<PAGE>
Exhibit 10.40
SECOND AMENDMENT TO
LETTER OF CREDIT AGREEMENT
This
Second Amendment to Letter of Credit Agreement (the "Amendment")
is
made as of the 10th day of November, 2006 by and between:
THE
GREAT ATLANTIC & PACIFIC TEA COMPANY, INC., a Maryland
corporation (the
"Company"); and
BANK
OF AMERICA, N.A., as Issuing Bank (the "Issuing Bank").
In consideration of the mutual covenants herein contained and
benefits to be
derived herefrom, the parties hereto agree as follows:
WITNESSETH
WHEREAS, the Company and the Issuing Bank are parties to a Letter
of Credit
Agreement dated as of October 14, 2005, as amended by the First
Amendment to
Letter of Credit Agreement dated as of October 13, 2006 (the
"Letter of Credit
Agreement"); and
WHEREAS, the Company has advised the Issuing Bank that the Company
desires
to amend the Letter of Credit Agreement as provided herein.
NOW
THEREFORE, it is hereby agreed as follows:
1. Definitions:
All capitalized terms used herein and not otherwise defined
shall have the same meaning herein as in the Letter of Credit
Agreement.
2. Amendment of
the Letter of Credit Agreement. The Letter of Credit Agreement
is
hereby amended as follows:
a. Section 1.01
of the Letter of Credit Agreement is hereby amended by the
addition of the following new definitions, inserted in
appropriate
alphabetical order:
"L/C
Fee Rate" shall mean, as of any date of determination, the per
annum
rate, determined by reference to the average daily percentage
of
Availability attributable to the Collateral consisting of Cash and
Cash
Equivalents and Additional Collateral during the immediately
preceding
calendar quarter, as set forth in the following grid:
<TABLE>
<CAPTION>
Collateral consisting of Cash and Cash Equivalents and
Additional Collateral
L/C Fee Rate
------------------------------------------------------ ------------
<S>
<C>
< 60%
62.5 bps
> 60% and < 100%
37.5 bps
100%
15.0 bps
</TABLE>
<PAGE>
"Metro Inc. Securities Availability Cap" means $75,000,000.
"Metro Inc. Securities Collateral" means the shares of capital
stock of
Metro Inc., a Quebec corporation, specified on Schedule 2
hereto.
"Metro Inc. Securities Collateral Account" means that certain
account now
or
hereafter established by the Company with Bank of America, N.A. or
any
of
its Affiliates under the sole and exclusive dominion and control of
the
Issuing Bank designated as the "A&P Letter of Credit Metro Inc.
Securities
Collateral Account" containing investments constituting the Metro
Inc.
Securities Collateral, and in which account the Issuing Bank has
been
granted a Lien pursuant to the Pledge and Security Agreement.
"Revolving Credit Facility" means the revolving credit facility
maintained
by
the Company pursuant to the Credit Agreement, dated as of November
15,
2005, by and among the Company, the other borrowers thereto, Bank
of
America, N.A., as Administrative Agent and Collateral Agent, and
the other
Lenders party thereto.
b. The
definition of "Account" in Section 1.01 of the Letter of Credit
Agreement is hereby is deleted in its entirety and the following
is
substituted in its stead:
""Account" means each of the Cash Collateral Account, the
Additional
Collateral Account and the Metro Inc. Securities Collateral
Account."
c. The
definition of "Availability" in Section 1.01 of the Letter of
Credit
Agreement is hereby is deleted in its entirety and the following
is
substituted in its stead:
""Availability" means, at any time of determination, the lesser of
(i)
$150,000,000, and (ii) an amount equal to the difference between
(a) the
sum
of (1) 100% of the Cash and Cash Equivalents on deposit in the
Cash
Collateral Account and (2) as to the Metro Inc. Securities
Collateral on
deposit in the Metro Inc. Securities Collateral Account, the lesser
of (A)
50%
of the market value of such Metro Inc. Securities Collateral
(as
determined by reference to the price of Metro Inc. stock as listed
on the
Toronto Stock Exchange) and (B) the Metro Inc. Securities
Availability Cap
and
(3) as to each item of Additional Collateral on deposit in the
Additional Collateral Account, the amount of such Additional
Collateral
multiplied by the Applicable Advance Rate applicable to such
Additional
Collateral and (b) the aggregate Letter of Credit Outstandings.
In
determining Availability, the Metro Inc. Securities Collateral
shall be
valued daily at the US Dollar equivalent of the value of such Metro
Inc.
Securities Collateral in Canadian Dollars."
<PAGE>
d. The
definition of "Commitment" in Section 1.01 of the Letter of
Credit
Agreement is hereby deleted in its entirety and the following
is
substituted in its stead:
""Commitment" means $150,000,000 or such lesser amount on account
of a
reduction thereof in accordance with the provisions of Section
2.09
hereof."
e. The
definition of "Pledge and Security Agreement" in Section 1.01 of
the
Letter of Credit Agreement is hereby deleted in its entirety and
the
following is substituted in its stead:
""Pledge and Security Agreement" means the Amended and Restated
Pledge and
Security Agreement, dated as of November 10, 200
