Document:

SECOND AMENDMENT TO

    CREDIT AGREEMENT 
  

     This Second Amendment to Credit Agreement (the “Second Amendment”) is made as of the 20th day of October, 2006 by and among:

TRANS WORLD ENTERTAINMENT CORPORATION, a New York corporation, having its principal place of business at 38 Corporate Circle, Albany, New York 12203, as Lead Borrower (in
such capacity, the “Lead Borrower”) for the Borrowers; 

	
the Borrowers party hereto; 

the Facility Guarantors party hereto;

the Lenders party hereto;

BANK OF AMERICA, N.A., as Issuing Bank; and

BANK OF AMERICA, N.A., as Administrative Agent and as Collateral Agent (in such capacities, the “Agent”). 

In consideration of the mutual covenants herein contained and benefits to be derived herefrom, the parties hereto agree as follows: 

	
WITNESSETH

     WHEREAS, the Lead Borrower, the Borrowers, the Lenders, the Issuing Bank and the Agent have entered into a Credit Agreement dated as of January 5, 2006 (as amended by the First Amendment to Credit
Agreement, dated as of March 23, 2006, and as further amended and in effect, the “Credit Agreement”); and

     WHEREAS, the Lead Borrower has advised the Agent and the Lenders that the Borrowers desire to increase the Total Commitments to $150,000,000.00 in accordance with Section 2.02 of the Credit
Agreement; and 

     WHEREAS, the Lead Borrower, the Borrowers, the Lenders, the Issuing Bank and the Agent desire to amend certain provisions of the Credit Agreement as set forth herein. 

     NOW THEREFORE, it is hereby agreed as follows: 

	 	
1.      		
Definitions: All capitalized terms used herein and not otherwise defined shall have the same meaning herein as in the Credit Agreement.	
	 
	 	   		 
	 

1

	 	2.   	 Amendment of Schedule 1.1(a) to the Credit Agreement. Effective
  as of the Second Amendment Effective Date, Schedule 1.1(a) to the Credit Agreement setting forth the Commitments of the Lenders is amended and restated in its entirety to read as set forth on Schedule 1.1(a) attached hereto.	
	 
	 	
3.      		
Amendments to the Credit Agreement. The Credit Agreement is hereby amended as follows:	
	 
	 	 	
a.      		
The definition of “Excess Availability” in Section 1.01 of the Credit Agreement is deleted in its entirety and the following substituted in its stead:	
	 
	 	 	 	
“Excess Availability” means as of any date of determination, the excess, if any, of (a) Availability over (b) the sum of (i) all checks then held by the Loan Parties (other than held checks drawn to pay accounts which are not more than thirty (30) days beyond stated credit terms); (ii) accounts payable of the Loan Parties which are more
than sixty (60) days beyond credit terms then accorded the Loan Parties; and (iii) overdrafts by the Loan Parties.	
	 
	 	 	
b.      		
The definition of “Payment Conditions” in Section 1.01 of the Credit Agreement is amended by deleting “$20,000,000” in the third line and substituting “$30,000,000” in its stead.	
	 
	 	 	
c.      		
The definition of “Total Commitments” in Section 1.01 of the Credit Agreement is deleted in its entirety and the following substituted in its stead:	
	 
	 	 	 	
“Total Commitments” means, at any time, the sum of the Commitments at such time. As of the Second Amendment Effective Date, the Total Commitments shall be
$150,000,000.	
	 
	 	 	
d.      		
The following definition is added to the Credit Agreement in appropriate alphabetical order:	
	 
	 	 	 	
“Second Amendment Effective Date” means October 20, 2006.	
	 
	 	 	
e.      		
Section 2.01(a)(ii) of the Credit Agreement is amended by deleting “$30,000,000” and substituting “$50,000,000” in its stead.	
	 
	 	 	
f.      		
Section 2.02(a) of the Credit Agreement is amended by deleting the first sentence thereof in its entirety and substituting the following in its stead:	
	 
	 	 	 	 
	 

2

	 	 	 “So long as no Default or Event of Default exists or would arise as a result thereof, in the event the Borrowers permanently reduce the Total Commitments in accordance with Section 2.16(a), the Lead Borrower shall have the right on two (2) occasions after the Second
  Amendment Effective Date to request an increase of the Total Commitments to an amount not to exceed $150,000,000, any such request to be in increments of $5,000,000.”	
	 
	 	 	
g.      		
Section 2.06(a) of the Credit Agreement is amended by deleting “$10,000,000” in the third line thereof and substituting “$15,000,000” in its stead.	
	 
	 	 	
h.      		
Section 2.07(a) of the Credit Agreement is amended by deleting	
	 
	 	 	 	
“$30,000,000” in the sixth line thereof and substituting “$50,000,000” in its stead.	
	 
	 	 	
i.      		
Section 2.09(b) of the Credit Agreement is amended by deleting	
	 
	 	 	 	
“$10,000,000” in the fourth line thereof and substituting “$15,000,000” in its stead.	
	 
	 	 	
j.      		
Section 2.16(a) of the Credit Agreement is amended by deleting the first sentence thereof in its entirety and substituting the following in its stead:	
	 
	 	 	 	
“Upon at least three (3) Business Days’ prior written notice to the Administrative Agent, the Borrowers may, at any time, in whole permanently terminate, or from time to time in part permanently reduce, the Commitments;
provided, however, that on two (2) occasions after the Second Amendment Effective Date, the Borrowers may request an increase in the Total Commitments in accordance with Section
2.02.”	
	 
	 	 	
k.      		
Section 9.01(a) of the Credit Agreement is deleted in its entirety and the following substituted in its stead:	
	 
	 	 	 	
“(a) if to any Loan Party, to it at 38 Corporate Circle, Albany, New York 12203, Attention: Chief Financial Officer (Telecopy No. (518) 452- 7833), with a copy to Boies, Schiller & Flexner LLP, 10 North Pearl Street,
4th Floor, Albany, New York 12207, Attention: Kathleen M. Franklin, Esquire (Telecopy No. (518) 434-0665);”	
	 
	 	
4.      		
Conditions to Effectiveness. This Second Amendment shall not be effective until each of the following conditions precedent have been fulfilled to the satisfaction of the Agent:	
	 
	 	 	 	 
	 

3

	 	 	 
	 	 	 a.      	 This Second Amendment shall have been duly executed and delivered by the Lead Borrower, the other Borrowers, the Facility Guarantors, the Agent and the Required Lenders. The Agent shall have received a fully executed copy hereof and of each other document required hereunder, including, without limitation,
  Amended and Restated Revolving Notes executed by the Borrowers in favor of the Lenders increasing their Total Commitments pursuant hereto.	
	 
	 	 	
b.      		
All action on the part of the Lead Borrower, the other Borrowers and the Facility Guarantors necessary for the valid execution, delivery and performance by such Persons of this Second Amendment shall have been duly and effectively
taken. The Agent shall have received from the Lead Borrower, the other Borrowers and the Facility Guarantors true copies of their respective certificate of the resolutions authorizing the transactions described herein, each certified by their
secretary or other appropriate officer to be true and complete.	
	 
	 	 	
c.      		
The Borrowers shall have paid the Agent all fees due in connection with this Second Amendment and reimbursed the Agent for all costs and expenses to be reimbursed in connection with this Second Amendment, including, without
limitation, all fees set forth in the Fee Letter between the Borrowers and the Agent dated the date hereof.	
	 
	 	 	
d.      		
No Default or Event of Default shall have occurred and be continuing.	
	 
	 	 	
e.      		
The Borrowers shall have provided such additional instruments, documents, and opinions of counsel to the Agent as the Agent and their counsel may have reasonably requested.	
	 
	 	
5.      		
Miscellaneous.	
	 
	 	 	
a.      		
Except as provided herein, all terms and conditions of the Credit Agreement and the other Loan Documents remain in full force and effect. The Lead Borrower, the other Borrowers and the Facility Guarantors hereby ratify, confirm, and reaffirm all of the representations, warranties and covenants
therein contained. Without limiting the generality of the foregoing, the Lead Borrower, the other Borrowers and the Facility Guarantors hereby acknowledge, confirm and agree that all Collateral shall continue to secure the Obligations as they may be
modified or amended pursuant to this Second Amendment or by any future modifications, amendments, substitutions or renewals of the Credit Agreement. Each Facility Guarantor hereby (i) ratifies, confirms and reaffirms, all and singular, the terms and
conditions of, and all warranties 	
	 

4

	 	 	
and representations set forth in, their respective Facility Guarantees, (ii) acknowledges, confirms and agrees that their respective Facility Guarantees remain in full force and effect and shall in no way be limited or affected by this Second Amendment and (iii) acknowledges and agrees that such Person has no offsets, defenses, or counterclaims against the Agent or any Lender with respect to such Person’s Facility Guarantee or otherwise, and to the extent that any of the undersigned has any such offsets, defenses, or counterclaims, then such Person hereby WAIVES and RELEASES the same.	
	 
	 	
b.      		
This Second Amendment may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered, each shall be an original, and all of which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page hereto by telecopy shall be effective as delivery of a manually executed counterpart hereof.	
	 
	 	
c.      		
This Second Amendment expresses the entire understanding of the parties with respect to the matters set forth herein and supersedes all prior discussions or negotiations hereon. Any determination that any provision of this Second
Amendment or any application hereof is invalid, illegal or unenforceable in any respect and in any instance shall not effect the validity, legality, or enforceability of such provision in any other instance, or the validity, legality or
enforceability of any other provisions of this Second Amendment.	
	 

5

     IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be executed and their seals to be hereto affixed as the date first above written.

 

	 

	
	 	 BORROWERS:  
	 	 	 
	 	 	 
	 	TRANS WORLD ENTERTAINMENT 

    CORPORATION, as Lead Borrower and 

    Borrower 
	 	 
	 	 	 
	 	 	 
	 	
By: 
		
/s/ John J. Sullivan 
	
	 	
Name: 
		
John J. Sullivan 
	
	 	
Title: 
		
Executive Vice President, Chief Financial 
	
	 
	 	Officer and Secretary  
	 
	 

	
	 
	MOVIES PLUS, INC.  
	 

	
	 	
By: 
		
/s/ John J. Sullivan 
	
	 	
Name: 
		
John J. Sullivan 
	
	 	
Title: 
		
Executive Vice President, Chief Financial 
	
	 
	 	Officer and Secretary  
	 	 
	 	 
	 
	RECORD TOWN, INC.  
	 

	
	 	
By: 
		
/s/ John J. Sullivan 
	
	 	
Name: 
		
John J. Sullivan 
	
	 	
Title: 
		
Executive Vice President, Chief Financial 
	
	 
		 	Officer and Secretary 
	 

	
	 
	 
	RECORD TOWN USA, LLC  
	 

	
	 	
By: 
		
/s/ John J. Sullivan 
	
	 	
Name: 
		
John J. Sullivan 
	
	 	
Title: 
		
Executive Vice President, Chief Financial 
	
	 
		 	Officer and Secretary 

 

6

	  
	  	 RECORD TOWN UTAH, LLC  
	  	  
	 	 By:  	 /s/ John J. Sullivan  
	 	 Name:  	 John J. Sullivan  
	 	 Title:  	 Executive Vice President, Chief Financial  
	  	 	 Officer and Secretary  
	 	 
	 	 
	  	 TRANS WORLD NEW YORK, LLC  
	  	  
	 	 By:  	 /s/ John J. Sullivan  
	 	 Name:  	 John J. Sullivan  
	 	 Title:  	 Executive Vice President, Chief Financial  
	  	 	 Officer and Secretary  
	  
	 
	  	 TRANS WORLD FLORIDA, LLC  
	  	  
	 	 By:  	 /s/ John J. Sullivan  
	 	 Name:  	 John J. Sullivan  
	 	 Title:  	 Executive Vice President, Chief Financial  
	 	 	 Officer and Secretary  
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 FACILITY GUARANTOR:  
	 	 	 
	 	 MEDIA LOGIC USA, LLC  
	 	 	 
	 	 By:  	 Record Town, Inc., its sole member  
	 	 	 
	 	 By:  	 /s/ John J. Sullivan  
	 	 Name:  	 John J. Sullivan  
	 	 Title:  	 Executive Vice President, Chief Financial  
	  	 	 Officer and Secretary  

 

 

 7

	  
	  	 BANK OF AMERICA, N.A., as Administrative 

    Agent, Collateral Agent, Swingline Lender, Issuing 

    Bank and Lender  
	 	 
	 	 
	  	  
	 	 By:  	 /s/ Sally A. Sheehan  
	 	 Name: 	Sally A. Sheehan  
	 	 Title:  	Managing Director 
	 	 
	 	 
	 	 Address:  
	 	 40 Broad Street, 10th Floor  
	 	 Boston, Massachusetts 02109  
	 	 Attn: Sally A. Sheehan  
	 	 Telephone: (617) 434-4045  
	 	 Telecopy: (617) 434-4339  
	 	 

 

   

8

	  
	  	 LASALLE BANK NATIONAL ASSOCIATION, as Lender  
	 	 
	 	 
	  	  
	 	
      By:  
	
      /s/ Mark Mital  

	 	
      Name: 
	Mark Mital  
	 	
      Title: 
	Senior Vice President  
	 	 
	 	 
	 	 Address:  
	 	 135 South LaSalle Street, Suite 1126  
	 	 Chicago, Illinois 60603  
	 	 Attn: Mark Mital  
	 	 Telephone: (312) 904-2747  
	 	 Telecopy: (312) 904-6546  
	 	 

 

9

	  
	  	 JPMORGAN CHASE BANK, N.A., as Lender  
	 	 
	 	 
	  	  
	 	
      By:  
	
      /s/ James M. Barbato  

	 	
      Name: 
	 James M. Barbato 
	 	
      Title: 
	Vice President  
	 	 
	 	 
	 	 Address: One Chase Square; T-25  
	 	 
	 	 
	 	 Attn: Trans World Client Executive  
	 	 Telephone:   	(585) 258-6466 
	 	 Telecopy:  	(585) 258-7440  
	 	 
	 	 
	 	 
	 	 

 

  

10

	 	 FIRST NIAGARA BANK, as Lender  
	 

	
	 

	
	 	
By: 
		
/s/ Schuyler Tilly 
	
	 	
Name: 
		Schuyler Tilly 
	 	
Title: 
		Vice President 
	 

	
	 	
Address: 
		
18 Corporate Woods Blvd 
	
	 	 
	Suite 100 

	 	 

		
Albany, NY 12211 
	
	 

	
	 	
Attn: 
		
Mr. Schuyler Tilly 
	
	 	
Telephone: 
		
(518) 694-3339 
    

	 	
Telecopy: 
		
(518) 694-3013 
    

11

	 	
TD BANKNORTH, N.A. 
	
	 

	
	 

	
	 

	
	 	
By: 
		
/s/ Matthew Leighton 
	
	 	
Name: 
		
Matthew Leighton 
	
	 	
Title: 
		
Vice President 
	
	 

	
	 

	
	 	
Address: 
		
7 New England Executive 
	
	 	 

		
Park, 10th Floor 
	
	 	 

		
Burlington, Massachusetts 01803 
	
	 

	
	 	
Attention: 
		
Mr. Matthew Leighton 
	

12

     Schedule 1.1(a) 

Lenders and Commitments 

	 

		 
	  Commitment 
    	 
	 
	  Lender 
    	 	 

		 

	
	

		
	

		 
	
	
Bank of America, N.A. 
		 $  	 58,000,000.00  	 
	

		
      

    	
      

    	 
	
LaSalle Bank National Association 
		 $  	 32,000,000.00  	 
	

		
      

    	
      

    	 
	
JPMorgan Chase Bank, N.A. 
		 $  	 25,000,000.00  	 
	

		
      

    	
      

    	 
	
TD Banknorth, N.A. 
		 $  	 25,000,000.00  	 
	

		
      

    	
      

    	 
	
First Niagara Bank 
		 $  	 10,000,000.00  	 
	

		
      

    	
      

    	 
	
TOTAL: 
		 $  	 150,000,000.00  	 
	

		
	

		 

	

13EXHIBIT 4.3

NUMBER                                                      WARRANTS

W
                          (SEE REVERSE SIDE FOR LEGEND)
         (THIS WARRANT WILL BE VOID IF NOT EXERCISED PRIOR TO 5:00 P.M.
                       NEW YORK CITY TIME, ________ 2010)

                      MEDIA & ENTERTAINMENT HOLDINGS, INC.

                                     WARRANT

                                                                           CUSIP

THIS CERTIFIES THAT, FOR VALUE RECEIVED,

     is the registered holder of a Warrant or Warrants expiring __________ ,
     2010 (the "Warrant") to purchase one fully paid and non-assessable share of
     Common Stock, par value $.0001 per share ("Shares"), of Media &
     Entertainment Holdings, Inc., a Delaware corporation (the "Company"), for
     each Warrant evidenced by this Warrant Certificate. The Warrant entitles
     the holder thereof to purchase from the Company, commencing on the later of
     (i) the Company's completion of a merger, capital stock exchange, asset
     acquisition or other similar business combination and (ii)_________ , 2007,
     such number of Shares of the Company at the price of $6.00 per share, upon
     surrender of this Warrant Certificate and payment of the Warrant Price at
     the office or agency of the Warrant Agent, Continental Stock Transfer &
     Trust Company (such payment to be made by check made payable to the Warrant
     Agent), but only subject to the conditions set forth herein and in the
     Warrant Agreement between the Company and Continental Stock Transfer &
     Trust Company. The Warrant Agreement provides that upon the occurrence of
     certain events the Warrant Price and the number of Warrant Shares
     purchasable hereunder, set forth on the face hereof, may, subject to
     certain conditions, be adjusted. The term Warrant Price as used in this
     Warrant Certificate refers to the price per Share at which Shares may be
     purchased at the time the Warrant is exercised.

          No fraction of a Share will be issued upon any exercise of a Warrant.
     If the holder of a Warrant would be entitled to receive a fraction of a
     Share upon any exercise of a Warrant, the Company shall, upon such
     exercise, round up to the nearest whole number the number of Shares to be
     issued to such holder.

          Upon any exercise of the Warrant for less than the total number of
     full Shares provided for herein, there shall be issued to the registered
     holder hereof or the registered holder's assignee a new Warrant Certificate
     covering the number of Shares for which the Warrant has not been exercised.

          Warrant Certificates, when surrendered at the office or agency of the
     Warrant Agent by the registered holder hereof in person or by attorney duly
     authorized in writing, may be exchanged in the manner and subject to the
     limitations provided in the Warrant Agreement, but without payment of any
     service charge, for another Warrant Certificate or Warrant Certificates of
     like tenor and evidencing in the aggregate a like number of Warrants.

          Upon due presentment for registration of transfer of the Warrant
     Certificate at the office or agency of the Warrant Agent, a new Warrant
     Certificate or Warrant Certificates of like tenor and evidencing in the
     aggregate a like number of Warrants shall be issued to the transferee in
     exchange for this Warrant

<PAGE>

     Certificate, subject to the limitations provided in the Warrant Agreement,
     without charge except for any applicable tax or other governmental charge.

          The Company and the Warrant Agent may deem and treat the registered
     holder as the absolute owner of this Warrant Certificate (notwithstanding
     any notation of ownership or other writing hereon made by anyone), for the
     purpose of any exercise hereof, of any distribution to the registered
     holder, and for all other purposes, and neither the Company nor the Warrant
     Agent shall be affected by any notice to the contrary.

          This Warrant does not entitle the registered holder to any of the
     rights of a stockholder of the Company.

          The Company reserves the right to call the Warrant at any time prior
     to its exercise, with a notice of call in writing to the holders of record
     of the Warrant, giving 30 days' notice of such call at any time after the
     Warrant becomes exercisable if the last sale price of the Shares has been
     at least $11.50 per share on each of 20 trading days within any 30 trading
     day period ending on the third business day prior to the date on which
     notice of such call is given. The call price of the Warrants is to be $.01
     per Warrant. Any Warrant either not exercised or tendered back to the
     Company by the end of the date specified in the notice of call shall be
     canceled on the books of the Company and have no further value except for
     the $.01 call price. The Warrants may not be exercised absent an effective
     registration statement covering the Common Stock underlying the Warrants.
     The Warrants may expire unexercised and unredeemed, and in no event will
     the Company be required to net cash settle the Warrants.

                                [Corporate Seal]

COUNTERSIGNED:                              By:_________________________________

CONTINENTAL STOCK TRANSFER & TRUST COMPANY       CHAIRMAN OF THE BOARD
(AS WARRANT AGENT)

BY: _____________________________________   By:_________________________________
          AUTHORIZED OFFICER
                                                 SECRETARY
<PAGE>

================================================================================

                                SUBSCRIPTION FORM

      To Be Executed by the Registered Holder in Order to Exercise Warrants

The undersigned Registered Holder irrevocably elects to exercise__________
Warrants represented by this Warrant Certificate, and to purchase the shares of
Common Stock issuable upon the exercise of such Warrants, and requests that
Certificates for such shares shall be issued in the name of

_______________________________________________________________________________

                     (PLEASE TYPE OR PRINT NAME AND ADDRESS)

_______________________________________________________________________________

                        (SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER)

and be delivered to ___________________________________________________________
                     (PLEASE TYPE OR PRINT NAME AND ADDRESS)

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________
and, if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below:

Dated:_____________________
                                                 ______________________________
                                                                    (SIGNATURE)
                                                 ______________________________
                                                                      (ADDRESS)
                                                 ______________________________
                                                 ______________________________
                                                    (TAX IDENTIFICATION NUMBER)

                                   ASSIGNMENT

             To Be Executed by the Registered Holder in Order to Assign Warrants

For Value Received,________________ hereby sell, assign, and transfer unto

_______________________________________________________________________________

                     (PLEASE TYPE OR PRINT NAME AND ADDRESS)

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________

                 (SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER)

and be delivered to ___________________________________________________________

                     (PLEASE TYPE OR PRINT NAME AND ADDRESS)
<PAGE>

__________________________ of the Warrants represented by this Warrant

   Certificate, and hereby irrevocably constitute and appoint _________________
   Attorney to transfer this Warrant Certificate on the books of the Company,
   with full power of substitution in the premises.

Dated: ________________

                                                     ___________________________

                                                                     (SIGNATURE)

THE SIGNATURE TO THE ASSIGNMENT OF THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
CHICAGO STOCK EXCHANGE.

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