INVESTMENT AGREEMENT By and Among THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. and YUCAIPA AMERICAN ALLIANCE FUND II, LP, YUCAIPA AMERICAN ALLIANCE (PARALLEL) FUND II, LP and YUCAIPA AMERICAN ALLIANCE FUND II, LLC, as Investors’ Representative and...

Exhibit 10.1

EXECUTION COPY

INVESTMENT AGREEMENT

By and Among

THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.

and

YUCAIPA AMERICAN ALLIANCE FUND II, LP,

YUCAIPA AMERICAN ALLIANCE (PARALLEL) FUND II, LP

and

YUCAIPA AMERICAN ALLIANCE FUND II, LLC, as Investors’ Representative

and

the other signatories hereto

Dated as of July 23, 2009

TABLE OF CONTENTS

Index of Defined Terms

iii

List of Exhibits and Schedules

INVESTMENT AGREEMENT, dated as of July 23, 2009 (this “Agreement”), among THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC., a Maryland corporation (the “Company”), and YUCAIPA AMERICAN ALLIANCE FUND II, LP (“YAAF”) and YUCAIPA AMERICAN ALLIANCE (PARALLEL) FUND II, LP (“YAAF Parallel” and, together with YAAF, the “Investors”), YUCAIPA CORPORATE INITIATIVES FUND I, LP, YUCAIPA AMERICAN ALLIANCE FUND I, LP and YUCAIPA AMERICAN ALLIANCE (PARALLEL) FUND I, LP (collectively, the “Existing Investors”) (who are parties to this Agreement solely with respect to Section 3.02 and Section 3.05 hereof) and YUCAIPA AMERICAN ALLIANCE FUND II, LLC (the “Investors’ Representative”) (which is a party to this Agreement solely with respect to Section 5.05 hereof).

A.    WHEREAS, the Investors desire to purchase from the Company, and the Company desires to issue and sell to the Investors, pursuant to the terms and conditions set forth in this Agreement, an aggregate of 115,000 shares of the Company’s 8.00% Convertible Preferred Stock due August 1, 2016 (the “Convertible Preferred  Stock”), to be issued on the Closing Date (as defined below), each share with an initial liquidation preference of $1,000 (the “Investor Shares”, and, together with any other shares of Convertible Preferred Stock issued pursuant to the Tengelmann Investment Agreement (as defined below) or issued pursuant to Section 4 of the Convertible Preferred Articles Supplementary (as defined below), the “Shares”), having the powers, preferences and rights and the qualifications, limitations and restrictions as specified in the Convertible Preferred Articles Supplementary in the form attached hereto as Exhibit A (the “Convertible Preferred Articles Supplementary”);

B.    WHEREAS, the Company and the Existing Investors are parties to a stockholder agreement dated as of March 4, 2007 (the “Stockholder Agreement”), and on the Closing Date, the Company, the Existing Investors, the Investors’ Representative and the Investors will enter into an amended and restated stockholder agreement in the form attached hereto as Exhibit B (the “Amended and Restated Stockholder Agreement”);

C.    WHEREAS, on the date hereof, the Company will announce and promptly commence a debt offering (the “Senior Secured Notes Offering”) of second-lien senior secured notes (the “Senior Secured Notes”) for an aggregate principal amount of at least $225,000,000;

D.    WHEREAS, simultaneously with the execution of this Agreement, the Company and Erivan ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ (collectively, the “Tengelmann Partners”) are entering into an investment agreement, dated as of the date hereof (the “Tengelmann  Investment Agreement”), which sets forth the terms and conditions by which the Tengelmann Partners shall purchase 60,000 shares of the Convertible Preferred Stock, to

be issued on the Closing Date for an aggregate cash purchase price of $60,000,000 (the “Tengelmann Initial Shares”), and, immediately following such purchase, the Tengelmann Partners shall contribute the Tengelmann Initial Shares to Tengelmann (as defined below); and

E. WHEREAS, the Company and Tengelmann WarenhandelsGesellschaft KG, a limited partnership organized under the law of Germany (“Tengelmann”), are parties to a stockholder agreement dated as of March 4, 2007, and on the Closing Date, the Company and Tengelmann will enter into an amended and restated stockholder agreement (the “Amended and Restated Tengelmann Stockholder  Agreement”).

NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations and warranties contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

Issuance and Sale of Investor Shares; Closing

SECTION 1.01 Issuance and Sale of the Investor Shares. On the terms and subject to the conditions set forth in this Agreement, at the Closing the Company shall issue, sell and deliver in certificated form to the Investors, and the Investors shall purchase from the Company, the Investor Shares for an aggregate cash purchase price of $115,000,000 (the “Purchase Price”), payable as set forth below in Section 1.03. The issuance and sale of the Investor Shares is referred to in this Agreement as the “Offering”.

SECTION 1.02 Closing Date. The closing of the Offering (the “Closing”) shall take place at the offices of Cravath, Swaine & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. on the date on which the condition set forth in Section 6.0 1(d) has been satisfied (or, to the extent permitted, waived), or, if on such day any condition set forth in Article VI has not been satisfied (or, to the extent permitted, waived by the party entitled to the benefit thereof), as soon as practicable after all the conditions set forth in Article VI have been satisfied (or, to the extent permitted, waived by the parties entitled to the benefits thereof), or at such other place, time and date as shall be agreed between the Company and the Investors. The date on which the Closing occurs is referred to in this Agreement as the “Closing Date”.

SECTION 1.03 Transactions To Be Effected at the Closing. At the Closing, each of the following shall occur substantially simultaneously and be dependent upon each other:

(a) The Company shall file the Convertible Preferred Articles Supplementary with the State Department of Assessments and Taxation of the State of Maryland and deliver to the Investors certificates representing the Investor Shares;

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(b)     The Investors shall deliver to the Company payment, by wire transfer to the bank account of the Company specified on Schedule 1, immediately available funds in an amount equal to the Purchase Price;

(c)     The Company, the Investors, the Existing Investors and the Investors’ Representative shall each execute the Amended and Restated Stockholder Agreement; and

(d) The Company shall deliver to the Investors payment, by wire transfer to the bank account of the Investors specified on Schedule 1, immediately available funds of the amounts owed to the Investors pursuant to Section 4.03.

ARTICLE II

Representations and Warranties

Relating to the Company

Prior to the execution and delivery of this Agreement, the Company has delivered to the Investors a letter, dated as of the date of this Agreement, from the Company to the Investors (the “Company Disclosure Letter”), with numbering corresponding to the sections and subsections of this Article II. Any items disclosed in any provision, section or subsection of the Company Disclosure Letter, with respect to a particular representation or warranty contained in this Article II shall be deemed to be disclosed for purposes of any other representation or warranty contained in this Article II to the extent its relationship thereto is reasonably apparent on its face. Except as set forth in the Company Disclosure Letter and except with respect to Sections 2.01, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.10, 2.11, 2.13 (other than the first sentence of Section 2.13) and 2.14 only (and not any other sections) as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2009 or the Company’s other reports filed with the SEC under Sections 12, 13, 14 or 15(d) of the Exchange Act after February 28, 2009 through and including the date hereof (excluding any forward-looking disclosures contained in such reports under the headings “Risk Factors” or “Cautionary Note” or any similar sections and any other forward looking statement, disclaimer or disclosure that is similarly nonspecific and predictive or forward-looking in nature), the Company represents and warrants to the Investors as follows as of the date of this Agreement (except as of July 20, 2009, as expressly provided in Section 2.03(a)):

SECTION 2.01 Corporate Status. Each of the Company and its material subsidiaries is duly incorporated or otherwise organized, validly existing and in good standing under the Laws of its governing jurisdiction and each (a) has all requisite corporate or other power and authority to carry on its business as it is now being conducted and (b) is duly qualified to do business in each of the jurisdictions in which the ownership, operation or leasing of its assets or the conduct of its business requires it to be so qualified, except where the failure to have such corporate or other power or authority or to be so qualified, has not had and would not reasonably be expected to have a Material Adverse Effect.

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SECTION 2.02 Authorization; Noncontravention; No Change of Control.  (a) Authorization. The Company has all necessary corporate power and authority to execute and deliver this Agreement, the Tengelmann Investment Agreement, the Amended and Restated Stockholder Agreement and the Amended and Restated Tengelmann Stockholder Agreement (collectively, the “Ancillary Agreements”), to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The Board of Directors has duly adopted resolutions at a meeting duly called and held (i) adopting, authorizing, approving and declaring this Agreement, the Ancillary Agreements, the classification of the Shares as Convertible Preferred Stock, the issuance of the Investor Shares at Closing, the reservation for issuance of the shares of Convertible Preferred Stock issued pursuant to Section 4 of the Convertible Preferred Articles Supplementary and the Underlying Securities and the other transactions contemplated hereby and by the Ancillary Agreements on the terms and subject to the conditions set forth herein and therein advisable, fair to and in the best interest of the Company, (ii) adopting the Company By-Laws Amendment and the Convertible Preferred Articles Supplementary, (iii) directing that the proposal for the Conversion Stockholder Approval be submitted to a vote at a meeting of the stockholders of the Company and (iv) recommending that the stockholders of the Company adopt the proposal for the Conversion Stockholder Approval. No “fair price,” “moratorium,” “control share acquisition,” “business combination,” or other similar anti-takeover provision under Maryland or Federal Laws, including Section 3-702 of the Maryland General Corporation Law, apply to this Agreement, the Offering and the other transactions contemplated hereby, and pursuant to the Company By-Laws Amendment, the Company will be exempt from the application of the Maryland Control Share Acquisition Act (Section 3-701, et seq. of the Maryland General Corporation Law) following the date thereof. The execution, delivery and performance of this Agreement and the Ancillary Agreements and the consummation by the Company of the transactions contemplated hereby and thereby, including the issuance (or reservation for issuance), sale and delivery of the Shares and the Underlying Securities, have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of the Company or its material subsidiaries or vote of holders of any class or series of capital stock of the Company or its material subsidiaries is necessary to authorize this Agreement or the Ancillary Agreements or to consummate the transactions contemplated hereby and thereby, including the issuance (or reservation for issuance), sale and delivery of the Shares and the Underlying Securities, other than the approval, to the extent and as required under the rules and regulations of the NYSE, of (1) the Shares, when voting together with common stock, par value $1.00 per share, of the Company (“Common  Stock”), becoming entitled to cast the full number of votes on an as-converted basis and (2) the issuance of the full amount Common Stock upon the exercise of conversion rights of the Shares, 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 in accordance with the NYSE rules for stockholder approval (the “Conversion Stockholder Approval”). This Agreement has been duly executed and delivered by the Company and (assuming due authorization, execution and delivery by each Investor, each Existing Investor and the Investors’ Representative) constitutes, and

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each Ancillary Agreement, when executed and delivered by the Company (assuming due authorization, execution and delivery by the other parties thereto), will constitute, a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally or by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at Law). The sale and issuance of the Shares at Closing are not, and the issuance of shares of Convertible Preferred Stock pursuant to Section 4 of the Convertible Preferred Articles Supplementary and the issuance of the Underlying Securities will not be, subject to any preemptive rights or rights of first offer.

(b) No Conflict. The Company is not in violation or Default of any provision of its Charter or By-Laws. None of the Company or its material subsidiaries is in breach or Default under any material Collective Bargaining Agreement. The execution, delivery and performance by the Company of this Agreement and the Ancillary Agreements do not, and the consummation of the Offering, the Senior Secured Notes Offering (assuming satisfaction of Sections 6.01(d) and 6.02(h)) and the other transactions contemplated hereby and thereby and compliance with the provisions of this Agreement and the Ancillary Agreements will not, result in a change of control under, or conflict with, or result in any Default under, or give rise to an increase in, or right of termination, cancellation or acceleration of, any obligation or to the loss of a benefit under, or result in the suspension, revocation, impairment, forfeiture or amendment of any term or provision of or the creation of any Encumbrance upon any of the properties or assets of the Company or any of its material subsidiaries under, or require any consent or waiver under, any provision of (i) the Charter of the Company, the By-Laws of the Company upon effectiveness of the Company By-Laws Amendment or the comparable organizational documents of any of the Company’s subsidiaries, (ii) any material Contract to which the Company or any of its material subsidiaries is a party or by which any of its assets are bound, (iii) any Law, material Judgment or material Permit, in each case applicable to the Company and its material subsidiaries or its assets or (iv) any Collective Bargaining Agreement, Company Multiemployer Plans or Company Plans. No Permit, order or authorization of, or registration, qualification, declaration or filing with, or notice to, any Governmental Entity is required to be obtained or made by or with respect to the Company or any of its material subsidiaries in connection with the execution, delivery and performance of this Agreement or any of the Ancillary Agreements by the Company or the consummation by the Company of the Offering, the Senior Secured Notes Offering or the other transactions contemplated by this Agreement or the Ancillary Agreements, including the issuance of the Shares, the Underlying Securities and the Senior Secured Notes, except for (A) the filing of the Convertible Preferred Articles Supplementary with the State Department of Assessments and Taxation of the State of Maryland, (B) the filing with the FTC and the DOJ of the notification and report form and other information and documents required to be filed pursuant to the HSR Act, which have been completed, (C) the filing with the SEC of such reports, forms, schedules, statements and other documents (including all exhibits) required to be filed by it under the Exchange Act, the Securities Act, state securities Laws or “blue-sky” laws as may be required in connection with this Agreement, the Ancillary

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Agreements and the transactions contemplated hereby and thereby, (D) any filings required under the rules and regulations of the NYSE and (E) such Permits, orders, authorizations, registrations, declarations, filings and notices, the failure of which to be obtained or made would not materially impair the Company’s ability to perform its obligations under this Agreement or the Ancillary Agreements or consummate the transactions contemplated hereby or thereby. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, either alone or in combination with another event (whether contingent or otherwise) will (1) result in the payment of any “excess parachute payment” under Section 280G of the Code, (2) entitle any current or former employee, consultant or director of the Company or any of its subsidiaries to any payment, (3) increase the amount of compensation or benefits due to any such employee, consultant or director or (4) accelerate the vesting, funding or time of payment of any compensation, equity award or other benefit.

(c)       No “Change of Control” (within the meaning of the Company’s 2008 Long Term Incentive and Share Award Plan or the Company’s 1998 Long Term Incentive and Share Award Plan, each as amended from time to time) has at any time occurred or been deemed to have occurred for purposes of such plans or any award granted under such plans, and no award granted under either such plan has become exercisable or vested on an accelerated basis on account of a Change of Control.

(d)     Notwithstanding any terms and obligations included on the face or back or otherwise included on any of the notes representing the Company’s outstanding 9 1/8% Senior Notes due 2011 (the “2011 Notes”), the terms and obligations of any such 2011 Notes include only those terms and obligations included in the 1991 Indenture, as supplemented by the Second Supplemental Indenture, dated as of December 20, 2011, and the Fourth Supplemental Indenture, dated as of August 23, 2005, and do not include any additional terms or obligations that may be included on the face or back or otherwise included on any of the 2011 Notes.

SECTION 2.03 Capital Structure. (a) As of the date of this Agreement, the authorized capital stock of the Company consists of 160,000,000 shares of Common Stock, of which 57,899,318 shares are issued and outstanding as of July 20, 2009, and 3,000,000 shares of preferred stock, no par value per share, of which no shares are issued and outstanding as of July 20, 2009. As of July 20, 2009, there are 2,564,396 shares of Common Stock subject to outstanding options to acquire Common Stock, 4,456,987 shares of Common Stock deliverable pursuant to outstanding restricted stock units, 6,965,858 shares of Common Stock issuable upon the exercise of the Series B Yucaipa Warrants, 6,965,858 shares of Common Stock reserved for issuance upon the exercise of the Series B Yucaipa Warrants, 686,277 shares of Common Stock issuable upon the exercise of the ChaseMellon Warrants, 686,277 shares of Common Stock reserved for issuance upon the exercise of the ChaseMellon Warrants, 11,278,999 shares of Common Stock issuable upon the conversion of the Convertible Notes, 11,278,999 shares of Common Stock reserved for issuance upon the conversion of the Convertible Notes and no stock equivalent units linked to Common Stock. Each share of Common Stock is duly authorized, validly issued, fully paid and nonassessable. The Shares, and the Common Stock issuable upon conversion of the Investor Shares (the “Underlying Securities”),

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have been duly authorized and reserved, and the Shares will, and upon conversion of the Shares in accordance with the Convertible Preferred Articles Supplementary, the Underlying Securities, will (i) be validly issued, fully paid and nonassessable, (ii) not have been issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Maryland General Corporation Law, the Charter or By-Laws of the Company or any Contract to which the Company or any of its material subsidiaries is a party or by which any of its or their respective assets are bound and (iii) be free and clear of all Encumbrances. Other than the Convertible Notes, the Company has no Voting Debt. Except as set forth above, in Section 2.03(a) of the Company Disclosure Letter or as expressly contemplated by this Agreement there are no (A) outstanding obligations, options, warrants, convertible securities, exchangeable securities, securities or rights that are linked to the value of the Common Stock or other rights, agreements or commitments relating to the capital stock of the Company or obligating the Company to issue or sell or otherwise transfer shares of capital stock of the Company or any securities convertible into or exchangeable for any shares of capital stock of the Company or any Voting Debt of the Company, (B) outstanding obligations of the Company to repurchase, redeem or otherwise acquire shares of capital stock of the Company, (C) voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of shares of capital stock of the Company (but only to the Company’s knowledge with respect to any such agreements to which the Company is not a party) or (D) rights of first refusal, preemptive rights, subscription rights or any similar rights under any provision of the Maryland General Corporation Law, the Charter or By-Laws or any Contract to which the Company is a party or by which any of its assets are bound. No provision of the Charter or the By-Laws would, directly or indirectly, restrict or impair the ability of the Investors to vote, or otherwise exercise the rights of a stockholder with respect to, the Shares (or any Underlying Securities) or any other shares of Common Stock of the Company that may be acquired or controlled by the Investors, except as expressly set forth in the Convertible Preferred Articles Supplementary. The Company does not have an outstanding “poison pill” or any similar arrangement in effect giving any person the right to purchase any equity interest in the Company upon the occurrence of certain events.

(b) Section 2.03(b) of the Company Disclosure Letter sets forth as of the date hereof a list of all material subsidiaries of the Company, including each such subsidiary’s name, its jurisdiction of incorporation or organization and the percentage of its outstanding capital stock or equity interests owned by the Company or a subsidiary of the Company (as applicable). The shares of outstanding capital stock or equity interests of the subsidiaries of the Company are duly authorized, validly issued, fully paid and nonassessable, and are held of record and beneficially owned by the Company or a subsidiary of the Company (as applicable), free and clear of any Encumbrances other than Permitted Encumbrances. There is no Voting Debt of any subsidiary of the Company. There are no (i) outstanding obligations, options, warrants, convertible securities, exchangeable securities, securities or rights that are linked to the value of the Common Stock or other rights, agreements or commitments, in each case, relating to the capital stock of the subsidiaries of the Company or obligating the Company or its subsidiaries to issue or sell or otherwise transfer shares of the capital stock of the

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subsidiaries of the Company or any securities convertible into or exchangeable for any shares of capital stock of the subsidiaries of the Company or any Voting Debt of any subsidiary of the Company, (ii) outstanding obligations of the subsidiaries of the Company to repurchase, redeem or otherwise acquire shares of their respective capital stock, (iii) voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of shares of capital stock of the subsidiaries of the Company (but only to the Company’s knowledge with respect to any such agreements to which the Company is not a party) or (iv) rights of first refusal, preemptive rights, subscription rights or any similar rights under any provision of the Maryland General Corporation Law, the governing documents of any material subsidiary of the Company or any Contract to which any material subsidiary of the Company is a party or by which any of their respective assets are bound.

(c)     Other than the subsidiaries of the Company, there are no persons in which any of the Company or its subsidiaries owns any equity, membership, partnership, joint venture or other similar interest.

(d)     The Company or one of its subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable Law) to receive dividends and other distributions on, all capital securities of its subsidiaries as owned by the Company or such subsidiary.

SECTION 2.04 Real Property. (a) The Company or one of its subsidiaries has good and marketable title in fee simple, free and clear of material Encumbrances (other than Permitted Encumbrances), to the real property owned by the Company. Neither the Company nor any of its subsidiaries has received written notice of any pending condemnation proceedings.

(b) Each (x) lease or sublease pursuant to which the Company or any of its subsidiaries holds a leasehold or subleasehold estate or other right to use or occupy any interest in real property (the “Company Leases”) and (y) existing leases, subleases, licenses or other occupancy agreements to which the Company or any of its subsidiaries is a party as landlord or lessor thereunder or by which the Company or any of its subsidiaries is bound as landlord or lessor thereunder, and all amendments, modifications, extensions and supplements thereto (each, a “Company Tenant Lease”) (i) constitutes a valid and binding obligation of the Company or the subsidiary of the Company party thereto; (ii) assuming such lease is a legal, valid and binding obligation of, and enforceable against, the other parties thereto, is enforceable against the Company or the subsidiary of the Company party thereto, except as limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting the enforcement of creditors’ rights in general and subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding at Law or in equity); and (iii) to the Company’s knowledge is a valid and binding obligation of the other parties thereto, except as limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting the enforcement of creditors’ rights in general and subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding at Law or in equity), except, with respect to clauses (i) through (iii) above, as

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has not had or would not reasonably be expected to have a Material Adverse Effect. Except as have not had or would not reasonably be expected to have a Material Adverse Effect, (i) none of the Company or its subsidiaries is in breach or default under any Company Lease and (ii) to the Company’s knowledge, none of the landlords or sublandlords under any Company Lease is in material breach or default of its obligations under such Company Lease. Except as has not had a Material Adverse Effect, the Company and its subsidiaries enjoy peaceful and undisturbed possession under each Company Lease.

(c)     The Real Property and the buildings and other improvements, fixtures, equipment and other property attached, situation or appurtenant thereto, are in good operating condition and repair, subject to normal wear and tear and normal industry practice with respect to maintenance, except as has not or would not reasonably be expected to have a Material Adverse Effect. Except as have not had or would not reasonably be expected to have a Material Adverse Effect, (i) the present use of the Real Property does not violate any restrictive covenant, municipal by-law or other Law or agreement that in any way restricts, prevents or interferes in any material respect with the continued use of the Real Property for which it is used in the business of the Company and its subsidiaries, other than Permitted Encumbrances (ii) no condemnation, eminent domain or similar proceeding exists or is pending or, to the Company’s knowledge, is threatened with respect to or that could affect any Real Property and (iii) all Real Property is supplied with utilities and other services necessary for the operation thereof generally consistent with past practices and consistent with the contemplated operation thereof.

(d)     All material fixtures, plants, vehicles, equipment, machinery and other material items of personal property owned by the Company and its material subsidiaries, used in the operation of the Company’s and its material subsidiaries’ business or located on any Real Property or attached thereto, are in good condition and working order, ordinary wear and tear excepted, and are reasonably suitable for the uses for which intended, free from any defects known to the Company, except for such defects or lack of good condition or working order which have not had and would not reasonably be expected to have a Material Adverse Effect.

SECTION 2.05 Intellectual Property. (a) The Company and its subsidiaries own, or are validly licensed or otherwise have the right to use, all Intellectual Property that is necessary for the conduct of the business of the Company and its subsidiaries taken as a whole, except as has not had or would not reasonably be expected to have a Material Adverse Effect. The Company and its subsidiaries have not entered into any license agreement with any Third Party with respect to the Company’s Registered Intellectual Property.

(b) The business of the Company and its subsidiaries as currently conducted (including the use of the Intellectual Property) does not infringe, misappropriate, conflict with or otherwise violate any person’s Intellectual Property and there is no such claim pending or, to the Company’s knowledge, threatened against any of the Company or its subsidiaries, except where such infringement, misappropriation,

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conflict, violation or claim has not had and would not reasonably be expected to have a Material Adverse Effect.

(c)     To the Company’s knowledge, and except as has not had or would not reasonably be expected to have a Material Adverse Effect, no person is infringing, misappropriating, conflicting with or otherwise violating any material Intellectual Property owned by any of the Company or its subsidiaries, and no such claims are pending or threatened against any person by any of the Company or its subsidiaries.

(d)     All Intellectual Property owned by the Company or its subsidiaries is owned free and clear of all Encumbrances (other than licenses to persons entered into in the ordinary course of business generally consistent with past practice of the Company and its subsidiaries), except for Permitted Encumbrances or where such Encumbrances have not had and would not reasonably be expected to have a Material Adverse Effect.

SECTION 2.06 Environmental Matters. (a) The Company and its subsidiaries have obtained all Permits that are required under any Environmental Law for the operation of the business of the Company and its subsidiaries as currently being conducted and their current use and operation of the Real Property, and all such Permits are in full force and effect, other than any failure to obtain or maintain such Permits in full force and effect which has had and would not reasonably be expected to have a Material Adverse Effect.

(b)     The Company and its subsidiaries have operated and are operating the business of the Company and its subsidiaries, and the Real Property and other assets of the Company and its subsidiaries are in compliance with Environmental Laws, other than any non-compliance which in the aggregate has not had and would not reasonably be expected to have a Material Adverse Effect.

(c)     Except as has not had and would not reasonably be expected to have a Material Adverse Effect, (i) there has been no Release of any Hazardous Materials by the Company or any of its subsidiaries at, on, under or from the Real Property or any other location, (ii) Real Property has not been used for the deposit of Hazardous Materials and (iii) neither the Company nor any of its subsidiaries has disposed of, arranged for treatment or disposal of, or arranged for the transportation for treatment or disposal of, any Hazardous Materials at any Third Party location.

(d)     (i) None of the Company or its subsidiaries has received any written notice, demand letter, claim or order alleging a violation of, or liability under, any Environmental Law and (ii) none of the Company or its subsidiaries is party to any pending Action, decree or injunction alleging liability under or violation of any Environmental Law, except in each case of (i) or (ii) of this Section 2.06(d), if adversely determined against the Company, would not have or would not reasonably be expected to have a Material Adverse Effect.

(e)     Except as has not had and would not reasonably be expected to have a Material Adverse Effect, there are no storage tanks, sumps or other similar vessels,

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asbestos-containing materials or polychlorinated biphenyls located on, at or under any Real Property or at, on or in any structures, Facilities or equipment at the Real Property.

SECTION 2.07 Legal Proceedings. There are no Actions pending or, to the Company’s knowledge, threatened in writing (and, in either case, not withdrawn), against the Company or any of its subsidiaries, which, if adversely determined, would have or would reasonably be expected to have a Material Adverse Effect. There are no Actions pending or, to the Company’s knowledge, threatened in writing (and, in either case, not withdrawn) against the Company or any of its subsidiaries which, if adversely determined, would materially impair the Company’s ability to perform its obligations under this Agreement or the Ancillary Agreements or challenge the validity or enforceability of this Agreement or any Ancillary Agreement or seek to enjoin or prohibit the consummation of the transactions contemplated hereby or thereby. None of the Company or any of its subsidiaries is in default with respect to any material Judgment or subject to any Judgment of over $1,000,000, which has had or would reasonably be expected to have a Material Adverse Effect or would materially impair the Company’s ability to perform its obligations under this Agreement or the Ancillary Agreements or consummate the transactions contemplated hereby or thereby.

SECTION 2.08 Taxes. (a) Except as has not had and would not reasonably be expected to have a Material Adverse Effect, (i) the Company and each of its subsidiaries have timely filed with the appropriate taxing authority all material Tax Returns required to be filed, taking into account valid extensions; (ii) all such Tax Returns are complete and accurate in all material respects; (iii) all Taxes due and owing by the Company and each of its subsidiaries (whether or not shown on any Tax Return) have been paid; and (iv) neither the Company nor any of its subsidiaries has been informed in writing by a Governmental Entity in a jurisdiction where the Company or any of its subsidiaries does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.

(b)     The unpaid Taxes of the Company and its subsidiaries did not, as of the dates of the financial statements contained in the most recent SEC Report filed with the SEC prior to the date of this Agreement, exceed by a material amount the reserve for Tax liability (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) included in the balance sheets contained in such financial statements. Since the date of the financial statements contained in the most recent SEC Report filed with the SEC prior to the date of this Agreement, neither the Company nor any of its subsidiaries has incurred any material liability for Taxes outside the ordinary course of business or otherwise inconsistent with past custom and past practice of the Company and its subsidiaries in filing their Tax Returns.

(c)     As of the date hereof, no deficiencies for Taxes against the Company or any of its subsidiaries in excess of $100,000 individually or $1,000,000 in the aggregate have been claimed or assessed in writing by a Governmental Entity that have not been settled or resolved. There are no currently ongoing, pending or, to the Company’s knowledge, threatened audits, assessments or other Actions for or relating to any liability in respect of Taxes of the Company or any of its subsidiaries. The Company

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has made available to the Investors or representatives of the Investors complete and accurate copies of all Federal income and material state, local and foreign income, franchise and sales and use Tax Returns of each of the Company and its subsidiaries and their predecessors for the years ended on or after February 23, 2008 and complete and accurate copies of all examination reports and statements of deficiencies assessed against or agreed to by the Company or any of its subsidiaries or any predecessors since February 23, 2008 with respect to any material Tax. Other than any waivers or extensions granted in the ordinary course of business after the date of this Agreement and prior to the Closing Date, neither the Company, its subsidiaries nor any of their respective predecessors has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency (other than as a result of a valid extension of time to file a Tax Return).

(d)     There are no material Encumbrances for Taxes on any assets of the Company or any of its subsidiaries, other than Encumbrances in respect of property taxes not yet due and payable.

(e)     Other than customary gross-up, tax escalation or similar provisions in financing and commercial Contracts entered into in the ordinary course of business, there are no Tax sharing agreements or similar arrangements (including indemnity arrangements) with respect to or involving the Company or any of its subsidiaries other than agreements solely between the Company or its subsidiaries, and, after the Closing Date, neither the Company nor any of its subsidiaries shall be bound by any such Tax sharing agreements or similar arrangements or have any liability thereunder.

(f)     Neither the Company nor any of its subsidiaries has been a member of any affiliated group filing a consolidated Federal income Tax Return other than a group the common parent of which is the Company. Except pursuant to customary gross-up, tax escalation or similar provisions in financing and commercial Contracts entered into in the ordinary course of business, neither the Company nor any of its subsidiaries has any actual or potential liability for the Taxes of any person (other than Taxes of the Company and its subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar provision of state or local Law), as a transferee or successor, by Contract, or otherwise.

(g)     The Company and each of its subsidiaries have timely withheld and paid all material Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party.

(h)     Neither the Company nor any of its subsidiaries has entered into any transaction identified as a “listed transaction” for purposes of Treasury Regulations Section 1.601 1-4(b)(2).

(i)    Neither the Company nor any of its subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period or portion thereof ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period beginning on or

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prior to the Closing Date under Section 48 1(c) of the Code (or any similar provision of state, local or foreign Law) or (ii) agreement with a taxing authority relating to Taxes.

(j)    None of the assets of the Company (a) is “tax-exempt use property” (as defined in Section 168(h)(1) of the Code), (b) may be treated as owned by any other person pursuant to Section 1 68(f)(8) of the Internal Revenue Code of 1954 (as in effect immediately prior to the enactment of the Tax Reform Act of 1986), (c) is property used predominantly outside the United States within the meaning of proposed Treasury Regulations Section 1.1 68-2(g)(5) or (d) is “tax exempt” and financed property within the meaning of Section 168(g)(5) of the Code.

(k)     Neither the Company nor any of its subsidiaries has distributed the stock of any corporation in a transaction satisfying the requirements of Section 355 of the Code since December 31, 2006, and neither the stock of the Company nor the stock of any of its subsidiaries has been distributed in a transaction satisfying the requirements of Section 355 of the Code since December 31, 2006.

SECTION 2.09 Labor. No Collective Bargaining Agreement currently is being negotiated. None of the Company or its subsidiaries has any obligation to inform or consult with any employees or their representatives in respect of the transactions contemplated hereby under the terms of any Collective Bargaining Agreement. Since February 28, 2008, there has not been any material work stoppage, slowdown, lockout, employee strike or, to the Company’s knowledge, labor union organizing activity involving any of the Company or its subsidiaries and, to the Company’s knowledge, none of the foregoing or any labor dispute or Action that has had or would reasonably be expected to have a Material Adverse Effect has been threatened. The Company and its subsidiaries are operating the business of the Company and its subsidiaries in compliance with all Labor Laws other than non-compliance which has not had and would not reasonably be expected to have a Material Adverse Effect. As of the date hereof, to the Company’s knowledge, there are no ongoing union certification drives or pending proceedings for certifying a union with respect to employees of any of the Company or its subsidiaries.

SECTION 2.10 Employee Benefit Plans. (a) Each Company Plan and, to the Company’s knowledge, each Company Multiemployer Plan has been operated and administered in all material respects in accordance with its terms and the terms of all Collective Bargaining Agreements and any other labor-related agreements with any labor union or labor organization applicable to employees of the Company or any of its subsidiaries and the requirements of all applicable Laws, including ERISA and the Code. As of the date of this Agreement, no Action is pending or, to the Company’s knowledge, threatened with respect to any Company Plan (other than claims for benefits in the ordinary course) that would result in any material liability to the Company, its subsidiaries or any Company Plan fiduciary and, to the Company’s knowledge, no fact or event exists that would give rise to any such Action. As of the date of this Agreement, to the Company’s knowledge, (i) no Action is pending or threatened with respect to any Company Multiemployer Plan (other than claims for benefits in the ordinary course) that

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would result in any material liability to the Company and (ii) no fact or event exists that would give rise to any such Action.

(b)     No withdrawal liability has been incurred under Title IV of ERISA by the Company or any of its ERISA Affiliates with respect to any “multiemployer plan” (as defined in Section 3(37) or 4001(a)(3) of ERISA) which is or has been contributed to by the Company or any of its ERISA Affiliates at any time during the six-year period ending on the date of this Agreement or as to which the Company or any of its ERISA Affiliates has any liability (the “Company Multiemployer Plans”), and no such liability would be incurred if the Company or any of its ERISA Affiliates were to withdraw from any Company Multiemployer Plan in a complete or partial withdrawal. The Company has not agreed with any person to be responsible for any liability under Title IV of ERISA with respect to any multiemployer plan within the meaning of Section 3(37) or 4001(a)(3) of ERISA.

(c)     With respect to any Company Plan which is subject to Part 3 of Subtitle B of Title I or to Title IV of ERISA (a “Company Title IV Plan”): (i) there is no lien under Section 412(n) of the Code; (ii) no liability (other than liability for premiums) to the Pension Benefit Guaranty Corporation, (the “PBGC”) has been incurred and all premiums required to be paid to the PBGC have been paid by or on behalf of such Company Title IV Plan; (iii) the assets of each Company Title IV Plan equal or exceed the benefit liabilities of such Company Title IV Plan determined on a termination basis; and (iv) as of the date hereof, the Company has received no actual notice from the PBGC that an event or condition exists which (A) would constitute grounds for termination of such Company Title IV Plan by the PBGC or (B) has caused a partial or complete termination of such Company Title IV Plan.

(d)     All contributions to Company Plans and, to the Company’s knowledge, the Company Multiemployer Plans required to be made by applicable Law or the terms of the applicable Company Plan or Company Multiemployer Plan have been timely made. Each Company Plan that is intended to be qualified under Section 401(a) of the Code has timely received a favorable determination letter from the United States Internal Revenue Service (“IRS”) which has not been revoked (or, in either case, the Company has timely applied for same or will do so) and each trust established in connection with any Company Plan which is intended to be exempt from Federal income taxation under Section 501(a) of the Code has received a determination letter from the IRS which has not been revoked that it is so exempt, and, to the Company’s knowledge, no fact or event has occurred since the date of such determination letter or letters from the IRS that would reasonably be expected to materially adversely affect the qualified status of any such Company Plan or the exempt status of any such trust. To the Company’s knowledge, each Company Multiemployer Plan intended to be qualified under Section 401(a) of the Code is so qualified.

(e)     Except as would not reasonably be expected to result in material liability, neither the Company nor any of its ERISA Affiliates, and to the Company’s knowledge no other person, has engaged in any transaction or acted or failed to act in any

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manner that would subject the Company or any of its ERISA Affiliates to any liability for breach of fiduciary duty under ERISA.

(f)     Except as would not reasonably be expected to result in material liability, neither the Company nor any of its ERISA Affiliates and, to the Company’s knowledge, no other person has engaged in any transaction in violation of Section 406(a) or (b) of ERISA or Section 4975 of the Code for which no exemption exists under Section 408 of ERISA or Section 4975(c) or (d) of the Code.

(g)     As of the date hereof, (i) all of the stock options issued by the Company that vest on or after January 1, 2005 were issued with an exercise price no less than the fair market value of the underlying stock at the actual date of grant or the Business Day immediately preceding the actual date of grant, (ii) no shares of restricted Common Stock provide for a deferral opportunity beyond vesting, and (iii) no restricted share units or other compensatory equity awards issued by the Company constitute “nonqualified deferred compensation” within the meaning of Section 409A(d)(1) of the Code.

(h)     Except as would not reasonably be expected to result in material liability, the Company and its subsidiaries have no obligations, whether under Company Plans, Company Multiemployer Plans or otherwise, to provide medical, health or life insurance or any other welfare-type benefits for current or future retired or terminated employees of the Company or its subsidiaries or their spouses or dependents (other than in accordance with Part 6 of Title I of ERISA or Code Section 4980B).

(i)    Each Company Plan that provides for “nonqualified deferred compensation” within the meaning of Section 409A(d)(1) of the Code, and any award thereunder, in each case that is subject to Section 409A of the Code, (i) has been operated in compliance in all material respects with Section 409A of the Code since January 1, 2005, based upon a good faith, reasonable interpretation of Section 409A of the Code and the Treasury Regulations and other official guidance issued thereunder, and (ii) has been maintained in compliance with Section 409A of the Code and the final Treasury Regulations and all subsequent official guidance issued thereunder.

SECTION 2.11 Compliance with Laws. Each of the Company and its subsidiaries is operating its business in compliance with all applicable Laws (including any zoning or building ordinance, code or approval), except to the extent any noncompliance with such Laws has not had and would not reasonably be expected to have a Material Adverse Effect. To the Company’s knowledge, neither the Company nor any of its subsidiaries is being investigated with respect to, or is subject to a pending threat to be charged with or given notice of any material violation of, any applicable Law. All Permits required to conduct the business of the Company and its subsidiaries as currently conducted have been obtained by one or more of the Company or its subsidiaries and all such Permits are in full force and effect and the business of the Company and its subsidiaries is being operated in compliance therewith, except for such Permits the failure of which to possess or be in full force and effect or to be complied with has not had and

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would not reasonably be expected to have a Material Adverse Effect (except that this sentence shall not apply to any Permits which are covered by Section 2.06).

SECTION 2.12 SEC Reports and Company Financial Statements. (a) The Company has timely filed all forms, reports, schedules, statements and other documents (including all exhibits) required to be filed by it with the SEC since February 23, 2008 (the “SEC Reports”). The SEC Reports (i) were prepared in all material respects in accordance with the requirements of the Exchange Act or the Securities Act, as the case may be, and the rules and regulations of the SEC thereunder, and (ii) did not at the time they were filed (or, in the case of a registration statement, as of its most recent effective date) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No subsidiary of the Company is a registrant with the SEC.

(b)     Each of the consolidated financial statements (including, in each case, any notes thereto) included or incorporated by reference in the SEC Reports complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, was prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and fairly presented in all material respects the consolidated financial position, results of operations and cash flows of the Company and its consolidated subsidiaries as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein.

(c)     Except as set forth on or reserved against in the consolidated balance sheet of the Company and its consolidated subsidiaries as of February 28, 2009 included in the “Fiscal 2008 Annual Report to Stockholders” attached as an exhibit to the Company’s Form 10-K for the year ended February 28, 2009 including the notes thereto, none of the Company or any of its consolidated subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise), except for liabilities or obligations (i) incurred since February 28, 2009 in the ordinary course of business and consistent with past practice, or (ii) that are less than $5,000,000 in the aggregate.

(d) Neither the Company nor any of its subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar Contract or arrangement (including any Contract relating to any transaction or relationship between or among the Company and any of its subsidiaries, on the one hand, and any unconsolidated affiliate of the Company or any of its subsidiaries, including any structured finance, special purpose or limited purpose entity or person, on the other hand, or any “off-balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K of the SEC)), where the result, purpose or effect of such Contract is to avoid disclosure of any material transaction involving, or material liabilities of, the Company or any of its subsidiaries in the Company’s or such subsidiary’s audited financial statements or other SEC Reports.

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(e)     The audit committee of the Board of Directors of the Company (the “Board of Directors”) has established “whistleblower” procedures that meet the requirements of Exchange Act Rule 1 0A-3. Neither the Company nor any subsidiary has received any “complaints” (within the meaning of Exchange Act Rule 10A-3) in respect of any accounting, internal accounting controls or auditing matters. To the Company’s knowledge, no complaint seeking relief under Section 806 of SOX has been filed with the United States Secretary of Labor and no employee has threatened to file any such complaint.

(f)     The Company has made all certifications and statements required by Sections 302 and 906 of SOX and the related rules and regulations promulgated thereunder with respect to the SEC Reports. The Company and its subsidiaries maintain a system of “disclosure controls and procedures” (as defined in Rule 1 3a- 15(e) of the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is, in all material respects, recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure. Since February 23, 2008, the Company and its subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and procedures as required by Rule 13a-15 of the Exchange Act.

(g) The Company and its subsidiaries maintain systems of “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that comply in all material respects with the requirements of the Exchange Act and have been designed by, or under the supervision of, their respective principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Except as would not have a Material Adverse Effect, the Company and its subsidiaries maintain internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has disclosed, based on its most recent evaluation prior to the date of this Agreement, to the Company’s outside auditors and the audit committee of the Board of Directors (A) any significant deficiencies and material weaknesses in the design or operation of “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

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(h)     The Company is in material compliance in all material respects with applicable requirements of SOX and applicable rules and regulations promulgated by the SEC thereunder. To the Company’s knowledge, there is no reason that its outside auditors and its chief executive officer and chief financial officer will not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of SOX, without qualification, when next due.

(i)    Except as disclosed in the Company’s Form 10-K for the year ended February 28, 2009, none of the officers, directors, employees or related persons (as defined in Regulation S-K Item 404) of the Company is presently a party to any transaction with the Company or any of its subsidiaries that would be required to be reported on Form 10-K by Item 13 thereof pursuant to Regulation S-K Item 404 (other than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer, director, employee or related person or, to the Company’s knowledge, any corporation, partnership, trust or other entity in which any such officer, director, employee or related person has a substantial interest or is an officer, director, trustee or partner.

(j)    Except as disclosed in the Company’s Form 10-K for the year ended February 28, 2009 and pursuant to the Ancillary Agreements, neither Tengelmann nor any of its officers, directors, employees or affiliates is presently a party to any transaction with the Company or any of its material subsidiaries, including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from Tengelmann or any of its officers, directors, employees or affiliates or, to the Company’s knowledge, any corporation, partnership, trust or other entity in which Tengelmann or any of its officers, directors, employees or affiliates has a substantial interest or is an officer, director, trustee or partner.

(k)     Except as disclosed in the Company’s Form 10-K for the year ended February 28, 2009, neither the Company nor any of its subsidiaries has any outstanding Indebtedness, other than intercompany loans (among wholly owned subsidiaries) and other than Indebtedness incurred in the ordinary course of business and consistent with past practice since February 28, 2009 in an aggregate principal amount which does not exceed $5,000,000. Neither the Company nor any of its material subsidiaries is, immediately prior to this Agreement, or will be, at the time of the Closing after giving effect thereto, in Default in the payment of any Indebtedness or in breach or Default under any Contract evidencing or relating to its material Indebtedness, including the resolutions adopted by the Pricing Committee of the Board of Directors on August 4, 1999, relating to the Company’s 9 3/8% Senior Quarterly Interest Bonds due 2039, and the exhibits thereto, or under any mortgage, deed of trust, security agreement or lease to which it is a party.

SECTION 2.13 Absence of Certain Changes. Since February 28, 2009 through the date hereof, there has not occurred any change, event or circumstance that

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has had or would be reasonably expected to have a Material Adverse Effect. Except as expressly contemplated by this Agreement or the Ancillary Agreements, since February 28, 2009 through the date hereof, the Company and its subsidiaries have conducted their business in the ordinary course generally consistent with past practice in all material respects, and none of the Company or its subsidiaries has:

(a)     amended its Charter, By-Laws or other organizational documents;

(b)     adopted a plan or agreement of liquidation, dissolution, restructuring, merger, consolidation, recapitalization or other reorganization;

(c)     (i) issued, sold, transferred or otherwise disposed of any shares of its capital stock, Voting Debt of the Company or other voting securities or any securities convertible into or exchangeable for any of the foregoing, (ii) granted or issued any options, warrants, securities or rights that are linked to the value of the Common Stock, or other rights to purchase or obtain any shares of its capital stock or any of the foregoing or any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock-based performance units, (iii) split, combined, subdivided or reclassified any shares of its capital stock, (iv) declared, set aside or paid any dividend or other distribution with respect to any shares of its capital stock or (v) redeemed, purchased or otherwise acquired any shares of its capital stock or any rights, warrants or options to acquire any such shares or effected any reduction in capital, except (with respect to clauses (i) through (v) above) for: (A) issuances of capital stock of the Company’s subsidiaries to the Company or a wholly owned subsidiary of the Company, (B) issuances of shares of Common Stock upon exercise of employee stock options or upon vesting of restricted stock units or restricted stock or redemptions, purchases or other acquisitions of capital stock in connection with net exercises or withholding with respect to the foregoing, (C) grants made pursuant to Company Plans (D) dividends or other distributions by any subsidiary of the Company to the Company or a wholly owned subsidiary of the Company and (E) issuances pursuant to any share lending agreement, hedging agreement, and any other documents related thereto;

(d)     issued any note, bond or other debt security or right to acquire any debt security, incurred or guaranteed any Indebtedness or entered into any “keep well” or other agreement to maintain the financial condition of another person or other arrangement having the economic effect of any of the foregoing, other than (i) trade or standby letters of credit in the ordinary course of business; (ii) in connection with new store openings or other actions in the ordinary course of business; (iii) pursuant to any existing credit agreement and other existing Contracts regarding other Indebtedness; (iv) issuances, incurrences or guarantees by the Company to any wholly owned subsidiary of the Company or by a subsidiary to the Company or any other wholly owned subsidiary of the Company; (v) incurrences or guarantees of store leases; (vi) other guarantees required under any agreements or commitments existing as of the date of this Agreement; (vii) in connection with any equipment leases and capital leases; (viii) in connection with any insurance premium financing in the ordinary course of business generally consistent with past practice; or (ix) guarantees of any Indebtedness permitted by the foregoing clauses (i) through (viii);

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(e) except as required under a Company Plan or Collective Bargaining Agreement or in the ordinary course of business generally consistent with past practice, (i) increased or accelerated the benefits under any Company Plan or Collective Bargaining Agreement, (ii) increased the compensation or benefits payable to any current or former director, officer, employee or consultant of the Company or its subsidiaries, (iii) granted any rights to severance, change in control or termination pay to, or entered into any employment, severance or change in control agreement or arrangement with, any current or former director, officer, employee or consultant of the Company or its subsidiaries, or (iv) taken any affirmative action to amend or waive any performance or vesting criteria or accelerate vesting, exercisability or funding under any Company Plan;

(f) entered into or consummated any transaction involving the acquisition (including, by merger, consolidation or acquisition of the business, stock or all or substantially all of the assets or other business combination) of any other person for consideration to such person in excess of $20,000,000 in the aggregate (other than purchases of inventory or acquisitions of real property, fixtures and equipment for the opening of any Facility in the ordinary course of business generally consistent with past practice);

(g)     settled any Action or threatened any Action involving a payment by the Company or any of its subsidiaries in excess of $1,000,000;

(h)     changed any of its material accounting policies or practices, except as required as a result of a change in GAAP or the rules and regulations of the SEC;

(i) (i) made, changed or revoked any material election in respect of Taxes, (ii) adopted or changed any material accounting method in respect of Taxes, (iii) entered into any Tax allocation agreement, Tax-sharing agreement, Tax indemnity agreement or closing agreement, (iv) settled or compromised any material claim, notice, audit report or assessment in respect of Taxes or (v) surrendered any right to claim a material refund of Taxes; or

(j) agreed or committed by Contract or otherwise to do any of the foregoing.

SECTION 2.14 Insurance. Each of the Company and its material subsidiaries maintains, with reputable insurers or through self-insurance, insurance in such amounts, including deductible arrangements, and of such a character as is customary for companies engaged in the same or similar business. All policies of title, fire, liability, casualty, business interruption, workers’ compensation and other forms of insurance including directors and officers insurance held by the Company and its subsidiaries as of the date hereof, are in full force and effect in accordance with their terms. Neither the Company nor any of its subsidiaries is in Default under any provisions of any such policy of insurance and neither the Company nor any of its subsidiaries has received notice of cancellation of any such insurance except as has not had and would not reasonably be expected to have a Material Adverse Effect.

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SECTION 2.15 Private Placement. Assuming that the representations of the Investors set forth in Articles III and V are true and correct, the offer, sale, and issuance of the Shares in conformity with the terms of this Agreement are exempt from the registration requirements of Section 5 of the Securities Act, and applicable state securities laws.

SECTION 2.16 Form S-3 Eligibility. The Company meets the eligibility requirements of General Instruction I to Form S-3 promulgated under the Securities Act.

SECTION 2.17 Listing and Maintenance Requirements. The Company has not, in the 12 months preceding the date hereof, received notice (written or oral) from any Trading Market on which any of its securities is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is in compliance with all such listing and maintenance requirements.

SECTION 2.18 Registration Rights. The Company has not granted or agreed to grant, and is not under any obligation to provide, any rights (including “piggyback” registration rights) to register under the Securities Act any of its presently outstanding securities or any of its securities that may be issued subsequently, except for those contained in the Amended and Restated Stockholder Agreement and the Amended and Restated Tengelmann Stockholder Agreement.

SECTION 2.19 No Restriction on the Ability to Pay Cash Dividends.  Except for the ABL Credit Agreement, neither the Company nor any of its material subsidiaries is a party to any contract, agreement, arrangement or other understanding, oral or written, express or implied, and is not subject to any provisions in its Charter or By-Laws or other governing documents or resolutions of the Board of Directors, that could restrict, limit, prohibit or prevent the Company’s ability to pay dividends in full in cash on the Shares in the amounts contemplated by the Convertible Preferred Articles Supplementary.

SECTION 2.20 Inventories. Except as would not have a Material Adverse Effect, all items of inventory reflected on the latest balance sheet included in the Company’s SEC Reports (i) were acquired in the ordinary course of business generally consistent with past practice and (ii) were usable and saleable in the ordinary course of business generally consistent with past practice, except for normal shrinkage, spoilage and obsolescence.

SECTION 2.21 Contracts. (a) Except as have not had or would not reasonably be expected to have a Material Adverse Effect, (i) each Company Contract, assuming such Company Contract is a legal, valid and binding obligation of and enforceable against the other parties thereto in accordance with its terms, constitutes a valid and binding obligation of the Company or the subsidiary of the Company party thereto and is enforceable against the Company or such subsidiary, except as limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting the enforcement of creditors’ rights in general and subject to general principles of equity

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(regardless of whether such enforceability is considered in a proceeding at law or in equity) and (ii) each Company Contract, to the Company’s knowledge, is a valid, binding and enforceable obligation of the other parties thereto, except as limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting the enforcement of creditors’ rights in general and subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

(b) Except as have not had or would not reasonably be expected to have a Material Adverse Effect, none of the Company or its subsidiaries and, to the Company’s knowledge, no other party to a Company Contract (other than any Collective Bargaining Agreement) is in breach or Default under any Company Contract (other than any Collective Bargaining Agreement). This subsection shall not apply to any Contract evidencing Indebtedness, which is covered by Section 2.12(k), or any Collective Bargaining Agreement, which is covered by Section 2.02(b).

ARTICLE III

Representations and Warranties of the Investors

Each Investor and, as applicable, the Investor’s Representative, and solely with respect to Section 3.02(a) and 3.05, the Existing Investors, severally but not jointly, hereby represents and warrants to the Company, as of the date of this Agreement, as follows:

SECTION 3.01 Corporate Status. Such Investor and the Investors’ Representative is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its formation and has all requisite power and authority to carry on its business as it is now being conducted.

SECTION 3.02 Authorization; Noncontravention. (a) Authorization.  Such Investor, such Existing Investor and the Investors’ Representative have all necessary power and authority to execute and deliver this Agreement and the Amended and Restated Stockholder Agreement, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby, including the authorization by the Investors and the Existing Investors of the Investors’ Representative to take actions on their behalf as set forth in Section 5.05 of this Agreement and Section 2.06 of the Amended and Restated Stockholder Agreement. The execution, delivery and performance of this Agreement and the Amended and Restated Stockholder Agreement and the consummation by such Investor, the Existing Investors and the Investors’ Representative of the transactions contemplated hereby and thereby, including the authorization by the Investors and the Existing Investors of the Investors’ Representative to take actions on their behalf as set forth in Section 5.05 of this Agreement and Section 2.06 of the Amended and Restated Stockholder Agreement, have been duly and validly authorized by all necessary corporate or other action. This Agreement has been duly executed and delivered by such Investor, the Existing Investors and the Investors’ Representative and (assuming due authorization, execution and

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delivery by the Company) constitutes, and the Amended and Restated Stockholder Agreement, when executed and delivered by each of the Investors, the Existing Investors and the Investors’ Representative (assuming due authorization, execution and delivery by the Company and any other parties thereto), will constitute, a valid and binding obligation of such Investor, the Existing Investors and the Investors’ Representative, enforceable against such Investor, the Existing Investors and the Investors’ Representative in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally or by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at Law).

(b)                                      No Conflict. The execution, delivery and performance by such Investor, the Existing Investors and the Investors’ Representative of this Agreement and the Amended and Restated Stockholder Agreement do not, and the consummation of the Offering and the other transactions contemplated hereby and thereby and compliance with the provisions of this Agreement and the Amended and Restated Stockholder Agreement will not, conflict with, or result in any Default under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of a benefit under, or result in the amendment of any term or provision of or the creation of any Encumbrance upon any of the assets of such Investor, the Existing Investors or the Investors’ Representative under any provision of (i) the certificate of incorporation or bylaws or any relevant organizational documents of such Investor, such Existing Investor or the Investors’ Representative, (ii) any material Contract (with a party other than the Company) to which any of the Investors, the Existing Investors or the Investors’ Representative is a party or by which any of the Investors’, the Existing Investors’ or the Investors’ Representative’s assets are bound or (iii) any Law or Judgment, in each case applicable to any of the Investors, the Existing Investors or the Investors’ Representative or their assets, other than, in the case of clauses (ii) or (iii), any such conflicts, Defaults, rights, losses, amendments or Encumbrances that would not reasonably be expected to materially impair or delay the ability of such Investor, such Existing Investor or the Investors’ Representative to perform its obligations (if any) under this Agreement or the Amended and Restated Stockholder Agreement or carry out the transactions contemplated hereby or thereby in accordance with the terms herein or therein. No material Permit, order or authorization of, or registration, declaration or filing with, or notice to, any Governmental Entity is required to be obtained or made by or with respect to any of the Investors, the Existing Investors or the Investors’ Representative in connection with the execution, delivery and performance of this Agreement, or the Amended and Restated Stockholder Agreement by such Investor, such Existing Investor or the Investors’ Representative or the consummation by such Investor, such Existing Investor or the Investors’ Representative of the Offering or the other transactions contemplated by this Agreement or the Amended and Restated Stockholder Agreement, except for compliance with and filings under the Exchange Act, the Securities Act, state securities Laws or “blue-sky” laws and the rules and regulations of the NYSE.

SECTION 3.03 Securities Act. The Shares purchased by such Investor pursuant to this Agreement are being acquired for investment only and not with a view to any public distribution thereof, and such Investor shall not offer to sell or otherwise

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dispose of the Shares or the Underlying Securities so acquired by it in violation of any of the registration requirements of the Securities Act.

SECTION 3.04 Available Funds. Such Investor has, or will have on or prior to the Closing, sufficient funds in its possession to permit it to acquire and pay for the Investor Shares to be purchased by it and to perform its obligations under this Agreement.

SECTION 3.05 Ownership of Common Stock. As of the date of this Agreement, the Investors, the Existing Investors and their affiliates, taken together, are the beneficial owners, as defined in Rule 1 3d-3 promulgated under the Exchange Act, of no more than 2,592,610 shares of Common Stock, provided that they also hold Series B Yucaipa Warrants to acquire 6,965,859 shares of Common Stock.

ARTICLE IV

Covenants

SECTION 4.01 Confidentiality. The Investors acknowledge that the information being provided to it in connection with the Offering and the consummation of the other transactions contemplated hereby is subject to the terms of a confidentiality agreement between the Investors’ Representative and the Company dated as of February 9, 2009 (the “Confidentiality Agreement”), the terms of which are incorporated herein by reference. Effective upon, and only upon, the Closing, the Confidentiality Agreement shall terminate and be superseded in all respects by the Amended and Restated Stockholder Agreement.

SECTION 4.02 Reasonable Best Efforts. (a) On the terms and subject to the conditions and limitations of this Agreement, including the provisions immediately below, each party shall use its reasonable best efforts to cause the Closing to occur as promptly as practicable.

(b) If any objections are asserted with respect to the Offering or the transactions contemplated hereby under any Law or if any suit is instituted (or threatened to be instituted) by any applicable Governmental Entity or any private party challenging any of the transactions contemplated hereby as violative of any Law or which would otherwise prevent, materially impede or materially delay the consummation of the transactions contemplated hereby, each party hereto shall promptly notify each of the other parties hereto and shall use its reasonable best efforts to resolve any such objections or suits which, in any case if not resolved, would reasonably be expected to prevent, materially impede or materially delay the consummation of the Offering or the other transactions contemplated hereby; provided that neither the Company nor any of the Investors shall be required to sell, hold separate or otherwise dispose of any of their respective assets or assets of their respective subsidiaries, or conduct its business or the business of any of its subsidiaries, in a manner which would resolve such objections or suits.

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(c) Nothing in this Section 4.02 shall require the Investors to agree to any change to the terms of this Agreement, any Ancillary Agreements, the Company By-Law Amendment, the Senior Secured Notes or the Senior Secured Notes Offering, except, in the case of the Senior Secured Notes and the Senior Secured Notes Offering only, for such changes that would not (absent a waiver) cause the closing condition in Section 6.01(d) hereof to fail to be satisfied. In the event the obligations set forth in this Section 4.02 require the Investors to (i) make any payments of any money or incur any liability for fees, expenses or otherwise to any Third Party (other than ordinary course fees to advisors that would be incurred in connection with this Agreement absent the obligations in this Section 4.02) or (ii) resolve objections or suits, litigate or dispute any matter with a Third Party (other than Tengelmann or its affiliates), the Company shall reimburse the Investors for all out-of-pocket costs and expenses (including legal fees) associated therewith within 10 Business Days of receiving a reasonably detailed invoice from the Investors’ Representative.

SECTION 4.03 Fees and Expenses. (a) Upon the occurrence of the Closing, the Company shall reimburse the Investors for all reasonable Third Party out-of-pocket costs and expenses incurred by the Investors or on the Investors’ behalf in connection with this Agreement, the Ancillary Agreements, the Offering and the transactions contemplated by this Agreement and the Ancillary Agreements, including reasonable fees and expenses of accountants and counsel of the Investors; provided, however, that such amounts, not including the $135,000 paid by the Company to the Investors on or about July 2009, shall not exceed $1,250,000.

(b) On the Closing Date, the Company shall pay the Investors a placement fee equal to $2,625,000.

SECTION 4.04 NYSE. Promptly following the Closing, the Company shall apply to cause the Underlying Securities with respect to the Investor Shares to be approved for listing on the NYSE.

SECTION 4.05 Use of Proceeds. The net proceeds from the Offering, the Tengelmann Initial Shares and the Senior Secured Notes Offering shall be used for general corporate purposes.

SECTION 4.06 Conduct of Business. Except for matters set forth in Section 4.06 of the Company Disclosure Letter, otherwise contemplated by this Agreement (including the Senior Notes Offering) or the Ancillary Agreements or as required by applicable Law, without the prior written consent of the Investors, from the date of this Agreement to the Closing Date, the Company shall not (i) conduct its business other than in the ordinary course in all material respects and in compliance in all material respects with applicable Law, (ii) take any action (or cause or permit its subsidiaries to take any action) that would otherwise require the approval of the Investors and the Existing Investors under Section 2.05 of the Amended and Restated Stockholder Agreement (were it in effect at the time) or (iii) take any action that is intended or would reasonably be expected to result in any condition in Article VI (other than 6.01(d) or 6.02(h)) not being satisfied.

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ARTICLE V

Additional Agreements

SECTION 5.01 Publicity. The Company and the Investors shall, and the Investors shall cause the Investors’ Representative to, communicate with each other and cooperate with each other prior to any public disclosure of the transactions contemplated by this Agreement. The Company, the Investors and the Investors’ Representative agree that no public release or announcement concerning the transactions contemplated hereby or by the Ancillary Agreements shall be issued by or as a result of the actions of any of them without the prior consent of the other parties hereto, except as such release or announcement may be required by Law or the rules and regulations of the NYSE, in which case the party required to make the release or announcement shall consult with the other parties hereto about, and allow the other parties hereto reasonable time (taking into account the circumstances) to comment on, such release or announcement in advance of such issuance.

SECTION 5.02 Transfer Restrictions. The Investors acknowledge and agree that the Shares and the Underlying Securities (a) have not been registered under the Securities Act or under any state securities laws, (b) will be, when issued, restricted securities under the Securities Act and may not be offered or sold except pursuant to an effective registration statement or an available exemption from registration under the Securities Act and (c) shall be subject to the restrictions on transfer set forth in the Amended and Restated Stockholders Agreement.

SECTION 5.03 Purchase for Investment. Each Investor (i) is acquiring the Shares pursuant to an exemption from registration under the Securities Act solely for investment with no present intention to distribute them to any person in violation of the Securities Act or any applicable U.S. state securities laws, (ii) has such knowledge and experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of the Offering and of making an informed investment decision, has conducted a review of the business and affairs of the Company that it considers sufficient and reasonable for purposes of purchasing the Investor Shares and has been provided an opportunity to ask questions of and receive answers from representatives of the Company concerning the terms and conditions of this Agreement, the Ancillary Agreements and the purchase of the Investor Shares, (iii) is able to bear the economic risk of the Offering and at the present time is able to afford a complete loss of such investment and (iv) is an “institutional accredited investor” (as that term is defined by Rule 501 under the Securities Act).

SECTION 5.04 Legend. The Investors agree that the Shares and Underlying Securities will bear a legend substantially to the following effect and, in the case of the Underlying Securities, with such modifications as may reasonably be required:

“THE SECURITIES REPRESENTED BY THIS INSTRUMENT AND THE SECURITIES ISSUABLE UPON CONVERSION OF SECURITIES

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REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS AND IN ACCORDANCE WITH THE TRANSFER RESTRICTIONS SET FORTH IN THE AGREEMENTS REFERRED TO BELOW (AS SUCH AGREEMENTS MAY BE AMENDED FROM TIME TO TIME). THIS INSTRUMENT IS ISSUED PURSUANT TO AND SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF AN INVESTMENT AGREEMENT, DATED AS OF JULY 23, 2009, BY AND AMONG THE ISSUER OF THIS INSTRUMENT AND THE INVESTORS AND THE INVESTORS’ REPRESENTATIVE REFERRED TO THEREIN AND AN AMENDED AND RESTATED STOCKHOLDER AGREEMENT, DATED AS OF JULY , 2009, BY AND AMONG THE ISSUER OF THIS INSTRUMENT AND THE INVESTORS AND THE INVESTORS’ REPRESENTATIVE REFERRED TO THEREIN. THE SECURITIES REPRESENTED BY THIS INSTRUMENT AND THE SECURITIES ISSUABLE UPON CONVERSION OF SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENTS. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENTS WILL BE VOID. THE FOREGOING SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO AND QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SAID AGREEMENTS, COPIES OF WHICH WILL BE SENT WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS. SUCH REQUEST MUST BE MADE TO THE SECRETARY OF THE COMPANY AT ITS PRINCIPAL OFFICE.

THE COMPANY IS AUTHORIZED TO ISSUE DIFFERENT CLASSES AND SERIES OF STOCK. THE DESIGNATIONS AND ANY PREFERENCES, CONVERSION AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS, QUALIFICATIONS, AND TERMS AND CONDITIONS OF REDEMPTION OF THE STOCK OF EACH CLASS AND SERIES OF STOCK AND THE DIFFERENCES IN THE RELATIVE RIGHTS AND PREFERENCES FOR EACH CLASS AND SERIES OF STOCK (AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF FUTURE CLASSES AND SERIES OF STOCK) WILL BE FURNISHED WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS. SUCH REQUEST MUST BE MADE TO THE SECRETARY OF THE COMPANY AT ITS PRINCIPAL OFFICE.”

SECTION 5.05 Investors’ Representative. The parties hereto acknowledge and agree that Yucaipa American Alliance Fund II, LLC shall be the designated representative of the Investors, or the Investors’ Representative, with the

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authority to make all decisions and determinations and to take all actions (including giving consents and waivers or agreeing to any amendments to this Agreement or to the termination hereof) required or permitted hereunder on behalf of the Investors, and any such action, decision or determination so made or taken shall be deemed the action, decision or determination of the Investors, and any notice, document, certificate or information required to be given, whether in writing or otherwise, to any Investor shall be deemed so given if given to the Investors’ Representative and the Company shall be fully protected against liability in relying on the actions of the Investors’ Representative as being authorized by the Investors.

SECTION 5.06 Waiver. The Company hereby agrees to waive any provision in the Stockholder Agreement that would be required to be waived in order for the parties hereto to enter into and perform their obligations and exercise their rights under this Agreement, the Ancillary Agreements and the Company By-Laws Amendment and to consummate the transactions contemplated hereby and thereby.

ARTICLE VI

Conditions Precedent

SECTION 6.01 Conditions to Each Party’s Obligation. The obligation of the Investors to purchase and pay for the Investor Shares and the obligation of Company to issue such Investor Shares to the Investors is subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions:

(a)              No Injunctions or Restraints. No Law or injunction enacted, entered, promulgated, enforced or issued by any Governmental Entity preventing the consummation of the Offering or the transactions contemplated by the Ancillary Agreements shall be in effect.

(b)              Amended and Restated Stockholder Agreement. The Company, the Existing Investors, the Investors and the Investors’ Representative shall have duly authorized, executed and delivered the Amended and Restated Stockholder Agreement.

(c)               Tengelmann Investment. Tengelmann and the Company shall have entered into the Amended and Restated Tengelmann Stockholder Agreement and the closing under the Tengelmann Investment Agreement shall occur concurrently with, and be subject to, the Closing hereunder and each of the Amended and Restated Tengelmann Stockholder Agreement and the Tengelmann Investment Agreement shall be in the form delivered to the Investors on the date hereof.

(d)              Senior Secured Notes Offering. The Senior Secured Notes Offering in an aggregate principal amount of at least $225,000,000 shall close prior to or concurrently with the Offering, and the terms and conditions of the Senior Secured Notes shall not be materially less favorable in the aggregate, to the Company or to the Investors,

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as holders of the Convertible Preferred Stock, than the terms and conditions set forth in Section 6.01 of the Company Disclosure Letter.

SECTION 6.02 Conditions to Obligation of the Investors. The obligation of the Investors to purchase and pay for the Investor Shares is subject to the satisfaction (or waiver by the Investors) on or prior to the Closing Date of the following conditions:

(a)              Representations and Warranties. (i) The representations and warranties of the Company contained in this Agreement (other than in Sections 2.02(a) and 2.03(a), which Sections shall be the subject of Section 6.02(a)(ii)) shall be true and correct, without giving effect to any “materiality” or “Material Adverse Effect” qualifications therein, as of the date of this Agreement, except to the extent that any failures of such representations and warranties to be so true and correct, individually or in the aggregate, have not had a Material Adverse Effect and (ii) the representations and warranties of the Company set forth in Sections 2.02(a) and 2.03(a) shall be true and correct in all material respects, as of the date of this Agreement, except to the extent such representations and warranties shall have been expressly made as of an earlier date, in which case such representations and warranties shall have been true and correct in all material respects as of such earlier date.

(b)              Performance of Covenants of the Company. The Company shall have performed or complied in all material respects with all covenants contained in this Agreement to be performed or complied with by the Company prior to or at the Closing.

(c)     Company Closing Certificate. The Investors shall have received a certificate signed by the chief executive officer or the chief financial officer of the Company on behalf of the Company, dated as of the Closing Date, to the effect that the conditions set forth in Sections 6.02(a) and 6.02(b) have been satisfied (the “Company Closing Certificate”).

(d)              Opinion of Counsel. The Investors shall have received (i) an opinion dated as of the Closing Date of counsel to the Company, substantially in the form attached hereto as Exhibit C and (ii) an opinion dated as of the Closing Date of Maryland counsel to the Company, substantially in the form attached hereto as Exhibit D.

(e)               Articles Supplementary. The Company shall have filed the Convertible Preferred Articles Supplementary with the State Department of Assessments and Taxation of the State of Maryland and the State Department of Assessments and Taxation of the State of Maryland shall have accepted the Convertible Preferred Articles Supplementary for record.

(f)                Board of Directors. The Board of Directors shall have taken all actions necessary and appropriate to permit ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇, to be elected to the Board effective immediately upon the delivery of a written consent to such effect to the holders of the Investor Shares following the Closing; provided that if the Governance Committee of the Board of Directors reasonably determines that neither of them qualify as an “Independent Director” under NYSE Rule 303A.02 (or any successor

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provision thereto), then the Board of Directors shall take all actions necessary to qualify another individual designated by the Investors as an “Independent Director” under NYSE Rule 303A.02 (or any successor provision thereto) so that immediately after the Closing two individuals designated by the Investors have been elected to the Board of Directors.

(g)               Company By-Laws Amendment. The Company shall have adopted the Company By-Laws Amendment.

(h)              Senior Secured Notes Offering. The Senior Secured Notes Offering in an aggregate principal amount of at least $225,000,000 shall close prior to or concurrently with the Offering, and (in addition to and without limitation of the closing condition in Section 6.01(d)), the terms and conditions of such Senior Secured Notes described in Section 6.02 of the Company Disclosure Letter shall not be changed without Investors prior written consent (which may be withheld in the Investors’ sole discretion).

SECTION 6.03 Conditions to Obligation of the Company. The obligation of the Company to sell the Investor Shares is subject to the satisfaction (or waiver by the Company) on or prior to the Closing Date of the following conditions:

(a)              Representations and Warranties. The representations and warranties of the Investors, the Existing Investors and the Investors’ Representative made in this Agreement and the Ancillary Agreements shall be true and correct in all material respects as of the date of this Agreement, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date.

(b)              Performance of Covenants of the Investors. The Investors and the Investors’ Representative shall have performed or complied in all material respects with all covenants contained in this Agreement to be performed or complied with by the Investors or the Investors’ Representative prior to or at the Closing.

(c) Investor Closing Certificates. The Company shall have received from each Investor a certificate, signed by the Investors’ Representative on behalf of such Investor dated as of the Closing Date, to the effect that the conditions set forth in Sections 6.03(a) and 6.03(b) have been satisfied (the “Investor Closing Certificates”).

SECTION 6.04 Satisfaction of Sections 6.01(d) and 6.01(h). If the Company provides one Business Day advance written notice of the pricing of the Senior Secured Notes Offering, the Investors’ Representative shall cooperate in good faith with the Company on the pricing date, including to make available representatives authorized to evaluate whether the “description of the notes” from the offering memorandum for the Senior Secured Notes Offering satisfies the conditions set forth in Sections 6.01(d) and 6.01(h). If on the pricing date, the Investors’ Representative delivers a written notice agreeing that the conditions in Sections 6.01(d) and 6.01(h) have been satisfied, then such conditions shall irrevocably be deemed to be satisfied upon the Closing of the Offering so long as the terms of the Senior Secured Notes at Closing of the Offering are the same as the “description of the notes” from the offering memorandum.

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SECTION 6.05 Frustration of Closing Condition. No party to this Agreement may rely on the failure of any condition set forth in this Article VI to be satisfied if such failure was caused by such party’s failure to cooperate or to use its reasonable best efforts to cause the Closing to occur, as required by Section 4.02.

ARTICLE VII

Indemnification

SECTION 7.01 Indemnification. (a) Except as set forth below, the representations and warranties of the parties contained in this Agreement (including the Company Disclosure Letter) shall not survive the Closing Date. The representations and warranties contained in the first sentence of Section 2.13 and in Sections 2.02(b), 2.12, 2.15, 2.16, 2.17, 2.18, 2.19 and 3.02(b) shall survive until the first anniversary of the Closing Date. The representations and warranties contained in Sections 2.02(a), 2.03 and 3.02(a) shall survive indefinitely.

(b)              The Company hereby agrees to indemnify, pay and hold each Investor, and each of the respective officers, directors, employees and affiliates of each Investor, and each of the respective direct and indirect beneficial owners of each Investor harmless, to the fullest extent permitted by Law, from and against any and all Losses which may be imposed on, incurred by or asserted against such Indemnified Party, in any manner relating to or arising out of (i) the breach of any representation or warranty set forth in the first sentence of Section 2.13 and in Sections 2.02, 2.03, 2.12, 2.15, 2.16, 2.17, 2.18 and 2.19 of this Agreement, as of the date hereof or as of the Closing Date, in each case, except with respect to Section 2.1 2(a)(ii) and the first sentence of Section 2.13, without giving effect to any limitation or qualification as to “materiality,” “material,” (including references to “material subsidiary” or “material subsidiaries”), “Material Adverse Effect” or similar qualifiers set forth in such representation or warranty for purposes of determining whether there is a breach and the Losses resulting from, arising out of or relating to such breach, or (ii) the breach, non-compliance or non-performance of any covenant, agreement or obligation of the Company contained in this Agreement at any time (the “Company Indemnified Liabilities”). The Company acknowledges and agrees that for purposes of its indemnification and other obligations under this Article VII, it will be deemed to have given the representations and warranties listed in clause (i) above both as of the date of this Agreement and as of the Closing Date and this Article VII will apply to any breaches at Closing as if such representations and warranties were given and made as of Closing.

(c)               Each Investor severally but not jointly hereby agrees to indemnify, pay and hold the Company and its officers, directors, employees and affiliates harmless to the fullest extent permitted by Law, from and against any and all Losses which may be imposed on, incurred by, or asserted against such Indemnified Party, in any manner relating to or arising out of the breach of any representation or warranty set forth in Section 3.02 of this Agreement, without giving effect to any limitation or qualification as to “materiality,” “material,” “Material Adverse Effect” or similar qualifiers set forth in

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such representation or warranty for purposes of determining whether there is a breach and the Losses resulting from, arising out of or relating to such breach (the “Investor Indemnified Liabilities”, and together with the Company Indemnified Liabilities, the “Indemnified Liabilities”).

(d) A party hereto seeking indemnification under this Article VII (the “Indemnified Party”) with respect to any action, lawsuit, proceeding, investigation or other claim brought against it by a Third Party (a “Third-Party Claim”) shall give prompt written notice to the party from whom indemnification is sought (the “Indemnitor”) of such Third-Party Claim that might give rise to Indemnified Liabilities setting forth a description of those elements of such Third-Party Claim of which such Indemnified Party has knowledge; provided that any delay or failure to give such notice shall not affect the obligations of the Indemnitor unless (and then solely to the extent) such Indemnitor is materially prejudiced by such delay or failure. The Indemnitor shall have the right at any time during which such Third-Party Claim is pending to select counsel to defend and control the defense thereof and settle any Third-Party Claim for which they are responsible for indemnification hereunder (provided that the Indemnitor will not settle any such Third-Party Claim without (i) the appropriate Indemnified Party’s prior written consent, which consent shall not be unreasonably withheld or (ii) obtaining an unconditional release of the appropriate Indemnified Party from all claims arising out of or in any way relating to the circumstances involving such Third-Party Claim) so long as in any such event the Indemnitor shall have stated in a writing delivered to the Indemnified Party that, as between the Indemnitor and the Indemnified Party, the Indemnitor is responsible to the Indemnified Party with respect to such Third-Party Claim to the extent and subject to the limitations set forth herein; provided that the Indemnitor shall not be entitled to control the defense of any Third-Party Claim in the event that in the reasonable opinion of counsel for the Indemnified Party there are one or more material defenses available to the Indemnified Party which are not available to the Indemnitor or that a conflict of interest is likely to exist if the same counsel were to represent the Indemnitor and the Indemnified Party; provided further that with respect to any Third-Party Claim as to which the Indemnified Party is controlling the defense, the Indemnitor will not be liable to any Indemnified Party for any settlement of any Third-Party Claim pursuant to this Section that is effected without its prior written consent. All reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend a matter not inconsistent with this Article VII) shall be paid to the Indemnified Party, as incurred, within 20 calendar days of written notice thereof to the Indemnitor (regardless of whether it is ultimately determined that the Indemnified Party is not entitled to indemnification hereunder; provided that the Indemnitor may require the Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that the Indemnified Party is not entitled to indemnification hereunder). To the extent that the undertaking to indemnify, pay and hold harmless set forth herein may be unenforceable because it is violative of any Law or public policy, the Indemnitor shall contribute the maximum portion which it is permitted to pay and satisfy under applicable Law to the payment and satisfaction of all Indemnified Liabilities incurred by the Indemnified Parties or any of them. The obligations of the parties set forth in this Article VII with regard to the breach or inaccuracy of the representations and

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warranties in this Agreement shall survive until the applicable representation or warranty ceases to survive pursuant to Section 7.01 of this Agreement and, with respect to any claim for Indemnified Liabilities made prior to such time that the applicable representation or warranty ceases to survive, until the final resolution thereof.

(e) Notwithstanding anything to the contrary contained in this Agreement: (i) an Indemnitor shall not be liable for any claim for indemnification pursuant to this Section 7.01 with respect to any breach, non-compliance or non-performance of any representation, warranty, covenant, agreement or obligation, unless and until the aggregate amount of indemnifiable Losses which may be recovered from the Indemnitor equals or exceeds on a cumulative basis an amount equal to $2.5 million, after which the Indemnitor shall be liable for the full amount of all such Losses from and including the first dollar of all such Losses and (ii) with respect to any breach of any representation, warranty or covenant, the maximum amount of indemnifiable Losses which may be recovered from an Indemnitor arising out of or resulting from the causes set forth in Section 7.01 shall be an amount equal to the Purchase Price.

ARTICLE VIII

Termination

SECTION 8.01 Termination. (a) Notwithstanding anything to the contrary in this Agreement, this Agreement may be terminated and the Offering and the other transactions contemplated by this Agreement abandoned at any time prior to the Closing upon written notice (other than in the case of Section 8.01 (a)(i) below) from the terminating party to the non-terminating party specifying the subsection of this Section 8.01 to which such termination is effected:

(i)             by mutual written consent of the Company and the Investors;

(ii)               by the Company, if any of the conditions set forth in Section 6.01 or 6.03 shall have become incapable of fulfillment, and shall not have been waived by the Company;

(iii)                 by the Investors, if any of the conditions set forth in Section 6.01 or Section 6.02 shall have become incapable of fulfillment, and shall not have been waived by the Investors;

(iv)                by the Company or the Investors, if the Tengelmann Investment Agreement is terminated; or

(v) by the Company or the Investors, if the Closing does not occur on or prior to August 14, 2009;

provided, however, that the right to terminate this Agreement under the foregoing clauses (ii), (iii) and (v) of this Section 8.01(a) shall not be available to any party whose action or

42

failure to act in violation of this Agreement has been a principal cause of, or resulted in, the event or circumstance giving rise to the right to terminate this Agreement.

(b) If the transactions contemplated by this Agreement are terminated as provided herein:

(i)             the Investors shall, and shall cause the Investors’ Representative to, return all documents and other material received from the Company relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to the Company; and

(ii)               all confidential information received by the Investors or the Investors’ Representative with respect to the business of the Company and its subsidiaries shall be treated in accordance with the Confidentiality Agreement, which shall remain in full force and effect notwithstanding the termination of this Agreement.

SECTION 8.02 Effect of Termination. (a) If this Agreement is terminated and the transactions contemplated hereby are abandoned as described in Section 8.01, this Agreement shall become null and void and of no further force and effect, except for the provisions of (i) Section 4.01 relating to the obligation of the Investors to keep confidential certain information and data obtained by them, (ii) Section 8.01 and this Section 8.02 and (iii) Sections 9.06, 9.07, 9.08, 9.09, 9.10 and 9.11 as applicable to the interpretation and enforcement of clauses (i) and (ii) above and the Sections referenced therein. Further, nothing in this Section 8.02 shall be deemed to release any party from any liability for any willful and material breach by such party of the terms and provisions of this Agreement.

(b) If this Agreement is terminated pursuant to Section 8.01 (a)(ii) (except as a result of a material breach by the Investors), Section 8.01 (a)(iii), Section 8.01 (iv) or Section 8.01(v), then the Company shall pay and reimburse the Investors for all reasonable Third Party out-of-pocket costs and expenses incurred by the Investors or on the Investors’ behalf in connection with this Agreement, the Ancillary Agreements, the Offering and the transactions contemplated by this Agreement and the Ancillary Agreements; provided, however, that such amounts shall not exceed $1,250,000. Payment of such fees and expenses shall be made by the Company to the Investors (by wire transfer of immediately available funds to an account designated by the Investors) not later than two Business Days after delivery to the Company by the Investors of a notice of demand for payment.

ARTICLE IX

General Provisions

SECTION 9.01 Amendments and Waivers. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. Except as otherwise provided in this Agreement, any failure of any party to

43

comply with any obligation, covenant, agreement or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights.

SECTION 9.02 Assignment. This Agreement and the rights and obligations hereunder shall not be assignable or transferable by any party without the prior written consent of the other parties hereto. Notwithstanding the foregoing, (a) each Investor may assign its right to purchase the Investor Shares to a controlled affiliate of such Investor or The Yucaipa Companies, LLC; provided that the representations and warranties of such Investor made in this Agreement and the Ancillary Agreements shall be true and correct in all material respects as if given by such controlled affiliate or The Yucaipa Companies, LLC and such controlled affiliate or The Yucaipa Companies, LLC shall become party to this Agreement and the Amended and Restated Stockholder Agreement by execution of a joinder hereto or thereto, and each such controlled affiliate or The Yucaipa Companies, LLC shall constitute an “Investor” for purposes hereunder as if it were an “Investor” as of the date hereof, and (b) each Investor may assign its rights hereunder by way of security; provided, however, that no assignment shall limit or affect the assignor’s obligations hereunder. Any attempted assignment in violation of this Section 9.02 shall be void.

SECTION 9.03 No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their permitted assigns and nothing herein expressed or implied shall give or be construed to give to any person, other than the parties hereto and such permitted assigns, any legal or equitable rights hereunder, except that each Indemnified Party is an intended beneficiary of Section 7.01 and may enforce the provisions of such Sections directly against the parties with obligations thereunder.

SECTION 9.04 Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent by facsimile or sent, postage prepaid, by registered, certified or express mail or overnight courier service and shall be deemed given when received, as follows:

if to the Investors, the Existing Investors or the Investors’ Representative;

Yucaipa American Alliance Fund II, LLC

▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇

▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Fax: (▇▇▇) ▇▇▇-▇▇▇▇

Email: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇

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with a copy to (which shall not constitute notice to any Investor, Existing Investor or the Investors’ Representative):

▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP

▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Attention: ▇▇▇▇▇▇ ▇’▇▇▇▇, Esq.; and

if to the Company;

The Great Atlantic & Pacific Tea Company, Inc.

▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇

▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇

Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.

with copies to (which shall not constitute notice to the Company):

Akin Gump ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP

▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇

▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇

Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.,

▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP

▇▇ ▇▇▇▇ ▇▇▇▇▇▇

▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇

Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.

▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.

and

Cravath, Swaine & ▇▇▇▇▇ LLP

▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇

Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.

LizabethAnn ▇▇▇▇▇, Esq.

SECTION 9.05 Interpretation; Exhibits and Schedules; Certain Definitions. The headings contained in this Agreement, in any Exhibit or Schedule hereto and in the table of contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. The term “or” is not exclusive. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein shall have the meaning as defined in this Agreement. When a reference is made in this Agreement to a Section, Exhibit or Schedule, such reference shall be to a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated.

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For all purposes hereof:

“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 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 prior to the date hereof).

“Action” means any action, cause of action, claim, prosecution, investigation, suit, litigation, grievance, arbitration or other proceeding, whether civil, criminal or administrative, at Law or in equity, by or before any Governmental Entity.

“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. A person shall be deemed to control another person if such first person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of such other person, whether through the ownership of voting securities, by contract or otherwise.

“By-Laws” means the By-Laws of the Company, as amended and restated on January 17, 2008.

“Business Day” means any day, other than a Saturday, Sunday or a day on which banks or national securities exchanges located in New York shall be authorized by Law to close.

“Capital Lease Obligations” means the obligations of the Company and its subsidiaries on a consolidated basis to pay rent or other amounts under a lease of (or other agreement conveying the right to use) real and/or personal property which obligations are required to be classified and accounted for as a capital lease on a consolidated balance sheet of the Company and its subsidiaries under GAAP (including Statement of Financial Accounting Standards No. 13 of the Financial Accounting Standards Board, as amended) and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount of such obligations, determined in accordance with GAAP (including such Statement No. 13).

“Charter” means the Articles of Amendment and Restatement of the Articles of Incorporation of the Company accepted for record by the State Department of Assessments and Taxation of the State of Maryland on July 1, 2008.

“ChaseMellon Warrants” means the warrants issued by Pathmark Stores, Inc. pursuant to the Warrant Agreement dated as of September 19, 2000 between Pathmark Stores, Inc. and ChaseMellon Shareholder Services, LLC, and assumed by the Company.

“Code” means the Internal Revenue Code, as amended, and the rules and regulations promulgated thereunder.

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“Collective Bargaining Agreement” means any collective bargaining agreement or any other labor-related agreement with any labor union or labor organization to which the Company or any of its subsidiaries is a party.

“Company By-Laws Amendment” means the amendments to the By-Laws as adopted by 66.67% of the directors then serving on the Board of Directors, to implement the provisions set forth in Sections 2.01, 2.05 and 8.01 of the Amended and Restated Stockholder Agreement and Sections 2.01, 2.04 and 8.01 of the Amended and Restated Tengelmann Stockholder Agreement, to provide that the Maryland Control Share Acquisition Act (Section 3-701, et seq. of the MGCL) shall not apply to the Investors or Tengelmann or any of their respective affiliates and any other amendments to the By-Laws required to implement the transactions contemplated hereby or by the Ancillary Agreements.

“Company Contract” means, collectively, the following Contracts to which the Company or any of its subsidiaries is a party or by which any of its or their respective assets are bound:

(i)             any Contract evidencing Indebtedness over $5,000,000;

(ii)               any Collective Bargaining Agreement;

(iii)                 any partnership or joint venture Contract;

(iv)           any “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC);

(v)         any Contract which contains any non-compete or exclusivity provisions with respect to any line of business or geographic area with respect to the Company or its subsidiaries, or which restricts the conduct of any line of business by the Company or its subsidiaries or any geographic area in which the Company or any of its subsidiaries may conduct business, in each case in any material respect;

(vi)           any Contract providing for capital expenditures or the acquisition or construction of fixed assets which requires payments by any of the Company or its subsidiaries in excess of $3,000,000 in any year;

(vii)             any Contract for the sale or other transfer of Owned Real Property or other material tangible assets having a fair market value in excess of $3,000,000 that has not yet been consummated, other than sales of inventory in the ordinary course of business generally consistent with past practice;

(viii)               any Contract with an affiliate of the Company or any officer, director, employee or related persons (as defined in Regulation S-K Item 404) of the Company;

(ix) any distribution, supply, vendor, inventory purchase, sales agency or advertising Contract (other than purchase orders entered into in the ordinary course of business generally consistent with past practice) involving annual expenditures by any of

47

the Company or its subsidiaries in excess of $5,000,000 which is not cancelable (without giving rise to any penalty or additional liability or cost) within one year;

(x)         (A) any other Contract (excluding Company Leases), not otherwise covered by clauses (i) through (x) of this definition of “Company Contract”, that requires payments by the Company or its subsidiaries in excess of $5,000,000 during any one year and (B) is not cancelable on 90 days, or less notice; and

(xi)           any written commitment (including any letter of intent or memorandum of understanding) to enter into any agreement of the type described in clauses (i) through (x) of this definition of “Company Contract”.

“Company Plans” means all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) and all bonus, incentive, stock option, stock purchase, restricted stock, phantom stock or other stock-based compensation, deferred compensation, medical, life insurance, disability, fringe benefit, supplemental executive retirement, severance or other compensation or benefit plans, programs, policies, practices, trusts or arrangements, and all employment, termination, severance, change in control, compensation or other Contracts or agreements, to which the Company or any of its subsidiaries or ERISA Affiliates is a party, or which are sponsored, maintained or contributed to by the Company or any of its subsidiaries or ERISA Affiliates or as to which the Company or any of its subsidiaries or ERISA Affiliates has any liability and any material Contracts, arrangements, agreements, policies, practices or understandings between the Company or any of its ERISA Affiliates and any current or former employee, director or consultant of the Company or of any of its subsidiaries, including any Contracts, arrangements or understandings relating to a change in control of the Company; provided, however, that the term “Company Plans” shall exclude any plan that is a multiemployer plan as defined in Section 3(37) or 4001(a)(3) of ERISA.

“Contract” means any contract, agreement, commitment, lease, purchase order, license, mortgage, indenture, supplemental indenture, line of credit, note, bond, loan, credit agreement, capital lease, sale/leaseback arrangement, concession agreement, franchise agreement or other instrument, including all amendments, supplements, exhibits and attachments thereto.

“Convertible Notes” means the Company’s 5.125% Convertible Senior Notes due 2011 and the 6.75% Convertible Senior Notes due 2012.

“Copyrights” means all rights in a work of authorship and all copyrights (including all registrations and applications to register the same).

“Default” means in violation of, or in default under (or, with or without the giving of notice or lapse of time, or both, would be in default) according to the terms of the relevant document or agreement.

“DOJ” means the United States Department of Justice.

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“Encumbrance” means any lien, encumbrance, security interest, pledge, mortgage, hypothecation, charge, restriction on transfer of title, adverse claim, title retention agreement of any nature or kind, or other encumbrance, except for any restrictions arising under any applicable securities Laws or pursuant to the Amended and Restated Stockholder Agreement or the Amended and Restated Tengelmann Stockholder Agreement.

“Environment” means ambient air, indoor air, surface water, groundwater and surface and subsurface strata and natural resources such as wetlands, flora and fauna.

“Environmental Law” means any Law and the common law relating to (i) pollution or the protection of the Environment, (ii) the protection of human health and safety as it pertains to Hazardous Materials or (iii) the generation, handling, use, presence, treatment, transport, storage, disposal or Release of any Hazardous Materials.

“ERISA Affiliate” means any trade or business, whether or not incorporated, which together with the Company would be deemed a “single employer” within the meaning of Section 414(b), (c) or (m) of the Code or Section 4001(b)(1) of ERISA.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Facilities” means any store, office, plant or warehouse owned or leased by the Company or any of its subsidiaries.

“FTC” means the United States Federal Trade Commission.

“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time.

“Governmental Entity” means any domestic or foreign, transnational, national, Federal, state, municipal or local government, or any other domestic or foreign governmental, regulatory or administrative authority, or any agency, board, department, commission, court, tribunal or instrumentality thereof.

“Hazardous Materials” means any pollutant, contaminant, waste, chemical, compound, substance or material, including any petroleum or petroleum product or by-product, asbestos-containing material, urea formaldehyde foam insulation, and mold, regulated under any Environmental Law.

“HSR Act” means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

“including” means including, without limitation.

“Indebtedness” means, with respect to any person, without duplication: (i) (A) indebtedness for borrowed money, (B) all obligations of such

49

person evidenced by

50

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.

“Intellectual Property” means all Trademarks, Patents, Copyrights, Trade Secrets, service marks, service ▇▇▇▇ rights, computer programs, moral rights and the benefits of any waivers of moral rights and any other proprietary intellectual property rights.

“Judgment” means any applicable judgment, order or decree of any Governmental Entity.

“knowledge of the Company” or “to the Company’s knowledge” means the actual knowledge of the particular fact in question by the individuals set forth in Section 9.05 of the Company Disclosure Letter.

“Labor Laws” means any applicable Law relating to employment standards, employee rights, health and safety, labor relations, workplace safety and insurance or pay equity.

“Laws” means any applicable statute, code, rule, regulation, ordinance, Judgment, or other pronouncement of any Governmental Entity.

“Losses” means all liabilities, costs, expenses, obligations, losses, damages (including diminution of value, lost profits, consequential damages and third-party punitive damages but excluding special damages, incidental damages and punitive damages not payable to third parties), penalties, actions, judgments, suits, claims and disbursements of any kind or nature, liabilities for Taxes, fees or expenses (including without limitation, legal fees).

“Material Adverse Effect” means any change, event or circumstance that, individually or in the aggregate with all other changes, events and circumstances, has had a material adverse effect on the business, results of operations or financial condition of the Company and its subsidiaries, taken as a whole, other than any change, event or circumstance arising out of: (a) general economic (including changes in prevailing interest rates, credit availability and liquidity, currency exchange rates, and price levels or trading volumes in the United States or foreign securities markets), legal, regulatory or

51

political conditions in the United States of America or geographic regions in which the Company and its subsidiaries operate; (b) conditions generally affecting the industries in which the Company and its subsidiaries operate; (c) the announcement, pendency or consummation of the Offering or the other transactions contemplated hereby or by the Ancillary Agreements; (d) any change in the market price or trading volume of the Common Stock in and of itself (but not any change, event or circumstance that may be underlying such decrease to the extent that such change, event or circumstance would otherwise constitute a Material Adverse Effect); (e) any changes in the securities markets generally, or in the credit markets, any downgrades in the credit markets, or adverse credit events resulting in deterioration in the credit markets generally or in respect of the customers of the Company; (f) the commencement or escalation of a war or armed hostilities or the occurrence of acts of terrorism or sabotage; (g) earthquakes, hurricanes or other natural disasters; (h) compliance with the requirements of changes in Law, GAAP or other accounting requirements or any interpretation thereof; (i) any failure by the Company to meet published revenue or earnings projections (but not any change, event or circumstance that may be underlying such failure to the extent that such change, event or circumstance would otherwise constitute a Material Adverse Effect); (j) any adverse effect on the Company under Section 382 of the Code resulting from an “ownership change” of the Company as defined in Section 3 82(g) of the Code or (k) any legal claims or other proceedings made by any of the Company’s stockholders or debtholders arising out of or related to the Offering.

“NYSE” means the New York Stock Exchange.

“Patents” means all patents, patent rights and patent applications, including divisions, continuations, continuations-in-part, reissues, re-examinations and all extensions thereof.

“Permits” means, collectively, all applicable consents, approvals, permits, orders, authorizations, licenses and registrations from Governmental Entities.

“Permitted Encumbrances” means: (i) mechanics’, carriers’, workers’, repairers’, materialmen’s, warehousemen’s, construction and other Encumbrances arising or incurred in the ordinary course of business and not yet due and payable or being contested in good faith by appropriate proceedings; (ii) Encumbrances for Taxes, utilities and other governmental charges that, in each case, are not yet due or payable, are being contested in good faith by appropriate proceedings or may thereafter be paid without giving rise to any material penalty or material additional cost or liability; (iii) matters of record or registered Encumbrances affecting title to any owned or leased real property of a person and its subsidiaries; (iv) requirements and restrictions of zoning, building and other applicable Laws and municipal by-laws, and development, site plan, subdivision or other agreements with municipalities that do not individually or in the aggregate materially and adversely affect the use of the owned or leased real property of a person and its subsidiaries affected thereby as currently used in the business of such person and its subsidiaries; (v) statutory Encumbrances of landlords for amounts not yet due and payable; (vi) Encumbrances arising under conditional sales Contracts and equipment leases with third parties entered into in the ordinary course of business generally

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consistent with past practice; (vii) defects, irregularities or imperfections of title and other Encumbrances which, individually or in the aggregate, do not materially impair the continued use (in a manner generally consistent with current use in the business of the person and its subsidiaries) of the asset or property to which they relate; and (viii) with respect to the Company and its subsidiaries, Encumbrances arising under the ABL Credit Agreement.

“person” means any individual, firm, corporation, partnership, limited liability company, trust, joint venture, Governmental Entity or other entity.

“Real Property” means, collectively, the Owned Real Properties, the Company Leases and the Company Tenant Leases.

“Registered Intellectual Property” means all (i) registered trademarks and service marks and applications therefor, (ii) registered copyrights and applications therefor, (iii) issued patents and patent applications and (iv) domain names, in each case, that are owned by the Company or any of its subsidiaries and are material to the conduct of the business of the Company and its subsidiaries.

“Release” means any spilling, leaking, pumping, emitting, emptying, discharging, injecting, escaping, leaching, migrating, dumping or disposing of Hazardous Materials (including the abandonment or discarding of barrels, containers or other closed receptacles containing Hazardous Materials) into or through the Environment or into or out of any real property, including the movement of Hazardous Materials through or in the air, soil, surface water, groundwater or property.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Series B Yucaipa Warrants” means the 6,965,858 warrants, exercisable at $32.40, issued by the Company on December 3, 2007.

“SOX” means the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002.

“subsidiary” of any person means, on any date, any person (i) the accounts of which would be consolidated with and into those of the first person in such person’s consolidated financial statements if such financial statement 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) an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its board of directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned, directly or indirectly, controlled or held by such first person or by one or more subsidiaries of such first person.

“Tax” means any foreign, Federal, state or local income, sales and use, excise, franchise, real and personal property, gross receipt, capital stock, production,

53

business and occupation, disability, estimated, employment, payroll, severance or withholding tax or other tax, duty, fee, impost, levy, assessment or charge imposed by any taxing authority, and any interest or penalties and other additions to tax related thereto.

“Tax Returns” means any return, report, declaration, information return or other document required to be filed with any Tax authority with respect to Taxes, including any amendments thereof.

“Third Party” means any person other than the Company, the Investors, the Investors’ Representative or any of their respective affiliates.

“Trade Secrets” means all proprietary, confidential information, formulas, processes, data, know-how, devices or compilations of information used in a business that confer a competitive advantage over those in similar businesses who do not possess them or know how to use them.

“Trademarks” means all trademarks, trademark rights, trade names, trade name rights, brands, logos, trade dress, business names and Internet domain names, together with the goodwill associated with any of the foregoing and all registrations and applications for registration of the foregoing.

“Trading Market” means whichever of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board on which the relevant security of the Company is listed or quoted for trading on the date in question.

“Voting Debt” means bonds, debentures, notes or other debt securities having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) generally in the election of directors of the Company or other matters on which holders of the Common Stock may vote.

“Voting Stock” of any person means securities having the right to vote generally in any election of directors or comparable governing persons of any such person.

SECTION 9.06 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the parties hereto and delivered to the other parties hereto.

SECTION 9.07 Entire Agreement. This Agreement, the Ancillary Agreements and the Confidentiality Agreement, along with the Company Disclosure Letter, the Schedules and the Exhibits thereto, contain the entire agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings relating to such subject matter. None of the parties shall be liable or bound to any other party in any manner by any representations, warranties or covenants relating to such subject matter except as

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specifically set forth herein or in the Ancillary Agreements or the Confidentiality Agreement.

SECTION 9.08 Severability. If any provision of this Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof (or the remaining portion thereof) or the application of such provision to any other persons or circumstances.

SECTION 9.09 Consent to Jurisdiction. Each party irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of the State of New York, New York County and (b) the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, any Ancillary Agreement or any transaction contemplated hereby or thereby. Each party agrees to commence any such action, suit or proceeding either in the United States District Court for the Southern District of New York or, if such suit, action or other proceeding may not be brought in such court for jurisdictional reasons, in the Supreme Court of the State of New York, New York County. Each party further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address set forth above shall be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction in this Section 9.09. Each party irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement, any Ancillary Agreement or the transactions contemplated hereby and thereby in (i) the Supreme Court of the State of New York, New York County, or (ii) the United States District Court for the Southern District of New York, and hereby and thereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

SECTION 9.10 Governing Law. This Agreement shall 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.

SECTION 9.11 Waiver of Jury Trial. Each party hereby waives, to the fullest extent permitted by applicable Law, any right it may have to a trial by jury in respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement, any Ancillary Agreement or any transaction contemplated hereby or thereby. Each party (a) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement and the Ancillary Agreements, as applicable, by, among other things, the mutual waivers and certifications in this Section 9.11.

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SECTION 9.12 No Personal Liability of Partners, Directors, Officers,  Owners, Etc. No director, officer, employee, incorporator, stockholder, managing member, member, general partner, limited partner, principal or other agent of any of the Investors shall have any liability for any obligations of the Investors under this Agreement or for any claim based on, in respect of, or by reason of, the obligations of the Investors hereunder. The Company waives and releases all such liability. This waiver and release is a material inducement to the Investors’ entry into this Agreement.

SECTION 9.13 Rights of Holders. Each party to this Agreement shall have the absolute right to exercise or refrain from exercising any right or rights that such party may have by reason of this Agreement, including, without limitation, the right to consent to the waiver or modification of any obligation under this Agreement, and such party shall not incur any liability to any other party or other holder of any securities of the Company as a result of exercising or refraining from exercising any such right or rights.

SECTION 9.14 Adjustment in Share Numbers and Prices. In the event of any stock split, subdivision, dividend or distribution payable in shares of Common Stock (or other securities or rights convertible into or entitling the holder thereof to receive directly or indirectly shares of Common Stock), combination or other similar recapitalization or event occurring after the date hereof, each reference in this Agreement and the Ancillary Agreements to a number of shares or a price per share shall be amended to appropriately account for such event.

[Signature page to follow.]

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IN WITNESS WHEREOF, the Investors, the Company, the Existing Investors (solely for the purposes of Section 3.02 and 3.05 of this Agreement) and the Investors’ Representative (solely for the purposes of Section 5.05 of this Agreement) have duly executed this Agreement as of the date first written above.

IN WITNESS WHEREOF, the Investors, the Company, the Existing Investors (solely for the purposes of Section 3.02 and 3.05 of this Agreement) and the Investors’ Representative (solely for the purposes of Section 5.05 of this Agreement) have duly executed this Agreement as of the date first written above.

ARTICLES SUPPLEMENTARY

OF

8% CUMULATIVE CONVERTIBLE PREFERRED STOCK
SERIES A-T, A-Y, B-T AND B-Y

OF

THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.

Pursuant to Section 2-208(b) of
the Maryland General Corporation Law

The Great Atlantic & Pacific Tea Company, Inc., a Maryland corporation (the “Company”), hereby certifies that:

FIRST: The charter of the Company (as amended, corrected or supplemented from time to time, the “Charter”) authorizes the issuance of up to three million (3,000,000) shares of preferred stock, without par value per share.

SECOND: The Charter expressly grants to the Board of Directors of the Company (the “Board of Directors”) the authority to provide for the issuance of the shares of preferred stock in series, and to establish from time to time the number of shares to be included in each such series and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof.

THIRD: Pursuant to the authority conferred upon the Board of Directors by Section VI of the Charter, the Board of Directors, by action duly taken on July 23, 2009, adopted resolutions authorizing the classification, issuance and sale of up to 1,400,000 shares of the Company’s preferred stock as described herein.

FOURTH: Therefore, pursuant to the authority of the Board of Directors under the authority conferred upon it by the Charter and by action duly taken pursuant thereto, the Board of Directors does hereby establish, create, authorize, classify and provide for the issue of four separate series of preferred stock having the following designation, voting powers, preferences, conversion and other rights, qualifications, limitations as to dividends, terms and conditions of redemption and restrictions:

Section 1. Designation.

The designation of the series of preferred stock shall be “8% Cumulative Convertible Preferred Stock, Series A-T” (the “Series A-T Convertible Preferred Stock”), “8% Cumulative Convertible Preferred Stock, Series A-Y” (the “Series A-Y Convertible Preferred Stock” and, together with the Series A-T Convertible Preferred Stock, the “Series A Convertible Preferred Stock”), “8% Cumulative Convertible Preferred Stock, Series B-T” (the “Series B-T Convertible Preferred Stock”) and “8% Cumulative Convertible Preferred Stock, Series B-Y” (the “Series B-Y Convertible Preferred Stock” and, together with the Series B-T Convertible Preferred Stock, the “Series B Convertible Preferred Stock”). The Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock are together referred to as the “Convertible Preferred Stock”. The Convertible Preferred Stock will rank equally with Parity Stock, if any, with respect to the payment of dividends and in the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, and will rank senior to Junior Stock and junior to Senior Stock, if any, with respect to the payment of dividends and/or in the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, as applicable.

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The Convertible Preferred Stock initially issued to the Tengelmann Parties shall be issued as Series A-T Convertible Preferred Stock, and the Convertible Preferred Stock initially issued to the Yucaipa Parties shall be issued as Series A-Y Convertible Preferred Stock. Each share of Series A-T Convertible Preferred Stock shall automatically convert into one share of Series B-T Convertible Preferred Stock upon a sale or other transfer of such share of Series A-T Convertible Preferred Stock to a Person other than a Tengelmann Party; provided that if the Conversion Stockholder Approval has been obtained, each share of Series A-T Convertible Preferred Stock shall automatically convert into one share of Series A-Y Convertible Preferred Stock upon a sale or other transfer of such share of Series A-T Convertible Preferred Stock to a Yucaipa Party. Each share of Series A-Y Convertible Preferred Stock shall automatically convert into one share of Series B-Y Convertible Preferred Stock upon a sale or other transfer of such share of Series A-Y Convertible Preferred Stock to a Person other than a Yucaipa Party; provided that each share of Series A-Y Convertible Preferred Stock shall automatically convert into one share of Series A-T Convertible Preferred Stock upon a sale or other transfer of such share of Series A-Y Convertible Preferred Stock to a Tengelmann Party.

Section 2. Number of Shares.

The number of authorized shares of Convertible Preferred Stock shall be 1,400,000, which shall consist of 350,000 shares of Series A-T Convertible Preferred Stock, 350,000 shares of Series A-Y Convertible Preferred Stock, 350,000 shares of Series B-T Convertible Preferred Stock and 350,000 shares of Series B-Y Convertible Preferred Stock. That number may from time to time be increased (but not in excess of the total number of authorized shares of preferred stock as set forth in the Charter which remain unissued) or decreased (but not below the number of shares of Convertible Preferred Stock then outstanding plus the number of shares of Convertible Preferred Stock issuable upon the exercise of options or rights then outstanding) by further resolution duly adopted by the Board of Directors or any duly authorized committee thereof and by the filing of articles supplementary with and the acceptance for record of such articles supplementary by the State Department of Assessments and Taxation of Maryland pursuant to the provisions of the MGCL, stating that such increase or reduction, as the case may be, has been so authorized. The Company shall have the authority to issue fractional shares of Convertible Preferred Stock.

Section 3. Definitions. As used herein with respect to Convertible Preferred Stock:

“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 in effect on the Issue Date or as amended thereafter.

“Additional Shares” has the meaning set forth in Section 11(a).

An “Affiliate” of any Person means another Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person.

“Amended and Restated Tengelmann Stockholder Agreement” means the Amended and Restated Tengelmann Stockholder Agreement, dated as of the date hereof, between the Company and Tengelmann.

“Amended and Restated Yucaipa Stockholder Agreement” means the Amended and Restated Yucaipa Stockholder Agreement, dated as of the date hereof, among the Company and Yucaipa.

“Applicable Rate” means, with respect to any Dividend Period, (i) the Base Rate in connection with any dividends paid in cash and (ii) the Base Rate plus 1.50% per annum in connection with any dividend paid pursuant to the Convertible Preferred Stock PIK Dividend Provision.

“Applicable Series A Board Representation Entitlement” means the Series A-T Board Representation Entitlement or Series A-Y Board Representation Entitlement, as applicable.

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“Applicable Series A Convertible Preferred Stock” means Series A-T Convertible Preferred Stock or Series A-Y Convertible Preferred Stock, as applicable.

“Applicable Series A Holders” means the Series A-T Holders or the Series A-Y Holders, as applicable.

“Applicable Series A Preferred Director” means a Series A Preferred Director elected by the Series A-T Holders or the Series A-Y Holders, as applicable.

“Authorized Capital Stock Charter Amendment Approval” means the approval of an amendment to the Charter increasing the number of authorized shares of Common Stock by up to 100,000,000 shares by the affirmative vote of holders entitled to cast two-thirds of the votes entitled to be cast on the matter.

“Base Rate” means 8.00% per annum.

“Beneficial Owner” and words of similar import have the meaning assigned to such terms in Rule 13d-3 promulgated under the Exchange Act; provided, however, that for purposes of any calculation of Tengelmann Percentage Interest, Yucaipa Percentage Interest or Voting Power, such terms have the meaning assigned them in Rule 13d-3 promulgated under the Exchange Act as in effect on the Issue Date, but without reference to whether or not an Equity Security is exercisable or convertible for Voting Stock in less than 60 days.

“Board of Directors” has the meaning set forth in the recitals above.

“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 and/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 in which banks are not required or authorized by law to close in New York, New York.

“Capital Stock” of any Person means any and all shares, interests, participations or other equivalents (however designated) of capital stock of such Person and all warrants or options to acquire such capital stock.

“cash” means U.S. legal tender.

“Certificated Common Stock” has the meaning set forth in Section 24(b).

“Certificated Preferred Stock” has the meaning set forth in Section 24(a).

“Certificated Security” has the meaning set forth in Section 24(b).

“Charter” has the meaning set forth in the recitals above.

“Closing Price” of the Common Stock on any date means the closing sale price per share (or, if no closing sale price is reported, the average of the bid and asked prices or, if more than one in either case, the average of the average bid and the average asked prices) on such date as reported by The New York Stock Exchange or, if the shares of Common Stock are not reported by The New York Stock Exchange, in composite transactions for the principal U.S. national or regional securities exchange (including The Nasdaq Stock Market) on which the Common Stock is traded. If the Common Stock is not listed for trading on a U.S. national or regional securities exchange on the relevant date, the Closing Price will be the last quoted bid price for the Common Stock in the over-the-counter

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market on the relevant date as reported by the Pink Sheets LLC or similar organization. If the Common Stock is not so quoted, the Closing Price will be the average of the mid-point of the last bid and asked prices for the Common Stock on the relevant date from each of at least three independent nationally recognized investment banking firms selected by the Company for this purpose.

“Common Stock” means the common stock of the Company, par value $1.00 per share, or any other shares of the capital stock of the Company into which such shares of common stock shall be reclassified or changed.

“Company” has the meaning set forth in the recitals above.

“Constituent Person” has the meaning set forth in Section 14(a).

“Continuing Director” means a director who either was a member of the Board of Directors on the Issue Date or who becomes a member of the Board of Directors subsequent to the Issue Date and whose appointment, election or nomination for election by the Company’s stockholders is duly approved by a majority of the members of the Board of Directors at the time of such approval (either by specific vote or by approval of the proxy statement issued by the Company on behalf of the Board of Directors in which such individual is named as nominee for director) who were either members of the Board of Directors on the Issue Date or whose appointment, election or nomination for election was previously so approved.

“Conversion Agent” means the Transfer Agent acting in its capacity as conversion agent for the Convertible Preferred Stock, and its successors and assigns.

“Conversion Date” has the meaning set forth in Section 8(d).

“Conversion Notice” has the meaning set forth in Section 8(d).

“Conversion Price” at any time means, for each share of Convertible Preferred Stock, a dollar amount equal to $1,000 (the Liquidation Preference) divided by the Conversion Rate (resulting initially in a Conversion Price of approximately $5.00).

“Conversion Rate” means, for each share of Convertible Preferred Stock, 200 shares of Common Stock, subject to adjustment as set forth herein.

“Conversion Stockholder Approval” means the approval, as required pursuant to New York Stock Exchange 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 Common Stock 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.

“Conversion Stockholder Approval Default” has the meaning set forth in Section 4(d)(ii).

“Convertible Preferred Stock” has the meaning set forth in Section 1.

“Convertible Preferred Stock PIK Dividend Provision” has the meaning set forth in Section 4(a).

“Dividend Payment Date” has the meaning set forth in Section 4(a).

“Dividend Period” has the meaning set forth in Section 4(a).

“Dividend Record Date” has the meaning set forth in Section 4(a).

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“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.

“Ex-Dividend Date” means the first date upon which a sale of the Common Stock does not automatically transfer the right to receive the relevant distribution from the seller of the Common Stock to its buyer.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchange Property” has the meaning set forth in Section 14(a).

“Fundamental Change” means the occurrence of any of the following events after the date hereof:

(i)   a “person” or “group” (each within the meaning of Section 1 3(d)(3) of the Exchange Act), other than a Permitted Holder, has become the direct or indirect Beneficial Owner of shares of Common Stock representing more than 50% of the total voting power in the aggregate of classes of the Company’s Capital Stock entitled to vote generally in the election of directors; provided that a transaction covered under (iii)(A) below where no person or group other than a Permitted Holder becomes the direct or indirect Beneficial Owner of Common Stock representing more than 50% of the total voting power of the Company’s Capital Stock entitled to vote generally in the election of directors of the ultimate parent company of the continuing, surviving or successor company shall not constitute a Fundamental Change for purposes of this clause (i); or

(ii)   the first day on which a majority of the members of the Board of Directors does not consist of Continuing Directors; or

(iii)  a consolidation, merger or binding share exchange, any conveyance, transfer, sale, lease or other disposition of all or substantially all of the Company’s assets to another Person or any recapitalization, reclassification or other transaction in which all or substantially all of the Common Stock is exchanged for or converted into cash, securities or other property, other than:

(A)  any transaction pursuant to which holders of the Company’s Capital Stock immediately prior to the transaction have the entitlement to exercise, directly or indirectly, 50% or more of the total voting power of all shares of Capital Stock entitled to vote generally in elections of directors of the continuing or surviving or successor Person immediately after giving effect to such transaction, so long as the continuing or surviving or successor Person is a publicly reporting company whose common stock trades on a U.S. national or regional securities exchange (including The Nasdaq Stock Market) and the shares of preferred stock are convertible into such publicly traded common stock of such entity; or

(B)  any consolidation, merger, share exchange, conveyance, transfer, sale, lease or other disposition of assets or similar transaction solely for the purpose of changing the Company’s jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding Common Stock, if at all, solely into common stock, ordinary shares, American Depositary Shares or depositary receipts or other certificates representing common equity interests of the surviving entity or a direct or indirect parent of the surviving entity; or

(C) any consolidation or merger with or into any of the Company’s subsidiaries, so long as such merger or consolidation is not part of a plan or a series of transactions designed to or having the effect of merging or consolidating with any Person that is not a subsidiary of the Company in a transaction that would otherwise be deemed a Fundamental Change by reason of this clause (iii); or

(iv) a Termination of Trading; or

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(v) the Company, within the meaning of Title 11 of the U.S. Code or any similar federal or state law for the relief of debtors, (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a custodian of it for all or substantially all of its property or (D) makes a general assignment for the benefit of its creditors.

“Fundamental Change Effective Date” has the meaning set forth in Section 11(b).

“Fundamental Change Notice” has the meaning set forth in Section 9(b).

“Fundamental Change Notice Date” has the meaning set forth in Section 9(b).

“Fundamental Change Repurchase Date” has the meaning set forth in Section 9(a).

“Fundamental Change Repurchase Notice” has the meaning set forth in Section 9(c).

“Fundamental Change Repurchase Price” has the meaning set forth in Section 9(a).

“Holder” means the Person in whose name the shares of the Convertible Preferred Stock are registered, which may be treated by the Company, Transfer Agent, Registrar, paying agent and Conversion Agent as the true and lawful owner of the shares of Convertible Preferred Stock for the purpose of making payment and settling the related conversions and for all other purposes.

“Independent Director” means a director of the Company who qualifies as an “independent director” of the Company under (a) New York Stock Exchange Rule 303A.02 (or any successor provision thereto) or (b) if the Company is not listed on the New York Stock Exchange, any comparable rule or regulation of the primary stock exchange or quotation system on which the Common Stock is listed or quoted.

“Issue Date” means the date on which the Convertible Preferred Stock is originally issued by the Company.

“Junior Stock” means the Common Stock and any other class or series of stock of the Company now existing or hereafter authorized over which Convertible Preferred Stock has preference or priority in the payment of dividends or in the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.

“Liquidation Preference” means $1,000 per share of Convertible Preferred Stock.

“Listed Common Equity” has the meaning set forth in Section 11(a).

“Make-Whole Fundamental Change” has the meaning set forth in Section 11(a).

“Market Disruption Event” means the occurrence or existence for more than one half-hour period in the aggregate on any scheduled Trading Day for the Common Stock of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by The New York Stock Exchange or another U.S. national or regional securities exchange (including The Nasdaq Stock Market) on which the Common Stock is traded or otherwise) in the Common Stock or in any options, contracts or future contracts relating to the Common Stock, and such suspension or limitation occurs or exists at any time before 1:00 p.m. (New York City time) on such day.

“Maturity Date” means August 1, 2016.

“Merger” means the transaction pursuant to which the Company acquired Pathmark Stores, Inc.

“MGCL” means the Maryland General Corporation Law, codified in Md. Code ▇▇▇., Corps. & Ass’ns, Titles 1-3, as may be in effect from time to time.

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“Nonpayment” has the meaning set forth in Section 1 5(d)(i).

“Nonpayment Preferred Director” has the meaning set forth in Section 1 5(d)(i).

“Officer” means the Chief Executive Officer, the Chairman, the Chief Administrative Officer, any Vice Chairman, the Chief Financial Officer, the Controller, the Chief Accounting Officer, the Treasurer and Head of Corporate Finance, any Assistant Treasurer, the General Counsel and Corporate Secretary and any Assistant Secretary of the Company.

“Officers’ Certificate” means a certificate signed (i) by the Chief Executive Officer, the Chairman, the Chief Administrative Officer, any Vice Chairman, the Chief Financial Officer, the Controller or the Chief Accounting Officer and (ii) by the Treasurer and Head of Corporate Finance, any Assistant Treasurer, the General Counsel and Corporate Secretary or any Assistant Secretary of the Company, and delivered to the Conversion Agent.

“Parity Stock” means any class or series of stock of the Company now existing or hereafter authorized that ranks equally with the Convertible Preferred Stock in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the affairs of the Company.

“Permitted Holder” means any of the Tengelmann Parties and the Yucaipa Parties.

“Person” means any individual, firm, corporation, partnership, limited partnership, company, limited liability company, trust, joint venture, association, unincorporated organization, syndicate or other entity, or 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 any U.S. national or regional securities exchange (including The Nasdaq Stock Market) on which the Common Stock is traded.

“Pro Rata Repurchase” means any purchase of all or a portion of the shares of Common Stock by the Company or any Affiliate pursuant to (A) any tender offer or exchange offer subject to Section 13(e) or 14(e) of the Exchange Act or Regulation 14E promulgated thereunder or (B) any other offer available to substantially all holders of Common Stock, in the case of both (A) and (B), whether for cash, shares of Capital Stock, other securities of the Company, evidences of indebtedness of the Company or any other Person or any other property (including shares of Capital Stock, other securities or evidences of indebtedness of a subsidiary), or any combination thereof.

“Record Date” has the meaning set forth in Section 13(m).

“Registrar” means the Transfer Agent acting in its capacity as registrar for the Convertible Preferred Stock, and its successors and assigns.

“Reorganization Event” has the meaning set forth in Section 14(a).

“Restricted Common Stock Legend” has the meaning set forth in Section 24(b).

“Restricted Preferred Stock Legend” has the meaning set forth in Section 24(a).

“Restricted Stock Legend” has the meaning set forth in Section 24(b).

“SEC” means the U.S. Securities and Exchange Commission.

“Securities” has the meaning set forth in Section 24(c)(i).

“Securities Act” has the meaning set forth in Section 24(c)(i).

“Senior Secured Notes” means the second-lien senior secured notes issued by the Company on the Issue Date.

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“Senior Stock” means any class or series of stock of the Company now existing or hereafter authorized which has preference or priority over the Convertible Preferred Stock as to the payment of dividends or in the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the Company.

“Series A Convertible Preferred Stock” has the meaning set forth in Section 1.

“Series A Holder” means a Holder of Series A Preferred Stock.

“Series A Preferred Director” has the meaning set forth in Section 1 5(b)(i).

“Series A-T Board Representation Entitlement” means zero directors, except, from and after the Issue Date and to, but not including, the Maturity Date, for so long as the Tengelmann Percentage Interest is, and has been continuously since the Issue Date, at least 10%, that number of directors equal to the product of the total number of Company directorships (including vacancies) at such time and the Tengelmann Percentage Interest at such time (rounded to the nearest whole number); provided, however, that so long as the Series A-Y Board Representation Entitlement equals two directors, if the calculation set forth above would result in a number of directors equal to five, then the Series A-T Board Representation Entitlement shall mean four directors.

“Series A-T Convertible Preferred Stock” has the meaning set forth in Section 1.

“Series A-T Holder” means a Holder of Series A-T Preferred Stock.

“Series A-Y Board Representation Entitlement” means zero directors, except, from and after the Issue Date and to, but not including, the Maturity Date, (i) two directors (at least one of whom would qualify as an Independent Director) so long as the Yucaipa Percentage Interest is, and has been continuously since the Issue Date, at least 20% or (ii) one director (who would qualify as an Independent Director) so long as the Yucaipa Percentage Interest is less than 20% and has been continuously since the Issue Date at least 10%.

“Series A-Y Convertible Preferred Stock” has the meaning set forth in Section 1.

“Series A-Y Holder” means a Holder of Series A-Y Preferred Stock.

“Series B Convertible Preferred Stock” has the meaning set forth in Section 1.

“Series B-T Convertible Preferred Stock” has the meaning set forth in Section 1.

“Series B-Y Convertible Preferred Stock” has the meaning set forth in Section 1.

“Share Price” has the meaning set forth in Section 11(b).

“Special Voting Parity Stock” has the meaning set forth in Section 1 5(d)(i).

“Spin-Off” has the meaning set forth in Section 13(c).

“Tengelmann” means Tengelmann Warenhandelsgesellschaft, a partnership organized under the laws of the Federal Republic of Germany.

“Tengelmann Parties” means (1) Tengelmann, (2) each controlled Affiliate of Tengelmann, (3) each partner of Tengelmann and the respective members of their immediate families and (4) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a majority or more controlling interest of which consist of any one or more of the Persons described in the preceding clauses (1), (2) and (3).

“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

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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 as of such date; provided, however, that for purposes of this calculation all determinations shall be made as if the Conversion Stockholder Approval has been obtained. Notwithstanding the foregoing sentence, to the extent that any decrease in the Tengelmann Percentage Interest is attributable to issuances from March 4, 2007 to, but not including, the Issue Date of Equity Securities by the Company (as opposed to dispositions of Equity Securities of the Company by Tengelmann or its Affiliates), such decrease will not be taken into account for purposes of determining the Tengelmann Percentage Interest 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 any consent right pursuant to any stockholder agreement between Tengelmann and Company or (y) 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.

“Termination of Trading” means the Common Stock (or other common stock into which the Convertible Preferred Stock is then convertible) is not listed for trading on a U.S. national or regional securities exchange (including The Nasdaq Stock Market).

“Trading Day” means any day on which (i) there is no Market Disruption Event and (ii) The New York Stock Exchange or, if the Common Stock is not listed on The New York Stock Exchange, the principal U.S. national securities exchange (including The Nasdaq Stock Market) on which the Common Stock is listed, admitted for trading or quoted, is open for trading or, if the Common Stock is not so listed, admitted for trading or quoted, any Business Day; provided, however, that a “Trading Day” only includes those days that have a scheduled closing time of 4:00 p.m. (New York City time) or the then-standard closing time for regular trading on the relevant exchange or trading system.

“Transfer Agent” means American Stock Transfer & Trust Company acting as Transfer Agent, Registrar, paying agent and Conversion Agent for the Convertible Preferred Stock, and its successors and assigns.

“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 1 3D 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 any Person, 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.

“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 Fund (Parallel) Fund I, LP, Yucaipa American Alliance Fund II, LP, and Yucaipa American Alliance (Parallel) Fund II, LP.

“Yucaipa Parties” means (1) Yucaipa, (2) each controlled Affiliate of Yucaipa, The Yucaipa Companies, LLC or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, (3) each partner of Yucaipa, any controlled Affiliate of Yucaipa, The Yucaipa Companies, LLC or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and the respective members of their immediate families and (4) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a majority or more controlling interest of which consist of any one or more Persons described in the preceding clauses (1), (2) and (3).

“Yucaipa 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

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contained such information) that is Beneficially Owned by Yucaipa and its controlled Affiliates as of such date (including any Equity Securities owned prior to the Issue Date); 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 Yucaipa 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 ▇▇▇▇▇▇ the economic consequences of ownership of any Voting Stock or Equity Securities.

Section 4. Dividends.

(a) Rate. Holders shall be entitled to receive, if, as and when authorized by the Board of Directors or any duly authorized committee thereof and declared by the Company, but only out of assets legally available therefor, cumulative dividends accruing at the Applicable Rate (subject to increase pursuant to clause (d) below) per share per annum on the Liquidation Preference for the applicable Dividend Period. For any Dividend Period, such dividends shall be payable in cash; provided that, if and only if, either (i) the payment in full in cash of such dividends would be prohibited by the terms of the ABL Credit Agreement or (ii) insufficient assets are legally available to the Company for the payment in full of such cash dividends, such dividends shall instead be paid in additional duly authorized, validly issued and fully paid and nonassessable shares of the series of Convertible Preferred Stock in respect of which such dividend is being paid (such election, the “Convertible Preferred Stock PIK Dividend Provision”); provided further that if the Company pays such dividend in shares of Convertible Preferred Stock, no fractional shares shall be issued in payment of any such dividend, and the Company shall pay, at its option, in lieu of any fraction of a share that would otherwise be issuable in payment of such dividend, (x) cash or (y) an additional whole share. The Company must provide Holders written notice, at least five Business Days prior to the Dividend Record Date for such dividend, of any exercise of the Convertible Preferred Stock PIK Dividend Provision. Dividends shall be payable quarterly in arrears on each of March 15, June 15, September 15 and December 15 of each year, commencing on September 15, 2009, for so long as any Convertible Preferred Stock is outstanding; provided, however, that if any such day is not a Business Day, then payment of any dividend otherwise payable on that date will be made on the next succeeding day that is a Business Day, unless that day falls in the next calendar year, in which case payment of such dividend will occur on the immediately preceding Business Day (in either case, without any interest or other payment in respect of such delay) (each such day on which dividends are payable, a “Dividend Payment Date”). Accumulated and unpaid dividends for any prior Dividend Period may be paid at any time. The period from and including [·], 2009 or any Dividend Payment Date to, but excluding, the next Dividend Payment Date is a “Dividend Period.” The record date for payment of dividends on the Convertible Preferred Stock will be the fifteenth day of the calendar month immediately preceding the month during which the Dividend Payment Date falls or such other record date fixed by the Board of Directors or any duly authorized committee thereof that is not more than 30 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”). Any such day that is a Dividend Record Date will be a Dividend Record Date whether or not such day is a Business Day. The amount of the dividend per share of Convertible Preferred Stock payable will be computed on the basis of a 360-day year of twelve 30-day months.

(b) Calculation of Non-Cash Dividends. In the event that the Company exercises the Convertible Preferred Stock PIK Dividend Provision and pays any dividend in shares of Convertible Preferred Stock, the amount of the dividend per share of Convertible Preferred Stock so payable shall be valued for such purposes at the Liquidation Preference of the Convertible Preferred Stock. The number of additional shares of Convertible Preferred Stock issuable to Holders pursuant to such Convertible Preferred Stock PIK Dividend Provision will be the number obtained by dividing (a) the amount of the dividend per share of Convertible Preferred Stock payable at the Applicable Rate (subject to increase pursuant to clause (d) below) on such applicable Dividend Payment Date by (b) the Liquidation Preference.

(c)  Accrual. Dividends on the Convertible Preferred Stock shall accrue whether or not the Company has earnings or profits, whether or not there are funds legally available for the payment of such dividends and whether or not dividends are declared. Dividends will accumulate to the extent they are not paid on the Dividend Payment Date for the Dividend Period to which they relate.

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(d) Dividend Step-Up.

(i) If and whenever dividends on the Convertible Preferred Stock have not been paid in full (in cash or pursuant to the Convertible Preferred Stock PIK Dividend Provision), whether or not declared, in respect of any Dividend Period, then the Applicable Rate in respect of the dividend payable on any Dividend Payment Date shall be increased by an additional 2.00% per annum with respect to such Dividend Period. The increase in the Applicable Rate set forth herein shall be in addition to, and shall not be considered a substitution for, any remedies available for Nonpayment specified in Section 15(b).

(ii)  If the Company fails to obtain the Conversion Stockholder Approval on or prior to the six-month anniversary of the Issue Date (a “Conversion Stockholder Approval Default”), the Applicable Rate in respect of the dividend payable on any Dividend Payment Date shall be increased by an additional 2.00% per annum from the date of such Conversion Stockholder Approval Default through, but excluding, the date on which such Conversion Stockholder Approval Default shall have been cured, and until such cure shall further increase by an additional 1.00% per annum at the end of each six-month period thereafter.

(e)  Priority of Dividends. So long as any share of Convertible Preferred Stock remains outstanding and subject to the Company’s compliance with the provisions of Section 13, unless as to a Dividend Payment Date, full cumulative dividends on all outstanding shares of the Convertible Preferred Stock for all past Dividend Periods have been or are contemporaneously declared and paid and for the then current Dividend Period have been or are contemporaneously declared and paid or declared and a sum sufficient for the payment of those dividends has been set aside, the Company will not, and will cause its subsidiaries not to, during the next succeeding Dividend Period that commences on such Dividend Payment Date, declare or pay any dividend on, set apart any sum for the payment of dividends on, make any distributions relating to, or redeem, purchase, acquire or make a liquidation payment relating to, any Junior Stock or Parity Stock, or make any guarantee payment with respect thereto.

The foregoing restriction, however, will not apply to any stock dividends paid by the Company with respect to Junior Stock where the dividend stock is the same stock as that on which the dividend is being paid.

For so long as any share of Convertible Preferred Stock remains outstanding, if dividends are not declared and paid in full upon the shares of Convertible Preferred Stock and any Parity Stock, all dividends declared upon shares of Convertible Preferred Stock and any Parity Stock will be declared on a proportional basis so that the amount of dividends declared per share will bear to each other the same ratio that accrued dividends for the then-current Dividend Period per share of Convertible Preferred Stock and accrued dividends for the then-current Dividend Period per share of any Parity Stock (including, in the case of any such Parity Stock that bears cumulative dividends, all accumulated and unpaid dividends for past Dividend Periods with respect to both the Convertible Preferred Stock and such Parity Stock) bear to each other.

Subject to the foregoing, and not otherwise, such dividends payable in cash, stock or otherwise, as may be determined by the Board of Directors or any duly authorized committee thereof, may be declared and paid on any Junior Stock and Parity Stock from time to time out of any assets legally available for such payment, and unless otherwise specifically provided, Holders will not be entitled to participate in those dividends.

(f)  Conversion Following A Record Date. If a Conversion Date for any shares of Convertible Preferred Stock is prior to the close of business on a Dividend Record Date for any declared dividend for the then-current Dividend Period, the Holder of such shares will not be entitled to any such dividend. If the Conversion Date for any shares of Convertible Preferred Stock is after the close of business on a Dividend Record Date for any declared dividend for the then-current Dividend Period, but prior to the corresponding Dividend Payment Date, the Holder of such shares shall be entitled to receive such dividend, notwithstanding the conversion of such shares prior to the Dividend Payment Date. However, such shares, upon surrender for conversion, must be accompanied by (i) cash or (ii) additional shares of Convertible Preferred Stock with an aggregate Liquidation Preference equal to the dividend on such shares; provided that no such payment need be made if a conversion is made in connection with a Make-Whole Fundamental Change in accordance with the terms hereof.

(g) Successive Adjustments. After any adjustment to the Applicable Rate under this Section 4 has been made, any subsequent event requiring an adjustment under this Section 4 shall cause an adjustment to the

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Applicable Rate as so adjusted. The increase in the Applicable Rate set forth in this Section 4 shall be in addition to, and shall not be considered a substitution for, any remedies set forth elsewhere in these Articles Supplementary.

Section 5. Liquidation Rights.

(a)   Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, Holders shall be entitled, out of assets legally available therefor, before any distribution or payment out of the assets of the Company may be made to or set aside for the holders of any Junior Stock and subject to the rights of the holders of any class or series of securities ranking senior to or on parity with Convertible Preferred Stock upon liquidation and the rights of the Company’s creditors, to receive in full a liquidating distribution equal to the greater of (i) the amount of the Liquidation Preference, plus any accumulated and unpaid and accrued and unpaid dividends thereon up to, but excluding, the date of the liquidation, dissolution or winding up, and (ii) in lieu of any payment pursuant to clause (i) above, the amount that would be payable in such liquidation, dissolution or winding up with respect to the shares of Common Stock issuable to such Holders upon the conversion of the shares of Convertible Preferred Stock held by such Holders had such shares of Convertible Preferred Stock been converted into Common Stock immediately prior to such liquidation, dissolution or winding up; provided, that for purposes of this calculation such determination shall be made as if the Conversion Stockholder Approval has been obtained. Holders shall not be entitled to any further payments in the event of any such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company other than what is expressly provided for in this Section 5.

(b)   Partial Payment. If the assets of the Company are not sufficient to pay in full the Liquidation Preference of the Convertible Preferred Stock, plus any accumulated and unpaid and accrued and unpaid dividends thereon, and the liquidation preference of any Parity Stock, plus any accumulated and unpaid and accrued and unpaid dividends thereon, any amounts paid to the Holders and to the holders of all Parity Stock shall be pro rata in accordance with the respective aggregate liquidating distributions to which they would otherwise be entitled.

(c)   Residual Distributions. If the respective aggregate liquidating distributions to which all Holders and all holders of any Parity Stock are entitled have been paid in full, the holders of Junior Stock shall be entitled to receive all remaining assets of the Company according to their respective rights and preferences.

(d)   Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 5, the sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property and assets of the Company shall not be deemed a voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, nor shall the merger, consolidation or any other business combination transaction of the Company into or with any other corporation or person or the merger, consolidation or any other business combination transaction of any other corporation or person into or with the Company be deemed to be a voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company.

(e)   Liquidation Preference Opt-Out. In determining whether a distribution (whether by voluntary or involuntary liquidation) by dividend, redemption or other acquisition of shares of stock of the Company or otherwise, is permitted under the MGCL, no effect shall be given to amounts that would be needed if the Company would be dissolved at the time of the distribution to satisfy the preferential rights upon dissolution of holders of shares of stock of the Company whose preferential rights upon dissolution are superior to those receiving the distribution.

Section 6. Redemption.

Subject to the repurchase rights of the Holders set forth herein, the Convertible Preferred Stock will not be redeemable by the Company on any date prior to the Maturity Date.

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Section 7. Right of the Holders to Convert.

Except as otherwise specified herein, each Holder shall have the right, at such Holder’s option, after the first anniversary of the Issue Date (or earlier if in connection with a Fundamental Change) to convert all or any portion of such Holder’s Convertible Preferred Stock into duly authorized, validly issued and fully paid and nonassessable shares of Common Stock at the Conversion Rate per share of Convertible Preferred Stock (subject to the conversion procedures of Section 8), plus, in lieu of any fractional share, (x) cash or (y) an additional whole share of Common Stock, at the option of the Company; provided, however, that at any time prior to the receipt of the Conversion Stockholder Approval, (a) the aggregate amount of Series A-Y Convertible Preferred Stock and Series B-Y Convertible Preferred Stock will not be exercisable into more than 18.99% of the Common Stock outstanding prior to the issuance of the Convertible Preferred Stock and (b) the aggregate amount of Series A-T Convertible Preferred Stock and Series B-T Convertible Preferred Stock will not be exercisable into more than 1.00% of the Common Stock outstanding prior to the issuance of the Convertible Preferred Stock.

Section 8. Conversion Procedures.

(a)     Conversion Date. Effective immediately prior to the close of business on any applicable Conversion Date, dividends shall no longer be declared on any such converted shares of Convertible Preferred Stock and such shares of Convertible Preferred Stock shall cease to be outstanding, in each case, subject to the right of Holders to receive any declared and unpaid dividends on such shares and any other payments to which they are otherwise entitled pursuant to the terms hereof.

(b)     Rights Prior to Conversion. No allowance or adjustment, except pursuant to Section 13, shall be made in respect of dividends payable to holders of the Common Stock of record as of any date prior to the close of business on any applicable Conversion Date. Prior to the close of business on any applicable Conversion Date, shares of Common Stock issuable upon conversion of, or other securities issuable upon conversion of, any shares of Convertible Preferred Stock shall not be deemed outstanding for any purpose, and Holders shall have no rights with respect to the Common Stock or other securities issuable upon conversion (including voting rights, rights to respond to tender offers for the Common Stock or other securities issuable upon conversion and rights to receive any dividends or other distributions on the Common Stock or other securities issuable upon conversion) by virtue of holding shares of Convertible Preferred Stock, except pursuant to Section 15 hereof.

(c)   Record Holder as of Conversion Date. The Person or Persons entitled to receive the Common Stock and/or cash, securities or other property issuable upon conversion of Convertible Preferred Stock shall be treated for all purposes as the record holder(s) of such shares of Common Stock and/or securities as of the close of business on any applicable Conversion Date. In the event that a Holder shall not by written notice designate the name in which shares of Common Stock and/or cash, securities or other property to be issued or paid upon conversion of shares of Convertible Preferred Stock should be registered or paid or the manner in which such shares should be delivered, the Company shall be entitled to register and deliver such shares, and make such payment, in the name of the Holder and in the manner shown on the records of the Company.

(d)     Conversion Procedure. On the date of any conversion, if a Holder’s interest is in certificated form, a Holder must do each of the following in order to convert:

(i)   complete and manually sign the conversion notice provided by the Conversion Agent (a “Conversion Notice”), or a facsimile of the conversion notice, and deliver such irrevocable notice to the Conversion Agent;

(ii)   surrender the shares of Convertible Preferred Stock to the Conversion Agent;

(iii)    if required, furnish appropriate endorsements and transfer documents;

(iv)    if required, pay any stock transfer, documentary, stamp or similar taxes not payable by the Company pursuant to Section 25; and

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(v)     if required pursuant to Section 4(f), pay funds equal to any declared and unpaid dividend payable on the next Dividend Payment Date to which such Holder is entitled.

The date on which a Holder complies with the procedures in this clause (d) is the “Conversion Date.” The Conversion Agent shall, on a Holder’s behalf, convert the Convertible Preferred Stock into shares of Common Stock, in accordance with the terms of the Conversion Notice.

Section 9. Repurchase of Convertible Preferred Stock Upon a Fundamental Change.

(a) Fundamental Change Repurchase. If a Fundamental Change occurs, at any time after December 3, 2012 (or, if the ABL Credit Agreement has been refinanced, such earlier date as permitted under the terms of the refinanced indebtedness) and, so long as any Senior Secured Notes are outstanding, after the completion of any Change of Control Offer (as defined in the indenture governing the Senior Secured Notes) required under the Senior Secured Notes as a result of the event that constitutes such Fundamental Change, the Convertible Preferred Stock shall be repurchased by the Company in whole or in part, out of funds legally available therefor, at the option of the Holder thereof, in cash at 101% of the Liquidation Preference of the Convertible Preferred Stock to be repurchased, plus any accumulated and unpaid and accrued and unpaid dividends thereon up to, but not including, such Fundamental Change Repurchase Date (the “Fundamental Change Repurchase Price”). The Fundamental Change Repurchase Date shall be a date that is no earlier than 20 Business Days and no later than 30 Business Days after the date of the Fundamental Change Notice delivered by the Company (the “Fundamental Change Repurchase Date”). If the Fundamental Change Repurchase Date is on a date that is after a Dividend Record Date and on or prior to the corresponding Dividend Payment Date, the Company will pay the related dividend to the person to whom the Fundamental Change Repurchase Price is payable (and only to the extent that such dividend was not already paid as part of the Fundamental Change Repurchase Price).

(b) Notices. On or before the twentieth day prior to the date on which the Company anticipates consummating a Fundamental Change (or, if later, promptly after the Company discovers a Fundamental Change will occur), a written notice shall be sent by or on behalf of the Company to the Holders by first-class mail setting forth the date on which it is anticipated that such Fundamental Change will occur. Within 15 days after the occurrence of a Fundamental Change, the Company shall mail a written notice of the Fundamental Change (the “Fundamental Change Notice”) by first-class mail to each Holder (the date of such mailing, the “Fundamental Change Notice Date”); provided that, if such Fundamental Change is also subject to the provisions of Section 11, any Fundamental Change Notice required to be delivered to the Holders pursuant to this Section 9 shall be mailed to each Holder by first class mail on the Fundamental Change Effective Date. The Fundamental Change Notice shall include a form of Fundamental Change Repurchase Notice to be completed by the Holder and shall state:

(i) briefly, the nature of the Fundamental Change and the date of such Fundamental Change;

(ii)  the date by which the Fundamental Change Repurchase Notice pursuant to Section 9(c) must be given;

(iii)  the Fundamental Change Repurchase Date;

(iv)  the Fundamental Change Repurchase Price;

(v) the name and address of (A) the bank or trust company with which funds necessary for the redemption contemplated by Section 9(a) will be deposited and (B) the paying agent and the Transfer Agent;

(vi)  the Conversion Rate and any adjustments thereto;

(vii) that the Convertible Preferred Stock as to which a Fundamental Change Repurchase Notice has been given may instead be converted if such Convertible Preferred Stock are otherwise convertible pursuant to Section 7 only if the Fundamental Change Repurchase Notice has been withdrawn in accordance with the terms of these Articles Supplementary;

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(viii)   that the Convertible Preferred Stock must be surrendered to the paying agent to collect the Fundamental Change Repurchase Price;

(ix)  briefly, the procedures the Holder must follow to exercise rights under this Section 9(b);

(x)   the procedures for withdrawing a Fundamental Change Repurchase Notice; and

(xi)    that, unless the Company defaults in making payment of such Fundamental Change Repurchase Price, dividends, if any, on the Convertible Preferred Stock surrendered for repurchase by the Company will cease to accrue on and after the Fundamental Change Repurchase Date.

(c) Fundamental Change Repurchase Procedures. A Holder may exercise its rights specified in Section 9(a) upon delivery of a written notice of repurchase (a “Fundamental Change Repurchase Notice”) to the paying agent at any time on or prior to the close of business on the second Business Day prior to the Fundamental Change Repurchase Date, stating:

(i)   the certificate number of the Convertible Preferred Stock which the Holder will deliver to be repurchased;

(ii)   the aggregate liquidation preference of the Convertible Preferred Stock, or portion thereof, which the Holder will deliver to be repurchased; and

(iii) that such Convertible Preferred Stock shall be repurchased pursuant to the terms and conditions specified in the applicable provisions of such Convertible Preferred Stock and these Articles Supplementary.

The delivery of such Convertible Preferred Stock to the paying agent with the Fundamental Change Repurchase Notice at the offices of the paying agent shall be a condition to the receipt by the Holder of the Fundamental Change Repurchase Price therefor; provided, however, that such Fundamental Change Repurchase Price shall be so paid pursuant to this Section 9 only if the Convertible Preferred Stock so delivered to the paying agent shall conform in all material respects to the description thereof set forth in the related Fundamental Change Repurchase Notice.

(d) Termination of Rights. Any repurchase by the Company contemplated pursuant to the provisions of this Section 9 shall be consummated by the delivery of the consideration to be received by the Holder on the Business Day following the later of the Fundamental Change Repurchase Date or the satisfaction of the foregoing conditions to such repurchase to be fulfilled by the Holder hereunder. If the bank or trust company meeting the requirements set forth in Section 9(g) holds money sufficient to pay the Fundamental Change Repurchase Price of the Convertible Preferred Stock which Holders have elected to require the Company to repurchase on such Business Day in accordance with the terms of these Articles Supplementary, then, from and including the Fundamental Change Repurchase Date, such Convertible Preferred Stock shall cease to be outstanding and dividends on such Convertible Preferred Stock shall cease to accrue and all other rights of the Holders shall terminate, other than the right to receive the Fundamental Change Repurchase Price upon satisfaction of the foregoing conditions.

(e) Effects of Fundamental Change Repurchase Notice. Upon receipt by the paying agent of the Fundamental Change Repurchase Notice specified in Section 9(c), the Holder of the Convertible Preferred Stock in respect of which such Fundamental Change Repurchase Notice was given shall (unless such Fundamental Change Repurchase Notice is withdrawn as specified in the following paragraph) thereafter be entitled to receive solely the Fundamental Change Repurchase Price with respect to such Convertible Preferred Stock. The Company shall cause such Fundamental Change Repurchase Price to be paid to such Holder promptly following the later of (i) the Business Day following the Fundamental Change Repurchase Date, as the case may be, with respect to such Convertible Preferred Stock (provided the conditions in Section 9(c) have been satisfied) and (ii) the time of delivery of such Convertible Preferred Stock to the paying agent by the Holder thereof in the manner required by Section 9(c). Convertible Preferred Stock in respect of which a Fundamental Change Repurchase Notice has been

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given by the Holder thereof may not be converted pursuant to Section 7 hereof on or after the date of the delivery of such Fundamental Change Repurchase Notice unless such Fundamental Change Repurchase Notice has first been validly withdrawn as specified in the following paragraph.

(f) Withdrawal. A Fundamental Change Repurchase Notice may be withdrawn by means of a written notice of withdrawal delivered to the office of the paying agent in accordance with the Fundamental Change Repurchase Notice at any time prior to the close of business on the second Business Day prior to the Fundamental Change Repurchase Date specifying:

(i)   the certificate number of the Convertible Preferred Stock in respect of which such notice of withdrawal is being submitted;

(ii)  the aggregate liquidation preference of the Convertible Preferred Stock, or portion thereof, with respect to which such notice of withdrawal is being submitted; and

(iii) the aggregate liquidation preference, if any, of such Convertible Preferred Stock which remains subject to the original Fundamental Change Repurchase Notice and which has been or will be delivered for repurchase by the Holder;

provided, however, that such withdrawal shall be effective only if the description of the Convertible Preferred Stock set forth in such withdrawal notice conforms in all material respects to the description thereof set forth in the related Fundamental Change Repurchase Notice.

(g) Deposit of Fundamental Change Repurchase Price. Prior to 10:00 a.m. New York City time on the Business Day following the later of the Fundamental Change Repurchase Date and the Holder’s satisfaction of all applicable conditions specified in Section 9, the Company shall deposit with a bank or trust company selected by the Board of Directors doing business in the Borough of Manhattan, the City of New York, and having a capital and surplus of at least $500 million, an amount of cash (in immediately available funds if deposited on such Business Day), sufficient to pay the aggregate Fundamental Change Repurchase Price of all the Convertible Preferred Stock or portions thereof which are to be repurchased in respect of such Fundamental Change Repurchase Date.

(h) Convertible Preferred Stock Repurchased in Part. Any Convertible Preferred Stock which is to be repurchased only in part shall be surrendered at the office of the paying agent (with, if the Company or the Transfer Agent so requires, due endorsement by, or a written instrument of transfer in form reasonably satisfactory to the Company and the Transfer Agent duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing) and the Company shall execute and shall authenticate and deliver to the Holder of such Convertible Preferred Stock, without service charge, new Convertible Preferred Stock, of any authorized denomination as requested by such Holder in aggregate liquidation preference equal to, and in exchange for, the portion of the Liquidation Preference of the Convertible Preferred Stock so surrendered which is not repurchased.

Section 10. Reserved.

Section 11. Make-Whole.

(a) Make-Whole Fundamental Change Conversion. If, after the Convertible Preferred Stock is issued, the Fundamental Change Effective Date of a Fundamental Change pursuant to paragraph (i) (without giving effect to the proviso at the end of paragraph (i) in the definition of “Fundamental Change”), (iii) (without giving effect to clause (A) under paragraph (iii) in the definition of “Fundamental Change”) or (iv) of the definition of “Fundamental Change” occurs (regardless of whether the Holder has the right to require the Company to repurchase the Convertible Preferred Stock) and 10% or more of the consideration (excluding in calculating such percentage cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights) for the Common Stock in the transaction consists of consideration other than common stock that is traded or scheduled to be traded immediately following such transaction on a U.S. national or regional securities exchange (including The Nasdaq Stock Market) (collectively, “Listed Common Equity”) (a “Make-Whole Fundamental Change”) and the

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Convertible Preferred Stock is surrendered for conversion in accordance with the procedures set forth in Section 8(d) in connection with such Fundamental Change transaction, the Company will increase the Conversion Rate by a number of additional shares of Common Stock (the “Additional Shares”) determined pursuant to this Section 11.

A conversion of the Convertible Preferred Stock will be deemed for these purposes to be “in connection with” a Fundamental Change transaction if the related Conversion Notice is received by the Conversion Agent during the period from and including the Fundamental Change Effective Date until and including the 30th Business Day following such Fundamental Change Effective Date.

(b)   Number of Additional Shares. The number of Additional Shares by which the Conversion Rate shall be increased shall be determined by reference to the table below, with reference to the date such Fundamental Change transaction becomes effective (the “Fundamental Change Effective Date”) and the price (the “Share Price”) paid per share of Common Stock in such Fundamental Change transaction. If the holders of Common Stock receive only cash in the Fundamental Change transaction, the Share Price shall be the cash amount paid per share of Common Stock. Otherwise, the Share Price shall be the average of the Closing Prices of the Common Stock on the five Trading Days immediately prior to but not including the Fundamental Change Effective Date.

As of any date upon which the Conversion Rate is adjusted pursuant to Section 13, the Share Prices set forth in the first row of the table below shall be adjusted by the Company such that the adjusted Share Prices shall equal the Share Prices applicable immediately prior to such adjustment multiplied by a fraction, the numerator of which is the Conversion Rate immediately prior to such adjustment and the denominator of which is the Conversion Rate as so adjusted pursuant to Section 13. If the Share Price is between two Share Prices in the table, or the Fundamental Change Effective Date is between two Effective Dates in the table, the number of Additional Shares will be determined by straight-line interpolation between the number of Additional Shares set forth for the higher and lower Share Prices and the two Effective Dates, as applicable, based on a 365-day year. If the Share Price is in excess of $40.00 per share (subject to adjustment as set forth herein), or if the Share Price is less than $4.00 per share (subject to adjustment as set forth herein), no Additional Shares will be added to the Conversion Rate.

Number of Additional Shares
Share Price

Notwithstanding the foregoing, in no event will the number of Additional Shares of Common Stock by which the Conversion Rate is adjusted pursuant to this Section 11 exceed 50.0000 shares, subject to adjustment in the same manner as the Conversion Rate pursuant to Section 13.

(c)  Initial Make-Whole Fundamental Change Notice. On or before the twentieth day prior to the date on which the Company anticipates consummating a Make-Whole Fundamental Change (or, if later,

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promptly after the Company discovers a Make-Whole Fundamental Change will occur), a written notice shall be sent by or on behalf of the Company to the Holders by first-class mail. Such notice shall contain:

(i)   the date on which the Make-Whole Fundamental Change is anticipated to be effected; and

(ii)   the date, which shall be 30 Business Days after the anticipated Fundamental Change Effective Date, by which the conversion of the Convertible Preferred Stock will be deemed for purposes of this Section 11 to be in connection with a Fundamental Change transaction.

(d) Second Make-Whole Acquisition Notice. On the Fundamental Change Effective Date, another written notice shall be sent by or on behalf of the Company to the Holders by first-class mail. Such notice shall contain:

(i)   the date that shall be 30 Business Days after the Fundamental Change Effective Date;

(ii)   the number of Additional Shares and, if applicable, the Fundamental Change Repurchase Price;

(iii)    the amount of cash, securities and other consideration payable per share of Common Stock and Convertible Preferred Stock in connection with such Fundamental Change; and

(iv)  the instructions a Holder must follow to convert its Convertible Preferred Stock in connection with such Fundamental Change transaction or to exercise rights under Section 9(b), if applicable.

Section 12. Mandatory Redemption.

(a)   Mandatory Redemption. On the Maturity Date the Company shall redeem all of the outstanding Convertible Preferred Stock at 100% of the Liquidation Preference, plus all accumulated and unpaid and accrued and unpaid dividends thereon up to, but not including, the Maturity Date, out of funds legally available for such purposes. The Company shall take all actions required or permitted under the MGCL to permit such redemption of the Convertible Preferred Stock.

(b)   Notice. At least 30 days prior to the Maturity Date, the Company shall mail a written notice by first-class mail to each Holder, which notice shall state:

(i)   the Maturity Date;

(ii)   the name and address of (A) the bank or trust company with which funds necessary for the redemption contemplated by Section 12(a) will be deposited and (B) the Transfer Agent;

(iii)    the redemption price for the Convertible Preferred Stock;

(iv)  that the Convertible Preferred Stock must be surrendered to the Transfer Agent to collect the redemption price; and

(v)   briefly, any procedures the Holder must follow to exercise rights under this Section 12.

(c) Deposit of Funds. If on or before the Maturity Date all funds necessary for the redemption contemplated by Section 12(a) shall have been deposited with a bank or trust company selected by the Board of Directors doing business in the Borough of Manhattan, the City of New York, and having a capital and surplus of at least $500 million, for the purpose of redeeming the Convertible Preferred Stock, then, from and after the Maturity Date, dividends on the shares of the Convertible Preferred Stock shall cease to accrue and accumulate, and the shares of Convertible Preferred Stock shall no longer be deemed to be outstanding and shall not have the status of shares of Convertible Preferred Stock, and all rights of the Holders thereof as stockholders of the Company (except the right to receive from the Company the redemption price) shall cease. Upon surrender of the certificates for

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shares so redeemed (properly endorsed or assigned for transfer, if the Company shall so require), such shares shall be redeemed by the Company at the redemption price.

Any deposit by the Company of funds with a bank or trust company for the purpose of redeeming Convertible Preferred Stock shall be irrevocable, except that any balance of money so deposited and unclaimed by any Holders of shares of Convertible Preferred Stock entitled thereto at the expiration of two years from the Maturity Date shall be repaid, together with any interest or other earnings earned thereon, to the Company (or its successor), and after any such repayment, the Holders shall look only to the Company (or its successor) for payment without interest or other earnings.

Section 13. Anti-Dilution Adjustments.

(a) Adjustment for Change in Capital Stock. If, after the Convertible Preferred Stock is issued, the Company:

(i)                 pays a dividend or makes another distribution payable in shares of Common Stock on the Common Stock;

(ii)  subdivides the outstanding shares of Common Stock into a greater number of shares; or (iii) combines the outstanding shares of Common Stock into a smaller number of shares;

then the Conversion Rate in effect immediately prior to the Ex-Dividend Date for such dividend or distribution, or the effective date of such share split or share combination, shall be adjusted by the Company based on the following formula:

where

CR0 = the Conversion Rate in effect immediately prior to such Ex-Dividend Date, or effective date; & CR1 = the new Conversion Rate in effect immediately after such Ex-Dividend Date, or effective date;

OS0 = the number of shares of Common Stock outstanding immediately prior to such Ex-Dividend Date, or effective date; and

OS1 = the number of shares of Common Stock outstanding immediately prior to such Ex-Dividend Date, or effective date but after giving effect to such dividend, distribution, share split or share combination.

If any dividend or distribution described in this Section 13(a) is declared but not so paid or made, the new Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

(b) Adjustment for Rights Issue. If, after the Convertible Preferred Stock is issued, the Company distributes to all, or substantially all, holders of shares of Common Stock any rights, warrants or options entitling them, for a period of not more than 60 days after the date of issuance thereof, to subscribe for or to purchase shares of Common Stock at an exercise price per share of Common Stock less than the average of the Closing Prices of the Common Stock for each Trading Day in the 10-consecutive Trading Day period ending on the Trading Day immediately preceding the time of announcement of such issuance (other than any rights, warrants or options that by their terms will also be issued to Holders upon conversion of their Convertible Preferred Stock into

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Common Stock), then the Conversion Rate in effect immediately prior to the Ex-Dividend Date for such distribution shall be adjusted by the Company in accordance with the following formula:

where

CR0 = the Conversion Rate in effect immediately prior to the Ex-Dividend Date for such distribution;

CR1 = the new Conversion Rate in effect immediately after the Ex-Dividend Date for such distribution (e.g., the Conversion Rate in effect before trading commences on the morning after the Ex-Dividend Date);

OS0 = the number of shares of Common Stock outstanding immediately prior to the Ex-Dividend Date for such distribution;

X = the number of shares of Common Stock issuable pursuant to such rights, warrants or options; and

Y = the number of shares of Common Stock equal to the quotient of (A) the aggregate price payable to exercise such rights, warrants or options and (B) the average of the Closing Prices of the Common Stock for each Trading Day in the 10-consecutive Trading Day period ending on the Trading Day immediately preceding the date of announcement for the issuance of such rights, warrants or options.

For purposes of this Section 13(b), in determining whether any rights, warrants or options entitle the holders to subscribe for or purchase shares of Common Stock at less than the average of the Closing Prices for each Trading Day in the applicable 10-consecutive Trading Day period, there shall be taken into account any consideration the Company receives for such rights, warrants or options and any amount payable on exercise thereof, with the value of such consideration, if other than cash, to be determined in good faith by the Board of Directors.

If any right, warrant or option described in this Section 13(b) is not exercised prior to the expiration of the exercisability thereof, the new Conversion Rate shall be readjusted by the Company to the Conversion Rate that would then be in effect if such right, warrant or option had not been so issued.

(c) Adjustment for Other Distributions. If, after the Convertible Preferred Stock is issued, the Company distributes to all, or substantially all holders of its Common Stock shares of Capital Stock, evidences of indebtedness or other assets or property, excluding:

(i)   dividends, distributions, rights, warrants or options referred to in Section 13(a) or 13(b);

(ii)   dividends or distributions paid exclusively in cash; and

(iii)  Spin-Offs described below in this Section 13(c),

then the Conversion Rate will be adjusted by the Company based on the following formula:

where

CR0 = the Conversion Rate in effect immediately prior to the Ex-Dividend Date for such distribution;

CR1 = the new Conversion Rate in effect immediately after the Ex-Dividend Date for such distribution;

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SP0 = the average of the Closing Prices of the Common Stock for each Trading Day in the 10-consecutive Trading Day period ending on the Trading Day immediately preceding the Ex-Dividend Date for such distribution; and

FMV = the fair market value (as determined in good faith by the Board of Directors) of the shares of Capital Stock, evidences of indebtedness, assets or property distributed with respect to each outstanding share of Common Stock on the earlier of the Record Date or the Ex-Dividend Date for such distribution.

With respect to an adjustment pursuant to this Section 13(c), where there has been a payment of a dividend or other distribution to all, or substantially all, holders of Common Stock of shares of Capital Stock of any class or series, or similar equity interest, of or relating to any subsidiary of the Company or other business unit of the Company (a “Spin-Off”), then the Conversion Rate in effect immediately before the close of business on the effective date of the Spin-Off will be adjusted by the Company based on the following formula:

where

CR0 = the Conversion Rate in effect immediately prior to the effective date of the Spin-Off;

CR1 = the new Conversion Rate after the Spin-Off;

FMV0 = the average of the Closing Prices of the Capital Stock or similar equity interest distributed to holders of Common Stock applicable to one share of Common Stock over the 10-consecutive Trading Days after, and including, the effective date of the Spin-Off; and

MP0 = the average of the Closing Prices of the Common Stock over the 10-consecutive Trading Days after, and including, the effective date of the Spin-Off.

An adjustment to the Conversion Rate made pursuant to the immediately preceding paragraph will occur on the 10th Trading Day from, and including, the effective date of the Spin-Off; provided that in respect of any conversion within the 10 Trading Days following, and including, the effective date of any Spin-Off, references within this Section 13(c) to 10 Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed between the effective date of such Spin-Off and the Conversion Date in determining the applicable Conversion Rate.

If any such dividend or distribution described in this Section 13(c) is declared but not paid or made, the new Conversion Rate shall be readjusted by the Company to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

(d) Adjustment for Cash Dividends. If, after the Convertible Preferred Stock is issued, the Company makes any cash dividend or distribution to all, or substantially all, holders of its outstanding Common Stock, then the Conversion Rate in effect immediately prior to the Ex-Dividend Date for such distribution shall be adjusted by the Company based on the following formula:

where

CR0 = the Conversion Rate in effect immediately prior to the Ex-Dividend Date for such distribution;

CR1 = the new Conversion Rate in effect immediately after the Ex-Dividend Date for such distribution;

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SP0 = the average of the Closing Prices of the Common Stock for each Trading Day in the 10-consecutive Trading Day period ending on the Trading Day immediately preceding the Ex-Dividend Date for such distribution; and

C = the amount in cash per share that the Company distributes to holders of its Common Stock.

If any dividend or distribution described in this Section 13(d) is declared but not so paid or made, the new Conversion Rate shall be readjusted by the Company to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

(e)     Adjustment for Common Stock Repurchases. If, after the Convertible Preferred Stock is issued, the Company or any of its subsidiaries effects a Pro Rata Repurchase of shares of Common Stock, to the extent that the cash and value of any other consideration included in the payment per share of its Common Stock exceeds the Closing Price of a share of its Common Stock on the Trading Day following the effective date of such Pro Rata Repurchase, then the Conversion Rate in effect immediately prior to the effective date of such Pro Rata Repurchase shall be adjusted by the Company based on the following formula:

where

CR0 = the Conversion Rate in effect immediately prior to the effective date of such Pro Rata Repurchase;

CR1 = the new Conversion Rate in effect after such Pro Rata Repurchase;

AC = the aggregate value of all cash and any other consideration (as determined in good faith by the Board of Directors) paid or payable for the Common Stock purchased in such Pro Rata Repurchase;

OS0 = the number of shares of Common Stock outstanding immediately prior to such Pro Rata Repurchase;

OS1 = the number of shares of Common Stock outstanding immediately after the effective date of such Pro Rata Repurchase (after giving effect to such Pro Rata Repurchase); and

SP1 = the average of the Closing Prices of the Common Stock for each Trading Day in the 10-consecutive Trading Day period commencing on the Trading Day following the effective date of such Pro Rata Repurchase.

The adjustment to the Conversion Rate under this Section 13(e) will occur on the 10th Trading Day from, and including, the Trading Day following the effective date of such Pro Rata Repurchase; provided that in respect of any conversion within 10 Trading Days immediately following, and including, the effective date of such Pro Rata Repurchase, references in this Section 13(e) with respect to 10 Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed between the effective date of such Pro Rata Repurchase and the Conversion Date in determining the Conversion Rate.

(f)    Additional Adjustments.

(i) The Company may, from time to time, to the extent permitted by applicable law, increase the Conversion Rate by any amount for any period of at least 20 Business Days if the Board of Directors (taking into account, among other considerations, the impact of possible income or withholding taxes on the Holders) has determined that such increase would be in the Company’s best interests. The Company will give holders of Convertible Preferred Stock at least 15 days prior notice of such an increase in the Conversion Rate.

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(ii)  To the extent that the Company has a rights plan in effect upon any conversion of the Convertible Preferred Stock into Common Stock, a Holder shall receive, in addition to the Common Stock, the rights under the rights plan, unless, prior to any conversion, the rights have separated from the Common Stock, in which case the Conversion Rate will be adjusted at the time of separation as described in Section 13(c). A further adjustment shall occur as described in Section 13(c) if such rights become exercisable to purchase different securities, evidences of indebtedness or assets, subject to readjustment in the event of the expiration, termination or redemption of such rights.

(iii)  Following:

(A)  any reclassification of the Common Stock;

(B)  a consolidation, merger, binding share exchange or combination involving the Company;

(C)  a conveyance, transfer, sale, lease or other disposition to another Person or entity of all or substantially all of the Company’s assets; or

the settlement amount in respect of the Company’s conversion obligation will be computed as set forth in Section 13, based on the kind and amount of shares of stock, securities, other property or assets (including cash or any combination thereof) that a holder of a number of shares of Common Stock equal to the applicable Conversion Rate multiplied by the number of shares of Convertible Preferred Stock owned would have been entitled to receive in such transaction. However, if in any such transaction holders of Common Stock would be entitled to elect the consideration for their Common Stock, the Company shall make adequate provisions so that upon conversion each Holder of Convertible Preferred Stock shall be entitled to elect the consideration that they shall receive upon conversion of Convertible Preferred Stock as described in Section 13, if applicable.

(iv) Except as otherwise stated in this Section 13, the Company will not be required to adjust the Conversion Rate for the issuance of shares of Common Stock, including in connection with satisfaction of the Company’s conversion obligation in a combination of cash and shares of Common Stock, or any securities convertible into or exchangeable for shares of Common Stock or the right to purchase shares of Common Stock or such convertible or exchangeable securities.

(g)   De Minimis Impact on Conversion Rate. Notwithstanding anything in the forgoing provisions of this Section 13 to the contrary, the Company will not be required to adjust the Conversion Rate unless the adjustment would result in a change of at least 1% of the Conversion Rate. However, the Company will carry forward any adjustments that are less than 1% of the Conversion Rate and make such carried forward adjustments, regardless of whether the aggregate adjustment is less than 1%, upon any conversion of Convertible Preferred Stock, or upon required purchases of Convertible Preferred Stock in connection with a Fundamental Change, on every one year anniversary from the Issue Date on the Record Date and immediately prior to the Maturity Date; provided that any such adjustment of less than 1% that has not been made will be made upon (x) the end of each fiscal year of the Company, (y) the date of any notice of redemption of the Convertible Preferred Stock in accordance with the provisions hereof or any notice of a Make-Whole Fundamental Change and (z) any Conversion Date.

(h)   Notice of Adjustments. Whenever the Conversion Rate is adjusted, the Company shall promptly mail to Holders a notice of the adjustment. The Company shall file with the Conversion Agent such notice briefly stating the facts requiring the adjustment and the manner of computing it. The Conversion Agent shall not be under any duty or responsibility with respect to any such notice of adjustment except to exhibit the same to any Holder desiring inspection thereof. The Company shall also deliver to the Conversion Agent an Officers’ Certificate with respect to the adjustment.

(i) Successive Adjustments. After an adjustment to the Conversion Rate under this Section 13 has been made, any subsequent event requiring an adjustment under this Section 13 shall cause an adjustment to the Conversion Rate as so adjusted.

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(j)    Calculation of Adjustments. All adjustments to the Conversion Rate shall be calculated by the Company to the nearest 1/10,000th of one share of Common Stock (or if there is not a nearest 1/10,000th of a share, to the next lower 1/10,000th of a share).

(k)   When No Adjustment Required.

(i)   Except as otherwise provided in this Section 13, the Conversion Rate will not be adjusted for the issuance of Common Stock or any securities convertible into or exchangeable for Common Stock or carrying the right to purchase any of the foregoing or for the repurchase of Common Stock.

(ii)   No adjustment to the Conversion Rate need be made:

(A)  upon the issuance of any shares of Common Stock pursuant to any present or future plan or arrangement providing for the reinvestment of dividends or interest payable on securities of the Company and the investment of additional optional amounts in Common Stock under any plan;

(B)  upon the issuance of any shares of Common Stock or options, warrants or other rights to acquire Common Stock (including the issuance of Common Stock pursuant to such options, warrants or other rights) in any transaction resulting in an exchange for fair market value, including in connection with a reduction of indebtedness or liabilities of the Company or any of its subsidiaries;

(C)  upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of its subsidiaries;

(D)  upon the issuance of any shares of Common Stock pursuant to any option, warrant, right, or exercisable, exchangeable or convertible security outstanding as of the Issue Date (or otherwise issued as a pay-in-kind dividend in respect thereof) (unless otherwise specifically provided in Section 13); or

(E)   for accumulated and unpaid and accrued and unpaid dividends on the Convertible Preferred Stock.

(iii)  No adjustment to the Conversion Rate need be made for a change in the par value or no par value of the Common Stock.

(iv)  No adjustment to the Conversion Rate will be made to the extent that such adjustment would result in the Conversion Price being less than the par value of the Common Stock.

(l)    Record Date. For purposes of this Section 13, “Record Date” means, with respect to any dividend, distribution or other transaction or event in which the holders of the Common Stock have the right to receive any cash, securities or other property or in which the Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of the Common Stock entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise).

(m)   Multiple Adjustments. For the avoidance of doubt, if an event occurs that would trigger an adjustment to the Conversion Rate pursuant to this Section 13 under more than one subsection hereof, such event, to the extent fully taken into account in a single adjustment, shall not result in multiple adjustments hereunder.

(n)     Other Adjustments. The Company may, but shall not be required to, make such increases in the Conversion Rate, in addition to those required by this Section, as the Board of Directors (taking into account, among other considerations, the impact of possible income or withholding taxes on the Holders) considers to be

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advisable in order to avoid or diminish any income tax to any holders of shares of Common Stock resulting from any dividend or distribution of stock or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes or for any other reason.

(o)   Conversion Agent. The Conversion Agent shall not at any time be under any duty or responsibility to any Holder to determine whether any facts exist that may require any adjustment of the applicable Conversion Rate or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed in making the same. The Conversion Agent shall be fully authorized and protected in relying on an Officers’ Certificate and any adjustment contained therein and the Conversion Agent shall not be deemed to have knowledge of any adjustment unless and until it has received such certificate. The Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, that may at the time be issued or delivered with respect to any Convertible Preferred Stock; and the Conversion Agent makes no representation with respect thereto. The Conversion Agent shall not be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock pursuant to the conversion of Convertible Preferred Stock or to comply with any of the duties, responsibilities or covenants of the Company contained in this Section 13.

(p)   Fractional Shares. No fractional shares of Common Stock will be issued to Holders of the Convertible Preferred Stock upon conversion. All shares of Common Stock (including fractional shares thereof) that would issuable upon conversion of more than one share of Convertible Preferred Stock by a Holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share of Common Stock. If after such aggregation, the conversion would result in the issuance of any fractional share of Common Stock, in lieu of issuing a fractional share of Common Stock, a Holder will be entitled to receive, at the option of the Company, (i) an amount in cash equal to the fraction of a share of Common Stock multiplied by the Closing Price of the Common Stock on the Trading Day immediately preceding the applicable Conversion Date or (ii) an additional whole share of Common Stock.

Section 14. Adjustment for Reorganization Events.

(a) Reorganization Events. In the event of:

(i)    any consolidation or merger of the Company with or into another person (other than a merger or consolidation in which the Company is the continuing corporation and in which the shares of Common Stock outstanding immediately prior to the merger or consolidation are not exchanged for cash, securities or other property of the Company or another corporation);

(ii)   any sale, transfer, lease or conveyance to another person of all or substantially all the property and assets of the Company in which holders of Common Stock would be entitled to receive cash, securities or other property for their shares of Common Stock; or

(iii)  any statutory exchange of securities of the Company with another Person (other than in connection with a merger or acquisition) or any binding share exchange which reclassifies or changes its outstanding Common Stock or pursuant to which the holders of Common Stock would be entitled to receive cash, securities or other property for their shares of Common Stock;

each of which is referred to as a “Reorganization Event,” each share of the Convertible Preferred Stock outstanding immediately prior to such Reorganization Event will, without the consent of the Holders of the Convertible Preferred Stock, become convertible into the kind and amount of securities, cash and other property (the “Exchange Property”) receivable in such Reorganization Event (without any interest thereon, and without any right to dividends or distributions thereon which have a record date that is prior to the applicable Conversion Date) per share of Common Stock by a holder of Common Stock that is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be (any such Person, a “Constituent Person”), or an Affiliate of a Constituent Person. Upon the conversion of any Convertible Preferred Stock pursuant to Section 7 or Section 11 on each Conversion Date following a Reorganization Event, the Conversion Rate then in effect will be applied to the value on such Conversion Date of

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such securities, cash or other property received per share of Common Stock, as determined in accordance with this Section 14.

(b)   Exchange Property Election. In the event that holders of the shares of Common Stock have the opportunity to elect the form of Exchange Property to be received in such transaction, the form of Exchange Property that the Holders shall be entitled to receive shall be determined by the Holders of two-thirds of the outstanding Convertible Preferred Stock.

(c)   Successive Reorganization Events. The Company shall make provision for the provisions of this Section 14 to similarly apply to successive Reorganization Events and the provisions of Section 13 to apply to any shares of capital stock of the Company (or any successor) received by the holders of the Common Stock in any such Reorganization Event.

(d)   Reorganization Event Notice. The Company (or any successor) shall, within 10 days of the occurrence of any Reorganization Event, provide written notice to the Holders of the occurrence of such event and of the kind and amount of cash, securities or other property that constitutes the Exchange Property. Failure to deliver such notice shall not affect the operation of this Section 14.

Section 15. Voting Rights.

(a)   General. So long as any shares of Series A Convertible Preferred Stock are outstanding, the Series A Holders shall vote together with the holders of Common Stock on all matters upon which the holders of Common Stock are entitled to vote. Each Series A Holder shall be entitled to such number of votes as the number of shares of Common Stock into which such Series A Holder’s shares of Series A Convertible Preferred Stock would be convertible at the time of the record date for any such vote (without regard to the limitations set forth in Section 7) and for the purpose of such calculation, shares of Common Stock sufficient for the full conversion of all shares of Series A Convertible Preferred Stock shall be deemed to be authorized for issuance under the Charter on such date and shall be included in such calculation; provided, however, that until such time as the Conversion Stockholder Approval has been obtained, (a) the aggregate number of votes entitled to be cast by the Series A Convertible Preferred Stock shall not exceed 19.99% of the voting power of the Common Stock outstanding immediately prior to the issuance of the Series A Convertible Preferred Stock, applied on a pro rata per share basis, among all Holders of Series A Convertible Preferred Stock and (b) the aggregate number of votes entitled to be cast by the Series A-T Convertible Preferred Stock shall not exceed 1.00% of the voting power of the Common Stock outstanding immediately prior to the issuance of the Series A Convertible Preferred Stock.

(b)   Right to Elect Preferred Directors.

(i) Voting Right. So long as any shares of Series A-T Convertible Preferred Stock are outstanding, the Series A-T Holders shall have the right, voting separately as a single class, to the exclusion of any other Holders and the holders of Common Stock, to elect a total number of directors of the Company equal to the Series A-T Board Representation Entitlement. So long as any shares of Series A-Y Convertible Preferred Stock are outstanding, the Series A-Y Holders shall have the right, voting separately as a single class, to the exclusion of any other Holders and the holders of Common Stock, to elect a total number of directors of the Company equal to the Series A-Y Board Representation Entitlement. Each such director elected by either the Series A-T Holders or the Series A-Y Holders is a “Series A Preferred Director”. On the Issue Date, the Series A Preferred Directors elected by the Series A-T Holders shall be Christian W. E. ▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Series A Preferred Directors elected by the Series A-Y Holders shall be ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.

(ii) Election. The election of the Applicable Series A Preferred Directors will take place at any annual meeting of stockholders or any special meeting of the Applicable Series A Holders, called as provided herein. If at any time the number of Applicable Series A Preferred Directors is less than the Applicable Series A Board Representation Entitlement, the Company shall promptly notify the Applicable Series A Holders and the secretary of the Company may, and upon the written request of the Applicable Series A Holders of at least 25% of the Applicable Series A Convertible Preferred Stock (addressed to the Corporate Secretary at the Company’s principal office) must (unless such request is received less than 90

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days before the date fixed for the next annual or special meeting of the stockholders, in which event such election shall be held at such next annual or special meeting of stockholders), call a special meeting of the Applicable Series A Holders for the election of the number of directors necessary to make the number of the Applicable Series A Preferred Directors equal to the Applicable Series A Board Representation Entitlement. The Series A Preferred Directors shall each be entitled to one vote per director on any matter. At any meeting held for the purpose of electing the Applicable Series A Preferred Directors at which the Applicable Series A Holders shall have the right to elect directors as provided herein, the presence in person or by proxy of the Applicable Series A Holders of shares of the Applicable Series A Convertible Preferred Stock representing at least a majority in voting power of the then outstanding shares of the Applicable Series A Convertible Preferred Stock shall constitute a quorum of such class for the election of the Applicable Series A Preferred Directors. The affirmative vote of the holders of shares of Applicable Series A Convertible Preferred Stock constituting a majority of the shares of the Applicable Series A Convertible Preferred Stock present at such meeting, in person or by proxy, shall be required to elect any such Applicable Series A Preferred Director, in each case calculated on a per-directorship basis. In exercising the voting rights set forth in this Section 15(b), each share of Applicable Series A Convertible Preferred Stock shall be entitled to one vote.

(iii)   Notice of Special Meeting. Notice for a special meeting will be given in a similar manner to that provided in the Company’s by-laws for a special meeting of the stockholders. If the secretary of the Company does not call a special meeting within 20 days after receipt of any such request, then any Applicable Series A Holder may (at the expense of the Company) call such meeting, upon notice as provided in this Section 1 5(b)(iii), and for that purpose will have access to the stock register of the Company. The Applicable Series A Preferred Directors elected at any such special meeting will hold office until the next annual meeting of the stockholders of the Company and until their successors are duly elected and qualified unless they have been previously removed or terminated pursuant to Section 1 5(b)(iv) or 1 5(b)(v), respectively.

(iv)  Removal; Vacancy. Any Applicable Series A Preferred Director may be removed at any time without cause by the Applicable Series A Holders of a majority of the outstanding shares of the Applicable Series A Convertible Preferred Stock. In case any vacancy in the office of an Applicable Series A Preferred Director occurs (other than as a result of a termination pursuant to Section 1 5(b)(v)), the vacancy may be filled by the written consent of the Applicable Series A Preferred Directors remaining in office, or if none remains in office, by the vote of the Applicable Series A Holders as set forth in Section 1 5(b)(ii) to serve until the next annual meeting of the stockholders and until their successors are duly elected and qualified.

(v)   Termination. If at any time the number of Applicable Series A Preferred Directors exceeds the Applicable Series A Board Representation Entitlement, the number of Applicable Series A Preferred Directors shall be reduced immediately so that the total number of Applicable Series A Preferred Directors is equal to the Applicable Series A Board Representation Entitlement at such time. To effect such reduction, the term of office of the requisite number of Applicable Series A Preferred Directors shall immediately terminate, with the individual(s) whose term of office shall so terminate being determined by the Applicable Series A Preferred Directors in office immediately prior thereto. Any vacancy on the Board of Directors resulting from such cessation of the term of office of an Applicable Series A Preferred Director may be filled in accordance with the Company’s by-laws.

(vi)  Unfit Directors. At least fifteen Business Days prior to the election of any Applicable Series A Preferred Director, the Applicable Series A Holders shall submit to the Board of Directors a notice containing the name of the individual that such Applicable Series A Holders intend to elect as an Applicable Series A Preferred Director. To the extent that the Board of Directors determines, in good faith and after consideration of specific written advice of outside counsel (a copy of which will be provided to the Applicable Series A Holders), that such election would reasonably be expected to violate their duties under MGCL § 2-405.1(a) because (i) such individual is unfit to serve as a director of a company listed or quoted on the primary stock exchange or quotation system on which the Common Stock is listed or quoted or (ii) service by such nominee as a director of Company would reasonably be expected to violate applicable law, the New York Stock Exchange Listed Company Manual or, if the Company is not listed on the New York Stock Exchange, any comparable rule or regulation of the primary stock exchange or

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quotation system on which the Company Common Stock is listed or quoted, the Applicable Series A Holders shall not elect such individual and shall not elect any other individual without first complying with this Section 1 5(b)(vi) with respect to such other individual; provided that the Series A Preferred Directors on the Issue Date shall be deemed to have been elected in accordance with this Section 1 5(b)(vi).

(vii) Written Consent. Notwithstanding anything to the contrary in this Section 15(b), the Applicable Series A Holders shall be entitled to take by written consent any action described in this Section 15(b).

(c)   Voting Rights of Series B Convertible Preferred Stock. Except as provided in Sections 15(d) and 15(e), the Series B Convertible Preferred Stock shall have no voting rights.

(d)   Special Voting Right.

(i)  Voting Right. At any time when the equivalent of six quarterly dividends payable on the shares of Convertible Preferred Stock or any class or series of Parity Stock upon which voting rights equivalent to those granted by this Section 15(d) have been conferred and are exercisable (“Special Voting Parity Stock”) (whether or not consecutive and whether or not declared) are accrued and unpaid (a “Nonpayment”), the number of directors constituting the Board of Directors shall be automatically increased by two, and the Holders and the holders of any class or series of Special Voting Parity Stock, shall have the right, voting together as a single class without regard to class or series (and with voting power allocated pro rata based on the liquidation preference of such class or series), to the exclusion of the holders of Common Stock, to elect two directors of the Company to fill such newly created directorships (and to fill any vacancies in the terms of such directorships); provided that the Holders and the holders of any Special Voting Parity Stock shall not be entitled to elect such directors to the extent such election would cause the Company to violate the corporate governance requirements of The New York Stock Exchange (or other exchange on which the Company’s securities may be listed) that listed companies must have a majority of Independent Directors; provided further that the Board of Directors shall at no time include more than two such directors. The Company’s exercise of the Convertible Preferred Stock PIK Dividend Provision shall not constitute “Nonpayment” for purposes of this Section 15(d). Each such director elected by the Holders and the holders of any Special Voting Parity Stock is a “Nonpayment Preferred Director”.

(ii) Election. The election of the Nonpayment Preferred Directors will take place at any annual meeting of stockholders or any special meeting of the Holders and the holders of any Special Voting Parity Stock, called as provided herein, and thereafter at each annual meeting until such time as all dividends in arrears on the Convertible Preferred Stock and the Special Voting Parity Stock shall have been paid in full. At any time after the special voting right has vested pursuant to Section 1 5(d)(i) above, the Company shall promptly notify the Holders and the holders of any Special Voting Parity Stock and the secretary of the Company may, and upon the written request of the Holders of at least 25% of the Convertible Preferred Stock or the holders of at least 25% of any class or series of Special Voting Parity Stock (addressed to the Corporate Secretary at the Company’s principal office) must (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders, in which event such election shall be held at such next annual or special meeting of stockholders), call a special meeting of the Holders and the holders of Special Voting Parity Stock for the election of the two directors to be elected by them as provided in Section 1 5(d)(iii) below. The Nonpayment Preferred Directors shall each be entitled to one vote per director on any matter. At any meeting held for the purpose of electing the Nonpayment Preferred Directors at which the Holders and the holders of any Special Voting Parity Stock shall have the right to elect directors as provided herein, the presence in person or by proxy of Holders and holders of any Special Voting Parity Stock representing at least a majority in voting power of the then outstanding shares of Convertible Preferred Stock and any Special Voting Parity Stock (voting together as a single class without regard to class or series and with voting power allocated pro rata based on liquidation preference) shall constitute a quorum of such class for the election of the Nonpayment Preferred Directors. The affirmative vote of Holders and holders of any Special Voting Parity Stock constituting two-thirds of the voting power of the Convertible Preferred Stock and any Special Voting Parity Stock present at such meeting (voting together as a single class without regard to class or series and with voting power allocated

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pro rata based on liquidation preference), in person or by proxy, shall be required to elect any such Nonpayment Preferred Director, in each case calculated on a per-directorship basis.

(iii) Notice of Special Meeting. Notice for a special meeting will be given in a similar manner to that provided in the Company’s by-laws for a special meeting of the stockholders. If the secretary of the Company does not call a special meeting within 20 days after receipt of any such request, then any Holder or any holder of any Special Voting Parity Stock may (at the expense of the Company) call such meeting, upon notice as provided in this Section 1 5(d)(iii), and for that purpose will have access to the stock register of the Company. The Nonpayment Preferred Directors elected at any such special meeting will hold office until the next annual meeting of the stockholders of the Company and until their successors are duly elected and qualified unless they have been previously removed or terminated pursuant to Section 1 5(d)(iv) or 1 5(d)(v), respectively.

(iv)  Removal; Vacancy. Any Nonpayment Preferred Director may be removed at any time without cause by the Holders of two-thirds of the voting power of the then outstanding shares of Convertible Preferred Stock and any Special Voting Parity Stock (such voting power allocated pro rata based on liquidation preference). In case any vacancy in the office of a Nonpayment Preferred Director occurs (other than prior to the initial election of the Nonpayment Preferred Directors), the vacancy may be filled by the written consent of the Nonpayment Preferred Director remaining in office, or if none remains in office, by the vote of the Holders and the holders of any Special Voting Parity Stock as set forth in Section 1 5(d)(ii) to serve until the next annual meeting of the stockholders and until their successors are duly elected and qualified.

(v) Termination. Whenever the Company has paid all dividends in arrears in full, then the right of the Holders and the holders of any Special Voting Parity Stock to elect the Nonpayment Preferred Directors will cease (but subject always to the same provisions for the vesting of the special voting rights in the case of any similar non-payment of dividends in respect of future Dividend Periods). The terms of office of the Nonpayment Preferred Directors will immediately terminate, and the number of directors constituting the Board of Directors will be reduced accordingly.

(vi)  Written Consent. Notwithstanding anything to the contrary in this Section 15(d), the Holders and the holders of any Special Voting Parity Stock shall be entitled to take by written consent any action described in this Section 15(d).

(e) Issuances; Adverse Changes. So long as any shares of Convertible Preferred Stock are outstanding, unless a greater percentage shall be required by law, the vote or consent of the Holders of at least two-thirds of the shares of Convertible Preferred Stock at the time outstanding, voting together as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, will be necessary for effecting or validating any of the following actions, whether or not such approval is required pursuant to the MGCL:

(i) any amendment, alteration or repeal of any provision of the Charter (including these Articles Supplementary creating the Convertible Preferred Stock) or the Company’s by-laws, whether by merger, consolidation or otherwise, that would alter or change the preferences or privileges of the Convertible Preferred Stock so as to affect them adversely;

(ii)  any amendment or alteration of the Charter, whether by merger, consolidation or otherwise, to authorize or create, or increase the number of authorized shares of, or any securities convertible into shares of, or reclassify any security into, any class or series of the Company’s capital stock ranking equal or senior to the Convertible Preferred Stock in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding-up of the affairs of the Company; or

(iii) the consummation of a binding share exchange or reclassification involving the Convertible Preferred Stock or a merger or consolidation of the Company with another entity, except that holders of Convertible Preferred Stock will have no right to vote under this provision if, in each case, (A) the Convertible Preferred Stock remains outstanding or, in the case of any such merger or consolidation with

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respect to which the Company is not the surviving or resulting entity, is converted into or exchanged for preferred securities of the surviving or resulting entity or its ultimate parent, that is an entity organized and existing under the laws of the United States of America, any state thereof or the District of Columbia and that is a corporation for U.S. federal income tax purposes (or if such entity is not a corporation, the Company having received an opinion of nationally recognized counsel experienced in such matters to the effect that Holders will be subject to tax for U.S. federal income tax purposes with respect to such new preferred securities after such merger or consolidation in the same amount, at the same time and otherwise in the same manner as would have been the case under the Convertible Preferred Stock prior to such merger or consolidation), and (B) such Convertible Preferred Stock remaining outstanding or such preferred securities, as the case may be, have such rights, preferences, privileges and voting powers, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers of the Convertible Preferred Stock, taken as a whole;

provided, however, that any increase in the number of authorized shares of preferred stock or any securities convertible into preferred stock or the creation and issuance, or an increase in the number of authorized or issued shares, of other series of preferred stock or any securities convertible into preferred stock, in each case, ranking junior to the Convertible Preferred Stock with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and the distribution of assets upon the Company’s liquidation, dissolution or winding up will not be deemed to adversely affect the preferences or privileges of the Convertible Preferred Stock and Holders will have no right to vote on such an increase, creation or issuance.

In addition to the vote or consent required by the first sentence of this Section 15(e), if any amendment, alteration or repeal specified in clause (i) of the first sentence of this Section 15(e) would adversely affect one or more series of Convertible Preferred Stock disproportionately, the vote or consent of the Holders of at least two-thirds of each such series of Convertible Preferred Stock as are adversely affected by and entitled to vote on the matter, each voting as a class, will be necessary for effecting or validating such action.

In exercising the voting rights set forth in this Section 15(e), each share of Convertible Preferred Stock shall be entitled to one vote.

Section 16. Preemption.

The Holders shall not have any rights of preemption under these Articles Supplementary.

Section 17. Rank.

Notwithstanding anything set forth in the Charter, including these Articles Supplementary, to the contrary, the Board of Directors or any duly authorized committee thereof, without the vote of the Holders, may authorize and issue additional shares of Junior Stock.

Section 18. Repurchase.

Subject to the limitations imposed herein, the Company may purchase and sell Convertible Preferred Stock from time to time to such extent, in such manner, and upon such terms as the Board of Directors or any duly authorized committee thereof may determine; provided, however, that the Company shall not use any of its funds for any such purchase when there are reasonable grounds to believe that the Company is, or by such purchase would be, rendered insolvent; provided further, however, that in the event the Company beneficially owns any Convertible Preferred Stock, the Company will ensure that voting rights in respect of such Convertible Preferred Stock are not exercised.

Section 19. Reserved.

Section 20. No Sinking Fund.

Shares of Convertible Preferred Stock are not subject to the operation of a sinking fund.

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Section 21. Reservation of Common Stock.

(a)   Sufficient Shares. Following the Conversion Stockholder Approval and the Authorized Capital Stock Charter Amendment Approval, the Company shall at all times reserve and keep available out of its authorized and unissued Common Stock or shares acquired by the Company, solely for issuance upon the conversion of shares of Convertible Preferred Stock as provided in these Articles Supplementary, free from any preemptive or other similar rights (except for the preemptive rights set forth in the Amended and Restated Yucaipa Stockholder Agreement or the Amended and Restated Tengelmann Stockholder Agreement), such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the shares of Convertible Preferred Stock then outstanding.

(b)   Free and Clear Delivery. All shares of Common Stock delivered upon conversion of the Convertible Preferred Stock shall be duly authorized, validly issued, fully paid and non-assessable, free and clear of all liens, claims, security interests and other encumbrances (other than liens, charges, security interests and other encumbrances created by the Holders).

(c)   Compliance with Law. Prior to the delivery of any securities that the Company shall be obligated to deliver upon conversion of the Convertible Preferred Stock, the Company shall use its reasonable best efforts to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority.

(d)   Listing. The Company hereby covenants and agrees that, if at any time the Common Stock shall not be listed on the New York Stock Exchange or any other national securities exchange (including The Nasdaq Stock Market) or automated quotation system, the Company will, if permitted by the rules of such exchange or automated quotation system, list and keep listed, so long as the Common Stock shall be so listed on such exchange or automated quotation system, all the Common Stock issuable upon conversion of the Convertible Preferred Stock; provided, however, that if the rules of such exchange or automated quotation system require the Company to defer the listing of such Common Stock until the first conversion of Convertible Preferred Stock into Common Stock in accordance with the provisions hereof, the Company covenants to list such Common Stock issuable upon conversion of the Convertible Preferred Stock in accordance with the requirements of such exchange or automated quotation system at such time.

Section 22. Transfer Agent, Conversion Agent, Registrar and Paying Agent.

The duly appointed Transfer Agent, Conversion Agent, Registrar and paying agent for the Convertible Preferred Stock shall be American Stock Transfer & Trust Company. The Company may, in its sole discretion, remove the Transfer Agent in accordance with the agreement between the Company and the Transfer Agent; provided that the Company shall appoint a successor transfer agent who shall accept such appointment prior to the effectiveness of such removal. Upon any such removal or appointment, the Company shall send notice thereof by first-class mail, postage prepaid, to the Holders.

Section 23. Replacement Certificates.

(a)   Mutilated, Destroyed, Stolen and Lost Certificates. The Company shall replace any mutilated certificate at the Holder’s expense upon surrender of that certificate to the Transfer Agent. The Company shall replace certificates that become destroyed, stolen or lost at the Holder’s expense upon delivery to the Company and the Transfer Agent of reasonably satisfactory evidence that the certificate has been destroyed, stolen or lost, together with any customary indemnity that may be required by the Transfer Agent and the Company.