EXHIBIT 10.2


 




THIRD
AMENDMENT TO CREDIT AGREEMENT


 


This Third Amendment
to Credit Agreement (this “Amendment”) is made as of October 17, 2016, by and among:


 


TRANS WORLD ENTERTAINMENT
CORPORATION, a New York corporation (the “Lead Borrower”);


 


the Persons named on
Schedule I hereto (together with the Lead Borrower, individually, a “Borrower”, and collectively, the
“Borrowers”);


 


the Persons named on
Schedule II hereto (individually, a “Guarantor”, and collectively, the “Guarantors”,
and together with the Borrowers, individually, a “Loan Party”, and collectively, the “Loan Parties”);


 


the LENDERS party hereto; and


 


WELLS FARGO BANK, NATIONAL
ASSOCIATION (“Wells Fargo”), as Administrative Agent, Collateral Agent, Swingline Lender and as Issuing Bank;


 


in consideration of the mutual covenants herein contained and
benefits to be derived herefrom.


 


W I T
N E S S E T H:


 


WHEREAS, reference is
made to that certain Amended and Restated Credit Agreement, dated as of April 15, 2010 (as amended, restated, supplemented or otherwise
modified and in effect from time to time, the “Credit Agreement”), by, among others, the Loan Parties, the Lenders
party thereto from time to time, Bank of America, N.A. (“Bank of America”), as Administrative Agent, Collateral
Agent, Swingline Lender and Issuing Bank, and Bank of America, N.A. and Wells Fargo Bank, National Association (as successor by
merger to Wells Fargo Retail Finance, LLC), as Co-Borrowing Base Agents;


 


WHEREAS, on May 4, 2012,
Bank of America resigned as Administrative Agent, Collateral Agent, Swingline Lender, Issuing Bank and Co-Borrowing Base Agent
in accordance with the terms of the Credit Agreement, and Wells Fargo was appointed successor Administrative Agent, Collateral
Agent and Issuing Bank in accordance with the terms of the Credit Agreement;


 


WHEREAS, the Lead
Borrower has advised the Administrative Agent that the Lead Borrower desires to acquire (the “Etailz
Acquisition”) all of the issued and outstanding Capital Stock in Etailz Inc., a Washington corporation
(“Etailz”), pursuant to that certain Share Purchase Agreement dated as of even date (the “Etailz
Acquisition Agreement”), by and among Etailz, the Sellers named therein, Thomas C. Simpson, as Sellers’
Representative, and the Lead Borrower, as the buyer, for aggregate consideration of $70,800,000, consisting of, among other
things, (i) certain cash payments in an amount not to exceed $34,700,000, and (ii) (a) the deposit into an escrow account the
sum of $1,500,000 as an indemnity escrow (the “Indemnity Escrow Funds”),



    	 



    	



    


which Indemnity Escrow
Funds shall be paid as and when due in respect of certain contingent indemnification obligations as set forth in the Etailz Acquisition
Agreement (the “Indemnity Indebtedness”) and (b) the deposit into an escrow account the sum of $14,600,000 (the
“Earnout Escrow Funds”, and together with the Indemnity Escrow Funds, collectively, the “Escrow Funds”),
which Earnout Escrow Funds shall be paid as and when due in respect of certain contingent earnout payments as set forth in the
Etailz Acquisition Agreement (the “Earnout Indebtedness”, and together with the Indemnity Indebtedness, collectively,
the “Etailz Indebtedness”).


 


WHEREAS, absent the
consent of the Agents and the Required Lenders, (i) the incurrence of the Etailz Indebtedness would violate Section 6.01 of the
Credit Agreement, (ii) the consummation of the Etailz Acquisition would violate Section 6.04 of the Credit Agreement, (iii) the
maintenance of the Escrow Funds would violate Section 6.02 of the Credit Agreement, and (iv) the making of any payments in respect
of the Earnout Indebtedness would violate Section 6.06 of the Credit Agreement.


 


WHEREAS, the Loan Parties
have requested, and the Agents and the Required Lenders have agreed, that the Credit Agreement be amended to, among other things,
permit the foregoing, in each case as, and subject to the terms and conditions, set forth herein.


 


NOW, THEREFORE, the
parties hereto hereby agree as follows:


 


		1.	Defined Terms. Capitalized terms used in this Amendment shall have the respective meanings
assigned to such terms in the Credit Agreement unless otherwise defined herein.



 


		2.	Amendments to Article I of Credit Agreement. The provisions of Section 1.01 of the Credit
Agreement are hereby amended as follows:



 


		(a)	By amending the definition of “Permitted Acquisition” by deleting the phrase “means
an Acquisition as to which each of the following conditions is satisfied (as applicable):” therefrom and substituting in
its stead the phrase “means (i) the Etailz Acquisition, and (ii) an Acquisition as to which each of the following conditions
is satisfied (as applicable):”.



 


		(b)	By amending the definition of “Permitted Encumbrances” as follows:



 





	 	 	(i)	By deleting the word “and” from the end of clause (l) thereof, re-lettering clause (m) thereof as clause (n), and inserting the following new clause (m) therein:
	 	 	 	 
	 	 	 	(m)Liens
consisting of (i) the escrow of not more than $14,600,000 (excluding interest) in a DDA with Wells Fargo, as Escrow Agent under
the Etailz Acquisition Agreement, which amounts constitute security for the Lead Borrower’s obligations in respect of the
Earnout Consideration




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	 	 	 	(as defined in the Etailz Acquisition Agreement), and (ii) the escrow of not more than $1,500,000 (excluding interest) in a DDA with Wells Fargo, as Escrow Agent under the Etailz Acquisition Agreement, which amounts constitute security for the Lead Borrower’s contingent indemnification obligations under and as provided for in the Etailz Acquisition Agreement; and
	 	 	 	 
	 	 	(ii)	By deleting from the proviso at the end thereof the phrase “clauses (a) through (m) above” and substituting in its stead the phrase “clauses (a) through (n) above”.







 


		(c)	By adding the following new definitions in appropriate alphabetical order:



 


“Etailz”
means Etailz Inc., a Washington corporation.


 


“Etailz
Acquisition” means the Acquisition of Etailz pursuant to the Etailz Acquisition Agreement.


 


“Etailz
Acquisition Agreement” means that certain Share Purchase Agreement dated as of the Third Amendment Effective Date, by
and among Etailz, the Sellers named therein, Thomas C. Simpson, as Sellers’ Representative, and the Lead Borrower, as the
buyer.


 


“Third
Amendment” means that certain Third Amendment to Credit Agreement dated as of the Third Amendment Effective Date, by
and among the Loan Parties, the Agents, and the Lenders party thereto.


 


“Third
Amendment Effective Date” means October 17, 2016.


 


		3.	Amendments to Article VI of Credit Agreement. The provisions of Article VI of the Credit
Agreement are hereby amended as follows:



 


		(a)	By amending Section 6.01(a) thereof by deleting the word “and” from the end of clause
(xi) thereof, re-numbering clause (xii) thereof as clause (xiii), and inserting the following new clause (xii) therein:
	 	 	 
	 	 	(xii)Indebtedness
consisting of (i) the Lead Borrower’s obligations in respect of the Earnout Consideration (as defined in the Etailz Acquisition
Agreement), and (ii) the Lead Borrower’s contingent indemnification obligations pursuant to and as set forth in the Etailz
Acquisition Agreement; and



 





		(b)	By amending Section 6.04 thereof by deleting the word “and” from the end of clause
(g) thereof, re-lettering clause (h) thereof as clause (i), and inserting the following new clause (h) therein:




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		(h)	so long as no Default or Event of Default has occurred and is continuing or would result therefrom,
Investments in Etailz in an aggregate amount not in excess of $15,000,000 at any time; and



 


		(c)	By amending Section 6.06(b) thereof by deleting the word “and” from the end of clause
(i) thereof, re-numbering clause (ii) thereof as clause (iii), and inserting the following new clause (ii) therein:



 


(ii) payment
of the Earnout Consideration (as defined in the Etailz Acquisition Agreement), as and when due pursuant to the Etailz Acquisition
Agreement; provided that the sole source of payment thereof shall be the Earnout Escrow Funds (as defined in the Third Amendment);
and


 


		4.	Joinder of Etailz. Without limiting any of their obligations under the Credit Agreement
or the other Loan Documents, the Loan Parties hereby agree that they shall take such actions as are required by, and in accordance
with the time frames established in, Section 5.12 of the Credit Agreement to cause the joinder of Etailz to the Loan Documents,
the perfection of Liens on Etailz’ assets (to the extent constituting Collateral under the Security Documents) to secure
the Obligations, and the pledge of the shares of Capital Stock of Etailz to secure the Obligations.



 


		5.	Ratification; Representations and Warranties. Except as otherwise expressly provided herein,
all terms and conditions of the Credit Agreement, the Security Agreement, the Facility Guarantees and the other Loan Documents
remain in full force and effect. The Loan Parties hereby ratify, confirm, and reaffirm that all representations and warranties
of the Loan Parties contained in the Credit Agreement, the Security Agreement, the Facility Guarantees and each other Loan Document
are true and correct in all material respects on and as of the date hereof, other than (x) representations and warranties qualified
by materiality, in which case they are true and correct in all respects, or (y) representations and warranties that relate solely
to an earlier date, in which case they are true and correct in all material respects (or in all respects, as applicable) as of
such earlier date.



 


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



 


		(a)	The Administrative Agent shall have received counterparts of this Amendment duly executed and delivered
by each of the parties hereto.



 


		(b)	All action on the part of the Loan Parties necessary for the valid execution, delivery and performance
by the Loan Parties of this Amendment and the documents, instruments and agreements to be executed in connection herewith shall
have been duly and effectively taken and evidence thereof reasonably




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			satisfactory to the Administrative Agent shall have been provided to the Administrative Agent.



 


		(c)	The Loan Parties shall have paid in full all reasonable costs and expenses of the Agents (including,
without limitation, reasonable attorneys’ fees) in connection with the preparation, negotiation, execution and delivery of
this Amendment and related documents, to the extent invoiced at least one (1) Business Day prior to the date hereof.



 


		(d)	The Administrative Agent shall have received true and complete copies of the Etailz Acquisition
Agreement and the material documents, instruments and agreements executed in connection therewith, in each case duly executed by
each of the parties thereto and in form and substance reasonably satisfactory to the Administrative Agent. The Etailz Acquisition
shall have been consummated substantially contemporaneously herewith, and in accordance with the Etailz Acquisition Agreement.



 


		(e)	The Administrative Agent shall have received, in form and substance reasonably satisfactory to
the Administrative Agent, a payoff letter from JPMorgan Chase Bank, N.A. (“JPM”) in respect of Indebtedness
owing by Etailz to JPM in respect of the Etailz Line of Credit (as defined in the Etailz Purchase Agreement), evidencing that the
Etailz Line of Credit has been or concurrently with the Third Amendment Effective Date is being terminated, all obligations thereunder
have been or substantially concurrently with the Third Amendment Effective Date are being paid in full, and all Liens securing
obligations under the Etailz Line of Credit have been or substantially concurrently with the Third Amendment Effective Date are
being released (or other arrangements reasonably satisfactory to the Administrative Agent for delivery of termination statements
and releases have been made).



 


		(f)	No Default or Event of Default shall have occurred and be continuing.



 


		(g)	All representations and warranties of the Loan Parties shall be true and correct in all material
respects on and as of the date hereof, other than (x) representations and warranties that relate solely to an earlier date, in
which case they shall be true and correct as of such earlier date, or (y) representations and warranties qualified by materiality,
in which case they shall be true and correct in all respects.



 


		(h)	The Administrative Agent shall have received such additional documents, instruments, and agreements
as any Agent may reasonably request in connection with the transactions contemplated hereby.





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		7.	Miscellaneous.



 


		(a)	This Amendment may be executed in several counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.
This Amendment and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof
and supersede any and all contemporaneous or previous agreements and understandings, oral or written, relating to the subject matter
hereof. Delivery of an executed counterpart of a signature page to this Amendment by telecopy or other electronic transmission
shall be effective as delivery of a manually executed counterpart of this Amendment.



 


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



 


		(c)	The Loan Parties represent and warrant that they have consulted with independent legal counsel
of their selection in connection with this Amendment and are not relying on any representations or warranties of the Agents or
the other Credit Parties or their respective counsel in entering into this Amendment.



 


		(d)	This Amendment shall constitute a Loan Document for all purposes.



 


		(e)	THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.



 


[SIGNATURE PAGES FOLLOW]



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


 





	 	TRANS WORLD ENTERTAINMENT CORPORATION, as Lead Borrower and as a Borrower
	 	 	 	 
	 	By:	/s/ Edwin J. Sapienza	                
	 	Name:  	Edwin J. Sapienza	 
	 	Title:	Treasurer	 
	 	 	 	 
	 	RECORD TOWN, INC., as a Borrower
	 	 	 	 
	 	By:	/s/ Edwin J. Sapienza	                
	 	Name:  	Edwin J. Sapienza	 
	 	Title:	Treasurer	 
	 	 	 	 
	 	 	 	 
	 	RECORD TOWN USA, LLC, as a Borrower
	 	 	 	 
	 	By:	/s/ Edwin J. Sapienza	                
	 	Name:  	Edwin J. Sapienza	 
	 	Title:	Treasurer	 
	 	 	 	 
	 	 	 	 
	 	TRANS WORLD NEW YORK, LLC, as a Borrower
	 	 	 	 
	 	By:	/s/ Edwin J. Sapienza	                
	 	Name:  	Edwin J. Sapienza	 
	 	Title:	Treasurer	 
	 	 	 	 
	 	 	 	 
	 	TRANS WORLD FLORIDA, LLC, as a Borrower
	 	 	 	 
	 	By:	/s/ Edwin J. Sapienza	                
	 	Name:  	Edwin J. Sapienza	 
	 	Title:	Treasurer	 



 


Signature Page to Third Amendment to Credit
Agreement



    	 



    	



    







	 	MOVIES PLUS, INC., as a Borrower
	 	 	 	 
	 	By:	/s/ Edwin J. Sapienza	                
	 	Name:  	Edwin J. Sapienza	 
	 	Title:	Treasurer	 
	 	 	 	 
	 	 	 	 
	 	RECORD TOWN UTAH, LLC, as a Borrower
	 	 	 	 
	 	By:	/s/ Edwin J. Sapienza	                
	 	Name:  	Edwin J. Sapienza	 
	 	Title:	Treasurer	 




 


Signature Page to Third Amendment to Credit
Agreement


    	 



    	



    

	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative
    Agent, Collateral Agent, Swingline Lender, Issuing Bank and Lender
	 	 	 	 
	 	By:	/s/ Lauren Murphy	                
	 	Name:  	Lauren Murphy	 
	 	Title:	Vice President	 





 


Signature Page to Third Amendment to Credit
Agreement


    	 



    	



    





Schedule I


 


Borrowers other than the Lead Borrower


 


Record Town, Inc.


Record Town USA, LLC


Trans World New York, LLC


Trans World Florida, LLC


Movies Plus, Inc.


Record Town Utah, LLC



    	 



    	



    


Schedule II


 


Guarantors


 


None.


 


2043383.4