1998 LONG TERM INCENTIVE AND SHARE AWARD PLAN
 
1. Purposes.
 
                  The purposes of the 1998 Long Term Incentive and Share Award
Plan are to advance the interests of The Great Atlantic & Pacific Tea Company,
Inc. and its shareholders by providing a means to attract, retain, and motivate
employees of the Company upon whose judgment, initiative and efforts the
continued success, growth and development of the Company is dependent.
 
2.   Definitions.
 
     For purposes of the Plan, the following terms shall be defined as set forth
below:
 
     a)   "Affiliate" means any entity other than the Company and its
          Subsidiaries that is designated by the Board or the Committee as a
          participating employer under the Plan, provided that the Company
          directly or indirectly owns at least 20% of the combined voting power
          of all classes of stock of such entity or at least 20% of the
          ownership interests in such entity.
 
     b)   "Award" means any Option, SAR, Restricted Share, Restricted Share
          Unit, Performance Share, Performance Unit, Dividend Equivalent, or
          Other Share-Based Award granted to an Eligible Person under the Plan.
 
     c)   "Award Agreement" means any written agreement, contract, or other
          instrument or document evidencing an Award.
 
     d)   "Beneficiary" means the person, persons, trust or trusts which have
          been designated by the Eligible Person in his or her most recent
          written beneficiary designation filed with the Company to receive the
          benefits specified under this Plan upon the death of the Eligible
          Person, or, if there is no designated Beneficiary or surviving
          designated Beneficiary, then the person, persons, trust or trusts
          entitled by will or the laws of descent and distribution to receive
          such benefits.
 
     e)   "Board" means the Board of Directors of the Company.
 
     f)   "Code" means the Internal Revenue Code of 1986, as amended from time
          to time. References to any provision of the Code shall be deemed to
          include successor provisions thereto and regulations thereunder.
 
     g)   "Committee" means the Compensation Policy Committee of the Board, or
          such other Board committee as may be designated by the Board to
          administer the Plan; provided, however, that the Committee shall
          consist of two or more directors of the Company, each of whom is a
          "non-employee director" within the meaning of Rule 16b-3 under the
          Exchange Act, to the extent applicable.
 
     h)   "Company" means The Great Atlantic & Pacific Tea Company, Inc., a
          corporation organized under the laws of Maryland, or any successor
          corporation.
 
     i)   "Dividend Equivalent" means a right, granted under Section 5(g), to
          receive cash, Shares, or other property equal in value to dividends
          paid with respect to a specified number of Shares. Dividend
          Equivalents may be awarded on a free-standing basis or in connection
          with another Award, and may be paid currently or on a deferred basis.
 
     j)   "Eligible Person" means an employee of the Company, a Subsidiary or an
          Affiliate, including any director who is an employee.
 
     k)   "Exchange Act" means the Securities Exchange Act of 1934, as amended
          from time to time. References to any provision of the Exchange Act
          shall be deemed to include successor provisions thereto and
          regulations thereunder.
 
     l)   "Fair Market Value" means, with respect to Shares or other property,
          the fair market value of such Shares or other property determined by
          such methods or procedures as shall be established from time to time
          by the Committee. If the Shares are listed on any established stock
          exchange or a national market system, unless otherwise determined by
          the Committee in good faith, the Fair Market Value of a Share shall
          mean the closing price of the Share on the date on which it is to be
          valued hereunder (or, if the Shares were not traded on that day, the
          next preceding day that the Shares were traded) on the principal
          exchange on which the Shares are traded, as such prices are officially
          quoted on such exchange.
 
     m)   "ISO" means any option intended to be and designated as an incentive
          stock option within the meaning of Section 422 of the Code.
 
     n)   "NQSO" means any Option that is not an ISO.
 
     o)   "Option" means a right, granted under Section 5(b), to purchase
          Shares.
 
     p)   "Other Share-Based Award" means a right, granted under Section 5(h),
          that relates to or is valued by reference to Shares.
 
     q)   "Participant" means an Eligible Person who has been granted an Award
          under the Plan.
 
     r)   "Performance Share" means a performance share granted under Section
          5(f).
 
     s)   "Performance Unit" means a performance unit granted under Section
          5(f).
 
     t)   "Plan" means this 1998 Long Term Incentive and Share Award Plan.
 
     u)   "Restricted Shares" means an Award of Shares under Section 5(d) that
          may be subject to certain restrictions and to a risk of forfeiture.
 
     v)   "Restricted Share Unit" means a right, granted under Section 5(e), to
          receive Shares or cash at the end of a specified deferral period.
 
     w)   "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
          applicable to the Plan and Participants, promulgated by the Securities
          and Exchange Commission under Section 16 of the Exchange Act.
 
     x)   "SAR" or "Share Appreciation Right" means the right, granted under
          Section 5(c), to be paid an amount measured by the difference between
          the exercise price of the right and the Fair Market Value of Shares on
          the date of exercise of the right, with payment to be made in cash,
          Shares, or property as specified in the Award or determined by the
          Committee.
 
     y)   "Shares" means common stock, $1 par value per share, of the Company.
 
     z)   "Subsidiary" means any corporation (other than the Company) in an
          unbroken chain of corporations beginning with the Company if each of
          the corporations (other than the last corporation in the unbroken
          chain) owns shares possessing 50% or more of the total combined voting
          power of all classes of stock in one of the other corporations in the
          chain.
 
3.  Administration.
 
         a)       Authority of the Committee. The Plan shall be administered by
                  the Committee, and the Committee shall have full and final
                  authority to take the following actions, in each case subject
                  to and consistent with the provisions of the Plan:
 
                  i.       to select Eligible Persons to whom Awards may be
                           granted;
 
                  ii.      to designate Affiliates;
 
                  iii.     to determine the type or types of Awards to be
                           granted to each Eligible Person;
 
                  iv.      to determine the type and number of Awards to be
                           granted, the number of Shares to which an Award may
                           relate, the terms and conditions of any Award granted
                           under the Plan (including, but not limited to, any
                           exercise price, grant price, or purchase price, and
                           any bases for adjusting such exercise, grant or
                           purchase price, any restriction or condition, any
                           schedule for lapse of restrictions or conditions
                           relating to transferability or forfeiture,
                           exercisability, or settlement of an Award, and waiver
                           or accelerations thereof, and waivers of performance
                           conditions relating to an Award, based in each case
                           on such considerations as the Committee shall
                           determine), and all other matters to be determined in
                           connection with an Award;
 
                  v.       to determine whether, to what extent, and under what
                           circumstances an Award may be settled, or the
                           exercise price of an Award may be paid, in cash,
                           Shares, other Awards, or other property, or an Award
                           may be canceled, forfeited, exchanged, or
                           surrendered;
 
                  vi.      to determine whether, to what extent, and under what
                           circumstances cash, Shares, other Awards, or other
                           property payable with respect to an Award will be
                           deferred either automatically, at the election of the
                           Committee, or at the election of the Eligible Person;
 
                  vii.     to determine whether, to what extent, and under what
                           circumstances any cash, Shares, other Awards, or
                           other property payable on a deferred basis will be
                           adjusted for interest or earnings equivalents and, if
                           so, the basis for determining such equivalents;
 
                  viii.    to prescribe the form of each Award Agreement, which
                           need not be identical for each Eligible Person;
 
                  ix.      to adopt, amend, suspend, waive, and rescind such
                           rules and regulations and appoint such agents as the
                           Committee may deem necessary or advisable to
                           administer the Plan;
 
                  x.       to correct any defect or supply any omission or
                           reconcile any inconsistency in the Plan and to
                           construe and interpret the Plan and any Award, rules
                           and regulations, Award Agreement, or other instrument
                           hereunder;
 
                  xi.      to accelerate the exercisability or vesting of all or
                           any portion of any Award or to extend the period
                           during which an Award is exercisable; and
 
                  xii.     to make all other decisions and determinations as may
                           be required under the terms of the Plan or as the
                           Committee may deem necessary or advisable for the
                           administration of the Plan.
 
                           1.       Manner of Exercise of Committee Authority.
                                    The Committee shall have sole discretion in
                                    exercising its authority under the Plan. Any
                                    action of the Committee with respect to the
                                    Plan shall be final, conclusive, and binding
                                    on all persons, including the Company,
                                    Subsidiaries, Affiliates, Eligible Persons,
                                    any person claiming any rights under the
                                    Plan from or through any Eligible Person,
                                    and shareholders. The express grant of any
                                    specific power to the Committee, and the
                                    taking of any action by the Committee, shall
                                    not be construed as limiting any power or
                                    authority of the Committee. The Committee
                                    may delegate to officers or managers of the
                                    Company or any Subsidiary or Affiliate the
                                    authority, subject to such terms as the
                                    Committee shall determine, to perform
                                    administrative functions and, with respect
                                    to Awards granted to persons not subject to
                                    Section 16 of the Exchange Act, to perform
                                    such other functions as the Committee may
                                    determine, to the extent permitted under
                                    Rule 16b-3 (if applicable) and applicable
                                    law.
 
                           2.       Limitation of Liability. Each member of the
                                    Committee shall be entitled to, in good
                                    faith, rely or act upon any report or other
                                    information furnished to him or her by any
                                    officer or other employee of the Company or
                                    any Subsidiary or Affiliate, the Company's
                                    independent certified public accountants, or
                                    other professional retained by the Company
                                    to assist in the administration of the Plan.
                                    No member of the Committee, nor any officer
                                    or employee of the Company acting on behalf
                                    of the Committee, shall be personally liable
                                    for any action, determination, or
                                    interpretation taken or made in good faith
                                    with respect to the Plan, and all members of
                                    the Committee and any officer or employee of
                                    the Company acting on their behalf shall, to
                                    the extent permitted by law, be fully
                                    indemnified and protected by the Company
                                    with respect to any such action,
                                    determination, or interpretation.
 
                           3.       Limitation on Committee's Discretion.
                                    Anything in this Plan to the contrary
                                    notwithstanding, in the case of any Award
                                    which is intended to qualify as
                                    "performance-based compensation" within the
                                    meaning of Section 162(m)(4)(C) of the Code,
                                    unless the Award Agreement specifically
                                    provides otherwise, the Committee shall have
                                    no discretion to increase the amount of
                                    compensation payable under the Award to the
                                    extent such an increase would cause the
                                    Award to lose its qualification as such
                                    performance-based compensation.
 
                           4.       Quorum, Acts of Committee. A majority of the
                                    Committee shall constitute a quorum, and the
                                    acts of a majority of the members present at
                                    any meeting at which a quorum is present, or
                                    acts approved in writing by all of the
                                    members, shall be acts of the Committee.
 
4.  Shares Subject to the Plan.
 
         a) Subject to adjustment as provided in Section 4(c) hereof, the total
         number of Shares reserved for issuance in connection with Awards under
         the Plan shall be 8,000,000. No Award may be granted if the number of
         Shares to which such Award relates, when added to the number of Shares
         previously issued under the Plan, exceeds the number of Shares reserved
         under the preceding sentence. If any Awards are forfeited, canceled,
         terminated, exchanged or surrendered or such Award is settled in cash
         or otherwise terminates without a distribution of Shares to the
         Participant, any Shares counted against the number of Shares reserved
         and available under the Plan with respect to such Award shall, to the
         extent of any such forfeiture, settlement, termination, cancellation,
         exchange or surrender, again be available for Awards under the Plan.
         Upon the exercise of any Award granted in tandem with any other Awards,
         such related Awards shall be canceled to the extent of the number of
         Shares as to which the Award is exercised.
 
         b) Subject to adjustment as provided in Section 4(c) hereof, the
         maximum number of Shares with respect to which options or SARs may be
         granted during a calendar year to any Eligible Person under this Plan
         shall be 500,000 Shares.
 
         c) In the event that the Committee shall determine that any dividend in
         Shares, recapitalization, Share split, reverse split, reorganization,
         merger, consolidation, spin-off, combination, repurchase, or share
         exchange, or other similar corporate transaction or event, affects the
         Shares such that an adjustment is appropriate in order to prevent
         dilution or enlargement of the rights of Eligible Persons under the
         Plan, then the Committee shall make such equitable changes or
         adjustments as it deems appropriate and, in such manner as it may deem
         equitable, adjust any or all of (i) the number and kind of shares which
         may thereafter be issued under the Plan, (ii) the number and kind of
         shares, other securities or other consideration issued or issuable in
         respect of outstanding Awards, and (iii) the exercise price, grant
         price, or purchase price relating to any Award; provided, however, in
         each case that, with respect to ISOs, such adjustment shall be made in
         accordance with Section 424(a) of the Code, unless the Committee
         determines otherwise. In addition, the Committee is authorized to make
         adjustments in the terms and conditions of, and the criteria and
         performance objectives included in, Awards in recognition of unusual or
         non-recurring events (including, without limitation, events described
         in the preceding sentence) affecting the Company or any Subsidiary or
         Affiliate or the financial statements of the Company or any Subsidiary
         or Affiliate, or in response to changes in applicable laws,
         regulations, or accounting principles; provided, however, that, in the
         case of an Award which is intended to qualify as "performance-based
         compensation" within the meaning of Section 162(m)(4)(C) of the Code,
         such authority shall be subject to Section 3(d) hereof.
 
         d) Any Shares distributed pursuant to an Award may consist, in whole or
         in part, of authorized and unissued Shares or treasury Shares including
         Shares acquired by purchase in the open market or in private
         transactions.
 
5.  Specific Terms of Awards.
 
         a) General. Awards may be granted on the terms and conditions set forth
         in this Section 5. In addition, the Committee may impose on any Award
         or the exercise thereof, at the date of grant or thereafter (subject to
         Section 8(d)), such additional terms and conditions, not inconsistent
         with the provisions of the Plan, as the Committee shall determine,
         including terms regarding forfeiture of Awards or continued
         exercisability of Awards in the event of termination of employment by
         the Eligible Person.
 
         b) Options. The Committee is authorized to grant Options, which may be
         NQSOs or ISOs, to Eligible Persons on the following terms and
         conditions:
 
         a)       Exercise Price. The exercise price per Share purchasable under
                  an Option shall be determined by the Committee, and the
                  Committee may, without limitation, set an exercise price that
                  is based upon achievement of performance criteria if deemed
                  appropriate by the Committee.
 
         b)       Option Term. The term of each Option shall be determined by
                  the Committee.
 
         c)       Time and Method of Exercise. The Committee shall determine at
                  the date of grant or thereafter the time or times at which an
                  Option may be exercised in whole or in part (including,
                  without limitation, upon achievement of performance criteria
                  if deemed appropriate by the Committee), the methods by which
                  such exercise price may be paid or deemed to be paid
                  (including, without limitation, broker-assisted exercise
                  arrangements), the form of such payment (including, without
                  limitation, cash, Shares, notes or other property), and the
                  methods by which Shares will be delivered or deemed to be
                  delivered to Eligible Persons.
 
         d)       ISOs. The terms of any ISO granted under the Plan shall comply
                  in all respects with the provisions of Section 422 of the
                  Code, including but not limited to the requirement that the
                  ISO shall be granted within ten years from the earlier of the
                  date of adoption or shareholder approval of the Plan. ISOs may
                  only be granted to employees of the Company or a Subsidiary.
 
         c) SARs. The Committee is authorized to grant SARs (Share Appreciation
         Rights) to Eligible Persons on the following terms and conditions:
 
i.       Right to Payment. An SAR shall confer on the Eligible Person to whom it
         is granted a right to receive with respect to each Share subject
         thereto, upon exercise thereof, the excess of (1) the Fair Market Value
         of one Share on the date of exercise (or, if the Committee shall so
         determine in the case of any such right, the Fair Market Value of one
         Share at any time during a specified period before or after the date of
         exercise) over (2) the base amount of the SAR as determined by the
         Committee as of the date of grant of the SAR (which, in the case of an
         SAR granted in tandem with an Option, shall be equal to the exercise
         price of the underlying Option).
 
ii.      Other Terms. The Committee shall determine, at the time of grant or
         thereafter, the time or times at which an SAR may be exercised in whole
         or in part, the method of exercise, method of settlement, form of
         consideration payable in settlement, method by which Shares will be
         delivered or deemed to be delivered to Eligible Persons, whether or not
         an SAR shall be in tandem with any other Award, and any other terms and
         conditions of any SAR. Unless the Committee determines otherwise, an
         SAR (1) granted in tandem with an NQSO may be granted at the time of
         grant of the related NQSO or at any time thereafter and (2) granted in
         tandem with an ISO may only be granted at the time of grant of the
         related ISO.
 
         a.       Restricted Shares. The Committee is authorized to grant
                  Restricted Shares to Eligible Persons on the following terms
                  and conditions:
 
         i.       Issuance and Restrictions. Restricted Shares shall be subject
                  to such restrictions on transferability and other
                  restrictions, if any, as the Committee may impose at the date
                  of grant or thereafter, which restrictions may lapse
                  separately or in combination at such times, under such
                  circumstances (including, without limitation, upon achievement
                  of performance criteria if deemed appropriate by the
                  Committee), in such installments, or otherwise, as the
                  Committee may determine. Except to the extent restricted under
                  the Award Agreement relating to the Restricted Shares, an
                  Eligible Person granted Restricted Shares shall have all of
                  the rights of a shareholder including, without limitation, the
                  right to vote Restricted Shares and the right to receive
                  dividends thereon. The Committee must certify in writing prior
                  to the lapse of restrictions conditioned on achievement of
                  performance criteria that such performance criteria were in
                  fact satisfied.
 
         ii.      Forfeiture. Except as otherwise determined by the Committee,
                  at the date of grant or thereafter, upon termination of
                  employment during the applicable restriction period,
                  Restricted Shares and any accrued but unpaid dividends or
                  Dividend Equivalents (and any accrued but unpaid interest or
                  earnings equivalents thereon) that are at that time subject to
                  restrictions shall be forfeited; provided, however, that the
                  Committee may provide, by rule or regulation or in any Award
                  Agreement, or may determine in any individual case, that
                  restrictions or forfeiture conditions relating to Restricted
                  Shares will be waived in whole or in part in the event of
                  terminations resulting from specified causes, and the
                  Committee may in other cases waive in whole or in part the
                  forfeiture of Restricted Shares.
 
         iii.     Certificates for Shares. Restricted Shares granted under the
                  Plan may be evidenced in such manner as the Committee shall
                  determine. If certificates representing Restricted Shares are
                  registered in the name of the Eligible Person, such
                  certificates shall bear an appropriate legend referring to the
                  terms, conditions, and restrictions applicable to such
                  Restricted Shares, and the Company shall retain physical
                  possession of the certificate.
 
         iv.      Dividends. Dividends paid on Restricted Shares shall be either
                  paid at the dividend payment date, or deferred (with or
                  without the crediting of interest or earnings equivalents
                  thereon as determined by the Committee) for payment to such
                  date as determined by the Committee, in cash or in
                  unrestricted Shares having a Fair Market Value equal to the
                  amount of such dividends; provided, however, that any such
                  dividends (and any interest or earnings equivalents credited
                  thereon) shall be subject to forfeiture upon such conditions,
                  if any, as the Committee may specify. Shares distributed in
                  connection with a Share split or dividend in Shares, and other
                  property distributed as a dividend, shall be subject to
                  restrictions and a risk of forfeiture to the same extent as
                  the Restricted Shares with respect to which such Shares or
                  other property has been distributed.
 
                  e)       Restricted Share Units. The Committee is authorized
                           to grant Restricted Share Units to Eligible Persons,
                           subject to the following terms and conditions:
 
         i.       Award and Restrictions. Delivery of Shares or cash, as the
                  case may be, will occur upon expiration of the deferral period
                  specified for Restricted Share Units by the Committee (or, if
                  permitted by the Committee, as elected by the Eligible
                  Person). In addition, Restricted Share Units shall be subject
                  to such restrictions as the Committee may impose, if any
                  (including, without limitation, the achievement of performance
                  criteria if deemed appropriate by the Committee), at the date
                  of grant or thereafter, which restrictions may lapse at the
                  expiration of the deferral period or at earlier or later
                  specified times, separately or in combination, in installments
                  or otherwise, as the Committee may determine. The Committee
                  must certify in writing prior to the lapse of restrictions
                  conditioned on the achievement of performance criteria that
                  such performance criteria were in fact satisfied.
 
         ii.      Forfeiture. Except as otherwise determined by the Committee at
                  date of grant or thereafter, upon termination of employment
                  (as determined under criteria established by the Committee)
                  during the applicable deferral period or portion thereof to
                  which forfeiture conditions apply (as provided in the Award
                  Agreement evidencing the Restricted Share Units), or upon
                  failure to satisfy any other conditions precedent to the
                  delivery of Shares or cash to which such Restricted Share
                  Units relate, all Restricted Share Units that are at that time
                  subject to deferral or restriction shall be forfeited;
                  provided, however, that the Committee may provide, by rule or
                  regulation or in any Award Agreement, or may determine in any
                  individual case, that restrictions or forfeiture conditions
                  relating to Restricted Share Units will be waived in whole or
                  in part in the event of termination resulting from specified
                  causes, and the Committee may in other cases waive in whole or
                  in part the forfeiture of Restricted Share Units.
 
                  f)       Performance Shares and Performance Units. The
                           Committee is authorized to grant Performance Shares
                           or Performance Units or both to Eligible Persons on
                           the following terms and conditions:
 
         i.       Performance Period. The Committee shall determine a
                  performance period (the "Performance Period") of one or more
                  years and shall determine the performance objectives for
                  grants of Performance Shares and Performance Units.
                  Performance objectives may vary from Eligible Person to
                  Eligible Person and shall be based upon such performance
                  criteria as the Committee may deem appropriate. Performance
                  Periods may overlap and Eligible Persons may participate
                  simultaneously with respect to Performance Shares and
                  Performance Units for which different Performance Periods are
                  prescribed.
 
         ii.      Award Value. At the beginning of a Performance Period, the
                  Committee shall determine for each Eligible Person or group of
                  Eligible Persons with respect to that Performance Period the
                  range of number of Shares, if any, in the case of Performance
                  Shares, and the range of dollar values, if any, in the case of
                  Performance Units, which may be fixed or may vary in
                  accordance with such performance or other criteria specified
                  by the Committee, which shall be paid to an Eligible Person as
                  an Award if the relevant measure of Company performance for
                  the Performance Period is met.
 
         iii.     Significant Events. If during the course of a Performance
                  Period there shall occur significant events as determined by
                  the Committee which the Committee expects to have a
                  substantial effect on a performance objective during such
                  period, the Committee may revise such objective; provided,
                  however, that, in the case of an Award which is intended to
                  qualify as "performance-based compensation" within the meaning
                  of Section 162(m)(4)(C) of the Code, such authority shall be
                  subject to Section 3(d) hereof.
 
         iv.      Forfeiture. Except as otherwise determined by the Committee,
                  at the date of grant or thereafter, upon termination of
                  employment during the applicable Performance Period,
                  Performance Shares and Performance Units for which the
                  Performance Period was prescribed shall be forfeited;
                  provided, however, that the Committee may provide, by rule or
                  regulation or in any Award Agreement, or may determine in an
                  individual case, that restrictions or forfeiture conditions
                  relating to Performance Shares and Performance Units will be
                  waived in whole or in part in the event of terminations
                  resulting from specified causes, and the Committee may in
                  other cases waive in whole or in part the forfeiture of
                  Performance Shares and Performance Units.
 
         v.       Payment. Each Performance Share or Performance Unit may be
                  paid in whole Shares, or cash, or a combination of Shares and
                  cash either as a lump sum payment or in installments, all as
                  the Committee shall determine, at the time of grant of the
                  Performance Share or Performance Unit or otherwise, commencing
                  as soon as practicable after the end of the relevant
                  Performance Period. The Committee must certify in writing
                  prior to the payment of any Performance Share or Performance
                  Unit that the performance objectives and any other material
                  terms were in fact satisfied.
 
                  a.       Dividend Equivalents. The Committee is authorized to
                           grant Dividend Equivalents to Eligible Persons. The
                           Committee may provide, at the date of grant or
                           thereafter, that Dividend Equivalents shall be paid
                           or distributed when accrued or shall be deemed to
                           have been reinvested in additional Shares, or other
                           investment vehicles as the Committee may specify,
                           provided that Dividend Equivalents (other than
                           freestanding Dividend Equivalents) shall be subject
                           to all conditions and restrictions of the underlying
                           Awards to which they relate.
 
                  b.       Other Share-Based Awards. The Committee is
                           authorized, subject to limitations under applicable
                           law, to grant to Eligible Persons such other Awards
                           that may be denominated or payable in, valued in
                           whole or in part by reference to, or otherwise based
                           on, or related to, Shares, as deemed by the Committee
                           to be consistent with the purposes of the Plan,
                           including, without limitation, unrestricted shares
                           awarded purely as a "bonus" and not subject to any
                           restrictions or conditions, other rights convertible
                           or exchangeable into Shares, purchase rights for
                           Shares, Awards with value and payment contingent upon
                           performance of the Company or any other factors
                           designated by the Committee, and Awards valued by
                           reference to the performance of specified
                           Subsidiaries or Affiliates. The Committee shall
                           determine the terms and conditions of such Awards at
                           date of grant or thereafter. Shares delivered
                           pursuant to an Award in the nature of a purchase
                           right granted under this Section 5(h) shall be
                           purchased for such consideration, paid for at such
                           times, by such methods, and in such forms, including,
                           without limitation, cash, Shares, notes or other
                           property, as the Committee shall determine. Cash
                           awards, as an element of or supplement to any other
                           Award under the Plan, shall also be authorized
                           pursuant to this Section 5(h).
 
6.  Certain Provisions Applicable to Awards.
 
         a) Stand-Alone, Additional, Tandem and Substitute Awards. Awards
         granted under the Plan may, in the discretion of the Committee, be
         granted to Eligible Persons either alone or in addition to, in tandem
         with, or in exchange or substitution for, any other Award granted under
         the Plan or any award granted under any other plan or agreement of the
         Company, any Subsidiary or Affiliate, or any business entity to be
         acquired by the Company or a Subsidiary or Affiliate, or any other
         right of an Eligible Person to receive payment from the Company or any
         Subsidiary or Affiliate. Awards may be granted in addition to or in
         tandem with such other Awards or awards, and may be granted either as
         of the same time as or a different time from the grant of such other
         Awards or awards. The per Share exercise price of any Option, grant
         price of any SAR, or purchase price of any other Award conferring a
         right to purchase Shares which is granted, in connection with the
         substitution of awards granted under any other plan or agreement of the
         Company or any Subsidiary or Affiliate or any business entity to be
         acquired by the Company or any Subsidiary or Affiliate, shall be
         determined by the Committee, in its discretion.
 
         b) Terms of Awards. The term of each Award granted to an Eligible
         Person shall be for such period as may be determined by the Committee;
         provided, however, that in no event shall the term of any ISO or an SAR
         granted in tandem therewith exceed a period of ten years from the date
         of its grant (or such shorter period as may be applicable under Section
         422 of the Code).
 
         c) Form of Payment Under Awards. Subject to the terms of the Plan and
         any applicable Award Agreement, payments to be made by the Company or a
         Subsidiary or Affiliate upon the grant, maturation, or exercise of an
         Award may be made in such forms as the Committee shall determine at the
         date of grant or thereafter, including, without limitation, cash,
         Shares, or other property, and may be made in a single payment or
         transfer, in installments, or on a deferred basis. The Committee may
         make rules relating to installment or deferred payments with respect to
         Awards, including the rate of interest or earnings equivalents to be
         credited with respect to such payments.
 
         d) Nontransferability. Unless otherwise set forth by the Committee in
         an Award Agreement, Awards (except for vested shares) shall not be
         transferable by an Eligible Person except by will or the laws of
         descent and distribution (except pursuant to a Beneficiary designation)
         and shall be exercisable during the lifetime of an Eligible Person only
         by such Eligible Person or his or her guardian or legal representative.
         An Eligible Person's rights under the Plan may not be pledged,
         mortgaged, hypothecated, or otherwise encumbered, and shall not be
         subject to claims of the Eligible Person's creditors.
 
7.  Change of Control Provisions.
 
         a) Acceleration of Exercisability and Lapse of Restrictions. In the
         event of a Change of Control, the following acceleration provisions
         shall apply unless otherwise provided by the Committee at the time of
         the Award grant:
 
             All outstanding Awards pursuant to which the Participant may have
             rights the exercise of which is restricted or limited, shall become
             fully exercisable at the time of the Change of Control. Unless the
             right to lapse of restrictions or limitations is waived or deferred
             by a Participant prior to such lapse, all restrictions or
             limitations (including risks of forfeiture and deferrals) on
             outstanding Awards subject to restrictions or limitations under the
             Plan shall lapse, and all performance criteria and other conditions
             to payment of Awards under which payments of cash, Shares or other
             property are subject to conditions shall be deemed to be achieved
             or fulfilled and shall be waived by the Company at the time of the
             Change of Control.
 
         b) Definitions of Certain Terms. For purposes of this Section 7, the
         following definitions, in addition to those set forth in Section 2,
         shall apply:
 
         i.       "Change of Control" means and shall be deemed to have occurred
                  if:
 
                  a. any person (within the meaning of the Exchange Act), other
         than the Company, a Related Party or Tengelmann
         Warenhandelsgesellschaft, is or becomes the "beneficial owner" (as
         defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
         of Voting Securities representing 40 percent or more of the total
         voting power of all the then-outstanding Voting Securities; or
 
                  b. the individuals who, as of the effective date of the Plan,
         constitute the Board, together with those who first become directors
         subsequent to such date and whose recommendation, election or
         nomination for election to the Board was approved by a vote of at least
         a majority of the directors then still in office who either were
         directors as of the effective date of the Plan or whose recommendation,
         election or nomination for election was previously so approved (the
         "Continuing Directors"), cease for any reason to constitute a majority
         of the members of the Board; or
 
                  c. the stockholders of the Company approve a merger,
         consolidation, recapitalization or reorganization of the Company or a
         Subsidiary, reverse split of any class of Voting Securities, or an
         acquisition of securities or assets by the Company or a Subsidiary, or
         consummation of any such transaction if stockholder approval is not
         obtained, other than (I) any such transaction in which the holders of
         outstanding Voting Securities immediately prior to the transaction
         receive (or, in the case of a transaction involving a Subsidiary and
         not the Company, retain), with respect to such Voting Securities,
         voting securities of the surviving or transferee entity representing
         more than 60 percent of the total voting power outstanding immediately
         after such transaction, with the voting power of each such continuing
         holder relative to other such continuing holders not substantially
         altered in the transaction, or (II) any such transaction which would
         result in a Related Party beneficially owning more than 50 percent of
         the voting securities of the surviving entity outstanding immediately
         after such transaction; or
 
                  d. the stockholders of the Company approve a plan of complete
         liquidation of the Company or an agreement for the sale or disposition
         by the Company of all or substantially all of the Company's assets
         other than any such transaction which would result in a Related Party
         owning or acquiring more than 50 percent of the assets owned by the
         Company immediately prior to the transaction.
 
         i.       "Related Party" means (a) a majority-owned subsidiary of the
                  Company; (b) an employee or group of employees of the Company
                  or any majority-owned subsidiary of the Company; (c) a trustee
                  or other fiduciary holding securities under an employee
                  benefit plan of the Company or any majority-owned subsidiary
                  of the Company; or (d) a corporation owned directly or
                  indirectly by the stockholders of the Company in substantially
                  the same proportion as their ownership of Voting Securities.
 
         ii.      "Voting Securities" means any securities of the Company which
                  carry the right to vote generally in the election of
                  directors.
 
8.  General Provisions.
 
         a) Compliance with Legal and Trading Requirements. The Plan, the
         granting and exercising of Awards thereunder, and the other obligations
         of the Company under the Plan and any Award Agreement, shall be subject
         to all applicable federal and state laws, rules and regulations, and to
         such approvals by any regulatory or governmental agency as may be
         required. The Company, in its discretion, may postpone the issuance or
         delivery of Shares under any Award until completion of such stock
         exchange or market system listing or registration or qualification of
         such Shares or other required action under any state or federal law,
         rule or regulation as the Company may consider appropriate, and may
         require any Participant to make such representations and furnish such
         information as it may consider appropriate in connection with the
         issuance or delivery of Shares in compliance with applicable laws,
         rules and regulations. No provisions of the Plan shall be interpreted
         or construed to obligate the Company to register any Shares under
         federal or state law.
 
         b) No Right to Continued Employment or Service. Neither the Plan nor
         any action taken thereunder shall be construed as giving any employee
         or director the right to be retained in the employ or service of the
         Company or any of its Subsidiaries or Affiliates, nor shall it
         interfere in any way with the right of the Company or any of its
         Subsidiaries or Affiliates to terminate any employee's or director's
         employment or service at any time.
 
         c) Taxes. The Company or any Subsidiary or Affiliate is authorized to
         withhold from any Award granted, any payment relating to an Award under
         the Plan, including from a distribution of Shares, or any payroll or
         other payment to an Eligible Person, amounts of withholding and other
         taxes due in connection with any transaction involving an Award, and to
         take such other action as the Committee may deem advisable to enable
         the Company and Eligible Persons to satisfy obligations for the payment
         of withholding taxes and other tax obligations relating to any Award.
         This authority shall include authority to withhold or receive Shares or
         other property and to make cash payments in respect thereof in
         satisfaction of an Eligible Person's tax obligations.
 
         d) Changes to the Plan and Awards. The Board may amend, alter, suspend,
         discontinue, or terminate the Plan or the Committee's authority to
         grant Awards under the Plan without the consent of shareholders of the
         Company or Participants, except that any such amendment, alteration,
         suspension, discontinuation, or termination shall be subject to the
         approval of the Company's shareholders to the extent such shareholder
         approval is required under Section 422 of the Code; provided, however,
         that, without the consent of an affected Participant, no amendment,
         alteration, suspension, discontinuation, or termination of the Plan may
         materially and adversely affect the rights of such Participant under
         any Award theretofore granted to him or her. The Committee may waive
         any conditions or rights under, amend any terms of, or amend, alter,
         suspend, discontinue or terminate, any Award theretofore granted,
         prospectively or retrospectively; provided, however, that, without the
         consent of a Participant, no amendment, alteration, suspension,
         discontinuation or termination of any Award may materially and
         adversely affect the rights of such Participant under any Award
         theretofore granted to him or her.
 
         e) No Rights to Awards; No Shareholder Rights. No Eligible Person or
         employee shall have any claim to be granted any Award under the Plan,
         and there is no obligation for uniformity of treatment of Eligible
         Persons and employees. No Award shall confer on any Eligible Person any
         of the rights of a shareholder of the Company unless and until Shares
         are duly issued or transferred to the Eligible Person in accordance
         with the terms of the Award.
 
         f) Unfunded Status of Awards. The Plan is intended to constitute an
         "unfunded" plan for incentive compensation. With respect to any
         payments not yet made to a Participant pursuant to an Award, nothing
         contained in the Plan or any Award shall give any such Participant any
         rights that are greater than those of a general creditor of the
         Company; provided, however, that the Committee may authorize the
         creation of trusts or make other arrangements to meet the Company's
         obligations under the Plan to deliver cash, Shares, other Awards, or
         other property pursuant to any Award, which trusts or other
         arrangements shall be consistent with the "unfunded" status of the Plan
         unless the Committee otherwise determines with the consent of each
         affected Participant
 
         g) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
         Board nor its submission to the shareholders of the Company for
         approval shall be construed as creating any limitations on the power of
         the Board to adopt such other incentive arrangements as it may deem
         desirable, including, without limitation, the granting of options and
         other awards otherwise than under the Plan, and such arrangements may
         be either applicable generally or only in specific cases.
 
         h) Not Compensation for Benefit Plans. No Award payable under this Plan
         shall be deemed salary or compensation for the purpose of computing
         benefits under any benefit plan or other arrangement of the Company for
         the benefit of its employees or directors unless the Company shall
         determine otherwise.
 
         i) No Fractional Shares. No fractional Shares shall be issued or
         delivered pursuant to the Plan or any Award. The Committee shall
         determine whether cash, other Awards, or other property shall be issued
         or paid in lieu of such fractional Shares or whether such fractional
         Shares or any rights thereto shall be forfeited or otherwise
         eliminated.
 
         j) Governing Law. The validity, construction, and effect of the Plan,
         any rules and regulations relating to the Plan, and any Award Agreement
         shall be determined in accordance with the laws of New Jersey without
         giving effect to principles of conflict of laws.
 
         k) Effective Date; Plan Termination. The Plan shall become effective as
         of July 14, 1998 (the "Effective Date"), subject to approval by the
         vote of the holders of a majority of the shares of stock of the Company
         present or represented at the annual meeting of stockholders to be held
         in July 1999. Awards may be made prior to such approval by
         stockholders, but each such Award shall be subject to the approval of
         this Plan by the stockholders, and if this Plan shall not be so
         approved, all Awards granted under this Plan shall be of no effect. The
         Plan shall terminate as to future awards on the date which is ten (10)
         years after the Effective Date.
 
         l) Relationship to 1998 Restricted Stock Plan. This Plan constitutes an
         amendment and restatement of The Great Atlantic & Pacific Tea Company,
         Inc. 1998 Restricted Stock Plan (the "Restricted Stock Plan") effective
         as of July 14, 1998, the date of inception of the Restricted Stock
         Plan. Any awards of shares of Restricted Stock made under the
         Restricted Stock Plan shall be deemed to be Awards of Restricted Shares
         under this Plan and shall be subject to all the terms and conditions of
         this Plan.
 
         m) Titles and Headings. The titles and headings of the sections in the
         Plan are for convenience of reference only. In the event of any
         conflict, the text of the Plan, rather than such titles or headings,
         shall control.