Exhibit 10.1
 
EXECUTION VERSION

AMENDED AND RESTATED COOPERATION AGREEMENT
 
This AMENDED AND RESTATED COOPERATION AGREEMENT (this “Agreement”) is made and
entered into as of August 11, 2017 (the “Restatement Date”), among Fred’s, Inc.,
a Tennessee corporation (the “Company”), on the one hand, and Alden Global
Capital LLC, a Delaware limited liability company, Strategic Investment
Opportunities LLC, a Delaware limited liability company, and Heath B. Freeman
(collectively, “Alden”), on the other hand. The Company and Alden are each
referred to herein as a “Party” and collectively, as the “Parties.”
 
RECITALS
 
WHEREAS, as of the date hereof, Alden, including its Affiliates and Associates,
beneficially owns, in the aggregate, 9,275,000 shares of Class A voting, no par
value common stock (“Common Stock”), or approximately 24.4% of the Common Stock
issued and outstanding on the date hereof (“Alden’s Ownership”, which defined
term as used herein shall refer to shares of Common Stock beneficially owned by
Alden and its Affiliates and Associates);
 
WHEREAS, the Company and Alden have previously entered into a Cooperation
Agreement, dated April 21, 2017 (the “Original Agreement”), with respect to
certain matters relating to the composition of the Board of Directors of the
Company (the “Board”) and certain other matters, as provided therein; and
 
WHEREAS, the Company and Alden wish to amend and restate the Original Agreement
on the terms set forth herein.
 
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereto, intending to be legally bound hereby, agree as follows:
 
1.             Board Composition and Related Matters.
 
(a)            The Company agrees that the Board and all applicable committees
of the Board shall take all necessary actions, effective as of the next regular
Board meeting (and in any event no later than August 29, 2017)1, to appoint
Heath B. Freeman to the Board.  Steven B. Rossi and Timothy Barton (the
“Independent Designee” and, together with Mr. Rossi and Mr. Freeman, the “Alden
Designees”) will continue to serve on the Board.
 
(b)            The Board and all applicable committees of the Board shall
refrain from separating the Nominating and Governance Committee of the Board
(the “Nominating and Governance Committee”) during the time period starting on
the date hereof and ending on the Termination Date (the “Cooperation Period”). 
Mr. Rossi and Mr. Barton shall continue to serve on each of the Nominating and
Governance Committee and Compensation Committee.  In addition, the Nominating
and Governance Committee and the Compensation Committee shall each continue to
be comprised of four directors, including two Alden Designees on each such
committee. Notwithstanding anything to the contrary in this Agreement, the Board
shall not be obligated to appoint Mr. Freeman onto the Nominating and Governance
Committee or the Compensation Committee, even upon the resignation of any other
Alden Designee.  The Board shall determine the director who shall be chairman of
the Nominating and Governance Committee, the Board shall determine one of the
Alden Designees who shall be the chairman of the Compensation Committee, and the
Board shall take all necessary actions to appoint such individuals as chairman
of the respective committee.  In the event that either the Nominating and
Governance Committee or the Compensation Committee is unable to reach a majority
resolution on any matter under consideration by such committee, then the
chairman of such committee shall submit such matter to the members of the Board
who are “independent” pursuant to the NASDAQ rules for consideration, in which
case only directors who are qualified and eligible to have been members of the
committee in question are permitted to vote on such matter; provided, however,
if the chairman does not submit such matter to the independent members for
consideration within five Business Days following a request for such submission
by a member of such committee, such member of such committee shall be entitled
to submit such matter to the independent members for consideration.
 

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1  The next regular Board meeting is scheduled for August 29, 2017.

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(c)            During the Cooperation Period, the Board shall (i) nominate each
of the Alden Designees for election to the Board at each Stockholder Meeting at
which directors are to be elected; and (ii) cause the Company to file a
definitive proxy statement in respect of each Stockholder Meeting at which
directors are to be elected and recommend that the Company’s stockholders vote
directly or by proxy in favor of, and otherwise use reasonable best efforts to
cause, the election of each of the Alden Designees.
 
(d)       During the Cooperation Period, and so long as either (i) the Board
consists of more than 9 directors immediately prior to any time when an Alden
Designee (or any Replacement Designee (as defined below)) ceases to be a
director for any reason (other than pursuant to Section 1(f) below) or (ii) no
more than 2 Alden Designees are serving on the Board immediately prior to any
time when an Alden Designee (or any Replacement Designee) ceases to be a
director for any reason (other than pursuant to Section 1(f) below), in the
event that an Alden Designee (or any Replacement Designee (as defined below))
ceases to be a director for any reason (other than pursuant to Section 1(f)
below), and at such time Alden’s Ownership is at least the lesser of 10% of the
Company’s then outstanding Common Stock and 3,798,662 shares of Common Stock
(subject to adjustment for stock splits, reclassifications, combinations and
similar adjustments) (the “10% Ownership Threshold”), Alden shall be entitled to
designate, for consideration by the Nominating and Governance Committee, a
candidate for replacement for such Alden Designee (such replacement, a
“Replacement Designee”) in accordance with the process set forth in this Section
1(d); provided, however, if the Board consists of 9 or fewer directors at any
time during the Cooperation Period immediately prior to any time when an Alden
Designee (or any Replacement Designee) ceases to be a director for any reason
(other than pursuant to Section 1(f) below) such that there are 2 remaining
Alden Designees, Alden shall be permitted to propose  a Replacement Designee for
such previous Alden Designee as of any date during the Cooperation Period that
the Board would consist of more than 9 directors with the addition of a
Replacement Designee, provided that Alden’s Ownership is at or above the 10%
Ownership Threshold at such time; provided, further, that each selection of a
Replacement Designee must fully comply with the procedures set forth in this
Section 1(d).  During the Cooperation Period, in the event that an Alden
Designee ceases to be a director for any reason (other than pursuant to Section
1(f) below), and at such time Alden’s Ownership is at least the lesser of 5% of
the Company’s then outstanding Common Stock and 1,899,331 shares of Common Stock
(subject to adjustment for stock splits, reclassifications, combinations and
similar adjustments) (the “5% Ownership Threshold”), and below the 10% Ownership
Threshold, Alden shall be entitled to designate, for consideration by the
Nominating and Governance Committee, a Replacement Designee in accordance with
the process set forth in this Section 1(d); provided, however, that Alden shall
have the foregoing replacement right only if the Alden Designee who ceased to be
a director was the only Alden Designee on the Board. Any Replacement Designee
must (A) qualify as “independent” pursuant to the NASDAQ rules, (B) have served
for at least one year (either currently or at some time previously) as a
director or executive officer of a private or public company with at least $750
million in annual sales, and (C) solely with respect to any Replacement Designee
for the Independent Designee (and any Replacement Designee thereof), be
independent of Alden and its Affiliates and Associates (for the avoidance of
doubt, the nomination by Alden of such person to serve on the board of any other
company shall not (in and of itself) cause such person to not be deemed
independent of Alden) (clauses (A)–(C) the “Director Criteria”).  With respect
to any Replacement Designee, Alden shall have the right to propose a Replacement
Designee who satisfies the Director Criteria for consideration and acceptance by
the Nominating and Governance Committee (such acceptance not to be unreasonably
withheld).  Any Replacement Designee proposed by Alden shall not be a candidate
previously presented by Alden to the Company for consideration as a director
(whether prior to the date hereof or hereafter) and whom the Company refused to
accept. The Nominating and Governance Committee shall consider such candidate
submitted by Alden within five Business Days after a completed D&O questionnaire
has been received by the Nominating and Governance Committee with respect to
such candidate (the form of questionnaire shall be delivered to the Replacement
Designee promptly following his or her designation by Alden). In the event the
Nominating and Governance Committee does not accept the person recommended by
Alden as the first Replacement Designee, Alden shall submit to the Board two
additional candidates who satisfy the Director Criteria.  Among such two
additional candidates submitted by Alden, the Nominating and Governance
Committee shall choose one candidate as the Replacement Designee within five
Business Days after a completed D&O questionnaire has been received by the
Nominating and Governance Committee with respect to each such candidate (the
form of questionnaire shall be delivered to the Replacement Designee(s) within
five Business Days following their designation by Alden).  The Board shall
appoint such candidate approved by the Nominating and Governance Committee
within five Business Days. Upon a Replacement Designee’s appointment to the
Board, the Board and the Nominating and Governance Committee shall take all
necessary actions to appoint such Replacement Designee to the Nominating and
Governance Committee and the Compensation Committee. Unless a clear, contrary
interpretation applies, each reference herein to an “Alden Designee” shall
include a reference to any Replacement Designee with respect thereto.
 
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(e)            The size of the Board shall be no more than 9 directors
immediately following the execution of this Agreement until the Termination
Date; provided, however, the Board size may be increased up to 11 directors in
order to accommodate additional directors approved by the Board.  The Company
shall not be required to offer Alden any  directorships if the size of the Board
is expanded.  Effective immediately following the execution of this Agreement,
Mr. Freeman shall be entitled to interview the final candidate for the
appointment of the next member of the Board.  The Board shall not appoint any
new directors to the Board with an effective date prior to the effective date of
Mr. Freeman’s appointment to the Board.
 
(f)            In the event Alden’s Ownership fails to satisfy the 10% Ownership
Threshold at any time prior to the Termination Date, Alden shall designate one
or more Alden Designees who shall immediately resign from the Board and all
committees thereof such that there is only one remaining Alden Designee on the
Board (unless there is only one Alden Designee on the Board at such time).  In
the event Alden’s Ownership fails to satisfy the 5% Ownership Threshold at any
time prior to the Termination Date, all remaining Alden Designees shall
immediately resign from the Board and all committees thereof.  Prior to
appointment to the Board, each Alden Designee and any Replacement Designee shall
execute an irrevocable resignation as director in the form attached hereto as
Exhibit A.
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(g)            The Company shall hold the 2019 annual meeting of stockholders
(the “2019 Annual Meeting”) no later than June 30, 2019.
 
2.             Voting.
 
(a)            During the Cooperation Period, Alden agrees that it will appear
in person or by proxy at each Stockholder Meeting and vote all shares of Common
Stock beneficially owned by Alden at such Stockholder Meeting in accordance with
the Board’s recommendations with respect to (A) each election of directors and
any removal of directors, (B) the ratification of the appointment of the
Company’s independent registered public accounting firm, (C) the Company’s
“say-on-pay” proposal and (D) any other proposal to be submitted to the
stockholders of the Company; provided, however, that in the event that both
Institutional Shareholder Services Inc. (“ISS”) and Glass Lewis & Co., LLC
(“Glass Lewis”) recommend otherwise with respect to the Company’s “say-on-pay”
proposal or any other Company proposal or stockholder proposal (other than
proposals relating to the election of directors), Alden shall be permitted to
vote in accordance with the ISS and Glass Lewis recommendations; provided;
further, that Alden shall be permitted to vote in its discretion on any proposal
of the Company at any Stockholder Meeting in respect of any Extraordinary
Transaction or any Equity Issuance (other than a Compensation Equity Issuance);
provided, further, that with respect to any proposal of the Company at any
Stockholder Meeting in respect of a Compensation Equity Issuance, (A) if either
ISS or Glass Lewis recommend in favor of such Compensation Equity Issuance,
Alden shall vote in accordance with the Board’s recommendations, and (B) if both
ISS and Glass Lewis recommend otherwise with respect to such Compensation Equity
Issuance, Alden shall be permitted to vote in its discretion.
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(b)            During the Cooperation Period, Alden shall not execute any proxy
card, consent, consent revocation or voting instruction form in respect of any
Stockholder Meeting other than the proxy card and related voting instruction
form being solicited by or on behalf of the Board. Alden agrees that it shall
not, and that it shall not permit any of its Affiliates and Associates to,
directly or indirectly, take any action inconsistent with this Section 2;
provided, however, nothing in this Section 2(b) shall be deemed to prevent Alden
from voting all shares of Common Stock beneficially owned by Alden as expressly
permitted under Section 2(a).
 
3.             Standstill.  During the Cooperation Period, without the prior
written consent of the Board, Alden shall not, and shall cause its Affiliates
and Associates under its control not to, directly or indirectly:
 
(a)            (i) nominate, give notice of an intent to nominate, or recommend
for nomination a person for election at any Stockholder Meeting at which
directors of the Board are to be elected; (ii) initiate, encourage or
participate in any solicitation of proxies in respect of any election contest
with respect to the Company’s directors; (iii) submit any stockholder proposal
for consideration at, or bring any other business before, any Stockholder
Meeting; (iv) initiate, encourage or participate in any solicitation of proxies
in respect of any stockholder proposal for consideration at, or bring any other
business before, any Stockholder Meeting; (v) initiate, encourage or participate
in any “withhold” or similar campaign with respect to any Stockholder Meeting or
any solicitation of written consents of stockholders; or (vi) request, or
initiate, encourage or participate in any request to call, a special meeting of
the Company’s stockholders; provided, however, that from and after January 1,
2019, nothing in this Agreement shall prevent Alden or its Affiliates or
Associates from taking actions in furtherance of identifying director candidates
in connection with the 2019 Annual Meeting or any Shareholder Requested Special
Meeting scheduled to be held following the Termination Date, so long as such
actions do not create a public disclosure obligation for Alden or the Company
and are undertaken on a basis reasonably designed to be confidential and in
accordance in all material respects with Alden’s normal practices in the
circumstances;
 
(b)            (i) acquire, offer or propose to acquire, or agree to acquire,
directly or indirectly, whether by purchase, tender or exchange offer, through
the acquisition of control of another person, by joining a partnership, limited
partnership, syndicate or other group (including any group of persons that would
be treated as a single “person” under Section 13(d) of the Exchange Act),
through swap or hedging transactions or otherwise, any voting securities of the
Company or any voting rights decoupled from the underlying voting securities of
the Company; provided, however, that Alden and its Affiliates and Associates
shall be permitted to acquire additional shares of Common Stock in accordance
with Section 5(g); or (ii) knowingly sell, offer or agree to sell through swap
or hedging transactions or otherwise, the voting securities of the Company or
any voting rights decoupled from the underlying voting securities held by Alden
or its Affiliates or Associates to any filer of a Schedule 13D in respect of the
Company or any stockholder of the Company who has an ownership interest of 5.0%
or more of the then-outstanding shares of Common Stock at the time of such sale,
offer or agreement (except for Schedule 13G filers that are mutual funds,
pension funds or index funds with no known history of activism);
 
(c)            form, join or in any way participate in any group with respect to
any voting securities of the Company in connection with any election or removal
contest with respect to the Company’s directors or any stockholder proposal or
other business brought before any Stockholder Meeting; provided, however, that
nothing herein shall limit the ability of an Affiliate of Alden to join Alden’s
13(d) “group” following the execution of this Agreement, so long as any such
Affiliate agrees to be bound by the terms and conditions of this Agreement;
 
(d)            deposit any Company voting securities in any voting trust or
subject any Company voting securities to any arrangement or agreement with
respect to the voting thereof;
 
(e)            seek, alone or in concert with others, to amend any provision of
the Company’s charter or bylaws; provided, however, that nothing herein shall be
deemed to restrict the ability of any Alden Designee to privately propose any
changes he deems appropriate in accordance with his fiduciary duties as a
director of the Company;
 
(f)            demand an inspection of the Company’s books and records;
 
(g)            (i) make any offer or proposal (with or without conditions) with
respect to any merger, acquisition, recapitalization, restructuring, disposition
or other business combination involving Alden or its Affiliates or Associates
and the Company, (ii) solicit a Third Party to make an offer or proposal (with
or without conditions) with respect to any merger, acquisition,
recapitalization, restructuring, disposition or other business combination
involving the Company, or publicly encourage, initiate or support any Third
Party in making such an offer or proposal, or (iii) publicly comment on any
Third Party proposal regarding any merger, acquisition, recapitalization,
restructuring, disposition, or other business combination with respect to the
Company by such Third Party prior to such proposal becoming public;
 
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(h)            enter into any negotiations, agreements or understandings with
any Third Party with respect to the foregoing, or encourage or seek to persuade
any Third Party to take any action with respect to any of the foregoing, or
otherwise take or cause any action materially inconsistent with any of the
foregoing; or
 
(i)            take any action challenging the validity or enforceability of
this Section 3 or this Agreement, or publicly make or in any way advance
publicly any request or proposal that the Company or Board amend, modify or
waive any provision of this Agreement.
 
Nothing in this Section 3 shall be deemed to limit the ability of any Alden
Designee to exercise his fiduciary duties under law solely in his capacity as a
director of the Company and in a manner consistent with his obligations under
this Agreement.  Notwithstanding anything in this Section 3 to the contrary, in
respect of any stockholder vote on a proposal of the Company in respect of any
Equity Issuance (other than any Pro Rata Equity Issuance), Alden shall be
permitted to issue a one-time statement in accordance with Rule 14a-1(l)(iv)
under the Exchange Act as to how Alden intends to vote and the reasons
therefor.  Such press release shall not exceed three sentences and forty words
and shall be subject to Section 7 (Mutual Non-Disparagement) hereof.  For the
avoidance of doubt, with the exception of the foregoing one-time statement,
Alden shall be prohibited, publicly and privately, from soliciting any proxies
or otherwise advocating against any proposal of the Company in respect of any
Equity Issuance.  In addition, as of the execution and delivery of this
Agreement, Alden hereby withdraws any and all prior demands to inspect the
Company’s books and records and waives in all respects compliance by the Company
with any applicable notice, response or other provisions of the applicable
statutes relating thereto.
 
4.             No Litigation. During the Cooperation Period:
 
(a)            Alden covenants and agrees that it shall not, and shall not
permit any of its Representatives to, directly or indirectly, alone or in
concert with others, encourage, pursue, or assist any other person to threaten,
initiate or pursue, any lawsuit, claim or proceeding before any court
(collectively, “Legal Proceeding”) against the Company or any of its
Representatives, except for any Legal Proceeding initiated (i) to remedy a
breach of or to enforce this Agreement or (ii) to challenge any Equity Issuance
(including any Exempted Equity Issuance) or any action of the Board that Alden
believes to be motivated by entrenchment purposes, in each case, other than
Equity Issuances in which (A) at least one of the Alden Designees votes in favor
such Equity Issuance in his capacity as a member of the Board, (B) either ISS or
Glass Lewis recommends a vote in favor of such Equity Issuance (if subject to
shareholder vote), (C) Alden (in its capacity as a shareholder) votes in favor
of such Equity Issuance (if subject to shareholder vote), or (D) Alden provides
notice of its intent to exercise its Participation Right in accordance with
Section 5(c) (for the avoidance of doubt, the limitations set forth in the
foregoing (A)-(D) do not limit Alden’s rights to challenge any transaction
underlying such Equity Issuance if otherwise permitted by Section 4(a)(ii));
provided, however, that the foregoing shall not prevent Alden or its
Representatives from responding to oral questions, interrogatories, requests for
information or documents, subpoenas, civil investigative demands or similar
processes (each, a “Legal Requirement”) in connection with any Legal Proceeding
if such Legal Proceeding has not been initiated by, or on behalf of, or at the
suggestion of, Alden or any of its Representatives; provided, further, that in
the event Alden or any of its Representatives receives such Legal Requirement,
such Party shall give prompt written notice of such Legal Requirement to the
Company.
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(b)            The Company covenants and agrees that it shall not, and shall not
permit any of its Representatives to, directly or indirectly, alone or in
concert with others, encourage, pursue, or assist any other person to threaten,
initiate or pursue, any Legal Proceedings against Alden or any of its
Representatives, except for any Legal Proceeding initiated solely to remedy a
breach of or to enforce this Agreement; provided, however, that the foregoing
shall not prevent the Company or any of its Representatives from responding to a
Legal Requirement in connection with any Legal Proceeding if such Legal
Proceeding has not been initiated by, or on behalf of, or at the suggestion of,
the Company or any of its Representatives; provided, further, that in the event
the Company or any of its Representatives receives such Legal Requirement, the
Company shall give prompt written notice of such Legal Requirement to Alden.
 
5.             Equity Issuances.
 
(a)            During the Cooperation Period, the Company shall provide Alden
and its Affiliates and Associates with the opportunity to participate (the
“Participation Right”) on a pro rata basis in any Equity Issuance other than an
Exempted Equity Issuance (a “Pro Rata Equity Issuance”).  All references to
Alden in this Section 5 shall include Alden and its Affiliates and Associates. 
The term “Exempted Equity Issuance” means any Equity Issuance (i) pursuant to
any compensation plan, program, policy, contract or arrangement approved by the
Board (a “Compensation Equity Issuance”) not exceeding in the aggregate 4.5% of
the issued and outstanding shares of the Common Stock as of the date of this
Agreement (for purposes of calculating the foregoing, all Derivative Securities,
issued or granted (or to be issued or granted) in connection with any such
Exempted Equity Issuances shall be deemed to be converted or exercised into
Common Stock, and for purposes of Compensation Equity Issuances that exceed in
the aggregate 4.5% of the issued and outstanding shares of the Common Stock as
of the date of this Agreement, Alden’s Participation Right with respect to such
Equity Issuance is limited to the portion of such Equity Issuance in excess of
4.5% of the issued and outstanding shares of the Common Stock as of the date of
this Agreement), (ii) in connection with a merger or other business combination
acquisition (a “Business Combination Equity Issuance”), or (iii) to all
then-existing stockholders in connection with any stock split, stock dividend,
reclassification or recapitalization of the Company.
 
(b)            Before Alden may exercise the Participation Right, the Company
shall provide written notice (the “Issuance Notice”) to Alden stating (i) the
Company’s intention to effect a Pro Rata Equity Issuance; (ii) the total number
of equity securities to be issued in such Pro Rata Equity Issuance and Alden’s
pro rata portion of such securities (such pro rata portion, the “Pro Rata Equity
Securities”); and (iii) the cash price for which the Company proposes to issue
the Pro Rata Equity Securities (the “Issuance Price”).
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(c)            Alden shall have 48 hours from the time of its receipt of the
Issuance Notice to give written notice to the Company of its intent to exercise
its right to acquire all or a portion of the Pro Rata Equity Securities.  If
Alden gives timely notice of its intent to acquire all or a portion of such Pro
Rata Equity Securities, then the purchase and sale of such Pro Rata Equity
Securities shall close at the same time as the Pro Rata Equity Issuance.
 
(d)            If Alden affirmatively declines or fails to properly exercise its
Participation Right to acquire all or a portion of the Pro Rata Equity
Securities or fails to give timely notice to the Company of its intent to
acquire all or a portion of the Pro Rata Equity Securities, the Company shall be
free to issue all or a portion of the Pro Rata Equity Securities to Third
Parties; provided, however, that such issuance shall be consummated within 30
days (or within 90 days in the event such issuance requires stockholder approval
under the NASDAQ rules) after receipt of the Issuance Notice by Alden and shall
be consummated on terms no less favorable to the Company than the terms proposed
in the Issuance Notice.  To the extent that the Equity Issuance is not
consummated within these time periods, the Company will be obligated to send a
new Issuance Notice to Alden.
 
(e)            Notwithstanding anything contained herein, during the Cooperation
Period, the Company may not issue or grant any Equity Issuance (including
through an Exempted Equity Issuance) with special voting or super majority
voting power.

 
(f)            Notwithstanding anything to the contrary herein, if the Company
proposes to effect a Pro Rata Equity Issuance in an underwritten offering
pursuant to a registration statement that has been filed with the SEC or in a
private placement to more than one institutional investor (a “Marketed
Offering”), the following shall apply:

 
(i)             The Issuance Notice may (A) in lieu of providing the price at
which the Company proposes to issue the Pro Rata Equity Securities as a fixed
dollar amount, provide an estimated range of prices per share within which the
underwriter or placement agent, as the case may be, for such offering reasonably
estimates the Pro Rata Equity Securities will ultimately be priced (the
“Estimated Price”) and (B) in lieu of providing an exact number of Pro Rata
Equity Securities to be issued by the Company in such offering, provide an
estimated number the underwriter or placement agent, as the case may be, for
such offering reasonably estimates will ultimately be issued in such offering
(the “Offering Size”). If Alden desires to exercise its rights under this
Section 5(f)(i) with respect to a Marketed Offering, Alden shall be required to
make an election with respect to the purchase of up to a number of equity
securities being offered equal to its pro rata portion of the Offering Size no
later than 48 hours from the date of receipt of the Issuance Notice; provided,
however, that Alden’s obligation to purchase the number of equity securities
subject to its election shall be conditioned upon the issuance by the Company of
a number of shares of equity securities at least equal to the Offering Size and
the price per share shall be no greater than the highest price per share in the
Estimated Price. For the avoidance of doubt, the price to be paid by Alden in
any underwritten offering shall be the price to the public and not the price to
the underwriters.
 
(ii)           Any Issuance Notice provided by the Company to Alden in
connection with a Marketed Offering may specify a number of equity securities
that the underwriters or agents in such offering, or institutional investors,
shall be entitled to purchase upon exercise of an overallotment option, if any
(the “Overallotment Shares”). If Alden desires to exercise its rights under this
Section 5(f)(ii) with respect to Overallotment Shares, Alden shall be required
to make an election with respect to the purchase of up to its pro rata portion
of the Overallotment Shares at the same time Alden makes an election pursuant to
Section 5(f)(i).

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(iii)            In the event an offering contemplated by this Section 5(f) is
consummated, Alden shall be obligated to purchase its equity securities
hereunder at the closing of such offering on the same terms and subject to the
same conditions that would be applicable to the underwriters or institutional
investors in such offering.

(g)            To the extent the Company effects an Equity Issuance (including
any Compensation Equity Issuance or Business Combination Equity Issuance) which
results in an aggregate increase of 4.5% or more of the issued and outstanding
Common Stock from the amount of shares of Common Stock issued and outstanding as
of the date of this Agreement,  Alden and its Affiliates and Associates shall be
permitted to acquire additional shares of Common Stock up to the percentage of
the shares of Common Stock outstanding in the aggregate beneficially owned by
Alden immediately prior to such Equity Issuance (the “Top-Up Option”) during the
first 45 trading days in which their ability to purchase Common Stock is not
restricted by any blackout periods under the Company’s insider trading policy or
otherwise, such 45 trading day period to commence at the conclusion of such
Equity Issuance, and the Company shall take any actions that may be required in
order to permit Alden and its Affiliates and Associates to acquire such shares
of Common Stock.  With respect to a Business Combination Issuance, the 45
trading day period referred to in the previous sentence shall be replaced with a
90 day trading period.  To the extent that the Company effects (i) a Marketed
Offering (as such term is defined in Section 5(f)) or (ii) a private placement
to Third Party investors and Alden and its Affiliates and Associates do not
exercise their Participation Rights with respect to such Marketed Offering or
private placement, Alden and its Affiliates and Associates may only exercise the
Top-Up Option during the first 45 trading days in which their ability to
purchase Common Stock is not restricted by any blackout periods under the
Company’s insider trading policy or otherwise, such 45 trading day period to
commence at the conclusion of the Marketed Offering or private placement.  The
Top-Up Option may not be exercised if Alden and its Affiliates and Associates
exercised their Participation Right in connection with a Marketed Offering or a
private placement.  For purposes of calculating the 4.5% or more increase in the
issued and outstanding shares and the percentage of the shares of Common Stock
outstanding in the aggregate beneficially owned by Alden immediately after an
Equity Issuance, all Derivative Securities, issued or granted (or to be issued
or granted) in connection with any such Equity Issuances will be deemed to be
converted or exercised into Common Stock.  For purposes of calculating the
percentage of the shares of Common Stock outstanding in the aggregate
beneficially owned by Alden immediately prior to an Equity Issuance, (i) such
percentage shall be increased to offset any dilution of Alden’s beneficial
ownership resulting from prior Equity Issuances, if any (including any
Compensation Equity Issuances  or Business Combination Equity Issuances) which
do not result in an aggregate increase of 4.5% or more of the issued and
outstanding Common Stock from the amount of shares of Common Stock issued and
outstanding as of the date of this Agreement and (ii) if the Top-Up Option is
being exercised in connection with a Compensation Equity Issuance or Business
Combination Equity Issuance that exceeds 4.5% of the issued and outstanding
shares of the Common Stock as of the date of this Agreement, such percentage
shall be decreased by Alden’s pro rata portion of 4.5%.
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6.             Registration Rights.  The Parties hereby reaffirm and ratify the
terms and conditions of the Registration Rights Agreement between the Company
and Alden, dated May 24, 2017.
 
7.             Mutual Non-Disparagement.  Subject to applicable law, each of the
Parties covenants and agrees that, during the Cooperation Period, neither it nor
any of its respective Representatives, agents, subsidiaries, affiliates,
successors, assigns, officers, key employees or directors, shall in any way make
any public statement that constitutes or would reasonably be expected to
constitute an ad hominem on or otherwise disparages, calls into disrepute or
otherwise defames or slanders the Other Party or such Other Party’s
Representatives, subsidiaries, affiliates, successors, assigns, officers
(including any current officer of a Party or a Party’s subsidiaries who no
longer serves in such capacity following the execution of this Agreement),
directors (including any current director of a Party or a Party’s subsidiaries
who no longer serves in such capacity following the execution of this
Agreement), employees, stockholders, agents, attorneys or representatives, or
any of their businesses, products or services.
 
8.             Press Release and SEC Filings.
 
(a)            No later than one Business Day following the execution of this
Agreement, the Company shall issue a mutually agreeable press release (the
“Press Release”) announcing certain terms of this Agreement in the form attached
hereto as Exhibit B.  Prior to the issuance of the Press Release and subject to
the terms of this Agreement, neither the Company (including the Board and any
committee thereof) nor Alden shall issue any press release or make public
announcement regarding this Agreement or the matters contemplated hereby without
the prior written consent of the Other Party.  During the Cooperation Period,
neither the Company nor Alden shall make any public announcement or statement
(including, without limitation, in any filing required under the Exchange Act)
concerning the subject matter of this Agreement that is inconsistent with or
contrary to the terms of this Agreement, except as required by law or applicable
stock exchange listing rules or with the prior written consent of the Other
Party and otherwise in accordance with this Agreement.
 
(b)            No later than two Business Days following the execution of this
Agreement, Alden shall file with the SEC an amendment to its Schedule 13D dated
December 22, 2016 (as amended on April 25, 2017) in compliance with Section 13
of the Exchange Act, reporting its entry into this Agreement, disclosing
applicable items to conform to its obligations hereunder and appending this
Agreement as an exhibit thereto (the “Schedule 13D Amendment”).  The Schedule
13D Amendment shall be consistent with the Press Release and the terms of this
Agreement.  Alden shall provide the Company and its Representatives with a
reasonable opportunity to review the Schedule 13D Amendment prior to it being
filed with the SEC and consider in good faith any comments of the Company and
its Representatives.
 
(c)            No later than four Business Days following the execution of this
Agreement, the Company shall file with the SEC a Current Report on Form 8-K,
reporting its entry into this Agreement and appending this Agreement and the
Press Release as an exhibit thereto (the “Form 8-K”).  The Form 8-K shall be
consistent with the Press Release and the terms of this Agreement.  The Company
shall provide Alden and its Representatives with a reasonable opportunity to
review and comment on the Form 8-K prior to the filing with the SEC and consider
in good faith any comments of Alden and its Representatives.
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9.             Compliance with Securities Laws.  Alden acknowledges that the
U.S. securities laws generally prohibit any person who has received material,
non-public information concerning an issuer from purchasing or selling
securities of such issuer or from communicating such information to any other
person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell such securities.  As long as Mr. Freeman or
another principal or employee of Alden is on the Board, Alden shall not purchase
or sell, directly or indirectly, any securities of the Company during any
blackout periods under the Company’s insider trading policy; provided, however,
that nothing herein shall prohibit Alden from purchasing or selling any
securities of the Company pursuant to a 10b5-1 trading plan that complies with
Rule 10b5-1 under the Exchange Act and has been approved by the Company.
 
10.           Right of First Refusal.
 
(a)            During the Cooperation Period, Alden hereby grants the Company an
exclusive option (the “Right of First Refusal”) to purchase any shares of Common
Stock offered by Alden that Alden proposes to transfer in a single transaction
or series of related transactions in a privately negotiated transaction equal to
5% or more of the Common Stock issued and outstanding on the date thereof (any
such proposed transfer, a “Block Sale”). A Block Sale shall not include any
transfer from Alden to an Affiliate or an Associate, and any such transfer shall
not be subject to this Section 10; provided, however, such Affiliate or
Associate shall be subject to the provisions of Section 11 (Affiliates and
Associates).
 
(b)            Before Alden may effect a Block Sale, Alden shall provide written
notice (the “ROFR Notice”) to the Company stating (i) Alden’s bona fide
intention to transfer such shares in a Block Sale; (ii) the number of shares to
be transferred to such transferee (the “Transfer Shares”); and (iii) the bona
fide cash price or other consideration for which Alden proposes to transfer such
shares (the “Offer Price”).
 
(c)            The Company shall have 48 hours from the time of its receipt of
the ROFR Notice to give written notice to Alden of its intent to exercise its
Right of First Refusal to acquire all of such Transfer Shares. If the Company
gives timely notice of its intent to exercise its Right of First Refusal to
acquire all of such Transfer Shares, then it shall have 48 hours to tender the
Offer Price for such shares to Alden.  Upon receipt of the Offer Price, Alden
shall take all actions necessary to convey title to such Transfer Shares to the
Company or its designee, and Alden shall have no further rights to such Transfer
Shares.
 
(d)            If the Company affirmatively declines or fails to properly
exercise its Right of First Refusal or fails to give timely notice to Alden of
its intent to exercise its Right of First Refusal, Alden shall be free to sell
all, but not less than all, of the Transfer Shares; provided, however, that such
Block Sale shall be consummated within 30 days after receipt of the ROFR Notice
by the Company and shall be consummated on terms no less favorable to Alden than
the terms proposed in the ROFR Notice. To the extent that such Block Sale is not
consummated within this time period, Alden will be obligated to send a new ROFR
Notice to the Company.
 
11.           Affiliates and Associates. Each Party shall cause its Affiliates
and Associates to comply with the terms of this Agreement and shall be
responsible for any breach of this Agreement by any such Affiliate or Associate.
A breach of this Agreement by an Affiliate or Associate of a Party, if such
Affiliate or Associate is not a party to this Agreement, shall be deemed to
occur if such Affiliate or Associate engages in conduct that would constitute a
breach of this Agreement if such Affiliate or Associate was a Party to the same
extent as a Party to this Agreement.
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12.           Representations and Warranties.
 
(a)            Alden represents and warrants that it has full power and
authority to execute, deliver and carry out the terms and provisions of this
Agreement and to consummate the transactions contemplated hereby, and that this
Agreement has been duly and validly executed and delivered by Alden, constitutes
a valid and binding obligation and agreement of Alden and is enforceable against
Alden in accordance with its terms.  Alden represents and warrants that, as of
the date of this Agreement, Alden’s Ownership is 9,275,000 shares of the Common
Stock, Alden has voting authority over such shares, and Alden owns no Synthetic
Equity Interests or any Short Interests in the Company.  Alden represents and
warrants that it has not formed, is no member of, any group with any other
person (other than the members of the group formed pursuant to Alden’s Schedule
13D filed with the SEC) and does not act in concert with any other stockholder
of the Company.
 
(b)            The Company hereby represents and warrants that it has the power
and authority to execute, deliver and carry out the terms and provisions of this
Agreement and to consummate the transactions contemplated hereby, that this
Agreement has been duly and validly authorized, executed and delivered by the
Company, constitutes a valid and binding obligation and agreement of the Company
and is enforceable against the Company in accordance with its terms and that
prior to the execution of this Agreement, consistent with their fiduciary
duties, the Board approved the Alden Designees.  The Company further represents
and warrants that, as of the date of this Agreement, the Company has no
intention to effect, or seek to effect, any Equity Issuance (other than
Compensation Equity Issuances) in the time period prior to January 1, 2019.
 
13.           Termination.
 
(a)            This Agreement shall remain in effect until terminated by either
Party.  Each Party shall have the right to terminate this Agreement by giving
five Business Days’ prior written notice to the Other Party at any time after
the earlier of (i) March 1, 2019 and (ii) the date that is fifteen Business
Days’ prior to the deadline for the submission of stockholder nominations for
the 2019 Annual Meeting (the effective date of such termination of this
Agreement, the “Termination Date”).
 
(b)            Notwithstanding anything to the contrary in this Agreement:
 
(i)         the obligations of Alden pursuant to Sections 2 (Voting), 3
(Standstill), 4 (No Litigation), 7 (Mutual Non-Disparagement) and 10 (Right of
First Refusal) shall terminate in the event that the Company materially breaches
its obligations pursuant to Sections 1 (Board Composition and Related Matters),
4 (No Litigation), 5 (Equity Issuances) or 7 (Mutual Non-Disparagement) or the
representations and warranties in Section 12(b) of this Agreement and such
breach (if capable of being cured) has not been cured within 15 days following
written notice of such breach; provided, however, that any termination in
respect of a breach of Section 7 (Mutual Non-Disparagement) shall require a
determination of a court of competent jurisdiction that the Company has
materially breached Section 7 (Mutual Non-Disparagement); provided, further,
that the obligations of Alden pursuant to Section 4 (No Litigation) shall
terminate immediately in the event that the Company materially breaches its
obligations under Section 4 (No Litigation); and
12

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(ii)        the obligations of the Company pursuant to Section 1 (Board
Composition and Related Matters), Section 4 (No Litigation), Section 5 (Equity
Issuances) and Section 7 (Mutual Non-Disparagement) shall terminate in the event
that Alden materially breaches its obligations in Section 2 (Voting), Section 3
(Standstill), Section 4 (No Litigation), Section 7 (Mutual Non-Disparagement),
Section 10 (Right of First Refusal) or Section 18 (Confidentiality) or the
representations and warranties in Section 12(a) and such breach (if capable of
being cured) has not been cured within 15 days following written notice of such
breach; provided, however, that any termination in respect of a breach of
Section 7 (Mutual Non-Disparagement) shall require a determination of a court of
competent jurisdiction that Alden has materially breached Section 7 (Mutual
Non-Disparagement); provided, further, that the obligations of the Company
pursuant to Section 4 (No Litigation) shall terminate immediately in the event
that Alden materially breaches its obligations under Section 4 (No Litigation).
 
(c)            Except as otherwise provided herein, this Agreement shall
terminate on the Termination Date, except that Section 11 (Affiliates and
Associates), Section 15 (Notices), Section 16 (Governing Law; Jurisdiction),
Section 17 (Specific Performance), Section 18 (Confidentiality), Section 19
(Certain Definitions and Interpretations), Section 20 (Miscellaneous) and
Section 21 (Effectiveness of Original Agreement) shall continue to be in effect
for a period of two years following the Termination Date, and solely in the
event of a termination of this Agreement by either Party pursuant to Section
13(a)(ii) shall continue to be in effect for a period until six months following
the Termination Date.  Upon the Termination Date, this Agreement shall become
null and void, but no termination shall relieve any Party from liability for any
breach of this Agreement prior to such termination.
 
14.           Expenses.  The Company shall reimburse Alden for its reasonable,
documented out-of-pocket fees and expenses (including legal expenses) incurred
in connection with Alden’s negotiation and execution of this Agreement,
including its Schedule 13D Amendment, up to a maximum amount of $100,000 in the
aggregate.
 
15.           Notices.  All notices, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered by hand,
with written confirmation of receipt; upon sending if sent by facsimile to the
facsimile numbers below, with electronic confirmation of sending; one day after
being sent by a nationally recognized overnight carrier to the addresses set
forth below; or when actually delivered if sent by any other method that results
in delivery, with written confirmation of receipt:
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If to the Company:
 
Fred’s, Inc.
4300 New Getwell Road
Memphis, Tennessee 38118
Attention:  General Counsel
Facsimile:  901.366.6772
with a copy (which shall not constitute notice) to:
 
Vinson & Elkins L.L.P.
666 Fifth Avenue, 26th Floor
New York, NY  10103-0040
Attention:  Kai H. Liekefett, Esq., Lawrence S. Elbaum, Esq., Shaun Mathew, Esq.
Facsimile:  917.849.5337
   
If to Alden:
 
Alden Global Capital LLC
885 Third Avenue
New York, New York 10022
Attention: Heath Freeman
Facsimile: 212.751.9501
with a copy (which shall not constitute notice) to:
 
Olshan Frome Wolosky LLP
1325 Avenue of the Americas
New York, NY 10019
Attention:  Steve Wolosky, Esq., Andrew M. Freedman, Esq.
Facsimile:  212.451.2222

 
16.           Governing Law; Jurisdiction.  This Agreement, and any disputes
arising out of or related to this Agreement (whether for breach of contract,
tortious conduct or otherwise), shall be governed by and construed and enforced
in accordance with the laws of the State of Delaware without reference to the
conflict of laws principles thereof that would result in the application of the
law of another jurisdiction.  Each Party hereto irrevocably agrees that any
legal action or proceeding with respect to this Agreement and the rights and
obligations arising hereunder, or for recognition and enforcement of any
judgment in respect of this Agreement and the rights and obligations arising
hereunder brought by the Other Party hereto or its successors or assigns, shall
be brought and determined exclusively in the Delaware Court of Chancery and any
state appellate court therefrom within the State of Delaware (or, if the
Delaware Court of Chancery declines to accept jurisdiction over a particular
matter, any federal court within the State of Delaware).  Each Party hereto
hereby irrevocably submits with regard to any such action or proceeding for
itself and in respect of its property, generally and unconditionally, to the
personal jurisdiction of the aforesaid courts and agrees that it will not bring
any action relating to this Agreement in any court other than the aforesaid
courts.  Each Party hereto hereby irrevocably waives, and agrees not to assert
in any action or proceeding with respect to this Agreement, (a) any claim that
it is not personally subject to the jurisdiction of the above-named courts for
any reason, (b) any claim that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise)
and (c) to the fullest extent permitted by applicable legal requirements, any
claim that (i) the suit, action or proceeding in such court is brought in an
inconvenient forum, (ii) the venue of such suit, action or proceeding is
improper or (iii) this Agreement, or the subject matter hereof, may not be
enforced in or by such courts. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT.
 
17.           Specific Performance.  Alden, on the one hand, and the Company, on
the other hand, acknowledges and agrees that irreparable injury to the Other
Party would occur in the event any provision of this Agreement were not
performed in accordance with such provision’s specific terms or were otherwise
breached or threatened to be breached and that such injury would not be
adequately compensable by the remedies available at law (including the payment
of money damages).  It is accordingly agreed that Alden, on the one hand, and
the Company, on the other hand (each, the “Moving Party”), shall each be
entitled to specific enforcement of, and injunctive relief to prevent any
violation of, the terms hereof, and the Other Party shall not take action,
directly or indirectly, in opposition to the Moving Party seeking such relief on
the grounds that any other remedy or relief is available at law or in equity. 
This Section 17 shall not be the exclusive remedy for any violation of this
Agreement.
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18.           Confidentiality.
 
(a)            For so long as at least one Alden Designee is serving as a
director on the Board, an Alden Designee, if he wishes to do so, may provide
confidential information of the Company which such Alden Designee learns in his
capacity as a director of the Company, including discussions or matters
considered in meetings of the Board or Board committees (collectively,
“Confidential Information”), to Alden and its Representatives; provided,
however, that Alden (i) shall comply with the Confidentiality Agreement with the
Company dated April 21, 2016, (ii) shall inform any such Representatives of the
confidential nature of any such Confidential Information, and (iii) shall
instruct such Representatives to refrain from disclosing such Confidential
Information to anyone (whether to any company in which Alden has an investment
or otherwise), by any means, or otherwise from using the information in any way
other than in connection with Alden’s investment in the Company.  The Alden
Designees and Alden shall not, without the prior written consent of the Company,
otherwise disclose any Confidential Information to any other person or entity.
 
(b)            For the avoidance of doubt, the obligations under this Section 18
shall be in addition to, and not in lieu of, the Alden Designees’
confidentiality obligations under Tennessee law and the articles of
incorporation, bylaws and applicable corporate governance policies of the
Company.
 
19.           Certain Definitions and Interpretations.  As used in this
Agreement:  (a) the terms “Affiliate” and “Associate” (and any plurals thereof)
have the meanings ascribed to such terms under Rule 12b-2 promulgated by the SEC
under the Exchange Act and shall include all persons or entities that at any
time prior to the Termination Date become Affiliates or Associates of any person
or entity referred to in this Agreement; (b) the term “Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder; (c) the terms “beneficial ownership,” “group,” “person,”
“proxy,” and “solicitation” (and any plurals thereof) have the meanings ascribed
to such terms under the Exchange Act; (d) the term “Derivative Security” means
any option, warrant, convertible security, stock appreciation right, or similar
right which is convertible or exercisable into Common Stock; (e) the term
“Equity Issuance” means any issuance of equity securities by the Company
including the grant or issuance of any Derivative Security; (f) the term
“Extraordinary Transaction” means, any equity tender offer, equity exchange
offer, merger, acquisition, business combination, or other transaction with a
Third Party that, in each case, would result in a change of control of the
Company, liquidation, dissolution or other extraordinary transaction involving a
majority of its equity securities or a majority of its assets, and, for the
avoidance of doubt, including any such transaction with a Third Party that is
submitted for a vote of the Company’s stockholders; (g) the term “Business Day”
means any day that is not a Saturday, Sunday or other day on which commercial
banks in the State of Tennessee are authorized or obligated to be closed by
applicable law; (h) the term “Representatives” means a person’s Affiliates and
Associates under its control and its and their respective directors, officers,
employees, partners, members, managers, consultants, legal or other advisors,
agents and other representatives; (i) the term “Other Party” means (i) with
respect to the Company, Alden, and (ii) with respect to Alden, the Company; (j)
the term “SEC” means the U.S. Securities and Exchange Commission; (k) the term
“Short Interests” means any agreement, arrangement, understanding or
relationship, including any repurchase or similar so-called “stock borrowing”
agreement or arrangement, engaged in, directly or indirectly, by such person,
the purpose or effect of which is to mitigate loss to, reduce the economic risk
(of ownership or otherwise) of shares of any class or series of the Company’s
equity securities by, manage the risk of share price changes for, or increase or
decrease the voting power of, such person with respect to the shares of any
class or series of the Company’s equity securities, or which provides, directly
or indirectly, the opportunity to profit from any decrease in the price or value
of the shares of any class or series of the Company’s equity securities; (l) the
term “Stockholder Meeting” means each annual or special meeting of stockholders
of the Company, or any other meeting of stockholders held in lieu thereof, and
any adjournment, postponement, reschedulings or continuations thereof; (m) the
term “Synthetic Equity Interests” means any derivative, swap or other
transaction or series of transactions engaged in, directly or indirectly, by
such person, the purpose or effect of which is to give such person economic risk
similar to ownership of equity securities of any class or series of the Company,
including due to the fact that the value of such derivative, swap or other
transactions are determined by reference to the price, value or volatility of
any shares of any class or series of the Company’s equity securities, or which
derivative, swap or other transactions provide, directly or indirectly, the
opportunity to profit from any increase in the price or value of shares of any
class or series of the Company’s equity securities, without regard to whether
(i) the derivative, swap or other transactions convey any voting rights in such
equity securities to such person; (ii) the derivative, swap or other
transactions are required to be, or are capable of being, settled through
delivery of such equity securities; or (iii) such person may have entered into
other transactions that hedge or mitigate the economic effect of such
derivative, swap or other transactions; and (n) the term “Third Party” refers to
any person that is not a Party, a member of the Board, a director or officer of
the Company, or legal counsel to any Party.  In this Agreement, unless a clear
contrary intention appears, (i) the word “including” (in its various forms)
means “including, without limitation;” (ii) the words “hereunder,” “hereof,”
“hereto” and words of similar import are references in this Agreement as a whole
and not to any particular provision of this Agreement; (iii) the word “or” is
not exclusive; (iv) references to “Sections” in this Agreement are references to
Sections of this Agreement unless otherwise indicated; and (v) whenever the
context requires, the masculine gender shall include the feminine and neuter
genders.
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20.           Miscellaneous.
 
(a)            This Agreement contains the entire agreement and supersedes all
prior agreements and understandings, both written and oral, between the Parties
with respect to the subject matter hereof and thereof, except as set forth in
Section 21.
 
(b)            This Agreement is solely for the benefit of the Parties and is
not enforceable by any other persons.
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(c)            This Agreement shall not be assignable by operation of law or
otherwise by a Party without the consent of the Other Party.  Any purported
assignment without such consent is void.  Subject to the foregoing sentence,
this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by and against the permitted successors and assigns of each Party.
 
(d)            Neither the failure nor any delay by a Party in exercising any
right, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any right, power or privilege
hereunder.
 
(e)            If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.  It is hereby stipulated and
declared to be the intention of the Parties that the Parties would have executed
the remaining terms, provisions, covenants and restrictions without including
any of such which may be hereafter declared invalid, void or unenforceable.  In
addition, the Parties agree to use their reasonable best efforts to agree upon
and substitute a valid and enforceable term, provision, covenant or restriction
for any of such that is held invalid, void or unenforceable by a court of
competent jurisdiction.
 
(f)            Any amendment or modification of the terms and conditions set
forth herein or any waiver of such terms and conditions must be agreed to in a
writing signed by each Party.
 
(g)            This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same agreement. Signatures to this Agreement transmitted by facsimile
transmission, by electronic mail in “portable document format” (“.pdf”) form, or
by any other electronic means intended to preserve the original graphic and
pictorial appearance of a document, shall have the same effect as physical
delivery of the paper document bearing the original signature.
 
21.            Effectiveness of Original Agreement.
 
(a)            The Parties agree that the Original Agreement shall be amended
and restated as of the Restatement Date.  As used in this Agreement, the terms
“Agreement”, “this Agreement”, “herein”, “hereinafter”, “hereto”, “hereof”, and
words of similar import shall, unless the context otherwise requires, mean, from
and after the Restatement Date, this Agreement.
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(b)            Except as expressly set forth herein, this Agreement shall not by
implication or otherwise limit, impair, constitute a waiver of, or otherwise
affect the rights and remedies of the parties under the Original Agreement or
any ancillary document (including any exhibits to the Original Agreement), and
shall not alter, modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements contained in the Original
Agreement or any ancillary document (including any exhibits to the Original
Agreement), all of which are ratified and affirmed in all respects and shall
continue in full force and effect.  Nothing herein shall be deemed to entitle
any Party to a consent to, or a waiver, amendment, modification or other change
of, any of the terms, conditions, obligations, covenants or agreements contained
in the Original Agreement or any ancillary document (including any exhibits to
the Original Agreement) in similar or different circumstances.
 
 [Signature Pages Follow]
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IN WITNESS WHEREOF, each of the Parties has executed this Agreement, or caused
the same to be executed by its duly authorized representative, as of the date
first above written.
 
 
 
ALDEN GLOBAL CAPITAL LLC
 
By: /s/ Heath B.
Freeman                                                                                    
Name:      Heath B. Freeman
Title:        President
 
STRATEGIC INVESTMENT OPPORTUNITIES LLC
 
By: Alden Global Capital LLC
Investment Manager
 
By: /s/ Heath B.
Freeman                                                                                    
Name:      Heath B. Freeman
Title:        President
 
/s/ Heath B.
Freeman                                                                                    
Heath B. Freeman
 
 
Signature Page to Amended and Restated Cooperation Agreement    

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FRED’S, INC.
 
By: /s/ Jason A. Jenne
Name:      Jason A. Jenne
Title:        Chief Financial Officer
 
 
Signature Page to Amended and Restated Cooperation Agreement

--------------------------------------------------------------------------------

Exhibit A
 
Resignation Letter

--------------------------------------------------------------------------------

August 11, 2017
 
Board of Directors
Fred’s, Inc.
4300 New Getwell Road
Memphis, Tennessee 38118
 
Re: Resignation
 
Ladies and Gentlemen:
 
This irrevocable resignation is delivered pursuant to that certain Amended and
Restated Cooperation Agreement (the “Agreement”) dated as of August 11, 2017
among Fred’s, Inc. (the “Company”) and Alden Global Capital LLC, a Delaware
limited liability corporation, Strategic Investment Opportunities LLC, a
Delaware limited liability company, and Heath B. Freeman (collectively,
“Alden”). Capitalized terms used herein but not defined shall have the meaning
set forth in the Agreement.
 
Effective immediately upon (i) such time as Alden’s Ownership is less than the
10% Ownership Threshold in the event Alden designates me to resign at that time,
(ii) such time as Alden’s Ownership is less than the 5% Ownership Threshold, or
(iii) the Termination Date, I hereby irrevocably resign from my position as a
director of the Board and from any and all committees of the Board on which I
serve.  I acknowledge that upon such resignation I shall have no rights to
nominate, recommend, appoint or participate in a Board vote in respect of any
replacement director.
 
 
Very truly yours,
 
 
 
 
 
 
 
 
[●]
 

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Exhibit B
 
Press Release