EXHIBIT 10.1
EXECUTION COPY
 
AMENDED AND RESTATED TENGELMANN STOCKHOLDER AGREEMENT
by and among
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
and
TENGELMANN WARENHANDELSGESELLSCHAFT KG
Dated as of August 4, 2009
 

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TABLE OF CONTENTS

              Page   ARTICLE I

 
        Definitions

 
       
SECTION 1.01. Definitions
    2  
 
        ARTICLE II

 
        Corporate Governance

 
       
SECTION 2.01. Composition of the Board of Directors
    11  
SECTION 2.02. Committees
    16  
SECTION 2.03. Solicitation of Shares
    16  
SECTION 2.04. Approval Required for Certain Actions
    16  
SECTION 2.05. Charter and By-Laws
    20  
SECTION 2.06. Change in Law
    20  
 
        ARTICLE III

 
        Registration Rights

 
       
SECTION 3.01. Registration
    21  
SECTION 3.02. Piggyback Registration
    23  
SECTION 3.03. Reduction of Underwritten Offering
    24  
SECTION 3.04. Registration Procedures
    25  
SECTION 3.05. Conditions to Offerings
    29  
SECTION 3.06. Blackout Period
    29  
SECTION 3.07. Registration Expenses
    30  
SECTION 3.08. Indemnification; Contribution
    31  
SECTION 3.09. Lockup
    34  
SECTION 3.10. Termination of Registration Rights
    34  
SECTION 3.11. Specific Performance
    34  
SECTION 3.12. Other Registration Rights
    34  
SECTION 3.13. Rule 144
    35  
SECTION 3.14. Transfer of Registration Rights
    35  
 
        ARTICLE IV

 
        Preemptive Rights

 
       
SECTION 4.01. Rights To Purchase New Equity Securities
    35  

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              Page   ARTICLE V

 
        Put Right

 
       
SECTION 5.01. Put Right
    37  
 
        ARTICLE VI

 
        Covenants

 
       
SECTION 6.01. Stockholder Approvals
    38  
SECTION 6.02. Voting Agreement
    39  
SECTION 6.03. Petition for Bankruptcy
    40  
 
        ARTICLE VII

 
        Right of First Offer

 
       
SECTION 7.01. First Offer Exercise Rights
    40  
SECTION 7.02. Convertible Note Purchase
    41  
 
        ARTICLE VIII

 
        Miscellaneous

 
       
SECTION 8.01. Corporate Opportunities
    42  
SECTION 8.02. Adjustments
    44  
SECTION 8.03. Changes in Tengelmann Percentage Interest Attributable to
Issuances of the Company’s Equity Securities
    44  
SECTION 8.04. Notices
    45  
SECTION 8.05. Reasonable Efforts; Further Actions
    46  
SECTION 8.06. Consents
    46  
SECTION 8.07. Fees and Expenses
    46  
SECTION 8.08. Access to Information; Financial Statements
    47  
SECTION 8.09. Amendments; Waivers
    47  
SECTION 8.10. Interpretation
    48  
SECTION 8.11. Severability
    48  
SECTION 8.12. Counterparts
    48  
SECTION 8.13. Entire Agreement; No Third-Party Beneficiaries
    48  
SECTION 8.14. Governing Law
    49  
SECTION 8.15. Assignment
    49  
SECTION 8.16. Enforcement
    49  
SECTION 8.17. Automatic Termination
    50  
SECTION 8.18. Confidentiality
    50  
SECTION 8.19. No Liability of Partners
    51  

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     AMENDED AND RESTATED TENGELMANN STOCKHOLDER AGREEMENT dated as of August 4,
2009 (this “Agreement”), among THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC., a
Maryland corporation (the “Company”) and TENGELMANN WARENHANDELSGESELLSCHAFT KG,
a limited partnership organized under the laws of Germany (“Tengelmann”).
          WHEREAS, the Company, Sand Merger Corp., a Delaware corporation and a
wholly owned Subsidiary of the Company, and Pathmark Stores, Inc., a Delaware
corporation (“Pathmark”), entered into a Merger Agreement, dated as of March 4,
2007, pursuant to which the Company acquired Pathmark (the “Merger”);
          WHEREAS, in connection with the Merger, the parties hereto entered
into that certain Stockholder Agreement dated as of March 4, 2007 (the “Existing
Agreement”), to establish certain terms and conditions concerning the corporate
governance of the Company and certain other matters;
          WHEREAS, the Company and Erivan Karl Haub, Christian Wilhelm Erich
Haub, Karl-Erivan Warder Haub and Georg Rudolf Otto Haub (collectively, the
“Tengelmann Partners”) have entered into an investment agreement dated as of
July 23, 2009 (the “Investment Agreement”), pursuant to which the Tengelmann
Partners are purchasing from the Company, and the Company is issuing and selling
to the Tengelmann Partners (the “Transaction”), subject to the terms and
conditions set forth therein, an aggregate of 60,000 shares of Convertible
Preferred Stock (capitalized terms used in this Agreement shall have the
meanings given to such terms in Article I) (the “Initial Shares”, together with
any shares of Convertible Preferred Stock issued to Tengelmann pursuant to the
Convertible Preferred Stock PIK Dividend Provision, the “Tengelmann Shares”),
and immediately following such purchase, the Tengelmann Partners shall
contribute the Initial Shares to Tengelmann;
          WHEREAS, the Company and Yucaipa have entered into an investment
agreement dated as of July 23, 2009, pursuant to which Yucaipa American Alliance
Fund II, LP and Yucaipa American Alliance (Parallel) Fund II, LP (the “New
Investors”) are purchasing from the Company, and the Company is issuing and
selling to the New Investors, subject to the terms and conditions set forth
therein, an aggregate of 115,000 shares of Convertible Preferred Stock; and
          WHEREAS, it is a condition to the closing under the Investment
Agreement that the parties hereto amend and restate in its entirety the Existing
Agreement as provided herein.
          NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

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ARTICLE I
Definitions
          SECTION 1.01. Definitions. (a) As used in this Agreement, the
following terms will have the following meanings:
          “13D Group” means any group of Persons formed for the purpose of
acquiring, holding, voting or disposing of Voting Stock of the Company that
would be required under Section 13(d) of the Exchange Act (as in effect on, and
based on legal interpretations thereof existing on, the date hereof) to file a
statement on Schedule 13D with the SEC as a “person” within the meaning of
Section 13(d)(3) of the Exchange Act if such group beneficially owned Voting
Stock of the Company representing more than 5% of any class of Voting Stock of
the Company (whether or not registered pursuant to Section 12 of the Exchange
Act) then outstanding.
          “2000 Warrants” means the warrants issued by Pathmark pursuant to the
Warrant Agreement dated as of September 19, 2000, between Pathmark and
ChaseMellon Shareholder Services, LLC.
          “2011 Convertible Notes” means the Company’s 5.125% Convertible Senior
Notes due June 15, 2011.
          “2012 Convertible Notes” means the Company’s 6.75% Convertible Senior
Notes due December 15, 2012.
          “ABL Credit Agreement” means the Company’s five-year amended and
restated asset-based senior secured revolving credit agreement, dated as of
December 27, 2007, among the Company, the other borrowers party thereto and the
lenders party thereto, Bank of America, N.A., as administrative agent and
collateral agent, and Banc of America Securities LLC, as lead arranger (as
amended thereafter in accordance with the terms hereof, if applicable).
          An “Affiliate” of any Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person. The Company and its
Subsidiaries shall not be deemed Affiliates of Tengelmann for any reason under
this Agreement.
          “Amended and Restated Yucaipa Stockholder Agreement” means the Amended
and Restated Yucaipa Stockholder Agreement, dated as of the date hereof, between
the Company and Yucaipa.
          “Authorized Capital Stock Charter Amendment” means an amendment to the
Charter increasing the number of authorized shares of Company Common Stock by up
to 100,000,000 shares.
          “Automatic Shelf Registration Statement” means an “automatic shelf
registration statement” as defined in Rule 405 promulgated under the Securities
Act.

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          “beneficial owner” and words of similar import have the meaning
assigned to such terms in Rule 13d-3 promulgated under the Exchange Act as in
effect on the date of this Agreement, but without reference to whether or not an
Equity Security is exercisable or convertible for Voting Stock in less than
60 days. The term “beneficially own” has a meaning correlative to the foregoing.
          “Board” or “Board of Directors” means the board of directors of the
Company.
          “Business Combination” with respect to any Person means any of the
following: (i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation) of all or substantially all of the
assets of such Person and its Subsidiaries, taken as a whole, to any other
Person or (ii) any transaction (including any merger or consolidation) the
consummation of which would result in any other Person (or, in the case of a
merger or consolidation, the shareholders of such other Person) becoming,
directly or indirectly, the beneficial owner of more than 50% of the Voting
Stock or Equity Securities (other than debt securities) of such Person (measured
in the case of Voting Stock by Voting Power rather than number of shares).
          “Business Day” means any day on which banks are not required or
authorized by law to close in New York, New York.
          “By-Laws” means the By-Laws of the Company, as in effect from time to
time.
          “Charter” means the Articles of Amendment and Restatement of the
Articles of Incorporation of the Company, as in effect from time to time.
          “Charter Amendment Stockholder Approval” means the approval of the
Authorized Capital Stock Charter Amendment by the affirmative vote of holders
entitled to cast two-thirds of the votes entitled to be cast on the matter.
          “Closing” means the closing of the Transaction.
          “Closing Date” means the date of the Closing.
          “Company Common Stock” means the common stock of the Company, par
value $1.00 per share, and any other common stock of the Company that may be
issued from time to time.
          “Conversion Date” means any date on which shares of Convertible
Preferred Stock are converted into shares of Company Common Stock subject to the
terms and conditions of the Convertible Preferred Articles Supplementary.
          “Conversion Stockholder Approval” means the approval, as required
pursuant to NYSE Rule 312, of (x) the shares of Convertible Preferred Stock when
voting together with the Common Stock becoming entitled to cast the full number
of votes on an as converted basis and (y) the issuance of the full amount of
Company Common Stock

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upon the exercise of conversion rights of the Convertible Preferred Stock, in
each case, by the affirmative vote of holders of a majority of the votes present
and entitled to vote at the stockholders’ meeting duly called, noticed and
convened for such purpose, at which the total votes cast represent over 50% in
interest of all Voting Stock entitled to vote on such proposal.
          “Convertible Notes” means the 2011 Convertible Notes and the 2012
Convertible Notes.
          “Convertible Preferred Articles Supplementary” means the articles
supplementary filed with the Maryland State Department of Assessments and
Taxation on August 3, 2009, which govern the designation, voting powers,
preferences, conversions and other rights, qualifications, limitations as to
dividends, terms and conditions of redemption and restrictions of the
Convertible Preferred Stock.
          “Convertible Preferred Stock” means the shares of the Company’s 8.00%
Convertible Preferred Stock redeemable August 1, 2016, designated in four
separate series as “8% Cumulative Convertible Preferred Stock, Series A-T”, “8%
Cumulative Convertible Preferred Stock, Series A-Y”, “8% Cumulative Convertible
Preferred Stock, Series B-T” and “8% Cumulative Convertible Preferred Stock,
Series B-Y”.
          “Convertible Preferred Stock PIK Dividend Provision” means the
Company’s ability to issue Convertible Preferred Stock as dividends pursuant to
the Convertible Preferred Articles Supplementary.
          “Convertible Underlying Securities” means the shares of Company Common
Stock issuable upon the conversion of any Convertible Preferred Stock.
          “Director” means a member of the Board of Directors.
          “Discriminatory Transaction” means any corporate action (other than
those taken pursuant to the express terms of this Agreement) that would
(i) impose material limitations on the legal rights of Tengelmann as a holder of
a class of Voting Stock of the Company (including any action that would impose
material restrictions without lawful exemption on Tengelmann that are based upon
the size of security holding, the business in which a security holder is engaged
or other considerations applicable to Tengelmann and not to holders of the same
class of Voting Stock of the Company generally, but excluding any such action
which is expressly required by applicable Law without any provision to exclude
Tengelmann), which limitations are disproportionately (i.e., other than in a
proportionate manner consistent with Tengelmann’s pro rata ownership of such
class of Voting Stock) borne by Tengelmann as opposed to other holders of such
class of Voting Stock or (ii) deny any material benefit to Tengelmann
proportionately as a holder of any class of Voting Stock of the Company that is
made available to other holders of that same class of Voting Stock of the
Company generally, but excluding any such action which is expressly required by
applicable Law without any provision to exclude Tengelmann.

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          “Dissolution” means with respect to any Person the dissolution of such
Person, the adoption of a plan of liquidation of such Person or any action by
such Person to commence any suit, case, proceeding or other action (i) under any
existing or future Law of any jurisdiction relating to bankruptcy, insolvency,
reorganization or relief of debtors seeking to have an order for relief entered
with respect to such Person, or seeking to adjudicate such Person bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding up,
liquidation, dissolution, composition or other relief with respect to such
Person or (ii) seeking appointment of a receiver, trustee, custodian or other
similar official for such Person, or making a general assignment for the benefit
of the creditors of such Person. Any verb forms of this term have corresponding
meanings.
          “Encumbrance” means any security interest, pledge, mortgage, lien, or
other material encumbrance, except for any restrictions arising under any
applicable securities Laws.
          “Equity Security” means (i) any common stock or other Voting Stock,
(ii) any securities convertible into or exchangeable for common stock or other
Voting Stock or (iii) any options, rights or warrants (or any similar
securities) to acquire common stock or other Voting Stock.
          “Exchange Act” means the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder.
          “Exempt Transfer” has the meaning set forth in the Amended and
Restated Yucaipa Stockholder Agreement.
          “Existing Registrable Securities” means all shares of Company Common
Stock beneficially owned by Tengelmann immediately prior to the Closing.
          “Fair Market Value” means (i) with respect to cash or cash
equivalents, the amount of such cash or cash equivalents, (ii) with respect to
any security listed on a national securities exchange or otherwise traded on any
national securities exchange or other trading system, the average of the closing
prices of such security as reported on such exchange or trading system for each
of the five Trading Days prior to the date of determination and (iii) with
respect to property other than cash or securities of the type described in
clauses (i) and (ii), the cash price at which a willing seller would sell and a
willing buyer would buy such property in an arm’s-length negotiated transaction
without time constraints as determined in good faith by the Board.
          “GAAP” means U.S. generally accepted accounting principles, as in
effect at the time such term is relevant.
          “Governance Committee” means the Governance Committee of the Board of
Directors or any successor committee thereto.
          “Governmental Entity” means any transnational, Federal, state, local
or foreign government, or any court of competent jurisdiction, administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign, or

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any national securities exchange or national quotation system on which
securities issued by the Company or any of its Subsidiaries are listed or
quoted.
          “Indebtedness” means, with respect to any Person, without duplication:
(i) (A) indebtedness for borrowed money, (B) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, (C) all
obligations of such Person under interest rate or currency hedging transactions
(valued at the termination value thereof), (D) all letters of credit issued for
the account of such Person and (E) obligations of such Person to pay rent or
other amounts under any lease of real property or personal property, which
obligations are required to be classified as capital leases in accordance with
GAAP; (ii) indebtedness for borrowed money of any other Person guaranteed,
directly or indirectly, in any manner by such Person; and (iii) indebtedness of
the type described in clause (i) above secured by any Encumbrance upon property
owned by such Person, even though such Person has not in any manner become
liable for the payment of such indebtedness; provided, however, that
Indebtedness shall not be deemed to include (i) any accounts payable or trade
payables incurred in the ordinary course of business of such Person, or (ii) any
intercompany indebtedness between any Person and any wholly owned Subsidiary of
such Person or between any wholly owned Subsidiaries of such Person.
          “Issuer FWP” has the meaning assigned to “issuer free writing
prospectus” in Rule 433 under the Securities Act.
          “Law” means any law, treaty, statute, ordinance, code, rule,
regulation, judgment, decree, order, writ, award, injunction, authorization or
determination enacted, entered, promulgated, enforced or issued by any
Governmental Entity.
          “Market Price” for any security on each business day means: (A) if
such security is listed or admitted to trading on any securities exchange, the
closing price, regular way, on such day on the principal exchange on which such
security is traded, or if no sale takes place on such day, the average of the
closing bid and asked prices on such day; (B) if such security is not then
listed or admitted to trading on any securities exchange, the last reported sale
price on such day, or if there is no such last reported sale price on such day,
the average of the closing bid and the asked prices on such day, as reported by
a reputable quotation source designated by the Company; or (C) if neither clause
(A) nor (B) is applicable, the average of the reported high bid and low asked
prices on such day, as reported by a reputable quotation service, or a newspaper
of general circulation in the Borough of Manhattan, City of New York,
customarily published on each business day, designated by the Company. If there
are no such prices on a business day, then the Market Price shall not be
determinable on such business day.
          “Maturity Date” means August 1, 2016.
          “MGCL” means the Maryland General Corporation Law, codified in Md.
Code Ann., Corps. & Ass’ns, Titles 1-3, as may be in effect from time to time.
          “NYSE” means the New York Stock Exchange.

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          “Original Yucaipa Stockholders” means Yucaipa Corporate Initiative
Fund I, LP, Yucaipa American Alliance Fund II, LP and Yucaipa American Alliance
(Parallel) Fund II, LP.
          “Other Directors” means any Director who is not a Tengelmann Director.
          “Other Investors” means any holder of Convertible Preferred Stock with
which the Company has or enters into a stockholder agreement (other than
Tengelmann and its Affiliates).
          “Partner” means any partner of such Person.
          “Permitted Transferee” means, with respect to a specified Person, any
controlled Affiliate of such Person or any Partner of such Person and with
respect to Tengelmann, any controlled Affiliate of either Erivan Karl Haub,
Christian Wilhelm Erich Haub, Karl-Erivan Warder Haub, Georg Rudolf Otto Haub or
Tengelmann.
          “Person” means any individual, firm, corporation, partnership, limited
partnership, company, limited liability company, trust, joint venture,
association, Governmental Entity, unincorporated organization, syndicate or
other entity, foreign or domestic.
          “Piggyback Percentage” of Tengelmann or Yucaipa, as applicable, means
the result of dividing (i) the product of the number of shares requested to be
registered by such Person (including, in the case of Yucaipa, shares issuable
under the Series B Warrants) and the number of shares beneficially owned by such
Person as of the date of any notice given pursuant to Section 3.02 or, if not
practicably obtainable as of such date, as of the most recent date practicably
obtainable (excluding, in the case of Yucaipa, shares issuable under the
Series B Warrants to the extent not requested to be registered) (in the case of
Tengelmann, the “Tengelmann Amount” and, in the case of Yucaipa, the “Yucaipa
Amount”), by (ii) the sum of the Tengelmann Amount and the Yucaipa Amount.
          “Public Director” means a Director who is not a Tengelmann Director or
a Yucaipa Director.
          “Public Equity Holders” means holders of Equity Securities of the
Company, other than (i) Tengelmann and its Affiliates and any Person included in
any 13D Group with Tengelmann or any of its Affiliates and (ii) Yucaipa and its
Affiliates and any Person included in any 13D Group with Yucaipa or any of its
Affiliates.
          “Registrable Securities” means (i) all shares of Company Common Stock
beneficially owned by Tengelmann on the date hereof or purchased by Tengelmann
and beneficially owned at any time by Tengelmann, (ii) any Convertible
Underlying Securities beneficially owned by Tengelmann and (iii) any securities
issued or issuable with respect to any such shares of Company Common Stock by
way of a stock dividend or other similar distribution or stock split, or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise; provided that

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such securities shall cease to be Registrable Securities when (A) Tengelmann
Transfers such securities to any Person other than an Affiliate of Tengelmann or
a Registration Rights Transferee or (B) Tengelmann or Registration Rights
Transferee, as applicable, has beneficial ownership of less than 1% of the
outstanding Company Common Stock.
          “Registration Statement” means any registration statement of the
Company that covers Registrable Securities pursuant to the provisions of this
Agreement, including the prospectus, amendments and supplements to such
registration statement, including pre- and post-effective amendments, and all
exhibits and all material incorporated by reference in such registration
statement.
          “Rule 144” means Rule 144 promulgated under the Security Act or any
similar rule or regulation hereafter adopted by the SEC as a replacement thereto
having substantially the same effect as such Rule.
          “SEC” means the U.S. Securities and Exchange Commission.
          “Securities Act” means the Securities Act of 1933, and the rules and
regulations promulgated thereunder.
          “Series B Warrants” means the Series B warrants issued as part of the
Merger by the Company to the Original Yucaipa Stockholders, which entitled the
Original Yucaipa Stockholders to purchase 6,965,858 shares of common stock of
the Company at an exercise price of $32.40 per share which will expire on
June 9, 2015, as such share amount and exercise price may be adjusted from time
to time in accordance with the terms of such warrants in effect on the date
hereof.
          “Stockholder Approvals” means the Conversion Stockholder Approval and
the Charter Amendment Stockholder Approval.
          “Subsidiary” of any Person means, on any date, any Person (i) the
accounts of which would be consolidated with and into those of the applicable
Person in such Person’s consolidated financial statements if such financial
statements were prepared in accordance with GAAP or (ii) of which (a) securities
or other ownership interests representing more than 50% of the equity or (b)
more than 50% of the ordinary voting power or, in the case of a partnership,
more than 50% of the general partnership interests, as of such date, are owned,
controlled or held by the applicable Person or one or more Subsidiaries of such
Person.
          “Tengelmann Director” means a Director either (i) elected by
Tengelmann in accordance with Section 15(b) of the Convertible Preferred
Articles Supplementary or (ii) designated for nomination by Tengelmann and
actually elected or appointed pursuant to the provisions of Section 2.01.
          “Tengelmann Percentage Interest” means, as of any date of
determination, the percentage of Voting Power in the Company (determined on the
basis of the number of votes entitled to be cast by all outstanding shares of
Voting Stock of the Company, as set forth in the most recent SEC filing of the
Company prior to such date that contained

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such information) that is beneficially owned by Tengelmann and its Affiliates as
of such date (including any Equity Securities owned prior to the date of this
Agreement); provided, however, that for purposes of this calculation (x) all
determinations shall be made as if the Conversion Stockholder Approval has been
obtained and (y) notwithstanding the definition of “beneficial ownership” or
Voting Power, all determinations shall be made as if Tengelmann beneficially
owns any and all Voting Stock or Equity Securities subject to any swap, hedge,
forward contract, credit default swap or any other agreement that hedges the
economic consequences of ownership of any Voting Stock or Equity Securities.
          “Trading Day” means (i) for so long as Company Common Stock is listed
or admitted for trading on the NYSE or another national securities exchange, a
day on which the NYSE or such other national securities exchange is open for
business and trading in Company Common Stock is not suspended or restricted or
(ii) if Company Common Stock ceases to be so listed, any day other than a
Saturday or Sunday or a day on which banking institutions in the State of New
York are authorized or obligated by Law or executive order to close.
          “Transfer” means, with respect to any security, any sale, assignment,
transfer or distribution, whether voluntarily or by operation of Law, whether in
a single transaction or a series of related transactions and whether to a single
Person or a 13D Group. The terms “Transferred”, “Transferring”, “Transferor”,
“Transferee” and “Transferable” have meanings correlative to the foregoing.
          “Underwriter” means, with respect to any Underwritten Offering, a
securities dealer who purchases any Registrable Securities as a principal in
connection with a distribution of such Registrable Securities and not as part of
such dealer’s market-making activities.
          “Underwritten Offering” means a public offering of securities
registered under the Securities Act in which an Underwriter, placement agent or
other intermediary participates in the distribution of such securities.
          “Voting Power” means the ability to vote or to control, directly or
indirectly, by proxy or otherwise, the vote of any Voting Stock at the time such
determination is made; provided that a Person will not be deemed to have Voting
Power as a result of an agreement, arrangement or understanding to vote such
Voting Stock if such agreement, arrangement or understanding (i) arises solely
from a revocable proxy or consent given in response to a public proxy or consent
solicitation made pursuant to the applicable rules and regulations under the
Exchange Act and (ii) is not also then reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report). For purposes of
determining the percentage of Voting Power of any class or series (or classes or
series) beneficially owned by Tengelmann, any Voting Stock not outstanding which
is issuable pursuant to conversion, exchange or other rights, warrants, options
or similar securities will not be deemed to be outstanding for the purpose of
computing the Voting Power of any Person.

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          “Voting Stock” of any Person means securities having the right to vote
generally in any election of directors or comparable governing Persons of such
Person.
          “Yucaipa” means Yucaipa Corporate Initiatives Fund I, LP, Yucaipa
American Alliance Fund I, LP, Yucaipa American Alliance (Parallel) Fund I, LP,
Yucaipa American Alliance Fund II, LP, and Yucaipa American Alliance (Parallel)
Fund II, LP.
          “Yucaipa Director” means a Director either (i) elected by Tengelmann
in accordance with Section 15(b) of the Convertible Preferred Articles
Supplementary or (ii) designated for nomination by Yucaipa and actually elected
or appointed pursuant to Section 2.01 of the Amended and Restated Yucaipa
Stockholder Agreement.
          “Yucaipa Representative” means Yucaipa American Alliance Fund II, LLC.
          (b) As used in this Agreement, the terms set forth below will have the
meanings assigned in the corresponding Section listed below:

      Term   Section
Acceptance Date
  7.01(b) 
Accepted Offered Stock
  7.01(b) 
Agreement
  Preamble
Company
  Preamble
Deferral Period
  3.06(a)
Demand Notice
  3.01(c)
Demand Offering
  3.01(c)
EDGAR
  3.04(a)(i)
effective date
  3.04(a)(xii)
Election Notice
  7.01(d)
Effectiveness Date
  3.01(a)
Effectiveness Period
  3.01(a)
Existing Agreement
  Recitals
First Offer Acceptance
  7.01(b)
Filing Date
  3.01(a)
First Offer Exercise Notice
  7.01(a)
First Offer Transferor
  7.01(a)
fraudulent misrepresentation
  3.08(e)
IDEA
  3.04(a)(i)
indemnified party
  3.08(c)
Indemnified Persons
  3.08(a)
indemnifying party
  3.08(c)
Initial Shares
  Recitals
Inspectors
  3.04(a)(viii)
Investment Agreement
  Recitals
Liquidated Damages
  3.01(b)
Liquidity Impairment
  5.01(f)

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11

      Term   Section
Lock-up
  3.09
Merger
  Recitals
New Equity Securities
  4.01(a)
New Investors
  Recitals
Notice of Issuance
  4.01(b)
Offer Price
  7.01(a)
Offered Stock
  7.01(a)
Pathmark
  Recitals
Piggyback Registration
  3.02
Proposed Stock Settlement Amount
  5.01(b)
Proxy Statement
  6.01(a)
Put Notice
  5.01(c)
Put Price
  5.01(c)
Put Right
  5.01(a)
Records
  3.04(a)(viii)
Registration Default
  3.01(b)
Registration Default Date
  3.01(b)
Registration Default Period
  3.01(b)
Registration Rights Transferee
  3.14
Representative
  8.19
Required Financial Statements
  3.06(b)
Share Number
  5.01(b)
Subject Securities
  6.02(a)
Tengelmann
  Preamble
Tengelmann Mirror Vote
  2.01(d)
Tengelmann Nominee
  2.01(c)(i)
Tengelmann Partners
  Recitals
Tengelmann Shares
  Recitals
Transaction
  Recitals
Warrant Exercise Notice
  5.01(b)

ARTICLE II
Corporate Governance
          SECTION 2.01. Composition of the Board of Directors. The composition
of the Board of Directors will be as follows:
          (a) Immediately after the Closing Date, the By-Laws shall be amended
to provide that the authorized number of directors comprising the Board of
Directors shall be eleven Directors, and, subject to any additional requirements
provided for in the Charter or the By-Laws, the number of such Directors may not
be (i) increased without the consent of Tengelmann (except in accordance with
Section 15(d) of the Convertible Preferred Articles Supplementary) and that
number of directors that is at least 66.67% of the total number of directorships
(including vacancies) or (ii) decreased without the

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12

approval of that number of directors that is at least 66.67% of the total number
of directorships (including vacancies); provided, however, that any decrease in
the number of directorships that has the effect of reducing the number of
Directors that Tengelmann is entitled to nominate hereunder shall require the
consent of Tengelmann.
          (b) Immediately upon the Closing, the Board of Directors will be
comprised of (i) four Tengelmann Directors that, immediately prior to the
Closing, were Tengelmann Directors serving on the Board of Directors, (ii) five
Public Directors that, immediately prior to the Closing, were Public Directors
serving on the Board of Directors and (iii) two Yucaipa Directors selected in
accordance with Section 2.01 of the Amended and Restated Yucaipa Stockholder
Agreement and Section 15 of the Convertible Preferred Articles Supplementary.
          (c) From and after the Closing Date (without duplication of
Tengelmann’s rights to elect a Tengelmann Director pursuant to Section 15(b) of
the Convertible Preferred Articles Supplementary), so long as the Tengelmann
Percentage Interest has been continuously since the Closing Date 10% or more,
then the manner of selecting members of the Board of Directors will be as
follows:
     (i) Tengelmann will have the right to designate for nomination (it being
understood that such nomination will include any nomination of any incumbent
Tengelmann Director for reelection to the Board of Directors) to the Board of
Directors that number of individuals equal to (i) the product of the total
number of directorships (including vacancies) at such time and the Tengelmann
Percentage Interest at such time (rounded to the nearest whole number), minus
(ii) the number of Tengelmann Directors who are not then subject to election or
who will otherwise be continuing to serve on the Board following such election,
and each such designee (each, a “Tengelmann Nominee”) will be nominated and
recommended for election to the Board of Directors by the Governance Committee;
provided, however, that so long as the Stockholder Percentage Interest (as
defined in the Amended and Restated Yucaipa Stockholder Agreement) is and has
continuously been since the Closing at least 20%, if the calculation set forth
above would result in a number of Directors equal to five, then Tengelmann shall
have the right to designate for nomination to the Board of Directors the number
of individuals equal to (x) four, minus (y) the number of Tengelmann Directors
who are not then subject to election or who will otherwise be continuing to
serve on the Board following such election, and each such Tengelmann Nominee
will be nominated and recommended for election to the Board of Directors by the
Governance Committee. In the event that the Tengelmann Percentage Interest is at
any time less than 10%, Tengelmann shall not have any right to designate any
Directors, and, at the request of a majority of the Other Directors then in
office, shall cause any Tengelmann Directors then in office to resign
immediately upon such event.
     (ii) Subject to Section 2.01(c)(iii), the Company and the Board of
Directors, including the Governance Committee, shall cause each Tengelmann
Nominee to be included in management’s slate of nominees for such

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13

stockholders’ meeting at which Directors are elected and shall recommend such
Person for election to the Board of Directors.
     (iii) Notwithstanding anything to the contrary in this Section 2.01,
neither the Governance Committee, the Company nor the Board of Directors shall
be under any obligation to nominate and recommend a Tengelmann Nominee to the
extent it determines, in good faith and after consideration of specific written
advice of outside counsel (a copy of which will be provided to Tengelmann), that
such recommendation would reasonably be expected to violate their duties under
MGCL § 2-405.1(a) because (A) such nominee is unfit to serve as a director of a
company listed or quoted on the primary stock exchange or quotation system on
which the Company’s Common Stock is listed or quoted or (B) service by such
nominee as a Director would reasonably be expected to violate applicable Law,
the NYSE Listed Company Manual or, if the Company is not listed on the NYSE, any
comparable rule or regulation of the primary stock exchange or quotation system
on which the Company Common Stock is listed or quoted, in which case the Company
shall provide Tengelmann with a reasonable opportunity (but in any event not
less than 30 days) to designate an alternate Tengelmann Nominee.
     (iv) Without limiting the generality of Section 2.01(c), and except as
otherwise specified in Section 2.01(c)(ii) in the event that the number of
Tengelmann Directors on the Board of Directors differs from the number that
Tengelmann has the right (and wishes) to designate pursuant to this
Section 2.01, (i) if the number of Tengelmann Directors exceeds such number,
Tengelmann shall use reasonable best efforts to take all necessary action to
remove or cause to resign that number of Tengelmann Directors as is required to
make the remaining number of such Tengelmann Directors conform to this
Section 2.01 or (ii) if the number of Tengelmann Directors is less than such
number, the number of Directors shall automatically be increased by a number
sufficient to permit Tengelmann to designate the full number of Tengelmann
Directors that it is entitled (and wishes) to designate pursuant to this
Section 2.01 or, alternatively, at the request of Tengelmann, the Secretary of
the Company shall call a special meeting of the stockholders of the Company for
the purpose of removing Other Directors (other than a Yucaipa Director, if the
number of Yucaipa Directors on the Board of Directors at such time equals the
number of Directors Yucaipa is entitled to designate pursuant to Section 2.01(c)
of the Amended and Restated Yucaipa Stockholder Agreement) to create such
vacancies as are necessary to permit Tengelmann to designate the full number of
Tengelmann Directors that it is entitled (and wishes) to designate pursuant to
this Section 2.01. Upon the creation of any vacancy pursuant to clause (ii) of
the preceding sentence, Tengelmann shall designate the person to fill such
vacancy in accordance with this Section 2.01 and, subject to Section
2.01(c)(iii), the Board of Directors shall appoint each person so designated. In
the event that the number of Directors is increased pursuant to this
Section 2.01(c)(iv), the Board of Directors shall cause the number of Directors
to be reduced at the first available opportunity to comply with the number of
Directors otherwise specified by Section 2.01(a).

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14

          (d) In any election of Directors at a meeting of the stockholders of
the Company, if (x) Tengelmann has elected the applicable number of Tengelmann
Directors in accordance with Section 15(b) of the Convertible Preferred Articles
Supplementary, or (y) the Company has nominated and recommended the Tengelmann
Nominees (to the extent required by Section 2.01(c)) that Tengelmann wished to
nominate (subject to Section 2.01(c)(iii) above), then Tengelmann, (i) agrees
(A) to cause all Voting Stock held by Tengelmann to be present at such meeting
either in person or by proxy and (B) to vote such Voting Stock beneficially
owned by it for all nominees (other than the Tengelmann Nominees) included in
management’s slate, in a manner identical (on a proportionate basis) to the
manner in which the Public Equity Holders vote their shares of Voting Stock in
such elections (the “Tengelmann Mirror Vote”) and (ii) shall be entitled to vote
all Voting Stock held by Tengelmann for any Tengelmann Nominee in its sole
discretion. For purposes of allocating the Tengelmann Mirror Vote, abstentions
and broker non-votes shall be disregarded. As promptly as practicable following
the nomination and recommendation of the Tengelmann Nominees in accordance with
Section 2.01(c) above, Tengelmann shall, and shall cause its Affiliates to,
provide the Company a proxy (which will be subject to Section 2.01(k)) for
purposes of effecting the first sentence of this Section 2.01(d).
Notwithstanding the foregoing, this Section 2.01(d) shall not apply with respect
to any election of Directors in connection with which any Person (other than
(x) Tengelmann or any Affiliate of Tengelmann, (y) any member of any 13D Group
that includes Tengelmann or any Affiliate of Tengelmann or (z) any other Person
with whom Tengelmann is acting in concert) (i) has initiated (and is continuing)
a “proxy contest” or other solicitation of proxies, consents or votes in favor
of one or more nominees for election to the Board of Directors that are
different from the nominees to the Board of Directors in management’s slate,
(ii) has initiated (and is continuing) a “proxy contest” or other solicitation
of proxies, consents or votes against one or more of the nominees to the Board
of Directors in management’s slate or (iii) has included one or more stockholder
nominated director candidates in the Company’s proxy materials using the direct
proxy access procedures under the Exchange Act or otherwise.
          (e) In any matter submitted to a vote of stockholders not subject to
Section 2.01(d) or 6.02, Tengelmann may vote any or all of its Voting Stock in
its sole discretion subject to applicable Law.
          (f) For so long as (x) Tengelmann has elected the applicable number of
Tengelmann Directors in accordance with Section 15(b) of the Convertible
Preferred Articles Supplementary, or (y) the Board of Directors or Governance
Committee nominates and recommends (subject to Section 2.01(c)(iii) above), the
number of Tengelmann Nominees contemplated by Section 2.01(c) that Tengelmann
wishes to nominate and so long as the Company has complied with
Section 2.01(c)(iv), Tengelmann agrees not to take, without the consent of a
majority of the Other Directors, any action to remove or oppose any Other
Director or to seek to change the size of the Board of Directors or otherwise
seek to expand Tengelmann’s representation on the Board of Directors in a manner
inconsistent with Section 2.01(d) (except in accordance with Section 15(d) of
the Convertible Preferred Articles Supplementary).

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15

          (g) No Tengelmann Nominee or Tengelmann director shall be qualified to
be a Director unless at all times during his or her term, he or she remains
acceptable to Tengelmann.
          (h) Upon the death, resignation, retirement, incapacity,
disqualification or removal from office for any other reason of any Tengelmann
Director, Tengelmann will have the right to designate the replacement for such
Tengelmann Director and the Board of Directors will, subject to
Section 2.01(c)(iii), elect each such Person so designated in accordance with
this Section 2.01(h). Upon the death, resignation, incapacity, disqualification
or removal of any Public Director, a majority of the Public Directors will have
the exclusive right to designate the replacement for such Public Director and
elect same.
          (i) For the avoidance of doubt, Tengelmann Directors shall be entitled
to compensation and expense reimbursement in accordance with the Company’s
policies and practices applicable to Directors generally. The Company will also
provide and hereby agrees to enter into indemnification agreements with the
Tengelmann Directors on terms not less favorable to the Tengelmann Directors
than any indemnification agreement entered into with any Other Director
          (j) The rights and obligations of Tengelmann shall apply to any and
all Affiliate(s) of Tengelmann which currently beneficially own Voting Stock and
any and all Affiliate(s) of Tengelmann to whom any shares of Voting Stock are
transferred in any manner, and any such transfer shall be conditioned on such
transferee entering into a written agreement in form and substance acceptable to
the Company extending the rights and obligations of Tengelmann under this
Agreement to such transferee(s), in which cases all references to Tengelmann
herein shall be deemed to refer to Tengelmann and such Affiliates except as the
context otherwise requires.
          (k) Notwithstanding anything to the contrary in this Section 2.01,
Tengelmann shall be under no obligation to vote in favor of an Other Director
nominee who has been nominated by a Person other than the Governance Committee
or the Board of Directors to the extent Tengelmann determines, in good faith and
after consideration of specific written advice of outside counsel (a copy of
which will be provided to the Company and the Board of Directors), that the
hypothetical nomination or recommendation of such nominee by the Board of
Directors would have been reasonably expected to violate the Directors’ duties
under MGCL § 2-405.1(a) because (i) such nominee is unfit to serve as a director
of a company listed or quoted on the primary stock exchange or quotation system
on which Company’s Common Stock is listed or quoted or (ii) service by such
nominee as a Director would reasonably be expected to violate applicable Law,
the NYSE Listed Company Manual or, if the Company is not listed on the NYSE, any
comparable rule or regulation of the primary stock exchange or quotation system
on which the Company Common Stock is listed or quoted; provided that Tengelmann
shall make such determination as soon as practicable and, if applicable, provide
written notice thereof to the Company and the Board of Directors as soon as
practicable thereafter.

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16

          (l) If the Stockholder Percentage Interest (as defined in the Amended
and Restated Yucaipa Stockholder Agreement) falls below 10%, the By-Laws shall
promptly be amended to provide that the authorized number of directors
comprising the Board of Directors shall be nine Directors and Tengelmann shall
continue to have the right to designate for nomination a number of Tengelmann
Nominees as set forth in Section 15 of the Convertible Preferred Articles
Supplementary or 2.01(c)(i) of this Agreement.
          (m) The Board of Directors will use reasonable best efforts to ensure,
to the extent lawful, at all times that the Charter, By-Laws and corporate
governance policies and guidelines of the Company are not at any time
inconsistent in any material respect with the provisions of this Article II and
in the event of any such inconsistency, shall negotiate in good faith to revise
this Article II to achieve the parties’ intention set forth herein to the
greatest extent possible.
          SECTION 2.02. Committees. Tengelmann Directors shall have the right
(at Tengelmann’s election) to serve on each committee of the Board of Directors
and the number of Tengelmann Directors on a committee of the Board of Directors
shall be not less than (x) the number of Tengelmann Directors at such time
divided by (y) the total number of seats on the Board of Directors at such time
multiplied by (z) the number of Directors serving on such committee (rounded to
the nearest whole number). Tengelmann shall have the right to select the
Tengelmann Directors that will serve on each committee of the Board of
Directors; provided that, so long as there are any Tengelmann Directors serving
on the Board of Directors, at least one Tengelmann Director shall have the right
to serve on each committee of the Board of Directors. Notwithstanding the
foregoing, a Tengelmann Director shall not serve on any committee if such
service would violate any Law , the NYSE Listed Company Manual or, if the
Company is not listed on the NYSE, any comparable rule or regulation of the
primary stock exchange or quotation system on which the Company Common Stock is
listed or quoted. Upon any request by Tengelmann, as soon as reasonably
practicable, one Tengelmann Director shall be appointed to the board of
directors (or similar governing body) of each Subsidiary of the Company
requested by Tengelmann and each committee of each such Subsidiary.
          SECTION 2.03. Solicitation of Shares. The Company will use its
reasonable best efforts to solicit proxies in favor of the Tengelmann Nominees
selected in accordance with Section 2.01 from its stockholders eligible to vote
for the election of Directors.
          SECTION 2.04. Approval Required for Certain Actions. (a) For so long
as the Tengelmann Percentage Interest is at least 25%, the approval of
Tengelmann will be required for the Company to do (or authorize or permit any of
its Subsidiaries to do) any of the following actions (in addition to any other
Board of Directors or stockholder approval required by any Law, the Charter or
By-Laws); provided, however, that the approval of Tengelmann will not be
required in connection with the actions specified in clauses (v) and (vii) below
until the Stockholder Percentage Interest (as defined in the Amended and
Restated Yucaipa Stockholder Agreement) falls below 17.8%:

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17

     (i) any Business Combination by the Company, except for any Business
Combination involving consideration with a Fair Market Value not exceeding
$50,000,000 to be paid by or to the Company or its stockholders, as the case may
be;
     (ii) the issuance of any Equity Security of the Company, the creation of
any right to acquire such Equity Security or any amendment to the terms of any
such Equity Security, to the extent such issuance, creation or amendment
requires stockholder approval; provided, however, that this clause (ii) shall
not include any issuance (A) of any Series B Warrants, (B) pursuant to any
employee compensation plan or other benefit plan, including stock option,
restricted stock or other equity based compensation plans, (C) of any Equity
Security issued or issuable under rights existing as of Closing Date or (D) of
any Equity Security issued or issuable upon conversion of any Convertible
Preferred Stock or pursuant to the Convertible Preferred Stock PIK Dividend
Provision or pursuant to the conversion of any of the Convertible Notes
outstanding on the date hereof;
     (iii) any amendment to the Charter or the By-Laws (other than amendments
contemplated by (A) this Agreement, (B) the Investment Agreement or (C) the
Authorized Capital Stock Charter Amendment);
     (iv) any amendment to the charter of any committee of the Board of
Directors or to any corporate governance guideline relating to any matter
addressed by this Agreement that would reasonably be expected to circumvent in
any manner any of Tengelmann’s rights hereunder or the exercise thereof;
     (v) the adoption, implementation or amendment of, or redemption under, any
takeover defense measures (including a rights plan);
     (vi) any Discriminatory Transaction;
     (vii) any transaction between (A) the Company or any of its Subsidiaries,
on the one hand, and (B) any Affiliate of the Company (other than (1) any
Director, officer or Subsidiary of the Company and (2) Tengelmann or any of its
Affiliates), on the other hand;
     (viii) a change of the Company’s policies concerning the need for Board
approval intended or reasonably likely to circumvent any of Tengelmann’s rights
hereunder or the exercise thereof;
     (ix) the issuance and delivery to Yucaipa of any Company Common Stock upon
exercise by Yucaipa of the Series B Warrants, except to the extent that a cash
settlement of any Series B Warrants would reasonably be expected to cause a
Liquidity Impairment (as defined in Section 5.01(f)), in which case the Company
shall be permitted to issue and deliver Company Common Stock to Yucaipa upon
exercise of such Series B Warrants to the extent necessary to avoid a Liquidity
Impairment;

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18

     (x) prior to the Maturity Date, any amendment or refinancing of the ABL
Credit Agreement, except for changes that could not reasonably be expected to
adversely affect Tengelmann in its capacity as a holder of the Convertible
Preferred Stock or adversely affect any rights, privileges or preferences of the
Convertible Preferred Stock; or
     (xi) any action by the Company or any of its Subsidiaries (including
borrowings) that could cause the ABL Credit Facility to limit, restrict,
prohibit or prevent the Company from paying dividends in full in cash on the
Convertible Preferred Stock in the amounts contemplated by the Convertible
Preferred Articles Supplementary, except to the extent approved in advance by a
majority of Independent Directors of the Board; or
     (xii) any action by the Company or any of its Subsidiaries, including
entering into any contract or other agreement, that could limit, restrict,
prohibit or prevent the Company’s ability to pay dividends in full in cash on
the Convertible Preferred Stock in the amounts contemplated by the Convertible
Preferred Articles Supplementary.
          (b) For so long as the Tengelmann Percentage Interest is at least 25%,
the approval of a majority of the Tengelmann Directors will be required for the
Board of Directors to approve or authorize, and for the Company to do (or
authorize or permit any of its Subsidiaries to do), any of the following (in
addition to any other Board of Directors or stockholder approval required by any
Law, the Charter or By-Laws); provided, however, that the approval of a majority
of the Tengelmann Directors will not be required in connection with the actions
specified in clauses (v), (vi), (vii)(B), (viii) and (ix) until the Stockholder
Percentage Interest (as defined in the Amended and Restated Yucaipa Stockholders
Agreement) falls below 17.8%:
     (i) any acquisition or disposition (in one transaction or a series of
related transactions) of any assets (including any Equity Securities of any
Subsidiary of the Company), business operations or securities (other than Equity
Securities of the Company), with a Fair Market Value of more than $50,000,000,
but excluding any disposition to, or acquisition from or of, a wholly owned
Subsidiary of the Company or any disposition that (A) occurs in connection with
creating or granting any Encumbrances to a Third Party that is not a Subsidiary
or Affiliate of the Company in connection with a bona fide financing or
(B) arises as a matter of Law or occurs pursuant to a court order;
     (ii) the issuance of any Equity Security or any other stock or equity
interests (voting, non-voting, preferred or common) of the Company or any of its
Subsidiaries (other than to the Company or any wholly owned Subsidiary of the
Company), the creation of any obligation to acquire such Equity Security or any
amendment to the terms of any such Equity Security; provided, however, that this
clause (ii) shall not include any issuance (A) of any Series B Warrants,
(B) pursuant to any employee compensation plan or other benefit plan, including
stock option, restricted stock or other equity-based compensation plans, (C) of

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19

any Equity Security issued or issuable under rights existing as of the Closing
Date or (D) of any Equity Security issued or issuable under conversion of any
Convertible Preferred Stock or pursuant to the Convertible Preferred Stock PIK
Dividend Provision or pursuant to the conversion of any of the Convertible Notes
outstanding on the date hereof;
     (iii) any repurchase of Equity Securities of the Company or any of its
Subsidiaries (other than wholly owned Subsidiaries) pursuant to a self-tender
offer, stock repurchase program, open market transaction or otherwise other than
(A) a repurchase of Equity Securities of the Company from employees or former
employees subject to the terms and conditions of employee stock plans or a
purchase of Equity Securities of the Company from Tengelmann pursuant to this
Agreement, (B) the settlement of all or any portion of any exercised Series B
Warrants in cash pursuant to the terms of the Series B Warrants or (C) a
repurchase by the Company of the Convertible Notes;
     (iv) the declaration of any dividends or other distributions (whether in
cash or property) on shares of Company Common Stock.
     (v) the adoption or amendment of any long term (i.e., three years or more)
strategic plans, priorities or direction for the Company and its Subsidiaries
and their businesses, except for amendments not exceeding $10,000,000
individually or in the aggregate in any 12-month period;
     (vi) the adoption or amendment of the operating plan or budget, capital
expenditure budget, financing plan or any financial goal, except for amendments
not exceeding $10,000,000 individually or in the aggregate in any 12-month
period;
     (vii) (A) the appointment or removal of the chairman of the Board of
Directors or (B) the appointment (but not removal) of the chief executive
officer of the Company;
     (viii) the Dissolution of the Company;
     (ix) any capital expenditure of more than $10,000,000 (excluding any
capital expenditure previously approved, or capital expenditure pursuant to a
capital expenditure program or budget or plan that was previously approved, by
the Board of Directors as part of the approval of the Company’s annual operating
plan, capital expenditures budget or otherwise); or
     (x) any incurrence, assumption, or issuance of Indebtedness in one or a
series of related transactions in an aggregate principal amount of more than
$50,000,000 (other than any borrowing under the ABL Credit Agreement that do not
limit, restrict, prohibit or prevent the Company from paying dividends in full
in cash on the Convertible Preferred Stock in the amounts contemplated by the
Convertible Preferred Articles Supplementary, except to the extent approved in
advance by a majority of the Independent Directors of the Board); provided,

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20

however, that the foregoing shall not apply to any refinancing of Indebtedness
existing on the Closing Date (except any refinancing of the ABL Credit Agreement
shall be subject to Section 2.04(a)(x)); provided further, however, that such
refinancing does not (1) increase the principal amount of such Indebtedness
(other than as may be necessary for the payment of fees, discounts, expenses and
premiums), (2) shorten the maturity thereof, (3) limit, restrict, prohibit or
prevent the Company’s ability to pay dividends in full in cash on the
Convertible Preferred Stock in the amounts contemplated by the Convertible
Preferred Articles Supplementary, and (4) is otherwise on then market terms (as
determined by the Board of Directors), and which refinancing may apply to a
refinancing of commitments (whether drawn or undrawn) under any revolving credit
agreement.
          (c) Any transaction between the Company or any of its Subsidiaries, on
the one hand, and Tengelmann, or any Subsidiary or Affiliate of Tengelmann, on
the other hand (other than the compensation of Directors and officers in the
ordinary course of business), will require the approval of a majority of the
Other Directors (in addition to any other Board of Directors’ or stockholders’
approval required by any Law, the Charter or By-Laws).
          (d) The Company will cause its generally applicable policies regarding
matters that required approval of the Board of Directors to reflect the
requirements of this Section 2.04.
          (e) Notwithstanding the foregoing, Tengelmann shall not have any
approval rights with respect to any refinancing of (i) the 2011 Convertible
Notes, if at the time of such contemplated refinancing, Tengelmann, together
with its Affiliates own more than 25% of the aggregate principal amount of such
notes or (ii) the 2012 Convertible Notes, if at the time of such contemplated
refinancing, Tengelmann, together with its Affiliates own more than 25% of the
aggregate principal amount of such notes.
          SECTION 2.05. Charter and By-Laws. (a) Immediately after the Closing,
any Director will have the right to call a meeting of the Board of Directors.
          (b) The Company represents and warrants to Tengelmann that it has
adopted resolutions providing that automatically upon the Closing and without
any further act of any Person, the By-Laws will be amended substantially on the
terms set forth in Exhibit A. The Company will not amend, rescind or cause to be
superseded such resolution prior to the effectiveness of such amendments.
          (c) The Board of Directors will use reasonable best efforts to ensure,
to the extent lawful, at all times that the Charter, By-Laws and corporate
governance policies and guidelines of the Company are not at any time
inconsistent in any material respect with the provisions of this Agreement.
          SECTION 2.06. Change in Law. Without limiting the obligations of the
Board of Directors under Section 2.05(c), in the event any Charter provision,
By-Law provision or any Law exists or hereafter comes into force or effect
(including by

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amendment) which conflicts with the terms and conditions of this Agreement, the
parties will negotiate in good faith to revise this Agreement to achieve the
parties’ intention set forth herein to the greatest extent possible.
ARTICLE III
Registration Rights
          SECTION 3.01. Registration. (a) Prior to the six-month anniversary of
the date hereof (the “Filing Date”), the Company shall prepare and file with the
SEC a Registration Statement providing for the direct primary sales for cash by
Tengelmann of the Registrable Securities not already covered by an existing and
effective Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415. Thereafter, the Company shall use its commercially
reasonable efforts to cause the Registration Statement to be declared effective
or otherwise to become effective under the Securities Act within 365 days after
the date hereof (the “Effectiveness Date”), and subject to the other provisions
of this Article III, shall use its commercially reasonable efforts to keep the
Registration Statement continuously effective under the Securities Act until the
shares of Company Common Stock subject to this Article III cease to be
Registrable Securities (the “Effectiveness Period”). The Company agrees to
supplement or make amendments to the Registration Statement as may be necessary
to keep such Registration Statement effective during the Effectiveness Period,
including (A) to respond to the comments of the SEC, if any, (B) as may be
required by the registration form utilized by the Company for such Registration
Statement or by the instructions applicable to such registration form, (C) as
may be required by the Securities Act or (D) as may be reasonably requested in
writing by Tengelmann or any Underwriter regarding information about Tengelmann
or any Underwriter to be included in a prospectus.
          (b) If (i) the Registration Statement is not filed on or prior to the
Filing Date, (ii) a Registration Statement is not declared effective by the SEC
or does not otherwise become effective on or prior to its required Effectiveness
Date, or (iii) after its Effectiveness Date, such Registration Statement ceases
for any reason to be effective and available to Tengelmann as to all Registrable
Securities to which it is required to cover at any time prior to the expiration
of the Effectiveness Period (in each case, except as specifically permitted
herein) (any such failure or breach being referred to as a “Registration
Default,” and for purposes of clauses (i) or (ii) the date on which such
Registration Default occurs, and for purposes of clause (iii) the date on which
the Registration Statement ceases to be effective and available, being referred
to as the “Registration Default Date” and each period from and including the
Registration Default Date during which a Registration Default has occurred and
is continuing, a “Registration Default Period”), then, during the Registration
Default Period, in addition to any other rights available to Tengelmann, the
Company shall pay to Tengelmann (“Liquidated Damages”) in an amount in cash
equal to the product of (x) 1.00% per annum and (y) the difference between
(1) the sum of (A) $60,000,000 and (B) the Liquidation Preference (as defined in
the Convertible Preferred Articles Supplementary) attributable to any
Convertible Preferred Stock issued to Tengelmann pursuant to the Convertible
Preferred Articles Supplementary after the date hereof and (2) the Liquidation
Preference

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attributable to Registrable Securities (determined based on the amount
attributable to them prior to their becoming Registrable Securities) Transferred
prior to the beginning of the applicable Registration Default Period to a Third
Party that does not receive registration rights pursuant to Section 3.14.
Liquidated Damages shall accrue from the applicable Registration Default Date
until all Registration Defaults have been cured, and shall be payable quarterly
in arrears on each March 15, June 15, September 15 and December 15 following the
applicable Registration Default Date to the record holder of the applicable
security on the date that is 15 days prior to such payment date, until paid in
full. Following the cure of any Registration Default, Liquidated Damages will
cease to accrue with respect to such Registration Default. Liquidated Damages
payable in respect of any Registration Default Period shall be computed on the
basis of a 360-day year consisting of twelve 30-day months. Liquidated Damages
shall be payable only with respect to a single Registration Default at any given
time, notwithstanding the fact that multiple Registration Defaults may have
occurred and be continuing.
          (c) At any time and from time to time on or after the Effective Date,
upon the written request (a “Demand Notice”) of Tengelmann requesting that the
Company effect an Underwritten Offering of Registrable Securities of Tengelmann
(a “Demand Offering”), the Company shall use its commercially reasonable efforts
to effect, as expeditiously as possible, an Underwritten Offering of the
Registrable Securities which the Company has been so requested to register;
provided, however, that (A) (x) with respect to any Registrable Securities
(other than Existing Registrable Securities), the Company shall be obligated to
effect any such Underwritten Offering pursuant to this Section 3.01: (1) no more
than two times in any 12-month period and (2) no more than five times in the
aggregate and (y) with respect to the Existing Registrable Securities, the
Company shall be obligated to effect any such Underwritten Offering pursuant to
this Section 3.01: (1) no more than two times in any 12 month period and
(2) since December 3, 2007, no more than three times in the aggregate and (B) in
each case, the Registrable Securities for which a Demand Offering has been
requested will have a value (based on the average closing price per share of
Company Common Stock for the ten Trading Days preceding the delivery of such
Demand Notice) of not less than $20,000,000 or such lesser remaining amount of
Registrable Securities held by Tengelmann. Each such Demand Notice will specify
the number of Registrable Securities proposed to be offered for sale and will
also specify the intended method of distribution thereof. Notwithstanding
anything to the contrary herein, the Company shall not be required to make any
Registration Statement available for, or permit the use of any such Registration
Statement for the registration of all or any portion of a hedging transaction.
          (d) In the event an offering of Registrable Securities under this
Section 3.01 involves one or more Underwriters, Tengelmann will select the lead
Underwriter and any additional Underwriters in connection with the offering from
the list of investment banks set forth on Schedule I. The list of investment
banks on Schedule I may be amended from time to time by Tengelmann with the
consent of the Company (such consent not to be unreasonably withheld or
delayed).
          (e) Notwithstanding the foregoing provisions of this Section 3.01,
Tengelmann may not request a Demand Offering during a period commencing upon the

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filing (or earlier, but not more than 30 days prior to such filing upon notice
by the Company to Tengelmann that it so intends to file) of a Registration
Statement for Company Common Stock by the Company (for its own account or for
any other security holder) and ending (i) 90 days after such Registration
Statement is declared effective by the SEC (or becomes automatically effective),
(ii) upon the withdrawal of such Registration Statement or (iii) 30 days after
such notice if no such Registration Statement has been filed within such 30-day
period, whichever occurs first; provided that the foregoing limitation will not
apply if Tengelmann was not given reasonable opportunity, in violation of
Section 3.02, to include its Registrable Securities in the Registration
Statement described in this Section 3.01(e).
          (f) Tengelmann will be permitted to rescind a Demand Offering or
request the removal of any Registrable Securities held by it from any Demand
Offering at any time (so long as, in the case of a Demand Offering, after such
removal it would still constitute a Demand Offering, including with respect to
the required Fair Market Value thereof); provided that, if Tengelmann rescinds a
Demand Offering, such Demand Offering will nonetheless count as a Demand
Offering for purposes of determining when future Demand Offerings can be
requested by Tengelmann pursuant to this Section 3.01, unless Tengelmann
reimburses the Company for all expenses (including reasonable fees and
disbursements of counsel) incurred by the Company in connection with such Demand
Offering.
          SECTION 3.02. Piggyback Registration. If the Company proposes to file
a Registration Statement under the Securities Act with respect to an offering of
Company Common Stock for (a) the Company’s own account (other than (i) a
Registration Statement on Form S-4 or S-8 (or any substitute form that may be
adopted by the SEC) or (ii) a Registration Statement filed in connection with an
offering of securities solely to the Company’s existing security holders) or
(b) the account of any holder of Company Common Stock (other than Tengelmann)
pursuant to a demand registration requested by such holder, then the Company
will give written notice of such proposed filing to Tengelmann as soon as
practicable (but in no event less than 20 days before the anticipated filing
date), and upon the written request, given within 10 days after delivery of any
such notice by the Company, of Tengelmann to include Registrable Securities in
such registration (which request shall specify the number of Registrable
Securities proposed to be included in such registration), the Company will,
subject to Section 3.03, include all such Registrable Securities in such
registration on the same terms and conditions as the Company’s or such holder’s
Company Common Stock (a “Piggyback Registration”); provided, however, that if at
any time after giving written notice of such proposed filing and prior to the
business day prior to the effective date of the Registration Statement filed in
connection with such registration, the Company shall determine for any reason
not to proceed with the proposed registration of the securities, then the
Company may, at its election, give written notice of such determination to
Tengelmann and, thereupon, will be relieved of its obligation to register any
Registrable Securities in connection with such registration. The Company will
control the determination of the form of any offering contemplated by this
Section 3.02, including whether any such offering will be in the form of an
Underwritten Offering and, if any such offering is in the form of an
Underwritten Offering, (i) the Company will select the lead Underwriter and

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any additional Underwriters in connection with such offering and
(ii) Tengelmann’s right to participate shall be conditioned on Tengelmann
entering into an underwriting agreement in customary form and acting in
accordance with the provisions thereof.
          SECTION 3.03. Reduction of Underwritten Offering. Notwithstanding
anything contained herein, if the lead Underwriter of an Underwritten Offering
described in Section 3.01 or 3.02 advises the Company in writing that in its
reasonable opinion the number of shares of Company Common Stock (including any
Registrable Securities) that the Company, Tengelmann and any other Persons
intend to include in any Registration Statement is such that the success of any
such offering would be materially and adversely affected, including the price at
which the securities can be sold or the number of Registrable Securities that
any participant may sell, then the number of shares of Company Common Stock to
be included in the Registration Statement for the account of the Company,
Tengelmann and any other Persons will be reduced to the extent necessary to
reduce the total number of securities to be included in any such Registration
Statement to the number recommended by such lead Underwriter; provided that
(a) priority in the case of a Demand Offering pursuant to Section 3.01 will be
(i) first, the Registrable Securities requested to be included in the
Registration Statement for the account of Tengelmann pursuant to its
registration rights provided in this Agreement, (ii) second, securities proposed
to be offered by the Company for its own account and (iii) third, among any
other securities of the Company requested to be registered by the holders
thereof pursuant to a contractual right so that the total number of securities
to be included in any such offering for the account of all such Persons will not
exceed the number recommended by such lead Underwriter; (b) priority in the case
of a Registration Statement initiated by the Company for its own account which
gives rise to a Piggyback Registration pursuant to Section 3.02 will be (i)
first, securities initially proposed to be offered by the Company for its own
account, (ii) second, the Registrable Securities requested to be included in the
Registration Statement for the account of Tengelmann pursuant to its
registration right provided in this Agreement and securities requested to be
included in the Registration Statement for the account of Yucaipa pursuant to
the registration rights afforded to Yucaipa pursuant to the Amended and Restated
Yucaipa Stockholder Agreement pro rata, based on Tengelmann’s Piggyback
Percentage and Yucaipa’s Piggyback Percentage, respectively and (iii) third,
among any other securities of the Company requested to be registered pursuant to
a contractual right so that the total number of securities to be included in any
such offering for the account of all such Persons will not exceed the number
recommended by such lead Underwriter; (c) priority in the case of a Registration
Statement initiated by the Company for the account of Yucaipa pursuant to the
registration rights afforded to Yucaipa pursuant to the Amended and Restated
Yucaipa Stockholder Agreement will be (i) first, the securities requested to be
included in the Registration Statement for the account of Yucaipa, (ii) second,
securities to be offered by the Company for its own account, (iii) third,
securities requested to be included in the Registration Statement for the
account of Tengelmann pursuant to its registration right provided in this
Agreement and (iv) fourth, among any other securities of the Company requested
to be registered pursuant to a contractual right so that the total number of
securities to be included in any such offering for the account of all such
Persons will not exceed the number recommended by such lead Underwriter; and
(d) priority with respect to inclusion of securities in a Registration Statement
initiated

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25
by the Company for the account of holders other than Tengelmann or Yucaipa
pursuant to registration rights afforded such holders will be (i) first, pro
rata among securities requested to be included in the Registration Statement for
the account of such holders, (ii) second, securities requested to be included in
the Registration Statement by the Company for its own account, (iii) third, the
Registrable Securities requested to be included in the Registration Statement
for the account of Tengelmann pursuant to its registration right provided in
this Agreement and securities requested to be included in the Registration
Statement for the account of Yucaipa pursuant to the registration rights
afforded to Yucaipa pursuant to the Amended and Restated Yucaipa Stockholder
Agreement pro rata, based on Tengelmann’s Piggyback Percentage and Yucaipa’s
Piggyback Percentage, respectively and (iv) fourth, pro rata among any other
securities of the Company requested to be registered pursuant to a contractual
right so that the total number of securities to be included in any such offering
for the account of all such Persons will not exceed the number recommended by
such lead Underwriter.
          SECTION 3.04. Registration Procedures. (a) Subject to the provisions
of Section 3.01 hereof, in connection with the registration of the sale of
Registrable Securities hereunder, the Company will as promptly as reasonably
practicable:
     (i) furnish to Tengelmann without charge, if requested, prior to the filing
of a Registration Statement, copies of such Registration Statement as it is
proposed to be filed, and thereafter such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits thereto and documents incorporated by reference therein, except to the
extent such exhibits or documents are currently available electronically via the
SEC’s Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”)
Interactive Data Electronic Applications system (“IDEA”) or any successor system
of the SEC), which documents (other than those incorporated by reference) will
be subject to the review and good faith objection of Tengelmann prior to filing
(provided, however, if Tengelmann does not object to any such document prior to
the close of business on the third Business Day after receipt thereof,
Tenglemann shall be deemed to have waived any objection) the prospectus included
in such Registration Statement (including each preliminary prospectus), copies
of any and all transmittal letters or other correspondence with the SEC relating
to such Registration Statement (except to the extent such letters or
correspondence are currently available electronically via EDGAR, IDEA or any
successor system of the SEC) and such other documents in such quantities as
Tengelmann may reasonably request from time to time in order to facilitate the
disposition of such Registrable Securities;
     (ii) use its commercially reasonable efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as Tengelmann reasonably requests and do any and all other acts
and things as may be reasonably necessary or advisable to enable Tengelmann to
consummate the disposition of such Registrable Securities in such jurisdictions;
provided that the Company will not be required to (x) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify

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but for this Section 3.04(a)(ii), (y) subject itself to taxation in any such
jurisdiction or (z) consent to general service of process in any such
jurisdiction;
     (iii) notify Tengelmann at any time when a prospectus relating to
Registrable Securities is required to be delivered under the Securities Act, of
the happening of any event as a result of which the prospectus included in a
Registration Statement or the Registration Statement or amendment or supplement
relating to such Registrable Securities contains an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and the Company will promptly
prepare and file with the SEC a supplement or amendment to such prospectus and
Registration Statement (and comply fully with the applicable provisions of
Rules 424, 430A and 430B under the Securities Act in a timely manner) so that,
as thereafter delivered to the purchasers of the Registrable Securities, such
prospectus and Registration Statement will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
     (iv) advise the Underwriters, if any, and Tengelmann promptly and, if
requested by such Persons, confirm such advice in writing, of the issuance by
the SEC of any stop order suspending the effectiveness of the Registration
Statement under the Securities Act or of the suspension by any state securities
commission of the qualification of the Registrable Securities for offering or
sale in any jurisdiction, or the initiation of any proceeding for any of the
preceding purposes. If at any time the SEC shall issue any stop order suspending
the effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Registrable Securities
under state securities or blue sky laws, the Company shall use its commercially
reasonable efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
     (v) use its commercially reasonable efforts to cause such Registrable
Securities to be registered with or approved by such other Governmental Entities
as may be necessary by virtue of the business and operations of the Company to
enable Tengelmann to consummate the disposition of such Registrable Securities;
provided that the Company will not be required to (x) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3.04(a)(v), (y) subject itself to taxation in any such
jurisdiction or (z) consent to general service of process in any such
jurisdiction;
     (vi) enter into customary agreements and use commercially reasonable
efforts to take such other actions as are reasonably requested by Tengelmann in
order to expedite or facilitate the disposition of such Registrable Securities,
including preparing for and participating in a road show and all such other

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27

customary selling efforts as the Underwriters reasonably request in order to
expedite or facilitate such disposition;
     (vii) if requested by Tengelmann or the Underwriter(s) in connection with
such sale, if any, promptly include in any Registration Statement or prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as Tengelmann and such Underwriter(s), if any, may reasonably
request to have included therein, including information relating to the “Plan of
Distribution” of the Registrable Securities, information with respect to the
number of Registrable Securities being sold to such Underwriter(s), the purchase
price being paid therefor and any other terms of the offering of the Registrable
Securities to be sold in such offering, and make all required filings of such
prospectus supplement or post-effective amendment as soon as practicable after
the Company is notified of the matters to be included in such prospectus
supplement or post-effective amendment;
     (viii) make available for inspection by Tengelmann, any Underwriter
participating in any disposition of such Registrable Securities, and any
attorney for Tengelmann and such Underwriter and any accountant or other agent
retained by Tengelmann or such Underwriter (collectively, the “Inspectors”), all
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the “Records”) as will be reasonably necessary to enable
them to conduct customary due diligence with respect to the Company and the
related Registration Statement and prospectus, and cause the Representatives of
the Company and its Subsidiaries to supply all information reasonably requested
by any such Inspector; provided that (x) Records and information obtained
hereunder will be used by such Inspector only to conduct such due diligence and
(y) Records or information that the Company determines, in good faith, to be
confidential will not be disclosed by such Inspector unless (A) the disclosure
of such Records or information is necessary to avoid or correct a material
misstatement or omission in a Registration Statement or related prospectus or
(B) the release of such Records or information is ordered pursuant to a subpoena
or other order from a court or governmental authority of competent jurisdiction;
     (ix) (A) cause the Company’s Representatives to supply all information
reasonably requested by Tengelmann, or any Underwriter, attorney, accountant or
agent in connection with the Registration Statement and (B) provide Tengelmann
and its counsel with the opportunity to participate in the preparation of such
Registration Statement and the related prospectus;
     (x) use its commercially reasonable efforts to obtain and deliver to each
Underwriter and Tengelmann a comfort letter from the independent registered
public accounting firm for the Company (and additional comfort letters from the
independent registered public accounting firm for any company acquired by the
Company whose financial statements are included or incorporated by reference in
the Registration Statement) in customary form and covering such matters as are
customarily covered by comfort letters as such Underwriter and Tengelmann may

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reasonably request, including (x) that the financial statements included or
incorporated by reference in the Registration Statement or the prospectus, or
any amendment or supplement thereof, comply as to form in all material respects
with the applicable accounting requirements of the Securities Act and (y) as to
certain other financial information for the period ending no more than five
business days prior to the date of such letter; provided, however, that if the
Company fails to obtain such comfort letter, then such Demand Offering will not
count as a Demand Offering for purposes of determining when future Demand
Offerings can be requested by Tengelmann pursuant to Section 3.01;
     (xi) use its commercially reasonable efforts to obtain and deliver to each
Underwriter and Tengelmann a 10b-5 statement and legal opinion from the
Company’s counsel in customary form and covering such matters as are customarily
covered by 10b-5 statements and legal opinions as such Underwriter and
Tengelmann may reasonably request; provided, however, that if the Company fails
to obtain such statement or opinion, then such Demand Offering will not count as
a Demand Offering for purposes of determining when future Demand Offerings can
be requested by Tengelmann pursuant to Section 3.01;
     (xii) otherwise use its commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make generally available to its
security holders, within the required time period, an earnings statement (which
need not be audited) covering a period of 12 months, beginning with the first
fiscal quarter after the effective date of the Registration Statement relating
to such Registrable Securities (as the term “effective date” is defined in Rule
158(c) under the Securities Act), which earnings statement will satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder or any
successor provisions thereto; and
     (xiii) use its commercially reasonable efforts to cause such Registrable
Securities to be listed or quoted on the NYSE or, if Company Common Stock is not
then listed on the NYSE, then on any other securities exchange or national
quotation system on which similar securities issued by the Company are listed or
quoted.
          (b) In connection with the Registration Statement relating to such
Registrable Securities covering an Underwritten Offering, (i) the Company and
Tengelmann agree to enter into a written agreement with each Underwriter
selected in the manner herein provided in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such Underwriter and companies of the Company’s size and investment
stature and, to the extent practicable, on terms consistent with underwriting
agreements entered into by the Company (it being understood that, unless
required otherwise by the Securities Act or any other Law, the Company will not
require Tengelmann to make any representation, warranty or agreement in such
agreement other than with respect to Tengelmann, the ownership of Tengelmann’s
securities being registered and Tengelmann’s intended method of disposition) and
(ii) Tengelmann agrees to complete and execute all such other

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documents customary in similar offerings, including any reasonable
questionnaires, powers of attorney, holdback agreements, letters and other
documents customarily required under the terms of such underwriting
arrangements. The representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such Underwriter in such
written agreement with such Underwriter will also be made to and for the benefit
of Tengelmann. In the event an Underwritten Offering is not consummated because
any condition to the obligations under any related written agreement with such
Underwriter is not met or waived in connection with a Demand Offering, and such
failure to be met or waived is not attributable to the fault of Tengelmann, such
Demand Offering will not be deemed exercised.
          SECTION 3.05. Conditions to Offerings. (a) The obligations of the
Company to take the actions contemplated by Section 3.01, Section 3.02 and
Section 3.04 with respect to an offering of Registrable Securities will be
subject to the following conditions:
     (i) the Company may require Tengelmann to furnish to the Company such
information regarding Tengelmann or the distribution of such Registrable
Securities as the Company may from time to time reasonably request in writing,
in each case only as required by the Securities Act or under state securities or
blue sky laws; and
     (ii) in any Underwritten Offering pursuant to Section 3.01 or Section 3.02
hereof, Tengelmann, together with the Company, will enter into an underwriting
agreement in accordance with Section 3.04(b) above with the Underwriter or
Underwriters selected for such underwriting, as well as such other documents
customary in similar offerings.
          (b) Tengelmann agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in
Section 3.04(a)(iii) or Section 3.04(a)(iv) hereof or a condition described in
Section 3.06 hereof, Tengelmann will forthwith discontinue disposition of such
Registrable Securities pursuant to the Registration Statement covering the sale
of such Registrable Securities until Tengelmann’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3.04(a)(iii) hereof
or notice from the Company of the termination of the stop order or Deferral
Period.
          SECTION 3.06. Blackout Period. (a) The Company’s obligations pursuant
to Section 3.01, Section 3.02 and Section 3.03 hereof will be suspended
(including any obligation to pay Liquidated Damages) (1) upon the receipt of
comments from the SEC on any document incorporated by reference in the
Registration Statement or (2) if compliance with such obligations would (a)
violate applicable Law or otherwise prevent the Company from complying with
applicable Law, (b) require the Company to disclose a financing, acquisition,
disposition or other corporate development, and the chief executive officer of
the Company has determined, in the good faith exercise of his reasonable
business judgment, that such disclosure is not in the best interests of the
Company, (c) require the Company to make changes in the Registration Statement
in

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order that the Registration Statement not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, (d) otherwise require premature disclosure
of information the disclosure of which, the chief executive officer of the
Company has determined, in the good faith exercise of his reasonable business
judgment, is not in the best interests of the Company, or (e) otherwise
represent an undue hardship for the Company; provided that (i) any and all such
suspensions pursuant to clause (1) will not exceed 120 days in the aggregate in
any 12-month period and (ii) any and all such suspensions pursuant to clause
(2)(b), (2)(c), (2)(d) or (2)(e) will not exceed 120 days in the aggregate in
any 12-month period; provided that any suspensions attributable to clause 2(e)
will not extend beyond 90 days (any such period, a “Deferral Period”). The
Company will promptly give Tengelmann written notice of any such suspension
containing the approximate length of the anticipated delay, and the Company will
notify Tengelmann upon the termination of any Deferral Period. Upon receipt of
any notice from the Company of any Deferral Period, Tengelmann shall forthwith
discontinue disposition of the Registrable Securities pursuant to the
Registration Statement relating thereto until Tengelmann receives copies of the
supplemented or amended prospectus contemplated hereby or until it is advised in
writing by the Company that the use of the prospectus may be resumed and has
received copies of any additional or supplemented filings that are incorporated
by reference in the prospectus, and, if so directed by the Company, Tengelmann
will, and will request the lead Underwriter or Underwriters, if any, to, deliver
to the Company all copies, other than permanent file copies, then in
Tengelmann’s or such Underwriter’s or Underwriters’ possession of the current
prospectus covering such Registrable Securities.
          (b) The parties hereto further agree and acknowledge that any
suspension or non-use of the Registration Statement due to the updating of the
Registration Statement to include any financial statement the Registration
Statement is required to contain (the “Required Financial Statements”) shall not
be deemed to be a suspension for purposes of Section 3.06(a), unless and until
the seven business day period referenced in Section 3.06(c) shall have passed
without the updating of financial statements required by Section 3.06(c).
          (c) The Company shall use its commercially reasonable efforts to
update the Registration Statement on each date on which it shall be necessary to
do so to cause the Registration Statement to contain the Required Financial
Statements; provided, however, that, with respect to any financial period ending
after the date hereof, the Company shall not be obligated to update the Required
Financial Statements pursuant to Section 3.06(b) and shall not be deemed to be
in default under this sentence until seven business days after (or such earlier
date as may be reasonably practicable) the date upon which such updated
financial statements are required to be filed with the SEC.
          SECTION 3.07. Registration Expenses. All fees and expenses incident to
the Company’s performance of or compliance with the obligations of this
Article III, including all fees and expenses of compliance with securities or
blue sky laws (including reasonable fees and disbursements of counsel for any
Underwriters in connection with qualification of Registrable Securities under
applicable blue sky laws), printing expenses,

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messenger and delivery expenses of the Company, any registration or filing fees
payable under any Federal or state securities or blue sky laws, the fees and
expenses incurred in connection with any listing or quoting of the securities to
be registered on any national securities exchange or automated quotation system,
fees of the Financial Industry Regulatory Authority, fees and disbursements of
counsel for the Company, its independent registered certified public accounting
firm and any other public accountants who are required to deliver comfort
letters (including the expenses required by or incident to such performance),
transfer taxes, fees of transfer agents and registrars, costs of insurance, fees
and expenses of one counsel (in addition to any local counsel) for Tengelmann
and the fees and expenses of other Persons retained by the Company, will be
borne by the Company. Tengelmann will bear and pay any underwriting discounts
and commissions applicable to Registrable Securities offered for its account
pursuant to any Registration Statement. The Company shall also pay and reimburse
Tengelmann for all reasonable out-of-pocket fees and expenses incurred by
Tengelmann of one counsel for Tengelmann in connection with each Registration
Statement.
          SECTION 3.08. Indemnification; Contribution. (a) In connection with
any registration of Registrable Securities pursuant to Section 3.01,
Section 3.02 or Section 3.03 hereof, the Company agrees to indemnify and hold
harmless, to the fullest extent permitted by Law, Tengelmann, its Affiliates,
directors, officers and stockholders and each Person who controls Tengelmann
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act (collectively, the “Indemnified Persons”) from and against any
and all losses, claims, damages, liabilities, judgments, actions and expenses
(including reasonable attorneys’ fees) joint or several, caused by any untrue or
alleged untrue statement of material fact contained in any part of any
Registration Statement or any preliminary or final prospectus used in connection
with the Registrable Securities or any Issuer FWP, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading; provided
that the Company will not be required to indemnify any Indemnified Person for
any losses, claims, damages, liabilities, judgments, actions or expenses
resulting from any such untrue statement or omission if such untrue statement or
omission was made in reliance on and in conformity with information with respect
to any Indemnified Person furnished to the Company in writing by Tengelmann
expressly for use therein.
          (b) In connection with any Registration Statement, preliminary or
final prospectus, or Issuer FWP, Tengelmann agrees to indemnify the Company, its
Directors, its officers who sign such Registration Statement and each Person, if
any, who controls the Company (within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act) to the same extent as the
foregoing indemnity from the Company to Tengelmann, but only with respect to
information with respect to any Indemnified Person furnished to the Company in
writing by Tengelmann expressly for use in such Registration Statement,
preliminary or final prospectus, or Issuer FWP.
          (c) In case any claim, action or proceeding (including any
governmental investigation) is instituted involving any Person in respect of
which indemnity may be

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sought pursuant to Section 3.08(a) or (b), such Person (hereinafter called the
“indemnified party”) will (i) promptly notify the Person against whom such
indemnity may be sought (hereinafter called the “indemnifying party”) in
writing; provided that the failure to give such notice shall not relieve the
indemnifying party of its obligations pursuant to this Agreement except to the
extent such indemnifying party has been prejudiced in any material respect by
such failure; (ii) permit the indemnifying party to assume the defense of such
claim, action or proceeding with counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and (iii) pay the fees and
disbursements of such counsel related to such claim, action or proceeding. In
any such claim, action or proceeding, any indemnified party will have the right
to retain its own counsel, but the fees and expenses of such counsel will be at
the expense of such indemnified party (without prejudice to such indemnified
party’s indemnity and other rights under the Charter, By-Laws and applicable
Law, if any) unless (A) the indemnifying party and the indemnified party have
mutually agreed to the retention of such counsel, (B) the named parties to any
such claim, action or proceeding (including any impleaded parties) include both
the indemnifying party and the indemnified party and the indemnified party has
been advised in writing by counsel, with a copy provided to the Company, that
representation of both parties by the same counsel would be inappropriate due to
actual or potential conflicting interests between them or (C) the indemnifying
party has failed to assume the defense of such claim and employ counsel
reasonably satisfactory to the indemnified party. It is understood that the
indemnifying party will not, in connection with any claim, action or proceeding
or related claims, actions or proceedings in the same jurisdiction, be liable
for the reasonable fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel at any time for all such indemnified parties)
and that all such reasonable fees and expenses will be reimbursed reasonably
promptly following a written request by an indemnified party stating under which
clause of (A) through (C) above reimbursement is sought and delivery of
documentation of such fees and expenses. In the case of the retention of any
such separate firm for the indemnified parties, such firm will be designated in
writing by the indemnified parties. The indemnifying party will not be liable
for any settlement of any claim, action or proceeding effected without its
written consent (which consent shall not be unreasonably withheld), but if such
claim, action or proceeding is settled with such consent or if there has been a
final judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party will have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel as contemplated by
the third sentence of this Section 3.08(c), the indemnifying party agrees that
it will be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party will not have reimbursed the indemnified party in accordance
with such request or reasonably objected in writing, on the basis of the
standards set forth herein, to the propriety of such reimbursement prior to the
date of such settlement. No indemnifying party will, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could

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have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
          (d) If the indemnification provided for in this Section 3.08 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities, judgments, actions or expenses
referred to in this Section 3.08, then the indemnifying party, in lieu of
indemnifying such indemnified party, will contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities, judgments, actions or expenses (i) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified party in connection with the actions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations, or (ii) if the allocation provided by clause (i) is
not permitted by applicable Law, in such proportion as is appropriate to reflect
not only the relative fault referred to in clause (i) but also the relative
benefit of the Company, on the one hand, and Tengelmann, on the other, in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities, judgments, actions or expenses, as well as any
other relevant equitable considerations. The relative fault of such indemnifying
party and indemnified party will be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been taken by, or relates to information supplied by, such
indemnifying party or indemnified party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above will be deemed to include,
subject to the limitations set forth in Section 3.08(c), any legal or other fees
or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
          (e) The parties agree that it would not be just and equitable if
contribution pursuant to Section 3.08(d) were determined by pro rata allocation
or by any other method of allocation that does not take into account the
equitable considerations referred to in Section 3.08(d). No Person guilty of
“fraudulent misrepresentation” (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. Notwithstanding the provisions of
this Section 3.08(e), Tengelmann shall not be required to contribute, in the
aggregate, any amount in excess of the amount by which the net proceeds received
by Tengelmann with respect to the Registrable Securities exceed the greater of
(A) the amount paid by Tengelmann for its Registrable Securities and (B) the
amount of any damages which Tengelmann has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission.
          (f) For purposes of this Section 3.08, each controlling Person of
Tengelmann shall have the same rights to contribution as Tengelmann, and each
officer, Director and Person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
shall have the same rights to contribution as the Company, subject in each case
to the limitations set forth in the

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immediately preceding paragraph. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 3.08, notify such
party or parties from whom contribution may be sought, but the omission to so
notify such party or parties shall not relieve the party or parties from who
contribution may be sought from any obligation it or they may have under this
Section 3.08 or otherwise except to the extent that it has been prejudiced in
any material respect by such failure. No party shall be liable for contribution
with respect to any action or claim settled without its written consent;
provided, however, that such written consent was not unreasonably withheld.
          (g) If indemnification is available under this Section 3.08, the
indemnifying party will indemnify each indemnified party to the full extent
provided in Sections 3.08(a) and (b) without regard to the relative fault of
said indemnifying party or indemnified party or any other equitable
consideration provided for in Section 3.08(d) or (e).
          SECTION 3.09. Lockup. If and to the extent requested by the lead
Underwriter of an Underwritten Offering of Equity Securities of the Company, the
Company and Tengelmann agree not to effect, and to cause their respective
Affiliates not to effect, except as part of such registration, any offer, sale,
pledge, transfer or other distribution or disposition or any agreement with
respect to the foregoing of the issue being registered or offered, as
applicable, or of a similar security of the Company, or any securities into
which such Equity Securities are convertible, or any securities convertible
into, or exchangeable or exercisable for, such Equity Securities, including a
sale pursuant to Rule 144 under the Securities Act, during a period of up to
seven days prior to, and during a period of up to 45 days after, the effective
date of such registration, as reasonably requested by the lead Underwriter (the
“Lock-up”); provided, however, that Tengelmann shall not be obligated to enter
into a Lock-up more than one time in any 12-month period. The lead Underwriter
shall give the Company and Tengelmann prior notice of any such request.
          SECTION 3.10. Termination of Registration Rights. This Article III
(other than Sections 3.07 and 3.08) will terminate on the date on which all
shares of Company Common Stock subject to this Article III cease to be
Registrable Securities.
          SECTION 3.11. Specific Performance. Tengelmann, in addition to being
entitled to exercise all rights provided herein or granted by law, including
recovery of liquidated or other damages, will be entitled to specific
performance of its rights under this Agreement. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
          SECTION 3.12. Other Registration Rights. The Company (a) has not
granted and will not grant to any Third Party any registration rights
inconsistent with any of those contained herein and (b) has not entered into and
will not enter into any

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agreement that will impair its ability to perform its obligations under this
Article III, so long as any of the registration rights under this Agreement
remain in effect; provided, however, that the registration rights in the Amended
and Restated Yucaipa Stockholder Agreement shall be deemed not to impair these
rights under any circumstances. If the Company provides Yucaipa with the right
to require the Company to file a shelf registration statement pursuant to
Rule 415 under the Securities Act for resales of Registrable Securities (as such
term is defined in the Amended and Restated Yucaipa Stockholder Agreement) held
by Yucaipa, then Tengelmann shall have the right to require a shelf registration
statement to register all of Tengelmann’s Registrable Securities on
substantially the same terms and conditions as provided to Yucaipa.
          SECTION 3.13. Rule 144. For so long as the Company is subject to the
requirements of Section 13, 14 or 15(d) of the Exchange Act, if the Company
fails to timely file the reports required to be filed by it under the Securities
Act and the Exchange Act and such failure continues unremedied for a period of
90 days, then, if such failure shall be continuing, the Company shall pay
Liquidated Damages to Tengelmann from the date of such failure to, but excluding
the date on which such failure has been cured and otherwise in the amount and at
the same time and terms as provided in Section 3.01(b).
          SECTION 3.14. Transfer of Registration Rights. Notwithstanding
anything to the contrary in this Agreement, the rights to cause the Company to
register securities granted to Tengelmann under this Article III may be assigned
by Tengelmann in whole or part to any Person to whom Tengelmann Transfers Equity
Securities of the Company representing 10% or more of the Voting Power of the
Company (a “Registration Rights Transferee”); provided, however, that (x) the
Company is given prior written notice of the assignment, stating the name and
address of the transferee or assignee and identifying the securities with
respect to which such registration rights are being assigned and (y) such
Registration Rights Transferee agrees in writing to be bound by subject to the
provisions of this Article III mutatis mutandis as if the Registration Rights
Transferee were a party hereto.
ARTICLE IV
Preemptive Rights
          SECTION 4.01. Rights To Purchase New Equity Securities. (a) In the
event that after the date hereof, the Company proposes to issue any Equity
Securities of the Company (“New Equity Securities”), Tengelmann shall have the
right to purchase, in accordance with paragraph (b) below, a number of such New
Equity Securities equal to the product of (x) the total number of such New
Equity Securities to be issued and (y) the Tengelmann Percentage Interest at
such time. The following issuances shall be exempt from the right to purchase
New Equity Securities: (i) Equity Securities of the Company which are issued or
reserved for issuance pursuant to any employee compensation plan or other
benefit incentive plan (including stock option, restricted stock or other
equity-based compensation plans), now existing or hereafter approved by the
Board of Directors, (ii) Equity Securities of the Company issued or issuable
upon the exercise of the Series B Warrants or the 2000 Warrants, (iii) Equity
Securities of the Company to the extent

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issued or issuable in exchange for consideration consisting of property or
assets other than cash, (iv) Equity Securities of the Company which are issued
or issuable to Tengelmann or any Affiliate of Tengelmann or any wholly owned
Subsidiaries of the Company, (v) Equity Securities of the Company which are
issued or issuable to Yucaipa or its Affiliates under the Yucaipa Investment
Agreement and pursuant to the Convertible Preferred Articles Supplementary
(including any Equity Securities of the Company issued as dividends thereunder),
(vi) Equity Securities of the Company which are issued in connection with a
Business Combination and (vii) Equity Securities of the Company which are
existing as of the date hereof or that are issued or issuable thereafter
pursuant to the terms of any Equity Securities of the Company or other purchase
rights existing or assumed by the Company as of the date hereof but in each
case, only to the extent disclosed on Schedule 2.03 of the Investment Agreement
and without any amendments or modifications thereto.
          (b) In the event that the Company proposes to undertake an issuance of
New Equity Securities to which this Section 4.01 applies, and to which an
exception in clauses (i) through (vi) of Section 4.01(a) does not apply, it
shall give written notice to Tengelmann (a “Notice of Issuance”) of its
intention, describing the material terms of the New Equity Securities and the
issuance thereof, including the number of New Equity Securities proposed to be
issued, the price (or method for determining price) thereof, the terms of
payment and the proposed date of issuance. Tengelmann shall then have 20 days
from the date of receipt of the Notice of Issuance to exercise its right to
purchase all or a portion of its pro rata share of such New Equity Securities
(as determined pursuant to paragraph (a) above) for the same consideration, and
otherwise upon the terms specified in the Notice of Issuance, by giving written
notice to the Company and stating therein the quantity of New Equity Securities
to be purchased by Tengelmann. The rights of Tengelmann with respect to a
particular issuance of New Equity Securities under this Section 4.01(b) shall
expire if unexercised within 20 days after receipt of the applicable Notice of
Issuance. Tengelmann shall have 30 days after receipt of the applicable Notice
of Issuance to consummate such purchase.
          (c) If Tengelmann exercises its right pursuant to a Notice of
Issuance, then the closing of the purchase and sale of the New Equity Securities
to be issued to Tengelmann will be consummated simultaneously with the closing
of the purchase and sale of the New Equity Securities to be issued to Persons
other than Tengelmann, unless the closing of the purchase and sale of the New
Equity Securities issued to Tengelmann is required by Law to be consummated on a
later date. In the event any purchase by Tengelmann is not consummated, other
than as a result of the fault of the Company, within the provided time period,
the Company may issue the New Equity Securities to Persons other than Tengelmann
free and clear from the rights of Tengelmann and restrictions under this Section
4.01. Any New Equity Securities not elected to be purchased by Tengelmann may be
sold by the Company to any Person or Persons to which the Company intended to
sell such New Equity Securities at a price and other economic terms not less
than those offered to Tengelmann and on terms and conditions no less favorable
to the Company than those offered to Tengelmann.

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          (d) If, for any reason, the issuance of New Equity Securities to
Persons other than Tengelmann is not consummated within 90 days after the Notice
of Issuance, Tengelmann’s right to purchase its pro rata share of the New Equity
Securities shall automatically be rescinded. Thereafter, Tengelmann will
continue to have preemptive rights set forth in this Section 4.01 with respect
to other issuances of New Equity Securities at later dates or times.
ARTICLE V
Put Right
          SECTION 5.01. Put Right. (a) Prior to the settlement by the Company of
any Series B Warrant upon exercise by the Original Yucaipa Stockholders, and
subject to Tengelmann’s right to approve any issuance of Company Common Stock in
connection therewith pursuant to Section 2.04(a)(ix), the Company will give
Tengelmann the right (a “Put Right”) to (i) cause the Company to settle such
Series B Warrant by issuing and delivering Company Common Stock to Original
Yucaipa Stockholders (in which case, such issuance shall be deemed to be
approved by Tengelmann pursuant to Section 2.04(b)(ii)) and (ii) sell to the
Company some or all of the shares of Company Common Stock to be so issued and
delivered to Yucaipa in the following manner, provided that the Company shall
not be required to purchase Company Common Stock pursuant to this clause (ii) to
the extent necessary to avoid a Liquidity Impairment:
          (b) The Company will give notice (a “Warrant Exercise Notice”) to
Tengelmann in writing of each exercise by Yucaipa of one or more Series B
Warrants, specifying the number of shares (the “Share Number”) of Company Common
Stock subject to such Series B Warrants and what portion, if any, the Company
proposes to settle by the issuance and delivery to Yucaipa of Company Common
Stock (the “Proposed Stock Settlement Amount”) and what portion, if any, the
Company proposes to settle in cash.
          (c) If Tengelmann determines to exercise its Put Right, Tengelmann
will deliver a notice (a “Put Notice”) to the Company within 10 Business Days
after receipt of a Warrant Exercise Notice indicating, (i) the number of shares
of Company Common Stock which the Company shall purchase from Tengelmann
pursuant to Tengelmann’s Put Right (which number shall not exceed the Share
Number) and (ii) if the Proposed Stock Settlement Amount exceeds the number
specified pursuant to clause (i), the portion of such excess to be settled by
the issuance and delivery of Company Common Stock, if any, which Tengelmann has
approved pursuant to Section 2.04(a)(ii) (to the extent such approval is
required thereby). The purchase price per share for such Company Common Stock
will be equal to the Market Price of the Company Common Stock on the business
day immediately preceding the date of exercise by Yucaipa of such Series B
Warrants (the “Put Price”).
          (d) If Tengelmann exercises its Put Right, the Company will purchase
from Tengelmann, the number of shares of Company Common Stock set forth in the
Put Notice at the Put Price.

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          (e) Such purchase and sale shall occur on the date the Company issues
and delivers Company Common Stock to Yucaipa in settlement of such Series B
Warrants.
          (f) A “Liquidity Impairment” shall be deemed to occur to the extent
that any necessary cash settlement(s) of Series B Warrants, or any payment(s) in
accordance with Article V of this Agreement, would:
     (i) violate, breach or give rise to a default or event of default under or
in respect of any contract, credit facility, agreement or other obligation of
the Company, either existing as of the Closing Date or entered into after the
Closing Date (with the approval of a majority of the Tengelmann Directors), or
any refinancing thereof (with the approval of a majority of Tengelmann Directors
or on terms substantially similar to, and in any event no less favorable to the
Company than, the terms of the obligation being refinanced), or
     (ii) reasonably be expected, after giving effect to the proposed cash
settlement or payment, to cause (A) cash plus cash equivalents plus marketable
securities plus cash available for drawdown under any then existing credit
agreement or other financing facility of the Company or any of its Subsidiaries
(without conditions that are not reasonably capable of being satisfied at the
applicable time) less (B) cash in stores plus restricted cash plus restricted
marketable securities, to equal less than $150,000,000, as of the date of the
proposed cash settlement or payment, as applicable, or any date within 180 days
thereafter, after taking into account any changes or adjustments to any of the
foregoing items scheduled or reasonably anticipated, in good faith, by the Chief
Financial Officer of the Company to occur during such 180-day period.
     (iii) For purposes of the foregoing definition, the terms “cash”, “cash
equivalents”, “marketable securities”, “restricted cash” and “restricted
marketable securities” shall mean the amount set forth opposite the
corresponding line item on the Company’s most recent audited or unaudited
consolidated balance sheet prior to the date of the proposed cash settlement or
payment (i.e., as at the end of the most recently concluded 4-week fiscal
period) and “cash in stores” shall mean cash held by all of the Company’s or any
of its Subsidiaries’ stores as of such balance sheet date as determined by the
Company in accordance with past practices.
ARTICLE VI
Covenants
          SECTION 6.01. Stockholder Approvals. (a) (x) as promptly as
practicable after the date hereof, the Company, acting through the Board of
Directors, shall, in accordance with applicable Law, the Charter and By-Laws,
duly call, establish a record date for, give notice of, convene and hold an
annual or special meeting of the holders of Voting Stock for the purposes of
considering and taking action to obtain the Conversion Stockholder Approval and
(y) on or prior to the first anniversary of the date

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hereof, the Company, acting through the Board of Directors, shall, in accordance
with applicable Law, the Charter and By-Laws, duly call, establish a record date
for, give notice of, convene and hold an annual or special meeting of the
holders of Voting Stock for the purposes of considering and taking action to
obtain the Charter Amendment Stockholder Approval and, in each case, shall
include in a proxy statement filed with the SEC under the Exchange Act (the
“Proxy Statement”) the recommendation of the Board of Directors that the holders
of Voting Stock adopt such Conversion Stockholder Approval or Charter Amendment
Stockholder Approval , as applicable, which recommendation shall include that
the Board of Directors has found it advisable that such holders adopt the
Conversion Stockholder Approval or Charter Amendment Stockholder Approval, as
applicable.
          (b) (x) as promptly as practicable after the date hereof but in no
event later than September 1, 2009, with respect to the Conversion Stockholder
Approval and (y) no later than August 4, 2010, with respect to the Charter
Amendment Stockholder Approval, the Company shall, in each case, file a Proxy
Statement with the SEC under the Exchange Act, and shall use its reasonable best
efforts to have such Proxy Statement cleared by the SEC promptly. Tengelmann and
its counsel will be given a reasonable opportunity to review and comment on the
applicable Proxy Statement and any amendments or supplements thereto in advance
of their filings; it being understood that any disclosure specifically regarding
Tengelmann shall be subject to Tengelmann’s final review and approval (such
approval not to be unreasonably withheld). In addition, the Company shall
provide Tengelmann and its counsel a written copy of any comments the Company or
its counsel may receive from the SEC or its staff with respect to the applicable
Proxy Statement promptly after receipt of such comments and with copies of any
written responses to such comments, other correspondence and telephonic
notification of any verbal responses to such comments by the Company or its
counsel. The Company agrees to use its reasonable best efforts, after
consultation with Tengelmann, to respond promptly to all such comments of and
requests by the SEC and to cause the applicable Proxy Statement and all required
amendments and supplements thereto to be mailed to the holders entitled to vote
at the stockholders’ meeting at the earliest practicable time. Tengelmann agrees
to use its reasonable best efforts to respond promptly to any comments and
requests by the SEC specifically directed to Tengelmann. The Company will
promptly reimburse Tengelmann for all reasonable legal fees incurred by
Tengelmann or on Tengelmann’s behalf in connection with the applicable Proxy
Statement and any SEC comments or requests.
          SECTION 6.02. Voting Agreement. (a) Tengelmann agrees that as long as
any shares of Convertible Preferred Stock are outstanding and until the Company
obtains the Stockholder Approvals, at any annual or special meeting of the
holders of Company Common Stock, however called, or at any adjournment thereof,
and in any action by written consent of the holders of Company Common Stock,
Tengelmann will, and will cause each of its Affiliates to, vote all of the
Tengelmann Shares and shares of Company Common Stock now or hereafter
beneficially owned by Tengelmann or an Affiliate of Tengelmann (the “Subject
Securities”) in favor of the Stockholder Approvals.

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          (b) Tengelmann hereby irrevocably grants to, and appoints the Company
and any individual designated in writing by the Company, as Tengelmann’s proxy
and attorney-in-fact (with full power of substitution), for and in the name,
place and stead of Tengelmann, to vote, or cause to be voted, the Subject
Securities, or grant a consent or approval in respect of the Subject Securities
in a manner consistent with Section 6.02(a). Tengelmann hereby further affirms
that the irrevocable proxy is coupled with an interest and may under no
circumstances be revoked. Tengelmann hereby ratifies and confirms all that such
irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such
irrevocable proxy is executed and intended to be irrevocable in accordance with
Section 2-507 of the MGCL. The irrevocable proxy granted hereunder shall
terminate immediately upon the date on which the Company obtains the Stockholder
Approvals.
          SECTION 6.03. Petition for Bankruptcy. Stockholder agrees not to, and
agrees to cause its Affiliates not to, commence an involuntary case or
proceeding against the Company or any Subsidiary under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar Law or any other
case or proceeding to cause the Company or any of its Subsidiaries to be
adjudicated bankrupt or insolvent.
ARTICLE VII
Right of First Offer
          SECTION 7.01. First Offer Exercise Rights. (a) The Company will
provide notice (a “First Offer Exercise Notice”) to Tengelmann in writing any
time the Company receives written notice from an Other Investor (a “First Offer
Transferor”) of such Other Investor’s intention to Transfer Equity Securities of
the Company in an amount of at least 5% of its outstanding percentage interest
during any twelve-month period to any one Person (other than in an Exempt
Transfer). The First Offer Exercise Notice shall indicate the number of Equity
Securities being offered for Transfer (the “Offered Stock”), the price at which
such Other Investor proposes to Transfer the Offered Stock (the “Offer Price”)
and all other material terms and conditions on which the Other Investor proposes
to Transfer such Company Common Stock (including the identity of the proposed
Transferees).
          (b) If Tengelmann determines to exercise its right to purchase the
Offered Stock, Tengelmann will deliver a notice (the “First Offer Acceptance”)
to the Company within three Trading Days following the receipt of the First
Offer Exercise Notice (the “Acceptance Date”) indicating, (x) its irrevocable
election to purchase all or any portion of the Offered Stock (the “Accepted
Offered Stock”), (y) the closing arrangements and (z) a closing date not less
than 30 nor more than 45 days following the Acceptance Date (unless a longer
period of time is necessary to comply with the requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, or to obtain any other
consent required to effect such purchase and sale, in which case such longer
period).
          (c) If Tengelmann delivers a First Offer Acceptance to the Company
before 5:00 p.m. on or prior to the Acceptance Date, the Company shall deliver a
written notice to the First Offer Transferor on the same date it receives such
First Offer Acceptance, indicating the Company’s binding commitment to purchase
the Accepted Offered Stock from the First Offer Transferor on the terms set
forth in the First Offer

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Acceptance, and Tengelmann commits to purchase the Accepted Offered Stock from
the Company on the same terms set forth in such First Offer Acceptance.
          (d) If Tengelmann does not respond to the First Offer Exercise Notice
within the required response time period set forth above, or elects by written
notice to the Company (an “Election Notice”) not to purchase the Offered Stock,
the Company shall promptly deliver such Election Notice to the First Offer
Transferor and the First Offer Transferor shall then be free to Transfer the
Offered Stock to any Person; provided that (x) such Transfer is consummated
within 90 days after the latest of (A) the expiration of the foregoing required
response time periods, or (b) the receipt by the First Offer Transferor of the
foregoing Election Notice, and (y) the price at which the Equity Securities is
Transferred must be equal to or higher than the Offer Price.
          SECTION 7.02. Convertible Note Purchase. (a) If Tengelmann or any of
its Affiliates purchase any Convertible Notes, then within 10 days after the
closing of such purchase, Tengelmann shall deliver to the Company and the
Yucaipa Representative written notice indicating the principal amount of
Convertible Notes acquired and the price paid per $1,000 principal amount of
Convertible Notes. If any agreement effecting the purchase and sale (other than
the standard assignment or transfer documents contemplated by the indentures for
the Convertible Notes) is entered into to effect the purchase, such notice will
also describe the material terms and conditions of such agreement. Within five
Business Days following receipt of such notice, the Yucaipa Representative may
elect to notify Tengelmann that it desires to purchase up to 50% of the
Convertible Notes subject to the notice. The purchase price paid by the Yucaipa
Representative on behalf of Yucaipa shall equal the price paid by Tengelmann per
$1,000 principal amount of Convertible Notes plus 50% of any fees or expenses
incurred by the Yucaipa Representative in connection with the purchase of the
Convertible Notes. The Yucaipa Representative on behalf of Yucaipa, shall also
agree to be bound by and assume, in a pro rata manner, any other obligations or
agreements entered into by Tengelmann or its Affiliates in connection with the
purchase and sale of such Convertible Notes. The Yucaipa Representative must
deliver the purchase price, satisfy the other requirements herein and close its
purchase of the Convertible Notes contemplated herein within fifteen Business
Days following receipt of Tengelmann’s notice to the Yucaipa Representative
regarding the purchase of Convertible Notes. As a condition to purchasing such
Convertible Notes from Tengelmann, the Yucaipa Representative must also agree to
abide by the provisions set forth in Section 7.02(b) below and agree if it fails
to do so that Tengelmann will have the right to immediately repurchase any
Convertible Notes acquired by the Stockholder Representative from Tengelmann or
its Affiliates for the price paid by the Yucaipa Representative. If the Yucaipa
Representative fails to comply with the provisions of Section 7.02(b) then this
Section 7.02(a) shall immediately terminate and Tengelmann and its Affiliates
shall no longer have any obligations under this Section 7.02(a).
          (b) If Yucaipa or any of its Affiliates purchase any Convertible
Notes, then within 10 days after the closing of such purchase, the Yucaipa
Representative shall

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deliver to the Company and Tengelmann written notice indicating the principal
amount of Convertible Notes acquired, the price paid per $1,000 principal amount
of Convertible Notes. If any agreement effecting the purchase and sale (other
than the standard assignment or transfer documents contemplated by the
indentures for the Convertible Notes) is entered into to effect the purchase,
such notice will also describe the material terms and conditions of such
agreement. Within five Business Days following receipt of such notice,
Tengelmann may elect to notify the Yucaipa Representative that it desires to
purchase a portion of the Convertible Notes subject to the notice calculated by
dividing (1) an amount equal to the aggregate number of shares of Convertible
Preferred Stock owned by Tengelmann and its Affiliates at the time by (2) the
aggregate number of shares of Convertible Preferred Stock outstanding at such
time. The purchase price paid by Tenglemann shall equal the price paid by
Yucaipa per $1,000 principal amount of Convertible Notes plus Tengelmann’s pro
rata share of any fees or expenses incurred by Yucaipa in connection with the
purchase of the Convertible Notes. Tengelmann shall also agree to be bound by
and assume, in a pro rata manner, any other obligations or agreements entered
into by Yucaipa or its Affiliates in connection with the purchase and sale of
such Convertible Notes. Tengelmann must deliver the purchase price, satisfy the
other requirements herein and close its purchase of the Convertible Notes
contemplated herein within fifteen Business Days following receipt of the
Yucaipa Representatives’ notice to Stockholder regarding the purchase of
Convertible Notes.
ARTICLE VIII
Miscellaneous
          SECTION 8.01. Corporate Opportunities. (a) Certain Acknowledgments. In
recognition and anticipation (i) that the Company will not be a wholly-owned
Subsidiary of Tengelmann and that Tengelmann and its Affiliates (including
portfolio companies) may be controlling or significant stockholders of the
Company, (ii) that directors, officers or employees of any of Tengelmann or its
Affiliates may serve as directors or officers of the Company, (iii) that any of
Tengelmann or its Affiliates may engage (and are expected to continue to engage)
in the same, similar or related lines of business as those in which the Company,
directly or indirectly, may engage or other business activities that overlap
with or compete with those in which the Company, directly or indirectly, may
engage, (iv) that any of Tengelmann or its Affiliates may have an interest in
the same areas of opportunity as the Company and any Affiliate thereof, (v) that
any of Tengelmann or its Affiliates may engage in material business transactions
with the Company and any Affiliate thereof, and that any of the Tengelmann or
the Company may benefit therefrom, and (vi) that, as a consequence of the
foregoing, it is in the best interests of the Company that the respective rights
and duties of the Company and of any of Tengelmann and its Affiliates, and the
duties of any directors or officers of the Company who are also directors,
officers or employees of any of Tengelmann or its Affiliates, be determined and
delineated in respect of any transactions between, or opportunities that may be
suitable for both, the Company or any Affiliate thereof, on the one hand, and
any Tengelmann or its Affiliates, on the other hand, and in recognition of the
benefits to be derived by the Company through its continual contractual,
corporate and business relations with any of Tengelmann or its Affiliates

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(including possible service of officers and directors of any of Tengelmann or
its Affiliates as officers and directors of the Company), the provisions of this
Section 8.01 shall to the fullest extent permitted by Law regulate and define
the interest and reasonable expectancy of the Company in connection therewith.
          (b) Certain Agreements and Transactions Permitted; Certain Duties of
Certain Stockholders, Directors and Officers. The Company may from time to time
enter into and perform, and cause or permit any Subsidiary or Affiliate of the
Company to enter into and perform, one or more agreements (or modifications or
supplements to pre-existing agreements) with any of Tengelmann or its Affiliates
pursuant to which the Company or any Affiliate thereof, on the one hand, and
Tengelmann or its Affiliates, on the other hand, agree to engage in transactions
of any kind or nature with each other or with any Affiliate thereof or agree to
compete, or to refrain from competing or to limit or restrict their competition,
with each other, including to allocate and to cause their respective
Representatives (including any who are directors, officers, stockholders,
employees or agents of both) to allocate opportunities between or to refer
opportunities to each other. No such agreement, or the performance thereof by
the Company or any of Tengelmann or its Affiliates, shall to the fullest extent
permitted by Law be considered contrary to (i) any duty that any of Tengelmann
or its Affiliates may owe to the Company or any Affiliate thereof or to any
stockholder or other owner of an equity interest in the Company or any Affiliate
thereof by reason of any of Tengelmann or its Affiliates being a controlling or
significant stockholder of the Company or of any Affiliate thereof or
participating in the control of the Company or of any Affiliate thereof or
(ii) any duty of any director or officer of the Company or of any Affiliate
thereof who is also a director, officer, employee or agent of any of Tengelmann
or its Affiliates to the Company or any Affiliate thereof, or to any stockholder
thereof. To the fullest extent permitted by law, none of Tengelmann or its
Affiliates, as a stockholder of the Company or any Affiliate thereof, or
participant in control of the Company or any Affiliate thereof, shall have or be
under any duty to refrain from entering into any agreement or participating in
any transaction referred to above.
          (c) Similar Activities or Lines of Tengelmann Business. Except as
otherwise agreed in writing between the Company and Tengelmann or its Affiliates
shall to the fullest extent permitted by Law have no duty to refrain from
(i) engaging in the same or similar activities or lines of business as the
Company or any Affiliate thereof and (ii) doing business with any client,
customer or vendor of the Company or any Affiliate thereof, and no Tengelmann
nor any officer, director, employee or Affiliate of Tengelmann shall to the
fullest extent permitted by Law be deemed to have breached its or his or her
duties, if any, to the Company solely by reason of any of Tengelmann or its
Affiliates engaging in any such activity. To the extent permitted by Law,
neither the Company, any Affiliate thereof nor any of their respective
stockholders shall have any rights in or to any of the activities described in
the foregoing sentence or the income or profits derived therefrom. In the event
that any Tengelmann or its Affiliates acquires knowledge of a potential
transaction or matter which may be an opportunity for any of Tengelmann or its
Affiliates and the Company or any Affiliate thereof, Tengelmann and its
Affiliates shall to the fullest extent permitted by Law have no duty to
communicate or offer such opportunity to the Company or any Affiliate thereof
and shall not to the fullest

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44

extent permitted by Law be liable to the Company or its stockholders for breach
of any duty as a stockholder of the Company by reason of the fact that any of
the Tengelmann or its Affiliates acquires or seeks such opportunity for itself,
directs such opportunity to another person or entity, or otherwise does not
communicate information regarding such opportunity to the Company or any
Affiliate thereof.
          (d) Duties of Directors and Officers of the Company. In the event that
a director or officer of the Company who is also a director, officer or employee
of any Tengelmann or its Affiliates acquires knowledge of a potential
transaction or matter which may be an opportunity for the Company or any
Affiliate thereof or, any Tengelmann or its Affiliates, such director or officer
shall to the fullest extent permitted by Law have fully satisfied and fulfilled
his or her duty with respect to such opportunity, and the Company to the fullest
extent permitted by Law acknowledges that it does not have any claim that such
business opportunity constituted an opportunity that should have been presented
to the Company or any Affiliate thereof, if such director or officer acts in a
manner consistent with the following policy: such an opportunity offered to any
person who is an officer or director of the Company, and who is also an officer,
director or employee of any of Tengelmann or its Affiliates, shall belong to
Tengelmann or its Affiliates, unless such opportunity was offered to such person
in his or her capacity as a director, officer or employee of the Company.
          (e) This Section 8.01 is also intended to apply to any Subsidiaries of
the Company. In addition, any references to a director of Tengelmann in this
Section 8.01 shall include any Person performing a similar function. The Company
represents, warrants and agrees that it and its Subsidiaries and their
respective boards of directors have not adopted and will not adopt any codes of
conduct or ethics or other policies inconsistent with this Section 8.01.
          SECTION 8.02. Adjustments. References to numbers of shares and to sums
of money contained herein will be adjusted to account for any reclassification,
exchange, substitution, combination, stock split or reverse stock split of the
shares.
          SECTION 8.03. Changes in Tengelmann Percentage Interest Attributable
to Issuances of the Company’s Equity Securities. (a) To the extent that any
decrease in the Tengelmann Percentage Interest is attributable to issuances of
Equity Securities by the Company (as opposed to dispositions of Equity
Securities of the Company by Tengelmann or its Affiliates) from March 4, 2007
to, but not including, the date hereof, such decrease will not be taken into
account for purposes of this Agreement unless such decrease was attributable to
issuance of Equity Securities by the Company (x) in connection with a Business
Combination by the Company or other acquisition by the Company, other than the
Merger, approved by Tengelmann in accordance with Section 2.04(a)(i) or
2.04(b)(i), (y) for purposes of Article IV only, in connection with which
Tengelmann was entitled to exercise its rights under Article IV hereof or (z) on
or about December 3, 2007 in connection with the Merger, as merger
consideration, but not in any event by any warrants or options issued in
connection with the Merger.

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          (b) Tengelmann represents that Schedule II sets forth, as of the date
of this Agreement, Tengelmann’s beneficial ownership of Equity Securities of the
Company (including Company Common Stock and Convertible Preferred Stock) and the
calculation of the Tengelmann Percentage Interest.
          SECTION 8.04. Notices. All notices, requests, claims, demands and
other communications under this Agreement will be in writing and will be deemed
given (i) when delivered, if delivered in person, (ii) when sent by facsimile
(provided the facsimile is promptly confirmed by telephone confirmation
thereof), (iii) when sent by email (provided the email is promptly confirmed by
telephone confirmation thereof) or (iv) two business days following sending by
overnight delivery by an internationally recognized overnight courier, in each
case to the respective parties at the following addresses (or at such other
address for a party as will be specified in a notice given in accordance with
this Section 8.04):
          (a) if to the Company:
The Great Atlantic & Pacific Tea Company, Inc.
Two Paragon Drive
Montvale, New Jersey 07645
Attn: Allan Richards, Esq.
Fax: (201) 571-4106
Phone: 201-573-9700
Email: richarda@aptea.com
          with a copy (which shall not constitute notice to the Company) to:
Akin Gump Strauss Hauer & Feld LLP
One Bryant Park
New York, New York 10036
Attn: Patrick J. Dooley, Esq.
Fax: (212) 872-1002
Email: pdooley@akingump.com
and,
Cahill Gordon & Reindel LLP
80 Pine Street
New York, New York 10005
Fax: 212-269-5420
Phone: 212-701-3215
Email: korce@cahill.com
Attention: Kenneth W. Orce, Esq.
and,

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McGuireWoods LLP
7 Saint Paul St., Suite 1000
Baltimore, MD 21202-1671
Fax: 410.659.4535
Phone: 410.659.4419
Email: cmartin@mcguirewoods.com
Attention: Cecil E. Martin, III, Esq.
          (b) if to Tengelmann:
Wissollstrasse 5-43
D-45478 Mülheim an der Ruhr
GERMANY
Fax: +49 (0)208 5806 6585
Phone: +49 (0)208 5806 6382
Email: HaubC@APTEA.com,
            fhartmann@uz.tengelmann.de
Attention: Mr. Christian Haub
                 Dr. Frank Hartmann
          with a copy (which shall not constitute notice to Tengelmann) to:
Cravath, Swaine & Moore LLP
825 Eighth Avenue
New York, NY 10019
Fax: 212-474-3700
Phone: 212-474-1000
Email: sjebejian@cravath.com
            lizann.eisen@cravath.com
Attention: Sarkis Jebejian, Esq.
                 LizabethAnn Eisen, Esq.
          SECTION 8.05. Reasonable Efforts; Further Actions. The parties hereto
each will use commercially reasonable efforts to take or cause to be taken all
action and to do or cause to be done all things necessary, proper or advisable
under applicable Laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable.
          SECTION 8.06. Consents. The parties hereto will cooperate, with each
other in filing any necessary applications, reports or other documents with,
giving any notices to, and seeking any consents from, all regulatory bodies and
all Governmental Entities and all Third Parties as may be required in connection
with the consummation of the transactions contemplated by this Agreement.
          SECTION 8.07. Fees and Expenses. (a) Following the date hereof, the
Company and Tengelmann agree, subject to any restrictions under applicable Law,
to negotiate in good faith to enter into a services agreement whereby Tengelmann
would

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provide transactional and other services to the Company as requested from time
to time in exchange for reasonable compensation to Tengelmann as agreed by the
parties.
          (b) The Company will pay its own costs and expenses, and will
reimburse Tengelmann for its reasonable out-of-pocket costs and expenses,
incurred in connection with (a) this Agreement and (b) subject to authorization
of Tengelmann’s activities by the Other Directors, any purchase or sale of more
than 15% of the Company Common Stock outstanding on the date of such purchase or
sale or Business Combination or other strategic transaction or capital
transaction involving the Company, in each case including the reasonable fees
and expenses of counsel, irrespective of when incurred.
          SECTION 8.08. Access to Information; Financial Statements. (a) Upon
reasonable prior written notice, the Company will, and will cause its
Subsidiaries and the Representatives of the Company and its Subsidiaries to,
afford Tengelmann and its Representatives reasonable access, consistent with
applicable Law, to its and its Subsidiaries’ Representatives, and to the books
and records of the Company and its Subsidiaries, and shall furnish Tengelmann
with financial, operating and other data and information of the Company and its
Subsidiaries as Tengelmann may from time to time reasonably request in writing,
including to enable Tengelmann to prepare its financial statements and in
connection with its financial reporting generally. Neither the Company nor its
Subsidiaries shall be required to provide access to or to disclose information
where such access or disclosure would jeopardize the attorney-client privilege
of the Company or its Subsidiaries or contravene any Law (including antitrust
Laws).
          (b) As soon as reasonably practicable following the end of each fiscal
quarter and fiscal year, the Company will furnish to Tengelmann the consolidated
financial statements of the Company (including providing draft statements as
such statements become available and, with respect to fiscal years, audit
reports as such reports become available). The Company shall use its reasonable
best efforts to assist Tengelmann with respect to preparing Tengelmann’s
financial statements and in connection with Tengelmann’s financial reporting
generally, in a manner consistent with past practice. The Company will
cooperate, in a manner consistent with past practice, with and assist Tengelmann
in the translation of the Company’s financial statements in order to conform
such financial statements to applicable German and/or international accounting
standards and shall otherwise provide Tengelmann with access to information
necessary in connection with such financial statements and financial reporting.
          SECTION 8.09. Amendments; Waivers. (a) No provision of this Agreement
may be amended or waived unless such amendment or waiver is in writing and
signed, in the case of an amendment, by the parties hereto or, in the case of a
waiver, by the party against whom the waiver is to be effective.
          (b) The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise will not constitute a waiver of such
rights nor will any single or partial exercise by any party to this Agreement of
any of its rights under this Agreement preclude any other or further exercise of
such rights or any other rights under

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this Agreement. The rights and remedies herein provided will be cumulative and
not exclusive of any rights or remedies provided by Law or otherwise.
          SECTION 8.10. Interpretation. When a reference is made in this
Agreement to an Article, a Section, a subsection or a Schedule, such reference
will be to an Article, a Section, a subsection or a Schedule of this Agreement
unless otherwise indicated. The headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. Whenever the words “include,” “includes” and
“including” are used in this Agreement, they will be deemed to be followed by
the words “without limitation.” The words “hereof,” “herein” and “hereunder” and
words of similar import when used in this Agreement will refer to this Agreement
as a whole and not to any particular provision of this Agreement. The words
“date hereof” will refer to the date of this Agreement. The term “or” is not
exclusive. The word “extent” in the phrase “to the extent” will mean the degree
to which a subject or other thing extends, and such phrase will not mean simply
“if.” The definitions contained in this Agreement are applicable to the singular
as well as the plural forms of such terms. Any agreement, instrument, rule or
statute defined or referred to herein or in any agreement, instrument, rule or
statute that is referred to herein means such agreement, instrument, rule or
statute as from time to time amended, modified or supplemented. References to a
Person are also to its permitted successors and assigns.
          SECTION 8.11. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or Law,
or public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Without limiting the generality of the
foregoing, the invalidity, illegality or unenforceability of the Tengelmann
Mirror Vote provisions hereof will be deemed to materially adversely affect the
economic and legal substance of the transactions contemplated hereby in the
event Tengelmann ceases to comply therewith. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties will negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the purpose of this Agreement is fulfilled to the fullest
extent possible.
          SECTION 8.12. Counterparts. This Agreement may be executed in one or
more counterparts, all of which will be considered one and the same agreement
and will become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
          SECTION 8.13. Entire Agreement; No Third-Party Beneficiaries. This
Agreement constitutes the entire agreement, and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and is not intended to and does not confer upon any Person
other than the parties any rights or remedies.

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          SECTION 8.14. Governing Law. Except to the extent specifically
required by the MGCL, this Agreement will be governed by, and construed in
accordance with, the Laws of the State of New York, regardless of the Laws that
might otherwise govern under applicable principles of conflicts of Laws thereof.
The parties declare that it is their intention that this Agreement will be
regarded as made under the Laws of the State of New York and that the Laws of
the State of New York will be applied in interpreting its provisions in all
cases where legal interpretation will be required, except to the extent that the
MGCL is specifically required by such act to govern the interpretation of this
Agreement.
          SECTION 8.15. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement will be assigned, in whole
or in part, by any of the parties without the prior written consent of the other
parties hereto, except as provided in Section 3.14. Any purported assignment
without such prior written consent will be void. Subject to the preceding
sentences, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
          SECTION 8.16. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in the Supreme Court of the State of
New York sitting in New York County or the United States District Court of the
Southern District of New York, or in each case any appellate court thereof,
without the necessity of proving the inadequacy of money damages as a remedy,
this being in addition to any other remedy to which they are entitled at Law or
in equity. In addition, each of the parties: (a) irrevocably and unconditionally
consents to submit itself and its property to the exclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and in each
case any appellate court thereof, in the event any dispute arises out of this
Agreement, (b) agrees that it will not attempt to deny or defeat such exclusive
jurisdiction by motion or other request for leave from any such court,
(c) irrevocably and unconditionally waives (and agrees not to plead or claim)
any objection to the laying of venue, or the defense of an inconvenient forum to
the maintenance, of any action, suit or proceeding arising out of or relating to
this Agreement, or for recognition or enforcement of any judgment, (d) agrees
that it will not bring any action arising out of or relating to this Agreement
in any court other than the Supreme Court of the State of New York sitting in
New York County or the United States District Court of the Southern District of
New York, or in each case any appellate court thereof, and (e) waives any right
to trial by jury with respect to any action related to or arising out of this
Agreement, or for recognition or enforcement of any judgment. Each of the
parties hereto agrees that a final nonappealable judgment in any such action or
proceeding will be conclusive and may be enforced in other jurisdictions by suit
on the judgment or in any other manner provided by Law. Each of the parties to
this Agreement irrevocably consents to service of process in the manner provided
for delivering notices

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in Section 8.04. Nothing in this Agreement will affect the right of any party to
this Agreement to serve process in any other manner permitted by Law.
          SECTION 8.17. Automatic Termination. (a) Notwithstanding anything to
the contrary contained in this Agreement, this Agreement will automatically
terminate upon the earlier to occur of (i) the percentage of Voting Power in the
Company (determined on the basis of the number of outstanding shares of Voting
Stock of the Company as set forth in the most recent SEC filing of the Company
prior to such date that contained such information) that is beneficially owned
by Tengelmann and its Affiliates equaling 100% or (ii) such percentage equaling
less than 10%. For purposes of clarity, and notwithstanding anything to the
contrary herein, no hedging transaction will be deemed to reduce the Tengelmann
Percentage Interest, result in a termination of this Agreement or result in a
loss of rights under Article II or any other provision hereof.
          (b) Survival. In the event that this Agreement will terminate, all
provisions of this Agreement will terminate and will be void, except
(i) Article III will survive any such termination until Tengelmann and its
Affiliates no longer hold Registrable Securities and (ii) Articles I and VIII
will survive any such termination indefinitely. Nothing in this Section 8.17
will be deemed to release any party from any liability for any willful and
material breach of this Agreement or to impair the right of any party to compel
specific performance by any other party of its obligations under this Agreement.
          SECTION 8.18. Confidentiality. (a) Tengelmann agrees to maintain, and
shall cause its Representatives to maintain, the confidentiality of all material
non-public information obtained by it from the Company or any of its
Subsidiaries or any of their respective Representatives, and not to use such
information for any purpose other (i) than the evaluation of its investment in
the Company, (ii) the protection or Transfer of its investment in the Company,
(iii) the exercise of any of its respective rights under this Agreement and
(iv) the exercise by the Tengelmann Directors of their duties as Directors.
          (b) Notwithstanding the foregoing, the confidentiality obligations of
Section 8.18(a) will not apply to information obtained other than in violation
of this Agreement:
     (i) which Tengelmann or any of its Representatives is required to disclose
by judicial or administrative process, or by other requirements of applicable
Law or regulation or any governmental authority (including any applicable rule,
regulation or order of a self-governing authority, such as the NYSE); provided
that, where and to the extent practicable, the disclosing party (A) gives the
other party reasonable notice of any such requirement and, to the extent
protective measures consistent with such requirement are available, the
opportunity to seek appropriate protective measures and (B) cooperates with such
party in attempting to obtain such protective measures;

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51

     (ii) which becomes available to the public other than as a result of a
breach of Section 8.18(a); or
     (iii) which has been provided to Tengelmann or any of its Representatives
by a Third Party who obtained such information other than from any such Person
or other than as a result of a breach of Section 8.18(a).
          SECTION 8.19. No Liability of Partners. Notwithstanding anything that
may be expressed or implied in this Agreement, the Company acknowledges and
agrees that (i) notwithstanding that Tengelmann may be a partnership, no
recourse hereunder or under any documents or instruments delivered by Tengelmann
in connection herewith may be had against any officer, agent or employee of
Tengelmann or any partner, member or stockholder of Tengelmann or any director,
officer, employee, partner, affiliate, member, manager, stockholder, assignee or
representative of the foregoing (any such Person or entity, a “Representative”),
whether by the enforcement of any judgment or assessment or by any legal or
equitable proceeding, or by virtue of any statute, regulation or other
applicable law and (ii) no personal liability whatsoever will attach to, be
imposed on or otherwise be incurred by any Representative under this Agreement
or any documents or instruments delivered in connection herewith or for any
claim based on, in respect of or by reason of such obligations or by their
creation.
[Signature page to follow.]

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          IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Stockholder Agreement as of the day and year first above written.

            THE GREAT ATLANTIC & PACIFIC
TEA COMPANY, INC.,
      By:   /s/ Brenda Galgano       Name:   Brenda Galgano        Title:  
Senior Vice President, Chief
Financial Officer     

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                      TENGELMANN         WARENHANDELSGESELLSCHAFT KG,    
 
                    By:   Tengelmann Verwaltungs-und             Beteiligungs
GmbH, as Managing
Partner    
 
               
 
      By:  
/s/ Christian W. E. Haub
Name: Christian W. E. Haub    
 
          Title: Managing Director    

Signature Page to Stockholder Agreement

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SCHEDULE I
Investment Banks

1.   J.P. Morgan   2.   Morgan Stanley   3.   UBS Securities LLC   4.   Goldman
Sachs & Co.   5.   Banc of America Securities LLC   6.   Barclays

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SCHEDULE II
Tengelmann’s Equity Securities and Tengelmann Percentage Interest Calculation
Beneficial Ownership

              Equity Securities
Tengelmann Warenhandelsgesellschaft KG
  22,495,371 shares of Common Stock
Karl-Erivan Haub
  13,000 shares of Common Stock
Christian Haub
  281,351 shares of Common Stock
Emil Capital Partners, LLC
  1,290,393 shares of Common Stock

Tengelmann Percentage Interest

      41,602,638  
Shares of Common Stock outstanding as of March 3, 2007
6,781,067  
Shares of Common Stock issued pursuant to Merger
189,618  
Options exercised by Christian Haub
35,000,000  
Convertible Preferred Stock (as converted)
   
 
83,573,323  
 

         
Beneficial ownership of Tengelmann and its affiliates:
    24,080,115  
Tengelmann Convertible Preferred Stock (as converted):
    12,000,000  
 
     
 
    36,080,115  

Tengelmann Percentage Interest : 43.17%

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Exhibit A
Amended and Restated By-Laws of the Company