date:	The closing date of the offering of the Convertible Securities.
	Option Type:	Call
	Seller:	Dealer
	Buyer:	Counterparty
	Shares:	The Common Stock of Counterparty, par value USD 1.00 per share (Ticker Symbol: “GAP”).
	Number of Options:	The number of Convertible Securities in denominations of USD 1,000 principal amount issued by Counterparty on the closing date for the initial issuance of the Convertible Securities; provided that the Number of Options shall be automatically increased as of the date of exercise by Banc of America Securities LLC, and Lehman Brothers Inc., as Representatives of the Underwriters (as defined in the Underwriting Agreement), of their option pursuant to Section 2(b) of the Underwriting Agreement dated as of December 12, 2007, between the Counterparty and Banc of America Securities LLC, Lehman Brothers Inc. and Friedman, Billings, Ramsay & Co., as a “qualified independent underwriter,” (the “Underwriting Agreement”), by the number of Convertible Securities in denominations of USD 1,000 principal amount issued pursuant to such exercise (such Convertible Securities, the “Additional Convertible Securities”).
	Applicable Percentage:	50%
	Number of Shares:	As of any date, the product of the Number of Options and the Option Entitlement.
	Option Entitlement:	As of any date, a number equal to the product of the Conversion Rate as of such date and the Applicable Percentage.
	Strike Price:	USD 37.80
	Conversion Rate:	As of any date, the Conversion Rate, as defined in the Supplemental Indenture, but without regard to any adjustments to the Conversion Rate pursuant to the Conversion Rate Adjustment Sections (as defined in the Supplemental Indenture) (except as set forth under the “Delivery Obligation”).
	Premium:	USD 21,045,000.00 (Premium per Option USD 6.9174); provided that if the Number of Options is increased pursuant to the proviso to the definition of “Number of Options” above, an additional Premium equal to the product of the number of Options by which the Number of Options is so increased and the Premium per Option shall be paid on the Additional Premium Payment Date.
	Premium Payment Date:	The Effective Date

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	Additional Premium Payment Date:	The closing date for the purchase and sale of the Additional Convertible Securities.
	Exchange:	New York Stock Exchange
	Related Exchange:	All Exchanges
Procedures for Exercise:
	Potential Exercise Dates:	Each Conversion Date.
	Conversion Date:	Each “Conversion Date” as defined in the Supplemental Indenture.
	Required Exercise on Conversion Dates:	On each Conversion Date, a number of Options equal to the number of Convertible Securities in denominations of USD 1,000 principal amount submitted for conversion on such Conversion Date in accordance with the terms of the Supplemental Indenture shall be automatically exercised, subject to “Notice of Exercise” below.
	Expiration Date:	December 15, 2012
	Automatic Exercise:	Not applicable (as provided above under “Required Exercise on Conversion Dates”).
	Notice of Exercise:	Notwithstanding anything to the contrary in the Equity Definitions, in order to exercise any Options, Counterparty must notify Dealer in writing before 5:00 p.m. (New York City time) on the Scheduled Valid Day prior to the scheduled first day of the applicable Settlement Averaging Period for the Options, which notice shall specify (i) the number of Options being exercised and the scheduled Settlement Date, (ii) the scheduled first day of the applicable Settlement Averaging Period, (iii) the applicable Settlement Method and (iv) the applicable Specified Cash Amount (as defined in the Supplemental Indenture); provided that in respect of Options relating to Convertible Securities with a Conversion Date occurring on or after the Final Conversion Period, such notice (except for notice of the Settlement Method, which shall be provided as specified above) may be given on or prior to the second Scheduled Valid Day immediately preceding the Expiration Date and need only specify the number of such Options and the applicable Specified Cash Amount.
	Final Conversion Period:	With respect to any Conversion Date occurring on or after the 32nd Scheduled Valid Day immediately preceding the Expiration Date, the 30 consecutive Valid Day period beginning on, and including, the 32nd Scheduled Valid Day immediately prior to the Expiration Date, subject to any extension due to a Market Disruption Event.
	Specified Cash Amount:	“Specified Cash Amount” (defined in the Supplemental Indenture) applicable to such conversion.
	Valuation Time:	At the close of trading of the regular trading session on the Exchange; provided that if the principal trading session is extended, the Calculation Agent shall determine the Valuation Time in its reasonable discretion.
	Market Disruption Event:	Section 6.3(a) of the Equity Definitions is hereby replaced in its entirety by the following:

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		“‘Market Disruption Event’ means, in respect of a Share, (i) a failure by the primary United States national or regional securities exchange or market on which the Shares are listed or admitted to trading to open for trading during its regular trading session or (ii) the occurrence or existence prior to 1:00 p.m., New York City time, on any Valid Day for the Shares for an aggregate one half hour period of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Shares or in any options, contracts or future contracts relating to the Shares.”
Settlement Terms:
	Settlement Method:	Net Share Extended Settlement, Net Share Regular Settlement, Combination Settlement or Cash Settlement consistent with the settlement method elected by Counterparty for the corresponding Convertible Securities; provided that, if Counterparty does not provide a notice of Settlement Method to Dealer pursuant to Notice of Exercise above, Net Share Extended Settlement shall be deemed to apply to the relevant Options.
	Net Share Extended Settlement:	Net Share Extended Settlement shall apply if either (i) Counterparty has elected to deliver only Shares to satisfy the Conversion Obligation (as defined in the Supplemental Indenture) in connection with the conversion of the relevant Convertible Securities or (ii) Counterparty has elected to deliver a combination of Shares and cash to satisfy the Conversion Obligation in connection with the conversion of the relevant Convertible Securities and the Specified Cash Amount with respect to such conversion is less than $1,000.
	Net Share Regular Settlement:	Net Share Regular Settlement shall apply if (i) Counterparty has elected to deliver a combination of Shares and cash to satisfy the Conversion Obligation in connection with the conversion of the relevant Convertible Securities and (ii) the Specified Cash Amount with respect to such conversion is equal to $1,000.
	Combination Settlement:	Combination Settlement shall apply if (i) Counterparty has elected to deliver a combination of Shares and cash to satisfy the Conversion Obligation in connection with the conversion of the relevant Convertible Securities and (ii) the Specified Cash Amount with respect to such conversion is greater than $1,000.
	Cash Settlement:	Cash Settlement shall apply if Counterparty has elected to deliver only cash to satisfy the Conversion Obligation in connection with the conversion of the relevant Convertible Securities.
	Delivery Obligation:	Dealer will deliver to Counterparty, on the relevant Settlement Date,
		(a) if Net Share Extended Settlement applies, a number of Shares equal to the Net Shares (calculated based on a Settlement Averaging Period for a Net Share Extended Settlement) in respect

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	of any Option exercised or deemed exercised hereunder.1 In no event will the Net Shares be less than zero.
	(b) if Net Share Regular Settlement applies, a number of Shares equal to the Net Shares (calculated based on a Settlement Averaging Period for a Net Share Regular Settlement) in respect of any Option exercised or deemed exercised hereunder. In no event will the Net Shares be less than zero.
	(c) if Combination Settlement applies, an amount of cash and a number of Shares, if any, equal to the Combination Amount.
	(d) if Cash Settlement applies, an amount of cash equal to the Conversion Value in excess of $1,000.
	If such exercise relates to the conversion of Convertible Securities in connection with which holders thereof are entitled to receive additional Shares and/or cash pursuant to the adjustments to the Conversion Rate pursuant to Section 5.20 of the Supplemental Indenture, then, notwithstanding the foregoing, the Delivery Obligation shall include such additional Shares and/or cash, except that the Delivery Obligation shall be capped so that the value of the Delivery Obligation per Option (with the value of any Shares included in the Delivery Obligation determined by the Calculation Agent using the VWAP Price on the last day of the relevant Settlement Averaging Period) does not exceed the amount as determined by the Calculation Agent that would be payable by Dealer pursuant to Section 6 of the Agreement if such Conversion Date were an Early Termination Date resulting from an Additional Termination Event with respect to which the Transaction (except that, for purposes of determining such amount (x) the Number of Options shall be deemed to be equal to the number of Options exercised on such Exercise Date and (y) such amount payable will be determined as if Section 5.20 of the Supplemental Indenture were deleted) was the sole Affected Transaction and Counterparty was the sole Affected Party (determined without regard to Section 8(b) of this Confirmation).
	Dealer will deliver cash in lieu of any fractional Shares to be delivered with respect to any Net Shares or Combination Amount valued at the VWAP Price for the last Valid Day of the relevant Settlement Averaging Period.
Net Shares:	In respect of any Option exercised or deemed exercised, a number of Shares equal to (i) the Option Entitlement on the Conversion Date multiplied by (ii) the sum of the quotients, for each Valid Day during the applicable Settlement Averaging Period for such Option, of (A) the VWAP Price on such Valid Day less the Strike Price, divided by (B) such VWAP Price, divided by (iii) the number of Valid Days in such Settlement Averaging Period; provided, however, that if the calculation contained in clause (A) above results in a negative number, such number shall be replaced with the number “zero”.

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Valid Day:	A day on which (i) trading in the Shares generally occurs on the Exchange or, if the Shares are not then listed on the Exchange, on the principal other U.S. national or regional securities exchange on which the Shares are then listed or, if the Shares are not then listed on a U.S. national or regional securities exchange, in the principal other market on which the Shares are then traded and (ii) there is no Market Disruption Event.
Scheduled Valid Day:	A day on which trading in the Shares is scheduled to occur on the principal U.S. national or regional securities exchange or market on which the Shares are listed or admitted for trading. If the Shares are not so listed or admitted for trading, “Scheduled Valid Day” means a “Business Day.”
VWAP Price:	On any Valid Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page GAP <equity> VAP (or any successor thereto) in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such Valid Day (or if such volume-weighted average price is unavailable, the market value of one Share on such Valid Day, as determined by the Calculation Agent using a volume-weighted method).
Settlement Averaging Period:	For any Option, (x) if Counterparty has, on or prior to the first Valid Day of the Final Conversion Period, delivered a Notice of Exercise to Dealer with respect to such Option with a Conversion Date occurring prior to the first Valid Day of the Final Conversion Period, (i) if Net Share Extended Settlement applies, the ninety (90) consecutive Valid Days commencing on and including the second Valid Day following such Conversion Date or (ii) if Net Share Regular Settlement, Combination Settlement or Cash Settlement applies, the thirty (30) consecutive Valid Days commencing on and including the second Valid Day following such Conversion Date, or
	(y) if Counterparty has, on or following the first Valid Day of the Final Conversion Period, delivered a Notice of Exercise to Dealer with respect to such Option with a Conversion Date occurring on or following the first Valid Day of the Final Conversion Period, (i) if Net Share Extended Settlement applies, the ninety (90) consecutive Valid Days commencing on, and including, the ninety second (92nd) Scheduled Valid Day immediately prior the Expiration Date or (ii) if Net Share Regular Settlement, Combination Settlement or Cash Settlement applies, the thirty (30) consecutive Valid Days commencing on, and including, the thirty second (32nd) Scheduled Valid Day immediately prior to the Expiration Date.
Combination Amount:	In respect of any Option exercised or deemed exercised, (A) an amount of cash equal to the difference between (i) the lesser of (x) the Specified Cash Amount and (y) the Conversion Value and (ii) $1,000, and (B) to the extent the Conversion Value exceeds the Specified Cash Amount, a number of Shares equal to the sum of the Daily Share Amounts for each of the Valid Days during the applicable Settlement Averaging Period; provided, however, that if

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		the calculation contained in clause (A) above results in a negative number, such number shall be replaced with the number “zero”.
	Daily Share Amount:	Means, for each Valid Day during the applicable Settlement Averaging Period, (A) the greater of (i) zero and (ii) the Option Entitlement on the Conversion Date minus the quotient of (x) the product of (1) the Applicable Percentage and (2) the Specified Cash Amount divided by (y) the VWAP Price on such Valid Day divided by (B) 30.
	Conversion Value:	Means the product of (i) the Option Entitlement on the Conversion Date and (ii) the average of the VWAP Prices on each of the Valid Days during the applicable Settlement Averaging Period.
	Settlement Date:	For any Option, the date Shares will be delivered with respect to the Convertible Securities related to such Options, under the terms of the Supplemental Indenture; provided that if Net Share Extended Settlement applies, the Settlement Date shall be the date Shares and/or cash would have been required to be delivered if Combination Settlement or Cash Settlement applied to the settlement of such Relevant Convertible Securities. Other Applicable Provisions: To the extent Dealer is obligated to deliver Shares hereunder, the provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
	Restricted Certificated Shares:	Notwithstanding anything to the contrary in the Equity Definitions, Dealer may, in whole or in part, deliver Shares in certificated form representing the Number of Shares to be Delivered to Counterparty in lieu of delivery through the Clearance System. With respect to such certificated Shares, the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by deleting the remainder of the provision after the word “encumbrance” in the fourth line thereof.
Share Adjustments:
	Method of Adjustment:	Notwithstanding Section 11.2 of the Equity Definitions, upon the occurrence of any event or condition set forth in the Dilution Adjustment Sections (as defined in the Supplemental Indenture), the Calculation Agent shall make a corresponding adjustment, if necessary, to the terms relevant to the exercise, settlement or payment of the Transaction, subject to the definition of Conversion Rate. Promptly (but in no event later than the close of business on the following New York Business Day) upon the occurrence of any “Adjustment Event” (as defined in the Supplemental Indenture) Counterparty shall notify the Calculation Agent of such Adjustment Event; and once the adjustments to be made to the terms of the Supplemental Indenture and the Convertible Securities in respect of such Adjustment Event have been determined, Counterparty shall promptly (but in no event later than the close of

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		business on the following New York Business Day) notify the Calculation Agent in writing of the details of such adjustment necessary to make such corresponding adjustment hereunder.
Extraordinary Events:
	Merger Events:	Notwithstanding Section 12.1(b) of the Equity Definitions, a “Merger Event” means the occurrence of any event or condition set forth in the Consequences of Merger Section (as defined in the Supplemental Indenture).
	Tender Offer:	Applicable. Notwithstanding Section 12.1(d) of the Equity Definitions, a “Tender Offer” means the occurrence of any event or condition set forth in the Consequences of Tender Offer Section (as defined in the Supplemental Indenture).
	Consequences of Merger Events and
	Tender Offers:	Notwithstanding Sections 12.2 and 12.3 of the Equity Definitions, upon the occurrence of a Merger Event or Tender Offer, the Calculation Agent shall make the corresponding adjustment in respect of any adjustment under the Supplemental Indenture to any one or more of the nature of the Shares, the Number of Options, the Option Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction; provided that such adjustment shall be made without regard to any adjustment to the Conversion Rate pursuant the Conversion Rate Adjustment Sections and the election, if any, by Counterparty to adjust the Conversion Rate; and provided further that the Calculation Agent may limit or alter any such adjustment referenced in this paragraph so that the fair value of the Transaction to Dealer is not reduced as a result of such adjustment.
	Notice of Merger Consideration:	Upon the occurrence of a Merger Event that causes the Shares to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), Counterparty shall reasonably promptly (but, in any event prior to the Merger Date) notify the Calculation Agent of (i) the weighted average of the types and amounts of consideration received by the holders of Shares entitled to receive cash, securities or other property or assets with respect to or in exchange for such Shares in any Merger Event who affirmatively make such an election and (ii) the details of the adjustment made under the Supplemental Indenture in respect of such Merger Event.
	Nationalization, Insolvency
	or Delisting:	Cancellation and Payment (Calculation Agent Determination); provided that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it will also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the American Stock Exchange the NASDAQ Global Select Market or the NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
	Additional Disruption Events:
	(a) Change in Law:	Applicable

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	(b) Failure to Deliver:	Applicable
	(c) Insolvency Filing:	Applicable
	(d) Hedging Disruption:	Applicable
	(e) Increased Cost of Hedging:	Applicable
Hedging Party:		For all applicable Additional Disruption Events, Dealer
Determining Party:		For all applicable Extraordinary Events, Dealer
Non-Reliance:		Applicable
Agreements and Acknowledgments
Regarding Hedging Activities:		Applicable
Additional Acknowledgments:		Applicable
3.	Calculation Agent:	Dealer, which shall at all times act in good faith and in a commercially reasonable manner. In addition, Dealer shall use commercially reasonable efforts under the circumstances to consult with Counterparty on decisions it makes in its capacity as Calculation Agent; provided that Dealer shall not be required to take into account or be bound by any considerations raised by Counterparty.
4.	Account Details:
	Dealer Payment Instructions:	Bank of America
		New York, NY
		SWIFT: BOFAUS65
		Bank Routing: 026-009-593
		Account Name: Bank of America
		Account No. : 0012333-34172
	Counterparty Payment Instructions:	To be provided by Counterparty.

5.	Offices:
	The Office of Dealer for the Transaction is: New York
		Bank of America, N.A.
		c/o Banc of America Securities LLC
		9 West 57th Street, 40th Floor
		New York, NY 10019
		Attention:	John Servidio
		Telephone:	212-847-6527
		Facsimile:	212-230-8610
	The Office of Counterparty for the Transaction is: Not applicable
6.	Notices: For purposes of this Confirmation:
	(a)	Address for notices or communications to Counterparty:
		To:	The Great Atlantic & Pacific Tea Company
			2 Paragon Drive
			Montvale, New Jersey 07645
		Attn:	Brenda Galgano, Senior Vice President & Chief Financial Officer
		Telephone:	201-571-4363
		Facsimile:	201-571-8715

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(b)	Address for notices or communications to Dealer:
	To:	Bank of America, N.A.
		c/o Banc of America Securities LLC
		9 West 57th Street, 40th Floor
		New York, NY 10019
	Attn:	John Servidio
	Telephone:	212-847-6527
	Facsimile:	212-230-8610

	7. Representations, Warranties and Agreements:
(a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Counterparty represents and warrants to and for the benefit of, and agrees with, Dealer as follows:
	(i) On the Trade Date, (A) none of Counterparty and its officers and directors is aware of any material nonpublic information regarding Counterparty or the Shares and (B) all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of 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.
	(ii) (A) On the Trade Date, the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“Regulation M”) and (B) Counterparty shall not engage in any “distribution,” as such term is defined in Regulation M, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day immediately following the Trade Date.
	(iii) On the Trade Date, neither Counterparty nor any “affiliate” or “affiliated purchaser” (each as defined in Rule 10b-18 of the Exchange Act) shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except through Dealer.
	(iv) Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Dealer is not making any representations or warranties with respect to the treatment of the Transaction under FASB Statements 133, as amended, or 150, EITF Issue No. 00-19 (or any successor issue statements) or under FASB’s Liabilities & Equity Project.
	(v) Without limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.
	(vi) Prior to the Trade Date, Counterparty shall deliver to Dealer a resolution of Counterparty’s board of directors authorizing the Transaction and such other certificate or certificates as Dealer shall reasonably request.
	(vii) Counterparty is not entering into this Confirmation to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.
	(viii) Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
	(ix) On each of the Trade Date, the Premium Payment Date and the Additional Premium Payment Date, if any, Counterparty would be able to purchase the Shares hereunder in compliance with the laws of the jurisdiction of its incorporation.

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	(x) The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Sections 1 and 3 of the Underwriting Agreement are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.
	(xi) Counterparty understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any affiliate of Dealer or any governmental agency.
(b) Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended.
(c) Each of Dealer and Counterparty acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) thereof. Accordingly, Counterparty represents and warrants to Dealer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof, and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.
(d) Each of Dealer and Counterparty agrees and acknowledges that Dealer is a “financial institution,” “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of Title 11 of the United States Code (the “Bankruptcy Code”). The parties hereto further agree and acknowledge (A) that this Confirmation is (i) intended to be a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “settlement payment,” as such term is defined in Section 741(8) of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code, and (B) that Dealer is intended to be entitled to the protections afforded by, among other sections, Section 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code.
(e) Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Trade Date and reasonably acceptable to Dealer in form and substance (subject to customary qualifications, assumptions and exceptions), with respect to the matters set forth in Section 3(a) of the Agreement.
	8. Other Provisions:
(a) Additional Termination Events. The occurrence of (i) an event of default with respect to Counterparty under the terms of the Convertible Securities as set forth in the Default Events (as defined in the Supplemental Indenture), (ii) an Amendment Event, (iii) a Repayment Event, or (iv) a Redemption Event and shall be an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction and Counterparty is the sole Affected Party and Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(a) of the Agreement; provided that in the case of a Repayment Event the Transaction shall be subject to termination only in respect of the number of Convertible Securities that cease to be outstanding in connection with or as a result of such Repayment Event; provided further that in the case of a Redemption Event the Transaction shall be subject to termination only in respect of the number of Convertible Securities in respect of which the Counterparty has delivered a redemption notice.
	“Amendment Event” means that Counterparty amends, modifies, supplements or waives any term of the Supplemental Indenture or the Convertible Securities governing the principal amount, coupon, maturity, repurchase obligation of Counterparty, redemption right of Counterparty, any term relating to conversion of the Convertible Securities (including changes to the conversion price, conversion settlement dates or conversion conditions), or any term that would require consent of the holders of not less than 100% of the principal amount of the Convertible Securities to amend.
	“Repayment Event” means that (A) any Convertible Securities are repurchased (whether in connection with or as a result of a change of control, howsoever defined, or for any other reason) by Counterparty or any of its subsidiaries, (B) any Convertible Securities are delivered to Counterparty in exchange for delivery of any property or assets of Counterparty or any of its subsidiaries (howsoever described), (C) any principal of any of the Convertible Securities is repaid prior to the final maturity date of the Convertible Securities (whether following acceleration of the Convertible Securities or otherwise), or (D) any

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	Convertible Securities are exchanged by or for the benefit of the holders thereof for any other securities of Counterparty or any of its affiliates (or any other property, or any combination thereof) pursuant to any exchange offer or similar transaction; provided that, in the case of clause (B) and clause (D), conversions of the Convertible Securities pursuant to the terms of the Supplemental Indenture as in effect on the date hereof shall not be Repayment Events.
	“Redemption Event” means that the Counterparty (i) notifies the trustee under the Supplemental Indenture of the redemption date and of the principal amount of Convertible Securities to be redeemed or (ii) makes a public announcement of its intention to redeem a specified principal amount of Convertible Securities on a particular redemption date.
(b) Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events. If, subject to Section 8(k) below, Dealer shall owe Counterparty any amount pursuant to Section 12.2 or 12.3 of the Equity Definitions and “Consequences of Merger Events and Tender Offers” above, or Sections 12.6, 12.7 or 12.9 of the Equity Definitions (except in the event of an Insolvency, a Nationalization, a Tender Offer or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (except in the event of an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party, that resulted from an event or events within Counterparty’s control) (a “Payment Obligation”), Counterparty shall have the right, in its sole discretion, to require Dealer to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, between the hours of 9:00 A.M. and 4:00 P.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date or Early Termination Date, as applicable (“Notice of Share Termination”). Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the Merger Date, the Tender Offer Date, Announcement Date or Early Termination Date, as applicable:

Share Termination Alternative:	Applicable and means that Dealer shall deliver to Counterparty the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, in satisfaction of the Payment Obligation.
Share Termination Delivery
Property:	A number of Share Termination Delivery Units, as calculated by the Calculation Agent in good faith, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
Share Termination Unit Price:	The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer at the time of notification of the Payment Obligation.
Share Termination Delivery Unit:	In the case of a Termination Event, Event of Default or Delisting, one Share or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization, Merger Event or Tender Offer. If such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
Failure to Deliver:	Applicable
Other applicable provisions:	If Share Termination Alternative is applicable, the provisions of Sections 9.1(c), 9.8,

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9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units.”

          (c) Disposition of Hedge Shares. Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, any Shares (the “Hedge Shares”) acquired by Dealer for the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall, at its election: (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement, in form and substance commercially reasonably satisfactory to Dealer and Counterparty, substantially in the form of an underwriting agreement for a registered offering, (B) provide accountant’s “comfort” letters in customary form for registered offerings of equity securities, (C) provide disclosure opinions of nationally recognized outside counsel to Counterparty reasonably acceptable to Dealer, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities and (E) afford Dealer a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities; provided, however, that if Dealer, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this Section 8(c) shall apply at the election of Counterparty; (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance commercially reasonably satisfactory to Dealer and Counterparty, including customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Hedge Shares from Dealer), opinions and certificates and such other documentation as is customary for private placements agreements, all reasonably acceptable to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its reasonable judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from Dealer at the VWAP Price on such Exchange Business Days, and in the amounts, requested by Dealer. For the avoidance of doubt, unless Counterparty elects to purchase Hedge Shares from Dealer pursuant to clause (iii) above, under no circumstances shall Counterparty be required to pay cash to purchase Hedge Shares from Dealer.

          (d) Amendment to Equity Definitions. The following amendment shall be made to the Equity Definitions:

          Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that Issuer.”

          Section 12.9(b)(i) of the Equity Definitions is hereby amended by (1) replacing “either party may elect” with “Dealer may elect” and (2) replacing “notice to the other party” with “notice to the Counterparty” in the first sentence of such section.

          (e) Repurchase Notices. Counterparty shall, on any day on which Counterparty effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “Repurchase Notice”) on such day if, following such repurchase, the Notice Percentage as determined on such day is (i) greater than 6% and (ii) greater by 0.5% than the Notice Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater than the Notice Percentage as of the date hereof). The “Notice Percentage” as of any day is the fraction, expressed as a percentage, the numerator of which is the Number of Shares and the denominator of which is the number of Shares outstanding on such day. In the event that Counterparty fails to provide Dealer with a Repurchase Notice when and in the manner specified in this Section 8(e) then Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective directors, officers, employees, agents and controlling persons (Dealer and each such person being an “Indemnified Party”) from and against any and all losses, claims, damages and liabilities (or actions in respect thereof), joint or several, to which such Indemnified Party may become subject under applicable securities laws,

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including without limitation, Section 16 of the Exchange Act, solely relating to or arising out of such failure. If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability. In addition, Counterparty will reimburse any Indemnified Party for all reasonable expenses (including reasonable counsel fees and expenses) as they are incurred (after notice to Counterparty) in connection with the investigation of, preparation for or defense or settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on behalf of Counterparty. This indemnity shall survive the completion of the Transaction contemplated by this Confirmation and any assignment and delegation of the Transaction made pursuant to this Confirmation or the Agreement shall inure to the benefit of any permitted assignee of Dealer.

          (f) Transfer and Assignment. Either party may transfer any of its rights or obligations under the Transaction with the prior written consent of the non-transferring party, such consent not to be unreasonably withheld. In addition, Dealer may transfer or assign without any consent of the Counterparty its rights and obligations hereunder and under the Agreement, in whole or in part, to (i) any of its affiliates, (ii) any entities sponsored or organized by, or on behalf of or for the benefit of Dealer, or (iii) any person of credit quality equivalent to Dealer; provided further that at any time at which the Equity Percentage exceeds 8.5% (an “Excess Ownership Position”) or a Hedging Disruption has occurred and is continuing, if Dealer, in its commercially reasonable discretion, is unable to effect a transfer or assignment to a third party in accordance with the requirements set forth above after using its commercially reasonable efforts on pricing terms commercially reasonably acceptable to Dealer such that an Excess Ownership Position or a Hedging Disruption, as the case may be, no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “Terminated Portion”) of the Transaction, such that such Excess Ownership Position or Hedging Disruption, as the case may be, no longer exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Counterparty shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction. The “Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer, for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act (collectively, “Dealer Group”), beneficially own (within the meaning of Section 13 of the Exchange Act) on such day and (B) the denominator of which is the number of Shares outstanding on such day.

          (g) Staggered Settlement. Dealer may, by notice to Counterparty prior to any Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares on two or more dates (each, a “Staggered Settlement Date”) or at two or more times on the Nominal Settlement Date as follows:

          (i) in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to such Nominal Settlement Date, but not prior to the beginning of the related Conversion Reference Period (as defined in the Supplemental Indenture) or delivery times and how it will allocate the Shares it is required to deliver under “Delivery Obligation” (above) among the Staggered Settlement Dates or delivery times; and

          (ii) the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement Date.

          (h) Right to Extend. Dealer may postpone any Potential Exercise Date or any other date of valuation or delivery by Dealer, with respect to some or all of the relevant Options (in which event the Calculation Agent shall make appropriate adjustments to the Delivery Obligation), if Dealer determines, in its commercially reasonable discretion, that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions or (ii) to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer.

          (i) Disclosure. Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without

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limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure.

          (j) Designation by Dealer. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such shares or other securities and otherwise to perform Dealer obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance.

          (k) Netting and Set-off.

          (i) If on any date cash would otherwise be payable or Shares or other property would otherwise be deliverable hereunder or pursuant to the Agreement or pursuant to any other agreement between the parties by Counterparty to Dealer and cash would otherwise be payable or Shares or other property would otherwise be deliverable hereunder or pursuant to the Agreement or pursuant to any other agreement between the parties by Dealer to Counterparty and the type of property required to be paid or delivered by each such party on such date is the same, then, on such date, each such party’s obligation to make such payment or delivery will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable or deliverable by one such party exceeds the aggregate amount that would otherwise have been payable or deliverable by the other such party, replaced by an obligation of the party by whom the larger aggregate amount would have been payable or deliverable to pay or deliver to the other party the excess of the larger aggregate amount over the smaller aggregate amount.

          (ii) In addition to and without limiting any rights of set-off that a party hereto may have as a matter of law, pursuant to contract or otherwise, upon the occurrence of an Early Termination Date, Dealer shall have the right to terminate, liquidate and otherwise close out the Transaction and to set off any obligation or right that Dealer or any affiliate of Dealer may have to or against Counterparty hereunder or under the Agreement against any right or obligation Dealer or any of its affiliates may have against or to Counterparty, including without limitation any right to receive a payment or delivery pursuant to any provision of the Agreement or hereunder. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of the same type, such obligation and right shall be set off in kind. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of any other type, the value of each of such obligation and such right shall be determined by the Calculation Agent and the result of such set-off shall be that the net obligor shall pay or deliver to the other party an amount of cash or assets, at the net obligor’s option, with a value (determined, in the case of a delivery of assets, by the Calculation Agent) equal to that of the net obligation. In determining the value of any obligation to release or deliver Shares or any right to receive Shares, the value at any time of such obligation or right shall be determined by reference to the market value of the Shares at such time, as determined in good faith by the Calculation Agent. If an obligation or right is unascertained at the time of any such set-off, the Calculation Agent may in good faith estimate the amount or value of such obligation or right, in which case set-off will be effected in respect of that estimate, and the relevant party shall account to the other party at the time such obligation or right is ascertained.

          (iii) Counterparty shall not net or set off its obligations, if any, under the Transaction against its rights against Dealer under any other transaction or instrument. Dealer shall not net or set off its obligations, if any, under the Transaction against its rights against Counterparty under any other transaction or instrument.

          (l) Equity Rights. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Counterparty’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Counterparty’s bankruptcy to any claim arising as a result of a breach by Counterparty of any of its obligations under this Confirmation or the Agreement.

          (m) Early Unwind. In the event the sale by Counterparty of the Convertible Securities is not consummated with the underwriters pursuant to the Underwriting Agreement for any reason by the close of business in New York on December 18, 2007 (or such later date as agreed upon by the parties, which in no event shall be later than December 28, 2007) (December 18, 2007 or such later date being the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”) on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Counterparty thereunder shall be cancelled and terminated and (ii) Counterparty shall pay to Dealer an amount in cash equal to the aggregate amount of the reasonable costs and expenses relating to the unwinding

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of Dealer’s hedging activities in respect of the Transaction (including market losses incurred in reselling any Shares purchased by Dealer or its affiliates in connection with such hedging activities). Following such termination, cancellation and payment, each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of either party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Dealer and Counterparty represent and acknowledge to the other that upon an Early Unwind and following the payment referred to above, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

          (n) Waiver of Trial by Jury. EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF COUNTERPARTY OR DEALER OR THEIR RESPECTIVE AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

          (o) Governing Law. THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

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          Counterparty hereby agrees (a) to check this Confirmation carefully and promptly upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Counterparty with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and promptly returning an executed copy to John Servidio, Facsimile No. 212-230-8610.

		Yours faithfully,
		BANK OF AMERICA, N.A.
		By:	/s/ Michael Voris
			Name: Michael Voris
			Authorized Signatory
Agreed and Accepted By:
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
By:	/s/ William Moss
	Name: William Moss
	Title: Vice President and Treasurer

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EX-10.7

Exhibit 10.7

	December 12, 2007
To:	The Great Atlantic and Pacific Tea Company, Inc.
	2 Paragon Drive
	Montvale, NJ 07645
	Attn: Brenda Galgano, Senior Vice President and Chief Financial Officer
	Telephone: 201-573-4363
	Facsimile: 201-937-8715
From:	Lehman Brothers Inc., acting as Agent
	Lehman Brothers OTC Derivatives Inc., acting as Principal
	745 Seventh Avenue
	New York, NY 10019
	Telephone:	212-526-9986
	Facsimile:	646-885-9546 (United States of America)
Re:	Convertible Bond Hedge Transaction (2011)
	(Global ID: 3533505)

Ladies and Gentlemen:

          The purpose of this communication (this “Confirmation”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “Transaction”) between Lehman Brothers OTC Derivatives Inc. (“Dealer”) and The Great Atlantic and Pacific Tea Company, Inc. (“Counterparty”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below. This Confirmation is sent on behalf of both Dealer and Lehman Brothers Inc. (“LBI”). Lehman Brothers OTC Derivatives Inc. is not a member of the Securities Investor Protection Corporation.

          1. This Confirmation is subject to, and incorporates, the definitions and provisions of the 2000 ISDA Definitions (including the Annex thereto) (the “2000 Definitions”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and together with the 2000 Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc. (“ISDA”). In the event of any inconsistency between the 2000 Definitions and the Equity Definitions, the Equity Definitions will govern. Certain defined terms used herein have the meanings assigned to them in the Indenture to be dated as of December 18, 2007 between Counterparty and Wilmington Trust Company, as trustee and the first supplemental indenture to such indenture to be dated as of December 18, 2007 (such indenture, together with such supplemental indenture, the “Supplemental Indenture”) relating to the USD 150 million principal amount of 5.125% convertible senior notes due 2011 (the “Convertible Securities”). In the event of any inconsistency between the terms defined in the Supplemental Indenture and this Confirmation, this Confirmation shall govern. For the avoidance of doubt, references herein to sections of the Supplemental Indenture are based on the draft of the Supplemental Indenture most recently reviewed by the parties at the time of execution of this Confirmation. If any relevant sections of the Supplemental Indenture are changed, added or renumbered following execution of this Confirmation but prior to the execution of the Supplemental Indenture, the parties will amend this Confirmation in good faith to preserve the economic intent of the parties. The parties further acknowledge that references to the Supplemental Indenture herein are references to the Supplemental Indenture as in effect on the date of its execution and if the Supplemental Indenture is amended following its execution any such amendment will be disregarded for purposes of this Confirmation unless the parties agree otherwise in writing.

          This Confirmation evidences a complete and binding agreement and supersedes any prior agreements, written or oral, between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the 2002 ISDA Master Agreement (the “ISDA Master Agreement”) as if Dealer and Counterparty had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.

          All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation

except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern.

          2. The Transaction constitutes a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:

General Terms:

Trade Date:	December 12, 2007
Effective Date:	The closing date of the offering of the Convertible Securities.
Option Type:	Call
Seller:	Dealer
Buyer:	Counterparty
Shares:	The Common Stock of Counterparty, par value USD 1.00 per share (Ticker Symbol: “GAP”).
Number of Options:	The number of Convertible Securities in denominations of USD 1,000 principal amount issued by Counterparty on the closing date for the initial issuance of the Convertible Securities; provided that the Number of Options shall be automatically increased as of the date of exercise by Banc of America Securities LLC, and Lehman Brothers Inc., as Representatives of the Underwriters (as defined in the Underwriting Agreement), of their option pursuant to Section 2(b) of the Underwriting Agreement dated as of December 12, 2007, between the Counterparty and Banc of America Securities LLC, Lehman Brothers Inc. and Friedman, Billings, Ramsay & Co., as a “qualified independent underwriter,” (the “Underwriting Agreement”), by the number of Convertible Securities in denominations of USD 1,000 principal amount issued pursuant to such exercise (such Convertible Securities, the “Additional Convertible Securities”).
Applicable Percentage:	50%
Number of Shares:	As of any date, the product of the Number of Options and the Option Entitlement.
Option Entitlement:	As of any date, a number equal to the product of the Conversion Rate as of such date and the Applicable Percentage.
Strike Price:	USD 36.40
Conversion Rate:	As of any date, the Conversion Rate, as defined in the Supplemental Indenture, but without regard to any adjustments to the Conversion Rate pursuant to the Conversion Rate Adjustment Sections (as defined in the Supplemental Indenture) (except as set forth under the “Delivery Obligation”).
Premium:	USD 12,000,000 (Premium per Option USD 5.824); provided that if the Number of Options is increased pursuant to the proviso to the definition of “Number of Options” above, an additional Premium equal to the product of the number of Options by which the Number of Options is so increased and the Premium per Option shall be paid on the Additional Premium Payment Date.
Premium Payment Date:	The Effective Date

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	Additional Premium Payment Date:	The closing date for the purchase and sale of the Additional Convertible Securities.
	Exchange:	New York Stock Exchange
	Related Exchange:	All Exchanges
Procedures for Exercise:
	Potential Exercise Dates:	Each Conversion Date.
	Conversion Date:	Each “Conversion Date” as defined in the Supplemental Indenture.
	Required Exercise on
	Conversion Dates:	On each Conversion Date, a number of Options equal to the number of Convertible Securities in denominations of USD 1,000 principal amount submitted for conversion on such Conversion Date in accordance with the terms of the Supplemental Indenture shall be automatically exercised, subject to “Notice of Exercise” below.
	Expiration Date:	June 15, 2011
	Automatic Exercise:	Not applicable (as provided above under “Required Exercise on Conversion Dates”).
	Notice of Exercise:	Notwithstanding anything to the contrary in the Equity Definitions, in order to exercise any Options, Counterparty must notify Dealer in writing before 5:00 p.m. (New York City time) on the Scheduled Valid Day prior to the scheduled first day of the applicable Settlement Averaging Period for the Options, which notice shall specify (i) the number of Options being exercised and the scheduled Settlement Date, (ii) the scheduled first day of the applicable Settlement Averaging Period, (iii) the applicable Settlement Method and (iv) the applicable Specified Cash Amount (as defined in the Supplemental Indenture); provided that in respect of Options relating to Convertible Securities with a Conversion Date occurring on or after the Final Conversion Period, such notice (except for notice of the Settlement Method, which shall be provided as specified above) may be given on or prior to the second Scheduled Valid Day immediately preceding the Expiration Date and need only specify the number of such Options and the applicable Specified Cash Amount.
	Final Conversion Period:	With respect to any Conversion Date occurring on or after the 32nd Scheduled Valid Day immediately preceding the Expiration Date, the 30 consecutive Valid Day period beginning on, and including, the 32nd Scheduled Valid Day immediately prior to the Expiration Date, as applicable, subject to any extension due to a Market Disruption Event.
	Specified Cash Amount:	“Specified Cash Amount” (defined in the Supplemental Indenture) applicable to such conversion.
	Valuation Time:	At the close of trading of the regular trading session on the Exchange; provided that if the principal trading session is extended, the Calculation Agent shall determine the Valuation Time in its reasonable discretion.

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	Market Disruption Event:	Section 6.3(a) of the Equity Definitions is hereby replaced in its entirety by the following:
		“‘Market Disruption Event’ means, in respect of a Share, (i) a failure by the primary United States national or regional securities exchange or market on which the Shares are listed or admitted to trading to open for trading during its regular trading session or (ii) the occurrence or existence prior to 1:00 p.m., New York City time, on any Valid Day for the Shares for an aggregate one half hour period of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Shares or in any options, contracts or future contracts relating to the Shares.”
Settlement Terms:
	Settlement Method:	Net Share Extended Settlement, Net Share Regular Settlement, Combination Settlement or Cash Settlement consistent with the settlement method elected by Counterparty for the corresponding Convertible Securities; provided that, if Counterparty does not provide a notice of Settlement Method to Dealer pursuant to Notice of Exercise above, Net Share Extended Settlement shall be deemed to apply to the relevant Options.
	Net Share Extended Settlement:	Net Share Extended Settlement shall apply if either (i) Counterparty has elected to deliver only Shares to satisfy the Conversion Obligation (as defined in the Supplemental Indenture) in connection with the conversion of the relevant Convertible Securities or (ii) Counterparty has elected to deliver a combination of Shares and cash to satisfy the Conversion Obligation in connection with the conversion of the relevant Convertible Securities and the Specified Cash Amount with respect to such conversion is less than $1,000.
	Net Share Regular Settlement:	Net Share Regular Settlement shall apply if (i) Counterparty has elected to deliver a combination of Shares and cash to satisfy the Conversion Obligation in connection with the conversion of the relevant Convertible Securities and (ii) the Specified Cash Amount with respect to such conversion is equal to $1,000.
	Combination Settlement:	Combination Settlement shall apply if (i) Counterparty has elected to deliver a combination of Shares and cash to satisfy the Conversion Obligation in connection with the conversion of the relevant Convertible Securities and (ii) the Specified Cash Amount with respect to such conversion is greater than $1,000.
	Cash Settlement:	Cash Settlement shall apply if Counterparty has elected to deliver only cash to satisfy the Conversion Obligation in connection with the conversion of the relevant Convertible Securities.
	Delivery Obligation:	Dealer will deliver to Counterparty, on the relevant Settlement Date,
		(a) if Net Share Extended Settlement applies, a number of Shares equal to the Net Shares (calculated based on a Settlement

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	Averaging Period for a Net Share Extended Settlement) in respect of any Option exercised or deemed exercised hereunder. 1 In no event will the Net Shares be less than zero.
	(b) if Net Share Regular Settlement applies, a number of Shares equal to the Net Shares (calculated based on a Settlement Averaging Period for a Net Share Regular Settlement) in respect of any Option exercised or deemed exercised hereunder. In no event will the Net Shares be less than zero.
	(c) if Combination Settlement applies, an amount of cash and a number of Shares, if any, equal to the Combination Amount.
	(d) if Cash Settlement applies, an amount of cash equal to the Conversion Value in excess of $1,000.
	If such exercise relates to the conversion of Convertible Securities in connection with which holders thereof are entitled to receive additional Shares and/or cash pursuant to the adjustments to the Conversion Rate pursuant to Section 5.20 of the Supplemental Indenture, then, notwithstanding the foregoing, the Delivery Obligation shall include such additional Shares and/or cash, except that the Delivery Obligation shall be capped so that the value of the Delivery Obligation per Option (with the value of any Shares included in the Delivery Obligation determined by the Calculation Agent using the VWAP Price on the last day of the relevant Settlement Averaging Period) does not exceed the amount as determined by the Calculation Agent that would be payable by Dealer pursuant to Section 6 of the Agreement if such Conversion Date were an Early Termination Date resulting from an Additional Termination Event with respect to which the Transaction (except that, for purposes of determining such amount (x) the Number of Options shall be deemed to be equal to the number of Options exercised on such Exercise Date and (y) such amount payable will be determined as if Section 5.20 of the Supplemental Indenture were deleted) was the sole Affected Transaction and Counterparty was the sole Affected Party (determined without regard to Section 8(b) of this Confirmation).
	Dealer will deliver cash in lieu of any fractional Shares to be delivered with respect to any Net Shares or Combination Amount valued at the VWAP Price for the last Valid Day of the relevant Settlement Averaging Period.
Net Shares:	In respect of any Option exercised or deemed exercised, a number of Shares equal to (i) the Option Entitlement on the Conversion Date multiplied by (ii) the sum of the quotients, for each Valid Day during the applicable Settlement Averaging Period for such Option, of (A) the VWAP Price on such Valid Day less the Strike Price, divided by (B) such VWAP Price, divided by (iii) the number of Valid Days in such Settlement Averaging Period; provided, however, that if the calculation contained in clause (A)

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	above results in a negative number, such number shall be replaced with the number “zero”.
Valid Day:	A day on which (i) trading in the Shares generally occurs on the Exchange or, if the Shares are not then listed on the Exchange, on the principal other U.S. national or regional securities exchange on which the Shares are then listed or, if the Shares are not then listed on a U.S. national or regional securities exchange, in the principal other market on which the Shares are then traded and (ii) there is no Market Disruption Event.
Scheduled Valid Day:	A day on which trading in the Shares is scheduled to occur on the principal U.S. national or regional securities exchange or market on which the Shares are listed or admitted for trading. If the Shares are not so listed or admitted for trading, “Scheduled Valid Day” means a “Business Day.”
VWAP Price:	On any Valid Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page GAP <equity> VAP (or any successor thereto) in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such Valid Day (or if such volume-weighted average price is unavailable, the market value of one Share on such Valid Day, as determined by the Calculation Agent using a volume-weighted method).
Settlement Averaging Period:	For any Option, (x) if Counterparty has, on or prior to the first Valid Day of the Final Conversion Period, delivered a Notice of Exercise to Dealer with respect to such Option with a Conversion Date occurring prior to the first Valid Day of the Final Conversion Period, (i) if Net Share Extended Settlement applies, the ninety (90) consecutive Valid Days commencing on and including the second Valid Day following such Conversion Date or (ii) if Net Share Regular Settlement, Combination Settlement or Cash Settlement applies, the thirty (30) consecutive Valid Days commencing on and including the second Valid Day following such Conversion Date, or
	(y) if Counterparty has, on or following the first Valid Day of the Final Conversion Period, delivered a Notice of Exercise to Dealer with respect to such Option with a Conversion Date occurring on or following the first Valid Day of the Final Conversion Period, (i) if Net Share Extended Settlement applies, the ninety (90) consecutive Valid Days commencing on, and including, the ninety second (92nd) Scheduled Valid Day immediately prior to the Expiration Date or (ii) if Net Share Regular Settlement, Combination Settlement or Cash Settlement applies, the thirty (30) consecutive Valid Days commencing on, and including, the thirty second (32nd) Scheduled Valid Day immediately prior to the Expiration Date.
Combination Amount:	In respect of any Option exercised or deemed exercised, (A) an amount of cash equal to the difference between (i) the lesser of (x) the Specified Cash Amount and (y) the Conversion Value and (ii) $1,000, and (B) to the extent the Conversion Value exceeds the Specified Cash Amount, a number of Shares equal to the sum of

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		the Daily Share Amounts for each of the Valid Days during the applicable Settlement Averaging Period; provided, however, that if the calculation contained in clause (A) above results in a negative number, such number shall be replaced with the number “zero”.
	Daily Share Amount:	Means, for each Valid Day during the applicable Settlement Averaging Period, (A) the greater of (i) zero and (ii) the Option Entitlement on the Conversion Date minus the quotient of (x) the product of (1) the Applicable Percentage and (2) the Specified Cash Amount divided by (y) the VWAP Price on such Valid Day divided by (B) 30.
	Conversion Value:	Means the product of (i) the Option Entitlement on the Conversion Date and (ii) the average of the VWAP Prices on each of the Valid Days during the applicable Settlement Averaging Period.
	Settlement Date:	For any Option, the date Shares will be delivered with respect to the Convertible Securities related to such Options, under the terms of the Supplemental Indenture; provided that if Net Share Extended Settlement applies, the Settlement Date shall be the date Shares and/or cash would have been required to be delivered if Combination Settlement or Cash Settlement applied to the settlement of such Relevant Convertible Securities. Other Applicable Provisions:     To the extent Dealer is obligated to deliver Shares hereunder, the provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
	Restricted Certificated Shares:	Notwithstanding anything to the contrary in the Equity Definitions, Dealer may, in whole or in part, deliver Shares in certificated form representing the Number of Shares to be Delivered to Counterparty in lieu of delivery through the Clearance System. With respect to such certificated Shares, the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by deleting the remainder of the provision after the word “encumbrance” in the fourth line thereof.
Share Adjustments:
	Method of Adjustment:	Notwithstanding Section 11.2 of the Equity Definitions, upon the occurrence of any event or condition set forth in the Dilution Adjustment Sections (as defined in the Supplemental Indenture), the Calculation Agent shall make a corresponding adjustment, if necessary, to the terms relevant to the exercise, settlement or payment of the Transaction, subject to the definition of Conversion Rate. Promptly (but in no event later than the close of business on the following New York Business Day) upon the occurrence of any “Adjustment Event” (as defined in the Supplemental Indenture) Counterparty shall notify the Calculation Agent of such Adjustment Event; and once the adjustments to be made to the terms of the Supplemental Indenture and the Convertible Securities

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		in respect of such Adjustment Event have been determined, Counterparty shall promptly (but in no event later than the close of business on the following New York Business Day) notify the Calculation Agent in writing of the details of such adjustment necessary to make such corresponding adjustment hereunder.
Extraordinary Events:
	Merger Events:	Notwithstanding Section 12.1(b) of the Equity Definitions, a “Merger Event” means the occurrence of any event or condition set forth in the Consequences of Merger Section (as defined in the Supplemental Indenture).
	Tender Offer:	Applicable. Notwithstanding Section 12.1(d) of the Equity Definitions, a “Tender Offer” means the occurrence of any event or condition set forth in the Consequences of Tender Offer Section (as defined in the Supplemental Indenture).
	Consequences of Merger Events and Tender Offers:	Notwithstanding Sections 12.2 and 12.3 of the Equity Definitions, upon the occurrence of a Merger Event or Tender Offer, the Calculation Agent shall make the corresponding adjustment in respect of any adjustment under the Supplemental Indenture to any one or more of the nature of the Shares, the Number of Options, the Option Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction; provided that such adjustment shall be made without regard to any adjustment to the Conversion Rate pursuant the Conversion Rate Adjustment Sections and the election, if any, by Counterparty to adjust the Conversion Rate; and provided further that the Calculation Agent may limit or alter any such adjustment referenced in this paragraph so that the fair value of the Transaction to Dealer is not reduced as a result of such adjustment.
	Notice of Merger Consideration:	Upon the occurrence of a Merger Event that causes the Shares to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), Counterparty shall reasonably promptly (but, in any event prior to the Merger Date) notify the Calculation Agent of (i) the weighted average of the types and amounts of consideration received by the holders of Shares entitled to receive cash, securities or other property or assets with respect to or in exchange for such Shares in any Merger Event who affirmatively make such an election and (ii) the details of the adjustment made under the Supplemental Indenture in respect of such Merger Event.
	Nationalization, Insolvency or Delisting:	Cancellation and Payment (Calculation Agent Determination); provided that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it will also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the American Stock Exchange the NASDAQ Global Select Market or the NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.

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Additional Disruption Events:
(a) Change in Law:			Applicable
(b) Failure to Deliver:			Applicable
(c) Insolvency Filing:			Applicable
(d) Hedging Disruption:			Applicable
(e) Increased Cost of Hedging:			Applicable
Hedging Party:			For all applicable Additional Disruption Events, Dealer
Determining Party:			For all applicable Extraordinary Events, Dealer
Non-Reliance:			Applicable
Agreements and Acknowledgments
Regarding Hedging Activities:			Applicable
Additional Acknowledgments:			Applicable
3. Calculation Agent:			LBI is acting as agent on behalf of Dealer and Counterparty for the Transaction. LBI has no obligations, by guarantee, endorsement or otherwise, with respect to the performance of the Transaction by either party. LBI shall at all times act in good faith and in a commercially reasonable manner. In addition, LBI shall use commercially reasonable efforts under the circumstances to consult with Counterparty on decisions it makes in its capacity as Calculation Agent; provided that LBI shall not be required to take into account or be bound by any considerations raised by Counterparty.
4. Account Details:
Dealer Payment Instructions:			To be provided by Dealer.
Counterparty Payment Instructions:			To be provided by Counterparty.
5. Offices:
The Office of Dealer for the Transaction is: New York
	Lehman Brothers Inc., acting as Agent Lehman Brothers OTC Derivatives Inc., acting as Principal 745 Seventh Avenue New York, NY 10019
	Attention:	Transaction Management Group
	Telephone:	212-526-9986
	Facsimile:	646-885-9546 (United States of America)
The Office of Counterparty for the Transaction is: Not applicable
6. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Counterparty:
	To:	The Great Atlantic & Pacific Tea Company
		2 Paragon Drive
		Montvale, New Jersey 07645
	Attn:	Brenda Galgano, Senior Vice President & Chief Financial Officer
	Telephone:	201-571-4363
	Facsimile:	201-571-8715

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(b) Address for notices or communications to Dealer:
		To:	Lehman Brothers Inc., acting as Agent Lehman Brothers OTC Derivatives Inc., acting as Principal 745 Seventh Avenue New York, New York 10019
		Attn:	Transaction Management Group
		Telephone No.:	(212) 526-9986
		Facsimile No.:	(646) 885-9546
	with a copy:
		To:	Lehman Brothers Inc., acting as Agent
			Lehman Brothers OTC Derivatives Inc., acting as Principal
			745 Seventh Avenue
			New York, New York 10019
		Attn:	Steve Roti – US Equity Linked
		Telephone No.:	(212) 526-0055
		Facsimile No.:	(917) 552-0561

7. Representations, Warranties and Agreements:

          (a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Counterparty represents and warrants to and for the benefit of, and agrees with, Dealer as follows:

          (i) On the Trade Date, (A) none of Counterparty and its officers and directors is aware of any material nonpublic information regarding Counterparty or the Shares and (B) all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of 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.

          (ii) (A) On the Trade Date, the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“Regulation M”) and (B) Counterparty shall not engage in any “distribution,” as such term is defined in Regulation M, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day immediately following the Trade Date.

          (iii) On the Trade Date, neither Counterparty nor any “affiliate” or “affiliated purchaser” (each as defined in Rule 10b-18 of the Exchange Act) shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except through Dealer.

          (iv) Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Dealer is not making any representations or warranties with respect to the treatment of the Transaction under FASB Statements 133, as amended, or 150, EITF Issue No. 00-19 (or any successor issue statements) or under FASB’s Liabilities & Equity Project.

          (v) Without limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.

          (vi) Prior to the Trade Date, Counterparty shall deliver to Dealer a resolution of Counterparty’s board of directors authorizing the Transaction and such other certificate or certificates as Dealer shall reasonably request.

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          (vii) Counterparty is not entering into this Confirmation to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.

          (viii) Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

          (ix) On each of the Trade Date, the Premium Payment Date and the Additional Premium Payment Date, if any, Counterparty would be able to purchase the Shares hereunder in compliance with the laws of the jurisdiction of its incorporation.

          (x) The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Sections 1 and 3 of the Underwriting Agreement are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.

          (xi) Counterparty understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any affiliate of Dealer or any governmental agency.

          (xii) Counterparty has received and read and understands the Notice of Regulatory Treatment and the OTC Option Risk Disclosure Statement.

          (b) Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended.

          (c) Each of Dealer and Counterparty acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) thereof. Accordingly, Counterparty represents and warrants to Dealer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof, and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.

          (d) Each of Dealer and Counterparty agrees and acknowledges that Dealer is a “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of Title 11 of the United States Code (the “Bankruptcy Code”). The parties hereto further agree and acknowledge (A) that this Confirmation is (i) intended to be a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “settlement payment,” as such term is defined in Section 741(8) of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code, and (B) that Dealer is intended to be entitled to the protections afforded by, among other sections, Section 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code.

          (e) Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Trade Date and reasonably acceptable to Dealer in form and substance (subject to customary qualifications, assumptions and exceptions), with respect to the matters set forth in Section 3(a) of the Agreement.

          (f) LBI will furnish Counterparty upon written request, a statement as to the source and amount of any remuneration received or to be received by the LBI in connection with the Transaction evidenced hereby.

          8. Other Provisions:

          (a) Additional Termination Events. The occurrence of (i) an event of default with respect to Counterparty under the terms of the Convertible Securities as set forth in the Default Events (as defined in the Supplemental Indenture), (ii) an Amendment Event, (iii) or a Repayment Event and shall be an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction and Counterparty is the sole Affected Party and Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(a) of the Agreement; provided that in the case of a Repayment Event the Transaction shall be subject to termination only in respect of the number of Convertible Securities that cease to be outstanding in connection with or as a result of such Repayment Event.

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          “Amendment Event” means that Counterparty amends, modifies, supplements or waives any term of the Supplemental Indenture or the Convertible Securities governing the principal amount, coupon, maturity, repurchase obligation of Counterparty, redemption right of Counterparty, any term relating to conversion of the Convertible Securities (including changes to the conversion price, conversion settlement dates or conversion conditions), or any term that would require consent of the holders of not less than 100% of the principal amount of the Convertible Securities to amend.

          “Repayment Event” means that (A) any Convertible Securities are repurchased (whether in connection with or as a result of a change of control, howsoever defined, or for any other reason) by Counterparty or any of its subsidiaries, (B) any Convertible Securities are delivered to Counterparty in exchange for delivery of any property or assets of Counterparty or any of its subsidiaries (howsoever described), (C) any principal of any of the Convertible Securities is repaid prior to the final maturity date of the Convertible Securities (whether following acceleration of the Convertible Securities or otherwise), or (D) any Convertible Securities are exchanged by or for the benefit of the holders thereof for any other securities of Counterparty or any of its affiliates (or any other property, or any combination thereof) pursuant to any exchange offer or similar transaction; provided that, in the case of clause (B) and clause (D), conversions of the Convertible Securities pursuant to the terms of the Supplemental Indenture as in effect on the date hereof shall not be Repayment Events.

          (b) Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events. If, subject to Section 8(k) below, Dealer shall owe Counterparty any amount pursuant to Section 12.2 or 12.3 of the Equity Definitions and “Consequences of Merger Events and Tender Offers” above, or Sections 12.6, 12.7 or 12.9 of the Equity Definitions (except in the event of an Insolvency, a Nationalization, a Tender Offer or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (except in the event of an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party, that resulted from an event or events within Counterparty’s control) (a “Payment Obligation”), Counterparty shall have the right, in its sole discretion, to require Dealer to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, between the hours of 9:00 A.M. and 4:00 P.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date or Early Termination Date, as applicable (“Notice of Share Termination”). Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the Merger Date, the Tender Offer Date, Announcement Date or Early Termination Date, as applicable:

Share Termination Alternative:	Applicable and means that Dealer shall deliver to Counterparty the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, in satisfaction of the Payment Obligation.
Share Termination Delivery Property:	A number of Share Termination Delivery Units, as calculated by the Calculation Agent in good faith, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
Share Termination Unit Price:	The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer at the time of notification of the Payment Obligation.
Share Termination Delivery Unit:	In the case of a Termination Event, Event of Default or Delisting, one Share or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency,

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	Nationalization, Merger Event or Tender Offer. If such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
Failure to Deliver:	Applicable
Other applicable provisions:	If Share Termination Alternative is applicable, the provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units.”

          (c) Disposition of Hedge Shares. Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, any Shares (the “Hedge Shares”) acquired by Dealer for the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall, at its election: (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement, in form and substance commercially reasonably satisfactory to Dealer and Counterparty, substantially in the form of an underwriting agreement for a registered offering, (B) provide accountant’s “comfort” letters in customary form for registered offerings of equity securities, (C) provide disclosure opinions of nationally recognized outside counsel to Counterparty reasonably acceptable to Dealer, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities and (E) afford Dealer a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities; provided, however, that if Dealer, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this Section 8(c) shall apply at the election of Counterparty; (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance commercially reasonably satisfactory to Dealer and Counterparty, including customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Hedge Shares from Dealer), opinions and certificates and such other documentation as is customary for private placements agreements, all reasonably acceptable to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its reasonable judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from Dealer at the VWAP Price on such Exchange Business Days, and in the amounts, requested by Dealer. For the avoidance of doubt, unless Counterparty elects to purchase Hedge Shares from Dealer pursuant to clause (iii) above, under no circumstances shall Counterparty be required to pay cash to purchase Hedge Shares from Dealer.

          (d) Amendment to Equity Definitions. The following amendment shall be made to the Equity Definitions:

          Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that Issuer.”

          Section 12.9(b)(i) of the Equity Definitions is hereby amended by (1) replacing “either party may elect” with “Dealer may elect” and (2) replacing “notice to the other party” with “notice to the Counterparty” in the first sentence of such section.

          (e) Repurchase Notices. Counterparty shall, on any day on which Counterparty effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “Repurchase Notice”) on such day if, following such repurchase, the Notice Percentage as determined on such day is (i) greater than 6% and (ii) greater by 0.5% than the Notice Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase

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Notice, greater than the Notice Percentage as of the date hereof). The “Notice Percentage” as of any day is the fraction, expressed as a percentage, the numerator of which is the Number of Shares and the denominator of which is the number of Shares outstanding on such day. In the event that Counterparty fails to provide Dealer with a Repurchase Notice when and in the manner specified in this Section 8(e) then Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective directors, officers, employees, agents and controlling persons (Dealer and each such person being an “Indemnified Party”) from and against any and all losses, claims, damages and liabilities (or actions in respect thereof), joint or several, to which such Indemnified Party may become subject under applicable securities laws, including without limitation, Section 16 of the Exchange Act, solely relating to or arising out of such failure. If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability. In addition, Counterparty will reimburse any Indemnified Party for all reasonable expenses (including reasonable counsel fees and expenses) as they are incurred (after notice to Counterparty) in connection with the investigation of, preparation for or defense or settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on behalf of Counterparty. This indemnity shall survive the completion of the Transaction contemplated by this Confirmation and any assignment and delegation of the Transaction made pursuant to this Confirmation or the Agreement shall inure to the benefit of any permitted assignee of Dealer.

          (f) Transfer and Assignment. Either party may transfer any of its rights or obligations under the Transaction with the prior written consent of the non-transferring party, such consent not to be unreasonably withheld. In addition, Dealer may transfer or assign without any consent of the Counterparty its rights and obligations hereunder and under the Agreement, in whole or in part, to (i) any of its affiliates, (ii) any entities sponsored or organized by, or on behalf of or for the benefit of Dealer, or (iii) any person of credit quality equivalent to Dealer; provided further that at any time at which the Equity Percentage exceeds 8.5% (an “Excess Ownership Position”) or a Hedging Disruption has occurred and is continuing, if Dealer, in its commercially reasonable discretion, is unable to effect a transfer or assignment to a third party in accordance with the requirements set forth above after using its commercially reasonable efforts on pricing terms commercially reasonably acceptable to Dealer such that an Excess Ownership Position or a Hedging Disruption, as the case may be, no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “Terminated Portion”) of the Transaction, such that such Excess Ownership Position or Hedging Disruption, as the case may be, no longer exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Counterparty shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction. The “Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer, for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act (collectively, “Dealer Group”), beneficially own (within the meaning of Section 13 of the Exchange Act) on such day and (B) the denominator of which is the number of Shares outstanding on such day.

          (g) Staggered Settlement. Dealer may, by notice to Counterparty prior to any Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares on two or more dates (each, a “Staggered Settlement Date”) or at two or more times on the Nominal Settlement Date as follows:

          (i) in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to such Nominal Settlement Date, but not prior to the beginning of the related Conversion Reference Period (as defined in the Supplemental Indenture) or delivery times and how it will allocate the Shares it is required to deliver under “Delivery Obligation” (above) among the Staggered Settlement Dates or delivery times; and

          (ii) the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement Date.

          (h) Right to Extend. Dealer may postpone any Potential Exercise Date or any other date of valuation or delivery by Dealer, with respect to some or all of the relevant Options (in which event the Calculation Agent shall make appropriate adjustments to the Delivery Obligation), if Dealer determines, in its commercially reasonable discretion, that

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such extension is reasonably necessary or appropriate (i) to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions or (ii) to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer.

          (i) Disclosure. Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure.

          (j) Designation by Dealer. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such shares or other securities and otherwise to perform Dealer obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance.

(k) Netting and Set-off.

          (i) If on any date cash would otherwise be payable or Shares or other property would otherwise be deliverable hereunder or pursuant to the Agreement or pursuant to any other agreement between the parties by Counterparty to Dealer and cash would otherwise be payable or Shares or other property would otherwise be deliverable hereunder or pursuant to the Agreement or pursuant to any other agreement between the parties by Dealer to Counterparty and the type of property required to be paid or delivered by each such party on such date is the same, then, on such date, each such party’s obligation to make such payment or delivery will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable or deliverable by one such party exceeds the aggregate amount that would otherwise have been payable or deliverable by the other such party, replaced by an obligation of the party by whom the larger aggregate amount would have been payable or deliverable to pay or deliver to the other party the excess of the larger aggregate amount over the smaller aggregate amount.

          (ii) In addition to and without limiting any rights of set-off that a party hereto may have as a matter of law, pursuant to contract or otherwise, upon the occurrence of an Early Termination Date, Dealer shall have the right to terminate, liquidate and otherwise close out the Transaction and to set off any obligation or right that Dealer or any affiliate of Dealer may have to or against Counterparty hereunder or under the Agreement against any right or obligation Dealer or any of its affiliates may have against or to Counterparty, including without limitation any right to receive a payment or delivery pursuant to any provision of the Agreement or hereunder. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of the same type, such obligation and right shall be set off in kind. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of any other type, the value of each of such obligation and such right shall be determined by the Calculation Agent and the result of such set-off shall be that the net obligor shall pay or deliver to the other party an amount of cash or assets, at the net obligor’s option, with a value (determined, in the case of a delivery of assets, by the Calculation Agent) equal to that of the net obligation. In determining the value of any obligation to release or deliver Shares or any right to receive Shares, the value at any time of such obligation or right shall be determined by reference to the market value of the Shares at such time, as determined in good faith by the Calculation Agent. If an obligation or right is unascertained at the time of any such set-off, the Calculation Agent may in good faith estimate the amount or value of such obligation or right, in which case set-off will be effected in respect of that estimate, and the relevant party shall account to the other party at the time such obligation or right is ascertained.

          (iii) Counterparty shall not net or set off its obligations, if any, under the Transaction against its rights against Dealer under any other transaction or instrument. Dealer shall not net or set off its obligations, if any, under the Transaction against its rights against Counterparty under any other transaction or instrument.

          (l) Equity Rights. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Counterparty’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Counterparty’s bankruptcy to any claim arising as a result of a breach by Counterparty of any of its obligations under this Confirmation or the Agreement.

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          (m) Early Unwind. In the event the sale by Counterparty of the Convertible Securities is not consummated with the underwriters pursuant to the Underwriting Agreement for any reason by the close of business in New York on December 18, 2007 (or such later date as agreed upon by the parties, which in no event shall be later than December 28, 2007) (December 18, 2007 or such later date being the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”) on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Counterparty thereunder shall be cancelled and terminated and (ii) Counterparty shall pay to Dealer an amount in cash equal to the aggregate amount of the reasonable costs and expenses relating to the unwinding of Dealer’s hedging activities in respect of the Transaction (including market losses incurred in reselling any Shares purchased by Dealer or its affiliates in connection with such hedging activities). Following such termination, cancellation and payment, each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of either party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Dealer and Counterparty represent and acknowledge to the other that upon an Early Unwind and following the payment referred to above, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

          (n) Waiver of Trial by Jury. EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF COUNTERPARTY OR DEALER OR THEIR RESPECTIVE AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

          (o) Governing Law. THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

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          Counterparty hereby agrees (a) to check this Confirmation carefully and promptly upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Counterparty with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and promptly returning an executed copy to us at facsimile number 646-885-9545 (United States of America), Attention: Documentation.

		Yours faithfully,
		LEHMAN BROTHERS OTC DERIVATIVES INC.
		By:	/s/ Anatoly Kozlov
			Name: Anatoly Kozlov
			Authorized Signatory
Agreed and Accepted By:
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
By:	/s/ William Moss
	Name: William Moss
	Title: Vice President and Treasurer

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EX-10.8

Exhibit 10.8

	December 12, 2007
To:	The Great Atlantic and Pacific Tea Company, Inc.
	2 Paragon Drive
	Montvale, NJ 07645
	Attn: Brenda Galgano, Senior Vice President and Chief Financial Officer
	Telephone: 201-573-4363
	Facsimile: 201-937-8715
From:	Lehman Brothers Inc., acting as Agent
	Lehman Brothers OTC Derivatives Inc., acting as Principal
	745 Seventh Avenue
	New York, NY 10019
	Telephone:	212-526-9986
	Facsimile:	646-885-9546 (United States of America)
Re:	Convertible Bond Hedge Transaction (2012)
	(Global ID: 3534958)

Ladies and Gentlemen:

          The purpose of this communication (this “Confirmation”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “Transaction”) between Lehman Brothers OTC Derivatives Inc. (“Dealer”) and The Great Atlantic and Pacific Tea Company, Inc. (“Counterparty”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below. This Confirmation is sent on behalf of both Dealer and Lehman Brothers Inc. (“LBI”). Lehman Brothers OTC Derivatives Inc. is not a member of the Securities Investor Protection Corporation.

          1. This Confirmation is subject to, and incorporates, the definitions and provisions of the 2000 ISDA Definitions (including the Annex thereto) (the “2000 Definitions”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and together with the 2000 Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc. (“ISDA”). In the event of any inconsistency between the 2000 Definitions and the Equity Definitions, the Equity Definitions will govern. Certain defined terms used herein have the meanings assigned to them in the Indenture to be dated as of December 18, 2007 between Counterparty and Wilmington Trust Company, as trustee and the second supplemental indenture to such indenture to be dated as of December 18, 2007 (such indenture, together with such supplemental indenture (the “Supplemental Indenture”) relating to the USD 230 million principal amount of 6.75% convertible senior notes due 2012 (the “Convertible Securities”). In the event of any inconsistency between the terms defined in the Supplemental Indenture and this Confirmation, this Confirmation shall govern. For the avoidance of doubt, references herein to sections of the Supplemental Indenture are based on the draft of the Supplemental Indenture most recently reviewed by the parties at the time of execution of this Confirmation. If any relevant sections of the Supplemental Indenture are changed, added or renumbered following execution of this Confirmation but prior to the execution of the Supplemental Indenture, the parties will amend this Confirmation in good faith to preserve the economic intent of the parties. The parties further acknowledge that references to the Supplemental Indenture herein are references to the Supplemental Indenture as in effect on the date of its execution and if the Supplemental Indenture is amended following its execution any such amendment will be disregarded for purposes of this Confirmation unless the parties agree otherwise in writing.

          This Confirmation evidences a complete and binding agreement and supersedes any prior agreements, written or oral, between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the 2002 ISDA Master Agreement (the “ISDA Master Agreement”) as if Dealer and Counterparty had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.

          All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation

except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern.

          2. The Transaction constitutes a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:

General Terms:
	Trade Date:	December 12, 2007
	Effective Date:	The closing date of the offering of the Convertible Securities.
	Option Type:	Call
	Seller:	Dealer
	Buyer:	Counterparty
	Shares:	The Common Stock of Counterparty, par value USD 1.00 per share (Ticker Symbol: “GAP”).
	Number of Options:	The number of Convertible Securities in denominations of USD 1,000 principal amount issued by Counterparty on the closing date for the initial issuance of the Convertible Securities; provided that the Number of Options shall be automatically increased as of the date of exercise by Banc of America Securities LLC, and Lehman Brothers Inc., as Representatives of the Underwriters (as defined in the Underwriting Agreement), of their option pursuant to Section 2(b) of the Underwriting Agreement dated as of December 12, 2007, between the Counterparty and Banc of America Securities LLC, Lehman Brothers Inc. and Friedman, Billings, Ramsay & Co., as a “qualified independent underwriter”, (the “Underwriting Agreement”), by the number of Convertible Securities in denominations of USD 1,000 principal amount issued pursuant to such exercise (such Convertible Securities, the “Additional Convertible Securities”).
	Applicable Percentage:	50%
	Number of Shares:	As of any date, the product of the Number of Options and the Option Entitlement.
	Option Entitlement:	As of any date, a number equal to the product of the Conversion Rate as of such date and the Applicable Percentage.
	Strike Price:	USD 37.80
	Conversion Rate:	As of any date, the Conversion Rate, as defined in the Supplemental Indenture, but without regard to any adjustments to the Conversion Rate pursuant to the Conversion Rate Adjustment Sections (as defined in the Supplemental Indenture) (except as set forth under the “Delivery Obligation”).
	Premium:	USD 21,045,000.00 (Premium per Option USD 6.9174); provided that if the Number of Options is increased pursuant to the proviso to the definition of “Number of Options” above, an additional Premium equal to the product of the number of Options by which the Number of Options is so increased and the Premium per Option shall be paid on the Additional Premium Payment Date.
	Premium Payment Date:	The Effective Date

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	Additional Premium Payment Date:	The closing date for the purchase and sale of the Additional Convertible Securities.
	Exchange:	New York Stock Exchange
	Related Exchange:	All Exchanges
Procedures for Exercise:
	Potential Exercise Dates:	Each Conversion Date.
	Conversion Date:	Each “Conversion Date” as defined in the Supplemental Indenture.
	Required Exercise on Conversion Dates:	On each Conversion Date, a number of Options equal to the number of Convertible Securities in denominations of USD 1,000 principal amount submitted for conversion on such Conversion Date in accordance with the terms of the Supplemental Indenture shall be automatically exercised, subject to “Notice of Exercise” below.
	Expiration Date:	December 15, 2012
	Automatic Exercise:	Not applicable (as provided above under “Required Exercise on Conversion Dates”).
	Notice of Exercise:	Notwithstanding anything to the contrary in the Equity Definitions, in order to exercise any Options, Counterparty must notify Dealer in writing before 5:00 p.m. (New York City time) on the Scheduled Valid Day prior to the scheduled first day of the applicable Settlement Averaging Period for the Options, which notice shall specify (i) the number of Options being exercised and the scheduled Settlement Date, (ii) the scheduled first day of the applicable Settlement Averaging Period, (iii) the applicable Settlement Method and (iv) the applicable Specified Cash Amount (as defined in the Supplemental Indenture); provided that in respect of Options relating to Convertible Securities with a Conversion Date occurring on or after the Final Conversion Period, such notice (except for notice of the Settlement Method, which shall be provided as specified above) may be given on or prior to the second Scheduled Valid Day immediately preceding the Expiration Date and need only specify the number of such Options and the applicable Specified Cash Amount.
	Final Conversion Period:	With respect to any Conversion Date occurring on or after the 32nd Scheduled Valid Day immediately preceding the Expiration Date, the 30 consecutive Valid Day period beginning on, and including, the 32nd Scheduled Valid Day immediately prior to the Expiration Date, subject to any extension due to a Market Disruption Event.
	Specified Cash Amount:	“Specified Cash Amount” (defined in the Supplemental Indenture) applicable to such conversion.
	Valuation Time:	At the close of trading of the regular trading session on the Exchange; provided that if the principal trading session is extended, the Calculation Agent shall determine the Valuation Time in its reasonable discretion.
	Market Disruption Event:	Section 6.3(a) of the Equity Definitions is hereby replaced in its entirety by the following:

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		“‘Market Disruption Event’ means, in respect of a Share, (i) a failure by the primary United States national or regional securities exchange or market on which the Shares are listed or admitted to trading to open for trading during its regular trading session or (ii) the occurrence or existence prior to 1:00 p.m., New York City time, on any Valid Day for the Shares for an aggregate one half hour period of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Shares or in any options, contracts or future contracts relating to the Shares.”
Settlement Terms:
	Settlement Method:	Net Share Extended Settlement, Net Share Regular Settlement, Combination Settlement or Cash Settlement consistent with the settlement method elected by Counterparty for the corresponding Convertible Securities; provided that, if Counterparty does not provide a notice of Settlement Method to Dealer pursuant to Notice of Exercise above, Net Share Extended Settlement shall be deemed to apply to the relevant Options.
	Net Share Extended Settlement:	Net Share Extended Settlement shall apply if either (i) Counterparty has elected to deliver only Shares to satisfy the Conversion Obligation (as defined in the Supplemental Indenture) in connection with the conversion of the relevant Convertible Securities or (ii) Counterparty has elected to deliver a combination of Shares and cash to satisfy the Conversion Obligation in connection with the conversion of the relevant Convertible Securities and the Specified Cash Amount with respect to such conversion is less than $1,000.
	Net Share Regular Settlement:	Net Share Regular Settlement shall apply if (i) Counterparty has elected to deliver a combination of Shares and cash to satisfy the Conversion Obligation in connection with the conversion of the relevant Convertible Securities and (ii) the Specified Cash Amount with respect to such conversion is equal to $1,000.
	Combination Settlement:	Combination Settlement shall apply if (i) Counterparty has elected to deliver a combination of Shares and cash to satisfy the Conversion Obligation in connection with the conversion of the relevant Convertible Securities and (ii) the Specified Cash Amount with respect to such conversion is greater than $1,000.
	Cash Settlement:	Cash Settlement shall apply if Counterparty has elected to deliver only cash to satisfy the Conversion Obligation in connection with the conversion of the relevant Convertible Securities.
	Delivery Obligation:	Dealer will deliver to Counterparty, on the relevant Settlement Date,
		(a) if Net Share Extended Settlement applies, a number of Shares equal to the Net Shares (calculated based on a Settlement Averaging Period for a Net Share Extended Settlement) in respect

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	of any Option exercised or deemed exercised hereunder.1 In no event will the Net Shares be less than zero.
	(b) if Net Share Regular Settlement applies, a number of Shares equal to the Net Shares (calculated based on a Settlement Averaging Period for a Net Share Regular Settlement) in respect of any Option exercised or deemed exercised hereunder. In no event will the Net Shares be less than zero.
	(c) if Combination Settlement applies, an amount of cash and a number of Shares, if any, equal to the Combination Amount.
	(d) if Cash Settlement applies, an amount of cash equal to the Conversion Value in excess of $1,000.
	If such exercise relates to the conversion of Convertible Securities in connection with which holders thereof are entitled to receive additional Shares and/or cash pursuant to the adjustments to the Conversion Rate pursuant to Section 5.20 of the Supplemental Indenture, then, notwithstanding the foregoing, the Delivery Obligation shall include such additional Shares and/or cash, except that the Delivery Obligation shall be capped so that the value of the Delivery Obligation per Option (with the value of any Shares included in the Delivery Obligation determined by the Calculation Agent using the VWAP Price on the last day of the relevant Settlement Averaging Period) does not exceed the amount as determined by the Calculation Agent that would be payable by Dealer pursuant to Section 6 of the Agreement if such Conversion Date were an Early Termination Date resulting from an Additional Termination Event with respect to which the Transaction (except that, for purposes of determining such amount (x) the Number of Options shall be deemed to be equal to the number of Options exercised on such Exercise Date and (y) such amount payable will be determined as if Section 5.20 of the Supplemental Indenture were deleted) was the sole Affected Transaction and Counterparty was the sole Affected Party (determined without regard to Section 8(b) of this Confirmation).
	Dealer will deliver cash in lieu of any fractional Shares to be delivered with respect to any Net Shares or Combination Amount valued at the VWAP Price for the last Valid Day of the relevant Settlement Averaging Period.
Net Shares:	In respect of any Option exercised or deemed exercised, a number of Shares equal to (i) the Option Entitlement on the Conversion Date multiplied by (ii) the sum of the quotients, for each Valid Day during the applicable Settlement Averaging Period for such Option, of (A) the VWAP Price on such Valid Day less the Strike Price, divided by (B) such VWAP Price, divided by (iii) the number of Valid Days in such Settlement Averaging Period; provided, however, that if the calculation contained in clause (A) above results in a negative number, such number shall be replaced with the number “zero”.

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Valid Day:	A day on which (i) trading in the Shares generally occurs on the Exchange or, if the Shares are not then listed on the Exchange, on the principal other U.S. national or regional securities exchange on which the Shares are then listed or, if the Shares are not then listed on a U.S. national or regional securities exchange, in the principal other market on which the Shares are then traded and (ii) there is no Market Disruption Event.
Scheduled Valid Day:	A day on which trading in the Shares is scheduled to occur on the principal U.S. national or regional securities exchange or market on which the Shares are listed or admitted for trading. If the Shares are not so listed or admitted for trading, “Scheduled Valid Day” means a “Business Day.”
VWAP Price:	On any Valid Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page GAP <equity> VAP (or any successor thereto) in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such Valid Day (or if such volume-weighted average price is unavailable, the market value of one Share on such Valid Day, as determined by the Calculation Agent using a volume-weighted method).
Settlement Averaging Period:	For any Option, (x) if Counterparty has, on or prior to the first Valid Day of the Final Conversion Period, delivered a Notice of Exercise to Dealer with respect to such Option with a Conversion Date occurring prior to the first Valid Day of the Final Conversion Period, (i) if Net Share Extended Settlement applies, the ninety (90) consecutive Valid Days commencing on and including the second Valid Day following such Conversion Date or (ii) if Net Share Regular Settlement, Combination Settlement or Cash Settlement applies, the thirty (30) consecutive Valid Days commencing on and including the second Valid Day following such Conversion Date, or
	(y) if Counterparty has, on or following the first Valid Day of the Final Conversion Period, delivered a Notice of Exercise to Dealer with respect to such Option with a Conversion Date occurring on or following the first Valid Day of the Final Conversion Period, (i) if Net Share Extended Settlement applies, the ninety (90) consecutive Valid Days commencing on, and including, the ninety second (92nd) Scheduled Valid Day immediately prior to the Expiration Date or (ii) if Net Share Regular Settlement, Combination Settlement or Cash Settlement applies, the thirty (30) consecutive Valid Days commencing on, and including, the thirty second (32nd) Scheduled Valid Day immediately prior to the the Expiration Date.
Combination Amount:	In respect of any Option exercised or deemed exercised, (A) an amount of cash equal to the difference between (i) the lesser of (x) the Specified Cash Amount and (y) the Conversion Value and (ii) $1,000, and (B) to the extent the Conversion Value exceeds the Specified Cash Amount, a number of Shares equal to the sum of the Daily Share Amounts for each of the Valid Days during the applicable Settlement Averaging Period; provided, however, that if

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		the calculation contained in clause (A) above results in a negative number, such number shall be replaced with the number “zero”.
	Daily Share Amount:	Means, for each Valid Day during the applicable Settlement Averaging Period, (A) the greater of (i) zero and (ii) the Option Entitlement on the Conversion Date minus the quotient of (x) the product of (1) the Applicable Percentage and (2) the Specified Cash Amount divided by (y) the VWAP Price on such Valid Day divided by (B) 30.
	Conversion Value:	Means the product of (i) the Option Entitlement on the Conversion Date and (ii) the average of the VWAP Prices on each of the Valid Days during the applicable Settlement Averaging Period.
	Settlement Date:	For any Option, the date Shares will be delivered with respect to the Convertible Securities related to such Options, under the terms of the Supplemental Indenture; provided that if Net Share Extended Settlement applies, the Settlement Date shall be the date Shares and/or cash would have been required to be delivered if Combination Settlement or Cash Settlement applied to the settlement of such Relevant Convertible Securities. Other Applicable Provisions: To the extent Dealer is obligated to deliver Shares hereunder, the provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
	Restricted Certificated Shares:	Notwithstanding anything to the contrary in the Equity Definitions, Dealer may, in whole or in part, deliver Shares in certificated form representing the Number of Shares to be Delivered to Counterparty in lieu of delivery through the Clearance System. With respect to such certificated Shares, the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by deleting the remainder of the provision after the word “encumbrance” in the fourth line thereof.
Share Adjustments:
	Method of Adjustment:	Notwithstanding Section 11.2 of the Equity Definitions, upon the occurrence of any event or condition set forth in the Dilution Adjustment Sections (as defined in the Supplemental Indenture), the Calculation Agent shall make a corresponding adjustment, if necessary, to the terms relevant to the exercise, settlement or payment of the Transaction, subject to the definition of Conversion Rate. Promptly (but in no event later than the close of business on the following New York Business Day) upon the occurrence of any “Adjustment Event” (as defined in the Supplemental Indenture) Counterparty shall notify the Calculation Agent of such Adjustment Event; and once the adjustments to be made to the terms of the Supplemental Indenture and the Convertible Securities in respect of such Adjustment Event have been determined, Counterparty shall promptly (but in no event later than the close of

7

		business on the following New York Business Day) notify the Calculation Agent in writing of the details of such adjustment necessary to make such corresponding adjustment hereunder.
Extraordinary Events:
	Merger Events:	Notwithstanding Section 12.1(b) of the Equity Definitions, a “Merger Event” means the occurrence of any event or condition set forth in the Consequences of Merger Section (as defined in the Supplemental Indenture).
	Tender Offer:	Applicable. Notwithstanding Section 12.1(d) of the Equity Definitions, a “Tender Offer” means the occurrence of any event or condition set forth in the Consequences of Tender Offer Section (as defined in the Supplemental Indenture).
	Consequences of Merger Events and Tender Offers:	Notwithstanding Sections 12.2 and 12.3 of the Equity Definitions, upon the occurrence of a Merger Event or Tender Offer, the Calculation Agent shall make the corresponding adjustment in respect of any adjustment under the Supplemental Indenture to any one or more of the nature of the Shares, the Number of Options, the Option Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction; provided that such adjustment shall be made without regard to any adjustment to the Conversion Rate pursuant to the Conversion Rate Adjustment Sections and the election, if any, by Counterparty to adjust the Conversion Rate; and provided further that the Calculation Agent may limit or alter any such adjustment referenced in this paragraph so that the fair value of the Transaction to Dealer is not reduced as a result of such adjustment.
	Notice of Merger Consideration:	Upon the occurrence of a Merger Event that causes the Shares to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), Counterparty shall reasonably promptly (but, in any event prior to the Merger Date) notify the Calculation Agent of (i) the weighted average of the types and amounts of consideration received by the holders of Shares entitled to receive cash, securities or other property or assets with respect to or in exchange for such Shares in any Merger Event who affirmatively make such an election and (ii) the details of the adjustment made under the Supplemental Indenture in respect of such Merger Event.
	Nationalization, Insolvency or Delisting:	Cancellation and Payment (Calculation Agent Determination); provided that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it will also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the American Stock Exchange the NASDAQ Global Select Market or the NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
	Additional Disruption Events:
	(a) Change in Law:	Applicable

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(b) Failure to Deliver:	Applicable
(c) Insolvency Filing:	Applicable
(d) Hedging Disruption:	Applicable
(e) Increased Cost of Hedging:	Applicable
Hedging Party:	For all applicable Additional Disruption Events, Dealer
Determining Party:	For all applicable Extraordinary Events, Dealer
Non-Reliance:	Applicable
Agreements and Acknowledgments Regarding Hedging Activities:	Applicable
Additional Acknowledgments:	Applicable
3. Calculation Agent:	LBI is acting as agent on behalf of Dealer and Counterparty for the Transaction. LBI has no obligations, by guarantee, endorsement or otherwise, with respect to the performance of the Transaction by either party. LBI shall at all times act in good faith and in a commercially reasonable manner. In addition, LBI shall use commercially reasonable efforts under the circumstances to consult with Counterparty on decisions it makes in its capacity as Calculation Agent; provided that LBI shall not be required to take into account or be bound by any considerations raised by Counterparty.
4. Account Details:
Dealer Payment Instructions:	To be provided by Dealer.
Counterparty Payment Instructions:	To be provided by Counterparty.
5. Offices:
The Office of Dealer for the Transaction is: New York

	Lehman Brothers Inc., acting as Agent
	Lehman Brothers OTC Derivatives Inc., acting as Principal
	745 Seventh Avenue
	New York, NY 10019
	Attention:	Transaction Management Group
	Telephone:	212-526-9986
	Facsimile:	646-885-9546 (United States of America)
The Office of Counterparty for the Transaction is: Not applicable
6. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Counterparty:
	To:	The Great Atlantic & Pacific Tea Company
		2 Paragon Drive
		Montvale, New Jersey 07645
	Attn:	Brenda Galgano, Senior Vice President & Chief Financial Officer
	Telephone:	201-571-4363
	Facsimile:	201-571-8715
(b) Address for notices or communications to Dealer:

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	To:	Lehman Brothers Inc., acting as Agent
		Lehman Brothers OTC Derivatives Inc., acting as Principal
		745 Seventh Avenue
		New York, New York 10019
	Attn:	Transaction Management Group
	Telephone No.:	(212) 526-9986
	Facsimile No.:	(646) 885-9546
with a copy:
	To:	Lehman Brothers Inc., acting as Agent
		Lehman Brothers OTC Derivatives Inc., acting as Principal
		745 Seventh Avenue
		New York, New York 10019
	Attn:	Steve Roti – US Equity Linked
	Telephone No.:	(212) 526-0055
	Facsimile No.:	(917) 552-0561

          7. Representations, Warranties and Agreements:

          (a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Counterparty represents and warrants to and for the benefit of, and agrees with, Dealer as follows:

          (i) On the Trade Date, (A) none of Counterparty and its officers and directors is aware of any material nonpublic information regarding Counterparty or the Shares and (B) all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of 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.

          (ii) (A) On the Trade Date, the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“Regulation M”) and (B) Counterparty shall not engage in any “distribution,” as such term is defined in Regulation M, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day immediately following the Trade Date.

          (iii) On the Trade Date, neither Counterparty nor any “affiliate” or “affiliated purchaser” (each as defined in Rule 10b-18 of the Exchange Act) shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except through Dealer.

          (iv) Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Dealer is not making any representations or warranties with respect to the treatment of the Transaction under FASB Statements 133, as amended, or 150, EITF Issue No. 00-19 (or any successor issue statements) or under FASB’s Liabilities & Equity Project.

          (v) Without limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.

          (vi) Prior to the Trade Date, Counterparty shall deliver to Dealer a resolution of Counterparty’s board of directors authorizing the Transaction and such other certificate or certificates as Dealer shall reasonably request.

          (vii) Counterparty is not entering into this Confirmation to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise

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manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.

          (viii) Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

          (ix) On each of the Trade Date, the Premium Payment Date and the Additional Premium Payment Date, if any, Counterparty would be able to purchase the Shares hereunder in compliance with the laws of the jurisdiction of its incorporation.

          (x) The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Sections 1 and 3 of the Underwriting Agreement are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.

          (xi) Counterparty understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any affiliate of Dealer or any governmental agency.

          (xii) Counterparty has received and read and understands the Notice of Regulatory Treatment and the OTC Option Risk Disclosure Statement.

          (b) Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended.

          (c) Each of Dealer and Counterparty acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) thereof. Accordingly, Counterparty represents and warrants to Dealer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof, and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.

          (d) Each of Dealer and Counterparty agrees and acknowledges that Dealer is a “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of Title 11 of the United States Code (the “Bankruptcy Code”). The parties hereto further agree and acknowledge (A) that this Confirmation is (i) intended to be a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “settlement payment,” as such term is defined in Section 741(8) of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code, and (B) that Dealer is intended to be entitled to the protections afforded by, among other sections, Section 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code.

          (e) Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Trade Date and reasonably acceptable to Dealer in form and substance (subject to customary qualifications, assumptions and exceptions), with respect to the matters set forth in Section 3(a) of the Agreement.

          (f) LBI will furnish Counterparty upon written request, a statement as to the source and amount of any remuneration received or to be received by the LBI in connection with the Transaction evidenced hereby.

          8. Other Provisions:

          (a) Additional Termination Events. The occurrence of (i) an event of default with respect to Counterparty under the terms of the Convertible Securities as set forth in the Default Events (as defined in the Supplemental Indenture), (ii) an Amendment Event, (iii) a Repayment Event, or (iv) a Redemption Event and shall be an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction and Counterparty is the sole Affected Party and Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(a) of the Agreement; provided that in the case of a Repayment Event the Transaction shall be subject to termination only in respect of the number of Convertible Securities that cease to be outstanding in connection with or as a result of such Repayment Event; provided further that in the case of a Redemption Event the Transaction shall be subject to termination only in respect of the number of Convertible Securities in respect of which the Counterparty has delivered a redemption notice.

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          “Amendment Event” means that Counterparty amends, modifies, supplements or waives any term of the Supplemental Indenture or the Convertible Securities governing the principal amount, coupon, maturity, repurchase obligation of Counterparty, redemption right of Counterparty, any term relating to conversion of the Convertible Securities (including changes to the conversion price, conversion settlement dates or conversion conditions), or any term that would require consent of the holders of not less than 100% of the principal amount of the Convertible Securities to amend.

          “Repayment Event” means that (A) any Convertible Securities are repurchased (whether in connection with or as a result of a change of control, howsoever defined, or for any other reason) by Counterparty or any of its subsidiaries, (B) any Convertible Securities are delivered to Counterparty in exchange for delivery of any property or assets of Counterparty or any of its subsidiaries (howsoever described), (C) any principal of any of the Convertible Securities is repaid prior to the final maturity date of the Convertible Securities (whether following acceleration of the Convertible Securities or otherwise), or (D) any Convertible Securities are exchanged by or for the benefit of the holders thereof for any other securities of Counterparty or any of its affiliates (or any other property, or any combination thereof) pursuant to any exchange offer or similar transaction; provided that, in the case of clause (B) and clause (D), conversions of the Convertible Securities pursuant to the terms of the Supplemental Indenture as in effect on the date hereof shall not be Repayment Events.

          “Redemption Event” means that the Counterparty (i) notifies the trustee under the Supplemental Indenture of the redemption date and of the principal amount of Convertible Securities to be redeemed or (ii) makes a public announcement of its intention to redeem a specified principal amount of Convertible Securities on a particular redemption date.

          (b) Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events. If, subject to Section 8(k) below, Dealer shall owe Counterparty any amount pursuant to Section 12.2 or 12.3 of the Equity Definitions and “Consequences of Merger Events and Tender Offers” above, or Sections 12.6, 12.7 or 12.9 of the Equity Definitions (except in the event of an Insolvency, a Nationalization, a Tender Offer or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (except in the event of an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party, that resulted from an event or events within Counterparty’s control) (a “Payment Obligation”), Counterparty shall have the right, in its sole discretion, to require Dealer to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, between the hours of 9:00 A.M. and 4:00 P.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date or Early Termination Date, as applicable (“Notice of Share Termination”). Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the Merger Date, the Tender Offer Date, Announcement Date or Early Termination Date, as applicable:

Share Termination Alternative:	Applicable and means that Dealer shall deliver to Counterparty the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, in satisfaction of the Payment Obligation.
Share Termination Delivery Property:	A number of Share Termination Delivery Units, as calculated by the Calculation Agent in good faith, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
Share Termination Unit Price:	The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer at the time of notification of the Payment Obligation.

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Share Termination Delivery Unit:	In the case of a Termination Event, Event of Default or Delisting, one Share or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization, Merger Event or Tender Offer. If such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
Failure to Deliver:	Applicable
Other applicable provisions:	If Share Termination Alternative is applicable, the provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units.”

          (c) Disposition of Hedge Shares. Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, any Shares (the “Hedge Shares”) acquired by Dealer for the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall, at its election: (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement, in form and substance commercially reasonably satisfactory to Dealer and Counterparty, substantially in the form of an underwriting agreement for a registered offering, (B) provide accountant’s “comfort” letters in customary form for registered offerings of equity securities, (C) provide disclosure opinions of nationally recognized outside counsel to Counterparty reasonably acceptable to Dealer, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities and (E) afford Dealer a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities; provided, however, that if Dealer, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this Section 8(c) shall apply at the election of Counterparty; (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance commercially reasonably satisfactory to Dealer and Counterparty, including customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Hedge Shares from Dealer), opinions and certificates and such other documentation as is customary for private placements agreements, all reasonably acceptable to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its reasonable judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from Dealer at the VWAP Price on such Exchange Business Days, and in the amounts, requested by Dealer. For the avoidance of doubt, unless Counterparty elects to purchase Hedge Shares from Dealer pursuant to clause (iii) above, under no circumstances shall Counterparty be required to pay cash to purchase Hedge Shares from Dealer.

          (d) Amendment to Equity Definitions. The following amendment shall be made to the Equity Definitions:

          Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that Issuer.”

          Section 12.9(b)(i) of the Equity Definitions is hereby amended by (1) replacing “either party may elect” with “Dealer may elect” and (2) replacing “notice to the other party” with “notice to the Counterparty” in the first sentence of such section.

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          (e) Repurchase Notices. Counterparty shall, on any day on which Counterparty effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “Repurchase Notice”) on such day if, following such repurchase, the Notice Percentage as determined on such day is (i) greater than 6% and (ii) greater by 0.5% than the Notice Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater than the Notice Percentage as of the date hereof). The “Notice Percentage” as of any day is the fraction, expressed as a percentage, the numerator of which is the Number of Shares and the denominator of which is the number of Shares outstanding on such day. In the event that Counterparty fails to provide Dealer with a Repurchase Notice when and in the manner specified in this Section 8(e) then Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective directors, officers, employees, agents and controlling persons (Dealer and each such person being an “Indemnified Party”) from and against any and all losses, claims, damages and liabilities (or actions in respect thereof), joint or several, to which such Indemnified Party may become subject under applicable securities laws, including without limitation, Section 16 of the Exchange Act, solely relating to or arising out of such failure. If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability. In addition, Counterparty will reimburse any Indemnified Party for all reasonable expenses (including reasonable counsel fees and expenses) as they are incurred (after notice to Counterparty) in connection with the investigation of, preparation for or defense or settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on behalf of Counterparty. This indemnity shall survive the completion of the Transaction contemplated by this Confirmation and any assignment and delegation of the Transaction made pursuant to this Confirmation or the Agreement shall inure to the benefit of any permitted assignee of Dealer.

          (f) Transfer and Assignment. Either party may transfer any of its rights or obligations under the Transaction with the prior written consent of the non-transferring party, such consent not to be unreasonably withheld. In addition, Dealer may transfer or assign without any consent of the Counterparty its rights and obligations hereunder and under the Agreement, in whole or in part, to (i) any of its affiliates (ii) any entities sponsored or organized by, or on behalf of or for the benefit of Dealer or (iii) any person of credit quality equivalent to Dealer; provided further that at any time at which the Equity Percentage exceeds 8.5% (an “Excess Ownership Position”) or a Hedging Disruption has occurred and is continuing, if Dealer, in its commercially reasonable discretion, is unable to effect a transfer or assignment to a third party in accordance with the requirements set forth above after using its commercially reasonable efforts on pricing terms commercially reasonably acceptable to Dealer such that an Excess Ownership Position or a Hedging Disruption, as the case may be, no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “Terminated Portion”) of the Transaction, such that such Excess Ownership Position or Hedging Disruption, as the case may be, no longer exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Counterparty shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction. The “Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer, for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act (collectively, “Dealer Group”), beneficially own (within the meaning of Section 13 of the Exchange Act) on such day and (B) the denominator of which is the number of Shares outstanding on such day.

          (g) Staggered Settlement. Dealer may, by notice to Counterparty prior to any Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares on two or more dates (each, a “Staggered Settlement Date”) or at two or more times on the Nominal Settlement Date as follows:

          (i) in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to such Nominal Settlement Date, but not prior to the beginning of the related Conversion Reference Period (as defined in the Supplemental Indenture) or delivery times and how it will allocate the Shares it is required to deliver under “Delivery Obligation” (above) among the Staggered Settlement Dates or delivery times; and

          (ii) the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement Date.

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          (h) Right to Extend. Dealer may postpone any Potential Exercise Date or any other date of valuation or delivery by Dealer, with respect to some or all of the relevant Options (in which event the Calculation Agent shall make appropriate adjustments to the Delivery Obligation), if Dealer determines, in its commercially reasonable discretion, that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions or (ii) to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer.

          (i) Disclosure. Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure.

          (j) Designation by Dealer. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such shares or other securities and otherwise to perform Dealer obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance.

          (k) Netting and Set-off.

          (i) If on any date cash would otherwise be payable or Shares or other property would otherwise be deliverable hereunder or pursuant to the Agreement or pursuant to any other agreement between the parties by Counterparty to Dealer and cash would otherwise be payable or Shares or other property would otherwise be deliverable hereunder or pursuant to the Agreement or pursuant to any other agreement between the parties by Dealer to Counterparty and the type of property required to be paid or delivered by each such party on such date is the same, then, on such date, each such party’s obligation to make such payment or delivery will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable or deliverable by one such party exceeds the aggregate amount that would otherwise have been payable or deliverable by the other such party, replaced by an obligation of the party by whom the larger aggregate amount would have been payable or deliverable to pay or deliver to the other party the excess of the larger aggregate amount over the smaller aggregate amount.

          (ii) In addition to and without limiting any rights of set-off that a party hereto may have as a matter of law, pursuant to contract or otherwise, upon the occurrence of an Early Termination Date, Dealer shall have the right to terminate, liquidate and otherwise close out the Transaction and to set off any obligation or right that Dealer or any affiliate of Dealer may have to or against Counterparty hereunder or under the Agreement against any right or obligation Dealer or any of its affiliates may have against or to Counterparty, including without limitation any right to receive a payment or delivery pursuant to any provision of the Agreement or hereunder. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of the same type, such obligation and right shall be set off in kind. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of any other type, the value of each of such obligation and such right shall be determined by the Calculation Agent and the result of such set-off shall be that the net obligor shall pay or deliver to the other party an amount of cash or assets, at the net obligor’s option, with a value (determined, in the case of a delivery of assets, by the Calculation Agent) equal to that of the net obligation. In determining the value of any obligation to release or deliver Shares or any right to receive Shares, the value at any time of such obligation or right shall be determined by reference to the market value of the Shares at such time, as determined in good faith by the Calculation Agent. If an obligation or right is unascertained at the time of any such set-off, the Calculation Agent may in good faith estimate the amount or value of such obligation or right, in which case set-off will be effected in respect of that estimate, and the relevant party shall account to the other party at the time such obligation or right is ascertained.

          (iii) Counterparty shall not net or set off its obligations, if any, under the Transaction against its rights against Dealer under any other transaction or instrument.

          Dealer shall not net or set off its obligations, if any, under the Transaction against its rights against Counterparty under any other transaction or instrument.

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          (l) Equity Rights. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Counterparty’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Counterparty’s bankruptcy to any claim arising as a result of a breach by Counterparty of any of its obligations under this Confirmation or the Agreement.

          (m) Early Unwind. In the event the sale by Counterparty of the Convertible Securities is not consummated with the underwriters pursuant to the Underwriting Agreement for any reason by the close of business in New York on December 18, 2007 (or such later date as agreed upon by the parties, which in no event shall be later than December 28, 2007) (December 18, 2007 or such later date being the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”) on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Counterparty thereunder shall be cancelled and terminated and (ii) Counterparty shall pay to Dealer an amount in cash equal to the aggregate amount of the reasonable costs and expenses relating to the unwinding of Dealer’s hedging activities in respect of the Transaction (including market losses incurred in reselling any Shares purchased by Dealer or its affiliates in connection with such hedging activities). Following such termination, cancellation and payment, each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of either party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Dealer and Counterparty represent and acknowledge to the other that upon an Early Unwind and following the payment referred to above, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

          (n) Waiver of Trial by Jury. EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF COUNTERPARTY OR DEALER OR THEIR RESPECTIVE AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

          (o) Governing Law. THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

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          Counterparty hereby agrees (a) to check this Confirmation carefully and promptly upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Counterparty with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and promptly returning an executed copy to us at facsimile number 646-885-9545 (United States of America), Attention: Documentation.

		Yours faithfully,
		LEHMAN BROTHERS OTC DERIVATIVES INC.
		By:	/s/ Anatoly Kozlov
			Name: Anatoly Kozlov
			Authorized Signatory
Agreed and Accepted By:
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
By:	/s/ William Moss
	Name: William Moss
	Title: Vice President and Treasurer

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EX-10.9

Exhibit 10.9

EXECUTION COPY

SHARE LENDING AGREEMENT

Dated as of December 12, 2007

Between

THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. (“Lender”),

and

BANK OF AMERICA, N.A. (“Borrower”)

          This Agreement sets forth the terms and conditions under which Borrower may, from time to time, borrow from Lender shares of Common Stock.

          The parties hereto agree as follows:

          Section 1.      Certain Definitions.

          The following capitalized terms shall have the following meanings:

          “Business Day” means a day on which regular trading occurs in the principal trading market for the Common Stock.

          “Cash” means any coin or currency of the United States as at the time shall be legal tender for payment of public and private debts.

          “Clearing Organization” means The Depository Trust Company, or, if agreed to by Borrower and Lender, (a) such other Securities Intermediary at which Borrower and Lender maintain accounts or (b) Lender’s transfer agent for the Common Stock.

          “Common Stock” means shares of common stock, par value $1.00 per share, of Lender, or any other security into which the Common Stock shall be exchanged or converted as the result of any merger, consolidation, other business combination, reorganization, reclassification, recapitalization or other corporate action (including, without limitation, a reorganization in bankruptcy).

          “Convertible Securities” means (i) up to $150,000,000 aggregate principal amount of 5.125% Convertible Securities due 2011 issued by the Lender or up to $165,000,000 aggregate principal amount of such securities to the extent the option to purchase such additional convertible securities is exercised in full as set forth in the Underwriting Agreement (as defined in Section 21) (“Option 2011”) and (ii) up to $230,000,000 aggregate principal amount of 6.75% convertible securities due 2012 issued by the Lender or up to $255,000,000 aggregate principal amount of such securities to the extent the option to purchase such additional convertible securities is exercised in full as set forth in the Underwriting Agreement (“Option 2012”).

          “Delivery Time” shall mean 9:30 a.m. in the jurisdiction of the Clearing Organization, or such other time on a Business Day by which a transfer of Loaned Shares must be made by Borrower or Lender to the other, as shall be determined in accordance with market practice.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          “Facility Termination Date” has the meaning assigned to such term in Section 4(b).

          “Lender’s Designated Account” means the account of American Stock Transfer at the Depository Trust Company or such other account designated by Lender.

          “Loan Availability Period” means the period beginning with the date of issuance of the Convertible Securities and ending on the later of (A) the earliest of (i) December 15, 2012, (ii) the date as of which Lender has notified Borrower in writing of its intention to terminate this Agreement at any time after the later of (x) the date on which the entire principal amount of Convertible Securities ceases to be outstanding, and (y) the date on which the entire principal amount of any additional convertible securities of Lender that Lender has in writing consented to permit Borrower to hedge under the Agreement ceases to be outstanding, in each case, whether as a result of conversion, redemption, repurchase, cancellation or otherwise, and (iii) the date on which this Agreement shall terminate in accordance with its terms, and (B) the later of (x) the final settlement date with respect to the final expiration date or final termination date under Warrant Confirmation I and (y) the final settlement date with respect to the final expiration date or final termination date under Warrant Confirmation II.

          “Loaned Shares” means shares of Common Stock initially transferred to Borrower in a Loan hereunder until such Loan or portion thereof is terminated and a corresponding number of Loaned Shares is transferred to Lender pursuant to this Agreement; provided that in respect of any such share of Common Stock initially transferred to Borrower by Lender and subsequently transferred by Borrower to another transferee, “Loaned Shares” means an equivalent number of shares of identical Common Stock. If, as the result of a stock dividend, stock split or reverse stock split, the number of outstanding shares of Common Stock is increased or decreased, then the number of outstanding Loaned Shares shall be proportionately increased or decreased, as the case may be. If any new or different security (or two or more securities) shall be exchanged for the outstanding shares of Common Stock as the result of any reorganization, merger, consolidation, other business combination, reclassification, recapitalization or other corporate action (including, without limitation, a reorganization in bankruptcy), such new or different security (or such two or more securities collectively) shall, effective upon such exchange, be deemed to become a Loaned Share in substitution for the former Loaned Share for which such exchange is made and in the same proportion for which such exchange was made.

          “Maximum Number of Shares” means 6,767,393 shares of Common Stock, subject to the following adjustments:

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          (a)      If, as the result of a stock dividend, stock split or reverse stock split, the number of outstanding shares of Common Stock is increased or decreased, the Maximum Number of Shares shall, effective as of the payment or delivery date of any such event, be proportionally increased or decreased, as the case may be.

          (b)      If, pursuant to a merger, consolidation, other business combination, reorganization, reclassification, recapitalization or other corporate action (including, without limitation, a reorganization in bankruptcy), the Common Stock is exchanged for or converted into cash, securities or other property, the Maximum Number of Shares shall, effective upon such exchange, be adjusted by multiplying the Maximum Number of Shares at such time by the number of securities, the amount of cash or the fair market value of any other property exchanged for one share of Common Stock in such event.

          (c)      Upon the termination of any Loan pursuant to Section 4(a), the Maximum Number of Shares shall be reduced by the number of Loaned Shares surrendered by Borrower to Lender; provided that if the number of Loaned Shares offered and sold by Borrower in any registered public offering under the Securities Act is less than the number of shares of Common Stock constituting the Loan made in connection with such registered public offering (such difference, the “Unsold Amount”), any termination of a Loan in an amount equal to the Unsold Amount with respect to such Loan shall not so reduce the Maximum Number of Shares.

          (d)      If shares of Common Stock have been returned to Lender pursuant to Section 4 at any time or Replacement Shares have been purchased pursuant to Section 10(b) at any time (in each case taking into account any adjustments of the nature described in clauses (a) and (b) above), the Maximum Number of Shares shall be reduced by the number of shares so returned or purchased.

          (e)      Notwithstanding the foregoing, if on December 31, 2007, (i) Option 2011 has not been exercised in full, the Maximum Number of Shares shall be reduced by 247,253 shares of Common Stock and (ii) Option 2012 has not been exercised in full, the Maximum Number of Shares shall be reduced by 396,825 shares of Common Stock.

          (f)      On the final settlement date with respect to the final expiration date of Warrant Confirmation I, (i) the Maximum Number of Shares shall be reduced by 21,368 shares of Common Stock if Option 2011 has been exercised in full, and (ii) the Maximum Number of Shares shall be reduced by 0 shares of Common Stock if Option 2011 has not been exercised in full.

          (g)      If Option 2011 and/or Option 2012 is exercised in part, the Lender and the Borrower shall determine the appropriate adjustment to the Maximum Number of Shares and the date for such adjustment in good faith using commercially reasonable means consistent with the intent of this Agreement.

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          “Price” on any day means, with respect to the Common Stock, a closing price determined by Borrower in good faith using commercially reasonable terms; provided that Borrower shall use commercially reasonable efforts to consult with Lender on such price; and provided further, that in determining the Price, Borrower shall not be required to take into account or be bound by any considerations raised by Lender.

          “Securities Act” means the Securities Act of 1933, as amended.

          “Securities Intermediary” means a “securities intermediary” as defined by Section 8-102(a)(14) of the UCC.

          “UCC” means the Uniform Commercial Code as in effect in the State of New York on the date hereof and as it may be amended from time to time.

          “Warrant Confirmation I” means that certain warrant confirmation (2011) between affiliates of the Borrower and the Lender dated December 12, 2007.

          “Warrant Confirmation II” means that certain warrant confirmation (2012) between affiliates of the Borrower and the Lender dated December 12, 2007.

          Section 2.      Loans of Shares; Transfers of Loaned Shares.

          (a)      Subject to the terms and conditions of this Agreement, Lender hereby agrees to make available for borrowing by Borrower during the Loan Availability Period, at any time and from time to time, shares of Common Stock up to the Maximum Number of Shares.

          (b)      Subject to the terms and conditions of this Agreement, Borrower may, from time to time, by written notice to Lender (a “Borrowing Notice”), which Borrowing Notice shall be in the form of Exhibit A-1 hereto, initiate one or more transactions in which Lender will lend Loaned Shares to Borrower through the issuance by Lender of such Loaned Shares to Borrower (each such issuance and loan, a “Loan”). Each such Loan shall be confirmed by a cross receipt listing the Loaned Shares signed by Lender and Borrower (the “Cross Receipt/Confirmation”), which Cross Receipt/Confirmation shall be in the form of Exhibit A-2 hereto. Such Cross Receipt/Confirmation shall constitute conclusive evidence with respect to the Loan, including the number of shares of Common Stock that are the subject of the Loan to which the Cross Receipt/Confirmation relates.

          (c)      Lender shall transfer Loaned Shares to Borrower at or before the Delivery Time on the date specified in the Borrowing Notice for the commencement of the Loan, which date shall not be earlier than the third Business Day following the receipt by Lender of the Borrowing Notice, except with respect to the first Borrowing Notice delivered hereunder, and unless otherwise agreed to by Lender. Delivery of the Loaned Shares to Borrower shall be made in the manner and to the account set forth under Section 11 below.

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          (d)      Notwithstanding anything to the contrary in this Agreement, in no event shall Borrower be entitled to receive, or shall be deemed to receive, any shares of Common Stock if, immediately upon giving effect to such receipt of such shares, Borrower together with any affiliate of Borrower or any other person subject to aggregation with Borrower under Section 13 of the Exchange Act and the rules promulgated thereunder or any “group” (within the meaning of such Section 13 and rules) of which Borrower is a member (collectively, the “BorrowerGroup”) would be required to file the statements required by Section 16(a) of the Exchange Act. If any delivery owed to Borrower hereunder is not made, in whole or in part, as a result of this provision, Lender’s obligation to make such delivery shall not be extinguished and Lender shall make such delivery as promptly as practicable after, but in no event later than three Business Days after, Borrower gives notice to Lender that such delivery would not result in any member of the Borrower Group being required to file the statements required by such Section 16(a); provided that Lender shall not be required to deliver any Loaned Shares after the Loan Availability Period. Notwithstanding anything to the contrary in this Agreement, Lender shall not be liable to Borrower for any delivery of Loaned Shares in contravention of this Section 2(d) if Lender has not been notified by Borrower in writing that such delivery would contravene provisions of this paragraph.

          Section 3.      Loan Fee.

          Borrower agrees to pay Lender a single loan fee per Loan (a “Loan Fee”) equal to $0.001 per Loaned Share included in such Loan. The Loan Fee shall be paid by Borrower through the facilities of the Clearing Organization pursuant to Section 2(c) against payment therefore or in such other manner as agreed between Lender and Borrower.

          Section 4.      Loan Terminations.

          (a)      Borrower may terminate all or any portion of a Loan on any Business Day by giving written notice thereof to Lender and transferring the corresponding number of Loaned Shares to Lender, without any consideration being payable in respect thereof by Lender to Borrower.

          (b)      Subject to Section 10 below, all outstanding Loans, if any, on the last day of the Loan Availability Period shall terminate on the first Business Day following the date on which this Agreement terminates pursuant to Section 14 (the “Facility Termination Date”) and all outstanding Loaned Shares shall be delivered by Borrower to Lender, without any consideration being payable in respect thereof by Lender to Borrower, no later than the fifth Business Day following the Facility Termination Date.

          (c)      Subject to Section 10 below, if a Loan is terminated upon the occurrence of a Default as set forth in Section 9, the Loaned Shares shall be delivered by Borrower to Lender, without any consideration being payable in respect thereof by Lender to Borrower, no later than the third Business Day following the termination date of such Loan as provided in Section 9.

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          (d)      Subject to Section 10 below, if any of the adjustments to the Maximum Number of Shares set forth in clauses (e), (f) or (g) of the definition of Maximum Number of Shares occurs and if at such date the number of Loaned Shares exceeds the Maximum Number of Shares, then such number of Loaned Shares in excess of the Maximum Number of Shares shall be delivered by Borrower to Lender without any consideration being payable in respect thereof by Lender to Borrower, no later than the fifth Business Day following the occurrence of such adjustment.

          Section 5.      Distributions.

          (a)      If at any time when there are Loaned Shares outstanding under this Agreement, Lender pays a cash dividend or makes a cash distribution in respect of all of its outstanding Common Stock, Borrower shall pay to Lender (whether or not Borrower is a holder of any or all of the outstanding Loaned Shares), within three Business Days after the payment of such dividend or distribution, an amount in cash equal to the product of (i) the amount per share of Common Stock of such dividend or distribution and (ii) the number of Loaned Shares outstanding on the record date on which the dividend or distribution was paid.

          (b)      If at any time when there are Loaned Shares outstanding under this Agreement, Lender makes a distribution in respect of all of its outstanding Common Stock (other than a distribution upon liquidation or a reorganization in bankruptcy) in property or securities, including any options, warrants, rights or privileges in respect of securities (other than a distribution of Common Stock, but including any options, warrants, rights or privileges exercisable for, convertible into or exchangeable for Common Stock) (a “Non-CashDistribution”), Borrower shall deliver to Lender (whether or not Borrower is a holder of any or all of the outstanding Loaned Shares) in kind, within three Business Days after the date of such Non-Cash Distribution, the property or securities so distributed in an amount (the “DeliveryAmount”) equal to the product of (i) the amount per share of Common Stock of such Non-Cash Distribution and (ii) the number of Loaned Shares outstanding on the record date on which such Non-Cash Distribution was made; provided that in lieu of such delivery, Borrower may, with the prior written consent of Lender not to be unreasonably withheld or delayed, deliver to Lender an amount of cash equal to the market value of the Delivery Amount, as determined by Borrower in good faith using commercially reasonable means; provided that Borrower shall use commercially reasonable efforts to consult with Lender in connection with the determination of such market value; and provided further, that in determining such market value, Borrower shall not be required to take into account or be bound by any considerations raised by Lender.

          Section 6.      Rights in Respect of Loaned Shares.

          Except as otherwise provided in this Agreement, and except as otherwise agreed by Borrower and Lender, Borrower, insofar as it is the record owner of Loaned Shares, shall have all of the incidents of ownership in respect of any such Loaned Shares until such Loaned Shares are required to be delivered to Lender in accordance with the terms of this Agreement, including the right to transfer the Loaned Shares to others. Borrower agrees that it or any of its affiliates

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that are the record owner of any Loaned Shares will not vote or provide any consent or take any similar action with respect to such Loaned Shares on any matter submitted to a vote of Lender’s shareholders.

          Section 7.      Representations and Warranties.

          (a)      Each of Borrower and Lender represent and warrant to the other that:

          (ii)      it has full power to execute and deliver this Agreement, to enter into the Loans contemplated hereby and to perform its obligations hereunder;

          (ii)      it has taken all necessary action to authorize such execution, delivery and performance;

          (iii)      this Agreement constitutes its legal, valid and binding obligation enforceable against it in accordance with its terms; and

          (iv)      the execution, delivery and performance of this Agreement does not and will not violate, contravene, or constitute a default under, (A) its constitutive documents, bylaws or other governing documents, (B) any laws, rules or regulations of any governmental authority to which it is subject, (C) any contracts, agreements or instrument to which it is a party or (D) any judgment, injunction, order or decree by which it is bound, except, in the case of each of clauses (C) and (D), for any such violation, contravention or default that would not reasonably be expected to have a material adverse effect on the condition (financial or other), business, properties or results of operations of it and its subsidiaries taken as a whole.

          (b)      Lender represents and warrants to Borrower, as of the date hereof and as of the date any Loaned Shares are transferred to Borrower in respect of any Loan hereunder, that the Loaned Shares and all other outstanding shares of Common Stock of Lender have been duly authorized and, upon the issuance (where necessary) and delivery of the Loaned Shares to Borrower in accordance with the terms and conditions hereof, and subject to the contemporaneous or prior receipt of the applicable Loan Fee by Lender, the Loaned Shares will be duly authorized, validly issued, fully paid and nonassessable shares of Common Stock, and will conform to the description thereof in any prospectus or prospectus supplement prepared by or on behalf of Lender relating to any sale of Loaned Shares by Borrower or its affiliates; and the stockholders of Lender have no preemptive rights with respect to the Loaned Shares.

          (c)      Lender represents and warrants to Borrower, (i) as of the date hereof, and as of the date any Loaned Shares are transferred to Borrower in respect of any Loan hereunder, that the outstanding shares of Common Stock are listed on the New York Stock Exchange (the “Exchange”) and (ii) as of the date any Loaned Shares are transferred to Borrower in respect of any Loan hereunder, that the Loaned Shares have been approved for listing on the Exchange, subject to official notice of issuance.

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          (d)      Lender represents and warrants to Borrower, as of the date any Loaned Shares are transferred to Borrower in respect of any Loan hereunder, (i) Lender is not and will not be rendered as a result of such transfers, “insolvent” (as such term is defined under Section 101(32) of Title 11 of the United States Code (the “Bankruptcy Code”)) (ii) Lender is not engaged in, and is not about to engage in, a business or transaction for which it has unreasonably small capital, (iii) Lender does not intend to incur, and does not believe it would incur, debts beyond its ability to pay as such debts mature, and (iv) Borrower would be able to purchase the Maximum Number of Shares in compliance with the corporate law of Lender’s jurisdiction of incorporation.

          (e)      Lender represents to Borrower that Lender is a “United States person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended, and is classified as a corporation for United States federal income tax purposes.

          (f)      The representations and warranties of Borrower and Lender under this Section 7 shall remain in full force and effect at all times during the term of this Agreement and shall survive the termination for any reason of this Agreement.

          Section 8.      Covenants.

          (a)      Borrower covenants and agrees with Lender that it will not transfer or dispose of any Loaned Shares initially transferred to Borrower by Lender as a Loan hereunder of which it is the record owner except pursuant to a registration statement that is effective under the Securities Act; provided that Borrower may transfer any such Loaned Shares to any of its affiliates without a registration statement so long as such affiliate transferee does not transfer or dispose of such Loaned Shares to any non-affiliated transferee except pursuant to a registration statement that is effective under the Securities Act.

          (b)      Each of Borrower and Lender agrees and acknowledges that Borrower has represented to Lender that it is a “financial institution,” “swap participant” and/or “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and acknowledge (A) that each Loan under this Agreement is intended to be (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “settlement payment,” as such term is defined in Section 741(8) of the Bankruptcy Code, and (ii) a “swap agreement” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “transfer,” as such term is defined Section 101(54) of the Bankruptcy Code, and (B) that it is intended that the Borrower shall be entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code.

          (c)      Upon the request of Borrower, including at any time any Loan is initiated, Lender shall promptly provide Borrower a written confirmation of its Outstanding Shares as of the date of such request. The “Outstanding Shares” as of any day is the number of shares of Common Stock outstanding on such day, including all outstanding Loaned Shares; provided that as of any

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date, for purposes of calculating Outstanding Shares as of the date of the request, such number shall be adjusted as set forth in clauses (a) and (b) of the definition of “Maximum Number of Shares” above, to the same extent Shares are adjusted therein, and only to the extent that any of the events listed in such clauses (a) and (b) have occurred between the date of the immediately preceding request and such date.

          (d)      Notwithstanding anything contained herein to the contrary, after the Loaned Shares with respect to the first Borrowing Notice hereunder are delivered, Lender may, in its sole discretion, upon written notice to Borrower, suspend its obligation to make available for borrowing hereunder shares of Common Stock for up to 15 Business Days during any fiscal quarter, if Lender possesses material non-public information and Lender has determined in good faith that it is in the best interests of Lender to suspend its obligations hereunder for such period to avoid premature disclosure of such material non-public information.

          Section 9.      Events of Default.

          (a)      All Loans, and any further obligation to make Loans under this Agreement, may, at the option of Lender by a written notice to Borrower, which option shall be deemed exercised even if no notice is given immediately on the occurrence of an event specified in Section 9(a)(iii) or Section 9(a)(iv) below, be terminated (i) immediately on the occurrence of any of the events set forth in Section 9(a)(iii) or Section 9(a)(iv) below and (ii) two Business Days following such notice on the occurrence of any of the other events set forth below (each, a “Default”):

          (i)      Borrower fails to deliver Loaned Shares to Lender as required by Section 4;

          (ii) Borrower fails to deliver or pay to Lender when due any cash, securities or other property as required by Section 5;

          (iii)      the filing by or on behalf of Borrower of a voluntary petition or an answer seeking reorganization, arrangement, readjustment of its debts or for any other relief under any bankruptcy, reorganization, receivership, compromise, arrangement, insolvency, readjustment of debt, dissolution, moratorium, delinquency, winding-up or liquidation or similar act or law, of any state, federal or other applicable foreign jurisdictions, now or hereafter existing (“Bankruptcy Law”), or any action by Borrower for, or consent or acquiescence to, the appointment of a receiver, trustee, custodian or similar official of Borrower, or of all or a substantial part of its property; or the making by Borrower of a general assignment for the benefit of creditors; or the admission by Borrower in writing of its inability to pay its debts as they become due;

          (iv)      the filing of any involuntary petition against Borrower in bankruptcy or seeking reorganization, arrangement, readjustment of its debts or for any other relief under any Bankruptcy Law and an order for relief by a court having jurisdiction in the premises shall have been issued or entered therein; or any other similar relief shall be

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granted under any applicable federal or state law or law of any other applicable foreign jurisdictions; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee or other officer having similar powers over Borrower or over all or a part of its property shall have been entered; or the involuntary appointment of an interim receiver, trustee or other custodian of Borrower or of all or a substantial part of its property or the issuance of a warrant of attachment, execution or similar process against any substantial part of the property of Borrower ; and continuance of any such event for 15 consecutive calendar days unless dismissed, bonded to the satisfaction of the court having jurisdiction in the premises or discharged;

          (v)      Borrower fails to provide any indemnity as required by Section 12;

          (vi)      Borrower notifies Lender of its inability to or intention not to perform Borrower’s obligations hereunder or otherwise disaffirms, rejects or repudiates any of its obligations hereunder; or

          (vii)      Any representation made by Borrower under this Agreement in connection with any Loan or Loans hereunder shall be incorrect or untrue in any material respect during the term of any Loan hereunder or Borrower fails to comply in any material respect with any of its covenants under this Agreement.

          Section 10.      Right to Extend; Lender’s Remedies.

          (a)      Notwithstanding anything to the contrary herein, if (i) Lender terminates any Loan pursuant to Section 9, or (ii) all outstanding Loans terminate pursuant to Section 4 and, in any such case, on the date on which the related Loaned Shares are due to Lender the purchase of Common Stock in an amount equal to all or any portion of the number of Loaned Shares to be delivered to Lender in accordance with Section 4 shall (A) be prohibited by any law, rules or regulation of any governmental authority to which it is or would be subject, (B) violate, or would upon such purchase likely violate, any order or prohibition of any court, tribunal or other governmental authority, (C) require the prior consent of any court, tribunal or governmental authority prior to any such repurchase, (D) subject Borrower, in its commercially reasonable judgment exercised in good faith, to any liability or potential liability under any applicable federal securities laws (including, without limitation, Section 16 of the Exchange Act), or (E) be commercially impracticable, in the reasonable judgment of Borrower, in the time period required by Section 4 (each of (A), (B), (C), (D) and (E), a “Legal Obstacle”), then, in each case, Borrower shall immediately notify Lender of the Legal Obstacle and the basis therefor, whereupon Borrower’s obligations under Section 4 shall be suspended until such time as no Legal Obstacle with respect to such obligations shall exist (a “Repayment Suspension”). Following the occurrence of and during the continuation of any Repayment Suspension, Borrower shall use its commercially reasonable efforts to remove or cure the Legal Obstacle as soon as reasonably practicable; provided that Lender shall promptly reimburse all costs and expenses (including of legal counsel to Borrower) incurred or, at Borrower’s election, provide adequate surety or guarantee for any such costs and expenses that may be incurred by Borrower,

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in each case in removing or curing such Legal Obstacle. Notwithstanding anything else in this Agreement, if as a result of complying with Section 4, Borrower would beneficially own more than 9.0% of the shares of Common Stock outstanding at such time, then Borrower shall be permitted to extend the delivery due date for all or a portion of the corresponding delivery obligation to permit Borrower to return, as promptly as reasonably practicable but subject to applicable law, regulation or policy, such Loaned Shares through one transaction or a series of transactions without causing Borrower to become, directly or indirectly, a beneficial owner of more than 9.0% of the shares of Common Stock outstanding at such time. If Borrower is unable to remove or cure the Legal Obstacle within 20 Business Days of the termination of the Loan by Lender under Section 9 or the termination of the Loan under Section 4(b), then Borrower shall, upon the written request of Lender, pay to Lender, in lieu of the delivery of Loaned Shares in accordance with Section 4, an amount in immediately available funds (the “Replacement Cash”) equal to the product of the Price and the number of Loaned Shares otherwise required to be delivered. Such payment will be made by Borrower, and Borrower shall notify Lender of the Price and expected date of such payment, as soon as practicable after the determination of the Price by Borrower pursuant to the terms of this Agreement.

          (b)      Upon the termination of any Loan by Lender under Section 9, Borrower may, with the prior consent of Lender (which consent may be withheld at Lender’s sole discretion), in lieu of the delivery of Loaned Shares to Lender in accordance with Section 4(c) pay to Lender, Replacement Cash equal to the product of the Price and the number of Loaned Shares otherwise required to be delivered. Such payment will be made by Borrower, and Borrower shall notify Lender of the Price and expected date of such payment, as soon as practicable after the determination of the Price by Borrower pursuant to the terms of this Agreement.

          (c)      If Borrower shall fail to deliver Loaned Shares to Lender pursuant to Section 4 when due or shall fail to pay the Replacement Cash to Lender when due in accordance with Section 10(a) or Section 10(b) above, then, in either case, in addition to any other remedies available to Lender under this Agreement or under applicable law, Lender shall have the right (upon prior written notice to Borrower) to purchase a like number of shares of Common Stock (“Replacement Shares”) in the principal market for such securities in a commercially reasonable manner; provided that if any Repayment Suspension or failure to deliver shall exist and be continuing, Lender may not exercise its right to purchase Replacement Shares unless Borrower shall fail to deliver the Loaned Shares or to pay the Replacement Cash, as applicable, to Lender when due in accordance with Section 10(a) or Section 10(b) above. To the extent Lender shall exercise such right, Borrower’s obligation to return a like amount of Loaned Shares or to pay the Replacement Cash, as applicable, shall terminate and Borrower shall be liable to Lender for the purchase price of Replacement Shares (plus all other amounts, if any, due to Lender hereunder), all of which shall be due and payable within three Business Days of notice to Borrower by Lender of the aggregate purchase price of the Replacement Shares. The purchase price of Replacement Shares purchased under this Section 10(c) shall include broker’s fees and commissions and all other reasonable costs, fees and expenses related to such purchase.

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          Section 11.      Transfers.

          (a)      All transfers of Loaned Shares to Borrower hereunder shall be made by the crediting by a Clearing Organization of such financial assets to Borrower’s “securities account” (within the meaning of Section 8-501 of the UCC) maintained with such Clearing Organization, which shall be Banc of America Securities DTC Account Number 0773, or such other account as Borrower shall inform Lender. All transfers of Loaned Shares to Lender hereunder shall be made by the crediting of such Loaned Shares to Lender’s Designated Account. In every transfer of “financial assets” (within the meaning of Section 8-102 of the UCC) hereunder, the transferor shall take all steps necessary (i) to effect a delivery to the transferee under Section 8-301 of the UCC, or to cause the creation of a security entitlement in favor of the transferee under Section 8-501 of the UCC, (ii) to enable the transferee to obtain “control” (within the meaning of Section 8-106 of the UCC), and (iii) to provide the transferee with comparable rights under any applicable foreign law or regulation that is applicable to such transfer.

          (b)      All transfers of cash hereunder to Borrower or Lender shall be by wire transfer in immediately available, freely transferable funds.

          (c)      A transfer of securities or cash may be effected under this Section 11 on any day except (i) a day on which the transferee is closed for business at its address set forth in Section 16 or (ii) a day on which a Clearing Organization or wire transfer system is closed, if the facilities of such Clearing Organization or wire transfer system are required to effect such transfer.

          Section 12.      Indemnities.

          (a)      Lender hereby agrees to indemnify and hold harmless Borrower and its affiliates and its former, present and future directors, officers, employees and other agents and representatives from and against any and all liabilities, judgments, claims, settlements, losses, damages, fees, liens, taxes, penalties, obligations and expenses (and losses relating to Borrower’s market activities as a consequence of becoming, or of the risk of becoming, subject to Section 16(b) under the Exchange Act, including without limitation, any forbearance from market activities or cessation of market activities and any losses in connection therewith or with respect to this Agreement) incurred or suffered by any such person or entity directly or indirectly arising from, by reason of, or in connection with, (i) any breach by Lender of any of its representations or warranties contained in Section 7 or (ii) any breach by Lender of any of its covenants or agreements in this Agreement.

          (b)      Borrower hereby agrees to indemnify and hold harmless Lender and its affiliates and its former, present and future directors, officers, employees and other agents and representatives from and against any and all liabilities, judgments, claims, settlements, losses, damages, fees, liens, taxes, penalties, obligations and expenses, incurred or suffered by any such person or entity directly or indirectly arising from, by reason of, or in connection with (i) any

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breach by Borrower of any of its representations or warranties contained in Section 7 or (ii) any breach by Borrower of any of its covenants or agreements in this Agreement.

          (c)      In case any claim or litigation which might give rise to any obligation of a party under this Section 12 (each, an “Indemnifying Party”) shall come to the attention of the party seeking indemnification hereunder (the “Indemnified Party”), the Indemnified Party shall promptly notify the Indemnifying Party in writing of the existence and amount thereof; provided that the failure of the Indemnified Party to give such notice shall not adversely affect the right of the Indemnified Party to indemnification under this Agreement, except to the extent the Indemnifying Party is materially prejudiced thereby. The Indemnifying Party shall promptly notify the Indemnified Party in writing if it accepts such claim or litigation as being within its indemnification obligations under this Section 12. Such response shall be delivered no later than 30 days after the initial notification from the Indemnified Party; provided that, if the Indemnifying Party reasonably cannot respond to such notice within 30 days, the Indemnifying Party shall respond to the Indemnified Party as soon thereafter as reasonably possible.

          (d)      An Indemnifying Party shall be entitled to participate in and, if (i) in the judgment of the Indemnified Party such claim can properly be resolved by money damages alone and the Indemnifying Party has the financial resources to pay such damages and (ii) the Indemnifying Party admits that this indemnity fully covers the claim or litigation, the Indemnifying Party shall be entitled to direct the defense of any claim at its expense, but such defense shall be conducted by legal counsel reasonably satisfactory to the Indemnified Party. An Indemnified Party shall not make any settlement of any claim or litigation under this Section 12 without the written consent of the Indemnifying Party.

          Section 13.      Netting and Set Off.

          Lender shall not net or set off its obligations, if any, arising under any Loan against its rights against Borrower arising under any other transaction or instrument. Borrower shall not net or set off its obligations, if any, arising under any Loan against its rights against Lender arising under any other transaction or instrument.

          Section 14.      Termination of Agreement.

          (a)      This Agreement shall terminate on the first Business Day following the last day of the Loan Availability Period, and may be terminated earlier (i) at any time by the written agreement of Lender and Borrower, (ii) by Lender upon the occurrence of a Default of Borrower or (iii) upon termination of the underwriting agreement without issuance of the Convertible Securities.

          (b)      Unless otherwise agreed in writing by Borrower and Lender, the provisions of Section 12 shall survive the termination of this Agreement.

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          Section 15.

          [Intentionally Omitted.]

          Section 16.      Notices.

          (a)      All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when received.

          (b)      All such notices and other communications shall be directed to the following address:

          If to Borrower to:

Bank of America, N.A.
9 West 57^th Street
New York, New York 10019
Attention: John Servidio

          If to Lender to:

The Great Atlantic & Pacific Tea Company, Inc.
Two Paragon Drive
Montvale, New Jersey 07645
Attention: Chief Financial Officer

          (c)      In the case of any party, at such other address as may be designated by written notice to the other parties.

          Section 17.      Governing Law; Submission To Jurisdiction; Severability.

          (a)      This Agreement shall be governed by and construed in accordance with the laws of the State of New York, but excluding any choice of law provisions that would require the application of the laws of a jurisdiction other than New York.

          (b)      EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY SUCH COURT, SOLELY FOR THE PURPOSE OF ANY SUIT, ACTION OR PROCEEDING BROUGHT TO ENFORCE ITS OBLIGATIONS HEREUNDER OR RELATING IN ANY WAY TO THIS AGREEMENT OR ANY LOAN HEREUNDER AND (B) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND ANY RIGHT OF JURISDICTION ON ACCOUNT OF ITS PLACE OF RESIDENCE OR DOMICILE.

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          EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT THAT IT MAY HAVE TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

          (c)      To the extent permitted by law, the unenforceability or invalidity of any provision or provisions of this Agreement shall not render any other provision or provisions herein contained unenforceable or invalid.

          Section 18.      Counterparts.

          This Agreement may be executed in any number of counterparts, and all such counterparts taken together shall be deemed to constitute one and the same agreement.

          Section 19.      Amendment.

          No amendment or modification of this Agreement shall be effective unless it shall be in writing and signed by the parties hereto.

          Section 20.      Delivery of Shares.

          Notwithstanding anything to the contrary herein, Borrower may, by prior notice to Lender, satisfy its obligation to deliver any shares of Common Stock or other securities on any date due under the terms of this Agreement (an “Original Delivery Date”) by making separate deliveries of shares of Common Stock or such other securities, as the case may be, at more than one time on or prior to such Original Delivery Date, so long as the aggregate number of shares of Common Stock and other securities so delivered on or prior to such Original Delivery Date is equal to the number required to be delivered on such Original Delivery Date.

          Section 21.      Registration Provisions.

          Lender hereby agrees that following the registration of the 8,134,002 shares of Common Stock related to the underwriting agreement attached hereto as Exhibit B (the “Underwriting Agreement”), any subsequent Loan and public sale of Loaned Shares would require registration under the Securities Act. Accordingly, Lender, at its expense, shall use commercially reasonable efforts to register the public sale of Loaned Shares in connection with any such Loan in a form and manner reasonably satisfactory to Borrower, including, without limitation, as promptly as practicable filing a registration statement providing for the registration of, and the sale by the underwriter(s) in an underwritten offering of such securities, causing the registration statement to be declared effective as promptly as practicable, keeping the registration effective, supplemented and amended as required by federal and state securities laws in order to permit the prospectus forming part of the registration statement to be usable by the underwriter(s) in the public offering for such period of time as reasonably required by the Borrower or the underwriter(s), causing the registration statement and any related prospectus and any amendment or supplement to comply

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in all material respects with the applicable requirements of the Securities Act and not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading. In addition, Lender shall enter into an underwriting agreement substantially in the form of the Underwriting Agreement (including, without limitation, substantially equivalent representations and warranties, covenants, closing conditions and indemnities) and provide or cause to be provided customary lock-ups of Lender’s officers, directors and significant stockholders. Lender shall afford Borrower and its representatives and agents an opportunity to conduct an appropriate “due diligence” investigation to Borrower’s reasonable satisfaction, all at the expense of Lender, including, without limitation, providing the access referred to in Section 3(v) (Use of Personnel and Documents) and providing substantially equivalent deliveries set forth in the Underwriting Agreement, including comfort letters from auditors and legal opinions. Borrower shall provide reasonable written notice to Lender of any request for the registration of Loaned Shares pursuant to this Section 21 and Lender shall have a commercially reasonable period of time in which to comply with any such request. Lender shall use its commercially reasonable efforts to furnish copies of the registration statement, prospectus, and amendments or supplements thereto to the Borrower and the underwriter(s) and to reflect in such documents such comments as the underwriters reasonably propose. In no event shall this Section 21 require Lender to register shares of Common Stock in excess of the Maximum Number of Shares or to effect such registration on more than 5 occasions; provided that each request for registration shall be for a number of Loan Shares not less than 250,000 Loan Shares provided that if the number of Loan Shares that have not been registered is less than 250,000, then such request may be for such lesser number. The Lender has not entered into, and agrees not to enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Borrower and underwriter(s) herein or that otherwise conflicts with the provisions hereof. At the Borrower’s request, the Lender will enter into a registration rights agreement reflecting the terms set forth in this paragraph and other customary terms.

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          IN WITNESS WHEREOF, the parties hereto to have executed this Share Lending Agreement as of the date and year first above written.

THE GREAT ATLANTIC & PACIFIC		BANK OF AMERICA, N.A.,
TEA COMPANY, INC.,		as Borrower
as Lender
By:	/s/ William Moss	By:	/s/ Thomas Guagliardo
	Name: William Moss		Name: Thomas Guagliardo
	Title: Vice President and Treasurer		Title: Principal

EX-10.10

Exhibit 10.10

EXECUTION COPY

SHARE LENDING AGREEMENT

Dated as of December 12, 2007

Between

THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. (“Lender”),

and

LEHMAN BROTHERS INTERNATIONAL (EUROPE) LIMITED (“Borrower”), through
LEHMAN BROTHERS INC., as agent for Borrower (“Borrowing Agent”)

          This Agreement sets forth the terms and conditions under which Borrower may, from time to time, borrow from Lender shares of Common Stock.

          The parties hereto agree as follows:

          Section 1.      Certain Definitions.

          The following capitalized terms shall have the following meanings:

          “Business Day” means a day on which regular trading occurs in the principal trading market for the Common Stock.

          “Cash” means any coin or currency of the United States as at the time shall be legal tender for payment of public and private debts.

          “Clearing Organization” means The Depository Trust Company, or, if agreed to by Borrower and Lender, (a) such other Securities Intermediary at which Borrower (or Borrowing Agent) and Lender maintain accounts or (b) Lender’s transfer agent for the Common Stock.

          “Common Stock” means shares of common stock, par value $1.00 per share, of Lender, or any other security into which the Common Stock shall be exchanged or converted as the result of any merger, consolidation, other business combination, reorganization, reclassification, recapitalization or other corporate action (including, without limitation, a reorganization in bankruptcy).

          “Convertible Securities” means (i) up to $150,000,000 aggregate principal amount of 5.125% Convertible Securities due 2011 issued by the Lender or up to $165,000,000 aggregate principal amount of such securities to the extent the option to purchase such additional convertible securities is exercised in full as set forth in the Underwriting Agreement (as defined in Section 21) (“Option 2011”) and (ii) up to $230,000,000 aggregate principal amount of 6.75% convertible securities due 2012 issued by the Lender or up to $255,000,000 aggregate principal

amount of such securities to the extent the option to purchase such additional convertible securities is exercised in full as set forth in the Underwriting Agreement (“Option 2012”).

          “Delivery Time” shall mean 9:30 a.m. in the jurisdiction of the Clearing Organization, or such other time on a Business Day by which a transfer of Loaned Shares must be made by Borrower or Lender to the other, as shall be determined in accordance with market practice.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          “Facility Termination Date” has the meaning assigned to such term in Section 4(b).

          “Lender’s Designated Account” means the account of American Stock Transfer at the Depository Trust Company or such other account designated by Lender.

          “Loan Availability Period” means the period beginning with the date of issuance of the Convertible Securities and ending on the later of (A) the earliest of (i) December 15, 2012, (ii) the date as of which Lender has notified Borrower in writing of its intention to terminate this Agreement at any time after the later of (x) the date on which the entire principal amount of Convertible Securities ceases to be outstanding, and (y) the date on which the entire principal amount of any additional convertible securities of Lender that Lender has in writing consented to permit Borrower to hedge under the Agreement ceases to be outstanding, in each case, whether as a result of conversion, redemption, repurchase, cancellation or otherwise, and (iii) the date on which this Agreement shall terminate in accordance with its terms, and (B) the later of (x) the final settlement date with respect to the final expiration date or final termination date under Warrant Confirmation I and (y) the final settlement date with respect to the final expiration date or final termination date under Warrant Confirmation II.

          “Loaned Shares” means shares of Common Stock initially transferred to Borrower in a Loan hereunder until such Loan or portion thereof is terminated and a corresponding number of Loaned Shares is transferred to Lender pursuant to this Agreement; provided that in respect of any such share of Common Stock initially transferred to Borrower by Lender and subsequently transferred by Borrower to another transferee, “Loaned Shares” means an equivalent number of shares of identical Common Stock. If, as the result of a stock dividend, stock split or reverse stock split, the number of outstanding shares of Common Stock is increased or decreased, then the number of outstanding Loaned Shares shall be proportionately increased or decreased, as the case may be. If any new or different security (or two or more securities) shall be exchanged for the outstanding shares of Common Stock as the result of any reorganization, merger, consolidation, other business combination, reclassification, recapitalization or other corporate action (including, without limitation, a reorganization in bankruptcy), such new or different security (or such two or more securities collectively) shall, effective upon such exchange, be deemed to become a Loaned Share in substitution for the former Loaned Share for which such exchange is made and in the same proportion for which such exchange was made.

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          “Maximum Number of Shares” means 4,511,595 shares of Common Stock, subject to the following adjustments:

          (a)      If, as the result of a stock dividend, stock split or reverse stock split, the number of outstanding shares of Common Stock is increased or decreased, the Maximum Number of Shares shall, effective as of the payment or delivery date of any such event, be proportionally increased or decreased, as the case may be.

          (b)      If, pursuant to a merger, consolidation, other business combination, reorganization, reclassification, recapitalization or other corporate action (including, without limitation, a reorganization in bankruptcy), the Common Stock is exchanged for or converted into cash, securities or other property, the Maximum Number of Shares shall, effective upon such exchange, be adjusted by multiplying the Maximum Number of Shares at such time by the number of securities, the amount of cash or the fair market value of any other property exchanged for one share of Common Stock in such event.

          (c)      Upon the termination of any Loan pursuant to Section 4(a), the Maximum Number of Shares shall be reduced by the number of Loaned Shares surrendered by Borrower to Lender; provided that if the number of Loaned Shares offered and sold by Borrower in any registered public offering under the Securities Act is less than the number of shares of Common Stock constituting the Loan made in connection with such registered public offering (such difference, the “Unsold Amount”), any termination of a Loan in an amount equal to the Unsold Amount with respect to such Loan shall not so reduce the Maximum Number of Shares.

          (d)      If shares of Common Stock have been returned to Lender pursuant to Section 4 at any time or Replacement Shares have been purchased pursuant to Section 10(b) at any time (in each case taking into account any adjustments of the nature described in clauses (a) and (b) above), the Maximum Number of Shares shall be reduced by the number of shares so returned or purchased.

          (e)      Notwithstanding the foregoing, if on December 31, 2007, (i) Option 2011 has not been exercised in full, the Maximum Number of Shares shall be reduced by 164,835 shares of Common Stock and (ii) Option 2012 has not been exercised in full, the Maximum Number of Shares shall be reduced by 264,550 shares of Common Stock.

          (f)      On the final settlement date with respect to the final expiration date of Warrant Confirmation I, (i) the Maximum Number of Shares shall be reduced by 4,511,595 shares of Common Stock if Option 2011 has been exercised in full, and (ii) the Maximum Number of Shares shall be reduced by 4,120,875 shares of Common Stock if Option 2011 has not been exercised in full.

          (g)      If Option 2011 and/or Option 2012 is exercised in part, the Lender and the Borrower shall determine the appropriate adjustment to the Maximum Number of Shares

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and the date for such adjustment in good faith using commercially reasonable means consistent with the intent of this Agreement.

          “Price” on any day means, with respect to the Common Stock, a closing price determined by Borrower in good faith using commercially reasonable terms; provided that Borrower shall use commercially reasonable efforts to consult with Lender on such price; and provided further, that in determining the Price, Borrower shall not be required to take into account or be bound by any considerations raised by Lender.

          “Securities Act” means the Securities Act of 1933, as amended.

          “Securities Intermediary” means a “securities intermediary” as defined by Section 8-102(a)(14) of the UCC.

          “UCC” means the Uniform Commercial Code as in effect in the State of New York on the date hereof and as it may be amended from time to time.

          “Warrant Confirmation I” means that certain warrant confirmation (2011) between affiliates of the Borrower and the Lender dated December 12, 2007.

          “Warrant Confirmation II” means that certain warrant confirmation (2012) between affiliates of the Borrower and the Lender dated December 12, 2007.

          Section 2.      Loans of Shares; Transfers of Loaned Shares.

          (a)      Subject to the terms and conditions of this Agreement, Lender hereby agrees to make available for borrowing by Borrower during the Loan Availability Period, at any time and from time to time, shares of Common Stock up to the Maximum Number of Shares.

          (b)      Subject to the terms and conditions of this Agreement, Borrower may, from time to time, by written notice to Lender (a “Borrowing Notice”), which Borrowing Notice shall be in the form of Exhibit A-1 hereto, initiate one or more transactions in which Lender will lend Loaned Shares to Borrower through the issuance by Lender of such Loaned Shares to Borrower (each such issuance and loan, a “Loan”). Each such Loan shall be confirmed by a cross receipt listing the Loaned Shares signed by Lender and Borrower (the “Cross Receipt/Confirmation”), which Cross Receipt/Confirmation shall be in the form of Exhibit A-2 hereto. Such Cross Receipt/Confirmation shall constitute conclusive evidence with respect to the Loan, including the number of shares of Common Stock that are the subject of the Loan to which the Cross Receipt/Confirmation relates.

          (c)      Lender shall transfer Loaned Shares to Borrower at or before the Delivery Time on the date specified in the Borrowing Notice for the commencement of the Loan, which date shall not be earlier than the third Business Day following the receipt by Lender of the Borrowing Notice, except with respect to the first Borrowing Notice delivered hereunder, and unless

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otherwise agreed to by Lender. Delivery of the Loaned Shares to Borrower shall be made in the manner and to the account set forth under Section 11 below.

          (d)      Notwithstanding anything to the contrary in this Agreement, in no event shall Borrower be entitled to receive, or shall be deemed to receive, any shares of Common Stock if, immediately upon giving effect to such receipt of such shares, Borrower together with any affiliate of Borrower or any other person subject to aggregation with Borrower under Section 13 of the Exchange Act and the rules promulgated thereunder or any “group” (within the meaning of such Section 13 and rules) of which Borrower is a member (collectively, the “BorrowerGroup”) would be required to file the statements required by Section 16(a) of the Exchange Act. If any delivery owed to Borrower hereunder is not made, in whole or in part, as a result of this provision, Lender’s obligation to make such delivery shall not be extinguished and Lender shall make such delivery as promptly as practicable after, but in no event later than three Business Days after, Borrower gives notice to Lender that such delivery would not result in any member of the Borrower Group being required to file the statements required by such Section 16(a); provided that Lender shall not be required to deliver any Loaned Shares after the Loan Availability Period. Notwithstanding anything to the contrary in this Agreement, Lender shall not be liable to Borrower for any delivery of Loaned Shares in contravention of this Section 2(d) if Lender has not been notified by Borrower in writing that such delivery would contravene provisions of this paragraph.

          Section 3.     Loan Fee.

          Borrower agrees to pay Lender a single loan fee per Loan (a “Loan Fee”) equal to $0.001 per Loaned Share included in such Loan. The Loan Fee shall be paid by Borrower through the facilities of the Clearing Organization pursuant to Section 2(c) against payment therefore or in such other manner as agreed between Lender and Borrower.

          Section 4.     Loan Terminations.

          (a)      Borrower may terminate all or any portion of a Loan on any Business Day by giving written notice thereof to Lender and transferring the corresponding number of Loaned Shares to Lender, without any consideration being payable in respect thereof by Lender to Borrower.

          (b)      Subject to Section 10 below, all outstanding Loans, if any, on the last day of the Loan Availability Period shall terminate on the first Business Day following the date on which this Agreement terminates pursuant to Section 14 (the “Facility Termination Date”) and all outstanding Loaned Shares shall be delivered by Borrower to Lender, without any consideration being payable in respect thereof by Lender to Borrower, no later than the fifth Business Day following the Facility Termination Date.

          (c)      Subject to Section 10 below, if a Loan is terminated upon the occurrence of a Default as set forth in Section 9, the Loaned Shares shall be delivered by Borrower to Lender,

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without any consideration being payable in respect thereof by Lender to Borrower, no later than the third Business Day following the termination date of such Loan as provided in Section 9.

          (d)      Subject to Section 10 below, if any of the adjustments to the Maximum Number of Shares set forth in clauses (e), (f) or (g) of the definition of Maximum Number of Shares occurs and if at such date the number of Loaned Shares exceeds the Maximum Number of Shares, then such number of Loaned Shares in excess of the Maximum Number of Shares shall be delivered by Borrower to Lender without any consideration being payable in respect thereof by Lender to Borrower, no later than the fifth Business Day following the occurrence of such adjustment.

          Section 5.     Distributions.

          (a)      If at any time when there are Loaned Shares outstanding under this Agreement, Lender pays a cash dividend or makes a cash distribution in respect of all of its outstanding Common Stock, Borrower shall pay to Lender (whether or not Borrower is a holder of any or all of the outstanding Loaned Shares), within three Business Days after the payment of such dividend or distribution, an amount in cash equal to the product of (i) the amount per share of Common Stock of such dividend or distribution and (ii) the number of Loaned Shares outstanding on the record date on which the dividend or distribution was paid.

          (b)      If at any time when there are Loaned Shares outstanding under this Agreement, Lender makes a distribution in respect of all of its outstanding Common Stock (other than a distribution upon liquidation or a reorganization in bankruptcy) in property or securities, including any options, warrants, rights or privileges in respect of securities (other than a distribution of Common Stock, but including any options, warrants, rights or privileges exercisable for, convertible into or exchangeable for Common Stock) (a “Non-CashDistribution”), Borrower shall deliver to Lender (whether or not Borrower is a holder of any or all of the outstanding Loaned Shares) in kind, within three Business Days after the date of such Non-Cash Distribution, the property or securities so distributed in an amount (the “DeliveryAmount”) equal to the product of (i) the amount per share of Common Stock of such Non-Cash Distribution and (ii) the number of Loaned Shares outstanding on the record date on which such Non-Cash Distribution was made; provided that in lieu of such delivery, Borrower may, with the prior written consent of Lender not to be unreasonably withheld or delayed, deliver to Lender an amount of cash equal to the market value of the Delivery Amount, as determined by Borrower in good faith using commercially reasonable means; provided that Borrower shall use commercially reasonable efforts to consult with Lender in connection with the determination of such market value; and provided further, that in determining such market value, Borrower shall not be required to take into account or be bound by any considerations raised by Lender.

          Section 6.     Rights in Respect of Loaned Shares.

          Except as otherwise provided in this Agreement, and except as otherwise agreed by Borrower and Lender, Borrower, insofar as it is the record owner of Loaned Shares, shall have

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all of the incidents of ownership in respect of any such Loaned Shares until such Loaned Shares are required to be delivered to Lender in accordance with the terms of this Agreement, including the right to transfer the Loaned Shares to others. Borrower agrees that it or any of its affiliates that are the record owner of any Loaned Shares will not vote or provide any consent or take any similar action with respect to such Loaned Shares on any matter submitted to a vote of Lender’s shareholders.

          Section 7.     Representations and Warranties.

          (a)      Each of Borrower and Lender represent and warrant to the other that:

          (ii)      it has full power to execute and deliver this Agreement, to enter into the Loans contemplated hereby and to perform its obligations hereunder;

          (ii)      it has taken all necessary action to authorize such execution, delivery and performance;

          (iii)      this Agreement constitutes its legal, valid and binding obligation enforceable against it in accordance with its terms; and

          (iv)      the execution, delivery and performance of this Agreement does not and will not violate, contravene, or constitute a default under, (A) its constitutive documents, bylaws or other governing documents, (B) any laws, rules or regulations of any governmental authority to which it is subject, (C) any contracts, agreements or instrument to which it is a party or (D) any judgment, injunction, order or decree by which it is bound, except, in the case of each of clauses (C) and (D), for any such violation, contravention or default that would not reasonably be expected to have a material adverse effect on the condition (financial or other), business, properties or results of operations of it and its subsidiaries taken as a whole.

          (b)      Lender represents and warrants to Borrower, as of the date hereof and as of the date any Loaned Shares are transferred to Borrower in respect of any Loan hereunder, that the Loaned Shares and all other outstanding shares of Common Stock of Lender have been duly authorized and, upon the issuance (where necessary) and delivery of the Loaned Shares to Borrower in accordance with the terms and conditions hereof, and subject to the contemporaneous or prior receipt of the applicable Loan Fee by Lender, the Loaned Shares will be duly authorized, validly issued, fully paid and nonassessable shares of Common Stock, and will conform to the description thereof in any prospectus or prospectus supplement prepared by or on behalf of Lender relating to any sale of Loaned Shares by Borrower or its affiliates; and the stockholders of Lender have no preemptive rights with respect to the Loaned Shares.

          (c)      Lender represents and warrants to Borrower, (i) as of the date hereof, and as of the date any Loaned Shares are transferred to Borrower in respect of any Loan hereunder, that the outstanding shares of Common Stock are listed on the New York Stock Exchange (the

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“Exchange”) and (ii) as of the date any Loaned Shares are transferred to Borrower in respect of any Loan hereunder, that the Loaned Shares have been approved for listing on the Exchange, subject to official notice of issuance.

          (d)      Lender represents and warrants to Borrower, as of the date any Loaned Shares are transferred to Borrower in respect of any Loan hereunder, (i) Lender is not and will not be rendered as a result of such transfers, “insolvent” (as such term is defined under Section 101(32) of Title 11 of the United States Code (the “Bankruptcy Code”)) (ii) Lender is not engaged in, and is not about to engage in, a business or transaction for which it has unreasonably small capital, (iii) Lender does not intend to incur, and does not believe it would incur, debts beyond its ability to pay as such debts mature, and (iv) Borrower would be able to purchase the Maximum Number of Shares in compliance with the corporate law of Lender’s jurisdiction of incorporation.

          (e)      Lender represents to Borrower that Lender is a “United States person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended, and is classified as a corporation for United States federal income tax purposes.

          (f)      The representations and warranties of Borrower and Lender under this Section 7 shall remain in full force and effect at all times during the term of this Agreement and shall survive the termination for any reason of this Agreement.

          Section 8.     Covenants.

          (a)      Borrower covenants and agrees with Lender that it will not transfer or dispose of any Loaned Shares initially transferred to Borrower by Lender as a Loan hereunder of which it is the record owner except pursuant to a registration statement that is effective under the Securities Act; provided that Borrower may transfer any such Loaned Shares to any of its affiliates without a registration statement so long as such affiliate transferee does not transfer or dispose of such Loaned Shares to any non-affiliated transferee except pursuant to a registration statement that is effective under the Securities Act.

          (b)      Each of Borrower and Lender agrees and acknowledges that Borrower has represented to Lender that it is a “financial institution,” “swap participant” and/or “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and acknowledge (A) that each Loan under this Agreement is intended to be (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “settlement payment,” as such term is defined in Section 741(8) of the Bankruptcy Code, and (ii) a “swap agreement” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder is a “transfer,” as such term is defined Section 101(54) of the Bankruptcy Code, and (B) that it is intended that the Borrower shall be entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code.

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          (c)      Upon the request of Borrower, including at any time any Loan is initiated, Lender shall promptly provide Borrower a written confirmation of its Outstanding Shares as of the date of such request. The “Outstanding Shares” as of any day is the number of shares of Common Stock outstanding on such day, including all outstanding Loaned Shares; provided that as of any date, for purposes of calculating Outstanding Shares as of the date of the request, such number shall be adjusted as set forth in clauses (a) and (b) of the definition of “Maximum Number of Shares” above, to the same extent Shares are adjusted therein, and only to the extent that any of the events listed in such clauses (a) and (b) have occurred between the date of the immediately preceding request and such date.

          (d)      Notwithstanding anything contained herein to the contrary, after the Loaned Shares with respect to the first Borrowing Notice hereunder are delivered, Lender may, in its sole discretion, upon written notice to Borrower, suspend its obligation to make available for borrowing hereunder shares of Common Stock for up to 15 Business Days during any fiscal quarter, if Lender possesses material non-public information and Lender has determined in good faith that it is in the best interests of Lender to suspend its obligations hereunder for such period to avoid premature disclosure of such material non-public information.

          Section 9.     Events of Default.

          (a)      All Loans, and any further obligation to make Loans under this Agreement, may, at the option of Lender by a written notice to Borrower, which option shall be deemed exercised even if no notice is given immediately on the occurrence of an event specified in Section 9(a)(iii) or Section 9(a)(iv) below, be terminated (i) immediately on the occurrence of any of the events set forth in Section 9(a)(iii) or Section 9(a)(iv) below and (ii) two Business Days following such notice on the occurrence of any of the other events set forth below (each, a “Default”):

          (i)      Borrower fails to deliver Loaned Shares to Lender as required by Section 4;

          (ii)      Borrower fails to deliver or pay to Lender when due any cash, securities or other property as required by Section 5;

          (iii)      the filing by or on behalf of Borrower of a voluntary petition or an answer seeking reorganization, arrangement, readjustment of its debts or for any other relief under any bankruptcy, reorganization, receivership, compromise, arrangement, insolvency, readjustment of debt, dissolution, moratorium, delinquency, winding-up or liquidation or similar act or law, of any state, federal or other applicable foreign jurisdictions, now or hereafter existing (“Bankruptcy Law”), or any action by Borrower for, or consent or acquiescence to, the appointment of a receiver, trustee, custodian or similar official of Borrower, or of all or a substantial part of its property; or the making by Borrower of a general assignment for the benefit of creditors; or the admission by Borrower in writing of its inability to pay its debts as they become due;

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          (iv)      the filing of any involuntary petition against Borrower in bankruptcy or seeking reorganization, arrangement, readjustment of its debts or for any other relief under any Bankruptcy Law and an order for relief by a court having jurisdiction in the premises shall have been issued or entered therein; or any other similar relief shall be granted under any applicable federal or state law or law of any other applicable foreign jurisdictions; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee or other officer having similar powers over Borrower or over all or a part of its property shall have been entered; or the involuntary appointment of an interim receiver, trustee or other custodian of Borrower or of all or a substantial part of its property or the issuance of a warrant of attachment, execution or similar process against any substantial part of the property of Borrower ; and continuance of any such event for 15 consecutive calendar days unless dismissed, bonded to the satisfaction of the court having jurisdiction in the premises or discharged;

          (v)      Borrower fails to provide any indemnity as required by Section 12;

          (vi)      Borrower notifies Lender of its inability to or intention not to perform Borrower’s obligations hereunder or otherwise disaffirms, rejects or repudiates any of its obligations hereunder; or

          (vii)      Any representation made by Borrower under this Agreement in connection with any Loan or Loans hereunder shall be incorrect or untrue in any material respect during the term of any Loan hereunder or Borrower fails to comply in any material respect with any of its covenants under this Agreement.

          Section 10.     Right to Extend; Lender’s Remedies.

          (a)      Notwithstanding anything to the contrary herein, if (i) Lender terminates any Loan pursuant to Section 9, or (ii) all outstanding Loans terminate pursuant to Section 4 and, in any such case, on the date on which the related Loaned Shares are due to Lender the purchase of Common Stock in an amount equal to all or any portion of the number of Loaned Shares to be delivered to Lender in accordance with Section 4 shall (A) be prohibited by any law, rules or regulation of any governmental authority to which it is or would be subject, (B) violate, or would upon such purchase likely violate, any order or prohibition of any court, tribunal or other governmental authority, (C) require the prior consent of any court, tribunal or governmental authority prior to any such repurchase, (D) subject Borrower, in its commercially reasonable judgment exercised in good faith, to any liability or potential liability under any applicable federal securities laws (including, without limitation, Section 16 of the Exchange Act), or (E) be commercially impracticable, in the reasonable judgment of Borrower, in the time period required by Section 4 (each of (A), (B), (C), (D) and (E), a “Legal Obstacle”), then, in each case, Borrower shall immediately notify Lender of the Legal Obstacle and the basis therefor, whereupon Borrower’s obligations under Section 4 shall be suspended until such time as no Legal Obstacle with respect to such obligations shall exist (a “Repayment Suspension”). Following the occurrence of and during the continuation of any Repayment Suspension,

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Borrower and Borrowing Agent shall use their commercially reasonable efforts to remove or cure the Legal Obstacle as soon as reasonably practicable; provided that Lender shall promptly reimburse all costs and expenses (including of legal counsel to Borrower) incurred or, at Borrower’s election, provide adequate surety or guarantee for any such costs and expenses that may be incurred by Borrower, in each case in removing or curing such Legal Obstacle. Notwithstanding anything else in this Agreement, if as a result of complying with Section 4, Borrower would beneficially own more than 9.0% of the shares of Common Stock outstanding at such time, then Borrower shall be permitted to extend the delivery due date for all or a portion of the corresponding delivery obligation to permit Borrower to return, as promptly as reasonably practicable but subject to applicable law, regulation or policy, such Loaned Shares through one transaction or a series of transactions without causing Borrower to become, directly or indirectly, a beneficial owner of more than 9.0% of the shares of Common Stock outstanding at such time. If Borrower is unable to remove or cure the Legal Obstacle within 20 Business Days of the termination of the Loan by Lender under Section 9 or the termination of the Loan under Section 4(b), then Borrower shall, upon the written request of Lender, pay to Lender, in lieu of the delivery of Loaned Shares in accordance with Section 4, an amount in immediately available funds (the “Replacement Cash”) equal to the product of the Price and the number of Loaned Shares otherwise required to be delivered. Such payment will be made by Borrower, and Borrower shall notify Lender of the Price and expected date of such payment, as soon as practicable after the determination of the Price by Borrower pursuant to the terms of this Agreement.

          (b)      Upon the termination of any Loan by Lender under Section 9, Borrower may, with the prior consent of Lender (which consent may be withheld at Lender’s sole discretion), in lieu of the delivery of Loaned Shares to Lender in accordance with Section 4(c) pay to Lender, Replacement Cash equal to the product of the Price and the number of Loaned Shares otherwise required to be delivered. Such payment will be made by Borrower, and Borrower shall notify Lender of the Price and expected date of such payment, as soon as practicable after the determination of the Price by Borrower pursuant to the terms of this Agreement.

          (c)      If Borrower shall fail to deliver Loaned Shares to Lender pursuant to Section 4 when due or shall fail to pay the Replacement Cash to Lender when due in accordance with Section 10(a) or Section 10(b) above, then, in either case, in addition to any other remedies available to Lender under this Agreement or under applicable law, Lender shall have the right (upon prior written notice to Borrower) to purchase a like number of shares of Common Stock (“Replacement Shares”) in the principal market for such securities in a commercially reasonable manner; provided that if any Repayment Suspension or failure to deliver shall exist and be continuing, Lender may not exercise its right to purchase Replacement Shares unless Borrower shall fail to deliver the Loaned Shares or to pay the Replacement Cash, as applicable, to Lender when due in accordance with Section 10(a) or Section 10(b) above. To the extent Lender shall exercise such right, Borrower’s obligation to return a like amount of Loaned Shares or to pay the Replacement Cash, as applicable, shall terminate and Borrower shall be liable to Lender for the purchase price of Replacement Shares (plus all other amounts, if any, due to Lender hereunder),

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all of which shall be due and payable within three Business Days of notice to Borrower by Lender of the aggregate purchase price of the Replacement Shares. The purchase price of Replacement Shares purchased under this Section 10(c) shall include broker’s fees and commissions and all other reasonable costs, fees and expenses related to such purchase.

          Section 11.      Transfers.

          (a)      All transfers of Loaned Shares to Borrower hereunder shall be made by the crediting by a Clearing Organization of such financial assets to Borrower’s “securities account” (within the meaning of Section 8-501 of the UCC) maintained with such Clearing Organization. All transfers of Loaned Shares to Lender hereunder shall be made by the crediting of such Loaned Shares to Lender’s Designated Account. In every transfer of “financial assets” (within the meaning of Section 8-102 of the UCC) hereunder, the transferor shall take all steps necessary (i) to effect a delivery to the transferee under Section 8-301 of the UCC, or to cause the creation of a security entitlement in favor of the transferee under Section 8-501 of the UCC, (ii) to enable the transferee to obtain “control” (within the meaning of Section 8-106 of the UCC), and (iii) to provide the transferee with comparable rights under any applicable foreign law or regulation that is applicable to such transfer.

          (b)      All transfers of cash hereunder to Borrower or Lender shall be by wire transfer in immediately available, freely transferable funds.

          (c)      A transfer of securities or cash may be effected under this Section 11 on any day except (i) a day on which the transferee is closed for business at its address set forth in Section 16 or (ii) a day on which a Clearing Organization or wire transfer system is closed, if the facilities of such Clearing Organization or wire transfer system are required to effect such transfer.

          Section 12.     Indemnities.

          (a)      Lender hereby agrees to indemnify and hold harmless Borrower and its affiliates and its former, present and future directors, officers, employees and other agents and representatives from and against any and all liabilities, judgments, claims, settlements, losses, damages, fees, liens, taxes, penalties, obligations and expenses (and losses relating to Borrower’s market activities as a consequence of becoming, or of the risk of becoming, subject to Section 16(b) under the Exchange Act, including without limitation, any forbearance from market activities or cessation of market activities and any losses in connection therewith or with respect to this Agreement) incurred or suffered by any such person or entity directly or indirectly arising from, by reason of, or in connection with, (i) any breach by Lender of any of its representations or warranties contained in Section 7 or (ii) any breach by Lender of any of its covenants or agreements in this Agreement.

          (b)      Borrower hereby agrees to indemnify and hold harmless Lender and its affiliates and its former, present and future directors, officers, employees and other agents and

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representatives from and against any and all liabilities, judgments, claims, settlements, losses, damages, fees, liens, taxes, penalties, obligations and expenses, incurred or suffered by any such person or entity directly or indirectly arising from, by reason of, or in connection with (i) any breach by Borrower of any of its representations or warranties contained in Section 7 or (ii) any breach by Borrower of any of its covenants or agreements in this Agreement.

          (c)      In case any claim or litigation which might give rise to any obligation of a party under this Section 12 (each, an “Indemnifying Party”) shall come to the attention of the party seeking indemnification hereunder (the “Indemnified Party”), the Indemnified Party shall promptly notify the Indemnifying Party in writing of the existence and amount thereof; provided that the failure of the Indemnified Party to give such notice shall not adversely affect the right of the Indemnified Party to indemnification under this Agreement, except to the extent the Indemnifying Party is materially prejudiced thereby. The Indemnifying Party shall promptly notify the Indemnified Party in writing if it accepts such claim or litigation as being within its indemnification obligations under this Section 12. Such response shall be delivered no later than 30 days after the initial notification from the Indemnified Party; provided that, if the Indemnifying Party reasonably cannot respond to such notice within 30 days, the Indemnifying Party shall respond to the Indemnified Party as soon thereafter as reasonably possible.

          (d)      An Indemnifying Party shall be entitled to participate in and, if (i) in the judgment of the Indemnified Party such claim can properly be resolved by money damages alone and the Indemnifying Party has the financial resources to pay such damages and (ii) the Indemnifying Party admits that this indemnity fully covers the claim or litigation, the Indemnifying Party shall be entitled to direct the defense of any claim at its expense, but such defense shall be conducted by legal counsel reasonably satisfactory to the Indemnified Party. An Indemnified Party shall not make any settlement of any claim or litigation under this Section 12 without the written consent of the Indemnifying Party.

          Section 13.     Netting and Set Off.

          Lender shall not net or set off its obligations, if any, arising under any Loan against its rights against Borrower arising under any other transaction or instrument. Borrower shall not net or set off its obligations, if any, arising under any Loan against its rights against Lender arising under any other transaction or instrument.

          Section 14.     Termination of Agreement.

          (a)      This Agreement shall terminate on the first Business Day following the last day of the Loan Availability Period, and may be terminated earlier (i) at any time by the written agreement of Lender and Borrower, (ii) by Lender upon the occurrence of a Default of Borrower or (iii) upon termination of the underwriting agreement without issuance of the Convertible Securities.

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          (b)      Unless otherwise agreed in writing by Borrower and Lender, the provisions of Section 12 shall survive the termination of this Agreement.

          Section 15.

          [Intentionally Omitted.]

          Section 16.      Notices.

          (a)      All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when received.

          (b)      All such notices and other communications shall be directed to the following address:

          If to Borrower or Borrowing Agent to:

Lehman Brothers Inc.
745 7th Avenue
New York, NY 10019

          If to Lender to:

The Great Atlantic & Pacific Tea Company, Inc.
Two Paragon Drive
Montvale, New Jersey 07645
Attention: Chief Financial Officer

          (c)      In the case of any party, at such other address as may be designated by written notice to the other parties.

          Section 17.      Governing Law; Submission To Jurisdiction; Severability.

          (a)      This Agreement shall be governed by and construed in accordance with the laws of the State of New York, but excluding any choice of law provisions that would require the application of the laws of a jurisdiction other than New York.

          (b)      EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY SUCH COURT, SOLELY FOR THE PURPOSE OF ANY SUIT, ACTION OR PROCEEDING BROUGHT TO ENFORCE ITS OBLIGATIONS HEREUNDER OR RELATING IN ANY WAY TO THIS AGREEMENT OR ANY LOAN HEREUNDER AND (B) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF

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SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND ANY RIGHT OF JURISDICTION ON ACCOUNT OF ITS PLACE OF RESIDENCE OR DOMICILE.

          EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT THAT IT MAY HAVE TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

          (c)      To the extent permitted by law, the unenforceability or invalidity of any provision or provisions of this Agreement shall not render any other provision or provisions herein contained unenforceable or invalid.

          Section 18.     Counterparts.

          This Agreement may be executed in any number of counterparts, and all such counterparts taken together shall be deemed to constitute one and the same agreement.

          Section 19.     Amendment.

          No amendment or modification of this Agreement shall be effective unless it shall be in writing and signed by the parties hereto.

          Section 20.     Delivery of Shares.

          Notwithstanding anything to the contrary herein, Borrower may, by prior notice to Lender, satisfy its obligation to deliver any shares of Common Stock or other securities on any date due under the terms of this Agreement (an “Original Delivery Date”) by making separate deliveries of shares of Common Stock or such other securities, as the case may be, at more than one time on or prior to such Original Delivery Date, so long as the aggregate number of shares of Common Stock and other securities so delivered on or prior to such Original Delivery Date is equal to the number required to be delivered on such Original Delivery Date.

          Section 21.     Registration Provisions.

          Lender hereby agrees that following the registration of the 8,134,002 shares of Common Stock related to the underwriting agreement attached hereto as Exhibit B (the “Underwriting Agreement”), any subsequent Loan and public sale of Loaned Shares would require registration under the Securities Act. Accordingly, Lender, at its expense, shall use commercially reasonable efforts to register the public sale of Loaned Shares in connection with any such Loan in a form and manner reasonably satisfactory to Borrower, including, without limitation, as promptly as practicable filing a registration statement providing for the registration of, and the sale by the underwriter(s) in an underwritten offering of such securities, causing the registration statement to be declared effective as promptly as practicable, keeping the registration effective, supplemented and amended as required by federal and state securities laws in order to permit the prospectus

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forming part of the registration statement to be usable by the underwriter(s) in the public offering for such period of time as reasonably required by the Borrower or the underwriter(s), causing the registration statement and any related prospectus and any amendment or supplement to comply in all material respects with the applicable requirements of the Securities Act and not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading. In addition, Lender shall enter into an underwriting agreement substantially in the form of the Underwriting Agreement (including, without limitation, substantially equivalent representations and warranties, covenants, closing conditions and indemnities) and provide or cause to be provided customary lock-ups of Lender’s officers, directors and significant stockholders. Lender shall afford Borrower and its representatives and agents an opportunity to conduct an appropriate “due diligence” investigation to Borrower’s reasonable satisfaction, all at the expense of Lender, including, without limitation, providing the access referred to in Section 3(v) (Use of Personnel and Documents) and providing substantially equivalent deliveries set forth in the Underwriting Agreement, including comfort letters from auditors and legal opinions. Borrower shall provide reasonable written notice to Lender of any request for the registration of Loaned Shares pursuant to this Section 21 and Lender shall have a commercially reasonable period of time in which to comply with any such request. Lender shall use its commercially reasonable efforts to furnish copies of the registration statement, prospectus, and amendments or supplements thereto to the Borrower and the underwriter(s) and to reflect in such documents such comments as the underwriters reasonably propose. In no event shall this Section 21 require Lender to register shares of Common Stock in excess of the Maximum Number of Shares or to effect such registration on more than 5 occasions; provided that each request for registration shall be for a number of Loan Shares not less than 250,000 Loan Shares provided that if the number of Loan Shares that have not been registered is less than 250,000, then such request may be for such lesser number. The Lender has not entered into, and agrees not to enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Borrower and underwriter(s) herein or that otherwise conflicts with the provisions hereof. At the Borrower’s request, the Lender will enter into a registration rights agreement reflecting the terms set forth in this paragraph and other customary terms.

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          IN WITNESS WHEREOF, the parties hereto to have executed this Share Lending Agreement as of the date and year first above written.

THE GREAT ATLANTIC & PACIFIC		LEHMAN BROTHERS
TEA COMPANY, INC.,		INTERNATIONAL (EUROPE)
as Lender		LIMITED,
		as Borrower
By:	William Moss	By:	/s/ Piers Le Marchant
	Name: William Moss		Name: Piers Le Marchant
	Title: Vice President and Treasurer		Title: European Legal Director

	LEHMAN BROTHERS INC.,
	as Borrowing Agent
By:	/s/ John Sowinski
	Name: John Sowinski
	Title: Vice President

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