EMPLOYMENT AGREEMENT


           AGREEMENT, made and entered into as of the 1st day of
November, 2000, by and between THE GREAT ATLANTIC & PACIFIC TEA COMPANY,
INC. (the "Company"), and LAURANE MAGLIARI. (the "Employee").

                           W I T N E S S E T H


           WHEREAS,  the Company and the Employee (the "Parties") have agreed to
enter into this  agreement  (the  "Agreement)  relating to the employment of the
Employee by the Company;

           NOW, THEREFORE, in consideration of the premises and mutual covenants
contained  herein and for other good and  valuable  consideration,  the Parties,
intending to be legally bound, agree as follows:

1.    Term of Employment.

(a) The  Company  agrees to continue to employ the  Employee,  and the  Employee
agrees to remain in the employment of the Company,  in accordance with the terms
and  provisions  of  this  Agreement,  for  the  period  set  forth  below  (the
"Employment Period").

(b) The Employment  Period under this Agreement shall commence as of November 1,
2000 and,  subject only to the  provisions of Sections 7, 8 and 9 below relating
to termination of employment,  shall continue until (i) the close of business on
October 31, 2003 or (ii) such later date as shall  result from the  operation of
subparagraph (c) below (the "Terminal Date").

(c)  Commencing  on May 1,  2002,  and on the first  business  day of each month
thereafter  (such date and each such first business day, the "Renewal Date") the
Terminal  Date set forth in  subparagraph  (b) above  shall be extended so as to
occur  eighteen  months from the Renewal  Date unless  either the Company or the
Employee  shall have given  written  notice to the other Party on or before such
Renewal Date that the Terminal Date is not to be extended.

2.    Duties.

           It is the  intention  of the  Parties  that  during  the  term of her
employment  under  this  Agreement,  the  Employee  will  serve as  Senior  Vice
President,  People  Resources  and  Services of the Company.  The Employee  will
devote her full  business  time and  attention to the affairs of the Company and
her duties as its Senior Vice  President,  People  Resources and  Services.  The
Employee will have such duties as are appropriate to her position as Senior Vice
President,  People  Resources  and  Services,  and will have such  authority  as
required to enable her to perform these duties.  Consistent  with the foregoing,
the Employee shall comply with all reasonable  instructions of the President and
Chief Executive Officer of the Company.  The Employee will be based in Montvale,
New Jersey and her services will be rendered  there except insofar as travel may
be involved in  connection  with her regular  duties.  The Employee  will report
directly to the President and Chief Executive Officer of the Company.

3.    Salary and Bonus.

3.1 Salary. The Company will pay the Employee a base salary at an initial annual
rate of not less than $335,000, which base salary as in effect from time to time
will not be reduced and will be reviewed  periodically (at intervals of not more
than  eighteen  (18)  months)  by the  Compensation  Committee  of the  Board of
Directors (the "Board") for the purpose of  considering  increases  thereof.  In
evaluating  increases in the Employee's base salary, the Compensation  Committee
of the Board  will take into  account  such  factors as  corporate  performance,
individual  merit, and such other  considerations as it deems  appropriate.  The
Employee's  base salary will be paid in accordance  with the standard  practices
for other corporate executives of the Company.

3.2   Bonuses.

           The Employee  will be eligible to receive  annually or otherwise  any
bonus awards,  whether payable in cash, shares of common stock of the Company or
otherwise,  which the Company,  the Compensation  Committee of the Board or such
other authorized committee of the Board determines to award or grant.

4.    Benefit Programs.

           The Employee will receive such benefits and awards, including without
limitation  stock  options and  restricted  share  awards,  as the  Compensation
Committee of the Board shall  determine and will be eligible to  participate  in
all  employee  benefit  plans and  programs of the Company  from time to time in
effect for the benefit of senior executives of the Company,  including,  but not
limited  to,  pension  and  other  retirement   plans,   group  life  insurance,
hospitalization  and surgical and major medical  coverages,  sick leave,  salary
continuation  arrangements,  vacations and holidays,  long-term disability,  and
such other  benefits as are or may be made available from time to time to senior
executives of the Company.

5.    Business Expenses and Perquisites.

           The Employee will be reimbursed for all reasonable  expenses incurred
by her in connection  with the conduct of the business of the Company,  provided
she properly  accounts therefor in accordance with the Company's  policies.  She
will also be  entitled to such other  perquisites  as are  customary  for senior
executives of the Company.

6. Office and Services  Furnished.  The Company  shall furnish the Employee with
office space,  secretarial  assistance and such other facilities and services as
shall be suitable to the Employee's position and adequate for the performance of
her duties hereunder.

7.    Termination of Employment by the Company.

7.1  Involuntary  Termination  by the Company Other Than For Permanent and Total
Disability or For Cause. The Company may terminate the Employee's  employment at
any time and for any reason by giving  her a written  notice of  termination  to
that  effect at least 45 days before the date of  termination.  In the event the
Company  terminates  the  Employee's  employment  for any reason  other than for
Permanent and Total Disability, as provided in Section 7.2, below, or for Cause,
as  provided  in Section  7.3,  below,  the  Employee  shall be  entitled to the
benefits described in Section 10 or Section 11, whichever is applicable.

7.2 Termination Due to Permanent and Total Disability.  If the Employee incurs a
Permanent and Total Disability,  as defined below, the Company may terminate the
Employee's  employment by giving her written  notice of  termination at least 45
days before the date of such  termination.  In the event of such  termination of
the  Employee's  employment  because  of  Permanent  and Total  Disability,  the
Employee  shall be entitled  to receive (i) her base salary  pursuant to Section
3.1 and any other compensation and benefits to the extent actually earned by the
Employee  pursuant  to this  Agreement  or any  benefit  plan or  program of the
Company as of the date of such  termination of employment at the normal time for
payment of such salary,  compensation  or benefits,  and (ii) any  reimbursement
amounts  owing under  Section 5. For  purposes of this  Agreement,  the Employee
shall be considered to have incurred a Permanent and Total  Disability if she is
unable to  substantially  carry out her duties under this Agreement by reason of
any medically  determinable  physical or mental impairment which can be expected
to  result  in  death or  which  has  lasted  or can be  expected  to last for a
continuous  period of not less than 12 months.  The existence of such  Permanent
and Total  Disability  shall be evidenced by such medical  certification  as the
Secretary of the Company  shall  require and shall be subject to the approval of
the Compensation Committee of the Board of Directors of the Company.

7.3 Termination for Cause.  The Company may terminate the Employee's  employment
for Cause if (i) the Employee willfully, substantially, and continually fails to
perform the duties for which she is employed by the  Company,  (ii) the Employee
willfully fails to comply with the reasonable  instructions of the President and
Chief Executive Officer of the Company,  (iii) the Employee willfully engages in
conduct  which  is  or  would  reasonably  be  expected  to  be  materially  and
demonstrably injurious to the Company, (iv) the Employee willfully engages in an
act or acts of dishonesty resulting in material personal gain to the Employee at
the expense of the Company,  (v) the Employee is convicted of a felony, (vi) the
Employee  engages in an act or acts of gross  malfeasance in connection with her
employment  hereunder,  (vii)  the  Employee  commits a  material  breach of the
confidentiality  provision  set forth in  Section  15, or  (viii)  the  Employee
exhibits  demonstrable  evidence of alcohol or drug abuse  having a  substantial
adverse effect on her job performance hereunder.  The Company shall exercise its
right to terminate  the  Employee's  employment  for Cause by giving her written
notice  of  termination  at least 45 days  before  the date of such  termination
specifying in reasonable  detail the  circumstances  constituting such Cause. In
the event of such  termination  of the  Employee's  employment  for  Cause,  the
Employee  shall be entitled  to receive (i) her base salary  pursuant to Section
3.1 and any other  compensation  and  benefits  to the  extent  actually  earned
pursuant to this  Agreement  or any benefit plan or program of the Company as of
the date of such  termination  at the normal  time for  payment of such  salary,
compensation  or  benefits  and (ii) any  amounts  owed under the  reimbursement
policy of Section 5.

8.    Termination of Employment by the Employee.

(a) Good Reason.  The Employee may terminate her  employment  for Good Reason by
giving the Company a written  notice of  termination at least 45 days before the
date of such  termination  specifying  in  reasonable  detail the  circumstances
constituting such Good Reason. In the event of the Employee's termination of her
employment  for Good  Reason,  the  Employee  shall be entitled to the  benefits
described in Section 10 or Section 11, whichever is applicable.  For purposes of
this Agreement,  Good Reason shall mean (i) a significant reduction in the scope
of the Employee's  authority,  functions,  duties or responsibilities  from that
which is  contemplated  by this  Agreement,  (ii) the Employee being required to
report directly to someone other than the President and Chief Executive  Officer
of the Company,  (iii) the  relocation of the  Employee's  office  location to a
location  more  than 50  miles  away  from  the  Employee's  principal  place of
employment  on November  1, 2000,  (iv) any  reduction  in the  Employee's  base
salary, or (v) a significant  reduction in the employee benefits provided to the
Employee other than in connection with an  across-the-board  reduction similarly
affecting  substantially  all  senior  executives  of the  Company.  If an event
constituting a ground for termination of employment for Good Reason occurs,  and
the  Employee  fails to give  notice of  termination  within 3 months  after the
occurrence of such event,  the Employee shall be deemed to have waived her right
to terminate  employment for Good Reason in connection  with such event (but not
for any other event for which the 3-month period has not expired).

(b) Other.  The Employee may  terminate  her  employment at any time and for any
reason,  other than  pursuant to subsection  (a) above,  by giving the Company a
written notice of termination to that effect at least 45 days before the date of
termination.  In the  event  of the  Employee's  termination  of her  employment
pursuant to this  subsection  (b), the Employee shall be entitled to receive (i)
her base salary pursuant to Section 3.1 and any other  compensation and benefits
to the extent actually earned by the Employee  pursuant to this Agreement or any
benefit plan or program of the Company as of the date of such termination at the
normal time for payment of such salary,  compensation or benefits,  and (ii) any
reimbursement amounts owing under Section 5.

9. Termination of Employment By Death. In the event of the death of the Employee
during the course of her employment  hereunder,  the Employee's  estate shall be
entitled to receive  (i) her base  salary  pursuant to Section 3.1 and any other
compensation and benefits to the extent actually earned by the Employee pursuant
to this  Agreement or any other benefit plan or program of the Company as of the
date  of such  termination  at the  normal  time  for  payment  of such  salary,
compensation or benefits, and (ii) any reimbursement amounts owing under Section
5. In addition,  in the event of such death, the Employee's  beneficiaries shall
receive any death  benefits  owed to them under the Company's  employee  benefit
plans.

10.  Benefits  Upon  Termination  Without Cause or For Good Reason (No Change of
Control).  If (a) the Employee's employment with the Company shall terminate (i)
because of  termination  by the  Company  pursuant to Section 7.1 other than for
Cause and other than because of Permanent and Total Disability,  or (ii) because
of termination by the Employee for Good Reason pursuant to Section 8(a), and (b)
such  termination  of  employment  does not occur  within 13 months  following a
"Change of Control" of the Company  (as  defined in Section  12),  the  Employee
shall be entitled to the following:

(a) The Company  shall pay to the Employee  her base salary  pursuant to Section
3.1 and any other compensation and benefits to the extent actually earned by the
Employee  under this  Agreement or any benefit plan or program of the Company as
of the date of such  termination  at the normal time for payment of such salary,
compensation or benefits.

(b)   The Company shall pay the Employee any reimbursement amounts owing
under Section 5.

(c) The Company shall pay to the Employee as a severance  benefit for each month
during the 18 month period  beginning  with the month next following the date of
termination of the  Employee's  employment an amount equal to one-twelfth of the
sum of (i) her annual rate of base salary immediately  preceding her termination
of employment,  and (ii) the average of her three highest annual bonuses awarded
under the Company's annual  management  incentive bonus plan for any of the five
calendar  years  preceding her  termination  of  employment  (or, if she was not
eligible for a bonus for at least three calendar years in such five-year period,
then the average of such bonuses for all of the calendar years in such five-year
period for which she was eligible,  and if she was not eligible for such a bonus
in any  previous  year,  then 100% of her  target  annual  bonus for the year of
termination of her employment),  with any deferred bonuses counting for the year
earned  rather than the year paid.  Each such monthly  benefit  shall be paid no
later than the last day of the applicable  month. In the event that the Employee
dies before the end of such 18-month  period,  the payments for the remainder of
such period shall be made to the Employee's estate.

(d) The Company shall pay to the Employee as a bonus for the year of termination
of her  employment an amount equal to a portion  (determined  as provided in the
next sentence) of the bonus that the Employee would actually have received under
the Company's  annual  management  incentive bonus plan for the calendar year of
termination  of the  Employee's  employment if her employment had not terminated
(determined on the basis of her actual bonus  opportunity  and the actual degree
of achievement of the applicable  performance goals) or, if no bonus opportunity
for  that  year  had  been  established  for the  Employee  at the  time of such
termination  of  employment,  such portion of the bonus awarded to her under the
Company's  annual  management   incentive  bonus  plan  for  the  calendar  year
immediately  preceding the calendar year of the  termination of her  employment,
with  deferred  bonuses  counting for the year earned rather than the year paid.
Such  portion  shall  be  determined  by  dividing  the  number  of  days of the
Employee's  employment  during  such  calendar  year  up to her  termination  of
employment  by 365 (366 if a leap year).  Such payment shall be made on or about
the date on which bonuses for the applicable  year are paid to executives of the
Company  generally under the Company's annual  management  incentive bonus plan,
and the Employee shall have no right to any further bonuses under said plan.

(e)  During  the  period of 18 months  beginning  on the date of the  Employee's
termination  of  employment,  the Employee  shall remain covered by the medical,
dental,  vision,  life  insurance,  and, if  reasonably  commercially  available
through nationally  reputable insurance carriers,  long-term disability plans of
the Company that covered her immediately  prior to her termination of employment
as if she had  remained in  employment  for such  period.  In the event that the
Employee's  participation in any such plan is barred,  the Company shall arrange
to provide the Employee with substantially similar benefits (but, in the case of
long-term disability benefits, only if reasonably commercially  available).  Any
medical insurance  coverage for such 18-month period pursuant to this subsection
(e)  shall  become  secondary  upon the  earlier  of (i) the  date on which  the
Employee begins to be covered by comparable  medical coverage  provided by a new
employer, or (ii) the earliest date upon which the Employee becomes eligible for
Medicare or a comparable Government insurance program.

11.  Benefits  Upon  Termination  Without  Cause or For Good  Reason  (Change of
Control).  If (a) the Employee's employment with the Company shall terminate (i)
because of  termination  by the  Company  pursuant to Section 7.1 other than for
Cause and other than because of Permanent and Total Disability,  (ii) because of
termination  by the Employee for Good Reason  pursuant to Section 8(a), or (iii)
for any reason during the 30 days beginning on the first anniversary of a Change
of Control,  and (b) such  termination  of  employment  occurs  within 13 months
following a "Change of Control" of the Company (as defined in Section  12),  the
Employee shall be entitled to the following:

(a) The Company  shall pay to the Employee  her base salary  pursuant to Section
3.1 and any other compensation and benefits to the extent actually earned by the
Employee  under this  Agreement or any benefit plan or program of the Company as
of the date of such  termination  at the normal time for payment of such salary,
compensation or benefits.

(b)   The Company shall pay the Employee any reimbursement amounts owing
under Section 5.

(c) The Company shall pay to the Employee as a severance benefit an amount equal
to three (3) times the sum of (i) her  annual  rate of base  salary  immediately
preceding  her  termination  of  employment,  and (ii) the  average of her three
highest annual bonuses awarded under the Company's annual  management  incentive
bonus plan for any of the five  calendar  years  preceding  her  termination  of
employment  (or, if she was not eligible for a bonus for at least three calendar
years in such five-year period,  then the average of such bonuses for all of the
calendar years in such five-year  period for which she was eligible,  and if she
was not eligible for such a bonus in any previous year,  then 100% of her target
annual bonus for the year of termination of her  employment),  with any deferred
bonuses  counting for the year earned rather than the year paid.  Such severance
benefit  shall  be paid in a lump  sum  within  45 days  after  the date of such
termination of employment.

(d) The Company shall pay to the Employee as a bonus for the year of termination
of her  employment an amount equal to a portion  (determined  as provided in the
next sentence) of the bonus that the Employee would actually have received under
the Company's  annual  management  incentive bonus plan for the calendar year of
termination  of the  Employee's  employment if her employment had not terminated
(determined on the basis of her actual bonus  opportunity  and the actual degree
of achievement of the applicable  performance goals) or, if no bonus opportunity
for  that  year  had  been  established  for the  Employee  at the  time of such
termination  of  employment,  such portion of the bonus awarded to her under the
Company's  annual  management   incentive  bonus  plan  for  the  calendar  year
immediately  preceding the calendar year of the  termination of her  employment,
with  deferred  bonuses  counting for the year earned rather than the year paid.
Such  portion  shall  be  determined  by  dividing  the  number  of  days of the
Employee's  employment  during  such  calendar  year  up to her  termination  of
employment  by 365 (366 if a leap year).  Such payment shall be made on or about
the date on which bonuses for the applicable  year are paid to executives of the
Company  generally under the Company's annual  management  incentive bonus plan,
and the Employee shall have no right to any further bonuses under said plan.

(e)  During  the  period of 36 months  beginning  on the date of the  Employee's
termination  of  employment,  the Employee  shall remain covered by the medical,
dental,  vision,  life  insurance,  and, if  reasonably  commercially  available
through nationally  reputable insurance carriers,  long-term disability plans of
the Company that covered her immediately  prior to her termination of employment
as if he had  remained  in  employment  for such  period.  In the event that the
Employee's  participation in any such plan is barred,  the Company shall arrange
to provide the Employee with substantially similar benefits (but, in the case of
long-term disability benefits, only if reasonably commercially  available).  Any
medical insurance  coverage for such 36-month period pursuant to this subsection
(e)  shall  become  secondary  upon the  earlier  of (i) the  date on which  the
Employee begins to be covered by comparable  medical coverage  provided by a new
employer, or (ii) the earliest date upon which the Employee becomes eligible for
Medicare or a comparable Government insurance program.

12. Change of Control. For the purposes of this Agreement, a "Change of Control"
shall be deemed to have  occurred if (a) any person or persons  acting  together
which would constitute a "group" for purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),  (other than the Company,
any  subsidiary  of the  Company,  and  Tengelmann  Warenhandelsgesellschaft  (a
partnership  organized under the laws of the Federal  Republic of Germany or any
successor to such partnership, hereinafter "Tengelmann")) shall beneficially own
(as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, at least
30% of the total  voting  power of all  classes of capital  stock of the Company
entitled to vote  generally  in the  election of the Board and such voting power
exceeds the then current voting power of  Tengelmann;  (b) control of Tengelmann
is  acquired  by any person or persons  other than  family  members or  entities
controlled by family  members of Erivan Haub;  (c) Current  Directors (as herein
defined)  shall  cease for any reason to  constitute  at least a majority of the
members of the Board (for this  purpose,  a  "Current  Director"  shall mean any
member  of the  Board as of the  date  hereof  and any  successor  of a  Current
Director   whose   election,   or  nomination  for  election  by  the  Company's
shareholders,  was approved by at least two-thirds of the Current Directors then
on the  Board);  (d)  the  shareholders  of the  Company  approve  (i) a plan of
complete  liquidation  of the  Company or (ii) an  agreement  providing  for the
merger or  consolidation  of the Company other than a merger or consolidation in
which (x) the holders of the common  stock of the Company  immediately  prior to
the consolidation or merger have, directly or indirectly, at least a majority of
the common stock of the continuing or surviving  corporation  immediately  after
such consolidation or merger or (y) the Board immediately prior to the merger or
consolidation would, immediately after the merger or consolidation, constitute a
majority of the board of directors of the  continuing or surviving  corporation;
or (e) the  shareholders  of the Company  approve an agreement  (or  agreements)
providing for the sale or other  disposition  (in one transaction or a series of
transactions) of all or substantially all of the assets of the Company.

13.  Entitlement  to  Other  Benefits.  Except  as  otherwise  provided  in this
Agreement,  this  Agreement  shall not be  construed  as limiting in any way any
rights or benefits that the Employee or her spouse,  dependents or beneficiaries
may have pursuant to any other plan or program of the Company.

14.   Non-Competition.

           The Employee  agrees that during the term of this Agreement and for a
period of two years following  termination of her employment,  the Employee will
not,  within any of the  geographical  areas of the  United  States or Canada in
which the  Company  is then  conducting  business  (either  directly  or through
franchisees), directly or indirectly, own, manage, operate, control, be employed
by,  participate  in,  provide  consulting  services  to, or be connected in any
manner with the  ownership,  management,  operation  or control of any  business
similar  to any of the  types of  businesses  conducted  by the  Company  to any
significant  extent during her  employment or on the date of  termination of her
employment,  except the Employee may own for investment purposes up to 1% of the
capital stock of any company whose stock is publicly traded, and during such two
year period  following  termination  of her  employment  the  Employee  will not
contact or solicit  employees  of the Company  for the purpose of inducing  such
employees to leave the employ of the Company.

15.   Confidential Information and Trade Secrets.

           The  Employee  hereby  acknowledges  that she will have access to and
become acquainted with various trade secrets and proprietary  information of the
Company and other confidential information relating to the Company. The Employee
covenants  that she will  not,  directly  or  indirectly,  disclose  or use such
information  except as is  necessary  and  appropriate  in  connection  with her
employment by the Company and that she will otherwise  adhere in all respects to
the Company's policies against the use or disclosure of such information.

16.   Arbitration; Injunctive Relief.

           Any  controversy  or  claim  arising  out  of  or  relating  to  this
Agreement, directly or indirectly, or the performance or breach thereof, will be
settled by arbitration in accordance with the rules of the American  Arbitration
Association,  and judgment  upon the award  rendered by the  arbitrators  may be
entered in any court having jurisdiction  thereof.  The arbitration will be held
in New York,  New York, or such other place as may be agreed upon at the time by
the parties to the  arbitration.  The parties  shall bear their own  expenses in
connection with any arbitration or proceeding arising out of or relating to this
Agreement,  directly  or  indirectly,  or the  performance  or  breach  thereof;
provided,  however, that in the event that the Employee substantially  prevails,
the  Company  agrees  promptly  to  reimburse  the  Employee  for  all  expenses
(including  costs  and  fees of  witnesses,  evidence  and  attorneys  fees  and
expenses) reasonably incurred by her in investigating,  prosecuting,  defending,
or preparing to prosecute or defend any action,  proceeding or claim arising out
of or relating to this Agreement,  directly or indirectly, or the performance or
breach  thereof.  The parties  acknowledge and agree that a breach of Employee's
obligations  under Sections 14 or 15 could cause irreparable harm to Company for
which  Company  would have no adequate  remedy at law,  and further  agree that,
notwithstanding  the  agreement  of the parties to  arbitrate  controversies  or
claims  as set  forth  above,  the  Company  may  apply to a court of  competent
jurisdiction  to seek to  enjoin  preliminarily  or  permanently  any  breach or
threatened breach of the Employee's obligations under Sections 14 and 15.

17.   Indemnification.

           The Company  shall  indemnify  and hold the Employee  harmless to the
fullest  extent  legally  permissible  under the laws of the State of  Maryland,
against any and all expenses, liabilities and losses (including attorney's fees,
judgments, fines and amounts paid in settlement) reasonably incurred or suffered
by her by reason of any claim or cause of action asserted against her because of
her  service at any time as a director  or officer of the  Company.  The Company
shall advance to the Employee the amount of her expenses  incurred in connection
with any  proceeding  relating  to such  service to the fullest  extent  legally
permissible  under  the  laws of the  State  of  Maryland.  Notwithstanding  the
foregoing, the Company's obligations pursuant to this Section 17 shall not apply
in the case of any claim or cause of action by or in the right of the Company or
any subsidiary thereof.

18.   Liability Insurance.

           To the  extent  that  Company  maintains  a  directors  and  officers
liability  insurance policy in effect, the Company will take all steps necessary
to ensure that the  Employee  is covered  under such policy for her service as a
director or officer of the Company or any subsidiary of the Company with respect
to claims made at any time with respect to such service.

19.   Certain Additional Payments by the Company.

           (a) Anything in this  Agreement to the contrary  notwithstanding,  in
the event it shall be  determined  that any  payment or  distribution  made,  or
benefit  provided  (including,  without  limitation,  the  acceleration  of  any
payment, distribution or benefit and the accelerated exercisability of any stock
option),  to or for the  benefit  of the  Employee  (whether  paid or payable or
distributed  or  distributable  pursuant  to the  terms  of  this  Agreement  or
otherwise,  but determined  without regard to any additional  payments  required
under this Section 19) (a "Payment")  would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (or any similar
excise tax) or any  interest or  penalties  are  incurred by the  Employee  with
respect to such excise tax (such excise tax, together with any such interest and
penalties,  are hereinafter  collectively referred to as the "Excise Tax"), then
the Employee shall be entitled to receive from the Company an additional payment
(a "Gross-Up  Payment") in an amount such that after  payment by the Employee of
all taxes  (including  any Excise Tax,  income tax or employment  tax and taking
into  account any lost or reduced  tax  deductions  on account of such  Gross-Up
Payment) imposed upon the Gross-Up Payment and any interest or penalties imposed
with respect to such taxes,  the Employee  retains from the Gross-Up  Payment an
amount equal to the Excise Tax imposed upon the Payments.

           (b) Subject to the  provisions of Section 19(c),  all  determinations
required to be made under this Section 19, including  determination of whether a
Gross-Up  Payment is required  and of the amount of any such  Gross-up  Payment,
shall be made by  Deloitte & Touche LLP (the  "Accounting  Firm"),  which  shall
provide detailed  supporting  calculations  both to the Company and the Employee
within 15 business days of the date of termination of the Employee's employment,
if  applicable,  or such earlier  time as is requested by the Company,  provided
that any  determination  that an Excise Tax is payable by the Employee  shall be
made on the basis of substantial  authority.  The initial Gross-Up  Payment,  if
any, as determined pursuant to this Section 19(b), shall be paid to the Employee
within five business days of the receipt of the Accounting Firm's determination.
If the Accounting Firm determines that no Excise Tax is payable by the Employee,
it shall  furnish the Employee  with a written  opinion that he has  substantial
authority  not to report any Excise Tax on her Federal  income tax  return.  Any
determination  by the Accounting  Firm meeting the  requirements of this Section
19(b)  shall be binding  upon the  Company  and the  Employee;  subject  only to
payments  pursuant  to the  following  sentence  based on a  determination  that
additional  Gross-Up  Payments  should  have  been  made,  consistent  with  the
calculations  required  to be made  hereunder  (the  amount  of such  additional
payments  is referred to herein as the  "Gross-Up  Underpayment").  In the event
that the  Company  exhausts  its  remedies  pursuant  to  Section  19(c) and the
Employee  thereafter  is  required  to make a payment  of any  Excise  Tax,  the
Accounting Firm shall determine the amount of the Gross-Up Underpayment that has
occurred  and any  such  Gross-Up  Underpayment  shall be  promptly  paid by the
Company to or for the benefit of the Employee. The fees and disbursements of the
Accounting Firm shall be paid by the Company.

           (c) The Employee  shall notify the Company in writing of any claim by
the Internal  Revenue Service that, if successful,  would require the payment by
the Company of a Gross-Up Payment.  Such notification  shall be given as soon as
practicable  but not later than ten business  days after the  Employee  receives
written notice of such claim and shall apprise the Company of the nature of such
claim and the date on which such Claim is  requested  to be paid.  The  Employee
shall not pay such claim prior to the expiration of the 30-day period  following
the date on which it gives such notice to the Company  (or such  shorter  period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company  notifies the Employee in writing prior to the expiration of such
period that it desires to contest such claim and that it will bear the costs and
provide the indemnification as required by this sentence, the Employee shall:

           (i)  give the Company any information reasonably requested by
the Company relating to such claim,

           (ii) take such action in connection with contesting such claim as the
Company  shall  reasonably  request  in  writing  from time to time,  including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

           (iii) cooperate with the Company in good faith in order
effectively to contest such claim, and

           (iv) permit the Company to participate in any proceedings
relating to such claim;

provided,  however,  that the Company  shall bear and pay directly all costs and
expenses  (including  additional  interest and penalties) incurred in connection
with such  contest and shall  indemnify  and hold the Employee  harmless,  on an
after-tax  basis,  for any Excise Tax, income tax or employment tax (taking into
account  any lost or  reduced  tax  deductions  on  account  of such  payments),
including  interest and penalties with respect  thereto,  imposed as a result of
such representation and payment of costs and expenses. Without limitation on the
foregoing  provisions  of this  Section  19(c),  the Company  shall  control all
proceedings  taken in connection with such contest and, at its sole option,  may
pursue or forgo any and all administrative  appeals,  proceedings,  hearings and
conferences  with the taxing  authority in respect of such claim and may, at its
sole  option,  either  direct the  Employee to pay the tax claimed and sue for a
refund or contest the claim in any permissible  manner,  and the Employee agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial  jurisdiction and in one or more appellate  courts, as the
Company shall  determine;  provided,  however,  that if the Company  directs the
Employee to pay such claim and sue for a refund,  the Company  shall advance the
amount of such  payment  to the  Employee  on an  interest-free  basis and shall
indemnify and hold the Employee harmless, on an after-tax basis, from any Excise
Tax,  income tax or employment  tax (taking into account any lost or reduced tax
deductions on account of such  advance),  including  interest or penalties  with
respect  thereto,  imposed  with  respect to such advance or with respect to any
imputed  income with  respect to such  advance;  and further  provided  that any
extension of the statute of limitations relating to the payment of taxes for the
taxable year of the  Employee  with  respect to which such  contested  amount is
claimed to be due is limited solely to such contested amount.  Furthermore,  the
Company's  control of the  contest  shall be limited to issues  with  respect to
which a Gross-Up  Payment would be payable  hereunder and the Employee  shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

           (d) If,  after the receipt by the  Employee of an amount  advanced by
the Company  pursuant to Section 19(c), the Employee becomes entitled to receive
any refund  with  respect to such  claim,  the  Employee  shall  (subject to the
Company's  complying with the requirements of Section 19(c)) promptly pay to the
Company the amount of such refund  (together  with any interest paid or credited
thereon after taxes applicable  thereto).  If, after the receipt by the Employee
of an amount advanced by the Company  pursuant to Section 19(c), a determination
is made that the  Employee  shall not be entitled to any refund with  respect to
such claim and the Company does not notify the Employee in writing of its intent
to contest such denial of refund prior to the  expiration  of 30 days after such
determination,  then any  obligation of the Employee to repay such advance shall
be forgiven and the amount of such advance shall offset,  to the extent thereof,
the amount of Gross-Up Payment required to be paid.

20.  No Duty to Seek  Employment.  The  Employee  shall not be under any duty or
obligation  to  seek  or  accept  other  employment  following   termination  of
employment,  and no amount,  payment or benefits due to the  Employee  hereunder
shall be reduced or suspended if the Employee accepts subsequent employment.

21.   Deductions and Withholding.

           All amounts  payable or which become  payable  under any provision of
this Agreement shall be subject to any deductions authorized by the Employee and
any deductions and withholdings required by law.

22.   Governing Law.

           The validity,  interpretation  and performance of this Agreement will
be  governed  by the  laws of the  State of New  Jersey  without  regard  to the
conflict of law provisions.

23.   Notice.

           Any  written  notice  required  to be given by one Party to the other
Party hereunder will be deemed effected if mailed by registered mail:



To the Company at:    The Great Atlantic & Pacific Tea Company
                      2 Paragon Drive
                      Montvale, New Jersey 07645
                      Attention: General Counsel



To the Employee at:  445 West 19th Street PHA

                     New York, NY  10011

or such other address as may be stated in a notice given as herein
before provided.

24.   Severability.

           If any one or more of the  provisions  contained in this Agreement is
held to be invalid,  illegal or unenforceable  in any respect,  such invalidity,
illegality or unenforceability will not affect any other provision hereof.

25.   Successors and Assigns.

           This  Agreement  will be binding upon and inure to the benefit of the
Parties  hereto  and their  personal  representatives,  and,  in the case of the
Company,  its  successors and assigns.  To the extent the Company's  obligations
under this Agreement are transferred to any successor or assign,  such successor
or assign  shall be treated as the  "Company"  for  purposes of this  Agreement.
Other than as contemplated  by this  Agreement,  the Employee may not assign her
rights or duties under this Agreement.

26.   Continuing Effect.

           Wherever  appropriate  to the  intention of the Parties  hereto,  the
respective  rights and  obligations  of the Parties,  including the  obligations
referred  to in  Sections  10,  11,  14, 15 and 19,  hereof,  will  survive  any
termination or expiration of the term of this Agreement.

27.   Entire Agreement.

           This Agreement  constitutes the entire agreement  between the Parties
and  supersedes  any and all other  agreements  and  understandings  between the
Parties in respect of the matters addressed in this Agreement.

28.   Amendment and Waiver.

           No amendment or waiver of any  provision of this  Agreement  shall be
effective,  unless the same shall be in writing and signed by the  Parties,  and
then such  amendment,  waiver or consent shall be effective only in the specific
instance or for the specific purpose for which such amendment, waiver or consent
was given.

29.   Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed an original
but all of which together shall constitute one and the same instrument.

           IN WITNESS  WHEREOF,  the  Company has caused  this  Agreement  to be
executed by its duly  authorized  officer and the  Employee has hereunto set her
hand as of the day and year first above written.

                                    THE GREAT ATLANTIC & PACIFIC TEA
                                        COMPANY, INC.


                                    By:
                                        Name:
                                        Title:



                                        LAURANE MAGLIARI.












                              EMPLOYMENT AGREEMENT


           AGREEMENT, made and entered into as of the 1st day of
November, 2000, by and between THE GREAT ATLANTIC & PACIFIC TEA COMPANY,
INC. (the "Company"), and NICHOLAS IOLI, JR. (the "Employee").

                           W I T N E S S E T H


           WHEREAS,  the Company and the Employee (the "Parties") have agreed to
enter into this  agreement  (the  "Agreement)  relating to the employment of the
Employee by the Company;

           NOW, THEREFORE, in consideration of the premises and mutual covenants
contained  herein and for other good and  valuable  consideration,  the Parties,
intending to be legally bound, agree as follows:

30.   Term of Employment.

(a) The  Company  agrees to continue to employ the  Employee,  and the  Employee
agrees to remain in the employment of the Company,  in accordance with the terms
and  provisions  of  this  Agreement,  for  the  period  set  forth  below  (the
"Employment Period").

(b) The Employment  Period under this Agreement shall commence as of November 1,
2000 and,  subject only to the  provisions of Sections 7, 8 and 9 below relating
to termination of employment,  shall continue until (i) the close of business on
October 31, 2003 or (ii) such later date as shall  result from the  operation of
subparagraph (c) below (the "Terminal Date").

(c)  Commencing  on May 1,  2002,  and on the first  business  day of each month
thereafter  (such date and each such first business day, the "Renewal Date") the
Terminal  Date set forth in  subparagraph  (b) above  shall be extended so as to
occur  eighteen  months from the Renewal  Date unless  either the Company or the
Employee  shall have given  written  notice to the other Party on or before such
Renewal Date that the Terminal Date is not to be extended.

31.   Duties.

           It is the  intention  of the  Parties  that  during  the  term of his
employment  under  this  Agreement,  the  Employee  will  serve as  Senior  Vice
President,  Chief Information  Officer of the Company.  The Employee will devote
his full  business  time and  attention  to the  affairs of the  Company and his
duties as its Senior Vice President,  Chief  Information  Officer.  The Employee
will have  such  duties  as are  appropriate  to his  position  as  Senior  Vice
President,  Chief Information  Officer, and will have such authority as required
to enable  him to perform  these  duties.  Consistent  with the  foregoing,  the
Employee  shall comply with all  reasonable  instructions  of the  President and
Chief Executive Officer of the Company.  The Employee will be based in Montvale,
New Jersey and his services will be rendered  there except insofar as travel may
be involved in  connection  with his regular  duties.  The Employee  will report
directly to the President and Chief Executive Officer of the Company.

32.   Salary and Bonus.

32.1  Salary.  The  Company  will pay the  Employee a base  salary at an initial
annual rate of not less than $225,000,  which base salary as in effect from time
to time will not be reduced and will be reviewed  periodically  (at intervals of
not more than eighteen (18) months) by the  Compensation  Committee of the Board
of Directors (the "Board") for the purpose of considering  increases thereof. In
evaluating  increases in the Employee's base salary, the Compensation  Committee
of the Board  will take into  account  such  factors as  corporate  performance,
individual  merit, and such other  considerations as it deems  appropriate.  The
Employee's  base salary will be paid in accordance  with the standard  practices
for other corporate executives of the Company.

32.2  Bonuses.

           The Employee  will be eligible to receive  annually or otherwise  any
bonus awards,  whether payable in cash, shares of common stock of the Company or
otherwise,  which the Company,  the Compensation  Committee of the Board or such
other authorized committee of the Board determines to award or grant.

33.   Benefit Programs.

           The Employee will receive such benefits and awards, including without
limitation  stock  options and  restricted  share  awards,  as the  Compensation
Committee of the Board shall  determine and will be eligible to  participate  in
all  employee  benefit  plans and  programs of the Company  from time to time in
effect for the benefit of senior executives of the Company,  including,  but not
limited  to,  pension  and  other  retirement   plans,   group  life  insurance,
hospitalization  and surgical and major medical  coverages,  sick leave,  salary
continuation  arrangements,  vacations and holidays,  long-term disability,  and
such other  benefits as are or may be made available from time to time to senior
executives of the Company.

34.   Business Expenses and Perquisites.

           The Employee will be reimbursed for all reasonable  expenses incurred
by him in connection  with the conduct of the business of the Company,  provided
he properly accounts therefor in accordance with the Company's policies. He will
also  be  entitled  to  such  other  perquisites  as are  customary  for  senior
executives of the Company.

35. Office and Services  Furnished.  The Company shall furnish the Employee with
office space,  secretarial  assistance and such other facilities and services as
shall be suitable to the Employee's position and adequate for the performance of
his duties hereunder.

36.   Termination of Employment by the Company.

36.1  Involuntary  Termination by the Company Other Than For Permanent and Total
Disability or For Cause. The Company may terminate the Employee's  employment at
any time and for any reason by giving  him a written  notice of  termination  to
that  effect at least 45 days before the date of  termination.  In the event the
Company  terminates  the  Employee's  employment  for any reason  other than for
Permanent and Total Disability, as provided in Section 7.2, below, or for Cause,
as  provided  in Section  7.3,  below,  the  Employee  shall be  entitled to the
benefits described in Section 10 or Section 11, whichever is applicable.

36.2 Termination Due to Permanent and Total Disability. If the Employee incurs a
Permanent and Total Disability,  as defined below, the Company may terminate the
Employee's  employment by giving him written  notice of  termination at least 45
days before the date of such  termination.  In the event of such  termination of
the  Employee's  employment  because  of  Permanent  and Total  Disability,  the
Employee  shall be entitled  to receive (i) his base salary  pursuant to Section
3.1 and any other compensation and benefits to the extent actually earned by the
Employee  pursuant  to this  Agreement  or any  benefit  plan or  program of the
Company as of the date of such  termination of employment at the normal time for
payment of such salary,  compensation  or benefits,  and (ii) any  reimbursement
amounts  owing under  Section 5. For  purposes of this  Agreement,  the Employee
shall be considered  to have incurred a Permanent and Total  Disability if he is
unable to  substantially  carry out his duties under this Agreement by reason of
any medically  determinable  physical or mental impairment which can be expected
to  result  in  death or  which  has  lasted  or can be  expected  to last for a
continuous  period of not less than 12 months.  The existence of such  Permanent
and Total  Disability  shall be evidenced by such medical  certification  as the
Secretary of the Company  shall  require and shall be subject to the approval of
the Compensation Committee of the Board of Directors of the Company.

36.3 Termination for Cause. The Company may terminate the Employee's  employment
for Cause if (i) the Employee willfully, substantially, and continually fails to
perform the duties for which he is employed by the  Company,  (ii) the  Employee
willfully fails to comply with the reasonable  instructions of the President and
Chief Executive Officer of the Company,  (iii) the Employee willfully engages in
conduct  which  is  or  would  reasonably  be  expected  to  be  materially  and
demonstrably injurious to the Company, (iv) the Employee willfully engages in an
act or acts of dishonesty resulting in material personal gain to the Employee at
the expense of the Company,  (v) the Employee is convicted of a felony, (vi) the
Employee  engages in an act or acts of gross  malfeasance in connection with his
employment  hereunder,  (vii)  the  Employee  commits a  material  breach of the
confidentiality  provision  set forth in  Section  15, or  (viii)  the  Employee
exhibits  demonstrable  evidence of alcohol or drug abuse  having a  substantial
adverse effect on his job performance hereunder.  The Company shall exercise its
right to terminate  the  Employee's  employment  for Cause by giving him written
notice  of  termination  at least 45 days  before  the date of such  termination
specifying in reasonable  detail the  circumstances  constituting such Cause. In
the event of such  termination  of the  Employee's  employment  for  Cause,  the
Employee  shall be entitled  to receive (i) his base salary  pursuant to Section
3.1 and any other  compensation  and  benefits  to the  extent  actually  earned
pursuant to this  Agreement  or any benefit plan or program of the Company as of
the date of such  termination  at the normal  time for  payment of such  salary,
compensation  or  benefits  and (ii) any  amounts  owed under the  reimbursement
policy of Section 5.

37.   Termination of Employment by the Employee.

(a) Good Reason.  The Employee may terminate his  employment  for Good Reason by
giving the Company a written  notice of  termination at least 45 days before the
date of such  termination  specifying  in  reasonable  detail the  circumstances
constituting such Good Reason. In the event of the Employee's termination of his
employment  for Good  Reason,  the  Employee  shall be entitled to the  benefits
described in Section 10 or Section 11, whichever is applicable.  For purposes of
this Agreement,  Good Reason shall mean (i) a significant reduction in the scope
of the Employee's  authority,  functions,  duties or responsibilities  from that
which is  contemplated  by this  Agreement,  (ii) the Employee being required to
report directly to someone other than the President and Chief Executive  Officer
of the Company,  (iii) the  relocation of the  Employee's  office  location to a
location  more  than 50  miles  away  from  the  Employee's  principal  place of
employment  on November  1, 2000,  (iv) any  reduction  in the  Employee's  base
salary, or (v) a significant  reduction in the employee benefits provided to the
Employee other than in connection with an  across-the-board  reduction similarly
affecting  substantially  all  senior  executives  of the  Company.  If an event
constituting a ground for termination of employment for Good Reason occurs,  and
the  Employee  fails to give  notice of  termination  within 3 months  after the
occurrence of such event,  the Employee shall be deemed to have waived his right
to terminate  employment for Good Reason in connection  with such event (but not
for any other event for which the 3-month period has not expired).

(b) Other.  The Employee may  terminate  his  employment at any time and for any
reason,  other than  pursuant to subsection  (a) above,  by giving the Company a
written notice of termination to that effect at least 45 days before the date of
termination.  In the  event  of the  Employee's  termination  of his  employment
pursuant to this  subsection  (b), the Employee shall be entitled to receive (i)
his base salary pursuant to Section 3.1 and any other  compensation and benefits
to the extent actually earned by the Employee  pursuant to this Agreement or any
benefit plan or program of the Company as of the date of such termination at the
normal time for payment of such salary,  compensation or benefits,  and (ii) any
reimbursement amounts owing under Section 5.

38.  Termination  of  Employment  By  Death.  In the  event of the  death of the
Employee during the course of his employment  hereunder,  the Employee's  estate
shall be entitled to receive (i) his base salary pursuant to Section 3.1 and any
other  compensation  and benefits to the extent  actually earned by the Employee
pursuant to this  Agreement or any other  benefit plan or program of the Company
as of the  date of such  termination  at the  normal  time for  payment  of such
salary, compensation or benefits, and (ii) any reimbursement amounts owing under
Section 5. In addition, in the event of such death, the Employee's beneficiaries
shall  receive  any death  benefits  owed to them under the  Company's  employee
benefit plans.

39.  Benefits  Upon  Termination  Without Cause or For Good Reason (No Change of
Control).  If (a) the Employee's employment with the Company shall terminate (i)
because of  termination  by the  Company  pursuant to Section 7.1 other than for
Cause and other than because of Permanent and Total Disability,  or (ii) because
of termination by the Employee for Good Reason pursuant to Section 8(a), and (b)
such  termination  of  employment  does not occur  within 13 months  following a
"Change of Control" of the Company  (as  defined in Section  12),  the  Employee
shall be entitled to the following:

(a) The Company  shall pay to the Employee  his base salary  pursuant to Section
3.1 and any other compensation and benefits to the extent actually earned by the
Employee  under this  Agreement or any benefit plan or program of the Company as
of the date of such  termination  at the normal time for payment of such salary,
compensation or benefits.

(b)   The Company shall pay the Employee any reimbursement amounts owing
under Section 5.

(c) The Company shall pay to the Employee as a severance  benefit for each month
during the 18 month period  beginning  with the month next following the date of
termination of the  Employee's  employment an amount equal to one-twelfth of the
sum of (i) his annual rate of base salary immediately  preceding his termination
of employment,  and (ii) the average of his three highest annual bonuses awarded
under the Company's annual  management  incentive bonus plan for any of the five
calendar  years  preceding  his  termination  of  employment  (or, if he was not
eligible for a bonus for at least three calendar years in such five-year period,
then the average of such bonuses for all of the calendar years in such five-year
period for which he was eligible, and if he was not eligible for such a bonus in
any  previous  year,  then  100% of his  target  annual  bonus  for the  year of
termination of his employment),  with any deferred bonuses counting for the year
earned  rather than the year paid.  Each such monthly  benefit  shall be paid no
later than the last day of the applicable  month. In the event that the Employee
dies before the end of such 18-month  period,  the payments for the remainder of
such period shall be made to the Employee's estate.

(d) The Company shall pay to the Employee as a bonus for the year of termination
of his  employment an amount equal to a portion  (determined  as provided in the
next sentence) of the bonus that the Employee would actually have received under
the Company's  annual  management  incentive bonus plan for the calendar year of
termination  of the  Employee's  employment if his employment had not terminated
(determined on the basis of his actual bonus  opportunity  and the actual degree
of achievement of the applicable  performance goals) or, if no bonus opportunity
for  that  year  had  been  established  for the  Employee  at the  time of such
termination  of  employment,  such portion of the bonus awarded to him under the
Company's  annual  management   incentive  bonus  plan  for  the  calendar  year
immediately  preceding the calendar year of the  termination of his  employment,
with  deferred  bonuses  counting for the year earned rather than the year paid.
Such  portion  shall  be  determined  by  dividing  the  number  of  days of the
Employee's  employment  during  such  calendar  year  up to his  termination  of
employment  by 365 (366 if a leap year).  Such payment shall be made on or about
the date on which bonuses for the applicable  year are paid to executives of the
Company  generally under the Company's annual  management  incentive bonus plan,
and the Employee shall have no right to any further bonuses under said plan.

(e)  During  the  period of 18 months  beginning  on the date of the  Employee's
termination  of  employment,  the Employee  shall remain covered by the medical,
dental,  vision,  life  insurance,  and, if  reasonably  commercially  available
through nationally  reputable insurance carriers,  long-term disability plans of
the Company that covered him immediately  prior to his termination of employment
as if he had  remained  in  employment  for such  period.  In the event that the
Employee's  participation in any such plan is barred,  the Company shall arrange
to provide the Employee with substantially similar benefits (but, in the case of
long-term disability benefits, only if reasonably commercially  available).  Any
medical insurance  coverage for such 18-month period pursuant to this subsection
(e)  shall  become  secondary  upon the  earlier  of (i) the  date on which  the
Employee begins to be covered by comparable  medical coverage  provided by a new
employer, or (ii) the earliest date upon which the Employee becomes eligible for
Medicare or a comparable Government insurance program.

40.  Benefits  Upon  Termination  Without  Cause or For Good  Reason  (Change of
Control).  If (a) the Employee's employment with the Company shall terminate (i)
because of  termination  by the  Company  pursuant to Section 7.1 other than for
Cause and other than because of Permanent and Total Disability,  (ii) because of
termination  by the Employee for Good Reason  pursuant to Section 8(a), or (iii)
for any reason during the 30 days beginning on the first anniversary of a Change
of Control,  and (b) such  termination  of  employment  occurs  within 13 months
following a "Change of Control" of the Company (as defined in Section  12),  the
Employee shall be entitled to the following:

(a) The Company  shall pay to the Employee  his base salary  pursuant to Section
3.1 and any other compensation and benefits to the extent actually earned by the
Employee  under this  Agreement or any benefit plan or program of the Company as
of the date of such  termination  at the normal time for payment of such salary,
compensation or benefits.

(b)   The Company shall pay the Employee any reimbursement amounts owing
under Section 5.

(c) The Company shall pay to the Employee as a severance benefit an amount equal
to three (3) times the sum of (i) his  annual  rate of base  salary  immediately
preceding  his  termination  of  employment,  and (ii) the  average of his three
highest annual bonuses awarded under the Company's annual  management  incentive
bonus plan for any of the five  calendar  years  preceding  his  termination  of
employment  (or, if he was not eligible for a bonus for at least three  calendar
years in such five-year period,  then the average of such bonuses for all of the
calendar years in such five-year period for which he was eligible, and if he was
not  eligible  for such a bonus in any  previous  year,  then 100% of his target
annual bonus for the year of termination of his  employment),  with any deferred
bonuses  counting for the year earned rather than the year paid.  Such severance
benefit  shall  be paid in a lump  sum  within  45 days  after  the date of such
termination of employment.

(d) The Company shall pay to the Employee as a bonus for the year of termination
of his  employment an amount equal to a portion  (determined  as provided in the
next sentence) of the bonus that the Employee would actually have received under
the Company's  annual  management  incentive bonus plan for the calendar year of
termination  of the  Employee's  employment if his employment had not terminated
(determined on the basis of his actual bonus  opportunity  and the actual degree
of achievement of the applicable  performance goals) or, if no bonus opportunity
for  that  year  had  been  established  for the  Employee  at the  time of such
termination  of  employment,  such portion of the bonus awarded to him under the
Company's  annual  management   incentive  bonus  plan  for  the  calendar  year
immediately  preceding the calendar year of the  termination of his  employment,
with  deferred  bonuses  counting for the year earned rather than the year paid.
Such  portion  shall  be  determined  by  dividing  the  number  of  days of the
Employee's  employment  during  such  calendar  year  up to his  termination  of
employment  by 365 (366 if a leap year).  Such payment shall be made on or about
the date on which bonuses for the applicable  year are paid to executives of the
Company  generally under the Company's annual  management  incentive bonus plan,
and the Employee shall have no right to any further bonuses under said plan.

(e)  During  the  period of 36 months  beginning  on the date of the  Employee's
termination  of  employment,  the Employee  shall remain covered by the medical,
dental,  vision,  life  insurance,  and, if  reasonably  commercially  available
through nationally  reputable insurance carriers,  long-term disability plans of
the Company that covered him immediately  prior to his termination of employment
as if he had  remained  in  employment  for such  period.  In the event that the
Employee's  participation in any such plan is barred,  the Company shall arrange
to provide the Employee with substantially similar benefits (but, in the case of
long-term disability benefits, only if reasonably commercially  available).  Any
medical insurance  coverage for such 36-month period pursuant to this subsection
(e)  shall  become  secondary  upon the  earlier  of (i) the  date on which  the
Employee begins to be covered by comparable  medical coverage  provided by a new
employer, or (ii) the earliest date upon which the Employee becomes eligible for
Medicare or a comparable Government insurance program.

41. Change of Control. For the purposes of this Agreement, a "Change of Control"
shall be deemed to have  occurred if (a) any person or persons  acting  together
which would constitute a "group" for purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),  (other than the Company,
any  subsidiary  of the  Company,  and  Tengelmann  Warenhandelsgesellschaft  (a
partnership  organized under the laws of the Federal  Republic of Germany or any
successor to such partnership, hereinafter "Tengelmann")) shall beneficially own
(as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, at least
30% of the total  voting  power of all  classes of capital  stock of the Company
entitled to vote  generally  in the  election of the Board and such voting power
exceeds the then current voting power of  Tengelmann;  (b) control of Tengelmann
is  acquired  by any person or persons  other than  family  members or  entities
controlled by family  members of Erivan Haub;  (c) Current  Directors (as herein
defined)  shall  cease for any reason to  constitute  at least a majority of the
members of the Board (for this  purpose,  a  "Current  Director"  shall mean any
member  of the  Board as of the  date  hereof  and any  successor  of a  Current
Director   whose   election,   or  nomination  for  election  by  the  Company's
shareholders,  was approved by at least two-thirds of the Current Directors then
on the  Board);  (d)  the  shareholders  of the  Company  approve  (i) a plan of
complete  liquidation  of the  Company or (ii) an  agreement  providing  for the
merger or  consolidation  of the Company other than a merger or consolidation in
which (x) the holders of the common  stock of the Company  immediately  prior to
the consolidation or merger have, directly or indirectly, at least a majority of
the common stock of the continuing or surviving  corporation  immediately  after
such consolidation or merger or (y) the Board immediately prior to the merger or
consolidation would, immediately after the merger or consolidation, constitute a
majority of the board of directors of the  continuing or surviving  corporation;
or (e) the  shareholders  of the Company  approve an agreement  (or  agreements)
providing for the sale or other  disposition  (in one transaction or a series of
transactions) of all or substantially all of the assets of the Company.

42.  Entitlement  to  Other  Benefits.  Except  as  otherwise  provided  in this
Agreement,  this  Agreement  shall not be  construed  as limiting in any way any
rights or benefits that the Employee or his spouse,  dependents or beneficiaries
may have pursuant to any other plan or program of the Company.

43.   Non-Competition.

           The Employee  agrees that during the term of this Agreement and for a
period of two years following  termination of his employment,  the Employee will
not,  within any of the  geographical  areas of the  United  States or Canada in
which the  Company  is then  conducting  business  (either  directly  or through
franchisees), directly or indirectly, own, manage, operate, control, be employed
by,  participate  in,  provide  consulting  services  to, or be connected in any
manner with the  ownership,  management,  operation  or control of any  business
similar  to any of the  types of  businesses  conducted  by the  Company  to any
significant  extent during his  employment or on the date of  termination of his
employment,  except the Employee may own for investment purposes up to 1% of the
capital stock of any company whose stock is publicly traded, and during such two
year period  following  termination  of his  employment  the  Employee  will not
contact or solicit  employees  of the Company  for the purpose of inducing  such
employees to leave the employ of the Company.

44.   Confidential Information and Trade Secrets.

           The  Employee  hereby  acknowledges  that he will have  access to and
become acquainted with various trade secrets and proprietary  information of the
Company and other confidential information relating to the Company. The Employee
covenants  that he will  not,  directly  or  indirectly,  disclose  or use  such
information  except as is  necessary  and  appropriate  in  connection  with his
employment by the Company and that he will  otherwise  adhere in all respects to
the Company's policies against the use or disclosure of such information.

45.   Arbitration; Injunctive Relief.

           Any  controversy  or  claim  arising  out  of  or  relating  to  this
Agreement, directly or indirectly, or the performance or breach thereof, will be
settled by arbitration in accordance with the rules of the American  Arbitration
Association,  and judgment  upon the award  rendered by the  arbitrators  may be
entered in any court having jurisdiction  thereof.  The arbitration will be held
in New York,  New York, or such other place as may be agreed upon at the time by
the parties to the  arbitration.  The parties  shall bear their own  expenses in
connection with any arbitration or proceeding arising out of or relating to this
Agreement,  directly  or  indirectly,  or the  performance  or  breach  thereof;
provided,  however, that in the event that the Employee substantially  prevails,
the  Company  agrees  promptly  to  reimburse  the  Employee  for  all  expenses
(including  costs  and  fees of  witnesses,  evidence  and  attorneys  fees  and
expenses) reasonably incurred by him in investigating,  prosecuting,  defending,
or preparing to prosecute or defend any action,  proceeding or claim arising out
of or relating to this Agreement,  directly or indirectly, or the performance or
breach  thereof.  The parties  acknowledge and agree that a breach of Employee's
obligations  under Sections 14 or 15 could cause irreparable harm to Company for
which  Company  would have no adequate  remedy at law,  and further  agree that,
notwithstanding  the  agreement  of the parties to  arbitrate  controversies  or
claims  as set  forth  above,  the  Company  may  apply to a court of  competent
jurisdiction  to seek to  enjoin  preliminarily  or  permanently  any  breach or
threatened breach of the Employee's obligations under Sections 14 and 15.

46.   Indemnification.

           The Company  shall  indemnify  and hold the Employee  harmless to the
fullest  extent  legally  permissible  under the laws of the State of  Maryland,
against any and all expenses, liabilities and losses (including attorney's fees,
judgments, fines and amounts paid in settlement) reasonably incurred or suffered
by him by reason of any claim or cause of action asserted against him because of
his  service at any time as a director  or officer of the  Company.  The Company
shall advance to the Employee the amount of his expenses  incurred in connection
with any  proceeding  relating  to such  service to the fullest  extent  legally
permissible  under  the  laws of the  State  of  Maryland.  Notwithstanding  the
foregoing, the Company's obligations pursuant to this Section 17 shall not apply
in the case of any claim or cause of action by or in the right of the Company or
any subsidiary thereof.

47.   Liability Insurance.

           To the  extent  that  Company  maintains  a  directors  and  officers
liability  insurance policy in effect, the Company will take all steps necessary
to ensure that the  Employee  is covered  under such policy for his service as a
director or officer of the Company or any subsidiary of the Company with respect
to claims made at any time with respect to such service.

48.   Certain Additional Payments by the Company.

           (a) Anything in this  Agreement to the contrary  notwithstanding,  in
the event it shall be  determined  that any  payment or  distribution  made,  or
benefit  provided  (including,  without  limitation,  the  acceleration  of  any
payment, distribution or benefit and the accelerated exercisability of any stock
option),  to or for the  benefit  of the  Employee  (whether  paid or payable or
distributed  or  distributable  pursuant  to the  terms  of  this  Agreement  or
otherwise,  but determined  without regard to any additional  payments  required
under this Section 19) (a "Payment")  would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (or any similar
excise tax) or any  interest or  penalties  are  incurred by the  Employee  with
respect to such excise tax (such excise tax, together with any such interest and
penalties,  are hereinafter  collectively referred to as the "Excise Tax"), then
the Employee shall be entitled to receive from the Company an additional payment
(a "Gross-Up  Payment") in an amount such that after  payment by the Employee of
all taxes  (including  any Excise Tax,  income tax or employment  tax and taking
into  account any lost or reduced  tax  deductions  on account of such  Gross-Up
Payment) imposed upon the Gross-Up Payment and any interest or penalties imposed
with respect to such taxes,  the Employee  retains from the Gross-Up  Payment an
amount equal to the Excise Tax imposed upon the Payments.

           (b) Subject to the  provisions of Section 19(c),  all  determinations
required to be made under this Section 19, including  determination of whether a
Gross-Up  Payment is required  and of the amount of any such  Gross-up  Payment,
shall be made by  Deloitte & Touche LLP (the  "Accounting  Firm"),  which  shall
provide detailed  supporting  calculations  both to the Company and the Employee
within 15 business days of the date of termination of the Employee's employment,
if  applicable,  or such earlier  time as is requested by the Company,  provided
that any  determination  that an Excise Tax is payable by the Employee  shall be
made on the basis of substantial  authority.  The initial Gross-Up  Payment,  if
any, as determined pursuant to this Section 19(b), shall be paid to the Employee
within five business days of the receipt of the Accounting Firm's determination.
If the Accounting Firm determines that no Excise Tax is payable by the Employee,
it shall  furnish the Employee  with a written  opinion that he has  substantial
authority  not to report any Excise Tax on his Federal  income tax  return.  Any
determination  by the Accounting  Firm meeting the  requirements of this Section
19(b)  shall be binding  upon the  Company  and the  Employee;  subject  only to
payments  pursuant  to the  following  sentence  based on a  determination  that
additional  Gross-Up  Payments  should  have  been  made,  consistent  with  the
calculations  required  to be made  hereunder  (the  amount  of such  additional
payments  is referred to herein as the  "Gross-Up  Underpayment").  In the event
that the  Company  exhausts  its  remedies  pursuant  to  Section  19(c) and the
Employee  thereafter  is  required  to make a payment  of any  Excise  Tax,  the
Accounting Firm shall determine the amount of the Gross-Up Underpayment that has
occurred  and any  such  Gross-Up  Underpayment  shall be  promptly  paid by the
Company to or for the benefit of the Employee. The fees and disbursements of the
Accounting Firm shall be paid by the Company.

           (c) The Employee  shall notify the Company in writing of any claim by
the Internal  Revenue Service that, if successful,  would require the payment by
the Company of a Gross-Up Payment.  Such notification  shall be given as soon as
practicable  but not later than ten business  days after the  Employee  receives
written notice of such claim and shall apprise the Company of the nature of such
claim and the date on which such Claim is  requested  to be paid.  The  Employee
shall not pay such claim prior to the expiration of the 30-day period  following
the date on which it gives such notice to the Company  (or such  shorter  period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company  notifies the Employee in writing prior to the expiration of such
period that it desires to contest such claim and that it will bear the costs and
provide the indemnification as required by this sentence, the Employee shall:

           (i)  give the Company any information reasonably requested by
the Company relating to such claim,

           (ii) take such action in connection with contesting such claim as the
Company  shall  reasonably  request  in  writing  from time to time,  including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

           (iii) cooperate with the Company in good faith in order
effectively to contest such claim, and

           (iv) permit the Company to participate in any proceedings
relating to such claim;

provided,  however,  that the Company  shall bear and pay directly all costs and
expenses  (including  additional  interest and penalties) incurred in connection
with such  contest and shall  indemnify  and hold the Employee  harmless,  on an
after-tax  basis,  for any Excise Tax, income tax or employment tax (taking into
account  any lost or  reduced  tax  deductions  on  account  of such  payments),
including  interest and penalties with respect  thereto,  imposed as a result of
such representation and payment of costs and expenses. Without limitation on the
foregoing  provisions  of this  Section  19(c),  the Company  shall  control all
proceedings  taken in connection with such contest and, at its sole option,  may
pursue or forgo any and all administrative  appeals,  proceedings,  hearings and
conferences  with the taxing  authority in respect of such claim and may, at its
sole  option,  either  direct the  Employee to pay the tax claimed and sue for a
refund or contest the claim in any permissible  manner,  and the Employee agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial  jurisdiction and in one or more appellate  courts, as the
Company shall  determine;  provided,  however,  that if the Company  directs the
Employee to pay such claim and sue for a refund,  the Company  shall advance the
amount of such  payment  to the  Employee  on an  interest-free  basis and shall
indemnify and hold the Employee harmless, on an after-tax basis, from any Excise
Tax,  income tax or employment  tax (taking into account any lost or reduced tax
deductions on account of such  advance),  including  interest or penalties  with
respect  thereto,  imposed  with  respect to such advance or with respect to any
imputed  income with  respect to such  advance;  and further  provided  that any
extension of the statute of limitations relating to the payment of taxes for the
taxable year of the  Employee  with  respect to which such  contested  amount is
claimed to be due is limited solely to such contested amount.  Furthermore,  the
Company's  control of the  contest  shall be limited to issues  with  respect to
which a Gross-Up  Payment would be payable  hereunder and the Employee  shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

           (d) If,  after the receipt by the  Employee of an amount  advanced by
the Company  pursuant to Section 19(c), the Employee becomes entitled to receive
any refund  with  respect to such  claim,  the  Employee  shall  (subject to the
Company's  complying with the requirements of Section 19(c)) promptly pay to the
Company the amount of such refund  (together  with any interest paid or credited
thereon after taxes applicable  thereto).  If, after the receipt by the Employee
of an amount advanced by the Company  pursuant to Section 19(c), a determination
is made that the  Employee  shall not be entitled to any refund with  respect to
such claim and the Company does not notify the Employee in writing of its intent
to contest such denial of refund prior to the  expiration  of 30 days after such
determination,  then any  obligation of the Employee to repay such advance shall
be forgiven and the amount of such advance shall offset,  to the extent thereof,
the amount of Gross-Up Payment required to be paid.

49.  No Duty to Seek  Employment.  The  Employee  shall not be under any duty or
obligation  to  seek  or  accept  other  employment  following   termination  of
employment,  and no amount,  payment or benefits due to the  Employee  hereunder
shall be reduced or suspended if the Employee accepts subsequent employment.

50.   Deductions and Withholding.

           All amounts  payable or which become  payable  under any provision of
this Agreement shall be subject to any deductions authorized by the Employee and
any deductions and withholdings required by law.

51.   Governing Law.

           The validity,  interpretation  and performance of this Agreement will
be  governed  by the  laws of the  State of New  Jersey  without  regard  to the
conflict of law provisions.

52.   Notice.

           Any  written  notice  required  to be given by one Party to the other
Party hereunder will be deemed effected if mailed by registered mail:



To the Company at:    The Great Atlantic & Pacific Tea Company
                      2 Paragon Drive
                      Montvale, New Jersey 07645
                      Attention: General Counsel


To the Employee at:  14 Crooked Hill

                     Oakland, NJ  07436

or such other address as may be stated in a notice given as herein
before provided.

53.   Severability.

           If any one or more of the  provisions  contained in this Agreement is
held to be invalid,  illegal or unenforceable  in any respect,  such invalidity,
illegality or unenforceability will not affect any other provision hereof.

54.   Successors and Assigns.

           This  Agreement  will be binding upon and inure to the benefit of the
Parties  hereto  and their  personal  representatives,  and,  in the case of the
Company,  its  successors and assigns.  To the extent the Company's  obligations
under this Agreement are transferred to any successor or assign,  such successor
or assign  shall be treated as the  "Company"  for  purposes of this  Agreement.
Other than as contemplated  by this  Agreement,  the Employee may not assign his
rights or duties under this Agreement.

55.   Continuing Effect.

           Wherever  appropriate  to the  intention of the Parties  hereto,  the
respective  rights and  obligations  of the Parties,  including the  obligations
referred  to in  Sections  10,  11,  14, 15 and 19,  hereof,  will  survive  any
termination or expiration of the term of this Agreement.

56.   Entire Agreement.

           This Agreement  constitutes the entire agreement  between the Parties
and  supersedes  any and all other  agreements  and  understandings  between the
Parties in respect of the matters addressed in this Agreement.

57.   Amendment and Waiver.

           No amendment or waiver of any  provision of this  Agreement  shall be
effective,  unless the same shall be in writing and signed by the  Parties,  and
then such  amendment,  waiver or consent shall be effective only in the specific
instance or for the specific purpose for which such amendment, waiver or consent
was given.

58.   Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed an original
but all of which together shall constitute one and the same instrument.

           IN WITNESS  WHEREOF,  the  Company has caused  this  Agreement  to be
executed by its duly  authorized  officer and the  Employee has hereunto set his
hand as of the day and year first above written.

                                    THE GREAT ATLANTIC & PACIFIC TEA
                                        COMPANY, INC.


                                    By:
                                        Name:
                                        Title:



                                        NICHOLAS IOLI, JR.



<PAGE>


                              EMPLOYMENT AGREEMENT


           AGREEMENT, made and entered into as of the 1st day of November, 2000,
by and between THE GREAT ATLANTIC & PACIFIC TEA COMPANY,  INC. (the  "Company"),
and WILLIAM P. COSTANTINI (the "Employee").

                           W I T N E S S E T H


           WHEREAS,  the Company and the Employee (the "Parties") have agreed to
enter into this  agreement  (the  "Agreement)  relating to the employment of the
Employee by the Company;

           NOW, THEREFORE, in consideration of the premises and mutual covenants
contained  herein and for other good and  valuable  consideration,  the Parties,
intending to be legally bound, agree as follows:

59.   Term of Employment.

(a) The  Company  agrees to continue to employ the  Employee,  and the  Employee
agrees to remain in the employment of the Company,  in accordance with the terms
and  provisions  of  this  Agreement,  for  the  period  set  forth  below  (the
"Employment Period").

(b) The Employment  Period under this Agreement shall commence as of November 1,
2000 and,  subject only to the  provisions of Sections 7, 8 and 9 below relating
to termination of employment,  shall continue until (i) the close of business on
October 31, 2003 or (ii) such later date as shall  result from the  operation of
subparagraph (c) below (the "Terminal Date").

(c)  Commencing  on May 1,  2002,  and on the first  business  day of each month
thereafter  (such date and each such first business day, the "Renewal Date") the
Terminal  Date set forth in  subparagraph  (b) above  shall be extended so as to
occur  eighteen  months from the Renewal  Date unless  either the Company or the
Employee  shall have given  written  notice to the other Party on or before such
Renewal Date that the Terminal Date is not to be extended.

60.   Duties.

           It is the  intention  of the  Parties  that  during  the  term of his
employment  under  this  Agreement,  the  Employee  will  serve as  Senior  Vice
President,  General  Counsel and  Secretary  of the Company.  The Employee  will
devote his full  business  time and  attention to the affairs of the Company and
his duties as its Senior Vice  President,  General  Counsel and  Secretary.  The
Employee will have such duties as are appropriate to his position as Senior Vice
President,  General  Counsel  and  Secretary,  and will have such  authority  as
required to enable him to perform these duties.  Consistent  with the foregoing,
the Employee shall comply with all reasonable instructions of the Vice Chairman,
Chief Financial Officer of the Company.  The Employee will be based in Montvale,
New Jersey and his services will be rendered  there except insofar as travel may
be involved in  connection  with his regular  duties.  The Employee  will report
directly to the Vice Chairman, Chief Financial Officer of the Company.

61.   Salary and Bonus.

61.1  Salary.  The  Company  will pay the  Employee a base  salary at an initial
annual rate of not less than $335,000,  which base salary as in effect from time
to time will not be reduced and will be reviewed  periodically  (at intervals of
not more than eighteen (18) months) by the  Compensation  Committee of the Board
of Directors (the "Board") for the purpose of considering  increases thereof. In
evaluating  increases in the Employee's base salary, the Compensation  Committee
of the Board  will take into  account  such  factors as  corporate  performance,
individual  merit, and such other  considerations as it deems  appropriate.  The
Employee's  base salary will be paid in accordance  with the standard  practices
for other corporate executives of the Company.

61.2  Bonuses.

           The Employee  will be eligible to receive  annually or otherwise  any
bonus awards,  whether payable in cash, shares of common stock of the Company or
otherwise,  which the Company,  the Compensation  Committee of the Board or such
other authorized committee of the Board determines to award or grant.

62.   Benefit Programs.

           The Employee will receive such benefits and awards, including without
limitation  stock  options and  restricted  share  awards,  as the  Compensation
Committee of the Board shall  determine and will be eligible to  participate  in
all  employee  benefit  plans and  programs of the Company  from time to time in
effect for the benefit of senior executives of the Company,  including,  but not
limited  to,  pension  and  other  retirement   plans,   group  life  insurance,
hospitalization  and surgical and major medical  coverages,  sick leave,  salary
continuation  arrangements,  vacations and holidays,  long-term disability,  and
such other  benefits as are or may be made available from time to time to senior
executives of the Company.

63.   Business Expenses and Perquisites.

           The Employee will be reimbursed for all reasonable  expenses incurred
by him in connection  with the conduct of the business of the Company,  provided
he properly accounts therefor in accordance with the Company's policies. He will
also  be  entitled  to  such  other  perquisites  as are  customary  for  senior
executives of the Company.

64. Office and Services  Furnished.  The Company shall furnish the Employee with
office space,  secretarial  assistance and such other facilities and services as
shall be suitable to the Employee's position and adequate for the performance of
his duties hereunder.

65.   Termination of Employment by the Company.

65.1  Involuntary  Termination by the Company Other Than For Permanent and Total
Disability or For Cause. The Company may terminate the Employee's  employment at
any time and for any reason by giving  him a written  notice of  termination  to
that  effect at least 45 days before the date of  termination.  In the event the
Company  terminates  the  Employee's  employment  for any reason  other than for
Permanent and Total Disability, as provided in Section 7.2, below, or for Cause,
as  provided  in Section  7.3,  below,  the  Employee  shall be  entitled to the
benefits described in Section 10 or Section 11, whichever is applicable.

65.2 Termination Due to Permanent and Total Disability. If the Employee incurs a
Permanent and Total Disability,  as defined below, the Company may terminate the
Employee's  employment by giving him written  notice of  termination at least 45
days before the date of such  termination.  In the event of such  termination of
the  Employee's  employment  because  of  Permanent  and Total  Disability,  the
Employee  shall be entitled  to receive (i) his base salary  pursuant to Section
3.1 and any other compensation and benefits to the extent actually earned by the
Employee  pursuant  to this  Agreement  or any  benefit  plan or  program of the
Company as of the date of such  termination of employment at the normal time for
payment of such salary,  compensation  or benefits,  and (ii) any  reimbursement
amounts  owing under  Section 5. For  purposes of this  Agreement,  the Employee
shall be considered  to have incurred a Permanent and Total  Disability if he is
unable to  substantially  carry out his duties under this Agreement by reason of
any medically  determinable  physical or mental impairment which can be expected
to  result  in  death or  which  has  lasted  or can be  expected  to last for a
continuous  period of not less than 12 months.  The existence of such  Permanent
and Total  Disability  shall be evidenced by such medical  certification  as the
Secretary of the Company  shall  require and shall be subject to the approval of
the Compensation Committee of the Board of Directors of the Company.

65.3 Termination for Cause. The Company may terminate the Employee's  employment
for Cause if (i) the Employee willfully, substantially, and continually fails to
perform the duties for which he is employed by the  Company,  (ii) the  Employee
willfully fails to comply with the reasonable instructions of the Vice Chairman,
Chief Financial Officer of the Company,  (iii) the Employee willfully engages in
conduct  which  is  or  would  reasonably  be  expected  to  be  materially  and
demonstrably injurious to the Company, (iv) the Employee willfully engages in an
act or acts of dishonesty resulting in material personal gain to the Employee at
the expense of the Company,  (v) the Employee is convicted of a felony, (vi) the
Employee  engages in an act or acts of gross  malfeasance in connection with his
employment  hereunder,  (vii)  the  Employee  commits a  material  breach of the
confidentiality  provision  set forth in  Section  15, or  (viii)  the  Employee
exhibits  demonstrable  evidence of alcohol or drug abuse  having a  substantial
adverse effect on his job performance hereunder.  The Company shall exercise its
right to terminate  the  Employee's  employment  for Cause by giving him written
notice  of  termination  at least 45 days  before  the date of such  termination
specifying in reasonable  detail the  circumstances  constituting such Cause. In
the event of such  termination  of the  Employee's  employment  for  Cause,  the
Employee  shall be entitled  to receive (i) his base salary  pursuant to Section
3.1 and any other  compensation  and  benefits  to the  extent  actually  earned
pursuant to this  Agreement  or any benefit plan or program of the Company as of
the date of such  termination  at the normal  time for  payment of such  salary,
compensation  or  benefits  and (ii) any  amounts  owed under the  reimbursement
policy of Section 5.

66.   Termination of Employment by the Employee.

(a) Good Reason.  The Employee may terminate his  employment  for Good Reason by
giving the Company a written  notice of  termination at least 45 days before the
date of such  termination  specifying  in  reasonable  detail the  circumstances
constituting such Good Reason. In the event of the Employee's termination of his
employment  for Good  Reason,  the  Employee  shall be entitled to the  benefits
described in Section 10 or Section 11, whichever is applicable.  For purposes of
this Agreement,  Good Reason shall mean (i) a significant reduction in the scope
of the Employee's  authority,  functions,  duties or responsibilities  from that
which is  contemplated  by this  Agreement,  (ii) the Employee being required to
report directly to someone other than the Vice Chairman, Chief Financial Officer
of the Company,  (iii) the  relocation of the  Employee's  office  location to a
location  more  than 50  miles  away  from  the  Employee's  principal  place of
employment  on November  1, 2000,  (iv) any  reduction  in the  Employee's  base
salary, or (v) a significant  reduction in the employee benefits provided to the
Employee other than in connection with an  across-the-board  reduction similarly
affecting  substantially  all  senior  executives  of the  Company.  If an event
constituting a ground for termination of employment for Good Reason occurs,  and
the  Employee  fails to give  notice of  termination  within 3 months  after the
occurrence of such event,  the Employee shall be deemed to have waived his right
to terminate  employment for Good Reason in connection  with such event (but not
for any other event for which the 3-month period has not expired).

(b) Other.  The Employee may  terminate  his  employment at any time and for any
reason,  other than  pursuant to subsection  (a) above,  by giving the Company a
written notice of termination to that effect at least 45 days before the date of
termination.  In the  event  of the  Employee's  termination  of his  employment
pursuant to this  subsection  (b), the Employee shall be entitled to receive (i)
his base salary pursuant to Section 3.1 and any other  compensation and benefits
to the extent actually earned by the Employee  pursuant to this Agreement or any
benefit plan or program of the Company as of the date of such termination at the
normal time for payment of such salary,  compensation or benefits,  and (ii) any
reimbursement amounts owing under Section 5.

67.  Termination  of  Employment  By  Death.  In the  event of the  death of the
Employee during the course of his employment  hereunder,  the Employee's  estate
shall be entitled to receive (i) his base salary pursuant to Section 3.1 and any
other  compensation  and benefits to the extent  actually earned by the Employee
pursuant to this  Agreement or any other  benefit plan or program of the Company
as of the  date of such  termination  at the  normal  time for  payment  of such
salary, compensation or benefits, and (ii) any reimbursement amounts owing under
Section 5. In addition, in the event of such death, the Employee's beneficiaries
shall  receive  any death  benefits  owed to them under the  Company's  employee
benefit plans.

68.  Benefits  Upon  Termination  Without Cause or For Good Reason (No Change of
Control).  If (a) the Employee's employment with the Company shall terminate (i)
because of  termination  by the  Company  pursuant to Section 7.1 other than for
Cause and other than because of Permanent and Total Disability,  or (ii) because
of termination by the Employee for Good Reason pursuant to Section 8(a), and (b)
such  termination  of  employment  does not occur  within 13 months  following a
"Change of Control" of the Company  (as  defined in Section  12),  the  Employee
shall be entitled to the following:

(a) The Company  shall pay to the Employee  his base salary  pursuant to Section
3.1 and any other compensation and benefits to the extent actually earned by the
Employee  under this  Agreement or any benefit plan or program of the Company as
of the date of such  termination  at the normal time for payment of such salary,
compensation or benefits.

(b)   The Company shall pay the Employee any reimbursement amounts owing
under Section 5.

(c) The Company shall pay to the Employee as a severance  benefit for each month
during the 18 month period  beginning  with the month next following the date of
termination of the  Employee's  employment an amount equal to one-twelfth of the
sum of (i) his annual rate of base salary immediately  preceding his termination
of employment,  and (ii) the average of his three highest annual bonuses awarded
under the Company's annual  management  incentive bonus plan for any of the five
calendar  years  preceding  his  termination  of  employment  (or, if he was not
eligible for a bonus for at least three calendar years in such five-year period,
then the average of such bonuses for all of the calendar years in such five-year
period for which he was eligible, and if he was not eligible for such a bonus in
any  previous  year,  then  100% of his  target  annual  bonus  for the  year of
termination of his employment),  with any deferred bonuses counting for the year
earned  rather than the year paid.  Each such monthly  benefit  shall be paid no
later than the last day of the applicable  month. In the event that the Employee
dies before the end of such 18-month  period,  the payments for the remainder of
such period shall be made to the Employee's estate.

(d) The Company shall pay to the Employee as a bonus for the year of termination
of his  employment an amount equal to a portion  (determined  as provided in the
next sentence) of the bonus that the Employee would actually have received under
the Company's  annual  management  incentive bonus plan for the calendar year of
termination  of the  Employee's  employment if his employment had not terminated
(determined on the basis of his actual bonus  opportunity  and the actual degree
of achievement of the applicable  performance goals) or, if no bonus opportunity
for  that  year  had  been  established  for the  Employee  at the  time of such
termination  of  employment,  such portion of the bonus awarded to him under the
Company's  annual  management   incentive  bonus  plan  for  the  calendar  year
immediately  preceding the calendar year of the  termination of his  employment,
with  deferred  bonuses  counting for the year earned rather than the year paid.
Such  portion  shall  be  determined  by  dividing  the  number  of  days of the
Employee's  employment  during  such  calendar  year  up to his  termination  of
employment  by 365 (366 if a leap year).  Such payment shall be made on or about
the date on which bonuses for the applicable  year are paid to executives of the
Company  generally under the Company's annual  management  incentive bonus plan,
and the Employee shall have no right to any further bonuses under said plan.

(e)  During  the  period of 18 months  beginning  on the date of the  Employee's
termination  of  employment,  the Employee  shall remain covered by the medical,
dental,  vision,  life  insurance,  and, if  reasonably  commercially  available
through nationally  reputable insurance carriers,  long-term disability plans of
the Company that covered him immediately  prior to his termination of employment
as if he had  remained  in  employment  for such  period.  In the event that the
Employee's  participation in any such plan is barred,  the Company shall arrange
to provide the Employee with substantially similar benefits (but, in the case of
long-term disability benefits, only if reasonably commercially  available).  Any
medical insurance  coverage for such 18-month period pursuant to this subsection
(e)  shall  become  secondary  upon the  earlier  of (i) the  date on which  the
Employee begins to be covered by comparable  medical coverage  provided by a new
employer, or (ii) the earliest date upon which the Employee becomes eligible for
Medicare or a comparable Government insurance program.

69.  Benefits  Upon  Termination  Without  Cause or For Good  Reason  (Change of
Control).  If (a) the Employee's employment with the Company shall terminate (i)
because of  termination  by the  Company  pursuant to Section 7.1 other than for
Cause and other than because of Permanent and Total Disability,  (ii) because of
termination  by the Employee for Good Reason  pursuant to Section 8(a), or (iii)
for any reason during the 30 days beginning on the first anniversary of a Change
of Control,  and (b) such  termination  of  employment  occurs  within 13 months
following a "Change of Control" of the Company (as defined in Section  12),  the
Employee shall be entitled to the following:

(a) The Company  shall pay to the Employee  his base salary  pursuant to Section
3.1 and any other compensation and benefits to the extent actually earned by the
Employee  under this  Agreement or any benefit plan or program of the Company as
of the date of such  termination  at the normal time for payment of such salary,
compensation or benefits.

(b)   The Company shall pay the Employee any reimbursement amounts owing
under Section 5.

(c) The Company shall pay to the Employee as a severance benefit an amount equal
to three (3) times the sum of (i) his  annual  rate of base  salary  immediately
preceding  his  termination  of  employment,  and (ii) the  average of his three
highest annual bonuses awarded under the Company's annual  management  incentive
bonus plan for any of the five  calendar  years  preceding  his  termination  of
employment  (or, if he was not eligible for a bonus for at least three  calendar
years in such five-year period,  then the average of such bonuses for all of the
calendar years in such five-year period for which he was eligible, and if he was
not  eligible  for such a bonus in any  previous  year,  then 100% of his target
annual bonus for the year of termination of his  employment),  with any deferred
bonuses  counting for the year earned rather than the year paid.  Such severance
benefit  shall  be paid in a lump  sum  within  45 days  after  the date of such
termination of employment.

(d) The Company shall pay to the Employee as a bonus for the year of termination
of his  employment an amount equal to a portion  (determined  as provided in the
next sentence) of the bonus that the Employee would actually have received under
the Company's  annual  management  incentive bonus plan for the calendar year of
termination  of the  Employee's  employment if his employment had not terminated
(determined on the basis of his actual bonus  opportunity  and the actual degree
of achievement of the applicable  performance goals) or, if no bonus opportunity
for  that  year  had  been  established  for the  Employee  at the  time of such
termination  of  employment,  such portion of the bonus awarded to him under the
Company's  annual  management   incentive  bonus  plan  for  the  calendar  year
immediately  preceding the calendar year of the  termination of his  employment,
with  deferred  bonuses  counting for the year earned rather than the year paid.
Such  portion  shall  be  determined  by  dividing  the  number  of  days of the
Employee's  employment  during  such  calendar  year  up to his  termination  of
employment  by 365 (366 if a leap year).  Such payment shall be made on or about
the date on which bonuses for the applicable  year are paid to executives of the
Company  generally under the Company's annual  management  incentive bonus plan,
and the Employee shall have no right to any further bonuses under said plan.

(e)  During  the  period of 36 months  beginning  on the date of the  Employee's
termination  of  employment,  the Employee  shall remain covered by the medical,
dental,  vision,  life  insurance,  and, if  reasonably  commercially  available
through nationally  reputable insurance carriers,  long-term disability plans of
the Company that covered him immediately  prior to his termination of employment
as if he had  remained  in  employment  for such  period.  In the event that the
Employee's  participation in any such plan is barred,  the Company shall arrange
to provide the Employee with substantially similar benefits (but, in the case of
long-term disability benefits, only if reasonably commercially  available).  Any
medical insurance  coverage for such 36-month period pursuant to this subsection
(e)  shall  become  secondary  upon the  earlier  of (i) the  date on which  the
Employee begins to be covered by comparable  medical coverage  provided by a new
employer, or (ii) the earliest date upon which the Employee becomes eligible for
Medicare or a comparable Government insurance program.

70. Change of Control. For the purposes of this Agreement, a "Change of Control"
shall be deemed to have  occurred if (a) any person or persons  acting  together
which would constitute a "group" for purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),  (other than the Company,
any  subsidiary  of the  Company,  and  Tengelmann  Warenhandelsgesellschaft  (a
partnership  organized under the laws of the Federal  Republic of Germany or any
successor to such partnership, hereinafter "Tengelmann")) shall beneficially own
(as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, at least
30% of the total  voting  power of all  classes of capital  stock of the Company
entitled to vote  generally  in the  election of the Board and such voting power
exceeds the then current voting power of  Tengelmann;  (b) control of Tengelmann
is  acquired  by any person or persons  other than  family  members or  entities
controlled by family  members of Erivan Haub;  (c) Current  Directors (as herein
defined)  shall  cease for any reason to  constitute  at least a majority of the
members of the Board (for this  purpose,  a  "Current  Director"  shall mean any
member  of the  Board as of the  date  hereof  and any  successor  of a  Current
Director   whose   election,   or  nomination  for  election  by  the  Company's
shareholders,  was approved by at least two-thirds of the Current Directors then
on the  Board);  (d)  the  shareholders  of the  Company  approve  (i) a plan of
complete  liquidation  of the  Company or (ii) an  agreement  providing  for the
merger or  consolidation  of the Company other than a merger or consolidation in
which (x) the holders of the common  stock of the Company  immediately  prior to
the consolidation or merger have, directly or indirectly, at least a majority of
the common stock of the continuing or surviving  corporation  immediately  after
such consolidation or merger or (y) the Board immediately prior to the merger or
consolidation would, immediately after the merger or consolidation, constitute a
majority of the board of directors of the  continuing or surviving  corporation;
or (e) the  shareholders  of the Company  approve an agreement  (or  agreements)
providing for the sale or other  disposition  (in one transaction or a series of
transactions) of all or substantially all of the assets of the Company.

71.  Entitlement  to  Other  Benefits.  Except  as  otherwise  provided  in this
Agreement,  this  Agreement  shall not be  construed  as limiting in any way any
rights or benefits that the Employee or his spouse,  dependents or beneficiaries
may have pursuant to any other plan or program of the Company.

72.   Non-Competition.

           The Employee  agrees that during the term of this Agreement and for a
period of two years following  termination of his employment,  the Employee will
not,  within any of the  geographical  areas of the  United  States or Canada in
which the  Company  is then  conducting  business  (either  directly  or through
franchisees), directly or indirectly, own, manage, operate, control, be employed
by,  participate  in,  provide  consulting  services  to, or be connected in any
manner with the  ownership,  management,  operation  or control of any  business
similar  to any of the  types of  businesses  conducted  by the  Company  to any
significant  extent during his  employment or on the date of  termination of his
employment,  except the Employee may own for investment purposes up to 1% of the
capital stock of any company whose stock is publicly traded, and during such two
year period  following  termination  of his  employment  the  Employee  will not
contact or solicit  employees  of the Company  for the purpose of inducing  such
employees to leave the employ of the Company.

73.   Confidential Information and Trade Secrets.

           The  Employee  hereby  acknowledges  that he will have  access to and
become acquainted with various trade secrets and proprietary  information of the
Company and other confidential information relating to the Company. The Employee
covenants  that he will  not,  directly  or  indirectly,  disclose  or use  such
information  except as is  necessary  and  appropriate  in  connection  with his
employment by the Company and that he will  otherwise  adhere in all respects to
the Company's policies against the use or disclosure of such information.

74.   Arbitration; Injunctive Relief.

           Any  controversy  or  claim  arising  out  of  or  relating  to  this
Agreement, directly or indirectly, or the performance or breach thereof, will be
settled by arbitration in accordance with the rules of the American  Arbitration
Association,  and judgment  upon the award  rendered by the  arbitrators  may be
entered in any court having jurisdiction  thereof.  The arbitration will be held
in New York,  New York, or such other place as may be agreed upon at the time by
the parties to the  arbitration.  The parties  shall bear their own  expenses in
connection with any arbitration or proceeding arising out of or relating to this
Agreement,  directly  or  indirectly,  or the  performance  or  breach  thereof;
provided,  however, that in the event that the Employee substantially  prevails,
the  Company  agrees  promptly  to  reimburse  the  Employee  for  all  expenses
(including  costs  and  fees of  witnesses,  evidence  and  attorneys  fees  and
expenses) reasonably incurred by him in investigating,  prosecuting,  defending,
or preparing to prosecute or defend any action,  proceeding or claim arising out
of or relating to this Agreement,  directly or indirectly, or the performance or
breach  thereof.  The parties  acknowledge and agree that a breach of Employee's
obligations  under Sections 14 or 15 could cause irreparable harm to Company for
which  Company  would have no adequate  remedy at law,  and further  agree that,
notwithstanding  the  agreement  of the parties to  arbitrate  controversies  or
claims  as set  forth  above,  the  Company  may  apply to a court of  competent
jurisdiction  to seek to  enjoin  preliminarily  or  permanently  any  breach or
threatened breach of the Employee's obligations under Sections 14 and 15.

75.   Indemnification.

           The Company  shall  indemnify  and hold the Employee  harmless to the
fullest  extent  legally  permissible  under the laws of the State of  Maryland,
against any and all expenses, liabilities and losses (including attorney's fees,
judgments, fines and amounts paid in settlement) reasonably incurred or suffered
by him by reason of any claim or cause of action asserted against him because of
his  service at any time as a director  or officer of the  Company.  The Company
shall advance to the Employee the amount of his expenses  incurred in connection
with any  proceeding  relating  to such  service to the fullest  extent  legally
permissible  under  the  laws of the  State  of  Maryland.  Notwithstanding  the
foregoing, the Company's obligations pursuant to this Section 17 shall not apply
in the case of any claim or cause of action by or in the right of the Company or
any subsidiary thereof.

76.   Liability Insurance.

           To the  extent  that  Company  maintains  a  directors  and  officers
liability  insurance policy in effect, the Company will take all steps necessary
to ensure that the  Employee  is covered  under such policy for his service as a
director or officer of the Company or any subsidiary of the Company with respect
to claims made at any time with respect to such service.

77.   Certain Additional Payments by the Company.

           (a) Anything in this  Agreement to the contrary  notwithstanding,  in
the event it shall be  determined  that any  payment or  distribution  made,  or
benefit  provided  (including,  without  limitation,  the  acceleration  of  any
payment, distribution or benefit and the accelerated exercisability of any stock
option),  to or for the  benefit  of the  Employee  (whether  paid or payable or
distributed  or  distributable  pursuant  to the  terms  of  this  Agreement  or
otherwise,  but determined  without regard to any additional  payments  required
under this Section 19) (a "Payment")  would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (or any similar
excise tax) or any  interest or  penalties  are  incurred by the  Employee  with
respect to such excise tax (such excise tax, together with any such interest and
penalties,  are hereinafter  collectively referred to as the "Excise Tax"), then
the Employee shall be entitled to receive from the Company an additional payment
(a "Gross-Up  Payment") in an amount such that after  payment by the Employee of
all taxes  (including  any Excise Tax,  income tax or employment  tax and taking
into  account any lost or reduced  tax  deductions  on account of such  Gross-Up
Payment) imposed upon the Gross-Up Payment and any interest or penalties imposed
with respect to such taxes,  the Employee  retains from the Gross-Up  Payment an
amount equal to the Excise Tax imposed upon the Payments.

           (b) Subject to the  provisions of Section 19(c),  all  determinations
required to be made under this Section 19, including  determination of whether a
Gross-Up  Payment is required  and of the amount of any such  Gross-up  Payment,
shall be made by  Deloitte & Touche LLP (the  "Accounting  Firm"),  which  shall
provide detailed  supporting  calculations  both to the Company and the Employee
within 15 business days of the date of termination of the Employee's employment,
if  applicable,  or such earlier  time as is requested by the Company,  provided
that any  determination  that an Excise Tax is payable by the Employee  shall be
made on the basis of substantial  authority.  The initial Gross-Up  Payment,  if
any, as determined pursuant to this Section 19(b), shall be paid to the Employee
within five business days of the receipt of the Accounting Firm's determination.
If the Accounting Firm determines that no Excise Tax is payable by the Employee,
it shall  furnish the Employee  with a written  opinion that he has  substantial
authority  not to report any Excise Tax on his Federal  income tax  return.  Any
determination  by the Accounting  Firm meeting the  requirements of this Section
19(b)  shall be binding  upon the  Company  and the  Employee;  subject  only to
payments  pursuant  to the  following  sentence  based on a  determination  that
additional  Gross-Up  Payments  should  have  been  made,  consistent  with  the
calculations  required  to be made  hereunder  (the  amount  of such  additional
payments  is referred to herein as the  "Gross-Up  Underpayment").  In the event
that the  Company  exhausts  its  remedies  pursuant  to  Section  19(c) and the
Employee  thereafter  is  required  to make a payment  of any  Excise  Tax,  the
Accounting Firm shall determine the amount of the Gross-Up Underpayment that has
occurred  and any  such  Gross-Up  Underpayment  shall be  promptly  paid by the
Company to or for the benefit of the Employee. The fees and disbursements of the
Accounting Firm shall be paid by the Company.

           (c) The Employee  shall notify the Company in writing of any claim by
the Internal  Revenue Service that, if successful,  would require the payment by
the Company of a Gross-Up Payment.  Such notification  shall be given as soon as
practicable  but not later than ten business  days after the  Employee  receives
written notice of such claim and shall apprise the Company of the nature of such
claim and the date on which such Claim is  requested  to be paid.  The  Employee
shall not pay such claim prior to the expiration of the 30-day period  following
the date on which it gives such notice to the Company  (or such  shorter  period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company  notifies the Employee in writing prior to the expiration of such
period that it desires to contest such claim and that it will bear the costs and
provide the indemnification as required by this sentence, the Employee shall:

           (i)  give the Company any information reasonably requested by
the Company relating to such claim,

           (ii) take such action in connection with contesting such claim as the
Company  shall  reasonably  request  in  writing  from time to time,  including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

           (iii) cooperate with the Company in good faith in order
effectively to contest such claim, and

           (iv) permit the Company to participate in any proceedings
relating to such claim;

provided,  however,  that the Company  shall bear and pay directly all costs and
expenses  (including  additional  interest and penalties) incurred in connection
with such  contest and shall  indemnify  and hold the Employee  harmless,  on an
after-tax  basis,  for any Excise Tax, income tax or employment tax (taking into
account  any lost or  reduced  tax  deductions  on  account  of such  payments),
including  interest and penalties with respect  thereto,  imposed as a result of
such representation and payment of costs and expenses. Without limitation on the
foregoing  provisions  of this  Section  19(c),  the Company  shall  control all
proceedings  taken in connection with such contest and, at its sole option,  may
pursue or forgo any and all administrative  appeals,  proceedings,  hearings and
conferences  with the taxing  authority in respect of such claim and may, at its
sole  option,  either  direct the  Employee to pay the tax claimed and sue for a
refund or contest the claim in any permissible  manner,  and the Employee agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial  jurisdiction and in one or more appellate  courts, as the
Company shall  determine;  provided,  however,  that if the Company  directs the
Employee to pay such claim and sue for a refund,  the Company  shall advance the
amount of such  payment  to the  Employee  on an  interest-free  basis and shall
indemnify and hold the Employee harmless, on an after-tax basis, from any Excise
Tax,  income tax or employment  tax (taking into account any lost or reduced tax
deductions on account of such  advance),  including  interest or penalties  with
respect  thereto,  imposed  with  respect to such advance or with respect to any
imputed  income with  respect to such  advance;  and further  provided  that any
extension of the statute of limitations relating to the payment of taxes for the
taxable year of the  Employee  with  respect to which such  contested  amount is
claimed to be due is limited solely to such contested amount.  Furthermore,  the
Company's  control of the  contest  shall be limited to issues  with  respect to
which a Gross-Up  Payment would be payable  hereunder and the Employee  shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

           (d) If,  after the receipt by the  Employee of an amount  advanced by
the Company  pursuant to Section 19(c), the Employee becomes entitled to receive
any refund  with  respect to such  claim,  the  Employee  shall  (subject to the
Company's  complying with the requirements of Section 19(c)) promptly pay to the
Company the amount of such refund  (together  with any interest paid or credited
thereon after taxes applicable  thereto).  If, after the receipt by the Employee
of an amount advanced by the Company  pursuant to Section 19(c), a determination
is made that the  Employee  shall not be entitled to any refund with  respect to
such claim and the Company does not notify the Employee in writing of its intent
to contest such denial of refund prior to the  expiration  of 30 days after such
determination,  then any  obligation of the Employee to repay such advance shall
be forgiven and the amount of such advance shall offset,  to the extent thereof,
the amount of Gross-Up Payment required to be paid.

78.  No Duty to Seek  Employment.  The  Employee  shall not be under any duty or
obligation  to  seek  or  accept  other  employment  following   termination  of
employment,  and no amount,  payment or benefits due to the  Employee  hereunder
shall be reduced or suspended if the Employee accepts subsequent employment.

79.   Deductions and Withholding.

           All amounts  payable or which become  payable  under any provision of
this Agreement shall be subject to any deductions authorized by the Employee and
any deductions and withholdings required by law.

80.   Governing Law.

           The validity,  interpretation  and performance of this Agreement will
be  governed  by the  laws of the  State of New  Jersey  without  regard  to the
conflict of law provisions.

81.   Notice.

           Any  written  notice  required  to be given by one Party to the other
Party hereunder will be deemed effected if mailed by registered mail:



To the Company at:    The Great Atlantic & Pacific Tea Company
                      2 Paragon Drive
                      Montvale, New Jersey 07645
                      Attention: General Counsel



To the Employee at:  64 Bouton Road

                     South Salem, NY  10590

or such other address as may be stated in a notice given as herein
before provided.

82.   Severability.

           If any one or more of the  provisions  contained in this Agreement is
held to be invalid,  illegal or unenforceable  in any respect,  such invalidity,
illegality or unenforceability will not affect any other provision hereof.

83.   Successors and Assigns.

           This  Agreement  will be binding upon and inure to the benefit of the
Parties  hereto  and their  personal  representatives,  and,  in the case of the
Company,  its  successors and assigns.  To the extent the Company's  obligations
under this Agreement are transferred to any successor or assign,  such successor
or assign  shall be treated as the  "Company"  for  purposes of this  Agreement.
Other than as contemplated  by this  Agreement,  the Employee may not assign his
rights or duties under this Agreement.

84.   Continuing Effect.

           Wherever  appropriate  to the  intention of the Parties  hereto,  the
respective  rights and  obligations  of the Parties,  including the  obligations
referred  to in  Sections  10,  11,  14, 15 and 19,  hereof,  will  survive  any
termination or expiration of the term of this Agreement.

85.   Entire Agreement.

           This Agreement  constitutes the entire agreement  between the Parties
and  supersedes  any and all other  agreements  and  understandings  between the
Parties in respect of the matters addressed in this Agreement.

86.   Amendment and Waiver.

           No amendment or waiver of any  provision of this  Agreement  shall be
effective,  unless the same shall be in writing and signed by the  Parties,  and
then such  amendment,  waiver or consent shall be effective only in the specific
instance or for the specific purpose for which such amendment, waiver or consent
was given.

87.   Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed an original
but all of which together shall constitute one and the same instrument.

           IN WITNESS  WHEREOF,  the  Company has caused  this  Agreement  to be
executed by its duly  authorized  officer and the  Employee has hereunto set his
hand as of the day and year first above written.

                                    THE GREAT ATLANTIC & PACIFIC TEA
                                        COMPANY, INC.


                                    By:
                                        Name:
                                        Title:



                                        William P. Costantini




<PAGE>


                              EMPLOYMENT AGREEMENT


           AGREEMENT, made and entered into as of the 8th day of
January, 2001, by and between THE GREAT ATLANTIC & PACIFIC TEA COMPANY,
INC. (the "Company"), and Elizabeth R. Culligan (the "Employee").

                           W I T N E S S E T H


           WHEREAS,  the Company and the Employee (the "Parties") have agreed to
enter into this  agreement  (the  "Agreement)  relating to the employment of the
Employee by the Company;

           NOW, THEREFORE, in consideration of the premises and mutual covenants
contained  herein and for other good and  valuable  consideration,  the Parties,
intending to be legally bound, agree as follows:

88.   Term of Employment.

(a) The Company  agrees to employ the  Employee,  and the Employee  agrees to be
employed by the Company,  in  accordance  with the terms and  provisions of this
Agreement, for the period set forth below (the "Employment Period").

(b) The Employment  Period under this Agreement  shall commence as of January 8,
2001 and,  subject only to the  provisions of Sections 7, 8 and 9 below relating
to termination of employment,  shall continue until (i) the close of business on
January 8, 2004 or (ii) such later date as shall  result from the  operation  of
subparagraph (c) below (the "Terminal Date").

(c)  Commencing  on July 8, 2002,  and on the first  business  day of each month
thereafter  (such date and each such first business day, the "Renewal Date") the
Terminal  Date set forth in  subparagraph  (b) above  shall be extended so as to
occur  eighteen  months from the Renewal  Date unless  either the Company or the
Employee  shall have given  written  notice to the other Party on or before such
Renewal Date that the Terminal Date is not to be extended.

89.   Duties.

           It is the  intention  of the  Parties  that  during  the  term of her
employment  under this  Agreement,  the Employee  will serve as  Executive  Vice
President and Chief Operating  Officer of the Company.  The Employee will devote
her full  business  time and  attention  to the  affairs of the  Company and her
duties as its Executive Vice  President and Chief  Operating  Officer;  provided
that, subject to the provisions of Section 14, nothing herein shall preclude the
Employee  from (i) serving on the board of  directors  of any other  corporation
with the consent of the Chief Executive Officer of the Company, (ii) engaging in
charitable  activities  and community  affairs,  and (iii) managing her personal
investments  and  affairs,   so  long  as  such   activities,   individually  or
collectively,  do  not  consume  an  unreasonable  amount  of  time  and  do not
materially   interfere   with  the   proper   performance   of  her  duties  and
responsibilities   hereunder.   The  Employee  will  have  such  duties  as  are
appropriate  to her position as Executive  Vice  President  and Chief  Operating
Officer, and will have such authority as required to enable her to perform these
duties.  Consistent  with the  foregoing,  the  Employee  shall  comply with all
reasonable  instructions  of the Chief  Executive  Officer of the  Company.  The
Employee will be based in Montvale, New Jersey and her services will be rendered
there except  insofar as travel may be involved in  connection  with her regular
duties.  The Employee will report directly to the Chief Executive Officer of the
Company.

90.   Salary and Bonus.

90.1  Salary.  The  Company  will pay the  Employee a base  salary at an initial
annual rate of not less than Five Hundred Thousand Dollars ($500,000.00),  which
base  salary as in effect  from  time to time  will not be  reduced  and will be
reviewed  periodically  (at  intervals of not more than eighteen (18) months) by
the  Compensation  Committee  of the Board of  Directors  (the  "Board") for the
purpose  of  considering  increases  thereof.  In  evaluating  increases  in the
Employee's base salary,  the Compensation  Committee of the Board will take into
account such factors as corporate performance,  individual merit, and such other
considerations as it deems appropriate.  The Employee's base salary will be paid
in accordance with the standard practices for other corporate  executives of the
Company.

90.2  Bonuses.

           The  Employee  shall be  eligible  to  participate  in the  Company's
Management  Incentive Plan (or any successor  annual  incentive plan) at a level
determined by the  Compensation  Committee of the Board (or any other authorized
committee of the Board) and on a basis  commensurate  with her position with the
Company, provided that for each year of her employment,  the Employee shall have
a target bonus opportunity at least equal to 50% of her then current annual base
salary and her bonus in such plan for the fiscal year 2001 shall be guaranteed.

91.   Benefit Programs.

           The Employee will receive such benefits and awards, including without
limitation  stock  options and  restricted  share  awards,  as the  Compensation
Committee  of the Board (or any other  authorized  committee of the Board) shall
determine from time to time on a basis  commensurate  with her position with the
Company and taking into account the awards made to other senior executives.  The
Employee shall also be eligible to participate in all employee benefit plans and
programs  of the  Company  from time to time in effect for the benefit of senior
executives  of the  Company,  including,  but not limited to,  pension and other
retirement plans, group life insurance,  hospitalization  and surgical and major
medical coverages, sick leave, salary continuation  arrangements,  vacations and
holidays,  long-term  disability,  and such other benefits as are or may be made
available from time to time to senior executives of the Company.  In addition to
the  foregoing,  the Employee will be provided  with an automobile  allowance in
accordance in accordance with the Company's Automobile Policy.

92.   Business Expenses and Perquisites.

           The Employee will be reimbursed for all reasonable  expenses incurred
by her in connection  with the conduct of the business of the Company,  provided
she properly  accounts therefor in accordance with the Company's  policies.  She
will also be  entitled to such other  perquisites  as are  customary  for senior
executives of the Company.

93. Office and Services  Furnished.  The Company shall furnish the Employee with
office space,  secretarial  assistance and such other facilities and services as
shall be suitable to the Employee's position and adequate for the performance of
her duties hereunder.

94.   Termination of Employment by the Company.

94.1  Involuntary  Termination by the Company Other Than For Permanent and Total
Disability or For Cause. The Company may terminate the Employee's  employment at
any time and for any reason by giving  her a written  notice of  termination  to
that  effect at least 45 days before the date of  termination.  In the event the
Company  terminates  the  Employee's  employment  for any reason  other than for
Permanent and Total Disability, as provided in Section 7.2, below, or for Cause,
as  provided  in Section  7.3,  below,  the  Employee  shall be  entitled to the
benefits described in Section 10 or Section 11, whichever is applicable.

94.2 Termination Due to Permanent and Total Disability. If the Employee incurs a
Permanent and Total Disability,  as defined below, the Company may terminate the
Employee's  employment by giving her written  notice of  termination at least 45
days before the date of such  termination.  In the event of such  termination of
the  Employee's  employment  because  of  Permanent  and Total  Disability,  the
Employee  shall be entitled  to receive (i) her base salary  pursuant to Section
3.1 and any other  compensation  and benefits to the extent  vested or otherwise
actually  earned by the Employee  pursuant to this Agreement or any benefit plan
or program of the Company as of the date of such  termination  of  employment at
the normal time for payment of such salary,  compensation or benefits,  and (ii)
any reimbursement amounts owing under Section 5. For purposes of this Agreement,
the  Employee  shall be  considered  to have  incurred  a  Permanent  and  Total
Disability  if she is unable to  substantially  carry out her duties  under this
Agreement by reason of any medically  determinable physical or mental impairment
which can be  expected to result in death or which has lasted or can be expected
to last for a  continuous  period of not less than 12 months.  The  existence of
such  Permanent  and  Total  Disability  shall  be  evidenced  by  such  medical
certification as the Secretary of the Company shall require and shall be subject
to the approval of the  Compensation  Committee of the Board of Directors of the
Company.

94.3 Termination for Cause. The Company may terminate the Employee's  employment
for Cause if (i) the Employee willfully, substantially, and continually fails to
perform the duties for which she is employed by the  Company,  (ii) the Employee
willfully  fails  to  comply  with  the  reasonable  instructions  of the  Chief
Executive  Officer  of the  Company,  (iii) the  Employee  willfully  engages in
conduct  which  is  or  would  reasonably  be  expected  to  be  materially  and
demonstrably injurious to the Company, (iv) the Employee willfully engages in an
act or acts of dishonesty resulting in material personal gain to the Employee at
the expense of the Company,  (v) the Employee is convicted of a felony, (vi) the
Employee  engages in an act or acts of gross  malfeasance in connection with his
employment  hereunder,  (vii)  the  Employee  commits a  material  breach of the
confidentiality  provision  set forth in  Section  15, or  (viii)  the  Employee
exhibits  demonstrable  evidence of alcohol or drug abuse  having a  substantial
adverse effect on her job performance hereunder.  The Company shall exercise its
right to terminate  the  Employee's  employment  for Cause by giving her written
notice  of  termination  at least 45 days  before  the date of such  termination
specifying in reasonable  detail the  circumstances  constituting such Cause. In
the event of such  termination  of the  Employee's  employment  for  Cause,  the
Employee  shall be entitled  to receive (i) her base salary  pursuant to Section
3.1 and any other  compensation  and benefits to the extent  vested or otherwise
actually earned pursuant to this Agreement or any benefit plan or program of the
Company as of the date of such  termination  at the normal  time for  payment of
such  salary,  compensation  or  benefits  and (ii) any  amounts  owed under the
reimbursement policy of Section 5.

95.   Termination of Employment by the Employee.

(a) Good Reason.  The Employee may terminate her  employment  for Good Reason by
giving the Company a written  notice of  termination at least 45 days before the
date of such  termination  specifying  in  reasonable  detail the  circumstances
constituting such Good Reason. In the event of the Employee's termination of her
employment  for Good  Reason,  the  Employee  shall be entitled to the  benefits
described in Section 10 or Section 11, whichever is applicable.  For purposes of
this Agreement,  Good Reason shall mean (i) a significant reduction in the scope
of the Employee's  authority,  functions,  duties or responsibilities from those
set forth in Section 2 of this  Agreement,  (ii) the Employee  being required to
report directly to someone other than the Chief Executive Office of the Company,
(iii) the relocation of the Employee's  office  location to a location more than
50 miles away from the  Employee's  principal  place of employment on January 8,
2001,  (iv) any reduction in the  Employee's  base salary,  or (v) a significant
reduction  in the  employee  benefits  provided  to the  Employee  other than in
connection with an across-the-board  reduction similarly affecting substantially
all senior  executives  of the Company.  If an event  constituting  a ground for
termination of employment for Good Reason occurs, and the Employee fails to give
notice of termination within 3 months after the occurrence of such event (or the
last event in a series of events that  collectively  result in the occurrence of
the circumstances  described in subclauses (i) or (v) above), the Employee shall
be deemed to have waived her right to  terminate  employment  for Good Reason in
connection  with such event (but not for any other  event for which the  3-month
period has not expired).

(b) Other.  The Employee may  terminate  her  employment at any time and for any
reason,  other than  pursuant to subsection  (a) above,  by giving the Company a
written notice of termination to that effect at least 45 days before the date of
termination.  In the  event  of the  Employee's  termination  of her  employment
pursuant to this  subsection  (b), the Employee shall be entitled to receive (i)
her base salary pursuant to Section 3.1 and any other  compensation and benefits
to the extent vested or otherwise  actually  earned by the Employee  pursuant to
this  Agreement  or any benefit plan or program of the Company as of the date of
such termination at the normal time for payment of such salary,  compensation or
benefits, and (ii) any reimbursement amounts owing under Section 5.

96.  Termination  of  Employment  By  Death.  In the  event of the  death of the
Employee during the course of her employment  hereunder,  the Employee's  estate
shall be entitled to receive (i) her base salary pursuant to Section 3.1 and any
other  compensation  and  benefits to the extent  vested or  otherwise  actually
earned by the Employee  pursuant to this  Agreement or any other benefit plan or
program of the Company as of the date of such termination at the normal time for
payment of such salary,  compensation  or benefits,  and (ii) any  reimbursement
amounts  owing under  Section 5. In  addition,  in the event of such death,  the
Employee's beneficiaries shall receive any death benefits owed to them under the
Company's employee benefit plans.

97.  Benefits  Upon  Termination  Without Cause or For Good Reason (No Change of
Control).  If (a) the Employee's employment with the Company shall terminate (i)
because of  termination  by the  Company  pursuant to Section 7.1 other than for
Cause and other than because of Permanent and Total Disability,  or (ii) because
of termination by the Employee for Good Reason pursuant to Section 8(a), and (b)
such  termination  of  employment  does not occur  within 13 months  following a
"Change of Control" of the Company  (as  defined in Section  12),  the  Employee
shall be entitled to the following:

(a) The Company  shall pay to the Employee  her base salary  pursuant to Section
3.1 and any other  compensation  and benefits to the extent  vested or otherwise
actually  earned by the  Employee  under this  Agreement  or any benefit plan or
program of the Company as of the date of such termination at the normal time for
payment of such salary, compensation or benefits.

(b)   The Company shall pay the Employee any reimbursement amounts owing
under Section 5.

(c) The Company shall pay to the Employee as a severance  benefit for each month
during the 18 month period  beginning  with the month next following the date of
termination of the  Employee's  employment an amount equal to one-twelfth of the
sum of (i) her annual rate of base salary immediately  preceding his termination
of employment,  and (ii) the average of her three highest annual bonuses awarded
under the Company's annual  management  incentive bonus plan for any of the five
calendar  years  preceding his  termination  of  employment  (or, if she was not
eligible for a bonus for at least three calendar years in such five-year period,
then the average of such bonuses for all of the calendar years in such five-year
period for which she was  eligible,  and if he was not eligible for such a bonus
in any  previous  year,  then 100% of her  target  annual  bonus for the year of
termination of her employment),  with any deferred bonuses counting for the year
earned  rather than the year paid.  Each such monthly  benefit  shall be paid no
later than the last day of the applicable  month. In the event that the Employee
dies before the end of such 18-month  period,  the payments for the remainder of
such period shall be made to the Employee's estate.

(d) The Company shall pay to the Employee as a bonus for the year of termination
of her  employment an amount equal to a portion  (determined  as provided in the
next sentence) of the bonus that the Employee would actually have received under
the Company's  annual  management  incentive bonus plan for the calendar year of
termination  of the  Employee's  employment if her employment had not terminated
(determined on the basis of her actual bonus  opportunity  and the actual degree
of achievement of the applicable  performance goals) or, if no bonus opportunity
for  that  year  had  been  established  for the  Employee  at the  time of such
termination  of  employment,  such portion of the bonus awarded to her under the
Company's  annual  management   incentive  bonus  plan  for  the  calendar  year
immediately  preceding the calendar year of the  termination of her  employment,
with  deferred  bonuses  counting for the year earned rather than the year paid.
Such  portion  shall  be  determined  by  dividing  the  number  of  days of the
Employee's  employment  during  such  calendar  year  up to his  termination  of
employment  by 365 (366 if a leap year).  Such payment shall be made on or about
the date on which bonuses for the applicable  year are paid to executives of the
Company  generally under the Company's annual  management  incentive bonus plan,
and the Employee shall have no right to any further bonuses under said plan.

(e)  During  the  period of 18 months  beginning  on the date of the  Employee's
termination  of  employment,  the Employee  shall remain covered by the medical,
dental,  vision,  life  insurance,  and, if  reasonably  commercially  available
through nationally  reputable insurance carriers,  long-term disability plans of
the Company that covered her immediately  prior to her termination of employment
as if she had  remained in  employment  for such  period.  In the event that the
Employee's  participation in any such plan is barred,  the Company shall arrange
to provide the Employee with substantially similar benefits (but, in the case of
long-term disability benefits, only if reasonably commercially  available).  Any
medical insurance  coverage for such 18-month period pursuant to this subsection
(e)  shall  become  secondary  upon the  earlier  of (i) the  date on which  the
Employee begins to be covered by comparable  medical coverage  provided by a new
employer, or (ii) the earliest date upon which the Employee becomes eligible for
Medicare or a comparable Government insurance program.

98.  Benefits  Upon  Termination  Without  Cause or For Good  Reason  (Change of
Control).  If (a) the Employee's employment with the Company shall terminate (i)
because of  termination  by the  Company  pursuant to Section 7.1 other than for
Cause and other than because of Permanent and Total Disability,  (ii) because of
termination  by the Employee for Good Reason  pursuant to Section 8(a), or (iii)
for any reason during the 30 days beginning on the first anniversary of a Change
of Control,  and (b) such  termination  of  employment  occurs  within 13 months
following a "Change of Control" of the Company (as defined in Section  12),  the
Employee shall be entitled to the following:

(a) The Company  shall pay to the Employee  her base salary  pursuant to Section
3.1 and any other  compensation  and benefits to the extent  vested or otherwise
actually  earned by the  Employee  under this  Agreement  or any benefit plan or
program of the Company as of the date of such termination at the normal time for
payment of such salary, compensation or benefits.

(b)   The Company shall pay the Employee any reimbursement amounts owing
under Section 5.

(c) The Company shall pay to the Employee as a severance benefit an amount equal
to three (3) times the sum of (i) her  annual  rate of base  salary  immediately
preceding  her  termination  of  employment,  and (ii) the  average of her three
highest annual bonuses awarded under the Company's annual  management  incentive
bonus plan for any of the five  calendar  years  preceding  her  termination  of
employment  (or, if she was not eligible for a bonus for at least three calendar
years in such five-year period,  then the average of such bonuses for all of the
calendar years in such five-year  period for which she was eligible,  and if she
was not eligible for such a bonus in any previous year,  then 100% of her target
annual bonus for the year of termination of her  employment),  with any deferred
bonuses  counting for the year earned rather than the year paid.  Such severance
benefit  shall  be paid in a lump  sum  within  30 days  after  the date of such
termination of employment.

(d) The Company shall pay to the Employee as a bonus for the year of termination
of her  employment an amount equal to a portion  (determined  as provided in the
next sentence) of the bonus that the Employee would actually have received under
the Company's  annual  management  incentive bonus plan for the calendar year of
termination  of the  Employee's  employment if her employment had not terminated
(determined on the basis of her actual bonus  opportunity  and the actual degree
of achievement of the applicable  performance goals) or, if no bonus opportunity
for  that  year  had  been  established  for the  Employee  at the  time of such
termination  of  employment,  such portion of the bonus awarded to her under the
Company's  annual  management   incentive  bonus  plan  for  the  calendar  year
immediately  preceding the calendar year of the  termination of her  employment,
with  deferred  bonuses  counting for the year earned rather than the year paid.
Such  portion  shall  be  determined  by  dividing  the  number  of  days of the
Employee's  employment  during  such  calendar  year  up to her  termination  of
employment  by 365 (366 if a leap year).  Such payment shall be made on or about
the date on which bonuses for the applicable  year are paid to executives of the
Company  generally under the Company's annual  management  incentive bonus plan,
and the Employee shall have no right to any further bonuses under said plan.

(e)  During  the  period of 36 months  beginning  on the date of the  Employee's
termination  of  employment,  the Employee  shall remain covered by the medical,
dental,  vision,  life  insurance,  and, if  reasonably  commercially  available
through nationally  reputable insurance carriers,  long-term disability plans of
the Company that covered her immediately  prior to her termination of employment
as if she had  remained in  employment  for such  period.  In the event that the
Employee's  participation in any such plan is barred,  the Company shall arrange
to provide the Employee with substantially similar benefits (but, in the case of
long-term disability benefits, only if reasonably commercially  available).  Any
medical insurance  coverage for such 36-month period pursuant to this subsection
(e)  shall  become  secondary  upon the  earlier  of (i) the  date on which  the
Employee begins to be covered by comparable  medical coverage  provided by a new
employer, or (ii) the earliest date upon which the Employee becomes eligible for
Medicare or a comparable Government insurance program.

99. Change of Control. For the purposes of this Agreement, a "Change of Control"
shall be deemed to have  occurred if (a) any person or persons  acting  together
which would constitute a "group" for purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),  (other than the Company,
any  subsidiary  of the  Company,  and  Tengelmann  Warenhandelsgesellschaft  (a
partnership  organized under the laws of the Federal  Republic of Germany or any
successor to such partnership, hereinafter "Tengelmann")) shall beneficially own
(as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, at least
30% of the total  voting  power of all  classes of capital  stock of the Company
entitled to vote  generally  in the  election of the Board and such voting power
exceeds the then current voting power of  Tengelmann;  (b) control of Tengelmann
is  acquired  by any person or persons  other than  family  members or  entities
controlled by family  members of Erivan Haub;  (c) Current  Directors (as herein
defined)  shall  cease for any reason to  constitute  at least a majority of the
members of the Board (for this  purpose,  a  "Current  Director"  shall mean any
member  of the  Board as of the  date  hereof  and any  successor  of a  Current
Director   whose   election,   or  nomination  for  election  by  the  Company's
shareholders,  was approved by at least two-thirds of the Current Directors then
on the  Board);  (d)  the  shareholders  of the  Company  approve  (i) a plan of
complete  liquidation  of the  Company or (ii) an  agreement  providing  for the
merger or  consolidation  of the Company other than a merger or consolidation in
which (x) the holders of the common  stock of the Company  immediately  prior to
the consolidation or merger have, directly or indirectly, at least a majority of
the common stock of the continuing or surviving  corporation  immediately  after
such consolidation or merger or (y) the Board immediately prior to the merger or
consolidation would, immediately after the merger or consolidation, constitute a
majority of the board of directors of the  continuing or surviving  corporation;
or (e) the  shareholders  of the Company  approve an agreement  (or  agreements)
providing for the sale or other  disposition  (in one transaction or a series of
transactions) of all or substantially all of the assets of the Company.

100.  Entitlement  to Other  Benefits.  Except  as  otherwise  provided  in this
Agreement,  this  Agreement  shall not be  construed  as limiting in any way any
rights or benefits that the Employee or her spouse,  dependents or beneficiaries
may have pursuant to any other plan or program of the Company.

101.  Non-Competition.

           The Employee  agrees that during the term of this Agreement and for a
period of eighteen months following termination of her employment,  the Employee
will not, within any of the geographical areas of the United States or Canada in
which the  Company  is then  conducting  business  (either  directly  or through
franchisees), directly or indirectly, own, manage, operate, control, be employed
by,  participate  in,  provide  consulting  services  to, or be connected in any
manner with the  ownership,  management,  operation  or control of any  business
engaged in retail sale of goods and products that are in direct competition with
any of the types of  businesses  conducted  by the  Company  to any  significant
extent during her employment or on the date of  termination  of her  employment,
except the  Employee  may own for  investment  purposes  up to 1% of the capital
stock of any company  whose stock is publicly  traded,  and during such two year
period following  termination of her employment the Employee will not contact or
solicit  employees of the Company for the purpose of inducing such  employees to
leave the employ of the Company.

102.  Confidential Information and Trade Secrets.

           The  Employee  hereby  acknowledges  that she will have access to and
become acquainted with various trade secrets and proprietary  information of the
Company and other confidential information relating to the Company. The Employee
covenants  that she will  not,  directly  or  indirectly,  disclose  or use such
information  except (i) as is necessary and  appropriate in connection  with her
employment  by the  Company,  (ii) as is  required  pursuant  to a  judicial  or
administrative  subpoena or (iii) if such  information  is already in the public
domain  (other  than by  reason  of the  Employee's  breach  of her  obligations
hereunder).  Subject to the exceptions set forth above, the Employee also agrees
that she will otherwise adhere in all respects to the Company's policies against
the use or disclosure of such information.

103.  Arbitration; Injunctive Relief.

           Any  controversy  or  claim  arising  out  of  or  relating  to  this
Agreement, directly or indirectly, or the performance or breach thereof, will be
settled by arbitration in accordance with the rules of the American  Arbitration
Association,  and judgment  upon the award  rendered by the  arbitrators  may be
entered in any court having jurisdiction  thereof.  The arbitration will be held
in New York,  New York, or such other place as may be agreed upon at the time by
the parties to the  arbitration.  The parties  shall bear their own  expenses in
connection with any arbitration or proceeding arising out of or relating to this
Agreement,  directly  or  indirectly,  or the  performance  or  breach  thereof;
provided,  however, that in the event that the Employee substantially  prevails,
the  Company  agrees  promptly  to  reimburse  the  Employee  for  all  expenses
(including  costs  and  fees of  witnesses,  evidence  and  attorneys  fees  and
expenses) reasonably incurred by her in investigating,  prosecuting,  defending,
or preparing to prosecute or defend any action,  proceeding or claim arising out
of or relating to this Agreement,  directly or indirectly, or the performance or
breach  thereof.  The parties  acknowledge and agree that a breach of Employee's
obligations  under Sections 14 or 15 could cause irreparable harm to Company for
which  Company  would have no adequate  remedy at law,  and further  agree that,
notwithstanding  the  agreement  of the parties to  arbitrate  controversies  or
claims  as set  forth  above,  the  Company  may  apply to a court of  competent
jurisdiction  to seek to  enjoin  preliminarily  or  permanently  any  breach or
threatened breach of the Employee's obligations under Sections 14 and 15.

104.  Indemnification.

           The Company  shall  indemnify  and hold the Employee  harmless to the
fullest  extent  legally  permissible  under the laws of the State of  Maryland,
against any and all expenses, liabilities and losses (including attorney's fees,
judgments, fines and amounts paid in settlement) reasonably incurred or suffered
by him by reason of any claim or cause of action asserted against her because of
her  service at any time as a director  or officer of the  Company.  The Company
shall advance to the Employee the amount of her expenses  incurred in connection
with any  proceeding  relating  to such  service to the fullest  extent  legally
permissible  under  the  laws of the  State  of  Maryland.  Notwithstanding  the
foregoing, the Company's obligations pursuant to this Section 17 shall not apply
in the case of any claim or cause of action by or in the right of the Company or
any subsidiary thereof.

105.  Liability Insurance.

           To the  extent  that  Company  maintains  a  directors  and  officers
liability  insurance policy in effect, the Company will take all steps necessary
to ensure that the  Employee  is covered  under such policy for her service as a
director or officer of the Company or any subsidiary of the Company with respect
to claims made at any time with respect to such service.

106.  Certain Additional Payments by the Company.

           (a) Anything in this  Agreement to the contrary  notwithstanding,  in
the event it shall be  determined  that any  payment or  distribution  made,  or
benefit  provided  (including,  without  limitation,  the  acceleration  of  any
payment, distribution or benefit and the accelerated exercisability of any stock
option),  to or for the  benefit  of the  Employee  (whether  paid or payable or
distributed  or  distributable  pursuant  to the  terms  of  this  Agreement  or
otherwise,  but determined  without regard to any additional  payments  required
under this Section 19) (a "Payment")  would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (or any similar
excise tax) or any  interest or  penalties  are  incurred by the  Employee  with
respect to such excise tax (such excise tax, together with any such interest and
penalties,  are hereinafter  collectively referred to as the "Excise Tax"), then
the Employee shall be entitled to receive from the Company an additional payment
(a "Gross-Up  Payment") in an amount such that after  payment by the Employee of
all taxes  (including  any Excise Tax,  income tax or employment  tax and taking
into  account any lost or reduced  tax  deductions  on account of such  Gross-Up
Payment) imposed upon the Gross-Up Payment and any interest or penalties imposed
with respect to such taxes,  the Employee  retains from the Gross-Up  Payment an
amount equal to the Excise Tax imposed upon the Payments.

           (b) Subject to the  provisions of Section 19(c),  all  determinations
required to be made under this Section 19, including  determination of whether a
Gross-Up  Payment is required  and of the amount of any such  Gross-up  Payment,
shall be made by Deloitte & Touche (the "Accounting Firm"),  which shall provide
detailed supporting  calculations both to the Company and the Employee within 15
business  days of the  date of  termination  of the  Employee's  employment,  if
applicable,  or such earlier time as is requested by the Company,  provided that
any determination that an Excise Tax is payable by the Employee shall be made on
the basis of substantial  authority.  The initial Gross-Up  Payment,  if any, as
determined  pursuant to this Section 19(b), shall be paid to the Employee within
five business days of the receipt of the Accounting Firm's determination. If the
Accounting  Firm  determines  that no Excise Tax is payable by the Employee,  it
shall  furnish the  Employee  with a written  opinion  that she has  substantial
authority  not to report any Excise Tax on her Federal  income tax  return.  Any
determination  by the Accounting  Firm meeting the  requirements of this Section
19(b)  shall be binding  upon the  Company  and the  Employee;  subject  only to
payments  pursuant  to the  following  sentence  based on a  determination  that
additional  Gross-Up  Payments  should  have  been  made,  consistent  with  the
calculations  required  to be made  hereunder  (the  amount  of such  additional
payments  is referred to herein as the  "Gross-Up  Underpayment").  In the event
that the  Company  exhausts  its  remedies  pursuant  to  Section  19(c) and the
Employee  thereafter  is  required  to make a payment  of any  Excise  Tax,  the
Accounting Firm shall determine the amount of the Gross-Up Underpayment that has
occurred  and any  such  Gross-Up  Underpayment  shall be  promptly  paid by the
Company to or for the benefit of the Employee. The fees and disbursements of the
Accounting Firm shall be paid by the Company.

           (c) The Employee  shall notify the Company in writing of any claim by
the Internal  Revenue Service that, if successful,  would require the payment by
the Company of a Gross-Up Payment.  Such notification  shall be given as soon as
practicable  but not later than ten business  days after the  Employee  receives
written notice of such claim and shall apprise the Company of the nature of such
claim and the date on which such Claim is  requested  to be paid.  The  Employee
shall not pay such claim prior to the expiration of the 30-day period  following
the date on which she gives such notice to the Company (or such  shorter  period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company  notifies the Employee in writing prior to the expiration of such
period that it desires to contest such claim and that it will bear the costs and
provide the indemnification as required by this sentence, the Employee shall:

           (i)  give the Company any information reasonably requested by
the Company relating to such claim,

           (ii) take such action in connection with contesting such claim as the
Company  shall  reasonably  request  in  writing  from time to time,  including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

           (iii) cooperate with the Company in good faith in order
effectively to contest such claim, and

           (iv) permit the Company to participate in any proceedings
relating to such claim;

provided,  however,  that the Company  shall bear and pay directly all costs and
expenses  (including  additional  interest and penalties) incurred in connection
with such  contest and shall  indemnify  and hold the Employee  harmless,  on an
after-tax  basis,  for any Excise Tax, income tax or employment tax (taking into
account  any lost or  reduced  tax  deductions  on  account  of such  payments),
including  interest and penalties with respect  thereto,  imposed as a result of
such representation and payment of costs and expenses. Without limitation on the
foregoing  provisions  of this  Section  19(c),  the Company  shall  control all
proceedings  taken in connection with such contest and, at its sole option,  may
pursue or forgo any and all administrative  appeals,  proceedings,  hearings and
conferences  with the taxing  authority in respect of such claim and may, at its
sole  option,  either  direct the  Employee to pay the tax claimed and sue for a
refund or contest the claim in any permissible  manner,  and the Employee agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial  jurisdiction and in one or more appellate  courts, as the
Company shall  determine;  provided,  however,  that if the Company  directs the
Employee to pay such claim and sue for a refund,  the Company  shall advance the
amount of such  payment  to the  Employee  on an  interest-free  basis and shall
indemnify and hold the Employee harmless, on an after-tax basis, from any Excise
Tax,  income tax or employment  tax (taking into account any lost or reduced tax
deductions on account of such  advance),  including  interest or penalties  with
respect  thereto,  imposed  with  respect to such advance or with respect to any
imputed  income with  respect to such  advance;  and further  provided  that any
extension of the statute of limitations relating to the payment of taxes for the
taxable year of the  Employee  with  respect to which such  contested  amount is
claimed to be due is limited solely to such contested amount.  Furthermore,  the
Company's  control of the  contest  shall be limited to issues  with  respect to
which a Gross-Up  Payment would be payable  hereunder and the Employee  shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

           (d) If,  after the receipt by the  Employee of an amount  advanced by
the Company  pursuant to Section 19(c), the Employee becomes entitled to receive
any refund  with  respect to such  claim,  the  Employee  shall  (subject to the
Company's  complying with the requirements of Section 19(c)) promptly pay to the
Company the amount of such refund  (together  with any interest paid or credited
thereon after taxes applicable  thereto).  If, after the receipt by the Employee
of an amount advanced by the Company  pursuant to Section 19(c), a determination
is made that the  Employee  shall not be entitled to any refund with  respect to
such claim and the Company does not notify the Employee in writing of its intent
to contest such denial of refund prior to the  expiration  of 30 days after such
determination,  then any  obligation of the Employee to repay such advance shall
be forgiven and the amount of such advance shall offset,  to the extent thereof,
the amount of Gross-Up Payment required to be paid.

107. No Duty to Seek  Employment.  The  Employee  shall not be under any duty or
obligation  to  seek  or  accept  other  employment  following   termination  of
employment,  and no amount,  payment or benefits due to the  Employee  hereunder
shall be reduced or suspended if the Employee accepts subsequent employment.

108.

<PAGE>


           Deductions and Withholding.

           All amounts  payable or which become  payable  under any provision of
this Agreement shall be subject to any deductions authorized by the Employee and
any deductions and withholdings required by law.

109.  Governing Law.

           The validity,  interpretation  and performance of this Agreement will
be  governed  by the  laws of the  State of New  Jersey  without  regard  to the
conflict of law provisions.

110.  Notice.

           Any  written  notice  required  to be given by one Party to the other
Party hereunder will be deemed effected if mailed by registered mail:

To the Company at:    The Great Atlantic & Pacific Tea Company
                      2 Paragon Drive
                      Montvale, New Jersey 07645
                      Attention: General Counsel

To the Employee at:  17 Worthington Avenue
                     Spring Lake, New Jersey 07762

or such other address as may be stated in a notice given as hereinbefore
provided.

111.  Severability.

           If any one or more of the  provisions  contained in this Agreement is
held to be invalid,  illegal or unenforceable  in any respect,  such invalidity,
illegality or unenforceability will not affect any other provision hereof.

112.  Successors and Assigns.

           This  Agreement  will be binding upon and inure to the benefit of the
Parties  hereto  and their  personal  representatives,  and,  in the case of the
Company,  its  successors and assigns.  To the extent the Company's  obligations
under this Agreement are transferred to any successor or assign,  such successor
or assign  shall be treated as the  "Company"  for  purposes of this  Agreement.
Other than as contemplated  by this  Agreement,  the Employee may not assign his
rights or duties under this Agreement.

113.  Continuing Effect.

           Wherever  appropriate  to the  intention of the Parties  hereto,  the
respective  rights and  obligations  of the Parties,  including the  obligations
referred  to in  Sections  10,  11,  14, 15 and 19,  hereof,  will  survive  any
termination or expiration of the term of this Agreement.

114.  Entire Agreement.

           This Agreement  constitutes the entire agreement  between the Parties
and  supersedes  any and all other  agreements  and  understandings  between the
Parties in respect of the matters addressed in this Agreement.

115.  Amendment and Waiver.

           No amendment or waiver of any  provision of this  Agreement  shall be
effective,  unless the same shall be in writing and signed by the  Parties,  and
then such  amendment,  waiver or consent shall be effective only in the specific
instance or for the specific purpose for which such amendment, waiver or consent
was given.

116.  Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed an original
but all of which together shall constitute one and the same instrument.



<PAGE>


           IN WITNESS  WHEREOF,  the  Company has caused  this  Agreement  to be
executed by its duly  authorized  officer and the  Employee has hereunto set his
hand as of the day and year first above written.

                                    THE GREAT ATLANTIC & PACIFIC TEA
                                        COMPANY, INC.


                                       By:
                                        Name: Christian Haub
                                        Title: Chief Executive Officer



                                        Elizabeth R. Culligan