Exhibit 10.1 

 

WELLS FARGO CAPITAL FINANCE

One Boston Place

Boston, MA 02108

 

October 29, 2018

 

Trans World Entertainment Corporation, as Lead Borrower

38 Corporate Circle

Albany, New York 12203

 

  Re: Store Closures – Trans World Entertainment Corporation, et al.

 

Ladies and Gentlemen:

 

Reference is made to that certain Second Amended and Restated Credit Agreement,
dated as of January 17, 2017 (as amended, restated, supplemented or otherwise
modified and in effect from time to time, the “Credit Agreement”), by and among
Trans World Entertainment Corporation, Record Town, Inc., Record Town USA, LLC,
Trans World New York, LLC, Trans World Florida, LLC, Record Town Utah, LLC, and
Etailz Inc. (each such Person, individually a “Borrower” and collectively the
“Borrowers”), the Guarantors party thereto from time to time (the Borrowers and
such Guarantors are hereinafter referred to as the “Loan Parties”), the Lenders
party thereto from time to time, and Wells Fargo Bank, National Association, as
Administrative Agent and Collateral Agent (in such capacities, the “Agent”), L/C
Issuer and Swingline Lender. Capitalized terms used herein but not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.

 

The Lead Borrower has advised the Agent that the Loan Parties have closed
thirty-three (33) Stores to date in this Fiscal Year (the “Completed Store
Closures”), and have further advised the Agent of Borrowers’ desire and
intention to close up to thirty-five (35) additional Stores (the “Remaining
Store Closures”, and, together with the Completed Store Closures, collectively,
the “2018 Fiscal Year Store Closures”) prior to the conclusion of this Fiscal
Year ending February 2, 2019 (the “2018 Fiscal Year”). Because the 2018 Fiscal
Year Store Closures will exceed thirty-five (35) Store closures in the aggregate
in the 2018 Fiscal Year, absent the consent of the Agent and the Required
Lenders, the bulk sales or other Dispositions of the Inventory of the Loan
Parties in connection with the 2018 Fiscal Year Store Closures (i) would not
constitute a Permitted Disposition pursuant to clause (b) of the definition
thereof in the Credit Agreement, (ii) would violate Section 7.05 of the Credit
Agreement, and (iii) would constitute an Event of Default under Section 8.01(b)
of the Credit Agreement. Accordingly, the Lead Borrower has requested that the
Agent and the Required Lenders provide their respective Consent to the Lead
Borrower and/or its Subsidiaries’ exceeding the permitted number of Store
closures and related Inventory Dispositions as set forth in Section 7.05 of the
Credit Agreement and the definition of Permitted Disposition, as contemplated by
the 2018 Fiscal Year Store Closures.

 

In accordance with Section 10.01 of the Credit Agreement, the Agent and the
Required Lenders have agreed to provide such Consent, subject to the terms and
conditions of this letter agreement (this “Letter Agreement”).

 

Trans World Entertainment Corporation, as Lead Borrower

October 29, 2018

Page 2

 

Accordingly, the parties hereto hereby agree as follows:

 

1.Consent.

 

a.The Agent and the Required Lenders hereby Consent to the Lead Borrower and/or
its Subsidiaries’ exceeding the permitted number of Store closures and related
Inventory Dispositions as set forth in Section 7.05 of the Credit Agreement and
the definition of Permitted Disposition, as contemplated by the 2018 Fiscal Year
Store Closures; provided, that absent the further consent of the Agent and the
Required Lenders (which consent may be granted, denied, withheld, delayed and/or
conditioned in Agent’s and Required Lenders’ discretion), (x) the Remaining
Store Closures shall not exceed thirty-five (35) in the aggregate, and (y) the
2018 Fiscal Year Store Closures shall not exceed sixty-eight (68) in the
aggregate. If, following the execution and delivery of this Letter Agreement,
the Lead Borrower advises the Agent of a further desire and intention to close
any additional Stores prior to the end of the 2018 Fiscal Year (“Additional
Store Closures”), such Additional Store Closures shall be subject to the prior
written Consent of the Agent and the Required Lenders, which Consent may be
granted, denied, withheld, delayed and/or conditioned in Agent’s and Required
Lenders’ discretion.

 

b.In accordance the Credit Agreement, the Remaining Store Closures (and any
Additional Store Closures, if any) shall be made in accordance with liquidation
agreements or formal consulting arrangements with professional liquidators or
liquidation consultants, in each case reasonably acceptable to the Agent. The
Agent hereby confirms that certain Consulting Agreement dated October 19, 2018
by and between TIGER CAPITAL GROUP, LLC and RECORD TOWN, INC. is reasonably
acceptable to the Agent.

 

c.Anything in the Credit Agreement to the contrary notwithstanding (including
solely with respect to the Remaining Store Closures, the definition of
“Borrowing Base” thereunder), the Lead Borrower shall be permitted to include
within the calculation of Eligible Inventory for purposes of calculating the
Borrowing Base all inventory located in each Store at which the Remaining Store
Closures (and any Additional Store Closures) are being conducted (hereinafter,
the “Remaining Store Closure Inventory”); provided, that (x) the Lead Borrower
shall report the aggregate amount of such Remaining Store Closure Inventory as a
separate line item in any Borrowing Base Certificate delivered to the Agent, and
(y) the Appraisal Percentage applicable to such Remaining Store Closure
Inventory in each such Borrowing Base Certificate shall be subject to adjustment
on a weekly basis by the Agent in such amount as may be agreed by the Lead
Borrower, Agent and such independent professional liquidation company engaged by
the Lead Borrower in connection with the Remaining Store Closures, and in any
case as Agent shall determine from time to time in the exercise of it’s
reasonable discretion.

 

Trans World Entertainment Corporation, as Lead Borrower

October 29, 2018

Page 3

 

d.The Consent provided herein shall in no way constitute a modification or
waiver of any other obligations of the Loan Parties under the Credit Agreement
or any other Loan Documents, each of which remains in full force and effect. It
is hereby agreed to and understood by the parties that the consent provided
herein is a one-time Consent related to the 2018 Fiscal Year Store Closures in
the 2018 Fiscal Year only and is not an amendment to the Credit Agreement with
respect to any other restrictions on Permitted Dispositions on any other
occasion, nor is it a waiver of any Default or Event of Default now existing or
hereafter arising under the Credit Agreement.

 

2.Miscellaneous.

 

a.The Loan Parties represent and warrant that, after giving effect to this
Letter Agreement, no Default or Event of Default now exists and is continuing.

 

b.Except as expressly waived or modified herein, all other terms and conditions
of the Credit Agreement and the other Loan Documents remain in full force and
effect. This Letter Agreement shall constitute a Loan Document for all purposes.

 

c.This Letter Agreement and the other Loan Documents constitute the entire
contract among the parties relating to the subject matter hereof and supersede
any and all contemporaneous or previous agreements and understandings, oral or
written, relating to the subject matter hereof.

 

d.This Letter Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract. Delivery of an executed counterpart of a signature page of this Letter
Agreement by telecopy or other electronic transmission shall be effective as
delivery of a manually executed counterpart of this Letter Agreement.

 

e.Any provision of this Letter Agreement held to be invalid, illegal or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity, illegality or unenforceability without
affecting the validity, legality and enforceability of the remaining provisions
hereof, and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

 

f.The Loan Parties represent and warrant that they have consulted with
independent legal counsel of their selection in connection with this Letter
Agreement and are not relying on any representations or warranties of the Agent
or the Lenders or their respective counsel in entering into this Letter
Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

Trans World Entertainment Corporation, as Lead Borrower

October 29, 2018

Page 4

 

g.This Letter Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, without giving effect to the conflicts of
laws principles thereof.

 

[Signature Pages Follow]

 

Trans World Entertainment Corporation, as Lead Borrower

October 29, 2018

Page 5

 

If the foregoing correctly sets forth our understanding, please indicate your
agreement by signing below.

 

  Very truly yours,       WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Administrative Agent, Collateral Agent, and Required Lender       By:  /s/ Scott
Klebenoff       Name: Scott Klebanoff   Title: Assistant Vice President

 

Trans World Entertainment Corporation, as Lead Borrower

October 29, 2018

Page 6

 

The foregoing is acknowledged, agreed and accepted:

 

TRANS WORLD ENTERTAINMENT
CORPORATION, as Lead Borrower and as
a Borrower

 

By: /s/ Edwin Sapienza   Name: Edwin Sapienza Title: Chief Financial Officer    
RECORD TOWN, INC., as a Borrower       By: /s/ Edwin Sapienza   Name: Edwin
Sapienza Title: Chief Financial Officer     RECORD TOWN USA, LLC, as a Borrower
    By: /s/ Edwin Sapienza   Name: Edwin Sapienza Title: Chief Financial Officer
    TRANS WORLD NEW YORK, LLC, as a Borrower     By: /s/ Edwin Sapienza   Name:
Edwin Sapienza Title: Chief Financial Officer     TRANS WORLD FLORIDA, LLC, as a
Borrower     By: /s/ Edwin Sapienza   Name: Edwin Sapienza Title: Chief
Financial Officer

 

Trans World Entertainment Corporation, as Lead Borrower

October 29, 2018

Page 7

 

RECORD TOWN UTAH, LLC, as a Borrower     By: /s/ Edwin Sapienza   Name: Edwin
Sapienza Title: Chief Financial Officer     ETAILZ INC., as a Borrower     By:
/s/ Edwin Sapienza   Name: Edwin Sapienza Title: Chief Financial Officer