Exhibit 4.1


 


FIRST AMENDMENT TO

CREDIT AGREEMENT


 


This First Amendment to Credit Agreement (the “First Amendment”) is
made as of the 23rd day of March, 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 (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 $130,000,000.00 in
accordance with Section 2.02 of the Credit Agreement; and


 


WHEREAS, pursuant to the terms and provisions of Section 2.02(b)(i) of
the Credit Agreement, each Additional Commitment Lender is required to join in,
and become party to, the Credit Agreement as a condition to any Commitment
Increase becoming effective; and


 


WHEREAS, in connection with the proposed Commitment Increase, (i) the
Lenders identified on Schedule 1 hereto as “Additional Commitment Lenders”
desire to become parties to the Credit Agreement as Lenders thereunder and (ii)
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

















 


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


 


2.                         Joinder
to Credit Agreement by the Additional Commitment Lenders. Effective as of
the date of this First Amendment, each Additional Commitment Lender hereby
acknowledges that it has received and reviewed a copy of the Credit Agreement
and the other Loan Documents, and acknowledges and agrees, as indicated with
its signature below, (i) to be bound by all of the representations, warranties
and agreements set forth in Section 9.05(b) of the Credit Agreement, (ii) to be
a party to and be bound by the provisions of the Credit Agreement as if such
Additional Commitment Lender was a signatory to the Credit Agreement and was
expressly named as a Lender therein, and (iii) to the extent of the Increased
Commitment assigned to the Additional Commitment Lender, to have the rights and
obligations of a Lender under the Credit Agreement. The Lead Borrower, the
other Borrowers and the Facility Guarantors hereby consent to the joinder of
each Additional Commitment Lender to the Credit Agreement, and acknowledge that
each Additional Commitment Lender is a party to the Credit Agreement as if such
Additional Commitment Lender was a signatory to the Credit Agreement and was
expressly named as a Lender therein.


 


3.                         Amendment
of Schedule 1.1(a) to the Credit Agreement. Effective as of the date of
this First Amendment, 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.


 


4.                         Joinder
to Credit Agreement as a “Borrower” by Movies Plus, Inc. and Record Town Utah,
LLC Effective as of the date of this First Amendment, each of Movies Plus,
Inc. and Record Town Utah, LLC, hereby acknowledges that it has received and
reviewed a copy of the Credit Agreement and the other Loan Documents, and
acknowledges and agrees, as indicated with its signature below, (i) to be a
party to and be bound by the provisions of the Credit Agreement and the other
Loan Documents as a “Borrower” thereunder as if Movies Plus, Inc., and Record
Town Utah, LLC, respectively, was a signatory to the Credit Agreement and was
expressly named as a Borrower therein, (ii) to be bound, jointly and severally
with all of the other Borrowers, by all of the representations, warranties, covenants
and agreements of the Borrowers set forth in the Credit Agreement and the other
Loan Documents, and (iii) to execute and deliver to the Agent (A) a Note
evidencing the obligations of Movies Plus, Inc., and Record Town Utah, LLC,
respectively, as a Borrower under the Credit Agreement and the other Loan
Documents and (B) such other instruments, documents and agreements as the Agent
may reasonably request. The Lead Borrower, the other Borrowers and the Facility
Guarantors hereby consent to the joinder to the Credit


 


2

















 


Agreement of each
of Movies Plus, Inc. and Record Town Utah, LLC, as a Borrower thereunder.


 


5.         Amendments to the Credit Agreement.
The Credit Agreement is hereby amended as follows:


 


a.                          The
definition of “Borrower(s)” “ in Section 1.01 of the Credit Agreement is
deleted in its entirety and the following is substituted in its stead:


 


““Borrower(s)”
means Movies Plus, Inc., Record Town, Inc., Record Town USA, LLC, Trans World
Entertainment Corporation, Trans World New York, LLC, Trans World Florida, LLC,
and Record Town Utah, LLC.”


 


b.                         The
definition of “Borrowing Base” in Section 1.01 of the Credit Agreement is
deleted in its entirety and the following is substituted in its stead:


 


““Borrowing Base” means, at any time of
calculation, an amount equal to:


 


(a)                     the
lesser of (i) (A) the Appraisal Percentage multiplied
by (B) the Appraised Value of Eligible Inventory (less Inventory
Reserves (provided such Inventory Reserves shall not be duplicative of any
reserve specifically provided for in the calculation of Appraised Value)) or
(ii) (A) the Inventory Advance Rate multiplied
by (B) the Cost of Eligible Inventory (less Inventory Reserves); provided
that at any time going out-of-business sales or other liquidation sales
are occurring in the greater of (x) five (5) or more of the Borrowers’ stores;
or (y) twenty-five (25) or more of the Borrowers’ stores if at such time the
Cost of Eligible Inventory (less Inventory Reserves) as reflected on the most
recent Borrowing Base Certificate delivered by the Borrowers pursuant to
Section 5.01(f) is equal to or greater than three (3) times the amount of the
then Total Commitments then, (a) all Inventory located in all such stores in
which a Loan Party is conducting the going-out-of-business or other liquidation
sales shall be excluded from Eligible Inventory for purposes of calculating the
Borrowing Base and (b) the Appraisal Percentage or Inventory Advance Rate, as
the case may be, applicable to Eligible Inventory located in stores in which an
independent professional liquidation company, reasonably acceptable to the
Agent, is conducting the going-out-of-business or other liquidation sales
(which Eligible Inventory shall not be excluded for purposes of calculating the
Borrowing Base) shall be subject to adjustment by the Administrative Agent in
its reasonable discretion; minus


 


(b)                    the
then amount of all Availability Reserves.”


 


3

















 


c.                          The
definition of “Facility Guarantors” in Section 1.01 of the Credit Agreement is
deleted in its entirety and the following is substituted in its stead:


 


““Facility
Guarantors” means (i) Media Logic USA, LLC, and (ii) each other Subsidiary
that is required to execute and deliver a Facility Guarantee pursuant to
Section 5.12 hereof.”


 


d.                         Section
1.01 of the Credit Agreement is hereby amended by the addition of the following
definitions inserted in appropriate alphabetical order:


 


“Musicland”
means Musicland Holding Corp., a Delaware corporation.


 


“Musicland
Acquisition” means that transactions contemplated by the Musicland Asset
Purchase Agreement whereby the Lead Borrower will (i) acquire from Musicland
the “Acquired Assets” (as such term is defined in the Musicland Asset Purchase
Agreement) for consideration in the amount of the Musicland Purchase Price and
(ii) assume the Assumed Liabilities (as such term is defined in the Musicland
Asset Purchase Agreement) to be assumed by the Lead Borrower pursuant to the
Musicland Asset Purchase Agreement.


 


“Musicland
Asset Purchase Agreement” means the Asset Purchase Agreement dated as of
February 17, 2006, by and among the Lead Borrower, Musicland, Musicland’s
debtor affiliates and the chapter 11 estates of Musicland and its debtor
affiliates, without giving effect to any amendment, modification, supplement or
other agreement relating thereto not approved in writing by the Agent.


 


“Musicland
Purchase Price” means the Purchase Price payable by the Lead Borrower as
defined in the Musicland Asset Purchase Agreement.


 


e.                          The
definition of “Permitted Acquisition” in Section 1.01 of the Credit Agreement
is hereby amended by deleting the proviso at the end of such definition and
substituting in its stead the following:


 


“provided, however
if the consideration paid or payable in connection with the proposed
Acquisition, plus (i) the aggregate consideration paid or payable in connection
with all other Acquisitions consummated since the Closing Date (excluding the
Musicland Purchase Price), (ii) the aggregate sum of all Restricted Payments
made pursuant to Section 6.06 since the Closing Date, and (iii) the aggregate
consideration paid or payable in connection with all Permitted Minority
Investments made after the Closing Date are in an aggregate amount equal to or
greater than $50,000,000, then as a condition to the consummation of such
Acquisition, in addition to the requirements set forth in clauses (a) through
(f) above, (x) the Payment Conditions shall have been satisfied and (y) the
Borrowers


 


4

















 


shall have
delivered to the Administrative Agent a certificate of a Financial Officer of
the Lead Borrower stating that the Payment Conditions have been satisfied,
together with supporting documentation demonstrating satisfaction of the
Payment Conditions, which supporting documentation shall be reasonably
satisfactory to the Administrative Agent; and provided, further
that the Musicland Acquisition shall be deemed a “Permitted Acquisition”.”


 


f.                            The
definition of “Permitted Minority Investment “ in Section 1.01 of the Credit
Agreement is hereby amended by deleting the proviso at the end of such
definition and substituting in its stead the following:


 


“provided, however
if the consideration paid or payable in connection with the proposed Permitted
Minority Investment plus the (i) aggregate consideration paid or payable in
connection with all other Permitted Minority Investments made after the Closing
Date, (ii) the aggregate consideration paid or payable in connection with all
Permitted Acquisitions consummated after the Closing Date (excluding the
Musicland Purchase Price), and (iii) the aggregate sum of all Restricted
Payments made pursuant to Section 6.06 after the Closing Date are in the
aggregate amount equal to or greater than $50,000,000, then as a condition to
the Investment, in addition to the requirements set forth in clauses (a)
through (d) above, (x) the Payment Conditions shall have been satisfied and (y)
the Borrowers shall have delivered to the Administrative Agent a certificate of
a Financial Officer of the Lead Borrower stating that the Payment Conditions
have been satisfied, together with supporting documentation demonstrating
satisfaction of the Payment Conditions, which supporting documentation shall be
reasonably satisfactory to the Administrative Agent.”


 


g.                         The
definition of “Permitted Overadvance” in Section 1.01 of the Credit Agreement
is hereby amended by deleting the clause “ninety (90) consecutive Business Days”
in clause (b)(ii) thereof and substituting the clause “ninety (90) consecutive
calendar days” in its stead.


 


h.                         Section
5.08 (b) of the Credit Agreement is deleted in its entirety and the following
is substituted in its stead:


 


“(b) Each Loan
Party will, and will cause each of the Subsidiaries to, from time to time upon
the request of the Collateral Agent or the Required Lenders through the
Administrative Agent and after reasonable prior notice during normal business
hours, permit any Agent or professionals (including investment bankers, consultants,
accountants, lawyers and appraisers) retained by the Agents to conduct
appraisals, commercial finance examinations and other evaluations, including,
without limitation, of (i) the Borrowers’ practices in the computation of the
Borrowing Base and (ii) the assets included in the Borrowing Base and related
financial information such as, but not limited to, sales, gross margins,
payables,


 


5

















 


accruals and
reserves, provided, however, unless a Default or Event of Default
has occurred and is continuing the Agents may cause no more than three (3)
Inventory appraisals and three (3) commercial finance examinations to be
undertaken during any Fiscal Year. The Loan Parties subject to the limitations
set forth below shall pay the reasonable fees and expenses of the Agents or
such professionals with respect to such evaluations and appraisals. The Loan
Parties acknowledge and agree that during any Fiscal Year in which (x) any
Revolving Loans are outstanding and (y) the Cost of the Borrowers’ Eligible
Inventory as reflected on the most recent Borrowing Base Certificate (net of
Inventory Reserves and after giving effect to any proposed Permitted Store
Closures) is less than three (3) times the then Total Commitments, the Loan
Parties shall reimburse the Agents the reasonable cost of up to one (1)
Inventory appraisal and up to one (1) commercial finance examination during
such Fiscal Year; provided, however, during any Fiscal Year in
which Excess Availability is less than thirty percent (30%) of the Total
Commitments, as reflected on the most recent Borrowing Base Certificate at
anytime during such Fiscal Year, the Loan Parties shall reimburse the Agents
the reasonable cost of up to a total of two (2) Inventory appraisals and up to
a total of two (2) commercial finance examinations during such Fiscal Year; provided,
further, however, that the Agents shall be entitled to undertake
such additional commercial finance examinations and Inventory appraisals each
Fiscal Year at the Agents’ own expense. Notwithstanding the foregoing, upon the
occurrence and during the continuance of a Default or Event of Default, the
Loan Parties shall reimburse the Agents for up to a total of three (3)
Inventory appraisals and up to three (3) commercial finance examinations during
any Fiscal Year to be undertaken as the Agents in their discretion deem
necessary or appropriate or as may be required by Applicable Law.”


 


i.                             Section
6.05 (e) of the Credit Agreement is deleted in its entirety and the following
is substituted in its stead:


 


“(e) the sale and
disposition of assets pursuant to the liquidation or closure of the Borrowers’
stores (including, without limitation, the equipment and Inventory therein) in
the ordinary course of business;”


 


j.                             Section
6.06 (a) of the Credit Agreement is hereby amended by deleting the proviso at
the end of such section and substituting in its stead the following:


 


“provided,  further
however, if the payments made in connection with clauses (i), (ii), or
(iii) hereof after the Closing Date, plus the sum of (x) the aggregate
consideration paid or payable in connection with all Permitted Acquisitions
consummated after the Closing Date (excluding the Musicland Purchase Price) and
(y) the aggregate consideration paid or payable in connection with all
Permitted Minority Investments made after the Closing Date are in an aggregate


 


6

















 


amount equal to or
greater than $50,000,000, then as a condition to the making of such proposed
payment, (x) the Payment Conditions shall have been satisfied and (y) the
Borrowers shall have delivered to the Administrative Agent a certificate of a
Financial Officer of the Lead Borrower stating that the Payment Conditions have
been satisfied, together with supporting documentation demonstrating
satisfaction of the Payment Conditions, which supporting documentation shall be
reasonably satisfactory to the Administrative Agent.”


 


k.                          Section
9.02 (b) (iv) of the Credit Agreement is deleted in its entirety and the
following is substituted in its stead:


 


“(iv) change
Sections 2.20, 2.22, 2.23 or 2.26 of this Agreement or Section 6.2 of the
Security Agreement, without the Consent of each Lender,”


 


1.                          Section
9.03 (a) of the Credit Agreement is deleted in its entirety and the following
is substituted in its stead:


 


“(a) The Loan
Parties shall jointly and severally pay (i) all reasonable out-of-pocket
expenses incurred by the Agents and their Affiliates, including the reasonable
fees, charges and disbursements of counsel for the Agents, outside consultants
for the Agents, appraisers and for commercial finance examinations permitted
under this Agreement, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of the Loan
Documents or any amendments, modifications or waivers of the provisions thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the
Issuing Bank in connection with the issuance, amendment, renewal or extension
of any Letter of Credit or any demand for payment thereunder, and (iii) all
reasonable out-of-pocket expenses incurred by the Agents, Bank of America, the
Issuing Bank or the Lenders, including the reasonable fees, charges and
disbursements of any counsel and any outside consultants for the Agents, Bank
of America, the Issuing Bank or the Lenders in connection with the Loans made
or Letters of Credit issued hereunder, or in connection with the enforcement or
protection of the rights of the Agents, Bank of America, the Issuing Bank or
the Lenders in connection with the Loan Documents, including their rights under
this Section, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans; provided that
the Lenders who are not the Agents or the Issuing Bank shall be entitled to
reimbursement for no more than one counsel or outside consultant representing
all such Lenders (absent a conflict of interest in which case the Lenders may
engage and be reimbursed for additional counsel or outside consultants).


 


7

















 


6.                         Conditions
to Effectiveness. This First Amendment shall not be effective until each of
the following conditions precedent have been fulfilled to the satisfaction of
the Agent:


 


a.                          This
First 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,
Notes executed by each of Movies Plus, Inc. and Record Town Utah, LLC.


 


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 First 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 First Amendment
and reimbursed the Agent for all costs and expenses to be reimbursed in
connection with this First Amendment, each as 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.


 


7.                         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 First 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


 


8

















 


singular, the
terms and conditions of, and all warranties 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 First 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 First
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
First 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 First
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 First Amendment.


 


9

















 


IN WITNESS WHEREOF, the parties hereto have caused this First 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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RECORD
  TOWN UTAH, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John J. Sullivan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John J. Sullivan

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President,
  Chief Financial Officer

  and Secretary

  



 


10

















 


	
   

  	
   

  	
  TRANS
  WORLD NEW YORK, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John J. Sullivan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John J. Sullivan

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President,
  Chief Financial Officer

  and Secretary

  



 


11

















 


	
   

  	
   

  	
  TRANS
  WORLD FLORIDA, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John J. Sullivan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John J. Sullivan

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President, Chief Financial Officer

  and Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FACILITY
  GUARANTORS

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  



 


12

















 


	
   

  	
   

  	
  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

  



 


13

















 


	
   

  	
   

  	
  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

  



 


14

















 


	
   

  	
   

  	
  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

  Rochester, N.Y. 14643

  Attn: Trans World Client Mgr.

  
	
   

  	
   

  	
  Telephone: (585) 258 -
  6466

  
	
   

  	
   

  	
  Telecopy: (585) 258 -
  7440

  



 


15

















 


	
   

  	
   

  	
  FIRST
  NIAGARA BANK, as Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Schuyler Tilly

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Schuyler Tilly

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:
  18 Corporate Woods Boulevard

  Suite 100

  Albany, NY 12211

  
	
   

  	
   

  	
  Attn: Schuyler
  Tilly, Corporate Banking

  
	
   

  	
   

  	
  Telephone:
  518-694-3339

  
	
   

  	
   

  	
  Telecopy:
  518-694-3013

  



 


16

















 


	
   

  	
   

  	
  SCHEDULE 1

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Additional Commitment
  Lenders

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  — JPMorgan Chase Bank,
  N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  — First Niagara Bank

  



 


17

















 


Schedule 1.1 (a)

Lenders and Commitments


 


 




	
  Lender

  	
   

  	
  Commitment

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  70,000,000.00

  	
   

  
	
  LaSalle Bank National Association

  	
   

  	
  $

  	
  25,000,000.00

  	
   

  
	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  $

  	
  25,000,000.00

  	
   

  
	
  First Niagara Bank

  	
   

  	
  $

  	
  10,000,000.00

  	
   

  






 


18

















 


JOINDER TO PLEDGE AGREEMENT


 


This Joinder to Pledge Agreement (this “Joinder”) is made as of
this 23rd day of March 2006, by and among (a) each of the Pledgors listed on
the signature pages hereto (the “Existing Pledgors”), (b) Record Town
USA, LLC (“Record Town USA”) and (c) Bank of America, N.A., as
Collateral Agent (in such capacity, the “Collateral Agent”) for the
Secured Parties (as defined in the Pledge Agreement referred to below).


 


W I T N E S S E T H:


 


A.       Reference is hereby made
to (i) the Credit Agreement dated as of January 5, 2006, by and among (a) Trans
World Entertainment Corporation (the “Lead Borrower”), (b) the other
Borrowers party thereto, (c) the Facility Guarantors party thereto, (d) the
Lenders party thereto, (e) Bank of America, N.A., as Issuing Bank and (f) Bank
of America, N.A., as Administrative Agent and Collateral Agent (such Credit
Agreement, as amended by the First Amendment to Credit Agreement, dated as of
March 23, 2006 (the “First Amendment”), is referred to herein as the “Credit
Agreement”), and (ii) the Pledge Agreement dated as of January 5, 2006, by
and among the Existing Pledgors and the Collateral Agent for the benefit of the
Secured Parties (the “Pledge Agreement”). All capitalized terms not
otherwise defined herein shall have the meanings given such terms in the Pledge
Agreement.


 


B.        Pursuant to the Pledge
Agreement, the Existing Pledgors have granted to the Collateral Agent, for the
benefit of the Secured Parties, a continuing security interest in and to the
Pledged Collateral (as defined in the Pledge Agreement).


 


C.        Record Town USA has
formed Record Town Utah, LLC, a New York limited liability company, as a new
Subsidiary, and pursuant to the First Amendment Record Town Utah, LLC has
joined the Credit Agreement as a Borrower thereunder.


 


D.        Pursuant to Section 5.12
of the Credit Agreement, the Loan Parties are required to cause Record Town USA
to pledge the Capital Stock of Record Town Utah, LLC to the Collateral Agent
for the benefit of the Secured Parties pursuant to the Pledge Agreement.


 


NOW, THEREFORE, in consideration of the premises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:


 


1.                          As
security for the payment and performance, as the case may be, in full of the
Obligations, Record Town USA hereby (i) agrees (a) to be a party to and be
bound by the provisions of the Pledge Agreement and the other Loan Documents as
a “Pledgor” thereunder as if Record Town USA was a signatory to the Pledge
Agreement and was expressly named as a Pledgor therein and (b) to be bound,
jointly and severally, with all of the other Pledgors, by all of the
representations, warranties, covenants and agreements of the Pledgors set forth
in the Pledge Agreement and the other Loan Documents, (ii) transfers, grants,
bargains, sells, conveys, hypothecates, pledges, sets over and delivers


 

















 


unto the
Collateral Agent, its successors and assigns, and hereby grants to the
Collateral Agent, its successors and assigns, for the benefit of the Secured
Parties, a security interest in all of Record Town USA’s right, title and
interest in, to and under: (a) the membership interests in Record Town Utah,
LLC listed on Schedule A hereto and the securities, if any, representing
all such membership interests (the “Additional Pledged Securities”), (b)
subject to Section 6 of the Pledge Agreement, all dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed or distributable, in respect of, or in exchange for, the Additional
Pledged Securities, (c) subject to Section 6 of the Pledge Agreement, all
rights and privileges of Record Town USA with respect to the Additional Pledged
Securities and (d) all proceeds of any of the foregoing (collectively, the “Additional
Pledged Collateral”), TO HAVE AND TO HOLD the Additional Pledged
Collateral, together with all right, title, interest, powers, privileges and
preferences pertaining or incidental thereto, unto the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties and (iii) agrees
to deliver to the Collateral Agent any and all certificates or other
instruments or documents representing the Additional Pledged Securities and to
execute and deliver to the Collateral Agent such other instruments, documents
and agreements as the Collateral Agent may reasonably request.


 


2.                          Record
Town USA and the Existing Pledgors hereby (i) agree that Schedule A
attached hereto shall be attached to, and hereafter constitute a part of, Schedule
I to the Pledge Agreement and (ii) agree that the Additional Pledged
Securities constitute “Pledged Securities” for all purposes of the Pledge
Agreement, (iii) agree that the Additional Pledged Collateral constitutes “Pledged
Collateral” for all purposes of the Pledge Agreement and (iii) represent,
warrant and covenant to and with the Collateral Agent that each of the
representations and warranties contained in Section 4 of the Pledge Agreement
are true and correct in all material respects on the date hereof after giving
effect to the addition of Schedule A hereto to Schedule 1 of the Pledge
Agreement.


 


3.                          All
of the terms and conditions of the Pledge Agreement, as supplemented herein,
remain in full force and effect.


 


4.                          This
Joinder, which may be executed in multiple counterparts, constitutes the entire
agreement of the parties regarding the matters contained herein and shall not
be modified by any prior oral or written discussions.


 


5.                          It
is intended that this Joinder take effect as an instrument under seal as of the
date first written above.


 


[Signature Pages Follow]


 

















 


	
  COLLATERAL
  AGENT:

  	
  BANK
  OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sally A. Sheehan

  	
   

  
	
   

  	
   

  	
  Sally A. Sheehan

  Managing Director

  



 


5

















 


IN WITNESS WHEREOF, the parties hereto have caused this Joinder to be
executed by their duly authorized officers under seal as of the date first
appearing above.


 


	
   

  	
   

  	
  PLEDGORS:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TRANS
  WORLD ENTERTAINMENT

  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TRANS
  WORLD NEW YORK, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  



 

















 


SCHEDULE A


 


Record Town Utah, LLC does not have any authorized, issued or
outstanding membership interests of any class or any commitments to issue any
membership interests of any class or any securities convertible into or
exchangeable for any membership interests of any class except as otherwise
stated in this Schedule I.


 


	
  Issuer

  	
   

  	
  Record

  Owner

  	
   

  	
  Type of Interest

  held by Record

  Owner

  	
   

  	
  Percentage of

  Membership

  Interests held by

  Record Owner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Record
  Town Utah, LLC

  	
   

  	
  Record
  Town USA, LLC

  	
   

  	
  Limited
  liability company membership interest

  	
   

  	
  100%

  



 

















 


JOINDER TO SECURITY AGREEMENT


 


This Joinder to Security Agreement (this “Joinder”) is made as
of this 23rd day of March 2006 by and among (a) each of the Grantors listed on
the signature pages hereto (the “Existing Grantors”), (b) Record Town
Utah, LLC (“Record Town Utah”) and (c) Bank of America, N.A., as
Collateral Agent (in such capacity, the “Collateral Agent”) for the
Secured Parties (as defined in the Security Agreement referred to below).


 


W I T N E S S E T H:


 


A.       Reference is hereby made
to (i) the Credit Agreement dated as of January 5, 2006, by and among (a) Trans
World Entertainment Corporation (the “Lead Borrower”), (b) the other
Borrowers party thereto, (c) the Facility Guarantors party thereto, (d) the
Lenders party thereto, (e) Bank of America, N.A., as Issuing Bank and (f) Bank
of America, N.A., as Administrative Agent and Collateral Agent (such Credit
Agreement, as amended by the First Amendment to Credit Agreement, dated as of
March 23, 2006 (the “First Amendment”), is referred to herein as the “Credit
Agreement”), and (ii) the Security Agreement dated as of January 5, 2006,
by and among the Existing Grantors and the Collateral Agent for the benefit of
the Secured Parties (the “Security Agreement”). All capitalized terms
not otherwise defined herein shall have the meanings given such terms in the
Security Agreement.


 


B.        Pursuant to the Security
Agreement, the Existing Grantors have granted to the Collateral Agent, for the
benefit of the Secured Parties, a continuing security interest in and to the
Collateral (as defined in the Security Agreement).


 


C.        Pursuant to the First
Amendment, Record Town Utah has joined the Credit Agreement as a Borrower
thereunder.


 


D.        Pursuant to Section 5.12
of the Credit Agreement, the Loan Parties are required to cause Record Town
Utah to join the Security Agreement.


 


NOW, THEREFORE, in consideration of the premises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:


 


1.                          As security for the payment and performance, as the case may be, in full
of the Obligations, Record Town Utah hereby (i) agrees (a) to be a party
to and be bound by the provisions of the Security Agreement and the other Loan
Documents as a “Grantor” thereunder as if Record Town Utah was a signatory to
the Security Agreement and was expressly named as a Grantor therein and (b) to
be bound, jointly and severally, with all of the other Grantors, by all of the
representations, warranties, covenants and agreements of the Grantors set forth
in the Security Agreement and the other Loan Documents and (ii) bargains,
assigns, mortgages, pledges, hypothecates and transfers to the Collateral
Agent, its successors and assigns, for the benefit of the Secured Parties, and
hereby grants to the Collateral Agent, its successors and assigns, for the
benefit of the Secured Parties, a


 


1

















 


security interest
in, all of Record Town Utah’s right, title and interest in, to and under the
Collateral. Without limiting the foregoing, Record Town Utah hereby designates
the Collateral Agent as Record Town Utah’s true and lawful attorney,
exercisable by the Collateral Agent whether or not an Event of Default exists,
with full power of substitution, at the Collateral Agent’s option, to file one
or more Financing Statements, continuation statements, or to sign other
documents for the purpose of perfecting, confirming, continuing, enforcing or
protecting the Security Interest granted by Record Town Utah, without the
signature of Record Town Utah (Record Town Utah hereby appointing the
Collateral Agent as such Person’s attorney to sign such Person’s name to any
such instrument or document, whether or not an Event of Default exists), and
naming Record Town Utah as debtor and the Collateral Agent as secured party.


 


2.                          All
of the terms and conditions of the Security Agreement, as supplemented herein,
remain in full force and effect.


 


3.                          This
Joinder, which may be executed in multiple counterparts, constitutes the entire
agreement of the parties regarding the matters contained herein and shall not
be modified by any prior oral or written discussions.


 


4.                          It
is intended that this Joinder take effect as an instrument under seal as of the
date first written above.


 


[Signature Pages Follow]


 


2

















 


IN WITNESS WHEREOF, the parties hereto have caused this Joinder to be
executed by their duly authorized officers under seal as of the date first
appearing above.


 


 


	
   

  	
   

  	
  GRANTORS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TRANS
  WORLD ENTERTAINMENT

  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  



 

















 


	
   

  	
   

  	
  MOVIES
  PLUS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John J. Sullivan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Sullivan

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President, Chief Financial Officer

  and Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RECORD
  TOWN UTAH, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Record Town USA, LLC,
  its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John J. Sullivan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Sullivan

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President, Chief Financial Officer

  and Secretary

  



 

















 


	
  COLLATERAL
  AGENT:

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sally A. Sheehan

  	
   

  
	
   

  	
   

  	
  Sally A. Sheehan

  Managing Director

  



 

















 


REVOLVING NOTE


 


	
  $70,000,000.00

  	
   

  	
  March 23, 2006

  	
   

  



 


FOR VALUE RECEIVED, the undersigned (singly, a “Borrower”, and
collectively, the “Borrowers”, together with successors and assigns),
jointly and severally promise to pay to the order of BANK OF AMERICA, N.A.
(hereinafter, together with its successors in title and assigns, the “Lender”),
c/o Bank of America, N.A., 40 Broad Street, Boston, Massachusetts 02109, the
principal sum of SEVENTY MILLION DOLLARS ($70,000,000.00), or, if less, the
aggregate unpaid principal balance of Revolving Loans made by the Lender to or
for the account of any Borrower pursuant to the Credit Agreement dated January
5, 2006 (as such may be amended, modified, supplemented or restated, the “Credit
Agreement”) by, among others, (i) Trans World Entertainment Corporation, as
Lead Borrower, (ii) the other Borrowers party thereto, (iii) the Facility
Guarantors party thereto, (iv) the Lenders named therein, (v) Bank of America,
N.A., as Administrative Agent for the Lenders and as Collateral Agent for the
Secured Parties (in such capacities, the “Agent”), and (vi) Bank of
America, N.A., as Swingline Lender and Issuing Bank, with interest, fees,
expenses, and costs at the rate and payable in the manner stated therein.


 


This is a “Revolving Note” to which reference is made in the Credit
Agreement and is subject to all terms and provisions thereof. The principal of,
and interest on, this Revolving Note shall be payable at the times, in the
manner, and in the amounts as provided in the Credit Agreement and shall be
subject to prepayment and acceleration as provided therein. Borrowers shall
have the right to borrow, re-pay and re-borrow amounts hereunder pursuant to
the terms and subject to the conditions of the Credit Agreement Capitalized
terms used herein and not defined herein shall have the meanings assigned to
such terms in the Credit Agreement.


 


The Agent’s books and records concerning the Revolving Loans, the
accrual of interest thereon, and the repayment of such Revolving Loans, shall
be prima facie evidence of the indebtedness hereunder, absent manifest error.


 


No delay or omission by the Agent or the Lender in exercising or
enforcing any of Agent’s or such Lender’s powers, rights, privileges, remedies,
or discretions hereunder shall operate as a waiver thereof on that occasion nor
on any other occasion. No waiver of any Event of Default shall operate as a
waiver of any other Event of Default, nor as a continuing waiver.


 


Each Borrower, and each endorser and guarantor of this Revolving Note,
waives presentment, demand, notice, and protest, and also waives any delay on
the part of the holder hereof. Each Borrower assents to any extension or other
indulgence (including, without limitation, the release or substitution of
Collateral) permitted by any Agent and/or the Lender with respect to this
Revolving Note and/or any Collateral or any extension or other indulgence with
respect to any other liability or any collateral given to secure any other
liability of any Borrower or any other Person obligated on account of this
Revolving Note.


 


1

















 


This Revolving Note shall be binding upon each Borrower, and each
endorser and guarantor hereof, and upon their respective successors, assigns,
and representatives, and shall inure to the benefit of the Lender and its
successors, endorsees, and assigns.


 


The liabilities of each Borrower, and of any endorser or guarantor of
this Revolving Note, are joint and several, provided,
however, the release by Agent or the Lender of any one or more such
Persons shall not release any other Person obligated on account of this
Revolving Note. Each reference in this Revolving Note to each Borrower, any
endorser, and any guarantor, is to such Person individually and also to all
such Persons jointly. No Person obligated on account of this Revolving Note may
seek contribution from any other Person also obligated unless and until all
liabilities, obligations and indebtedness to the Lender of the Person from whom
contribution is sought have been satisfied in full.


 


Each Borrower agrees that any suit for the enforcement of this
Revolving Note or any other Loan Document may be brought in any New York state
or federal court sitting in New York County as the Agent may elect in its sole
discretion and consents to the non-exclusive jurisdiction of such courts. Each
Borrower hereby waives any objection which it may now or hereafter have to the
venue of any such suit or any such court or that such suit is brought in an
inconvenient forum. Each Borrower agrees that any action commenced by any
Borrower asserting any claim or counterclaim arising under or in connection
with this Revolving Note or any other Loan Document shall be brought solely in
any New York state or federal court sitting in New York County as the Agent may
elect in its sole discretion and consents to the exclusive jurisdiction of such
courts with respect to any such action.


 


THIS REVOLVING NOTE IS DELIVERED TO THE LENDER AT THE OFFICES OF THE
AGENT IN BOSTON, MASSACHUSETTS, AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.


 


Each Borrower makes the following waiver knowingly, voluntarily, and
intentionally, and understands that the Agent and the Lender, in the
establishment and maintenance of their respective relationship with the Borrowers
contemplated by this Revolving Note, is relying thereon. EACH BORROWER, EACH
GUARANTOR, ENDORSER AND SURETY, AND THE LENDER BY ITS ACCEPTANCE HEREOF, HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A JURY
IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN WHICH ANY SUCH BORROWER, GUARANTOR,
ENDORSER, SURETY OR LENDER IS OR BECOMES A PARTY (WHETHER SUCH CASE OR
CONTROVERSY IS INITIATED BY OR AGAINST ANY SUCH BORROWER, GUARANTOR, ENDORSER,
SURETY OR LENDER OR IN WHICH ANY SUCH BORROWER, GUARANTOR, ENDORSER, SURETY OR
LENDER IS JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES
DIRECTLY OR INDIRECTLY OUT OF OR RELATES TO THIS REVOLVING NOTE, ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER


 


2

















 


PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THE CREDIT AGREEMENT AND THIS REVOLVING NOTE
BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.


 


3

















 


IN WITNESS WHEREOF, the Borrowers have caused this Revolving Note to be
duly executed as of the date set forth above.


 


 


	
   

  	
   

  	
  BORROWERS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TRANS
  WORLD ENTERTAINMENT CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  



 


4

















 


	
   

  	
   

  	
  MOVIES
  PLUS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John J. Sullivan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Sullivan

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President, Chief Financial Officer

  and Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RECORD
  TOWN UTAH, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John J. Sullivan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Sullivan

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President, Chief Financial Officer

  and Secretary

  



 


5

















 


	
  REVOLVING NOTE

  



 


	
  $25,000,000.00

  	
   

  	
  March 23, 2006

  	
   

  



 


FOR VALUE RECEIVED, the undersigned (singly, a “Borrower”, and
collectively, the “Borrowers”, together with successors and assigns),
jointly and severally promise to pay to the order of LASALLE BANK NATIONAL
ASSOCIATION (hereinafter, together with its successors in title and assigns,
the “Lender”), c/o Bank of America, N.A., 40 Broad Street, Boston,
Massachusetts 02109, the principal sum of TWENTY FIVE MILLION DOLLARS
($25,000,000.00), or, if less, the aggregate unpaid principal balance of
Revolving Loans made by the Lender to or for the account of any Borrower
pursuant to the Credit Agreement dated January 5, 2006 (as such may be amended,
modified, supplemented or restated, the “Credit Agreement”) by, among
others, (i) Trans World Entertainment Corporation, as Lead Borrower, (ii) the
other Borrowers party thereto, (iii) the Facility Guarantors party thereto,
(iv) the Lenders named therein, (v) Bank of America, N.A., as Administrative
Agent for the Lenders and as Collateral Agent for the Secured Parties (in such
capacities, the “Agent”), and (vi) Bank of America, N.A., as Swingline
Lender and Issuing Bank, with interest, fees, expenses, and costs at the rate
and payable in the manner stated therein.


 


This is a “Revolving Note” to which reference is made in the Credit
Agreement and is subject to all terms and provisions thereof. The principal of,
and interest on, this Revolving Note shall be payable at the times, in the
manner, and in the amounts as provided in the Credit Agreement and shall be
subject to prepayment and acceleration as provided therein. Borrowers shall
have the right to borrow, re-pay and re-borrow amounts hereunder pursuant to
the terms and subject to the conditions of the Credit Agreement. Capitalized
terms used herein and not defined herein shall have the meanings assigned to
such terms in the Credit Agreement.


 


The Agent’s books and records concerning the Revolving Loans, the
accrual of interest thereon, and the repayment of such Revolving Loans, shall
be prima facie evidence of the indebtedness hereunder, absent manifest error.


 


No delay or omission by the Agent or the Lender in exercising or
enforcing any of Agent’s or such Lender’s powers, rights, privileges, remedies,
or discretions hereunder shall operate as a waiver thereof on that occasion nor
on any other occasion. No waiver of any Event of Default shall operate as a
waiver of any other Event of Default, nor as a continuing waiver.


 


Each Borrower, and each endorser and guarantor of this Revolving Note,
waives presentment, demand, notice, and protest, and also waives any delay on
the part of the holder hereof. Each Borrower assents to any extension or other
indulgence (including, without limitation, the release or substitution of
Collateral) permitted by any Agent and/or the Lender with respect to this
Revolving Note and/or any Collateral or any extension or other indulgence


 


1

















 


with respect to
any other liability or any collateral given to secure any other liability of
any Borrower or any other Person obligated on account of this Revolving Note.


 


This Revolving Note shall be binding upon each Borrower, and each
endorser and guarantor hereof, and upon their respective successors, assigns, and
representatives, and shall inure to the benefit of the Lender and its
successors, endorsees, and assigns.


 


The liabilities of each Borrower, and of any endorser or guarantor of
this Revolving Note, are joint and several, provided,
however, the release by
Agent or the Lender of any one or more such Persons shall not release any other
Person obligated on account of this Revolving Note. Each reference in this
Revolving Note to each Borrower, any endorser, and any guarantor, is to such
Person individually and also to all such Persons jointly. No Person obligated
on account of this Revolving Note may seek contribution from any other Person
also obligated unless and until all liabilities, obligations and indebtedness
to the Lender of the Person from whom contribution is sought have been
satisfied in full.


 


Each Borrower agrees that any suit for the enforcement of this
Revolving Note or any other Loan Document may be brought in any New York state
or federal court sitting in New York County as the Agent may elect in its sole
discretion and consents to the non-exclusive jurisdiction of such courts. Each
Borrower hereby waives any objection which it may now or hereafter have to the
venue of any such suit or any such court or that such suit is brought in an
inconvenient forum. Each Borrower agrees that any action commenced by any
Borrower asserting any claim or counterclaim arising under or in connection
with this Revolving Note or any other Loan Document shall be brought solely in
any New York state or federal court sitting in New York County as the Agent may
elect in its sole discretion and consents to the exclusive jurisdiction of such
courts with respect to any such action.


 


THIS REVOLVING NOTE IS DELIVERED TO THE LENDER AT THE OFFICES OF THE
AGENT IN BOSTON, MASSACHUSETTS, AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.


 


Each Borrower makes the following waiver knowingly, voluntarily, and
intentionally, and understands that the Agent and the Lender, in the
establishment and maintenance of their respective relationship with the
Borrowers contemplated by this Revolving Note, is relying thereon. EACH
BORROWER, EACH GUARANTOR, ENDORSER AND SURETY, AND THE LENDER BY ITS ACCEPTANCE
HEREOF, HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN WHICH ANY SUCH
BORROWER, GUARANTOR, ENDORSER, SURETY OR LENDER IS OR BECOMES A PARTY (WHETHER
SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST ANY SUCH BORROWER,
GUARANTOR, ENDORSER, SURETY OR LENDER OR IN WHICH ANY SUCH BORROWER, GUARANTOR,
ENDORSER, SURETY OR LENDER IS JOINED AS A PARTY LITIGANT), WHICH CASE OR
CONTROVERSY ARISES DIRECTLY OR INDIRECTLY OUT OF OR RELATES TO THIS REVOLVING
NOTE, ANY OTHER LOAN


 


2

















 


DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY) EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THE CREDIT AGREEMENT AND THIS REVOLVING NOTE BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.


 


3

















 


IN WITNESS WHEREOF, the Borrowers have caused this Revolving Note to be
duly executed as of the date set forth above.


 


	
   

  	
   

  	
  BORROWERS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TRANS
  WORLD ENTERTAINMENT

  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  



 


4

















 


	
   

  	
   

  	
  MOVIES
  PLUS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John J. Sullivan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Sullivan

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President, Chief Financial Officer

  and Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RECORD
  TOWN UTAH, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John J. Sullivan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Sullivan

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President, Chief Financial Officer

  and Secretary

  



 


5

















 


REVOLVING NOTE


 


	
  $25,000,000.00

  	
   

  	
  March 23, 2006

  	
   

  



 


FOR VALUE RECEIVED, the undersigned (singly, a “Borrower”, and
collectively, the “Borrowers”, together with successors and assigns),
jointly and severally promise to pay to the order of JPMORGAN CHASE BANK, N.A.
(hereinafter, together with its successors in title and assigns, the “Lender”),
c/o Bank of America, N.A., 40 Broad Street, Boston, Massachusetts 02109, the
principal sum of TWENTY FIVE MILLION DOLLARS ($25,000,000.00), or, if less, the
aggregate unpaid principal balance of Revolving Loans made by the Lender to or
for the account of any Borrower pursuant to the Credit Agreement dated January
5, 2006 (as such may be amended, modified, supplemented or restated, the “Credit
Agreement”) by, among others, (i) Trans World Entertainment Corporation, as
Lead Borrower, (ii) the other Borrowers party thereto, (iii) the Facility
Guarantors party thereto, (iv) the Lenders named therein, (v) Bank of America,
N.A., as Administrative Agent for the Lenders and as Collateral Agent for the
Secured Parties (in such capacities, the “Agent”), and (vi) Bank of
America, N.A., as Swingline Lender and Issuing Bank, with interest, fees,
expenses, and costs at the rate and payable in the manner stated therein.


 


This is a “Revolving Note” to which reference is made in the Credit
Agreement and is subject to all terms and provisions thereof. The principal of,
and interest on, this Revolving Note shall be payable at the times, in the
manner, and in the amounts as provided in the Credit Agreement and shall be
subject to prepayment and acceleration as provided therein. Borrowers shall
have the right to borrow, re-pay and re-borrow amounts hereunder pursuant to
the terms and subject to the conditions of the Credit Agreement. Capitalized
terms used herein and not defined herein shall have the meanings assigned to
such terms in the Credit Agreement.


 


The Agent’s books and records concerning the Revolving Loans, the
accrual of interest thereon, and the repayment of such Revolving Loans, shall
be prima facie evidence of the indebtedness hereunder, absent manifest error.


 


No delay or omission by the Agent or the Lender in exercising or
enforcing any of Agent’s or such Lender’s powers, rights, privileges, remedies,
or discretions hereunder shall operate as a waiver thereof on that occasion nor
on any other occasion. No waiver of any Event of Default shall operate as a
waiver of any other Event of Default, nor as a continuing waiver.


 


Each Borrower, and each endorser and guarantor of this Revolving Note,
waives presentment, demand, notice, and protest, and also waives any delay on
the part of the holder hereof. Each Borrower assents to any extension or other
indulgence (including, without limitation, the release or substitution of
Collateral) permitted by any Agent and/or the Lender with respect to this
Revolving Note and/or any Collateral or any extension or other indulgence


 


1

















 


with respect to
any other liability or any collateral given to secure any other liability of
any Borrower or any other Person obligated on account of this Revolving Note.


 


This Revolving Note shall be binding upon each Borrower, and each
endorser and guarantor hereof, and upon their respective successors, assigns,
and representatives, and shall inure to the benefit of the Lender and its
successors, endorsees, and assigns.


 


The liabilities of each Borrower, and of any endorser or guarantor of
this Revolving Note, are joint and several, provided,
however, the release by Agent or the Lender
of any one or more such Persons shall not release any other Person obligated on
account of this Revolving Note. Each reference in this Revolving Note to each
Borrower, any endorser, and any guarantor, is to such Person individually and
also to all such Persons jointly. No Person obligated on account of this
Revolving Note may seek contribution from any other Person also obligated
unless and until all liabilities, obligations and indebtedness to the Lender of
the Person from whom contribution is sought have been satisfied in full.


 


Each Borrower agrees that any suit for the enforcement of this
Revolving Note or any other Loan Document may be brought in any New York state
or federal court sitting in New York County as the Agent may elect in its sole
discretion and consents to the non-exclusive jurisdiction of such courts. Each
Borrower hereby waives any objection which it may now or hereafter have to the
venue of any such suit or any such court or that such suit is brought in an
inconvenient forum. Each Borrower agrees that any action commenced by any
Borrower asserting any claim or counterclaim arising under or in connection
with this Revolving Note or any other Loan Document shall be brought solely in
any New York state or federal court sitting in New York County as the Agent may
elect in its sole discretion and consents to the exclusive jurisdiction of such
courts with respect to any such action.


 


THIS REVOLVING NOTE IS DELIVERED TO THE LENDER AT THE OFFICES OF THE
AGENT IN BOSTON, MASSACHUSETTS, AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.


 


Each Borrower makes the following waiver knowingly, voluntarily, and
intentionally, and understands that the Agent and the Lender, in the
establishment and maintenance of their respective relationship with the
Borrowers contemplated by this Revolving Note, is relying thereon. EACH
BORROWER, EACH GUARANTOR, ENDORSER AND SURETY, AND THE LENDER BY ITS ACCEPTANCE
HEREOF, HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN WHICH ANY SUCH
BORROWER, GUARANTOR, ENDORSER, SURETY OR LENDER IS OR BECOMES A PARTY (WHETHER
SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST ANY SUCH BORROWER,
GUARANTOR, ENDORSER, SURETY OR LENDER OR IN WHICH ANY SUCH BORROWER, GUARANTOR,
ENDORSER, SURETY OR LENDER IS JOINED AS A PARTY LITIGANT), WHICH CASE OR
CONTROVERSY ARISES DIRECTLY OR INDIRECTLY OUT OF OR RELATES TO THIS REVOLVING
NOTE, ANY OTHER LOAN


 


2

















 


DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THE CREDIT AGREEMENT AND THIS REVOLVING NOTE BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.


 


3

















 


IN WITNESS WHEREOF, the Borrowers have caused this Revolving Note to be
duly executed as of the date set forth above.


 


	
   

  	
   

  	
  BORROWERS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TRANS
  WORLD ENTERTAINMENT

  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  



 


4

















 


	
   

  	
   

  	
  MOVIES
  PLUS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John J. Sullivan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Sullivan

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President, Chief Financial Officer

  and Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RECORD
  TOWN UTAH, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John J. Sullivan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Sullivan

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President,
  Chief Financial Officer

  and Secretary

  



 


5

















 


REVOLVING NOTE


 


	
  $10,000,000.00

  	
   

  	
  March
  23, 2006

  	
   

  



 


FOR VALUE RECEIVED, the undersigned (singly, a “Borrower”, and
collectively, the “Borrowers”, together with successors and assigns),
jointly and severally promise to pay to the order of FIRST NIAGARA BANK
(hereinafter, together with its successors in title and assigns, the “Lender”),
c/o Bank of America, N.A., 40 Broad Street, Boston, Massachusetts 02109, the
principal sum of TEN MILLION DOLLARS ($10,000,000.00), or, if less, the
aggregate unpaid principal balance of Revolving Loans made by the Lender to or
for the account of any Borrower pursuant to the Credit Agreement dated January
5, 2006 (as such may be amended, modified, supplemented or restated, the “Credit
Agreement”) by, among others, (i) Trans World Entertainment Corporation, as
Lead Borrower, (ii) the other Borrowers party thereto, (iii) the Facility
Guarantors party thereto, (iv) the Lenders named therein, (v) Bank of America,
N.A., as Administrative Agent for the Lenders and as Collateral Agent for the
Secured Parties (in such capacities, the “Agent”), and (vi) Bank of
America, N.A., as Swingline Lender and Issuing Bank, with interest, fees,
expenses, and costs at the rate and payable in the manner stated therein.


 


This is a “Revolving Note” to which reference is made in the Credit
Agreement and is subject to all terms and provisions thereof. The principal of,
and interest on, this Revolving Note shall be payable at the times, in the
manner, and in the amounts as provided in the Credit Agreement and shall be
subject to prepayment and acceleration as provided therein. Borrowers shall
have the right to borrow, re-pay and re-borrow amounts hereunder pursuant to
the terms and subject to the conditions of the Credit Agreement. Capitalized
terms used herein and not defined herein shall have the meanings assigned to
such terms in the Credit Agreement.


 


The Agent’s books and records concerning the Revolving Loans, the
accrual of interest thereon, and the repayment of such Revolving Loans, shall
be prima facie evidence of the indebtedness hereunder, absent manifest error.


 


No delay or omission by the Agent or the Lender in exercising or
enforcing any of Agent’s or such Lender’s powers, rights, privileges, remedies,
or discretions hereunder shall operate as a waiver thereof on that occasion nor
on any other occasion. No waiver of any Event of Default shall operate as a
waiver of any other Event of Default, nor as a continuing waiver.


 


Each Borrower, and each endorser and guarantor of this Revolving Note,
waives presentment, demand, notice, and protest, and also waives any delay on
the part of the holder hereof. Each Borrower assents to any extension or other
indulgence (including, without limitation, the release or substitution of
Collateral) permitted by any Agent and/or the Lender with respect to this
Revolving Note and/or any Collateral or any extension or other indulgence


 


1

















 


with respect to
any other liability or any collateral given to secure any other liability of
any Borrower or any other Person obligated on account of this Revolving Note.


 


This Revolving Note shall be binding upon each Borrower, and each
endorser and guarantor hereof, and upon their respective successors, assigns,
and representatives, and shall inure to the benefit of the Lender and its
successors, endorsees, and assigns.


 


The liabilities of each Borrower, and of any endorser or guarantor of
this Revolving Note, are joint and several, provided,
however, the release by Agent or the Lender of any one or more such
Persons shall not release any other Person obligated on account of this
Revolving Note. Each reference in this Revolving Note to each Borrower, any
endorser, and any guarantor, is to such Person individually and also to all
such Persons jointly. No Person obligated on account of this Revolving Note may
seek contribution from any other Person also obligated unless and until all
liabilities, obligations and indebtedness to the Lender of the Person from whom
contribution is sought have been satisfied in full.


 


Each Borrower agrees that any suit for the enforcement of this
Revolving Note or any other Loan Document may be brought in any New York state
or federal court sitting in New York County as the Agent may elect in its sole
discretion and consents to the non-exclusive jurisdiction of such courts. Each
Borrower hereby waives any objection which it may now or hereafter have to the
venue of any such suit or any such court or that such suit is brought in an
inconvenient forum. Each Borrower agrees that any action commenced by any
Borrower asserting any claim or counterclaim arising under or in connection
with this Revolving Note or any other Loan Document shall be brought solely in
any New York state or federal court sitting in New York County as the Agent may
elect in its sole discretion and consents to the exclusive jurisdiction of such
courts with respect to any such action.


 


THIS REVOLVING NOTE IS DELIVERED TO THE LENDER AT THE OFFICES OF THE
AGENT IN BOSTON, MASSACHUSETTS, AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.


 


Each Borrower makes the following waiver knowingly, voluntarily, and
intentionally, and understands that the Agent and the Lender, in the
establishment and maintenance of their respective relationship with the
Borrowers contemplated by this Revolving Note, is relying thereon. EACH
BORROWER, EACH GUARANTOR, ENDORSER AND SURETY, AND THE LENDER BY ITS ACCEPTANCE
HEREOF, HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN WHICH ANY SUCH
BORROWER, GUARANTOR, ENDORSER, SURETY OR LENDER IS OR BECOMES A PARTY (WHETHER
SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST ANY SUCH BORROWER,
GUARANTOR, ENDORSER, SURETY OR LENDER OR IN WHICH ANY SUCH BORROWER, GUARANTOR,
ENDORSER, SURETY OR LENDER IS JOINED AS A PARTY LITIGANT), WHICH CASE OR
CONTROVERSY ARISES DIRECTLY OR INDIRECTLY OUT OF OR RELATES TO THIS REVOLVING
NOTE, ANY OTHER LOAN


 


2

















 


DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THE CREDIT AGREEMENT AND THIS REVOLVING NOTE BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.


 


3

















 


IN WITNESS WHEREOF, the Borrowers have caused this Revolving Note to be
duly executed as of the date set forth above.


 


	
   

  	
   

  	
  BORROWERS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TRANS
  WORLD ENTERTAINMENT

  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  



 


4

















 


	
   

  	
   

  	
  MOVIES
  PLUS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John J. Sullivan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Sullivan

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President, Chief Financial Officer

  and Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RECORD
  TOWN UTAH, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John J. Sullivan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Sullivan

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President, Chief Financial Officer

  and Secretary

  



 


5

















 


OFFICER’S CLOSING AND SOLVENCY CERTIFICATE


 


Reference is made to the Credit Agreement dated as of January 5, 2006
(the “Credit Agreement”), as amended by the First Amendment (the “First
Amendment”), dated as of March 23, 2006 (as such may be further amended,
modified, supplemented or restated hereafter, the “Amended Credit Agreement”)
by, among others, (i) Trans World Entertainment Corporation, as Lead Borrower,
(ii) the other Borrowers party thereto, (iii) the Facility Guarantors party
thereto, (iv) the Lenders named therein, (v) Bank of America, N.A., as
Administrative Agent for the Lenders and as Collateral Agent for the Secured
Parties (in such capacities, the “Agent”), and (vi) Bank of America,
N.A., as Swingline Lender and Issuing Bank. Capitalized terms used herein and
not defined herein shall have the meanings assigned to such terms in the
Amended Credit Agreement.


 


Pursuant to the provisions of Section 6.e of the First Amendment, the
undersigned, in his capacity as the Senior Vice President, Chief Financial
Officer and Treasurer of Trans World Entertainment Corporation, Record Town,
Inc., Record Town USA, LLC, Trans World New York, LLC, Trans World Florida,
LLC, and Movies Plus, Inc., the Senior Vice President, Chief Financial Officer
and Treasurer of the sole member of Media Logic USA, LLC, and the Executive
Vice President, CFO and Secretary of Record Town Utah, LLC, hereby certifies to
the Agent that, to the best of his knowledge after due investigation, as of
this day:


 


a.                         All
representations and warranties made by each of the Loan Parties in the Amended
Credit Agreement, and in any other Loan Document to which any of the Loan Parties
is a party, are true and complete in all material respects;


 


b.                        No
event has occurred or failed to occur, which occurrence or which failure to
occur constitutes, or solely with the passage of time or the giving of notice
(or both) would constitute, a Default or Event of Default; and


 


c.                         The
Loan Parties are each Solvent.


 


IN WITNESS WHEREOF, the undersigned has executed this certificate as
the officer set forth above of each Loan Party as of the 23rd day of
March, 2006.


 


	
   

  	
  TRANS WORLD
  ENTERTAINMENT CORPORATION

  RECORD TOWN, INC.

  RECORD
  TOWN USA, LLC

  RECORD TOWN UTAH, LLC

  TRANS WORLD NEW YORK, LLC

  TRANS WORLD FLORIDA, LLC

  MEDIA LOGIC USA, LLC, by its sole member

  MOVIES PLUS, INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ John J. Sullivan

  	
   

  
	
   

  	
  Name:

  	
  John J. Sullivan

  
					



 

















 


March 23, 2006


 


Trans World
Entertainment Corporation


38 Corporate
Circle


Albany, New York
12203


Attn:       John J. Sullivan

Chief Financial Officer


 


Re:  First Amendment to Senior
Secured Revolving Credit Facility with Bank of America, N.A. as Agent


 


Dear
Mr. Sullivan:


 


Reference is made to the First Amendment to Credit Agreement dated as
of even date herewith (as amended, supplemented or otherwise modified from time
to time, the “First Amendment”), by, among others, (i) Trans World
Entertainment Corporation, as Lead Borrower, (ii) the other Borrowers party
thereto, (iii) the Facility Guarantors party thereto, (iv) the Lenders named
therein, (v) Bank of America, N.A., as Administrative Agent for the Lenders and
as Collateral Agent for the Secured Parties (in such capacities, the “Agent”),
and (vi) Bank of America, N.A., as Swingline Lender and Issuing Bank.
Capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the First Amendment.


 


In connection with, and in consideration for, the agreements contained
in the First Amendment and to induce the Agent to enter into the First
Amendment, the Loan Parties jointly and severally agree as follows:


 


1.                          The
Borrowers shall pay the Agent, for the Agent’s own account, an arrangement fee
(the “Arrangement Fee”) in an amount equal to .10% of the Commitment
Increase (i.e. $30,000,000 x .10% = $30,000.00). The Arrangement Fee shall be
fully earned and paid by the Borrowers in full on the date of the First
Amendment. The Arrangement Fee shall not be subject to refund or rebate under
any circumstances. The Agent, without prior notice to or consent from the
Borrowers, may allocate and pay over a portion of the Arrangement Fee to a
Lender or Lenders, in such amounts as the Agent in its discretion determines.


 


2.                          The
Borrowers shall reimburse the Agent and the Lenders for all expenses incurred
in connection with the First Amendment, including, without limitation,
reasonable attorneys’ fees (to the extent such attorneys’ fees exceed
$5,000.00) and costs and expenses.


 


3.                          The Loan
Parties shall execute such instruments, documents and agreements as the Agent
and its counsel may reasonably require in order to implement the terms of this
Fee Letter. The Loan Parties agree to keep the terms of this Fee Letter confidential
and not to disclose same to any other person or entity (including, without
limitation, any proposed or actual lender or participant in the credit
facilities), without the Agent’s prior written consent.


 

















 


This Fee Letter is subject to, and is a part of, and is specifically
incorporated, in the First Amendment, which documents together constitute one
entire agreement. Without limiting the foregoing, as set forth in the First
Amendment, this Fee Letter shall be governed by and construed in accordance
with, the laws of the State of New York.


 


This Fee Letter is intended to be solely for the benefit of the parties
hereto and is not intended to confer any benefits upon, or create any rights in
favor of, any person other than the parties hereto.


 


This Fee Letter may be executed in any number of counterparts, each of
which shall be an original, and all of which, when taken together, shall
constitute one agreement. Delivery of an executed signature page of this Fee
Letter by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof.


 


[Remainder of page intentionally left blank]


 


2

















 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  BANK
  OF AMERICA, N.A., as Administrative

  Agent and Collateral Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sally A. Sheehan

  	
   

  
	
   

  	
  Name:

  	
  Sally
  A. Sheehan

  
	
   

  	
  Title:

  	
  Managing
  Director

  



 

















 


	
   

  	
   

  	
  The foregoing is agreed
  to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BORROWERS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TRANS
  WORLD ENTERTAINMENT CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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
  GUARANTORS

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MEDIA
  LOGIC USA, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John J. Sullivan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Sullivan

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President,
  Chief Financial Officer

  and Secretary