Document:

Exhibit 4.2

 

AMENDED AND RESTATED

RIGHTS AGREEMENT

 

AMENDED AND
RESTATED RIGHTS AGREEMENT, dated as of May 30, 2003 (this “Agreement”),
between Bunge Limited, a Bermuda company (the “Company”), and Mellon
Investor Services LLC, a New Jersey limited liability company, as rights agent
(the “Rights Agent”).

 

WHEREAS,
effective July 11, 2001 (the “Rights Dividend Declaration Date”), the
Board of Directors of the Company authorized and granted one Right (each, a “Right”)
for each common share, par value US$0.01 per share, of the Company (the “Company
Common Stock”) outstanding at the Close of Business (as defined below) on
August 7, 2001 (the “Record Date”), and has authorized the issuance of
one Right (as such number may hereinafter be adjusted pursuant hereto) for each
share of Company Common Stock issued between the Record Date and, except as
otherwise provided in Section 22, the Distribution Date, each Right initially
representing the right to purchase upon the terms and subject to the conditions
hereinafter set forth one Unit (as defined below) of Preferred Stock (as
defined below);

 

WHEREAS, on
August 1, 2001, the Company and the Rights Agent entered in a Rights Agreement
(the “Original Rights Agreement”) that set forth certain terms and
conditions governing the Rights prior to the date hereof and pursuant to which
the Company appointed the Rights Agent to act as rights agent;

 

WHEREAS, this
Agreement amends and restates in all respects the Original Rights Agreement;
and

 

WHEREAS,
pursuant to this Agreement, the Company appoints the Rights Agent, and the
Rights Agent accepts the appointment, to act as rights agent in accordance with
the terms and conditions hereof;

 

NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein
set forth, the parties hereby agree as follows:

 

SECTION 1.  Certain Definitions.  For purposes of this Agreement, the
following terms have the meanings indicated:

 

(a)                                  “Acquiring
Person” shall mean any Person who or which, alone or together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of 20%
or more of the shares of Company Common Stock then outstanding, but shall not
include (i) the Company, any Subsidiary of the Company, any employee benefit
plan maintained by the Company or any of its Subsidiaries or any trustee or
fiduciary with respect to such plan acting in such capacity or (ii) any such
Person who has become and is such a Beneficial Owner solely because (A) of a
change in the aggregate number of shares of the Company Common Stock since the
last date on which such Person acquired Beneficial Ownership of any shares of
the Company Common Stock or (B) it acquired

 

1

 

such
Beneficial Ownership in the good faith belief that such acquisition would not
(1) cause such Beneficial Ownership to be equal to or exceed 20% of the shares
of the Company Common Stock then outstanding and such Person relied in good
faith in computing the percentage of its Beneficial Ownership on publicly filed
reports or documents of the Company that are inaccurate or out-of-date or
(2) otherwise cause a Distribution Date or the adjustment provided for in
Section 11(a)(ii) to occur. 
Notwithstanding clause (ii)(B) of the prior sentence, if any Person that
is not an Acquiring Person due to such clause (ii)(B) does not reduce its
percentage of Beneficial Ownership of the Company Common Stock to less than 20%
by the Close of Business on the fifth Business Day after notice from the
Company (the date on which such notice is first mailed or sent being the first
day) that such person’s Beneficial Ownership of the Company Common Stock is
equal to or exceeds 20%, such Person shall, at the end of such five Business
Day period, become an Acquiring Person (and such clause (ii)(B) shall no longer
apply to such Person).  For purposes of
this definition, the determination whether any Person acted in “good faith”
shall be conclusively determined by the Board of Directors of the Company,
acting by a vote of those directors of the Company whose approval would be
required to redeem the Rights under Section 23.

 

(b)                                 “Adjustment
Shares” has the meaning set forth in Section 11(a)(ii).

 

(c)                                  “Adjustment
Spread” has the meaning set forth in Section 34(a)(ii).

 

(d)                                 “Affiliate”
and “Associate” shall have the respective meanings ascribed to such
terms in Rule 12b-2 of the Exchange Act Regulations as in effect on the
date of this Agreement.

 

(e)                                  “Agreement”
has the meaning set forth in the preamble to this Agreement.

 

(f)                                    A
Person shall be deemed the “Beneficial Owner” of, and shall be deemed to
“beneficially own”, and shall be deemed to have “Beneficial Ownership”
of, any securities:

 

(i)                                     of
which such Person or any of such Person’s Affiliates or Associates is
considered to be a “beneficial owner” under Rule 13d-3 of the Exchange Act
Regulations as in effect on the date of this Agreement; provided, however,
that a Person shall not be deemed the “Beneficial Owner” of, or to
“beneficially own”, or to have “Beneficial Ownership” of, any securities under
this subparagraph (i) as a result of an agreement, arrangement or
understanding to (A) sell such securities if such agreement, arrangement or
understanding arises in connection with a Demand Registration Request (as
defined in the Registration Rights Agreement) pursuant to the Registration
Rights Agreement or (B) vote such securities if such agreement, arrangement or
understanding (1) arises in connection with the extension of the Final
Expiration Date under this Agreement or the adoption of any other rights agreement
or similar device or agreement or (2)(x) arises solely from a revocable proxy
given in response to a proxy or consent solicitation made in connection with
any annual meeting of members or special meeting of members and (y) would
not be reportable by such Person on

 

2

 

Schedule 13D
under the Exchange Act (or any comparable or successor report); or

 

(ii)                                  that
such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is exercisable
immediately or only after the passage of time or upon the satisfaction of
conditions) pursuant to any agreement, arrangement or understanding (whether or
not in writing) or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise;

 

provided, however, that under this
paragraph (f) a Person shall not be deemed the “Beneficial Owner” of, or
to “beneficially own”, or to have “Beneficial Ownership” of,
(A) securities tendered pursuant to a tender or exchange offer made in
accordance with Exchange Act Regulations by such Person or any of such Person’s
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange, (B) securities that may be issued upon exercise of
Rights at any time prior to the occurrence of a Triggering Event or
(C) securities that may be issued upon exercise of Rights from and after
the occurrence of a Triggering Event, which Rights were acquired by such Person
or any of such Person’s Affiliates or Associates prior to the Distribution Date
or pursuant to Section 3(c) or Section 22 or pursuant to
Section 11(i) in connection with an adjustment made with respect to any
such Rights.

 

(g)                                 “Bermuda
Act” has the meaning set forth in Section 9(c).

 

(h)                                 “Business
Day” shall mean any day other than a Saturday, Sunday or a day on which
banking institutions in Bermuda or in The City of New York are authorized or
obligated by law or executive order to close.

 

(i)                                     “Close
of Business” on any given date shall mean 5:00 p.m., New York
City time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 p.m., New York City time, on
the next succeeding Business Day.

 

(j)                                     “Common
Stock” of any Person other than the Company shall mean the capital stock of
such Person with the greatest voting power, or, if such Person shall have no
capital stock, the equity securities or other equity interest having power to
control or direct the management of such Person.

 

(k)                                  “Company”
has the meaning set forth in the preamble to this Agreement.

 

(l)                                     “Company
Common Stock” has the meaning set forth in the recitals to this Agreement.

 

(m)                               “Current
Value” has the meaning set forth in Section 11(a)(iii).

 

(n)                                 “Depositary
Agent” has the meaning set forth in Section 7(c).

 

(o)                                 “Distribution
Date” has the meaning set forth in Section 3(a).

 

3

 

(p)                                 “Equivalent
Preferred Stock” has the meaning set forth in Section 11(b).

 

(q)                                 “Exchange
Act” shall mean the United States Securities Exchange Act of 1934, as
amended.

 

(r)                                    “Exchange
Act Regulations” shall mean the General Rules and Regulations under the
Exchange Act.

 

(s)                                  “Expiration
Date” has the meaning set forth in Section 7(a).

 

(t)                                    “Final
Expiration Date” has the meaning set forth in Section 7(a).

 

(u)                                 “Final
Order” has the meaning set forth in Section 18(a).

 

(v)                                 “Non-Third
Party Proceeding” has the meaning set forth in Section 18(a).

 

(w)                               “Original
Rights Agreement” has the meaning set forth in the recitals to this
Agreement.

 

(x)                                   “Person”
shall mean any individual, partnership, limited liability company, firm,
corporation, joint venture, association, trust, unincorporated organization or
other entity, as well as any syndicate or group deemed to be a person under
Section 14(d)(2) of the Exchange Act.

 

(y)                                 “Preferred
Stock” shall mean the Series A Preference Shares, par value US$0.01
per share, of the Company having the voting powers, designation, preferences
and relative, participating, optional or other special rights and
qualifications, limitations and restrictions described in the Certificate of
Designation set forth as Exhibit B hereto.

 

(z)                                   “preferred
stock equivalents” has the meaning specified in Section 11(a)(iii).

 

(aa)                            “Principal
Party” has the meaning set forth in Section 13(b).

 

(bb)                          “Purchase
Price” has the meaning set forth in Section 7(b).

 

(cc)                            “Record
Date” has the meaning set forth in the recitals to this Agreement.

 

(dd)                          “Redemption
Price” has the meaning set forth in Section 23(a).

 

(ee)                            “Registered
Common Stock” has the meaning set forth in Section 13(b)(ii).

 

(ff)                                “Registration
Date” has the meaning set forth in Section 9(c).

 

(gg)                          “Registration
Rights Agreement” shall mean the Registration Rights Agreement, dated as of
June 25, 2001, by and among the Company and the parties listed on Annex A
thereto.

 

4

 

(hh)                          “Registration
Statement” has the meaning set forth in Section 9(c).

 

(ii)                                  “Right”
has the meaning set forth in the recitals to this Agreement.

 

(jj)                                  “Rights
Agent” has the meaning set forth in the preamble to this Agreement.

 

(kk)                            “Rights
Certificates” has the meaning set forth in Section 3(a).

 

(ll)                                  “Rights
Dividend Declaration Date” has the meaning set forth in the recitals to
this Agreement.

 

(mm)                      “Section
11(a)(ii) Event” has the meaning set forth in Section 11(a)(ii).

 

(nn)                          “Section
11(a)(iii) Trigger Date” has the meaning set forth in
Section 11(a)(iii).

 

(oo)                          “Section
13 Event” has the meaning set forth in Section 13(a).

 

(pp)                          “Section
34(a)(i) Exchange Ratio” has the meaning set forth in
Section 34(a)(i).

 

(qq)                          “Section
34(a)(ii) Exchange Ratio” has the meaning set forth in
Section 34(a)(ii).

 

(rr)                                “Securities
Act” shall mean the Securities Act of 1933, as amended.

 

(ss)                            “Spread”
has the meaning set forth in Section 11(a)(iii).

 

(tt)                                “Stock
Acquisition Date” shall mean the first date of public announcement
(including, without limitation, the filing of any report pursuant to
Section 13(d) of the Exchange Act) by the Company or an Acquiring Person
that an Acquiring Person has become such.

 

(uu)                          “Subsidiary”
of any Person shall mean any other Person of which a majority of the voting
securities or equity interests is beneficially owned, directly or indirectly,
by such Person, or which is otherwise controlled by such Person.

 

(vv)                          “Trading
Day” has the meaning set forth in Section 11(d)(i).

 

(ww)                      “Triggering
Event” shall mean any Section 11(a)(ii) Event or any Section 13
Event.

 

(xx)                              “Unit”
has the meaning set forth in Section 7(b).

 

SECTION 2.  Appointment of Rights Agent.  The Company hereby appoints the Rights Agent
to act as agent for the Company in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment.  With the consent of the Rights Agent, the
Company may from time to time appoint such Co-Rights Agents as it may deem

 

5

 

necessary or desirable.  The
Rights Agent shall have no duty to supervise, and in no event be liable for,
the acts or omissions of any Co-Rights Agent. 
In the event that the Company appoints one or more Co-Rights Agents, the
respective duties of the Rights Agent and any Co-Rights Agent shall be as the
Company determines and shall not be inconsistent with this Agreement.

 

SECTION 3.  Issue of Rights Certificates.  (a) 
Until the earlier of (i) the Close of Business on the tenth day
after the Stock Acquisition Date and (ii) the Close of Business on the
tenth Business Day (or such later date as may be determined by action of the
Board of Directors of the Company prior to such time as any Person becomes an
Acquiring Person, and of which the Company will give the Rights Agent prompt
written notice) after the date that a tender or exchange offer by any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan maintained by the Company or any of its Subsidiaries or any trustee or
fiduciary with respect to such plan acting in such capacity) is commenced
within the meaning of Rule 14d-2 of the Exchange Act Regulations or any
successor rule, if upon consummation thereof such Person would be the
Beneficial Owner of 20% or more of the shares of Company Common Stock then
outstanding (the earlier of (i) and (ii) above being the “Distribution Date”),
(x) the Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for shares of
Company Common Stock registered in the names of the holders of shares of
Company Common Stock as of and subsequent to the Record Date (which
certificates for shares of Company Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the
Rights will be transferable only in connection with the transfer of the
underlying shares of Company Common Stock (including a transfer to the
Company).  The Company shall notify the
Rights Agent in writing of the occurrence of a Distribution Date. As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of shares of
Company Common Stock as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form of Exhibit A hereto (the “Rights
Certificates”), evidencing one Right for each share of Company Common Stock
so held, subject to adjustment as provided herein.  In the event that an adjustment in the number of Rights per share
of Company Common Stock has been made pursuant to Section 11(p), at the
time of distribution of the Rights Certificates, the Company may make the
necessary and appropriate rounding adjustments (in accordance with
Section 14(a)) so that Rights Certificates evidencing only whole numbers
of Rights are distributed and cash is paid in lieu of any fractional
Rights.  As of and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.

 

(b)                                 Rights shall, without
any further action, be issued in respect of all shares of Company Common Stock
that are issued after the Record Date but prior to the earlier of the
Distribution Date and the Expiration Date. 
Certificates evidencing such shares of Company Common Stock issued after
the Record Date shall bear the following legend:

 

“This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Amended and Restated Rights Agreement (the
“Rights Agreement”), between Bunge Limited (the “Company”) and Mellon Investor
Services LLC (the “Rights Agent”), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the office of the Rights
Agent designated for such purpose. 
Under certain circumstances, as set forth in the

 

6

 

Rights
Agreement, such Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. 
The Company will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge promptly
after receipt of a written request therefor. 
Under certain circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes an Acquiring Person or
any Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person or by any
subsequent holder, may become null and void.”

 

With respect
to certificates evidencing shares of Company Common Stock, until the earlier of
the Distribution Date and the Expiration Date, the Rights associated with the
shares of Company Common Stock evidenced by such certificates shall be
evidenced by such certificates alone and registered holders of the shares of Company
Common Stock shall also be the registered holders of the associated Rights, and
the transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the shares of Company Common Stock evidenced by such
certificates.

 

SECTION 4.  Form of Rights Certificates.  (a) 
The Rights Certificates (and the forms of election to purchase,
assignment and certificate to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit A hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or any rule or regulation thereunder or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed or to conform to usage. 
Subject to the provisions of Section 11 and Section 22, the
Rights Certificates, whenever distributed, shall be dated as of the Record Date
and on their face shall entitle the holders thereof to purchase such number of
Units of Preferred Stock as shall be set forth therein at the price set forth
therein, but the amount and type of securities, cash or other assets that may
be acquired upon the exercise of each Right and the Purchase Price thereof
shall be subject to adjustment as provided herein.

 

(b)                                 Any Rights Certificate
issued pursuant hereto that evidences Rights beneficially owned by:  (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) that becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) that becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
that receives such Rights pursuant to either (A) a transfer (whether or
not for consideration) from the Acquiring Person (or any such Associate or
Affiliate) to holders of equity interests in such Acquiring Person (or such
Associate or Affiliate) or to any Person with whom such Acquiring Person (or
such Associate or Affiliate) has any continuing agreement, arrangement or
understanding regarding either the transferred Rights, shares of Company Common
Stock or the Company or (B) a transfer that a majority of the Board of
Directors of the Company has determined to be part of a plan, agreement, arrangement
or understanding that has as a primary purpose or effect the avoidance of
Section 7(e) hereof, shall, upon the written direction of a majority of
the Board of Directors of

 

7

 

the Company (which direction shall be conveyed in writing to the Rights
Agent), contain (to the extent feasible) the following legend:

 

“The Rights evidenced by this Rights
Certificate are or were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Amended and Restated Rights Agreement).  Accordingly, this Rights Certificate and the
Rights evidenced hereby may become null and void in the circumstances specified
in Section 7(e) of such Agreement.”

 

SECTION 5.  Countersignature and Registration.  (a) 
Rights Certificates shall be executed on behalf of the Company by its
Chairman of the Board, the President or one of its Vice Presidents, under its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries.  The signature of
any one or more of these officers on the Rights Certificates may be manual or
facsimile.  Rights Certificates bearing
the manual or facsimile signatures of the individuals who were at any time the
proper officers of the Company shall bind the Company, notwithstanding that
such individuals or any of them have ceased to hold such offices prior to the
countersignature of such Rights Certificates or did not hold such offices at
the date of such Rights Certificates. 
No Rights Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose unless there appears on such Rights
Certificate a countersignature duly executed by the Rights Agent by manual
signature of an authorized signatory, and such countersignature upon any Rights
Certificate shall be conclusive evidence, and the only evidence, that such
Rights Certificate has been duly countersigned as required hereunder.

 

(b)                                 Following the
Distribution Date, the Rights Agent will keep or cause to be kept, at its
office designated for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder.  Such books shall show the
name and address of each holder of the Rights Certificates, the number of
Rights evidenced on its face by each Rights Certificate and the date of each
Rights Certificate.

 

SECTION 6.  Transfer, Split Up, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.  (a)  Subject to the provisions of
Sections 4(b), 7(e) and 14, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the Expiration
Date, any Rights Certificate or Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or Certificates, entitling
the registered holder to purchase a like number of Units of Preferred Stock
(or, following a Triggering Event, other securities, cash or other assets, as
the case may be) as the Rights Certificate or Certificates surrendered then
entitled such holder to purchase.  Any
registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose.  Neither
the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have properly completed and duly
executed the certificate set forth in the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional
evidence of the identity of

 

8

 

the Beneficial Owner (or former Beneficial Owner) of the Rights
evidenced by such Rights Certificate or Affiliates or Associates thereof as the
Company shall reasonably request; whereupon the Rights Agent shall, subject to
the provisions of Sections 4(b), 7(e) and 14, countersign and deliver to
the Person entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested.  The
Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates.

 

(b)                                 If a Rights
Certificate shall be mutilated, destroyed, lost or stolen, upon request by the
registered holder of the Rights evidenced thereby and upon payment to the
Company and the Rights Agent of all reasonable expenses incident thereto, there
shall be issued, in exchange for and upon cancellation of the mutilated Rights
Certificate, or in substitution for the lost, stolen or destroyed Rights
Certificate, a new Rights Certificate, in substantially the form of the prior
Rights Certificate, of like tenor and evidencing the equivalent number of
Rights, but, in the case of loss, theft or destruction, only upon receipt of
evidence satisfactory to the Company and the Rights Agent of such loss, theft
or destruction of such Rights Certificate and, if requested by the Company or
the Rights Agent, indemnity also satisfactory to it.

 

SECTION 7.  Exercise of Rights; Purchase Price;
Expiration Date of Rights. 
(a)  Prior to the earlier of (i) the Close of Business on
August 1, 2007 (the “Final Expiration Date”) and (ii) the time at
which the Rights are redeemed as provided in Section 23 (the earlier of
(i) and (ii) being the “Expiration Date”), the registered holder of any
Rights Certificate may, subject to the provisions of Sections 7(e) and
9(c), exercise the Rights evidenced thereby in whole or in part at any time
after the Distribution Date upon surrender of the Rights Certificate, with the
form of election to purchase and the certificate on the reverse side thereof
duly executed, to the Rights Agent at the office of the Rights Agent designated
for such purpose, together with payment of the aggregate Purchase Price (as
hereinafter defined) for the number of Units of Preferred Stock (or, following
a Triggering Event, other securities, cash or other assets, as the case may be)
for which such surrendered Rights are then exercisable.

 

(b)                                 The purchase price for
each one one-thousandth of a share (each such one one-thousandth of a share
being a “Unit”) of Preferred Stock upon exercise of Rights shall be
US$29.02, subject to adjustment from time to time as provided in
Sections 11 and 13(a) (such purchase price, as so adjusted, being the “Purchase
Price”), and shall be payable in accordance with paragraph (c) below.

 

(c)                                  As promptly as
practicable following the occurrence of the Distribution Date, the Company
shall deposit with a corporation in good standing organized under the laws of
the United States or any state of the United States, that is authorized under
such laws to exercise corporate trust or stock transfer powers and is subject
to supervision or examination by federal or state authority (such institution
being the “Depositary Agent”), certificates evidencing the shares of
Preferred Stock that may be acquired upon exercise of the Rights and shall cause
such Depositary Agent to enter into an agreement pursuant to which the
Depositary Agent shall issue receipts evidencing interests in the shares of
Preferred Stock so deposited.  Upon
receipt of a Rights Certificate evidencing exercisable Rights, with the form of
election to purchase and the certificate duly executed, accompanied by payment,
with respect to each Right so exercised, of the Purchase Price for the Units of
Preferred Stock (or, following a Triggering Event, other

 

9

 

securities, cash or other assets, as the case may be) to be purchased
thereby as set forth below and an amount equal to any applicable tax or
governmental charge or evidence satisfactory to the Company of payment of such
tax or charge, the Rights Agent shall, subject to Section 20(k), thereupon
promptly (i) requisition from the Depositary Agent depositary receipts or
certificates evidencing such number of Units of Preferred Stock as are to be
purchased and the Company will direct the Depositary Agent to comply with such
request, (ii) requisition from the Company the amount of cash, if any, to
be paid in lieu of fractional shares in accordance with Section 14,
(iii) after receipt of such depositary receipts or certificates, cause the
same to be delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder, and (iv) after receipt thereof, deliver such cash, if any, to
or upon the order of the registered holder of such Rights Certificate.  In the event that the Company is obligated
to issue Company Common Stock, other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(a), the Company will make
all arrangements necessary so that such Company Common Stock, other securities,
cash and/or other property are available for distribution by the Rights Agent,
if and when appropriate.  Subject to
Section 34, the payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii)) may be made in cash or by certified or
bank check payable to the order of the Company, or by wire transfer of
immediately available funds to the account of the Company (provided that notice
of such wire transfer shall be given by the holder of the related Right to the
Rights Agent).

 

(d)                                 In case the registered
holder of any Rights Certificate shall exercise less than all the Rights
evidenced thereby, a new Rights Certificate evidencing the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or upon the
order of, the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, subject to the provisions of
Section 14.

 

(e)                                  Notwithstanding anything
in this Agreement to the contrary, from and after the first occurrence of any
Section 11(a)(ii) Event or Section 13 Event, any Rights beneficially owned
by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate
or Affiliate) that becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) that becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and that receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the
Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or such Associate or Affiliate) or to any
Person with whom such Acquiring Person (or such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, shares of Company Common Stock or the Company or (B) a transfer
that a majority of the Board of Directors of the Company has determined to be
part of a plan, agreement, arrangement or understanding that has as a primary
purpose or effect the avoidance of this Section 7(e), shall be null and
void without any further action, and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise.  The
Company shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) are complied with, but neither the
Company nor the Rights Agent shall have any liability to any holder of Rights
or any other Person as a result of the Company’s

 

10

 

failure to make any determination under this Section 7(e) or
Section 4(b) with respect to an Acquiring Person or its Affiliates,
Associates or transferees.

 

(f)                                    Notwithstanding
anything in this Agreement or any Rights Certificate to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action
with respect to a registered holder upon the occurrence of any purported
exercise by such registered holder unless such registered holder shall have
(i) properly completed and duly executed the certificate following the
form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former Beneficial
Owner) of the Rights evidenced by such Rights Certificate or Affiliates or
Associates thereof as the Company shall reasonably request.

 

SECTION 8.  Cancellation and Destruction of Rights
Certificates.  All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement.  The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any Rights Certificates acquired by the
Company otherwise than upon the exercise thereof.  The Rights Agent shall deliver all cancelled Rights Certificates
to the Company, or shall, at the written request of the Company, destroy such
cancelled Rights Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.

 

SECTION 9.  Reservation and Availability of Capital
Stock.  (a)  The Company
shall at all times prior to the Expiration Date cause to be reserved and kept
available, out of its authorized and unissued shares of Preferred Stock, the
number of shares of Preferred Stock that, as provided in this Agreement, will
be sufficient to permit the exercise in full of all outstanding Rights.  Upon the occurrence of any events resulting
in an increase in the aggregate number of shares of Preferred Stock (or other
equity securities of the Company) issuable upon exercise of all outstanding
Rights above the number then reserved, the Company shall make appropriate
increases in the number of shares so reserved.

 

(b)                                 If the shares of
Preferred Stock to be issued and delivered upon the exercise of the Rights may
be listed on any national securities exchange, the Company shall during the
period from the Distribution Date through the Expiration Date use its best
efforts to cause all securities reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.

 

(c)                                  The Company shall use
its best efforts (i) as soon as practicable following the occurrence of a
Section 11(a)(ii) Event and a determination by the Company in accordance
with Section 11(a)(iii) of the consideration to be delivered by the
Company upon exercise of the Rights or, if so required by law, as soon as
practicable following the Distribution Date (such date being the “Registration
Date”), to file a registration statement on an appropriate form under the
Securities Act and, if appropriate, under the Companies Act 1981 of Bermuda
(the “Bermuda Act”) with respect to the securities that may be acquired upon
exercise of the Rights (the

 

11

 

“Registration Statement”), (ii) to cause the Registration
Statement to become effective as soon as practicable after such filing,
(iii) to cause the Registration Statement to continue to be effective (and
to include a prospectus complying with the requirements of the Securities Act
and, if appropriate, the Bermuda Act) until the earlier of (A) the date as
of which the Rights are no longer exercisable for the securities covered by the
Registration Statement and (B) the Expiration Date and (iv) to take
as soon as practicable following the Registration Date such action as may be
required to ensure that any acquisition of securities upon exercise of the
Rights complies with any applicable state securities or “blue sky”
laws.  If the Registration Statement
does not become effective prior to the Close of Business on the 45th Business
Day following the occurrence of a Section 11(a)(ii) Event, the Company shall,
unless otherwise determined by a majority of the Board of Directors of the
Company, on the 46th Business Day following the occurrence of such Section
11(a)(ii) Event, be obligated to exercise the option described in Section 34.

 

(d)                                 The Company shall take
such action as may be necessary to ensure that all shares of Preferred Stock
(and, following the occurrence of a Triggering Event, any other securities that
may be delivered upon exercise of Rights) shall be, at the time of delivery of
the certificates or depositary receipts for such securities, duly and validly
authorized and issued and fully paid and non-assessable.

 

(e)                                  The Company shall pay
any documentary, stamp or transfer tax imposed in connection with the issuance
or delivery of the Rights Certificates or upon the exercise of Rights; provided,
however, that the Company shall not be required to pay any such tax
imposed in connection with the issuance or delivery of Units of Preferred
Stock, or any certificates or depositary receipts for such Units of Preferred
Stock (or, following the occurrence of a Triggering Event, any other
securities, cash or assets, as the case may be) to any Person other than the
registered holder of the Rights Certificates evidencing the Rights surrendered
for exercise.  The Company shall not be required
to issue or deliver any certificates or depositary receipts for Units of
Preferred Stock (or, following the occurrence of a Triggering Event, any other
securities, cash or assets, as the case may be) to, or in a name other than
that of, the registered holder of the Rights Certificate upon the exercise of
any Rights evidenced thereby until any such tax shall have been paid (any such
tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company’s satisfaction that
no such tax is due.

 

SECTION 10.  Preferred Stock Record Date.  Each Person in whose name any certificate or
depositary receipt for Units of Preferred Stock (or, following the occurrence
of a Triggering Event, other securities) is issued upon the exercise of Rights
shall be registered as the holder of record of the Units of Preferred Stock
(or, following the occurrence of a Triggering Event, other securities)
evidenced thereby on, and such certificate or depositary receipt shall be
dated, the date upon which the Rights Certificate evidencing such Rights is
duly surrendered and payment of the Purchase Price (and any applicable transfer
taxes) is made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Stock (or, following
the occurrence of a Triggering Event, other securities) register of members is
closed, such Person shall be registered as the record holder of such securities
on, and such certificate or depositary receipt shall be dated, the next
succeeding Business Day on which the Preferred Stock (or, following the
occurrence of a Triggering Event, other securities) register of members is
open; and further  provided, however, that if delivery of
Units of Preferred Stock is delayed as a

 

12

 

result of a failure to register such Units of Preferred Stock pursuant
to Section 9(c), such Persons shall be registered as the record holders of
such Units of Preferred Stock only when such Units first become
deliverable.  Prior to the registration
in the register of members of the Rights evidenced thereby, the holder of a
Rights Certificate shall not be entitled to any rights of a shareholder of the Company
with respect to securities for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled
to receive any notice of any proceedings of the Company, except as provided
herein.

 

SECTION 11.  Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. 
The Purchase Price, the number and kind of securities covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.

 

(a)                                  (i)  In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the Preferred
Stock payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine or consolidate the outstanding Preferred
Stock into a smaller number of shares or (D) issue any shares in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation, amalgamation or merger in which the Company is
the continuing or surviving corporation), except as otherwise provided in this
Section 11(a), the Purchase Price in effect at the time of the record date
for such dividend or of the effective date of such subdivision, combination,
consolidation or reclassification, and the number and kind of shares of
Preferred Stock or other class of shares, as the case may be, issuable on such
date upon exercise of the Rights, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive,
upon payment of the Purchase Price then in effect, the aggregate number and
kind of shares of Preferred Stock or other class of shares, as the case may be,
which, if such Right had been exercised immediately prior to such date, such
holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination, consolidation or
reclassification.  If an event occurs
that would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).

 

(ii)                                  In
the event:

 

(A)                              any
Acquiring Person or any Associate or Affiliate of any Acquiring Person, at any
time after the date of this Agreement, directly or indirectly, shall
(1) merge into the Company or amalgamate or otherwise combine with the
Company and the Company shall be the continuing or surviving corporation of
such merger, amalgamation or combination and Company Common Stock shall remain
outstanding and unchanged, (2) in one transaction or a series of
transactions, transfer any assets to the Company or to any of its Subsidiaries
in exchange (in whole or in part) for shares of Company Common Stock, for other
shares of the Company or any such Subsidiary, or for securities exercisable for
or convertible into shares of the Company or any of its

 

13

 

Subsidiaries
(whether Company Common Stock or otherwise) or otherwise obtain from the
Company or any of its Subsidiaries, with or without consideration, any
additional shares or securities exercisable for or convertible into such shares
(other than pursuant to a pro rata distribution to all holders of Company
Common Stock), (3) sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise acquire or dispose of, in one transaction or a series of
transactions, to, from or with the Company or any of its Subsidiaries or any
employee benefit plan maintained by the Company or any of its Subsidiaries or
any trustee or fiduciary with respect to such plan acting in such capacity,
assets (including securities) on terms and conditions less favorable to the
Company or such Subsidiary or plan than those that could have been obtained in
arm’s-length negotiations with an unaffiliated third party, other than pursuant
to a transaction set forth in Section 13(a), (4) sell, purchase,
lease, exchange, mortgage, pledge, transfer or otherwise acquire or dispose of,
in one transaction or a series of transactions, to, from or with the Company or
any of the Company’s Subsidiaries or any employee benefit plan maintained by
the Company or any of its Subsidiaries or any trustee or fiduciary with respect
to such plan acting in such capacity (other than transactions, if any,
consistent with those engaged in, as of the date hereof, by the Company and
such Acquiring Person or such Associate or Affiliate), assets (including securities)
having an aggregate fair market value of more than US$5,000,000, other than
pursuant to a transaction set forth in Section 13(a), (5) sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise acquire or
dispose of, in one transaction or a series of transactions, to, from or with
the Company or any of its Subsidiaries or any employee benefit plan maintained
by the Company or any of its Subsidiaries or any trustee or fiduciary with
respect to such plan acting in such capacity, any material trademark or
material service mark, other than pursuant to a transaction set forth in
Section 13(a), (6) receive, or any designee, agent or representative
of such Acquiring Person or any Affiliate or Associate of such Acquiring Person
shall receive, any compensation from the Company or any of its Subsidiaries
other than compensation for full-time employment as a regular employee at rates
in accordance with the Company’s (or its Subsidiaries’) past practices, or
(7) receive the benefit, directly or indirectly (except proportionately as
a holder of Company Common Stock or as required by law or governmental
regulation), of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage provided by the Company or
any of its Subsidiaries or any employee benefit plan maintained by the Company
or any of its Subsidiaries or any trustee or fiduciary with respect to such
plan acting in such capacity; or

 

(B)                                any
Person shall become an Acquiring Person, unless the event causing such Person
to become an Acquiring Person is a transaction set forth in Section 13(a);
or

 

(C)                                during
such time as there is an Acquiring Person, there shall be any reclassification
of securities (including any reverse stock split), or recapitalization of the
Company, or any amalgamation, merger or consolidation of the Company with any
of its Subsidiaries or any other transaction or series of transactions

 

14

 

involving the
Company or any of its Subsidiaries, other than a transaction or transactions to
which the provisions of Section 13(a) apply (whether or not with or into
or otherwise involving an Acquiring Person), which has the effect, directly or
indirectly, of increasing by more than 1% the proportionate share of the
outstanding shares of any class of shares of the Company or any of its
Subsidiaries that is directly or indirectly beneficially owned by any Acquiring
Person or any Associate or Affiliate of any Acquiring Person;

 

then, immediately upon the date of the
occurrence of an event described in Section 11(a)(ii)(A), (B) or (C) (a “Section 11(a)(ii)
Event”), proper provision shall be made so that each holder of a Right
(except as provided below and in Section 7(e)) shall thereafter have the right
to receive, upon exercise thereof at the then-current Purchase Price in
accordance with the terms of this Agreement, in lieu of the number of Units of
Preferred Stock for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event, such number of Units of
Preferred Stock as shall equal the result obtained by (x) multiplying the
then-current Purchase Price by the then number of Units of Preferred Stock for
which a Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event (such product thereafter being, for all purposes
of this Agreement other than Section 13, the “Purchase Price”), and
(y) dividing that product by 50% of the then-current market price
(determined pursuant to Section 11(d)) per Unit of Preferred Stock on the
date of such first occurrence (such Units of Preferred Stock being the “Adjustment
Shares”).

 

(iii)                               In
the event that the number of shares of Preferred Stock that are authorized by
the Company’s Memorandum of Association and Bye-laws but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights is
not sufficient to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii) of this Section 11(a), the Company,
by the vote of a majority of the Board of Directors of the Company, shall:  (A) determine the excess of
(1) the value of the Adjustment Shares issuable upon the exercise of a
Right (the “Current Value”) over (2) the Purchase Price (such excess
being the “Spread”), and (B) with respect to each Right, make
adequate provision to substitute for such Adjustment Shares, upon payment of
the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Company Common Stock or other shares of the Company
(including, without limitation, preferred shares, or units of preferred shares
(such other shares being “preferred stock equivalents”)), (4) debt
securities of the Company, (5) other assets or (6) any combination of
the foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by a majority of the Board of Directors of
the Company, after receiving advice from a nationally recognized investment
banking firm; provided, however, that if the Company shall not
have made adequate provision to deliver value pursuant to clause (B) above
within thirty days following the later of (x) the first occurrence of a
Section 11(a)(ii) Event and (y) the date on which the Company’s right
of redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the “Section 11(a)(iii) Trigger Date”),
then the Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price, Units of
Preferred Stock (to the extent available) and then, if necessary, cash, which
Units of Preferred Stock and/or cash shall have an

 

15

 

aggregate
value equal to the Spread.  To the extent
that the Company determines that some action need be taken pursuant to the
first sentence of this Section 11(a)(iii), the Company shall provide,
subject to Section 7(e), that such action shall apply uniformly to all
outstanding Rights.  For purposes of this
Section 11(a)(iii), the value of a Unit of Preferred Stock shall be the
current market price (as determined pursuant to Section 11(d)) per Unit of
Preferred Stock on the Section 11(a)(iii) Trigger Date and the value of
any preferred stock equivalent shall be deemed to have the same value as the
Preferred Stock on such date.

 

(b)                                 In
case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them to subscribe for or
purchase (for a period expiring within forty-five calendar days after such
record date) shares of Preferred Stock (or shares having substantially the same
rights, privileges and preferences as shares of Preferred Stock (“Equivalent
Preferred Stock”)) or securities convertible into Preferred Stock or
Equivalent Preferred Stock at a price per share of Preferred Stock or per share
of Equivalent Preferred Stock (or having a conversion price per share, if a
security convertible into Preferred Stock or Equivalent Preferred Stock) less
than the current market price (as determined pursuant to Section 11(d))
per share of Preferred Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the sum of the number of shares of Preferred Stock
outstanding on such record date plus the number of shares of Preferred Stock
which the aggregate offering price of the total number of shares of Preferred
Stock and/or Equivalent Preferred Stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price, and the denominator of which shall be
the number of shares of Preferred Stock outstanding on such record date plus
the number of additional shares of Preferred Stock and/or Equivalent Preferred
Stock to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible).  In case such subscription price may be paid
by delivery of consideration part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good faith by a
majority of the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent and the holders of the Rights.  Shares of Preferred Stock owned by or held for the account of the
Company or any Subsidiary shall not be deemed outstanding for the purpose of
any such computation.  Such adjustment
shall be made successively whenever such a record date is fixed, and in the
event that such rights or warrants are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price that would then be in effect if such
record date had not been fixed.

 

(c)                                  In
case the Company shall fix a record date for a distribution to all holders of
shares of Preferred Stock (including any such distribution made in connection
with a consolidation, amalgamation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a
regular quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in shares of Preferred Stock,
but including any dividend payable in shares other than Preferred Stock) or
subscription rights or warrants (excluding those

 

16

 

referred to in
Section 11(b)), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
current market price (as determined pursuant to Section 11(d)) per share
of Preferred Stock on such record date less the fair market value (as
determined in good faith by a majority of the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holder of the
Rights) of the cash, assets or evidences of indebtedness so to be distributed
or of such subscription rights or warrants distributable in respect of a share
of Preferred Stock and the denominator of which shall be such current market
price (as determined pursuant to Section 11(d)) per share of Preferred
Stock.  Such adjustments shall be made
successively whenever such a record date is fixed, and in the event that such
distribution is not so made, the Purchase Price shall be adjusted to be the
Purchase Price that would have been in effect if such record date had not been
fixed.

 

(d)                                 (i)  For the purpose of any computation
hereunder, the “current market price” per share of Company Common Stock or
Common Stock on any date shall be deemed to be the average of the daily closing
prices per share of such shares for the ten consecutive Trading Days
immediately prior to (but not including) such date; provided, however,
that if prior to the expiration of such requisite ten Trading Day period the
issuer announces either (A) a dividend or distribution on such shares
payable in such shares or securities convertible into such shares (other than
the Rights) or (B) any subdivision, combination or reclassification of
such shares, then, following the ex-dividend date for such dividend or the
record date for such subdivision, combinations or reclassifications, as the
case may be, the “current market price” shall be properly adjusted to take into
account such event.  The closing price
for each day shall be, if the shares are listed and admitted to trading on a
national securities exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such shares are listed or admitted to trading or,
if such shares are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by The
Nasdaq Stock Market Consolidated Quotations Service or such other system then
in use, or, if on any such date such shares are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in such shares selected by a majority of the Board
of Directors of the Company.  If, on any
such date no market maker is making a market in such shares, the fair value of
such shares on such date as determined in good faith by a majority of the Board
of Directors of the Company shall be used. 
If such shares are not publicly held or not so listed or traded,
“current market price” per share shall mean the fair value per share as
determined in good faith by a majority of the Board of  Directors
of the Company, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes.  The term “Trading Day” shall mean, if
such shares are listed or admitted to trading on any national securities
exchange, a day on which the principal national securities exchange on which
such shares are listed or admitted to trading is open for the transaction of
business or, if such shares are not so listed or admitted, a Business Day.

 

17

 

(ii)                                  For
the purpose of any computation hereunder, the “current market price” per share
of Preferred Stock shall be determined in the same manner as set forth above
for Company Common Stock in clause (i) of this Section 11(d) (other
than the fourth sentence thereof).  If
the current market price per share of Preferred Stock cannot be determined in
the manner provided above or if the Preferred Stock is not publicly held or
listed or traded in a manner described in clause (i) of this
Section 11(d), the “current market price” per share of Preferred Stock
shall be conclusively deemed to be an amount equal to 1,000 (as such amount may
be appropriately adjusted for such events as share consolidations and
subdivisions, bonus issues, share splits, share dividends and recapitalizations
with respect to Company Common Stock occurring after the date of this
Agreement) multiplied by the current market price per share of Company Common
Stock.  If neither Company Common Stock
nor Preferred Stock is publicly held or so listed or traded, “current market
price” per share of the Preferred Stock shall mean the fair value per share as
determined in good faith by a majority of the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights.  For all purposes of this
Agreement, the “current market price” of a Unit of Preferred Stock shall be
equal to the “current market price” of one share of Preferred Stock divided by
1,000.

 

(e)                                  Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment.  All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one–hundredth
of a share of Company Common Stock or Common Stock or other share or
hundred-thousandth of a share of Preferred Stock, as the case may be.  Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be
made no later than the earlier of (i) three years from the date of the
transaction that mandates such adjustment and (ii) the Expiration Date.

 

(f)                                    If,
as a result of an adjustment made pursuant to Section 11(a)(ii) or 13(a),
the holder of any Right thereafter exercised shall become entitled to receive
any shares other than Preferred Stock, thereafter the number of such other
shares so receivable upon exercise of any Right and the Purchase Price thereof
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the
Preferred Stock contained in Sections 11(a), (b), (c), (d), (e), (g), (h),
(i), (j), (k), (l) and (m), and the provisions of Sections 7, 9, 10, 13
and 14 with respect to the Preferred Stock shall apply on like terms to any
such other shares.

 

(g)                                 All
Rights originally issued by the Company subsequent to any adjustment made to
the Purchase Price hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of Units of Preferred Stock (or other
securities or amount of cash or combination thereof) that may be acquired from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.

 

18

 

(h)                                 Unless
the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of Units of
Preferred Stock (calculated to the nearest one hundred-thousandth of a Unit)
obtained by (i) multiplying (x) the number of Units of Preferred
Stock covered by a Right immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.

 

(i)                                     The
Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights, in lieu of any adjustment in the number of
Units of Preferred Stock that may be acquired upon the exercise of a
Right.  Each of the Rights outstanding
after the adjustment in the number of Rights shall be exercisable for the
number of Units of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. 
Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest
hundred-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price.  The Company shall make a public announcement
of its election to adjust the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the adjustment to be
made.  This record date may be the date on
which the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten days later than the date
of such public announcement.  If Rights
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause
to be distributed to such holders of record in substitution and replacement for
the Rights Certificates held by such holders prior to the date of adjustment,
and upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment.  Rights Certificates to be
so distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.

 

(j)                                     Irrespective
of any adjustment or change in the Purchase Price or the number of Units of
Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per Unit and the number of Units of Preferred Stock that were
expressed in the Initial Rights Certificates issued hereunder without prejudice
to any such adjustment or change.

 

(k)                                  Before
taking any action that would cause an adjustment reducing the Purchase Price
below the then-par value of the number of Units of Preferred Stock

 

19

 

issuable upon
exercise of the Rights, the Company shall take any corporate action that may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue such fully paid and non-assessable number of Units of
Preferred Stock at such adjusted Purchase Price.

 

(l)                                     In
any case in which this Section 11 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date of that number of
Units of Preferred Stock and other shares or securities of the Company, if any,
issuable upon such exercise over and above the number of Units of Preferred
Stock and other shares or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder
a due bill or other appropriate instrument evidencing such holder’s right to
receive such additional shares (fractional or otherwise) or securities upon the
occurrence of the event requiring such adjustment.

 

(m)                               Anything
in this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent
that in their good faith judgment a majority of the Board of Directors of the
Company shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred Stock,
(ii) issuance wholly for cash of any shares of Preferred Stock at less
than the current market price, (iii) issuance wholly for cash of shares of
Preferred Stock or securities that by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) stock dividends or bonus
issues or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred
Stock, shall not be taxable to such holders or shall reduce the taxes payable
by such holders.

 

(n)                                 The
Company shall not, at any time after the Distribution Date,
(i) consolidate with any other Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(o)),
(ii) merge or amalgamate with or into any other Person (other than a
Subsidiary of the Company in a transaction that complies with
Section 11(o)), or (iii) sell or transfer (or permit any Subsidiary
to sell or transfer), in one transaction, or a series of transactions, assets
or earning power aggregating more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o)), if (x) at
the time of or immediately after such consolidation, merger, amalgamation or
sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect that would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or
(y) prior to, simultaneously with or immediately after such consolidation,
merger, amalgamation or sale, the Person that constitutes, or would constitute,
the “Principal Party” for purposes of Section 13(a) shall have distributed
or otherwise transferred to its shareholders or other Persons holding an equity
interest in such Person Rights previously owned by such Person or any of its
Affiliates and Associates; provided, however, that this
Section 11(n) shall not affect the ability of any

 

20

 

Subsidiary of
the Company to consolidate with, merge or amalgamate with or into, or sell or
transfer assets or earning power to, any other Subsidiary of the Company.

 

(o)                                 After
the Distribution Date, the Company shall not, except as permitted by
Section 23 or Section 26, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate the benefits intended
to be afforded by the Rights.

 

(p)                                 Anything
in this Agreement to the contrary notwithstanding, in the event that the
Company shall at any time after the Rights Dividend Declaration Date and prior
to the Distribution Date (i) declare a dividend on the outstanding shares
of Company Common Stock payable in shares of Company Common Stock,
(ii) subdivide the outstanding shares of Company Common Stock,
(iii) combine or consolidate the outstanding shares of Company Common
Stock into a smaller number of shares, or (iv) issue any shares in a
reclassification of Company Common Stock (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), the number of Rights associated with each
share of Company Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be proportionately
adjusted so that the number of Rights thereafter associated with each share of
Company Common Stock following any such event shall equal the result obtained
by multiplying the number of Rights associated with each share of Company
Common Stock immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Company Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Company Common Stock outstanding
immediately following the occurrence of such event.

 

SECTION 12.  Certificate of Adjusted Purchase Price or
Number of Shares.  Whenever an
adjustment is made as provided in Section 11 or Section 13, the
Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for
the Preferred Stock and the Company Common Stock, a copy of such certificate,
and (c) mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate evidencing shares of Company Common Stock) in accordance with
Section 25.  The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained and shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such certificate.

 

SECTION 13.  Consolidation, Merger, Amalgamation or
Sale or Transfer of Assets or Earning Power.  (a)  In the event that, following the Stock Acquisition
Date, directly or indirectly, either (x) the Company shall consolidate
with, or merge or amalgamate with and into, any other Person (other than a
Subsidiary of the Company in a transaction that complies with
Section 11(o)), and the Company shall not be the continuing or surviving
corporation of such consolidation, amalgamation or merger, (y) any Person
(other than a Subsidiary of the Company in a transaction that complies with
Section 11(o)) shall consolidate with, or merge or amalgamate with or
into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation, amalgamation or merger and, in connection
with such consolidation,

 

21

 

amalgamation or merger, all or part of the outstanding shares of
Company Common Stock shall be converted into or exchanged for stock or other
securities of any other Person or cash or any other property, or (z) the
Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer) to any Person or Persons (other than the
Company or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o)), in one or more transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries, taken as a whole (any such event described in
clause (x), (y) or (z) being a “Section 13 Event”), then, and in
each such case, proper provision shall be made so that:  (i) each holder of a Right, except as
provided in Section 7(e), shall thereafter have the right to receive, upon
the exercise thereof at the then current Purchase Price, such number of validly
authorized and issued, fully paid and non-assessable shares of Common Stock of
the Principal Party, which shares shall not be subject to any liens,
encumbrances, rights of first refusal, transfer restrictions or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of Units of Preferred Stock for which
a Right is exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior
to the first occurrence of a Section 13 Event, multiplying the number of
such Units for which a Right would be exercisable hereunder but for the
occurrence of such Section 11(a)(ii) Event by the Purchase Price that
would be in effect hereunder but for such first occurrence) and
(2) dividing that product (which, following the first occurrence of a
Section 13 Event, shall be the “Purchase Price” for all purposes of this
Agreement) by 50% of the current market price (determined pursuant to
Section 11(d)) per share of the Common Stock of such Principal Party on
the date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term “Company” shall, for all
purposes of this Agreement, thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of Section 11
shall apply only to such Principal Party following the first occurrence of a
Section 13 Event; (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock) in connection with the consummation of any such
transaction as may be necessary to ensure that the provisions of this Agreement
shall thereafter be applicable to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and (v) the provisions of
Section 11(a)(ii) shall be of no further effect following the first
occurrence of any Section 13 Event.

 

(b)                                 “Principal
Party” shall mean:

 

(i)                                     in
the case of any transaction described in clause (x) or (y) of the first
sentence of Section 13(a), (A) the Person that is the issuer of any
securities into which shares of Company Common Stock are converted in such
merger, amalgamation or consolidation, or, if there is more than one such
issuer, the issuer of Common Stock that has the highest aggregate current
market price (determined pursuant to Section 11(d)) and (B) if no
securities are so issued, the Person that is the other party to such merger,
amalgamation or consolidation, or, if there is more than one such Person, the
Person the Common Stock of which has the highest aggregate current market price
(determined pursuant to Section 11(d)); and

 

22

 

(ii)                                  in
the case of any transaction described in clause (z) of the first sentence
of Section 13(a), the Person that is the party receiving the largest
portion of the assets or earning power transferred pursuant to such transaction
or transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power
transferred pursuant to such transaction or transactions or if the Person
receiving the largest portion of the assets or earning power cannot be
determined, whichever Person the Common Stock of which has the highest
aggregate current market price (determined pursuant to Section 11(d)); provided,
however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
twelve-month period registered under Section 12 of the Exchange Act (“Registered
Common Stock”), or such Person is not a corporation, and such Person is a
direct or indirect Subsidiary of another Person that has Registered Common
Stock outstanding, “Principal Party” shall refer to such other Person;
(2) if the Common Stock of such Person is not Registered Common Stock or
such Person is not a corporation, and such Person is a direct or indirect
Subsidiary of another Person but is not a direct or indirect Subsidiary of
another Person that has Registered Common Stock outstanding, “Principal Party”
shall refer to the ultimate parent entity of such first-mentioned Person;
(3) if the Common Stock of such Person is not Registered Common Stock or
such Person is not a corporation, and such Person is directly or indirectly
controlled by more than one Person, and one or more of such other Persons has
Registered Common Stock outstanding, “Principal Party” shall refer to whichever
of such other Persons is the issuer of the Registered Common Stock having the
highest aggregate current market price (determined pursuant to
Section 11(d)); and (4) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and none of such
other Persons have Registered Common Stock outstanding, “Principal Party” shall
refer to whichever ultimate parent entity is the corporation having the
greatest shareholders’ equity or, if no such ultimate parent entity is a
corporation, shall refer to whichever ultimate parent entity is the entity
having the greatest net assets.

 

(c)                                  The Company shall not
consummate any such consolidation, amalgamation, merger, sale or transfer
unless the Principal Party shall have a sufficient number of authorized shares
of its Common Stock that have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this
Section 13, and unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this
Section 13 and further providing that the Principal Party will:

 

(i)                                     (A)
file on an appropriate form, as soon as practicable following the execution of
such agreement, a registration statement under the Securities Act, and, if
appropriate, the Bermuda Act with respect to the Common Stock that may be
acquired upon exercise of the Rights, (B) cause such registration
statement to remain effective (and to include a prospectus complying with the
requirements of the Securities Act) until the Expiration Date, and (C) as
soon as practicable following the execution of such agreement take such action
as may be required to ensure that any acquisition of such Common Stock upon the
exercise of the Rights complies with any applicable state securities or “blue sky”
laws; and

 

23

 

(ii)                                  deliver
to holders of the Rights historical financial statements for the Principal
Party and each of its Affiliates that comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.

 

(d)                                 In case the Principal
Party that is to be a party to a transaction referred to in this
Section 13 has a provision in any of its authorized securities or in its
Certificate of Incorporation or By-laws or other instrument governing its
corporate affairs, which provision would have the effect of (i) causing
such Principal Party to issue, in connection with, or as a consequence of, the
consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then current market price
per share (determined pursuant to Section 11(d)) or securities exercisable
for, or convertible into, Common Stock of such Principal Party at less than
such then current market price (other than to holders of Rights pursuant to
this Section 13) or (ii) providing for any special payment, tax or
similar provisions in connection with the issuance of the Common Stock of such
Principal Party pursuant to the provisions of this Section 13, then, in such
event, the Company shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing that the provision in
question of such Principal Party shall have been cancelled, waived or amended,
or that the authorized securities shall be redeemed, so that the applicable
provision will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.

 

(e)                                  The provisions of
this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. 
In the event that a Section 13 Event shall occur at any time after
the occurrence of a Section 11(a)(ii) Event, the Rights that have not
theretofore been exercised shall thereafter become exercisable in the manner
described in Section 13(a).

 

SECTION 14.  Fractional Rights and Fractional Shares.  (a) 
The Company shall not be required to issue fractions of Rights or to
distribute Rights Certificates that evidence fractional Rights.  In lieu of such fractional Rights, there
shall be paid to the Persons to which such fractional Rights would otherwise be
issuable, an amount in cash equal to such fraction of the market value of a
whole Right.  For purposes of this
Section 14(a), the market value of a whole Right shall be the closing price of
the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable.  The closing price of the Rights for any day shall be, if the
Rights are listed or admitted to trading on a national securities exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by The Nasdaq Stock Market
Consolidated Quotations Service or such other system then in use or, if on any
such date the Rights are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Rights selected by a majority of the Board of Directors
of the Company.  If on any such date no
such market maker is making a market in the Rights, the fair value of the
Rights on such date as determined in good faith by a majority of the Board of
Directors of the Company shall be used and such

 

24

 

determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.

 

(b)                                 The Company shall not
be required to issue fractions of shares of Preferred Stock (other than
fractions that are integral multiples of one one-thousandth of a share of
Preferred Stock) upon exercise of the Rights or to distribute certificates that
evidence such fractional shares of Preferred Stock (other than fractions that
are integral multiples of one one-thousandth of a share of Preferred
Stock).  In lieu of such fractional
shares of Preferred Stock that are not integral multiples of one one-thousandth
of a share, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the then current market price of a share
of Preferred Stock on the day of exercise, determined in accordance with
Section 11(d).

 

(c)                                  The holder of a Right
by the acceptance of such Right expressly waives his right to receive any
fractional Rights or any fractional shares upon exercise of a Right, except as
permitted by this Section 14.

 

SECTION 15.  Rights of Action.  All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Section 18, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
certificates evidencing shares of Company Common Stock), and the Company hereby
unilaterally and irrevocably covenants in favor of such holders to perform all
obligations of the Company under this Agreement; and any registered holder of a
Rights Certificate (or, prior to the Distribution Date, of a certificate
evidencing shares of Company Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of a certificate evidencing shares of Company Common Stock),
may, on such registered holder’s own behalf and for such registered holder’s
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company or any other Person to enforce, or otherwise act
in respect of, such registered holder’s right to exercise the Rights evidenced
by such Rights Certificate in the manner provided in such Rights Certificate
and in this Agreement.  Without limiting
the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to
specific performance of the obligations hereunder and injunctive relief against
actual or threatened violations of the obligations hereunder of any Person
subject to this Agreement.

 

SECTION 16.  Agreement of Rights Holders.  Every holder of a Right by accepting the
same consents and agrees with the Company and the Rights Agent and with every
other holder of a Right that:

 

(a)                                  prior
to the Distribution Date, the Rights will be transferable only in connection
with the transfer of Company Common Stock;

 

(b)                                 after
the Distribution Date, the Rights Certificates are transferable only on the
registry books of the Rights Agent if surrendered at the office of the Rights
Agent

 

25

 

designated for
such purposes, duly endorsed or accompanied by a proper instrument of transfer
and with the appropriate forms and certificates duly executed;

 

(c)                                  subject
to Section 6(a) and Section 7(f), the Company and the Rights Agent
may deem and treat the Person in whose name a Rights Certificate (or, prior to
the Distribution Date, the associated Company Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights Certificates
or the associated Company Common Stock certificate made by anyone other than
the Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent, subject to the last sentence of
Section 7(e), shall be affected by any notice to the contrary; and

 

(d)                                 notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights
Agent shall have any liability to any holder of a Right or any other Person as
a result of its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or other order,
decree, judgment or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, that the Company must use its best efforts to
have any such order, decree, judgment or ruling lifted or otherwise overturned
as promptly as practicable.

 

SECTION 17.  Rights Certificate Holder Not Deemed a
Stockholder.  No holder, as such, of
any Rights Certificate shall be entitled to vote, receive dividends or be
deemed for any purpose the holder of the number of shares of Preferred Stock or
any other securities of the Company that may at any time be issuable on the
exercise of the Rights evidenced thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, except as provided in Section 24, to receive notice of
meetings or other actions affecting shareholders, or to receive dividends or
subscription rights, or otherwise.

 

SECTION 18.  Concerning the Rights Agent.  (a) 
The Company agrees to pay to the Rights Agent the fees set forth in
Schedule I hereto for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses, including
reasonable fees and disbursements of its counsel, incurred in connection with
the preparation, execution, delivery and administration of this Agreement, the
exercise and performance of its duties hereunder or any amendment or supplement
hereof.  The Company shall indemnify the
Rights Agent for, and hold it harmless against, any loss, liability, or
expense, incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this Agreement,
including, without limitation, the costs and expenses of defending against any
claim of liability hereunder.  The determination of gross negligence, bad
faith or willful misconduct hereunder shall be pursuant to a final,
non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction (a “Final Order”); provided, however, that,
in the case of any action,

 

26

 

suit
or proceeding that is threatened or brought by one party to this Agreement
against the other party to this Agreement (a “Non-Third Party Proceeding”),
no payment otherwise required to be made by the Company to the Rights Agent
under this Section 18 in respect of such Non-Third Party Proceeding shall be
required to be made by the Company until receipt of a Final Order; provided
further, that the foregoing shall not prevent or delay any request for,
or payment of, reasonable expenses or indemnification pursuant to and in
accordance with this Section 18 that is unrelated in all respects to a
Non-Third Party Proceeding.

 

(b)                                 The Rights Agent shall
be protected and shall incur no liability for or in respect of any action
taken, suffered or omitted by it in connection with its administration of this
Agreement in reliance upon any Rights Certificate or certificate or depositary
receipt for Preferred Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement or other paper or document
believed by it to be genuine and to have been signed, executed and, where
necessary, verified or acknowledged by the proper Person or Persons.  The Rights Agent shall not be deemed to have
knowledge of any event for which it is required to receive notice under this
Agreement and the Rights Agent shall be fully protected and shall incur no
liability for failing to take any action in connection therewith unless and
until it has received such notice in writing.

 

(c)                                  This Section 18 shall
survive the termination of this Agreement, the exercise or expiration of the
Rights and the resignation or removal of the Rights Agent.

 

SECTION 19.  Merger or Consolidation or Change of Name
of Rights Agent.  (a)Any corporation,
limited liability company or association into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation, limited liability company or association resulting from any
merger or consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation, limited liability company or association
succeeding to the corporate trust or shareholder services business of the
Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any
document or any further act on the part of any of the parties hereto; provided
that such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21. 
In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have
been countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or
in the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.

 

(b)                                 In case at any time
the name of the Rights Agent shall be changed and at such time any of the
Rights Certificates shall have been countersigned but not delivered, the Rights
Agent may adopt the countersignature under its prior name and deliver Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name

 

27

 

or in its changed name; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.

 

SECTION 20.  Duties of Rights Agent The Rights
Agent undertakes the duties and obligations expressly imposed by this Agreement
(and no implied duties or obligations) upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:

 

(a)                                  The
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the advice or opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken,
suffered or omitted by it in good faith and in accordance with such advice or
opinion.

 

(b)                                 Whenever
in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person and the determination of
“current market price”) be proved or established by the Company prior to
taking, suffering or omitting to take any action hereunder, such fact or matter
(unless other evidence in respect thereof be specified herein) may be deemed to
be conclusively proved and established by a certificate signed by the Chairman
of the Board, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken, suffered or omitted to be taken in
good faith by it under the provisions of this Agreement in reliance upon such
certificate.

 

(c)                                  The
Rights Agent shall be liable hereunder only for its own gross negligence, bad
faith or willful misconduct.  The determination of gross negligence, bad
faith or willful misconduct hereunder shall be pursuant to a Final Order; provided,
however, that, in the case of any Non-Third Party Proceeding, no payment
otherwise required to be made by the Company to the Rights Agent under Section
18 in respect of such Non-Third Party Proceeding shall be required to be made
by the Company until receipt of a Final Order; provided  further,
that the foregoing shall not prevent or delay any request for, or payment of,
reasonable expenses or indemnification pursuant to and in accordance with
Section 18 that is unrelated in all respects to a Non-Third Party Proceeding.

 

(d)                                 The
Rights Agent shall not be liable for or by reason of any of the statements of
fact or recitals contained in this Agreement or in the Rights Certificates or
be required to verify the same (except as to its countersignature on such
Rights Certificates), but all such statements and recitals are and shall be
deemed to have been made by the Company only.

 

(e)                                  The
Rights Agent shall not have any responsibility or liability for the validity of
this Agreement or the execution and delivery hereof (except the due execution
and delivery hereof by the Rights Agent) or for the validity or execution of
any Rights Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or failure by the
Company to satisfy conditions

 

28

 

contained in
this Agreement or in any Rights Certificate; nor shall it be responsible for
any determination to nullify or void the Rights of any holder thereof pursuant
to Section 7(e) of this Agreement; nor shall it be responsible for any
adjustment required under the provisions of Section 11 or Section 13
or for the manner, method or amount of any such adjustment or the ascertaining
of the existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates after
receipt by the Rights Agent of the certificate describing any such adjustment
contemplated by Section 12); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or reservation
of any shares of Preferred Stock or any other securities to be issued pursuant
to this Agreement or any Rights Certificate or as to whether any shares of
Preferred Stock or any other securities will, when so issued, be validly authorized
and issued, fully paid and non-assessable.

 

(f)                                    The
Company shall perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further acts,
instruments and assurances as may reasonably be required by the Rights Agent
for the performance by the Rights Agent of its duties under this Agreement.

 

(g)                                 The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from the Chairman of the
Board, the President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Company, and to
apply to such officers for advice or instructions in connection with its
duties.  Such instructions shall be full
authorization and protection of the Rights Agent and the Rights Agent shall not
be liable for any action taken, suffered or omitted to be taken by it in good
faith in accordance with instructions of any such officer or for any delay in
acting while awaiting such instructions. 
Any application by the Rights Agent for written instructions from the
Company may, at the option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this Agreement and
the date on and/or after which such action shall be taken or such omission
shall be effective.  The Rights Agent
shall not be liable for any action taken by, or omission of, the Rights Agent
in accordance with a proposal included in any such application on or after the
date specified in such application (which date shall not be less than five
Business Days after the date any such officer of the Company actually receives
such application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.

 

(h)                                 The
Rights Agent and any stockholder, affiliate, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement.  Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company or
for any other Person.

 

29

 

(i)                                     The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself or by or through its
attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorney or
agent or for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided that reasonable care was exercised in the
selection and continued employment thereof.

 

(j)                                     No
provision of this Agreement shall require the Rights Agent to expend or risk
its own funds or otherwise incur any financial liability in the performance of
any of its duties or in the exercise of its rights hereunder if the Rights
Agent reasonably believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.

 

(k)                                  If,
with respect to any Rights Certificate surrendered to the Rights Agent for
exercise or transfer, the certificate attached to the form of assignment or
form of election to purchase, as the case may be, has either not been
completed, not signed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with
the Company.  If such certificate has
been completed and signed and shows a negative response to clauses 1 and 2
of such certificate, unless previously instructed otherwise in writing by the
Company (which instructions may impose on the Rights Agent additional
ministerial responsibilities, but no discretionary responsibilities), the
Rights Agent may assume without further inquiry that the Rights Certificate is
not owned by a person described in Section 4(b) or Section 7(e) and
shall not be charged with any knowledge to the contrary.

 

(l)                                     Anything
in this Agreement to the contrary notwithstanding, in no event shall the Rights
Agent be liable for special, indirect or consequential damages of any kind
whatsoever.

 

SECTION 21.  Change of Rights Agent.  The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon
thirty days’ prior notice in writing mailed to the Company, and to each
transfer agent of the Preferred Stock and the Company Common Stock, by
registered or certified mail, and to the holders of the Rights Certificates (or
certificates for the Company Common Stock prior to the Distribution Date) by
first-class mail.  The Company may
remove the Rights Agent or any successor Rights Agent upon thirty days’ prior
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Preferred Stock and the Company
Common Stock, by registered or certified mail, and to the holders of the Rights
Certificates (or certificates for the Company Common Stock prior to the
Distribution Date) by first-class mail. 
If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights
Agent.  If the Company shall fail to
make such appointment within a period of thirty days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate or, prior to the Distribution Date, the holder of a
certificate for the Company Common Stock (who shall, with such notice, submit
such holder’s Rights Certificate or certificate for Company Common Stock, as
the case may be, for inspection

 

30

 

by the Company), then any
registered holder of any Rights Certificate or, prior to the Distribution Date,
the holder of a certificate for the Company Common Stock may apply to any court
of competent jurisdiction for the appointment of a new Rights Agent.  Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation,
limited liability company or association organized and doing business under the
laws of the United States or any state of the United States in good standing,
shall be authorized to do business as a banking institution in the State of New
York, shall be authorized under such laws to exercise corporate trust or stock
transfer powers, shall be subject to supervision or examination by federal or
state authorities and shall have at the time of its appointment as Rights Agent
a combined capital and surplus of at least US$100,000,000 or (b) an
Affiliate of a corporation, limited liability company or association described
in clause (a).  After appointment,
the successor Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose.  Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Preferred Stock and the Company Common Stock, and mail a notice
thereof in writing to the registered holders of the Rights Certificates (or
certificates for the Company Common Stock prior to the Distribution Date).  Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent.

 

SECTION 22.  Issuance of New Rights Certificates.  Notwithstanding any of the provisions of
this Agreement or the Rights to the contrary, the Company may, at its option,
issue new Rights Certificates evidencing Rights in such form as may be approved
by a majority of the Board of Directors of the Company to reflect any
adjustment or change made in accordance with the provisions of this Agreement
in the Purchase Price or the number or kind or class of shares or other
securities or property that may be acquired upon exercise of the Rights.  In addition, in connection with the issuance
or sale of shares of Company Common Stock following the Distribution Date and
prior to the Expiration Date, the Company (a) shall, with respect to
shares of Company Common Stock so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company, and
(b) may, in any other case, if deemed necessary or appropriate by a
majority of the Board of Directors of the Company, issue Rights Certificates
evidencing the appropriate number of Rights in connection with such issuance or
sale; provided, however, that (i) no such Rights Certificate shall be
issued if, and to the extent that, the Company shall be advised by counsel that
such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights Certificate would
be issued and (ii) no such Rights Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.

 

SECTION 23.  Redemption and Termination.  (a) 
Subject to Section 28, the Company may, at its option, by action of
a majority of the Board of Directors of the Company, at any time prior to the
earlier of (i) the Close of Business on the tenth Day following the Stock
Acquisition Date or (ii) the Final Expiration Date, redeem all but not
less than all of the then outstanding Rights at a redemption price of US$0.0001
per Right, as such amount may be

 

31

 

appropriately adjusted to
reflect any stock split, share consolidation or subdivision, bonus issue, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being the “Redemption Price”), and the Company may, at its option,
by action of a majority of the  Board of
Directors of the Company, pay the Redemption Price either in shares of Company
Common Stock (based on the current market price, determined in accordance with
Section 11(d), of the shares of Company Common Stock at the time of
redemption) or cash.  Subject to the
foregoing, the redemption of the Rights may be made effective at such time, on
such basis and with such conditions as the Board of Directors of the Company in
its sole discretion may establish.

 

(b)                                 Immediately upon the
action of a majority of the Board of Directors of the Company ordering the
redemption of the Rights, evidence of which shall be filed with the Rights
Agent, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price for each Right so held.  Promptly after the action of a majority of the
Board of Directors of the Company ordering the redemption of the Rights, the
Company shall give written notice of such redemption to the Rights Agent and
the holders of the then outstanding Rights by mailing such notice to all such
holders at each holder’s last address as it appears upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the register of members
of the transfer agent for Company Common Stock.  Any notice that is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice.  Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made.

 

SECTION 24.  Notice of Certain Events.  (a) 
In case the Company shall propose, at any time after the Distribution
Date, (i) to pay any dividend or bonus issue payable in shares of any
class to the holders of Preferred Stock or to make any other distribution to
the holders of Preferred Stock (other than a regular quarterly cash dividend out
of earnings or retained earnings of the Company), (ii) to offer to the
holders of Preferred Stock rights or warrants to subscribe for or to purchase
any additional shares of Preferred Stock or shares of any class or any other
securities, rights or options, (iii) to effect any reclassification of the
Preferred Stock (other than a reclassification involving only the subdivision
of outstanding shares of Preferred Stock), (iv) to effect any
consolidation or merger or amalgamation into or with any other Person (other
than a Subsidiary of the Company in a transaction that complies with
Section 11(o)), or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o)) or (v) to
effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of a Rights Certificate (or,
prior to the Distribution Date, to each holder of certificates for Company
Common Stock), to the extent feasible and in accordance with Section 25, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, amalgamation, sale,
transfer, liquidation, dissolution or winding up is to take place and the date
of participation therein by the holders of the shares of Preferred Stock, if
any such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least 20 days prior to
the record date for determining holders of the shares of Preferred Stock for
purposes of such action,

 

32

 

and in the case of any such
other action, at least 20 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of the shares of
Preferred Stock, whichever shall be the earlier; provided, however,
that no such notice shall be required pursuant to this Section 24 if any
Subsidiary of the Company effects a consolidation or merger or amalgamation
with or into, or effects a sale or other transfer of assets or earning power
to, any other Subsidiary of the Company.

 

(b)                                 In case any of the
events set forth in Section 11(a)(ii) shall occur, then, in any such case,
the Company shall as soon as practicable thereafter give to each holder of a
Rights Certificate, to the extent feasible and in accordance with
Section 25, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under
Section 11(a)(ii).

 

SECTION 25.  Notices.  All notices and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing and mailed or sent or
delivered (including by facsimile transmission), if to the Company, at its
address at:

 

Bunge Limited

50 Main Street

Suite 635

White Plains, NY 10606

Attention: Chief Financial Officer

 

and if to the Rights Agent, at
its address at:

 

Mellon
Investor Services LLC

44 Wall Street, 6th Floor

New York, NY 10005

Attention:  Relationship Manager

Facsimile No.:  (917) 320-6318

 

with a copy to:

 

Mellon
Investor Services LLC

85 Challenger Road

Ridgefield Park, NJ  07660

Attention: General Counsel

Facsimile No.:  (201) 296-4004.

 

Notices or demands authorized
or required by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any Rights Certificate (or, if prior to the Distribution
Date, to the holder of certificates evidencing shares of Company Common Stock)
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Rights Agent or, prior

 

33

 

to the Distribution Date, on
the registry books of the transfer agent for the Company Common Stock.

 

SECTION 26.  Supplements and Amendments.  Prior to the Distribution Date and subject
to the penultimate sentence of this Section 26, the Company and the Rights
Agent shall, if the Company so directs, supplement or amend any provision of
this Agreement without the approval of any holders of certificates evidencing
shares of Company Common Stock.  From
and after the Distribution Date and subject to the penultimate sentence of this
Section 26, the Company and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of
Rights Certificates in order (a) to cure any ambiguity, (b) to
correct or supplement any provision contained herein that may be defective or
inconsistent with any other provisions herein, (c) to shorten or lengthen
any time period hereunder or (d) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable and
which shall not adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person); provided, however, that, prior to the Close of
Business on the Final Expiration Date, this Agreement may not be supplemented
or amended to extend the Final Expiration Date except in accordance with
Section 35; and provided  further, that this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (c) of this
sentence, (i) subject to Section 30, a time period relating to when
the Rights may be redeemed at such time as the Rights are not then redeemable
or (ii) any other time period unless such lengthening is for the purpose
of protecting, enhancing or clarifying the rights of, and/or the benefits to,
the holders of Rights.  Upon the
delivery of a certificate from an appropriate officer of the Company or, so
long as any Person is an Acquiring Person hereunder, from the majority of the
Board of Directors of the Company, that states that the proposed supplement or
amendment is in compliance with the terms of this Section 26 and provided
that such supplement or amendment does not adversely change (as reasonably
determined in good faith by the Rights Agent) or increase the rights, duties or
obligations of the Rights Agent, the Rights Agent shall execute such supplement
or amendment; provided that any supplement or amendment that does not adversely
change (as reasonably determined in good faith by the Rights Agent) or increase
the rights, duties or obligations of the Rights Agent shall become effective
immediately upon execution by the Company, whether or not executed by the
Rights Agent.  Prior to the Distribution
Date, the interests of the holders of Rights shall be deemed coincident with
the interests of the holders of Company Common Stock.

 

SECTION 27.  Successors.  All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.

 

SECTION 28.  Determinations and Actions by the Board
of Directors, Etc.  For all purposes
of this Agreement, any calculation of the number of shares of Company Common
Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Company Common Stock of
which any Person is the Beneficial Owner, shall be made in accordance with the
last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act Regulations as in
effect on the date hereof.  Except as
otherwise specifically provided herein, the Board of Directors of the Company
shall have the exclusive power and authority to administer this Agreement and
to exercise all rights and powers

 

34

 

specifically granted to the
Board of Directors of the Company or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power (i) to interpret the provisions of this
Agreement and (ii) to make all determinations deemed necessary or
advisable for the administration of this Agreement.  All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions
with respect to the foregoing) that are done or made by the Board of Directors
of the Company in good faith shall (x) be final, conclusive and binding on
the Company, the Rights Agent, the holders of the Rights and all other parties,
and (y) not subject the Board of Directors of the Company or any member
thereof to any liability to the holders of the Rights.

 

SECTION 29.  Benefits of this Agreement.  Nothing in this Agreement shall be construed
to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of shares of Company Common Stock) any legal or
equitable right, remedy or claim under this Agreement.  This Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders
of the Rights Certificates (and, prior to the Distribution Date, registered
holders of shares of Company Common Stock).

 

SECTION 30.  Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or restriction
is held by such court or authority to be invalid, void or unenforceable and a
majority of the Board of Directors of the Company determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement and the Rights shall not then be
redeemable, the right of redemption set forth in Section 23 shall be
reinstated (with the Company giving the Rights Agent prompt written notice of
such reinstatement) and shall not expire until the Close of Business on the
tenth Business Day following the date of such determination by a majority of
the Board of Directors of the Company.

 

SECTION 31.  Governing Law.  This Agreement, each Right and each Rights
Certificate issued hereunder shall be governed by, and construed in accordance
with, the laws of Bermuda; provided, however, that the rights,
duties and obligations of the Rights Agent shall be governed by, and construed
in accordance with, the laws of the State of New York.

 

SECTION 32.  Counterparts.  This Agreement may be executed (including by
facsimile) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument.

 

SECTION 33.  Descriptive Headings.  The headings contained in this Agreement are
for descriptive purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

35

 

SECTION 34.  Exchange.  (a)  (i)  The Company may, at its option, at
any time after any person becomes an Acquiring Person, upon resolution adopted
by a majority of the Board of Directors of the Company, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights
that have become null and void pursuant to Section 7(e)) for Units of Preferred
Stock at an exchange ratio of one Unit of Preferred Stock per Right,
appropriately adjusted to reflect any stock split, share consolidation or
subdivision, bonus issue, stock dividend or similar transaction occurring after
the date hereof (such exchange ratio being hereinafter referred to as the “Section
34(a)(i) Exchange Ratio”). 
Notwithstanding the foregoing, the Company may not effect the exchange
described in this Section 34(a)(i) at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan maintained by
the Company or any of its Subsidiaries, or any trustee or fiduciary with
respect to such plan acting in such capacity), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
shares of Company Common Stock then outstanding.

 

(ii)                                  The Company may, at
its option, at any time after any person becomes an Acquiring Person, upon
resolution adopted by a majority of the Board of Directors of the Company,
exchange all or part of the then outstanding and exercisable Rights (which
shall not include Rights that have become null and void pursuant to
Section 7(e)) for Units of Preferred Stock at an exchange ratio specified
in the following sentence, as appropriately adjusted to reflect any stock split,
share consolidation or subdivision, bonus issue, stock dividend or similar
transaction occurring after the date hereof. 
Subject to such adjustment, each Right may be exchanged for that number
of Units of Preferred Stock obtained by dividing the Adjustment Spread (as
defined below) by the then-current market price (determined pursuant to
Section 11(d)) per Unit of Preferred Stock on the earlier of (i) the
date on which any Person becomes an Acquiring Person and (ii) the date on
which a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan maintained by the Company
or any of its Subsidiaries or any trustee or fiduciary with respect to such
plan acting in such capacity) is commenced within the meaning of
Rule 14d-2 of the Exchange Act Regulations or any successor rule, if upon
consummation thereof such Person would be the Beneficial Owner of 20% or more
of the shares of Company Common Stock then outstanding (such exchange ratio
being the “Section 34(a)(ii) Exchange Ratio”).  The “Adjustment Spread” shall equal
(x) the aggregate market price on the date of such event of the number of
Adjustment Shares determined pursuant to Section 11(a)(ii), minus
(y) the Purchase Price.

 

(b)                                 Immediately upon the
action of a majority of the Board of Directors of the Company ordering the
exchange of any Rights pursuant to Section 34(a) and without any further
action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be to
receive that number of Units of Preferred Stock equal to the number of such
Rights held by such holder multiplied by the Section 34(a)(i) Exchange
Ratio or Section 34(a)(ii) Exchange Ratio, as the case may be.  The Company shall promptly give public
notice (and prompt written notice to the Rights Agent) of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. 
The Company promptly shall mail a notice of any such exchange to all of
the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent.  Any
notice that is mailed in the manner herein provided

 

36

 

shall be deemed given, whether
or not the holder receives the notice. 
Each such notice of exchange shall state the method by which the
exchange of Units of Preferred Stock for Rights will be effected and, in the event
of any partial exchange, the number of Rights that will be exchanged.  Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights that have become null and
void pursuant to Section 7(e)) held by each holder of Rights.

 

(c)                                  In the event that the
number of shares of Preferred Stock that are authorized by the Company’s
Memorandum of Association and Bye-laws but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights are not sufficient
to permit any exchange of Rights as contemplated in accordance with this
Section 34, the Company shall take all such action as may be necessary to
authorize additional shares of Preferred Stock for issuance upon exchange of
the Rights or make adequate provision to substitute (1) cash,
(2) Company Common Stock or other equity securities of the Company,
(3) debt securities of the Company, (4) other assets or (5) any
combination of the foregoing, having an aggregate value equal to the Adjustment
Spread, where such aggregate value has been determined by a majority of the
Board of Directors of the Company.

 

(d)                                 The Company shall not
be required to issue fractions of Units of Preferred Stock or to distribute
certificates that evidence fractional Units. 
In lieu of fractional Units, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exchanged as herein
provided an amount in cash equal to the same fraction of the current market
price (determined pursuant to Section 11(d)) of one Unit of Preferred
Stock.

 

SECTION 35. 
Renewal.  Prior to the
Close of Business on the Final Expiration Date, the Chairman of the Board of
Directors of the Company or the Board of Directors of the Company may, in
accordance with the Company’s Bye-laws, convene an annual general meeting or
special general meeting of the Company’s shareholders for the purpose of
considering an amendment to Section 7(a)(i) of this Agreement, which amendment
shall provide for an extension of the Final Expiration Date (the “Final
Expiration Date Amendment”).  The
Final Expiration Date Amendment shall become effective upon a resolution of the
members including the affirmative vote of not less than 66% of votes cast on
the resolution.

 

[SIGNATURE PAGE FOLLOWS]

 

37

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their behalf as of the date first above written.

 

 

	
   

  	
   

  	
  The Common
  Seal of the Company was affixed hereto in the presence of:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ ALBERTO WEISSER

  	
   

  
	
   

  	
   

  	
   

  	
  Name:
  Alberto Weisser

  
	
   

  	
   

  	
   

  	
  Title:  Chairman and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MELLON
  INVESTOR SERVICES LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ KATHRYN M. GALLAGHER

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Kathryn M. Gallagher

  
	
   

  	
   

  	
   

  	
  Title:  Vice President

  

 

38

 

EXHIBIT A

 

[FORM OF RIGHTS CERTIFICATE]

 

Certificate
No.                      
Rights

 

NOT EXERCISABLE AFTER THE
EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT REFERRED TO BELOW).  THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.  UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN
THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS
DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID.

 

RIGHTS CERTIFICATE

 

BUNGE LIMITED

 

This certifies
that
                  , or registered assigns, is the registered holder of the number of Rights
set forth above, each of which entitles the registered holder thereof, subject
to the terms and conditions of the Amended and Restated Rights Agreement dated
as of May 30, 2003 (the “Rights Agreement”; terms defined therein are
used herein with the same meaning unless otherwise defined herein) between
Bunge Limited, a Bermuda company (the “Company”), and Mellon Investor
Services LLC, as Rights Agent (which term shall include any successor Rights
Agent under the Rights Agreement), to purchase from the Company at any time
after the Distribution Date and prior to the Expiration Date at the office of
the Rights Agent, one-thousandth of a fully paid and non-assessable Series A
Preference Share, par value US$0.01 per share (the “Preferred Stock”),
of the Company at the Purchase Price initially of US$29.02 per one-thousandth
share (each such one-thousandth of a share being a “Unit”) of Preferred
Stock, upon presentation and surrender of this Rights Certificate with the
Election to Purchase and related Certificate (on the reverse side hereof)
properly completed and duly executed. 
The number of Rights evidenced by this Rights Certificate (and the
number of Units that may be purchased upon exercise thereof) set forth above,
and the Purchase Price per Unit set forth above shall be subject to adjustment
in certain events as provided in the Rights Agreement.

 

Upon the
occurrence of a Section 11(a)(ii) Event or a Section 13 Event, if the Rights
evidenced by this Rights Certificate are beneficially owned by an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person or, under
certain circumstances described in the Rights Agreement, a transferee of any
such Acquiring Person, Associate or Affiliate, such Rights shall become null
and void and no holder hereof shall have any right with respect to such Rights
from and after the occurrence of such Section 11(a)(ii) Event or such Section
13 Event.

 

In certain
circumstances described in the Rights Agreement, the Rights evidenced hereby
may entitle the registered holder thereof to purchase capital stock of an
entity other than the Company or to receive common stock, cash or other assets,
all as provided in the Rights Agreement.

 

39

 

This Rights
Certificate is subject to all of the terms and conditions of the Rights
Agreement, which terms and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Rights Certificates. 
Copies of the Rights Agreement are on file at the principal office of
the Company and are available from the Company upon written request.

 

This Rights
Certificate, with or without other Rights Certificates, upon surrender at the
office of the Rights Agent designated for such purpose, may be exchanged for
another Rights Certificate or Rights Certificates of like tenor and date
evidencing an aggregate number of Rights equal to the aggregate number of Rights
evidenced by the Rights Certificate or Rights Certificates surrendered.  If this Rights Certificate shall be
exercised in part, the registered holder shall be entitled to receive, upon
surrender hereof, another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.

 

Subject to the
provisions of the Rights Agreement, the Rights evidenced by this Certificate
may be redeemed by the Company under certain circumstances at its option at a
redemption price of US$0.0001 per Right, payable at the Company’s option in
cash or in common shares of the Company, subject to adjustment in certain
events as provided in the Rights Agreement.

 

No fractional
shares of Preferred Stock will be issued upon the exercise of any Right or
Rights evidenced hereby (other than fractions that are integral multiples of
one one-thousandth of a share of Preferred Stock), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.

 

No holder of
this Rights Certificate, as such, shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of Preferred Stock or of any
other securities that may at any time be issuable on the exercise hereof, nor
shall anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement and such holder shall have been entered in the register of
members of the Company.

 

This Rights
Certificate shall not be valid or obligatory for any purpose until it shall
have been countersigned by the Rights Agent.

 

40

 

WITNESS the
facsimile signature of the proper officers of the Company and its corporate
seal.  Dated as of
                    .

 

 

	
  ATTEST:

  	
   

  	
  BUNGE
  LIMITED

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Countersigned:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  MELLON
  INVESTOR SERVICES LLC, as Rights Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

41

 

[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]

 

FORM OF ASSIGNMENT

 

(To be executed by the registered holder if

such holder desires to transfer the Rights.)

 

 

FOR VALUE RECEIVED
                                              
hereby sells, assigns and transfers unto
                                                           
(Please print name and address of transferee)
                                                                    
the Rights represented by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
                 ,
Attorney, to transfer the said Rights on the books of the within-named Company,
with full power of substitution.

 

Dated:
               ,
200  

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

Signature Guaranteed:

 

 

CERTIFICATE

 

The
undersigned hereby certifies by checking the appropriate boxes that:

 

(1)                                  the
Rights evidenced by this Rights Certificate [ 
] are [  ] are not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement); and

 

(2)                                  after
due inquiry and to the best knowledge of the undersigned, it [  ] did [ 
] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.

 

	
  Dated:
                  ,
  200

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  

 

 

NOTICE

 

The signature
to the foregoing Assignment and Certificate must correspond to the name as
written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.

 

In the event
the certification set forth above is not completed, the Company will deem the
beneficial owner of the Rights evidenced by this Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) and, in the case of an Assignment, will affix a legend to that
effect on any Rights Certificates issued in exchange for this Rights
Certificate.

 

 

FORM OF ELECTION TO PURCHASE

 

(To be executed if the registered holder

desires to exercise Rights represented

by the Rights Certificate.)

 

To:  Bunge Limited

 

The
undersigned hereby irrevocably elects to exercise
             Rights
represented by this Rights Certificate to purchase the Units of Preferred Stock
issuable upon the exercise of such Rights (or such other securities of the
Company or of any other person or other property that may be issuable upon the
exercise of such Rights) and requests that certificates for such Units be
issued in the name of and delivered to:

 

	
   

  	
   

  
	
  (Please print name and address)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Please insert social security

  or other identifying number:

  	
   

  	
   

  
			

 

If such number
of Rights shall not be all the Rights evidenced by this Rights Certificate, a
new Rights Certificate for the balance of such Rights shall be registered in
the name of and delivered to:

 

	
   

  	
   

  
	
  (Please print name and address)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Please insert social security

  or other identifying number:

  	
   

  	
   

  
			

 

 

	
  Dated:
               ,
  200

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  

 

 

 

CERTIFICATE

 

The
undersigned hereby certifies by checking the appropriate boxes that:

 

(1)  the Rights evidenced by this Rights
Certificate [  ] are [  ] are not beneficially owned by an Acquiring
Person or an Affiliate or an Associate thereof (as defined in the Rights
Agreement); and

 

(2)  after due inquiry and to the best knowledge
of the undersigned, the undersigned [  ]
did [  ] did not acquire the Rights
evidenced by this Rights Certificate from any person who is, was or
subsequently became an Acquiring Person or an Affiliate or Associate thereof.

 

	
  Dated:
               ,
  200

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  

 

 

NOTICE

 

The signature
in the foregoing Election to Purchase and Certificate must conform to the name
as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.

 

In the event
the certification set forth above is not completed, the Company will deem the
beneficial owner of the Rights evidenced by this Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) and, in the case of an Assignment, will affix a legend to that
effect on any Rights Certificates issued in exchange for this Rights
Certificate.

 

 

 

EXHIBIT B

 

CERTIFICATE OF DESIGNATION

OF THE VOTING POWERS, DESIGNATION,

PREFERENCES AND RELATIVE, PARTICIPATING,

OPTIONAL OR OTHER SPECIAL RIGHTS AND
QUALIFICATIONS,

LIMITATIONS AND RESTRICTIONS OF THE

SERIES A PREFERENCE SHARES

 

Set out below
are the voting powers, designation, relative, participating, optional and other
special rights, preferences and qualifications, limitations and restrictions of
the series of preference shares of Bunge Limited (the “Company”), par
value US $0.01 per share, designated as Series A Preference Shares (the “Series
A Preference Shares”) approved by a resolution of the board of directors of
the Company (the “Board of Directors”) on July 11, 2001:

 

Section
1.  Designation and Amount.  The shares of such series shall be
designated as “Series A Preference Shares” and the number of shares
constituting such series shall be 240,000.

 

Section
2.  Dividends and Distributions.  (A) 
Subject to the prior and superior rights of the holders of any shares of
any other series of preference shares (“Preference Shares”) or any other
class of shares of the Company ranking prior and superior to the Series A Preference
Shares with respect to dividends, each holder of one one-thousandth (1/1,000)
of a Series A Preference Share (a “Unit”) shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for that purpose, (i) quarterly dividends payable in cash on the
last day of March, June, September and December in each year (each such date
being a “Quarterly Dividend Payment Date”), commencing on the first
Quarterly Dividend Payment Date after the first issuance of such Unit, in an
amount per Unit (rounded to the nearest cent) equal to the greater of (a)
US$0.01 or (b) subject to the provision for adjustment hereinafter set forth,
the aggregate per share amount of all cash dividends declared on the common
shares of the Company, par value US$0.01 per share (the “Common Shares”),
since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of a Unit, and (ii) subject to the provision for adjustment hereinafter set
forth, quarterly distributions (payable in kind) on each Quarterly Dividend
Payment Date in an amount per Unit equal to the aggregate per share amount of
all non–cash dividends, bonus issues or other distributions (other than a
dividend or bonus issue payable in Common Shares or a subdivision of the
outstanding Common Shares, by reclassification or otherwise) declared on the
Common Shares since the immediately preceding Quarterly Dividend Payment Date,
or with respect to the first Quarterly Dividend Payment Date, since the first
issuance of a Unit.  In the event that
the Company shall at any time after July 11, 2001 (the “Rights Declaration
Date”) (i) declare any dividend or bonus issue on outstanding Common Shares
payable in Common Shares, (ii) subdivide outstanding Common Shares or (iii)
combine or consolidate outstanding Common Shares into a smaller number of
shares, then in each such case the amount to which the holder of a Unit was
entitled immediately prior to such event pursuant to the preceding sentence
shall be adjusted by multiplying such amount by a fraction

 

 

 

the numerator of which shall be
the number of Common Shares that are outstanding immediately after such event
and the denominator of which shall be the number of Common Shares that were
outstanding immediately prior to such event.

 

(B)                                The
Company shall declare a dividend or distribution on Units as provided in
paragraph (A) above immediately after it declares a dividend or distribution on
the Common Shares (other than a dividend or bonus issue payable in Common
Shares); provided, however, that, in the event no dividend or
distribution shall have been declared on the Common Shares during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of US$0.01 per Unit shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.

 

(C)                                Dividends
shall begin to accrue and shall be cumulative on each outstanding Unit from the
Quarterly Dividend Payment Date next preceding the date of issuance of such
Unit, unless the date of issuance of such Unit is prior to the record date for
the first Quarterly Dividend Payment Date, in which case, dividends on such
Unit shall begin to accrue from the date of issuance of such Unit, or unless
the date of issuance is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of Units entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends shall begin to accrue and be cumulative from
such Quarterly Dividend Payment Date. 
Accrued but unpaid dividends shall not bear interest.  Dividends paid on Units in an amount less
than the aggregate amount of all such dividends at the time accrued and payable
on such Units shall be allocated pro rata on a Unit-by-Unit basis among all
Units at the time outstanding.  The
Board of Directors may fix a record date for the determination of holders of
Units entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date
fixed for the payment thereof.

 

Section
3.  Voting Rights.  The holders of Units shall have the
following voting rights:

 

(A)                              Subject
to the provision for adjustment hereinafter set forth, each Unit shall entitle
the holder thereof to one vote on all matters submitted to a vote of the
shareholders of the Company.  In the
event the Company shall at any time after the Rights Declaration Date (i)
declare any dividend or bonus issue on outstanding Common Shares payable in
Common Shares, (ii) subdivide outstanding Common Shares or (iii) combine or
consolidate the outstanding Common Shares into a smaller number of shares, then
in each such case the number of votes per Unit to which holders of Units were
entitled immediately prior to such event shall be adjusted by multiplying such
number by a fraction the numerator of which shall be the number of Common
Shares outstanding immediately after such event and the denominator of which
shall be the number of Common Shares that were outstanding immediately prior to
such event.

 

(B)                                Except
as otherwise provided herein or by law, the holders of Units and the holders of
Common Shares shall vote together as one class on all matters submitted to a
vote of shareholders of the Company.

 

(C)                                Except
as set forth herein or as required by law, holders of Units shall have no
special voting rights and their consents shall not be required (except to the
extent they

 

 

 

are entitled to vote with
holders of Common Shares as set forth herein) for taking any corporate action.

 

Section
4.  Certain Restrictions.  (A) 
Whenever quarterly dividends or other dividends or distributions payable
on Units as provided in Section 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not declared, on
outstanding Units shall have been paid in full, the Company shall not:

 

(i)                                     declare or pay
dividends on, make any other distributions on, or redeem or repurchase or
otherwise acquire for consideration any junior shares;

 

(ii)                                  declare or pay
dividends on or make any other distributions on any parity shares, except
dividends paid ratably on Units and all such parity shares on which dividends
are payable or in arrears in proportion to the total amounts to which the
holders of such Units and all such shares are then entitled;

 

(iii)                               redeem or repurchase or
otherwise acquire for consideration any parity shares; provided, however,
that the Company may at any time redeem, repurchase or otherwise acquire any
such parity shares in exchange for any junior shares; or

 

(iv)                              repurchase or otherwise
acquire for consideration any Units, except in accordance with a repurchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such Units.

 

(B)                                The
Company shall not permit any subsidiary of the Company to purchase or otherwise
acquire for consideration any shares of the Company unless the Company could,
under paragraph (A) of this Section 4, repurchase or otherwise acquire such
shares at such time and in such manner.

 

Section
5.  Reacquired Shares.  Any Units repurchased or otherwise acquired
by the Company in any manner whatsoever shall be cancelled upon the acquisition
thereof.  All such Units shall, upon
their cancellation, become authorized but unissued Units and may be reissued as
part of a new series of Preference Shares to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.

 

Section
6.  Liquidation, Dissolution or
Winding Up.  (A)  Upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, no distribution shall be
made (i) to the holders of junior shares unless the holders of Units shall have
received, subject to adjustment as hereinafter provided in paragraph (B), the
greater of either (a) US$0.01 per Unit plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not earned or declared,
to the date of such payment, or (b) the amount equal to the aggregate per share
amount to be distributed to holders of Common Shares, or (ii) to the holders of
parity shares, unless simultaneously therewith distributions are made ratably
on Units and all other such parity shares in proportion to the total amounts to
which the holders of Units are entitled under clause (i)(a) of this sentence
and to which the holders of such parity shares are entitled, in each case upon
such liquidation, dissolution or winding up.

 

 

 

(B)                                In
the event the Company shall, at any time after the Rights Declaration Date, (i)
declare any dividend or bonus issue on outstanding Common Shares payable in
Common Shares, (ii) subdivide outstanding Common Shares, or (iii) combine or
consolidate outstanding Common Shares into a smaller number of shares, then in
each such case the aggregate amount to which holders of Units were entitled
immediately prior to such event pursuant to clause (i)(b) of paragraph (A) of
this Section 6 shall be adjusted by multiplying such amount by a fraction the
numerator of which shall be the number of Common Shares that are outstanding
immediately after such event and the denominator of which shall be the number of
Common Shares that were outstanding immediately prior to such event.

 

Section
7.  Consolidation, Merger, etc.  In case the Company shall enter into any
consolidation, merger, amalgamation, combination or other transaction in which
the Common Shares are exchanged for or converted into other shares, cash and/or
any other property, then in any such case Units shall at the same time be
similarly exchanged for or converted into an amount per Unit (subject to the
provision for adjustment hereinafter set forth) equal to the aggregate amount
of shares, cash and/or any other property (payable in kind), as the case may
be, into which or for which each Common Share is converted or exchanged.  In the event the Company shall at any time
after the Rights Declaration Date (i) declare any dividend or bonus issue on
outstanding Common Shares payable in Common Shares, (ii) subdivide outstanding
Common Shares, or (iii) combine or consolidate outstanding Common Shares into a
smaller number of shares, then in each such case the amount set forth in the
immediately preceding sentence with respect to the exchange or conversion of
Units shall be adjusted by multiplying such amount by a fraction the numerator
of which shall be the number of Common Shares that are outstanding immediately
after such event and the denominator of which shall be the number of Common
Shares that were outstanding immediately prior to such event.

 

Section
8.  Redemption.  The Units shall not be redeemable.

 

Section
9.  Ranking.  The Units shall rank junior to all other
series of the Preference Shares and to any other class of preference shares
that hereafter may be issued by the Company as to the payment of dividends and
the distribution of assets, unless the terms of any such series or class shall
provide otherwise.

 

Section
10.  Amendment.  The rights of the Series A Preference Shares
shall not hereafter be amended, either directly or indirectly, or through
merger, consolidation or amalgamation with any other company or companies
without the affirmative vote of the holders of a majority or more of the
outstanding Units, voting separately as a class.

 

Section
11.  Fractional Shares.  The Series A Preference Shares may be issued
in Units or other fractions of a share, which Units or fractions shall entitle
the holder, in proportion to such holder’s fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to have the
benefit of all other rights of holders of Series A Preference Shares.

 

Section
12.  Certain Definitions.  As used herein with respect to the Series A
Preference Shares, the following terms shall have the following meanings:

 

 

 

(A)                              The
term “Common Shares” shall mean the class of shares designated as common
shares, par value US $0.01 per share, of the Company at the date of the
creation of the Series A Preference Shares by resolution of the Board of
Directors or any other class of shares resulting from successive changes or
reclassification of such common shares.

 

(B)                                The
term “junior shares” (i) as used in Section 4, shall mean the Common
Shares and any other class or series of shares of the Company hereafter
authorized or issued over which the Series A Preference Shares have preference
or priority as to the payment of dividends and (ii) as used in Section 6, shall
mean the Common Shares and any other class or series of shares of the Company
over which the Series A Preference Shares have preference or priority in the
distribution of assets upon any liquidation, dissolution or winding up of the
Company.

 

(C)                                The
term “parity shares” (i) as used in Section 4, shall mean any class or
series of shares of the Company hereafter authorized or issued ranking pari
passu with the Series A Preference Shares as to the payment of dividends
and (ii) as used in Section 6, shall mean any class or series of shares ranking
pari  passu with the Series A Preference Shares in the
distribution of assets on any liquidation, dissolution or winding up of the
Company.

 

 

 

SCHEDULE I

 

FEE SCHEDULE

 

	
  1.)

  	
  One time
  acceptance fee:

  	
  $2,500.00

  
	
  2.)

  	
  Annual
  Agency fee:

  	
  $2,500.00

  
	
  3.)

  	
  Issuance of
  Rights Certificates:

  	
  By Appraisal

  
	
  4.)

  	
  Special
  Services:

  	
  By Appraisal

  
	
  5.)

  	
  Legal Out of
  Pocket Expenses:

  	
   

  
	
   

  	
  (a)

  	
  Minimum Fee
  for reviewing the Agreement

  	
  $1,500.00

  
	
   

  	
  (b)

  	
  Minimum Fee
  for reviewing an Amendment

  	
  $   750.00

  

 

 

 

EXECUTION COPY

 

BUNGE LIMITED

 

 

and

 

 

MELLON INVESTOR SERVICES LLC

 

Rights Agent

 

 

Amended and Restated

Rights Agreement

 

 

Dated as of May 30, 2003

 

 

 

TABLE OF CONTENTS

 

	
  SECTION 1. 

  	
  Certain Definitions

  
	
   

  	
   

  
	
  SECTION 2. 

  	
  Appointment of Rights Agent

  
	
   

  	
   

  
	
  SECTION 3.

  	
  Issue of Rights Certificates

  
	
   

  	
   

  
	
  SECTION 4.

  	
  Form of Rights Certificates

  
	
   

  	
   

  
	
  SECTION 5. 

  	
  Countersignature and Registration

  
	
   

  	
   

  
	
  SECTION 6. 

  	
  Transfer, Split Up, Combination and
  Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
  Certificates

  
	
   

  	
   

  
	
  SECTION 7. 

  	
  Exercise of Rights; Purchase Price;
  Expiration Date of Rights

  
	
   

  	
   

  
	
  SECTION 8. 

  	
  Cancellation and Destruction of Rights
  Certificates

  
	
   

  	
   

  
	
  SECTION 9. 

  	
  Reservation and Availability of Capital
  Stock

  
	
   

  	
   

  
	
  SECTION
  10. 

  	
  Preferred
  Stock Record Date

  
	
   

  	
   

  
	
  SECTION
  11. 

  	
  Adjustment
  of Purchase Price, Number and Kind of Shares or Number of Rights

  
	
   

  	
   

  
	
  SECTION
  12. 

  	
  Certificate
  of Adjusted Purchase Price or Number of Shares

  
	
   

  	
   

  
	
  SECTION
  13. 

  	
  Consolidation,
  Merger or Sale or Transfer of Assets or Earning Power

  
	
   

  	
   

  
	
  SECTION
  14. 

  	
  Fractional
  Rights and Fractional Shares

  
	
   

  	
   

  
	
  SECTION
  15. 

  	
  Rights
  of Action

  
	
   

  	
   

  
	
  SECTION
  16. 

  	
  Agreement
  of Rights Holders

  
	
   

  	
   

  
	
  SECTION
  17. 

  	
  Rights
  Certificate Holder Not Deemed a Stockholder

  
	
   

  	
   

  
	
  SECTION
  18. 

  	
  Concerning
  the Rights Agent

  
	
   

  	
   

  
	
  SECTION
  19.

  	
  Merger
  or Consolidation or Change of Name of Rights Agent

  
	
   

  	
   

  
	
  SECTION 20.

  	
  Duties of Rights Agent

  

 

i

 

	
  SECTION 21.

  	
  Change of Rights Agent

  
	
   

  	
   

  
	
  SECTION 22.

  	
  Issuance of New Rights Certificates

  
	
   

  	
   

  
	
  SECTION 23.

  	
  Redemption and Termination

  
	
   

  	
   

  
	
  SECTION 24.

  	
  Notice of Certain Events

  
	
   

  	
   

  
	
  SECTION 25.

  	
  Notices

  
	
   

  	
   

  
	
  SECTION 26.

  	
  Supplements and Amendments

  
	
   

  	
   

  
	
  SECTION 27.

  	
  Successors

  
	
   

  	
   

  
	
  SECTION 28.

  	
  Determinations and Actions by the Board of
  Directors, Etc.

  
	
   

  	
   

  
	
  SECTION 29.

  	
  Benefits of this Agreement

  
	
   

  	
   

  
	
  SECTION 30.

  	
  Severability

  
	
   

  	
   

  
	
  SECTION 31.

  	
  Governing Law

  
	
   

  	
   

  
	
  SECTION 32.

  	
  Counterparts

  
	
   

  	
   

  
	
  SECTION 33.

  	
  Descriptive Headings

  
	
   

  	
   

  
	
  SECTION 34.

  	
  Exchange

  
	
   

  
	
  Exhibit A - Form of Rights Certificate

  
	
  Exhibit B - Certification of Designation

  
	
   

  
	
  Schedule I - Schedule of FeesQuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 4.3    
    

        [Execution Version] 

        As
of May 30, 2003 

Trans
World Entertainment

    Corporation

Record Town, Inc.

Record Town Michigan, Inc.

Record Town Minnesota, LLC

38 Corporate Circle

Albany, New York 12203 

	Re:
	Amendment No. 6 to Loan and Security Agreement

Ladies
and Gentlemen: 

        Reference
is made to the Loan and Security Agreement, dated as of July 9, 1997, by and among Congress Financial Corporation ("Lender"), Trans World Entertainment Corporation
("TWE"), Record Town, Inc. ("RTI"), Record Town Minnesota, LLC, successor by conversion of Record Town Minnesota, Inc. into Record Town Minnesota, LLC ("RT Minnesota"), and Record Town
Michigan, Inc. ("RT Michigan"; and together with TWE, RTI and RT Minnesota, individually and collectively, jointly and severally, "Borrowers"), as amended by Amendment No. 1 to Loan and
Security Agreement, dated as of February 17, 1998, Amendment No. 2 to Loan and Security Agreement, dated May 29, 1998, Amendment No. 3 to Loan and Security Agreement, dated
as of December 31, 1998, Amendment No. 4 to Loan and Security Agreement, dated as of May 31, 1999, and Amendment No. 5 to Loan and Security Agreement, dated as of
June 30, 2000 ("Amendment No. 5 to Loan Agreement"), as amended by this Amendment No. 6 to Loan and Security Agreement (this "Amendment"), dated as of the date hereof (as the same
now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, collectively, the "Loan Agreement"), together with all other agreements, documents, supplements
and instruments now or at any time hereafter executed or delivered by
Borrowers and Media Logic USA, LLC, successor by merger of Media Logic, Inc. with and into Media Logic USA, LLC ("Media Logic"), Trans World Fixture Company, Inc. ("TWFC"), Movies
Plus, Inc. ("Movies Plus"), Records N' Such, Inc. ("R&S"), Saturday Matinee, Inc. ("SMI"), Trans World Management Company, Inc. ("TW Management"), Trans World New York, LLC
("TW New York LLC") and TWEC.com LLC ("TWEC LLC"; together with Media Logic, TWFC, Movies Plus, R&S, SMI, TW Management and TW New York LLC, each, individually, an "Existing Guarantor" and,
collectively, "Existing Guarantors"), or any other person, with, to or in favor of Lender in connection therewith (all of the foregoing, together with the Loan Agreement and the agreements and
instruments delivered hereunder, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, collectively, the "Financing Agreements"). 

        Borrowers
and Existing Guarantors have informed Lender that Camelot Music Holdings, Inc. ("CMHI" as hereinafter further defined), a wholly owned subsidiary of TWE, and each of the
subsidiaries of CMHI have transferred, assigned and sold to Borrowers and Guarantors substantially all of the assets and properties of Camelot and its subsidiaries (the "Camelot Assets" as hereinafter
further defined) and Borrowers and Guarantors have requested that Lender consent to such acquisition by Borrowers and Guarantors of the Camelot Assets from CMHI and its subsidiaries. Lender has
heretofore provided its preliminary consent to Borrowers and Existing Guarantors to the transfer of such Camelot Assets as set forth in Amendment No. 5 to Loan Agreement. 

        Based
upon additional information furnished by Borrowers and Existing Guarantors to Lender and the further assurances of Borrowers and Existing Guarantors to execute and deliver such
additional agreements as may be required by Lender in accordance with Amendment No. 5 to Loan Agreement, Borrowers, Existing Guarantors and Lender have agreed (a) to make each of CMHI
and Spec's Music, Inc. ("Specs" as hereinafter further defined) a Guarantor pursuant to the terms and conditions 

 

of
the Loan Agreement and the other Financing Agreements, (b) to extend the term of the Financing Agreements to July 9, 2006, (c) to revise certain of the terms under which
Borrowers are permitted to make certain investments, (d) to permit the repurchase of up to 10,000,000 shares of Capital Stock of TWE not to exceed $50,000,000, (e) permit Record Town
Minnesota, Inc. to merge with and into Record Town Minnesota, LLC, (f) permit Media Logic to convert from a corporation to a limited liability company, (g) permit TWEC LLC and
TWFC to be dissolved, and (h) to enter into certain additional agreements and amendments to the Loan Agreement and the other Financing Agreements. Each Existing Guarantor, together with CMHI
and Specs, individually, a "Guarantor" and, collectively, "Guarantors" (as hereinafter further defined). 

        The
parties hereto wish to enter into this Amendment No. 6 to Loan and Security Agreement, dated as of the date hereof (this "Amendment") to evidence and effectuate such
amendments and consents and
certain other agreements relating thereto, in each case subject to the terms and conditions and to the extent set forth herein. 

        In
consideration of the premises and covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows: 

        1.    Definitions.    

        1.1    Additional Definitions.    As used herein or in any of the other Financing Agreements, the following terms
shall have the meanings given to them below, and the Loan Agreement shall be deemed and is hereby amended to include, in addition and not in limitation, the following definitions: 

        (a)   "Affiliate"
when capitalized, shall mean, with respect to a specified Person, any other Person which directly or indirectly, through one or more intermediaries, controls
or is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes (i) any Person which beneficially owns or holds five (5%) percent
or more of any class of Voting Stock of such Person or other equity interests in such Person, (ii) any Person of which such Person beneficially owns or holds five (5%) percent or more of any
class of Voting Stock or in which such Person beneficially owns or holds five (5%) percent or more of the equity interests and (iii) any director or executive officer of such Person. For the
purposes of this definition, the term "control" (including with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by agreement or
otherwise. 

        (b)   "California,
Illinois and New Hampshire Camelot Store Assets" shall mean all of the assets and properties that (i) are or were owned by RTI immediately before the
consummation of the Camelot Reorganization and (ii) are or have been owned or acquired by RT Minnesota at any time on or after the effective date of the Camelot Reorganization, which assets and
properties were and are primarily related to or primarily used in connection with or arise from the sale of records and other merchandise or services sold through the retail stores located in the
States of California, Illinois and New Hampshire identified on Schedule 1.1(b) hereto, including, without limitation, all Accounts, Inventory, Equipment, and the Intellectual Property listed on
Schedule 1.1(b) hereto. 

        (c)   "Camelot"
shall mean Camelot Music, Inc., a Pennsylvania corporation, and its successors and assigns. 

        (d)   "Camelot
Reorganization" shall mean, individually and collectively, the business restructure and asset transfers effected under the Camelot Reorganization Agreements. 

2

 

        (e)   "Camelot
Reorganization Agreements" shall mean, collectively, (i) the agreements, documents, and instruments listed on Schedule 1.1(e) hereto, and
(ii) all related agreements, documents and instruments executed, delivered or filed in connection with, or otherwise evidencing, each of the transactions consented to in Section 2
hereof, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. 

        (f)    "Camelot
Assets" shall mean all the right, title and interest of CMHI and any of the Camelot Subsidiaries into any of the property, rights and assets of CMHI, and the
Camelot Subsidiaries, whether real and personal, tangible and intangible, wherever found or situated, including, but not limited to, all contract rights, receivables, accounts, intellectual property
and all of the shares of stock of each of the Camelot Subsidiaries and also Camelot Distribution, including, without limitation, the California, Illinois and New Hampshire Camelot Store Assets, the
Connecticut and Michigan Camelot Store Assets, and the Camelot Trademarks. 

        (g)   "Camelot
Distribution" shall mean Camelot Distribution Co., Inc., a Delaware corporation, and its successors and assigns. 

        (h)   "Camelot
Subsidiaries" shall mean, individually and collectively, Camelot Midwest Region, Inc., a Delaware corporation, Camelot Northeast Region, Inc., a
Delaware corporation, Camelot Southeast Region, Inc., a Delaware corporation and Camelot Western Region, Inc., a Delaware corporation, and each of their respective successors and
assigns. 

        (i)    "Camelot
Trademarks" shall mean all of the right, title and interest of Camelot and the Camelot Subsidiaries in and to trademarks, service marks, trade dress and any
registrations thereof or applications therefor filed with the U.S. Patent and Trademark Office, together with the goodwill of Camelot and the Camelot Subsidiaries' business symbolized thereby, and all
rights in such trademarks, including the right to file for protection around the world on the trademarks and the right to renew any registrations on the marks, including the right to sue for past and
future infringement of the marks, that (i) are or were owned by Camelot and the Camelot Subsidiaries immediately before the consummation of the Camelot Reorganization and (ii) are or
have been acquired by RTI or TW New York LLC at any time on or after the effective date of the Camelot Reorganization. 

        (j)    "Capital
Stock" shall mean, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of such Person's capital
stock or partnership, limited liability
company or other equity interests at any time outstanding, and any and all rights, warrants or options exchangeable for or convertible into such capital stock or other interests (but excluding any
debt security that is exchangeable for or convertible into such capital stock). 

        (k)   "CMHI"
shall mean the Camelot Music Holdings, Inc., a Delaware corporation, and its successors and assigns. 

        (l)    "Collateral
Access Agreement" shall mean an agreement in writing, in form and substance satisfactory to Lender, by a lessor of premises to Borrowers, Guarantors, or any
other person to whom any Collateral (including Inventory, Equipment, bills of lading or other documents of title) is consigned or who has custody, control or possession of any such Collateral or is
otherwise the owner or operator of any premises on which any of such Collateral is located, in favor of Lender waiving or subordinating any rights of such lessor other person with respect to the
Collateral and granting Lender certain rights. 

        (m)  "Connecticut
and Michigan Camelot Store Assets" shall mean all of the assets and properties that (i) are or were owned by RTI immediately before the consummation
of the Camelot Reorganization and (ii) are or have been owned or acquired by RT Michigan at any time on or after the effective date of the Camelot Reorganization, which assets and properties 

3

 

were
and are primarily related to or primarily used in connection with or arise from the sale of records and other merchandise or services sold through the retail stores located in the States of
Michigan and Connecticut identified on Schedule 1.1(m) hereto, including, without limitation, all Accounts, Inventory, Equipment, and the Intellectual Property listed on Schedule 1.1(m)
hereto. 

        (n)   "Deposit
Account Control Agreement" shall mean an agreement in writing, in form and substance satisfactory to Lender, by and among Lender, the Borrower or Guarantor with
a deposit account at any bank and the bank at which such deposit account is at any time maintained which provides that such bank will comply with instructions originated by Lender directing
disposition of the funds in the deposit account without further consent by such Borrower or Guarantor and such other terms and conditions as Lender may require, including as to any such agreement with
respect to any Blocked Account, providing that all items received or deposited in the Blocked Accounts are the property of Lender, that the bank has no lien upon, or right to setoff against, the
Blocked Accounts, the items received for deposit therein, or the funds from time to time on deposit therein and that the bank will wire, or otherwise transfer, in immediately available funds, on a
daily basis to the Lender payment account all funds received or deposited into the Blocked Accounts. 

        (o)   "Governmental
Authority" shall mean any nation or government, any state, province, or other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. 

        (p)   "Existing
Guarantor Security Agreements" shall mean, collectively, the Media Logic Security Agreement and each of the General Security Agreements by Guarantors in favor
of Lender described on Schedule 1.1(p) hereto, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. 

        (q)   "Intellectual
Property" shall mean, as to each Borrower and each Guarantor, such Borrower's and Guarantor's now owned and hereafter arising or acquired:
(i) patents, patent rights, patent applications, copyrights, works which are the subject matter of copyrights, copyright registrations, trademarks, trade names, trade styles, trademark and
service mark applications, and licenses and rights to use any of the foregoing; (ii) all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; (iii) all rights to sue for past, present and future infringement of any of the foregoing; (iv) inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys, reports, manuals, and operating standards; (v) goodwill (including any goodwill associated with any trademark or
the license of any trademark); (vi) customer and other lists in whatever form maintained; and trade secret rights, copyright rights, rights in works of authorship, domain names and domain name
registrations; and (vii) software and contract rights relating to software, in whatever form created or maintained. 

        (r)   "Investment
Property Control Agreement" shall mean an agreement in writing, in form and substance satisfactory to Lender, by and among Lender, any Borrower or Guarantor
(as the case may be) and any securities intermediary, commodity intermediary or other person who has custody, control or possession of any investment property of such Borrower or Guarantor
acknowledging that such securities intermediary, commodity intermediary or other person has custody, control or possession of such investment property on behalf of Lender, that it will comply with
entitlement orders originated by Lender with respect to such investment property, or other instructions of Lender, or (as the case may be) apply any value distributed on account of any commodity
contract as directed by Lender, in each case, without 

4

 

the
further consent of such Borrower or Guarantor and including such other terms and conditions as Lender may require. 

        (s)   "Media
Logic Merger" shall mean the merger of Media Logic, Inc., a New York corporation, with and into Media Logic USA, LLC, a New York limited liability company
with Media Logic USA, LLC as the surviving entity of such merger in accordance with the terms of the Media Logic Merger Agreements. 

        (t)    "Media
Logic Merger Agreements" shall mean, collectively, (i) the Agreement of Merger, dated as of November 12, 2002, between Medial Logic, Inc. and
Media Logic USA, LLC, (ii) the Certificate of Merger, dated as of November 20, 2002, between Medial Logic, Inc. and Media Logic USA, LLC, and (iii) all related agreements,
documents and instruments executed or delivered in connection therewith, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. 

        (u)   "Media
Logic Security Agreement" shall have the meaning given to such term in Section 4.2(a) hereof. 

        (v)   "Multiemployer
Plan" shall mean a "multi-employer plan" as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the
immediately preceding six (6) years contributed to by any Borrower, or Guarantor or any ERISA Affiliate. 

        (w)  "Plan"
means an employee benefit plan (as defined in Section 3(3) of ERISA) which any Borrower or Guarantor sponsors, maintains, or to which it makes, is making,
or is obligated to make contributions, or in the case of a Multiemployer Plan has made contributions at any time during the immediately preceding six (6) plan years. 

        (x)   "Receivables"
shall mean all of the following now owned or hereafter arising or acquired property of each Borrower and each Guarantor: (i) all Accounts;
(ii) Credit Card Receivables, (iii) all interest, fees, late charges, penalties, collection fees and other amounts due or to become due or otherwise payable in connection with any Account or
Credit Card Receivable; (iv) all payment intangibles of such Borrower or Guarantor; (v) letters of credit, indemnities, guarantees, security or other deposits and proceeds thereof issued
payable to any Borrower or Guarantor or otherwise in favor of or delivered to any Borrower or Guarantor in connection with any Account or Credit Card Receivable; or (vi) all other accounts,
contract rights, chattel paper, instruments, notes, general intangibles and other forms of obligations owing to any Borrower or Guarantor, whether from the sale and lease of goods or other property,
licensing of any property (including Intellectual Property or other general intangibles), rendition of services or from loans or advances by any Borrower or Guarantor or to or for the benefit of any
third person (including loans or advances to any Affiliates or Subsidiaries of any Borrower or Guarantor) or otherwise associated with any Accounts, Credit Card Receivables, Inventory or general
intangibles of any Borrower or Guarantor (including, without limitation, choses in action, causes of action, tax refunds, tax refund claims, any funds which may become payable to any Borrower or
Guarantor in connection with the termination of any Plan or other employee benefit plan and any other amounts payable to any Borrower or Guarantor from any Plan or other employee benefit plan, rights
and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, casualty or any similar types of insurance and any proceeds thereof and
proceeds of insurance covering the lives of employees on which any Borrower or Guarantor is a beneficiary). 

        (y)   "RT
Minnesota Conversion" shall mean the conversion of Record Town Minnesota, Inc., a Delaware corporation, into Record Town Minnesota, LLC, a Delaware 

5

 

limited
liability company, in accordance with the terms of the RT Minnesota Conversion Agreements. 

        (z)   "RT
Minnesota Conversion Agreements" shall mean, collectively, (i) the Limited Liability Company Certificate of Formation, dated March 24, 2003, filed with
the Delaware Secretary of State, (ii) Certificate of Conversion from a Corporation to a Limited Liability Company, dated as of March 24, 2003, by Record Town Minnesota, Inc., and
(iii) all related agreements, documents and instruments executed or delivered in connection therewith, as the same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced. 

        (aa) "Specs"
shall mean Spec's Music, Inc., a Florida corporation, and its successors and assigns. 

        (ab) "TW
Management/Camelot Distribution Merger" shall mean the merger of Camelot Distribution Co., Inc. with and into Trans World Management Company, Inc.
with Trans World Management Company, Inc. as the surviving corporation of such merger in accordance with the terms of the TW Management/Camelot Distribution Merger Agreements. 

        (ac) "TW
Management/Camelot Distribution Merger Agreements" shall mean, collectively, (i) the Agreement and Plan of Merger, dated as of October 31, 1999, by
and between TW Management and Camelot Distribution and (ii) all related agreements, documents and instruments executed or delivered in connection therewith, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. 

        (ad) "UCC"
shall mean the Uniform Commercial Code as in effect in the State of New York, and any successor statute, as in effect from time to time (except that terms used
herein which are defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of
such statute except as Lender may otherwise determine). 

        (ae) "Voting
Stock" shall mean with respect to any Person, (i) one (1) or more classes of Capital Stock of such Person having general voting powers to elect at
least a majority of the board of directors, managers or trustees of such Person, irrespective of whether at the time Capital Stock of any other class or classes have or might have voting power by
reason of the happening of any contingency, and (ii) any Capital Stock of such Person convertible or exchangeable without restriction at the option of the holder thereof into Capital Stock of
such Person described in clause (i) of this definition. 

        1.2    Amendments to Definitions.    

        (a)   All
references to "Accounts" in the Loan Agreement and the other Financing Agreements shall be deemed and each such reference is hereby amended to mean, as to each
Borrower and Guarantor, all present and future rights of such Borrower and such Guarantor to payment of a monetary obligation, whether or not earned by performance, which is not evidenced by chattel
paper or an instrument, (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered or to be rendered,
(iii) for a secondary obligation incurred or to be incurred, or (iv) arising out of the use of a credit or charge card or information contained on or for use with the card. 

        (b)   All
references to "affiliate" or "affiliates" in Sections 9.5 and 9.12 of the Loan Agreement shall be deemed and each such reference is hereby redesignated "Affiliate"
or "Affiliates" as the case may be. 

6

 

        (c)   All
references to "Cash Equivalents" in the Loan Agreement and the other Financing Agreements shall be deemed and each such reference is hereby amended to mean, as to
each Borrower and Guarantor, at any time, (i) any evidence of indebtedness with a maturity date of three hundred sixty-five (365) days or less issued or directly and fully
guaranteed or insured by the United States of America or any agency or instrumentality thereof; provided,  that, the full faith and credit of the United
States of America is pledged, directly or indirectly, in support thereof; (ii) certificates of
deposit or bankers' acceptances with a maturity of three hundred sixty-five (365) days or less of any financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than $250,000,000; (iii) commercial paper (including variable rate demand notes), corporate bonds, notes and medium term notes
with a maturity of three hundred sixty-five (365) days or less issued by a corporation (except an Affiliate of Borrower) organized under the laws of any State of the United States
of America or the District of Columbia and rated at least A-1 by Standard & Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc. or at least
P-1 by Moody's Investors Service, Inc.; (iv) municipal bonds or other debt instruments issued by a Governmental Authority of any State or of the United States of America or
the District of Columbia or political subdivision of such State and rated at least SP-1 by Standard & Poor's Ratings Service, a division of The McGraw-Hill
Companies, Inc., or at least MIG 1/VMIG 1 by Moody's Investors Service, Inc.; (v) repurchase obligations with a term of not more than thirty (30) days for underlying
securities of the types described in clause (i) above entered into with any financial institution having combined capital and surplus and undivided profits of not less than $250,000,000;
(vi) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by any
governmental agency thereof and backed, directly or indirectly, by the full faith and credit of the United States of America, in each case maturing within three hundred sixty-five
(365) days or less from the date of acquisition; provided, that, the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions
with
Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985; and (vii) investments in money market funds and mutual funds which invest substantially
all of their assets in securities of the types described in clauses (i) through (vi) above. 

        (d)   All
references to "Equipment" in the Loan Agreement and the other Financing Agreements shall be deemed and each such reference is hereby amended to mean, as to each
Borrower and Guarantor, all of such Borrower's and such Guarantor's now owned and hereafter acquired equipment, wherever located, including, without limitation, machinery, data processing and computer
equipment and computer hardware and software, (whether owned or licensed, and including embedded software) vehicles, tools, furniture, fixtures, all attachments, accessions and property now or
hereafter affixed thereto or used in connection therewith, and substitutions and replacements thereof, wherever located. 

        (e)   All
references to "Guarantors" in the Loan Agreement and the other Financing Agreements shall be deemed and each such reference is hereby amended to mean, individually
and collectively, each Person that at any time guarantees payment or performance of all or any portion of the Obligations, including, Media Logic USA, LLC, a New York limited liability company, Movies
Plus, Inc., a New York corporation, Records N' Such, Inc., a New York corporation, Saturday Matinee, Inc., a New York corporation, Trans World New York, LLC, a New York limited
liability company, Camelot Music Holdings, Inc., a Delaware corporation, and Spec's Music, Inc., a Florida corporation, and their respective successors and assigns. 

7

  

        (f)    All
references to "Inventory" in the Loan Agreement and the other Financing Agreements shall be deemed and each such reference is hereby amended to mean, as to each
Borrower, all of such Borrower's now owned and hereafter existing or acquired goods, wherever located, which (i) are leased by Borrower as lessor; (ii) are held by Borrower for sale or
lease or to be furnished under a contract of service; (iii) are furnished by Borrower under a contract of service; or (iv) consist of raw materials, work in process, finished goods or
materials used or consumed in its business. 

        (g)   All
references to "MLI" in the Loan Agreement and the other Financing Agreements shall be deemed and each such reference is hereby redesignated "Media Logic" and amended
to mean Media Logic USA, LLC, a New York limited liability company, successor by merger to Media Logic, Inc., a New York corporation, its successors and assigns. 

        (h)   All
references to the term "Net Worth" in the Loan Agreement and the other Financing Agreements shall be deemed and each such reference is hereby amended to mean as to
any Person, at any time, in accordance with GAAP (except as otherwise specifically set forth below), on a consolidated basis for such Person and its subsidiaries (if any), the amount equal to the
difference between: (i) the aggregate net book value of all assets of such Person and its subsidiaries, calculating the book value of inventory for this purpose on an average cost method of
accounting for inventory at retail stores and at distribution center(s) after deducting from such book values all appropriate reserves in accordance with GAAP (including all reserves for doubtful
receivables, obsolescence, depreciation and amortization) and (ii) the aggregate amount of the indebtedness and other liabilities of such Person and its subsidiaries (including tax and other
proper accruals; provided, that, solely for purposes of calculating Net Worth of Borrowers and their
subsidiaries for the fiscal month ending May 31, 2003 and every fiscal month thereafter, (A) if Borrowers or their subsidiaries are required to take a charge for losses due to the
impairment of long-lived assets of Borrowers or their subsidiaries consisting of leasehold improvements as may be required by the provisions of Financial Accounting Standards
No. 144, then non-cash charges for such losses or non-cash write downs due to the impairment of all or part of such long-lived assets consisting of leasehold
improvements of any such Borrower or any such subsidiary of a Borrower up to $50,000,000 in the aggregate shall not be considered a reduction of total assets of such Borrowers or their subsidiaries,
and (B) if Borrowers and their subsidiaries are required in accordance with GAAP to take non-cash charges equal to the value of employee stock options, then non-cash
charges equal to the value required by Borrowers or their subsidiaries to be expensed under GAAP of up to $15,000,000 shall not be considered a reduction of total assets of such Borrowers or such
subsidiaries. 

        (i)    All
references to "R&S" in the Loan Agreement and the other Financing Agreements shall be deemed and each such reference is hereby amended to mean Records N'
Such, Inc., a New York corporation, its successors and assigns. 

        (j)    All
references to "RT Minnesota" in the Loan Agreement and the other Financing Agreements shall be deemed and each such reference is hereby amended to mean Record Town
Minnesota, LLC, a Delaware limited liability company, successor by conversion of Record Town Minnesota, Inc., a Delaware corporation into Record Town Minnesota, LLC, its successors and assigns. 

        1.3    Interpretation.    For purposes of this Amendment, unless otherwise defined herein, all terms used herein,
including, but not limited to, those terms used above, shall have the respective meanings given to them in the Loan Agreement. 

        2.    Consent to the Repurchase of Stock of TWE.    Notwithstanding anything to the contrary contained in
Section 9.11 of the Loan Agreement, Lender hereby consents to the repurchase, 

8

 

redemption
or retirement from time to time by TWE of up to 10,000,000 shares of its common stock having a value of up to $50,000,000 (which value shall be determined at the time of purchase of such
shares) in the aggregate during the period beginning on the date hereof through and including July 7, 2006, so long as at the time of any such repurchase, redemption or retirement, the
following conditions have been satisfied as determined by Lender: 

        (a)   as
of the date of any such repurchase, redemption or retirement and after giving effect to thereto, the Excess Availability of Borrowers on such date and the immediately
preceding thirty (30) consecutive days before such repurchase, redemption or retirement shall be not less than $25,000,000; 

        (b)   TWE
shall furnish to Lender, upon Lender's request, any agreements, documents and instruments evidencing or relating to such repurchase, redemption or retirement of such
shares of common stock of TWE; 

        (c)   any
such repurchase, redemption or retirement shall not contravene the Certificate of Incorporation and By-Laws of TWE and shall comply with all applicable
provisions of state and Federal law; 

        (d)   on
or before the date hereof, TWE has completed all repurchases, redemptions or retirements of TWE common stock otherwise permitted by Consent No. 5 under Loan
Agreement, dated as of January 12, 2001, among Lender, Borrowers and Existing Guarantors; and 

        (e)   no
Event of Default or event which with notice or passage of time or both, would constitute an Event of Default shall exist or have occurred and be continuing. 

        3.    Consents to Camelot Reorganization.    

        3.1    Camelot Reorganization.    Notwithstanding anything to the contrary contained in Sections 9.7(b), 9.7(c),
9.9(d), 9.10(c), or 9.12 of the Loan Agreement, subject to all other terms and conditions of the Loan Agreement and to the terms of the other Financing Agreements Lender consents to the following
transactions, to the extent such consent is or may be required under the Loan Agreement: 

        (a)   the
sale and transfer by TWE of all of the issued and outstanding Capital Stock of RTI to CMHI in exchange for the sale and assignment of all of the Camelot Assets to
RTI in accordance with the applicable Camelot Reorganization Agreements as in effect on the date of execution and delivery thereof; 

        (b)   after
the consummation of the transaction contemplated in Section 3(a) hereof, the sale by RTI to RT Michigan, and the purchase by RT Michigan from RTI, of all of
RTI's right, title and interest in and to all of the Connecticut and Michigan Camelot Store Assets, subject to the security interests and liens of Lender therein, all in accordance with the applicable
Camelot Reorganization Agreements as in effect on the date of execution and delivery thereof; 

        (c)   after
the consummation of the transaction contemplated in Section 3(a) hereof, the sale by RTI to RT Minnesota, and the purchase by RT Minnesota from RTI, of all
of RTI's right, title and interest in and to all of the California, Illinois and New Hampshire Camelot Store Assets, subject to the security interests and liens of Lender therein, all in accordance
with the applicable Camelot Reorganization Agreements as in effect on the date of execution and delivery thereof; 

        (d)   after
the consummation of the transaction contemplated in Sections 3(b) and 3(c) hereof, the assignment by RT Michigan to TW New York LLC, and the assumption by TW New
York LLC from RT Michigan, of all of RT Michigan's right, title and interest in and to 

9

 

all
of the Camelot Trademarks, subject to the security interests and liens of Lender therein, all in accordance with the applicable Camelot Reorganization Agreements as in effect on the date of
execution and delivery date thereof; 

        (e)   after
the consummation of the transaction contemplated in Sections 3(b) and 3(c) hereof, the assignment by RTI Minnesota to TW New York LLC, and the assumption by TW New
York LLC from RT Minnesota, of all of RTI Minnesota's right, title and interest in and to all of the Camelot Trademarks, subject to the security interests and liens of Lender therein, all in
accordance with the applicable Camelot Reorganization Agreements as in effect on the date of execution and delivery date thereof; and 

        (f)    the
merger of Camelot Distribution Co., Inc. with and into Trans World Management Company, Inc. pursuant to the terms and conditions of the TW
Management/Camelot Distribution Merger in accordance with the TW Management/Camelot Distribution Merger Agreements as in effect on the date of execution and delivery thereof. 

        3.2    Acknowledgments with respect to Camelot Reorganization.    Effective as of the earlier of the date hereof or
the effective date of the Camelot Reorganization as to the respective parties, each Borrower and each Guarantor, including, without limitation, CMHI and Specs, hereby agrees that all references to
Guarantor or Guarantors or other terms intended to refer to a Guarantor or Guarantors, such as Debtor or Debtors, contained in any of the Financing Agreements are hereby amended to include each of
CMHI and Specs and each other person or entity at any time hereafter made a "Guarantor" under the Loan Agreement, as an additional Guarantor or Debtor, or other appropriate term of similar import, as
the case may be. 

        4.    Consents to Certain Corporate Changes and Dissolutions.    

        4.1    RT Minnesota Conversion.    

        (a)   Notwithstanding
anything to the contrary contained in Sections 9.1 or 9.7 of the Loan Agreement, subject to the terms and conditions contained herein, Lender hereby
consents to the RT Minnesota Conversion. 

        (b)   Effective
as of the earlier of the date hereof or the effective date of the RT Minnesota Conversion: 

          (i)  Record
Town Minnesota, LLC hereby expressly (A) assumes and agrees to be directly liable to Lender, jointly and severally with the other Borrowers, for all
Obligations under, contained in, or arising out of the Loan Agreement and the other Financing Agreements applicable to all Borrowers and as applied to RT Minnesota as a Borrower and Guarantor,
(B) agrees to perform, comply with and be bound by all terms, conditions and covenants of the Loan Agreement and the other Financing Agreements applicable to all Borrowers and as applied to RT
Minnesota as a Borrower and Guarantor, with the same force and effect as if RT Minnesota had originally executed and been an original Borrower and Guarantor party signatory to the Loan Agreement and
the other Financing Agreements, and (C) agrees that Lender shall have all rights, remedies and interests, including security interests in
and to the Collateral granted pursuant to Section 5 hereof, the Loan Agreement and the other Financing Agreements, with respect to RT Minnesota and its properties and assets with the same force
and effect as Lender has with respect to the other Borrowers and their respective assets and properties as if RT Minnesota had originally executed and had been an original Borrower and Guarantor party
signatory to the Loan Agreement and the other Financing Agreements. 

         (ii)  Record
Town Minnesota, LLC, a Delaware limited liability company as the surviving corporation pursuant to the RT Minnesota Conversion, has continued and shall 

10

 

continue
to be directly and primarily liable in all respects for the Obligations of Record Town Minnesota, Inc., a Delaware corporation, arising prior to the effective time of the RT Minnesota
Conversion; and 

        (iii)  Lender
has and shall continue to have valid and perfected security interests, liens and rights in and to all of the assets and properties owned and acquired by Record
Town Minnesota, LLC, as the converted limited liability company of the RT Minnesota Conversion pursuant to the RT Minnesota Conversion Agreements, by operation of law or otherwise, and all such assets
and properties shall be deemed included in the Collateral and such security interests, liens and rights and their perfection and priorities have continued and shall continue in all respects in full
force and effect. 

        4.2    Media Logic Merger.    

        (a)   Notwithstanding
anything to the contrary contained in Section 5.1 of the General Security Agreement, dated July 9, 1997, by Media Logic, Inc. in
favor of Lender (as the same now exists and may hereafter be amended, modified, extended, renewed, restated or replaced, the "Media Logic Security Agreement"), subject to the terms and conditions
contained herein, Lender hereby consents to the merger of Media Logic a New York corporation with and into Media Logic USA, LLC, with Media Logic USA, LLC as the surviving entity. 

          (i)  Media
Logic USA, LLC hereby expressly (A) assumes and agrees to be directly liable to Lender, jointly and severally with the other Guarantors, for all
"Guaranteed Obligations" as defined in the Guarantee dated July 7, 1997 by Media Logic in favor of Lender (the "Media Logic Guarantee") and the other Financing Agreements applicable to all
Guarantors and as applied to Media Logic as a Guarantor, (B) agrees to perform, comply with and be bound by all terms, conditions and covenants of the Media Logic Guarantee, Media Logic
Security Agreement and the other Financing Agreements applicable to all Guarantors and as applied to Media Logic as a Guarantor, with the same force and effect as if Media Logic had originally
executed and been an original Guarantor party signatory to the Financing Agreements, and (C) agrees that Lender shall have all rights, remedies and interests, including security interests in
and to the Collateral granted pursuant to Section 5 hereof, the Media Logic Guarantee, the Media Logic Security Agreement and the other Financing Agreements, with
respect to Media Logic and its properties and assets with the same force and effect as Lender has with respect to the other Guarantors and their respective assets and properties as if Media Logic had
originally executed and had been an original Guarantor party signatory to the Media Logic Guarantee, the Media Logic Security Agreement and the other Financing Agreements. 

         (ii)  Media
Logic USA, LLC, a New York limited liability company as the surviving corporation pursuant to the Media Logic Merger, has continued and shall continue to be
directly and primarily liable in all respects for the Guaranteed Obligations of Media Logic, Inc., a New York corporation, arising prior to the effective time of the Media Logic Merger; and 

        (iii)  Lender
has and shall continue to have valid and perfected security interests, liens and rights in and to all of the assets and properties owned and acquired by Media
Logic USA, LLC, as the surviving entity of the Media Logic Merger pursuant to the Media Logic Merger Agreements, by operation of law or otherwise, and all such assets and properties shall be deemed
included in the Collateral and such security interests, liens and rights and their perfection and priorities have continued and shall continue in all respects in full force and effect. 

11

 

        4.3    Dissolution of TWFC and TWEC LLC.    

        (a)   Notwithstanding
anything to the contrary contained in Section 5.1 of the General Security Agreement, dated July 9, 1997, by TWFC in favor of Lender or
Section 5.1 of the General Security Agreement, dated as of December 31, 1998, by TWEC LLC in favor of Lender, Lender hereby consents to the dissolution of TWFC and TWEC LLC. 

        (b)   Each
of Borrowers and Guarantors hereby acknowledges, confirms and agrees that, upon the effectiveness of the dissolutions of TWFC and TWEC LLC: 

          (i)  The
dissolutions of TWFC and TWEC LLC consented to under Section 4.3(a) hereof shall not in any way limit, impair or adversely affect the Obligations now or
hereafter owed to Lender by any continuing Borrower or Guarantor, including, without limitation, any such Obligations they have as shareholders of such dissolved Guarantors pursuant to applicable law; 

         (ii)  Lender
shall continue to have valid and perfected security interests, liens and rights in and to all assets and properties of each of TWFC and TWEC LLC and such assets
and properties of TWFC and TWEC LLC shall continue to be deemed included in the Collateral of those entities, and such security
interests, liens and rights and their perfection and priorities shall continue in all respects in full force and effect; 

        (iii)  as
soon as available, but in any event, no later than thirty (30) days after the date hereof, Borrowers and Guarantors shall deliver to Lender, in form and
substance satisfactory to Lender, true and complete copies of all of the dissolution agreements, documents and instruments with respect to the dissolution of TWFC and TWEC LLC; and 

        (iv)  as
soon as available, but in any event, no later than thirty (30) days after the date hereof, Lender shall have received, in form and substance satisfactory to
Lender, evidence that the certificate of dissolution with respect to TWFC and TWEC LLC has been issued by the appropriate State governmental authority. 

        5.    Collateral.    

        5.1    Grant of Security Interest.    Without limiting the provisions of Section 4(a) hereof, to secure payment
and performance of all Obligations, each Borrower and Guarantor hereby grants (and confirms its prior grant of) to Lender, a continuing security interest in, a lien upon, and a right of set off
against, and hereby assigns (and confirms its prior assignment) to Lender, as security, all personal and real property and fixtures, and interests in property and fixtures, of each Borrower and
Guarantor, whether now owned or hereafter acquired or existing, and wherever located (together with all other collateral security for the Obligations at any time granted to or held or acquired by
Lender, collectively, the "Collateral", including, without limitation): 

        (a)   all
Accounts; 

        (b)   all
general intangibles, including, without limitation, all Intellectual Property; 

        (c)   all
goods, including, without limitation, Inventory and Equipment; 

        (d)   all
Real Property and fixtures; 

        (e)   all
chattel paper, including, without limitation, all tangible and electronic chattel paper; 

        (f)    all
instruments, including, without limitation, all promissory notes; 

        (g)   all
documents; 

12

 

        (h)   all
deposit accounts; 

        (i)    all
letters of credit, banker's acceptances and similar instruments and including all letter-of-credit rights; 

        (j)    all
supporting obligations and all present and future liens, security interests, rights, remedies, title and interest in, to and in respect of Receivables and other
Collateral, including (i) rights and remedies under or relating to guaranties, contracts of suretyship, letters of credit and credit and other insurance related to the Collateral,
(ii) rights of stoppage in transit, replevin, repossession, reclamation and other rights and remedies of an unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing or evidencing, Receivables or other Collateral, including returned, repossessed and reclaimed goods, and
(iv) deposits by and property of account debtors or other persons securing the obligations of account debtors; 

        (k)   all
(i) investment property (including securities, whether certificated or uncertificated, securities accounts, security entitlements, commodity contracts or
commodity accounts) and (ii) monies, credit balances, deposits and other property of any Borrower or Guarantor now or hereafter held or received by or in transit to Lender or its Affiliates or
at any other depository or other institution from or for the account of any Borrower or Guarantor, whether for safekeeping, pledge, custody, transmission, collection or otherwise; 

        (l)    all
commercial tort claims, including, without limitation, those identified of Schedule 5.1(l) hereto and in the Information Certificate; 

        (m)  to
the extent not otherwise described above, all Receivables; 

        (n)   all
Records; and 

        (o)   all
products and proceeds of the foregoing, in any form, including insurance proceeds and all claims against third parties for loss or damage to or destruction of or
other involuntary conversion of any kind or nature of any or all of the other Collateral. 

        5.2    Perfection of Security Interests.    

        (a)   Each
Borrower and Guarantor irrevocably and unconditionally authorizes Lender (or its agent) to file at any time and from time to time such financing statements with
respect to the Collateral naming Lender or its designee as the secured party and such Borrower or Guarantor as debtor, as Lender may require, and including any other information with respect to such
Borrower or Guarantor or otherwise required by part 5 of Article 9 of the Uniform Commercial Code of such jurisdiction as Lender may determine, together with any amendment and
continuations with respect thereto, which authorization shall apply to all financing statements filed on, prior to or after the date hereof. Each Borrower and Guarantor hereby ratifies and approves
all financing statements naming Lender or its designee as secured party and such Borrower or Guarantor, as the case may be, as debtor with respect to the Collateral (and any amendments with respect to
such financing statements) filed by or on behalf of Lender prior to the date hereof and ratifies and confirms the authorization of Lender to file such financing statements (and amendments, if any).
Each Borrower and Guarantor hereby authorizes Lender to adopt on behalf of such Borrower and Guarantor any symbol required for authenticating any electronic filing. In the event that the description
of the collateral in any financing statement naming Lender or its designee as the secured party and any Borrower or Guarantor as debtor includes assets and properties of such Borrower or Guarantor
that do not at any time constitute Collateral, whether hereunder, under any of the other Financing Agreements or otherwise, the filing of such financing statement shall nonetheless be deemed
authorized by such Borrower or Guarantor to the extent of the 

13

 

Collateral
included in such description and it shall not render the financing statement ineffective as to any of the Collateral or otherwise affect the financing statement as it applies to any of the
Collateral. In no event shall any Borrower or Guarantor at any time file, or permit or cause to be filed, any correction statement or termination statement with respect to any financing statement (or
amendment or continuation with respect thereto) naming Lender or its designee as secured party and such Borrower or Guarantor as debtor. 

        (b)   Each
Borrower and Guarantor does not have any chattel paper (whether tangible or electronic) or instruments as of the date hereof, except as set forth in
Schedule 5.2(b) hereto and the Information Certificate. In the event that any Borrower or Guarantor shall be entitled to or shall receive any chattel paper or instrument after the date hereof
having individually or collectively a value in excess of $1,000,000 in the aggregate, Borrowers and Guarantors shall promptly notify Lender thereof in writing. Promptly upon the receipt thereof by or
on behalf of any Borrower or Guarantor (including by any agent or representative), such Borrower or Guarantor shall deliver, or cause to be delivered to Lender, all tangible chattel paper and
instruments that such Borrower or Guarantor has or may at any time acquire, accompanied by such instruments of transfer or assignment duly executed in blank as Lender may from time to time specify, in
each case except as Lender may otherwise agree. At Lender's option,
each Borrower and Guarantor shall, or Lender may at any time on behalf of any Borrower or Guarantor, cause the original of any such instrument or chattel paper to be conspicuously marked in a form and
manner acceptable to Lender with the following legend referring to chattel paper or instruments as applicable: "This [chattel paper][instrument] is
subject to the security interest of Congress Financial Corporation and any sale, transfer, assignment or encumbrance of this [chattel paper][instrument]
violates the rights of such secured party." 

        (c)   In
the event that any Borrower or Guarantor shall at any time hold or acquire an interest in any electronic chattel paper or any "transferable record" (as such term is
defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction), such Borrower or Guarantor shall promptly notify Lender thereof in writing. Promptly upon Lender's request, such Borrower or Guarantor shall take, or cause to be taken, such actions as
Lender may request to give Lender control of such electronic chattel paper under Section 9-105 of the UCC and control of such transferable record under Section 201 of the
Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such jurisdiction. 

        (d)   Each
Borrower and Guarantor does not have any deposit accounts as of the date hereof, except as set forth in Schedule 5.2(d) hereto and the Information
Certificate. Borrowers and Guarantors shall not, directly or indirectly, after the date hereof open, establish or maintain any deposit account unless each of the following conditions is satisfied:
(i) Lender shall have received not less than five (5) Business Days' prior written notice of the intention of any Borrower or Guarantor to open or establish such account which notice
shall specify in reasonable detail and specificity acceptable to Lender the name of the account, the owner of the account, the name and address of the bank at which such account is to be opened or
established, the individual at such banks with whom such Borrower or Guarantor is dealing and the purpose of the account, (ii) the bank where such account is opened or maintained shall be
acceptable to Lender, and (iii) on or before the opening of such deposit account, such Borrower or Guarantor shall as Lender may specify either (A) deliver to Lender a Deposit Account
Control Agreement with respect to such deposit account duly authorized, executed and delivered by such Borrower or Guarantor and the bank at which such deposit account is opened and maintained or
(B) arrange for Lender to become the customer of the bank with respect to the deposit account on terms and conditions acceptable to Lender. The 

14

 

terms
of this subsection (d) shall not apply to (1) deposit accounts specifically and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for
the benefit of any Borrower's or Guarantor's salaried employees or (2) the deposit accounts of Borrowers and Guarantors with the local retail banks of Borrowers and Guarantors so long as
(x) the amounts in such deposit accounts are remitted at the end of each Business Day to a Blocked Account in accordance with Section 6.3 of the Loan Agreement and (y) the amount
of cash receipts at any such deposit account bank in the aggregate does not exceed fifteen (15%) percent of the amount of cash receipts (exclusive of credit card receipts) for Borrowers and Guarantors
in the aggregate on a monthly basis for all Borrowers and Guarantors. Borrowers and Guarantors shall use commercially reasonable efforts to deliver to Lender a Deposit Account Control Agreement with
respect to such local retail deposit accounts duly authorized, executed and delivered by such Borrower or Guarantor and such banks at which such deposit account is opened and maintained and at which
the aggregate amount of cash receipts at any such deposit account bank exceeds fifteen (15%) percent of the amount of cash receipts (exclusive of credit card receipts) for Borrowers and Guarantors in
the aggregate on a monthly basis for all Borrowers and Guarantors. 

        (e)   No
Borrower or Guarantor owns or holds, directly or indirectly, beneficially or as record owner or both, any investment property, as of the date hereof, or have any
investment account, securities account, commodity account or other similar account with any bank or other financial institution or other securities intermediary or commodity intermediary as of the
date hereof, in each case except as set forth in Schedule 5.2(e) hereto and the Information Certificate. 

          (i)  In
the event that any Borrower or Guarantor shall be entitled to or shall at any time after the date hereof hold or acquire any certificated securities, such Borrower
or Guarantor shall notify Lender and at the request of Lender, promptly endorse, assign and deliver the same to Lender, accompanied by such instruments of transfer or assignment duly executed in blank
as Lender may from time to time specify. If any securities, now or hereafter acquired by any Borrower or Guarantor are uncertificated, are issued to such Borrower or Guarantor or its nominee directly
by the issuer thereof, and individually or collectively have a market value in excess of $1,000,000 in the aggregate, such Borrower or Guarantor shall immediately notify Lender thereof and shall as
Lender may specify, either (A) cause
the issuer to agree to comply with instructions from Lender as to such securities, without further consent of any Borrower or Guarantor or such nominee, or (B) arrange for Lender to become the
registered owner of the securities. 

         (ii)  Borrowers
and Guarantors shall not, directly or indirectly, after the date hereof open, establish or maintain any investment account, securities account, commodity
account or any other similar account (other than a deposit account) with any securities intermediary or commodity intermediary unless each of the following conditions is satisfied: (A) Lender
shall have received not less than five (5) Business Days' prior written notice of the intention of Borrower or Guarantor to open or establish such account which notice shall specify in
reasonable detail and specificity acceptable to Lender the name of the account, the owner of the account, the name and address of the securities intermediary or commodity intermediary at which such
account is to be opened or established, the individual at such intermediary with whom such Borrower or Guarantor is dealing and the purpose of the account, (B) the securities intermediary or
commodity intermediary (as the case may be) where such account is opened or maintained shall be acceptable to Lender, and (C) on or before the opening of such investment account, securities
account or other similar account with a securities intermediary or commodity intermediary, such Borrower or Guarantor shall as Lender 

15

 

may
specify either (1) execute and deliver, and cause to be executed and delivered to Lender, an Investment Property Control Agreement with respect thereto duly authorized, executed and
delivered by such Borrower or Guarantor and such securities intermediary or commodity intermediary or (2) arrange for Lender to become the entitlement holder with respect to such investment
property on terms and conditions acceptable to Lender. As of the date hereof, Borrowers and Guarantors have established or maintain investment accounts, securities accounts, commodity accounts or any
other similar account (other than a deposit account) with those securities intermediaries or commodity intermediaries listed on Schedule 5.2(e) hereto. Borrowers and Guarantors shall promptly,
but in any event by no later than July 31, 2003, execute and deliver, and cause to be executed and delivered to Lender, an Investment Property Control Agreement with respect to such accounts,
duly authorized, executed and delivered by such Borrower or Guarantor and such securities intermediaries or commodity intermediaries. 

        (f)    Borrowers
and Guarantors are not the beneficiary or otherwise entitled to any right to payment under any letter of credit, banker's acceptance or similar instrument as
of the date hereof, except as set forth in Schedule 5.2(f) hereto and the Information Certificate. In the event that any Borrower or Guarantor shall be entitled to or shall receive any right to
payment under any letter of credit, banker's acceptance or any similar instrument individually or collectively have a stated amount in excess of $1,000,000 in the aggregate, whether as beneficiary
thereof or otherwise after the date hereof, such Borrower or Guarantor shall promptly notify Lender thereof in writing. Such Borrower or Guarantor shall immediately, as Lender may specify, either
(i) deliver, or cause to be delivered to Lender, with respect to any such letter of credit, banker's acceptance or similar instrument, the written agreement of the issuer and any other
nominated person obligated to make any payment in respect thereof (including any confirming or negotiating bank), in form and substance satisfactory to Lender, consenting to the assignment of the
proceeds of the letter of credit to Lender by such Borrower or Guarantor and agreeing to make all payments thereon directly to Lender or as Lender may otherwise direct or (ii) cause Lender to
become, at Borrowers' expense, the transferee beneficiary of the letter of credit, banker's acceptance or similar instrument (as the case may be). 

        (g)   Borrowers
and Guarantors do not have any commercial tort claims as of the date hereof, except as set forth on Schedule 5.1(l) hereto and in the Information
Certificate. In the event that any Borrower or Guarantor shall at any time after the date hereof have any commercial tort claims individually or collectively having a stated amount of recovery or
damages sought in excess of $1,000,000 in the aggregate, such Borrower or Guarantor shall promptly notify Lender thereof in writing, which notice shall (i) set forth in reasonable detail the
basis for and nature of such commercial tort claim and (ii) include the express grant by such Borrower or Guarantor to Lender of a security interest in such commercial tort claim (and the
proceeds thereof). In the event that such notice does not include such grant of a security interest, the sending thereof by such Borrower or Guarantor to Lender shall be deemed to constitute such
grant to Lender. Upon the sending of such notice, any commercial tort claim described therein shall constitute part of the Collateral and shall be deemed included therein. Without limiting the
authorization of Lender provided in Section 5.2(a) hereof or otherwise arising by the execution by such Borrower or Guarantor of this Amendment or any of the other Financing Agreements, Lender
is hereby irrevocably authorized from time to time and at any time to file such financing statements naming Lender or its designee as secured party and such Borrower or Guarantor as debtor, or any
amendments to any financing statements, covering any such commercial tort claim as Collateral. In addition, each Borrower and Guarantor shall promptly upon Lender's request, execute and deliver, or
cause to be executed and delivered, to Lender such other agreements, 

16

 

documents
and instruments as Lender may require in connection with such commercial tort claim. 

        (h)   Borrower
and Guarantors do not have any goods, documents of title or other Collateral in the custody, control or possession of a third party as of the date hereof,
except as set forth in Schedule 5.2(h) hereto and the Information Certificate and except for goods located in the United States in transit to a location of a Borrower or Guarantor permitted
herein in the ordinary course of business of such Borrower or Guarantor in the possession of the carrier transporting such goods. In the event that any goods, documents of title or other Collateral
are at any time after the date hereof in the custody, control or possession of any other person not referred to in Schedule 5.2(h) hereto or the Information Certificate or such carriers,
Borrowers and Guarantors shall promptly notify Lender thereof in writing. Promptly upon Lender's request, Borrowers and Guarantors shall use reasonable efforts to deliver to Lender a Collateral Access
Agreement, duly authorized, executed and delivered by such person and the Borrower or Guarantor that is the owner of such Collateral. 

        (i)    Borrowers
and Guarantors shall take any other actions reasonably requested by Lender from time to time to cause the attachment, perfection and first priority of, and the
ability of Lender to enforce, the security interest of Lender in any and all of the Collateral, including, without limitation, (i) executing, delivering and, where appropriate, filing financing
statements and amendments relating thereto under the UCC or other applicable law, to the extent, if any, that any Borrower's or Guarantor's signature thereon is required therefor, (ii) causing
Lender's name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of Lender to enforce, the
security interest of Lender in such Collateral, (iii) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or ability of Lender to enforce, the security interest of Lender in such Collateral, and (iv) obtaining the consents and
approvals
of any Governmental Authority or third party, including, without limitation, any consent of any licensor, lessor or other person obligated on Collateral, and taking all actions required by any earlier
versions of the UCC or by other law, as applicable in any relevant jurisdiction. 

        5.3    Amendments to Loan Agreement and Existing Guarantor Security Agreements.    

        (a)   Each
Borrower hereby acknowledges, confirms and agrees that effective on and after the date hereof Section 5 of the Loan Agreement is hereby amended by replacing
Sections 5.1 through 5.7 of the Loan Agreement with Sections 5.1 and 5.2 hereof, together with all the appropriate schedules and exhibits hereto, as applicable to a Borrower. 

17

  

        (b)   Each
Guarantor hereby acknowledges, confirms and agrees that effective on and after the date hereof Section 2 of each of the Existing Guarantor Security
Agreements is hereby amended by replacing Sections 2.1 through 2.7 of the Existing Guarantor Security Agreements with Sections 5.1 and 5.2 hereof, together with all the appropriate schedules and
exhibits hereto, as applicable to a Guarantor. 

        6.    Information Certificates and Schedules.    

        (a)   Schedule II
of the Information Certificate of RTI is hereby amended to include, without limitation, those locations as set forth on Exhibit A hereto. 

        (b)   Schedule II
of the Information Certificate of RT Michigan is hereby amended to include, without limitation, those locations as set forth on Exhibit B
hereto. 

        (c)   Schedule II
of the Information Certificate of RT Minnesota is hereby amended to include, without limitation, those locations as set forth on Exhibit C
hereto. 

        7.    Investments.    Section 9.10(f) of the Loan Agreement is hereby amended by deleting clauses
(B) and (C) in their entirety and replacing them with the following: 

        "(B)
the aggregate amount of all such investments (whether with respect to Retailing Investments or Retailing Ventures or both) made by Borrowers after May 30, 2003 shall not
exceed $50,000,000, (C) Borrowers shall have maintained not less than $25,000,000 of Excess Availability as of the close of business of each day during the period of thirty
(30) consecutive days immediately preceding each such investment and after giving effect thereto," 

        8.    Additional Bank Accounts.    Section 9.15 of the Loan Agreement is hereby deleted in its entirety and
replaced with the following: 

        "9.15    Additional Bank Accounts.    No Borrower shall, directly or indirectly, open, establish or maintain any
deposit account, investment account or any other account with any bank or other financial institution, other than the Blocked Accounts and the accounts set forth in Schedule 6.3 hereto and
Schedule 5.2(d) hereto, except to the extent permitted by Sections 5.2(d) and 5.2(e) hereof." 

        9.    Minimum Net Worth.    Section 9.16 of the Loan Agreement is hereby amended and restated in its entirety
as follows: 

        "9.16    Minimum Net Worth. 

        (a)   Borrowers
shall, at all times from July 9, 1997 to April 30, 2003, on a consolidated basis with their subsidiaries, maintain a Net Worth of not less than
$75,000,000. 

        (b)   Borrowers
shall, on and after May 1, 2003 at all times, on a consolidated basis with their subsidiaries, maintain a Net Worth of not less than $290,000,000.
Borrowers shall not be required to deliver a statement to Lender certifying that Borrowers are in compliance with this Section 9.16(b) so long as Excess Availability of Borrowers at any time is
equal to or greater than $30,000,000. 

        (c)   If
Excess Availability at any time is less than $30,000,000 (an "Excess Availability Trigger Event"), Borrowers shall deliver to Lender each month upon and after the
occurrence and during the continuance of an Excess Availability Trigger Event, a certificate, in form and substance satisfactory to Lender, certified by the chief financial officer of TWE that
Borrowers are in compliance with Section 9.16(b) hereof by maintaining Net Worth of not less than $290,000,000, together with a schedule of the calculations used to determine such compliance;  provided,
that, if Borrowers thereafter maintain Excess Availability in excess of $30,000,000 for 

18

 

a
period of thirty (30) consecutive days, then Borrowers shall no longer be required to comply with this Section 9.16(c) until such time as an Excess Availability Trigger Event occurs." 

        10.    Term.    Section 12.1(a) of the Loan Agreement is hereby amended by deleting the first two sentences of
that Section and replacing them with the following: 

        "(a)
This Agreement and the other Financing Agreements shall become effective as of the date set forth on the first page hereof and shall continue in full force and effect for a term
ending on July 9, 2006 (the "Renewal Date"), and from year to year thereafter, unless sooner terminated pursuant to the terms hereof; provided,  that,
Lender may, at its option, extend the Renewal Date to July 9, 2007 by
giving Borrower written notice at least sixty (60) days prior to July 9, 2006. Lender may terminate this Agreement and the other Financing Agreements effective on the Renewal Date or on
the anniversary of the Renewal Date in any year by giving to Borrowers or TWE on behalf of Borrowers at least sixty (60) days' prior written notice and Borrowers may terminate this Agreement at
any time without premium or penalty, including, the payment of any prepayment or early termination fees; provided,  that, this Agreement and all other
Financing Agreements must be terminated simultaneously." 

        Section
11.    Waiver of Event of Default.    

        11.1     Lender
hereby waives, subject to the terms and conditions contained in this Amendment, the Event of Default arising under Section 10.1(a)(ii)(C) of
the Loan Agreement as a result of the failure of Borrowers to comply with Section 9.15 of the Loan Agreement with respect to the deposit accounts opened by Borrowers or Guarantors with Bank of
America, N. A., Fleet National Bank, N.A. and Wachovia Bank and the investments accounts opened by Borrowers or Guarantors with the securities intermediaries listed on Schedule 5.2(e) hereto. 

        11.2     The
waiver contained in Section 11.1 hereof is conditioned upon Borrowers and Guarantors using commercially reasonable efforts to obtain a Deposit
Account Control Agreement from each of Bank of America, N. A., Fleet National Bank, N.A. and Wachovia Bank with respect to such deposit accounts and Borrowers and Guarantors using best efforts to
obtain an Investment Property Control Agreement from each of the securities intermediaries listed on Schedule 5.2(e) hereto. Lender has not waived and is not by this Amendment waiving, and has
no intention of waiving, any other Event of Default, which may have occurred before the date hereof, or may be continuing on the date hereof or any Event of Default that may occur after the date
hereof, whether the same or similar to the Event of Default described in Section 11.1 hereof or otherwise, other than the Event of Default described in Section 11.1 hereof. Lender
reserves the right, in its discretion, to exercise its rights and remedies arising under the Financing Agreements, applicable law or otherwise as a result of any other Events of Default that may have
occurred before the date hereof, or are continuing on the date hereof, or any Event of Default that may occur after the date hereof, whether the same or similar to the Event of Default described in
Section 11.1 hereof or otherwise. 

        12.    Amendment Fee.    In addition to all other fees, charges, interest and expenses payable by Borrowers to Lender
under the Financing Agreements, Borrowers shall pay to Lender a fee for entering into this Amendment in the amount of $150,000, which amount is fully earned and payable as of the date hereof and may,
at Lender's option, be charged directly to Borrowers' Loan account maintained by Lender. 

        13.    Representations, Warranties and Covenants.    Borrowers and Guarantors represent, warrant and covenant with and
to Lender as follows, which representations, warranties and covenants are continuing and shall survive the execution and delivery hereof, the truth and accuracy of, or compliance with each, together
with the representations, warranties and covenants in the other Financing Agreements, being a 

19

 

condition
of the effectiveness of this Amendment and a continuing condition of the making or providing of any Loans or Letter of Credit Accommodations by Lender to Borrowers: 

        (a)   This
Amendment and each other agreement or instrument to be executed and delivered by Borrowers and CMHI, Specs and the other Guarantors hereunder have been duly
authorized, executed and delivered by all necessary action on the part of each of Borrowers and each of CMHI, Specs and the other Guarantors which is a party hereto and thereto and, if necessary,
their respective stockholders (with respect to any corporation) or members (with respect to any limited liability company), and is in full force and effect as of the date hereof, as the case may be,
and the agreements and obligations of each of Borrowers and CMHI, Specs and the other Guarantors, as the case may be, contained herein and therein constitute legal, valid and binding obligations of
each of Borrowers and CMHI, Specs and the other Guarantors, as the case may be, enforceable against them in accordance with their terms, except as enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors' rights generally and by general principles of equity regardless of whether considered a proceeding in equity or
at law. 

        (b)   Neither
the execution and delivery of the Camelot Reorganization Agreements, nor the consummation of the transactions contemplated by the Camelot Reorganization
Agreements, nor compliance with the provisions of the Camelot Reorganization Agreements, shall result in the creation or imposition of any lien, claim, charge or encumbrance upon any of the Camelot
Assets or any other Collateral, except in favor of Lender and except as may otherwise be permitted by the Loan Agreement and the other Financing Agreements. 

        (c)   Neither
the execution and delivery of the Camelot Reorganization Agreements, nor the consummation of the transactions therein contemplated, nor compliance with the
provisions thereof, (i) has violated or shall violate any applicable Federal or State securities laws or any other law or regulation in any material respect or any order or decree of any court
or governmental instrumentality in any respect, except for such violations that would not have or would not reasonably be expected to have a Material Adverse Effect or a Material Adverse Effect as
defined in the Existing Guarantor Security Agreements, (ii) does, or shall conflict with or result in the breach of, or constitute a default in any respect under any mortgage, deed of trust,
security agreement, agreement or instrument to which any of Borrowers, CMHI, Specs or any other Guarantor is a party or may be bound, except for such conflicts, breaches or defaults that would not
have or would not reasonably be expected to have a Material Adverse Affect or a Material Adverse Effect as defined in the Existing Guarantor Security Agreements or (iii) shall violate any
provision of the Certificates of Incorporation or By-Laws of Borrowers, CMHI, Specs or any other Guarantor. 

        (d)   All
of the outstanding shares of capital stock of each of CMHI and Specs have been duly authorized, validly issued and are fully paid and non-assessable,
free and clear of all claims, liens, pledges and encumbrances of any kind, except those granted in favor of Lender pursuant to the Financing Agreements. TWE is the beneficial and direct owner of
record of one hundred (100%) percent of the issued and outstanding shares of capital stock of CMHI. RTI is the beneficial and direct owner of record of one hundred (100%) percent of the issued and
outstanding shares of capital stock of Specs. 

        (e)   No
court of competent jurisdiction has issued any injunction, restraining order or other order which has prohibited or prohibits consummation of the Camelot
Reorganization or any part thereof, and no governmental action or proceeding has been threatened or commenced seeking any injunction, restraining order or other order which seeks to void or otherwise
modify the transactions described in the Camelot Reorganization Agreements. 

20

 

        (f)    Each
of CMHI and Specs is a corporation, duly organized and validly existing in good standing under the laws of its State of incorporation. Each of CMHI and Specs is
duly licensed or qualified to do business as a foreign limited liability company or foreign corporation, as the case may be, and is in good standing in each of the jurisdictions set forth in
Exhibit D annexed hereto, which are the only jurisdictions wherein the character of the properties owned or licensed or the nature of the business of any of CMHI and Specs, makes such licensing
or qualification to do business necessary and has all requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted and will be
conducted in the future. By no later than July 15, 2003, Specs shall deliver to Lender, in form and substance satisfactory to Lender, evidence that Specs is in good standing in the Commonwealth
of Puerto Rico. 

        (g)   The
assets and properties of CMHI and Specs are owned by them, free and clear of all security interests, liens and encumbrances of any kind, nature or description, as of
the date hereof, except those security interests existing in favor of Lender and those granted pursuant hereto in favor of Lender, and except for liens (if any) permitted under Section 8.4 of
the Loan Agreement or the other Financing Agreements. 

        (h)   No
action of, or filing with, or consent of any governmental or public body or authority, other than the filing of UCC financing statements or filings with the U.S.
Patent and Trademark Office, and no approval or consent of any other party, is required to authorize, or is otherwise required in connection with, the execution, delivery and performance of this
Amendment. 

        (i)    All
of the representations and warranties set forth in the Loan Agreement as amended hereby, and the other Financing Agreements, are true and correct in all material
respects after giving effect to the
provisions of this Amendment, except to the extent any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct as
of such date. 

        (j)    By
no later than June 30, 2003, Lender shall have received, in form and substance satisfactory to Lender, updates or amendments to the existing Evidence of
Property Insurance and Certificate of Liability Insurance issued in favor of Lender with respect to coverage as to CMHI, Specs and the Camelot Assets. 

        (k)   By
no later than June 30, 2003, Lender shall have received, in form and substance satisfactory to Lender, a Trademark Collateral Assignment and Security Agreement
between Lender and Specs with respect to all present and future trademarks of Specs, together with Special Power of Attorney (Trademarks) by Specs in favor of Congress with respect thereto. 

        14.    Conditions Precedent.    The effectiveness of this Amendment and the agreement of Lender to the consents,
modifications and amendments set forth in this Amendment are subject to the fulfillment of the following conditions precedent: 

        (a)   Lender
shall have received, in form and substance satisfactory to Lender, evidence that (i) the Camelot Reorganization Agreements have been duly executed and
delivered by and to the appropriate parties thereto and (ii) the transactions that are contemplated by the Camelot Reorganization Agreements to be consummated prior to or as of the date hereof
have been consummated prior to, or contemporaneously with, the execution of this Amendment; 

        (b)   Borrowers
and Guarantors shall have delivered, or shall have caused to be delivered, to Lender, in form and substance satisfactory to Lender, each of the following
agreements to which it is a party, duly authorized, executed and delivered: 

          (i)  an
original of Amendment No. 1 to Trademark Collateral Assignment and Security Agreement between TW New York LLC and Lender, and any such documents, instruments
or 

21

 

filings
with respect thereto with the U.S. Patent and Trademark Office to protect such Collateral; 

         (ii)  originals
of Guarantees by each of CMHI and Specs in favor of Lender with respect to the Obligations of Borrowers to Lender; 

        (iii)  an
original of General Security Agreements by each of CMHI and Specs in favor of Lender; 

        (iv)  an
original of Amendment No. 2 to Trademark Collateral Assignment and Security Agreement among RTI, RT Michigan and Lender, and any such documents, instruments
or filings with respect thereto with the U.S. Patent and Trademark Office to protect such Collateral; 

         (v)  five
(5) originals of a Special Power of Attorney (Trademarks) by RT Michigan in favor of Congress; 

        (c)   RT
Michigan, RT Minnesota, RTI, CMHI and Specs and all other Borrowers and Guarantors shall have duly executed and delivered to Lender such UCC financing statements and
other documents and instruments which Lender in its sole discretion has determined are necessary to perfect or continue perfected the security interests of Lender in all Collateral now or hereafter
owned by RT Michigan, RT Minnesota, RTI, CMHI, Specs, and the other Borrowers and Guarantors; 

        (d)   Each
of CMHI and Specs shall have delivered to Lender (i) a copy of its Certificate of Incorporation, and all amendments thereto, certified by the Secretary of
State of its jurisdiction of incorporation as of the most recent practicable date certifying that each of the foregoing documents remains in full force and effect and has not been modified or amended,
except as described therein, (ii) a copy of its By-Laws, certified by its Secretary or Assistant Secretary, (iii) a certificate from its Secretary or Assistant Secretary,
dated the date hereof, certifying that each of the foregoing documents remains in full force and effect and has not been modified or amended, except as described therein; 

        (e)   Each
of CMHI and Specs shall have delivered to Lender evidence, as of the most recent practicable date, that it is duly qualified and in good standing in each
jurisdiction set forth in Exhibit D annexed hereto, other than, subject to Section 13(f) hereof, as to Specs for the Commonwealth of Puerto Rico; 

        (f)    Lender
shall have received, in form and substance satisfactory to Lender, (i) Secretary's or Assistant Secretary's Certificates of Directors' Resolutions with
Shareholders' Consent (other than TWE) evidencing the adoption and subsistence of corporate resolutions approving the execution, delivery and performance by each Borrower and Guarantor that is a
corporation of this Amendment and the agreements, documents and instruments to be delivered pursuant to this Amendment and (ii) Sole Member's Certificate evidencing the adoption and subsistence
of company resolutions approving the execution, delivery and performance by each Borrower and Guarantor that is a limited liability company, of this Amendment and the agreements, documents and
instruments to be delivered pursuant to this Amendment; 

        (g)   Lender
shall have received, in form and substance satisfactory to Lender, for the limited liability companies RT Minnesota and Media Logic, a sole member and incumbency
certificate of each such company that (i) identifies all managers, officers or other persons authorized to act on behalf of such company, (ii) evidences the adoption and subsistence of
company resolutions approving the execution, delivery and performance by RT Minnesota and Media Logic of this Amendment and the agreements, documents and instruments to be delivered pursuant to this
Amendment, (iii) certifying as to a true, correct and complete copy of the operating agreement of 

22

 

such
company, and (iv) evidences the adoption of the consent of the sole member members of such company; 

        (h)   each
of Borrowers and Guarantors shall deliver, or cause to be delivered, to Lender a true and correct copy of any consent, waiver or approval to or of this Amendment,
which any Borrower or Guarantor is required to obtain from any other Person, and such consent, approval or waiver shall be in a form reasonably acceptable to Lender; 

        (i)    Lender
shall have received, in form and substance satisfactory to Lender, all other consents, waivers, acknowledgments and other agreements from third persons which
Lender may deem necessary or desirable in order to permit, protect and perfect its security interests and liens upon the Collateral or to affect the provisions or purposes of this Amendment and the
other Financing Agreements; 

        (j)    all
requisite corporate action and proceedings in connection with this Amendment and the documents and instruments to be delivered hereunder shall be in form and
substance satisfactory to Lender, and Lender shall have received all information and copies of all documents, including, without limitation, records of requisite corporate action and proceedings which
Lender may have reasonably requested in connection therewith, such documents where requested by Lender or its counsel to be certified by appropriate corporate officers or governmental authorities; and 

        (k)   no
Event of Default shall exist or have occurred and no event or condition shall have occurred or exist which with notice or passage of time or both would constitute an
Event of Default. 

        15.    Effect of this Amendment.    This Amendment and the instruments and agreements delivered pursuant hereto
constitute the entire agreement of the parties with respect to the subject matter hereof and thereof, and supersede all prior oral or written communications, memoranda, proposals, negotiations,
discussions, term sheets and commitments with respect to the subject matter hereof and thereof. Except as expressly amended pursuant hereto, and except for the consents expressly set forth in the
Consent No. 1 under Loan Agreement, Consent No. 2 under Loan Agreement, Consent No. 3 under Loan Agreement, Consent No. 4 under Loan Agreement and Consent No. 5
under Loan Agreement, no other changes or modifications to the Financing Agreements or consents under any provisions thereof are intended or implied, and in all other respects the Financing Agreements
are hereby specifically ratified,
restated and confirmed by all parties hereto as of the effective date hereof. To the extent of conflict between the terms of this Amendment and the other Financing Agreements, the terms of this
Amendment shall control. 

        16.    Further Assurances.    Borrowers shall execute and deliver such additional documents and take such additional
action as may be reasonably requested by Lender to effectuate the provisions and purposes of this Amendment. 

        17.    Governing Law.    The rights and obligations hereunder of each of the parties hereto shall be governed by and
interpreted and determined in accordance with the internal laws of the State of New York (without giving effect to principles of conflict of laws). 

        18.    Binding Effect.    This Amendment shall be binding upon and inure to the benefit of each of the parties hereto
and their respective successors and assigns. 

        19.    Counterparts.    This Amendment may be executed in any number of counterparts, but all of such counterparts
shall together constitute but one and the same agreement. In making proof of this Amendment, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the
parties hereto. 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK] 

23

        Please sign in the space provided below and return a counterpart of this Amendment, whereupon this Amendment, as so agreed to and accepted, shall become a binding agreement among
Borrowers and Lender. 

	 	 	Very truly yours,
	

 	
 	

CONGRESS FINANCIAL CORPORATION
	

 	
 	

By:	
 	

 
	 	 	 	 	

	

 	
 	

Title:	
 	

 
	 	 	 	 	

	AGREED TO AND ACCEPTED:
	

TRANS WORLD ENTERTAINMENT CORPORATION
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	

Title:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	

RECORD TOWN, INC.
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	

Title:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	

RECORD TOWN MICHIGAN, INC.
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	

Title:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	

RECORD TOWN MINNESOTA, LLC
	

By:	
 	

RECORD TOWN, INC.,

    its sole member	
 	

 
	

 	
 	

By:	
 	

 	
 	

 
	 	 	 	 	
	 	 
	

 	
 	

Title:	
 	

 	
 	

 
	 	 	 	 	
	 	 
	

[SIGNATURES CONTINUE ON NEXT PAGE]
	 	 	 	 	 	 	 

	

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
	

CONSENTED AND AGREED TO:
	

MEDIA LOGIC USA, LLC
	

By:	
 	

RECORD TOWN, INC.,

    its sole member	
 	

 
	

 	
 	

By:	
 	

 	
 	

 
	 	 	 	 	
	 	 
	

 	
 	

Title:	
 	

 	
 	

 
	 	 	 	 	
	 	 
	

MOVIES PLUS, INC.
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	

Title:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	

SATURDAY MATINEE, INC.
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	

Title:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	

RECORDS N' SUCH, INC.
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	

Title:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	

[SIGNATURES CONTINUE ON NEXT PAGE]
	 	 	 	 	 	 	 

	

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
	

TRANS WORLD NEW YORK, LLC
	

By:	
 	

RECORD TOWN MICHIGAN, INC.,

    its sole member	
 	

 
	

 	
 	

By:	
 	

 	
 	

 
	 	 	 	 	
	 	 
	

 	
 	

Title:	
 	

 	
 	

 
	 	 	 	 	
	 	 
	

TRANS WORLD MANAGEMENT COMPANY, INC.
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	

Title:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	

CAMELOT MUSIC HOLDINGS, INC.
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	

Title:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	

SPEC'S MUSIC, INC.
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 
	

Title:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 

SCHEDULE 1.1(p)

TO

AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT 

List of Existing Guarantor Security Agreements

	1.
	General
Security Agreement, dated as of July 9, 1997, by Trans World Fixture Company, Inc. in favor of Lender

	2.
	General
Security Agreement, dated as of July 9, 1997, by Movies Plus, Inc. in favor of Lender

	3
	General
Security Agreement, dated as of July 9, 1997, by Saturday Matinee, Inc. in favor of Lender

	4
	General
Security Agreement, dated as of July 9, 1997, by Records N' Such, Inc. in favor of Lender

	5
	General
Security Agreement, dated as of December 31, 1998, by Trans World Management Company, Inc. in favor of Lender

	6.
	General
Security Agreement, dated as of December 31, 1998, by Trans World New York, LLC in favor of Lender 

QuickLinks

Exhibit 4.3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00053-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00053-of-00352.parquet"}]]