EXHIBIT 10.1


 


EXECUTION VERSION


 







REGISTRATION RIGHTS AGREEMENT


 


This Registration Rights Agreement (this
“Agreement”) is made as of October 17, 2016 (the “Closing Date”), by and among (i) Trans
World Entertainment Corporation, a New York corporation (the “Company”), and (ii) the shareholders of the Company
listed in Schedule I hereto (each a “Seller” and, collectively, the “Sellers”). Capitalized
terms used herein have the meanings set forth in Article I of this Agreement.


 


WHEREAS, the Company, the Sellers and certain
other parties have entered into that certain Share Purchase Agreement dated as of October 17, 2016 (the “Purchase Agreement”),
pursuant to which the Sellers will receive shares (the “Consideration Shares”) of common stock, par value $0.01
per share, of the Company (“Company Common Stock”);


 


WHEREAS, the Company and the Sellers desire
to establish certain rights, terms and conditions in connection with the Consideration Shares issued pursuant to the Purchase Agreement,
effective as of and subject to the occurrence of the Closing;


 


NOW, THEREFORE, in consideration of the mutual
covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:


 


ARTICLE I


 


DEFINITIONS


 


SECTION 1.01.     Definitions.


 


(a)     As used in this Agreement, the following
terms shall have the meanings indicated below:


 


“Blackout Period” means
(i) the period beginning on the date that is 2 weeks before the end of each fiscal quarter and fiscal year of the and ending on
the date that is 2 days after the public disclosure by the Company of its quarterly or annual earnings information, as applicable,
(ii) the period from and including the Friday after Thanksgiving until the date that is 2 days after public disclosure by the Company
of the Company’s holiday sales information, and
(iii) such other period or periods as may be imposed by the Company from time to time if the board of directors of the Company
determines in its reasonable good faith judgment that a public filing would (A) materially interfere with an acquisition, corporate
organization, financing, securities offering or other similar transaction involving the Company; (B) require premature disclosure
of material information that the Company has a bona fide business purpose for preserving as confidential; or (C) render the Company
unable to comply with requirements under the Securities Act or Exchange Act.


 


“Exchange Act” means the
United States Securities Exchange Act of 1934, as amended.


 


“Holder” means a Seller
for so long as such Seller is the registered owner of any Registrable Shares.


 


“Nasdaq” means the Nasdaq
Stock Market LLC.


 



    	 



    	



    

“Participating Holder”
means a Holder who has (i) elected to include Registrable Shares in a Registration Statement, (ii) provided the Required Information,
and (iii) entered into the underwriting agreement and such other customary agreements as may be requested by the Company and/or
the underwriters.


 


“Participating Shares”
means Registrable Shares included in a Registration Statement, the registered owner of which is a Participating Holder.


 


“Person” means any individual,
firm, partnership, corporation, trust, joint venture, association, joint stock company, limited liability company, unincorporated
organization or any other entity or organization, including a government or agency or political subdivision thereof, and shall
include any successor (by merger or otherwise) of such entity.


 


“Prospectus” means the
prospectus included in any Registration Statement; all amendments and supplements to any prospectus included in any Registration
Statement, including pre- and post-effective amendments; and all other material incorporated by reference in any such prospectus.


 


“register,” “registered”
and “registration” means a registration effected by preparing and filing the Registration Statement or similar
document in compliance with the Securities Act, and the declaration or ordering of effectiveness of the Registration Statement
or similar document pursuant to the Securities Act.


 


“Registrable Shares” means
(i) any outstanding Consideration Shares, (ii) any other shares of Company Common Stock the holders of which are entitled to registration
rights, and (iii) any securities that may be issued or distributed or be issuable in respect thereof by way of conversion, dividend,
stock split or other distribution, merger, consolidation, exchange, recapitalization or reclassification or similar transaction
or exercise or conversion of any of the foregoing; provided that any such of the foregoing securities shall cease to be
“Registrable Shares” to the extent (a) such Registrable Shares have been disposed of pursuant to a Registration Statement
or Rule 144; (b) such Registrable Shares were sold or otherwise transferred in a private transaction other than a transaction contemplated
by Section 3.02(b); or (c) such Registrable Shares shall have ceased to be outstanding.


 


“Registration Statement”
shall mean any registration statement of the Company, including the related Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, and all exhibits and all material incorporated by reference
in such registration statement, filed with the SEC.


 


“Rule 144” means Rule
144 under the Securities Act (or any similar rule then in force).


 


“SEC” means the Securities
and Exchange Commission, or any successor agency having jurisdiction to enforce the Securities Act.


 


“Securities Act” means
the United States Securities Act of 1933, as amended.


 


“Selling Expenses” means,
with respect to any Demand Registration or Piggyback Registration, (i) all underwriting fees, discounts, selling commissions and
similar expenses, (ii) all stock transfer taxes applicable to the sale of Registrable Shares in connection with such Demand Registration
or Piggyback Registration, (iii) except for the fees and disbursements of the Participating Holder Counsel borne and paid by the
Company as provided in Section 2.03, all fees and disbursements of counsel for Participating Holders, and (iv) all other expenses
incurred by Participating Holders.



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As used in this Agreement, the following
terms shall have the meanings assigned in the section indicted:


 


	Agreement
    	Preamble
	Arbitration
    Award	3.06
	Claims
    	2.04(a)
	Company
    	Preamble
	Company
    Common Stock	Recitals
	Consideration
    Shares	Recitals
	Demand
    Notice	2.01(a)(i)
	Demand
    Registration	2.01(a)(i)
	Demand
    Registration Request	2.01(a)(i)
	Initiating
    Holders	2.01(a)(i)
	Maximum
    Amount	2.01(d)
	Piggyback
    Notice	2.01(b)
	Piggyback
    Registration	2.01(b)(i)
	Purchase
    Agreement	Recitals
	Required
    Information	2.01(c)
	Sellers	Preamble


 


All capitalized terms not otherwise defined
in this Agreement shall have the meanings assigned thereto in the Purchase Agreement.


 


ARTICLE II


 


REGISTRATION RIGHTS


 


SECTION 2.01.     Registration Rights.
Subject to the terms and conditions set forth herein, the Holders shall have registration rights in respect of their Registrable
Shares as follows:


 


(a)     Demand Registration Rights.


 


(i)     At
any time after October 17, 2018, if (A) the Holders have not been given the opportunity to exercise piggyback registration rights
in accordance with Section 2.01(b) in connection with an underwritten offering in which the Maximum Amount includes at least 80%
of the Consideration Shares requested to be included in such registration statement by the Holders pursuant to Section 2.01(b)(ii),
and (b) the Company is qualified at such time to register the offer and sale of securities under the Securities Act pursuant
to a Registration Statement on Form S-3 or any successor form thereto, subject to the limitations set forth in Section 2.01(a)(iii),
the Holders of the Consideration Shares that are then Registrable Shares (“Initiating
Holders”) shall have the right to request registration
(a “Demand Registration Request”) under the Securities Act
of all or any portion of their Registrable Shares pursuant to a Registration Statement on Form S-3 (a “Demand Registration”);
provided that the Company shall not be obligated to effect more than one (1) Demand Registration in any 12-month period,
nor more than two (2) Demand Registrations in total. Each Demand Registration Request
shall specify the names of the Initiating Holders and the number of Registrable Shares requested to registered by each Initiating
Holder. Within 10 days after receipt of a Demand Registration Request, the
Company shall provide notice (a “Demand Notice”) to all holders of
Registrable Shares that a Demand Registration Request has been made by the Initiating Holders and shall offer such holders
the



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opportunity to include their Registrable
Shares in the Registration Statement to be filed to satisfy such Demand Registration Request.


 


(ii)     Any Holder wishing to register
its Registrable Shares shall notify the Company in writing prior to the deadline specified in the Demand
Notice (which deadline shall be reasonable and, in any event, not less than 10 days after the date of such Demand
Notice) of the number of Registrable Shares requested to be registered by such Holder. The Company shall use its commercially reasonable
efforts to include in the offering the number of Registrable Shares requested to be included by each Holder. The Company will select
the underwriters for each Demand Registration, and shall use its commercially reasonable efforts prepare and file with the SEC
within 45 days after receipt of a Demand Registration Request is received, a Registration
Statement on Form S-3 covering all of the Registrable Shares that the Initiating Holders and any other Participating Holders have
requested the Company to register.


 


(iii)     The Company shall not be
obligated to effect any Demand Registration (A) within ninety (90) days after the effective date of any Piggyback Registration
in which Initiating Holders had the opportunity to register the offer and sale of Registrable Shares under the Securities Act,
(B) during any Blackout Period, or (C) unless the aggregate proceeds expected to be received from the sale of the Registrable Shares
requested to be included in such Demand Registration is not less than $15,000,000.


 


(iv)     The Company may postpone,
suspend or withdraw the filing or effectiveness of a Registration Statement for a Demand Registration if the board of directors
of the Company determines in its reasonable good faith judgment that such Demand Registration would (A) materially interfere with
an acquisition, corporate organization, financing, securities offering or other similar transaction involving the Company; (B)
require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential;
or (C) render the Company unable to comply with requirements under the Securities Act or Exchange Act; provided, that if
the Company has postponed or suspended filing or effectiveness for more than 90 days or has withdrawn a Registration Statement
filing, the Initiating Holders shall be entitled to withdraw their Registration Request and, if such Registration Request is withdrawn,
such Demand Registration shall not count as a Demand Registration hereunder.


 


(b)     Piggyback Registration
Rights.


 


(i)     If the Company proposes to
file a Registration Statement (other than a Registration Statement (A) on Form S-8 or any successor form applicable to employee
benefit-related offers and sales, (B) where the securities being offered are not being sold for cash or (C) where the offering
is a bona fide offering of securities not of the same class as the Registrable Shares, even if such securities are convertible
into or exchangeable or exercisable for securities of the same class as the Registrable Shares) with respect to a primary or secondary
offering by the Company of Company Common Stock (other than a secondary offering pursuant to Section 2.01(a)), the Company shall
give written notice (a “Piggyback Notice”) of such proposed filing to the Holders as soon as practicable (but
in no event less than 20 days before the anticipated filing date), and such notice shall offer the Holders the opportunity to register
(a “Piggyback Registration”) such number of Registrable Shares as each such Holder may request.


 


(ii)     Any Holder wishing to exercise
piggyback registration rights shall notify the Company in writing prior to the deadline specified in the Piggyback
Notice (which deadline shall be reasonable and, in any event, not less than 10 days after the date of such Piggyback
Notice) of the number of Registrable Shares requested to be registered by such Holder. Subject to the



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cutback requirements set forth in
Section 2.01(d) below, the Company shall include in the Registration Statement the number of Registrable Shares requested to be
included by each Holder.


 


(iii)     Notwithstanding delivery
of a Piggyback Notice, the Company may in its sole discretion delay filing a Registration Statement, or withdraw a Registration
Statement at any time prior to the time it becomes effective, or delay or suspend the effectiveness of a Registration Statement.


 


(c)     Required Information.
Each Holder agrees to provide to the Company in writing such information relating to such Holder and its ownership of Registrable
Shares as the Company may reasonably request in order to satisfy the applicable disclosure requirements in connection with any
Registration Statement or Prospectus (the “Required Information”). It shall be a condition precedent to the
obligations of the Company to include any Registrable Shares requested to be included in a Registration Statement that the Company
shall have received all the applicable Required Information from such Holder, it being understood that each Holder may consult
as appropriate with its own counsel and advisors at its own expense in connection with the completion of the Required Information.
The Company may exclude from any Registration Statement the Registrable Shares of any Holder who fails to furnish the Required
Information within a reasonable period of time prior to the filing. Each Holder shall notify the Company of any inaccuracy or change
in any information previously furnished by such Holder to the Company or of the occurrence of any event, in either case as a result
of which any Prospectus relating to the Participating Shares covered by the Registration Statement contains or would contain an
untrue statement of a material fact or omits to state any material fact with respect to such Holder required to be stated therein
or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and promptly
furnish to the Company any additional information required to correct and update any previously furnished information (including
Required Information) so that such Prospectus shall not contain an untrue statement of a material fact or omit to state a material
fact with respect to such Holder required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.


 


(d)     Underwritten Offerings.
All Participating Holders in any underwritten offering shall enter into an underwriting agreement containing usual and customary
terms, including representations, warranties, indemnification and lock-up provisions, with the underwriter(s) selected by the Company.
No Participating Holder may participate in any registration hereunder which is underwritten unless such Holder (a) agrees to sell
its Participating Shares on the basis provided in such underwriting agreement, and (b) completes and executes all questionnaires,
powers of attorney, lock-up agreements, indemnities and other customary documents required under the terms of such underwriting
agreement. If the underwriters of any underwritten offering advise the Company that, in their opinion, the number of shares of
Company Common Stock requested to be included in an underwritten offering exceeds the amount that can be sold in such offering
without adversely affecting the distribution of such offering, or the offering price per share of Company Common Stock, such offering
will include only the number of shares of Company Common Stock that the underwriters advise can be sold in such offering (the “Maximum
Amount”). In the case of a Demand Registration or a Piggyback Registration on a secondary offering, the number of Registrable
Shares proposed to be sold by all Participating Holders shall be cutback pro rata based on the number of Registrable Shares initially
requested by them to be included in such offering, or in such other proportion as may be mutually
be agreed by all Participating Holders. In the case of a Piggyback Registration on a primary offering by the Company, the
Company will have first priority and, to the extent the number of shares of



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Company Common Stock to be sold by
the Company does not exceed the Maximum Amount, the number of Registrable Shares proposed to be sold by Participating Holders shall
be cutback pro rata based on the number of Registrable Shares initially requested by them to be included in such offering.


 


SECTION 2.02.     Registration Procedures.


 


(a)     In connection with any Registration
Statement and any Prospectus relating to the Participating Shares, subject to the terms herein, the Company shall use reasonable
commercial efforts to:


 


(i)      furnish to the Participating
Holders and their respective counsel draft copies of the Registration Statement or Prospectus proposed to be filed at least 3 days
prior to such filing;


 


(ii)     cause the Registration Statement
and Prospectus to comply as to form in all material respects with the SEC requirements of the applicable SEC form;


 


(iii)    prepare and file with the
SEC such amendments, post-effective amendments and supplements to the Registration Statement and the applicable Prospectus as may
be necessary as determined by the Company;


 


(iv)    subject to Section 2.07,
register or qualify the Participating Shares for offer and sale under the securities or blue sky laws of such jurisdictions as
any Holder or the underwriters reasonably requests in writing;


 


(v)     list the Participating Shares
on Nasdaq or on the principal securities exchange or interdealer quotation system on which the Company Common Stock is then listed
or quoted;


 


(vi)    notify promptly the Participating
Holders after becoming aware of any of the events described in sub-clauses (A) through (E) of this paragraph: (A) when the Registration
Statement or any Prospectus has been filed, and when the same has become effective, if applicable, (B) of any request by the SEC
or any United States state securities authority for amendments or supplements to the Registration Statement or any Prospectus or
for additional information (other than comment letters relating to the documents incorporated or deemed incorporated therein by
reference), (C) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (D) of the receipt by the Company of any notification with respect to the suspension
of the qualification of the Participating Shares for sale in any jurisdiction or the initiation of any proceeding for such purpose
or (E) of the happening of any event or the existence of any fact which makes any statement in the Registration Statement or Prospectus
untrue in any material respect or which requires the making of any changes in the Registration Statement or Prospectus so that
they will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;


 


(vii)     obtain the withdrawal of
any stop order or other order enjoining or suspending the use or effectiveness of the Registration Statement or the lifting of
any suspension of the qualification of any of the Participating Shares for sale in any jurisdiction;


 


(viii)     deliver promptly to the
Participating Holders, upon written request therefor, copies of all correspondence between the SEC and the Company, its counsel
or auditors including any comment and response letters with respect to the Registration Statement or Prospectus (but



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excluding any comment
and response letters relating to any documents incorporated or deemed incorporated by reference into the Registration Statement);


 


(ix)     subject to customary confidentiality
agreements, permit the Participating Holders or their representatives to conduct, at their sole expense, such investigation with
respect to information contained in or omitted from the Registration Statement or Prospectus as they deem reasonably necessary
for the purpose of conducting customary due diligence with respect to the Company, provided that any such investigation
shall not interfere with the Company’s business;


 


(x)      provide and cause to be maintained
a transfer agent and registrar for all Participating Shares;


 


(xi)     cooperate with the Participating
Holders to facilitate the timely entry into the book-entry system of the transfer agent of the Participating Shares to be sold
under the Registration Statement in a form eligible for deposit with The Depository Trust Company; and


 


(xii)    in connection with any
underwritten public offering pursuant to a Demand Registration, enter into an underwriting agreement containing usual and customary
terms, including indemnification and lock-up provisions, with underwriter(s) selected by the Company.


 


SECTION 2.03.     Registration Expenses.
The Company shall pay the fees and disbursements of the Company’s counsel and accountants, all registration and filing fees,
all Nasdaq listing fees and all printers’ fees and costs and the reasonable fees and disbursements, not to exceed $15,000,
of one counsel for the Participating Holders (the “Participating Holder Counsel”), if any, in connection with
the registration of Participating Shares. The Company shall not be responsible for any Selling Expenses, all of which shall be
paid by the Participating Holders (allocated on a pro rata basis among such Participating Holders based on their Participating
Shares or on such other basis as may be agreed among the Participating Holders).


 


SECTION 2.04.     Indemnification; Contribution.


 


(a)     The Company shall, and hereby agrees
to, indemnify and hold harmless each Participating Holder and its partners, members, directors, officers, employees, agents and
controlling Persons, if any, in any offering or sale of the Participating Shares pursuant to the Registration Statement, against
any losses, claims, damages or liabilities, actions or proceedings (whether commenced or threatened) in respect thereof and expenses
(including reasonable fees of counsel) (collectively, “Claims”) to which each such indemnified party may become
subject, insofar as such Claims (including any amounts paid in settlement effected with the consent of the Company as provided
herein), or actions or proceedings in respect thereof, (i) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, or any Prospectus or preliminary Prospectus contained therein
with respect to Participating Shares, or any amendment or supplement thereto, or any document incorporated by reference therein,
or (ii) arise out of or are based upon any omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in each case in light of the circumstances in which they were made, not misleading;
provided that the Company shall not be liable to any such Participating Holder in any such case to the extent that any such
Claims arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the
Registration Statement, Prospectus or preliminary Prospectus relating to the Participating Shares, or amendment or supplement thereto,
in reliance upon and in conformity with written information furnished to the Company by the Participating Holder with respect to
such Participating Holder expressly for use therein, or by such Participating Holder’s failure to furnish the Company,
upon the Company’s reasonable request, with the information



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 with respect to such Participating Holder, or such Participating
Holder’s intended method of distribution, that is the subject of the untrue statement or omission, or if such Participating
Holder sold securities to the Person alleging such Claims without sending or giving, at or prior to the written confirmation of
such sale, a copy of the applicable Prospectus (excluding any documents incorporated by reference therein) or of the applicable
Prospectus, as then amended or supplemented (excluding any documents incorporated by reference therein), if the Company had previously
furnished copies thereof to the Participating Holders, and such Prospectus corrected such untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement.


 


(b)     Each Participating Holder, severally
and not jointly, shall, and hereby agrees to, indemnify and hold harmless the Company, its directors, officers, employees and controlling
Persons, if any, in any offering or sale of Participating Shares pursuant to the Registration Statement, against any Claims to
which each such indemnified party may become subject, insofar as such Claims (including any amounts paid in settlement effected
with the consent of such Participating Holder as provided herein), or actions or proceedings in respect thereof, arise out of or
are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any
Prospectus or preliminary Prospectus contained therein with respect to the Participating Shares, or any document incorporated by
reference therein, or arise out of or are based upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading, in each case only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Participating Holder with respect to such Participating Holder expressly for use therein;
provided, that in no event shall any indemnity under this Section 2.04(b), when combined with any contribution under Section
2.04(d), exceed the total proceeds from the offering received by such Participating Holder unless such liability arises out of
or is based on fraud or willful breach by such Participating Holder.


 


(c)     Promptly after receipt by an indemnified
party under Section 2.04(a) or Section 2.04(b) of written notice of the commencement of any action or proceeding for which indemnification
under Section 2.04(a) or Section 2.04(b) may be requested, such indemnified party shall notify such indemnifying party in writing
of the commencement of such action or proceeding. In case any such action or proceeding shall be brought against any indemnified
party and it notifies an indemnifying party of the commencement thereof, such indemnifying party shall be entitled to participate
therein and, to the extent that it shall determine, jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party, and, after notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof, such indemnifying party shall not be liable to such
indemnified party for any legal or any other expenses subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that (i) if the indemnifying party fails
to take reasonable steps necessary to defend diligently the action or proceeding within twenty (20) days after receiving notice
from such indemnified party that the indemnified party believes it has failed to do so; (ii) if such indemnified party who is a
defendant in any action or proceeding which is also brought against the indemnifying party reasonably shall have concluded based
on an opinion of counsel that there may be one or more legal defenses available to such indemnified party which are not available
to the indemnifying party; or (iii) if representation of both parties by the same counsel is otherwise inappropriate under applicable
standards of professional conduct, then, in any such case, the indemnified party shall have the right to assume or continue its
own defense as set forth above (but with no more than one firm of counsel for all indemnified parties) and the indemnifying party
shall be liable for any expenses therefor (including, without limitation, any such reasonable counsel’s fees). If the indemnifying
party is not entitled to, or elects not to, assume the defense of a claim, it will not be obligated to pay the fees and expenses of more than one counsel for all
indemnified parties with respect to such claim. The 



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indemnifying party will not be subject to any liability for any settlement
made without its consent (not to be unreasonably withheld, conditioned or delayed). No indemnifying party shall, without the prior
written consent of the indemnified party, compromise or consent to entry of any judgment or enter into any settlement agreement
with respect to any action or proceeding in respect of which indemnification is sought under Section 2.04(a) or Section 2.04(b)
(whether or not the indemnified party is an actual or potential party thereto), unless such compromise, consent or settlement is
solely for monetary damages and includes an unconditional release of the indemnified party from all liability in respect of such
claim or litigation, and does not include a statement or admission of fault, culpability or a failure to act, by or on behalf of
the indemnified party.


 


(d)     The Participating Holders and the
Company agree that if, for any reason, the indemnification provisions contemplated by Section 2.04(a) or Section 2.04(b) hereof
are unavailable to or are insufficient to hold harmless an indemnified party in respect of any Claims referred to therein, then
each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such Claims in
such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the indemnified
party, on the other hand, with respect to the applicable offering of securities. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of
a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party
or by such indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission. If, however, the allocation in the first sentence of this Section 2.04(d) is not permitted
by applicable law, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative fault, but also the relative benefits of the indemnifying party
and the indemnified party, as well as any other relevant equitable considerations. The parties hereto agree that it would not be
just and equitable if contributions pursuant to this Section 2.04(d) were to be determined by pro rata allocation or by any other
method of allocation which does not take into account the equitable considerations referred to in the preceding sentences of this
Section 2.04(d). Notwithstanding any of the foregoing, in no event shall any contribution by any Participating Holder under this
Section 2.04(d), when combined with any amounts payable or paid by such Participating Holder under Section 2.04(b), exceed the
total proceeds from the offering received by such Participating Holder, unless such liability arises out of or is based on fraud
or willful breach by such Participating Holder. No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.


 


SECTION 2.05.     Rule 144.


 


(a)     Each Holder acknowledges that the
Registrable Shares are “restricted securities” that may not be sold unless sold pursuant to an offering registered
with the SEC or pursuant to an exemption from the registration requirements.


 


(b)     With a view to making available to
the Holders the benefits of certain rules and regulations of the SEC that may permit the sale of the Registrable Shares to the
public without registration after a holding period of six months, the Company agrees to use its reasonable commercial efforts to:
(i) make and keep current public information available, within the meaning of Rule 144, at all times that it is subject to the
reporting requirements of the Exchange Act; (ii) file with the SEC, in a timely manner, all reports and other documents required
under the Securities Act and Exchange Act (at all times that it is subject to such reporting requirements); and (iii) so long as
any Holder owns any Registrable Shares, subject to the terms and conditions herein, furnish to such Person forthwith upon



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written request any of the statements referenced
in items 1 or 2 of the “Note to Paragraph (c)” that appears at the end of Rule 144(c).


 


SECTION 2.06.     Confidentiality.
Subject to any required public disclosure by the Company under applicable legal requirements, the parties shall maintain confidentiality
with respect to any discussions of proposed offerings or proposed repurchases of Company Common Stock.


 


SECTION 2.07.     Other Matters. Nothing
in this Agreement shall limit the Company’s ability to grant to any third party, in its sole and absolute discretion, rights
with respect to the registration of any securities issued or to be issued by the Company or the Company’s ability to issue,
distribute or offer equity securities. Nothing in this Agreement shall require the Company to (i) qualify to do business as a foreign
corporation in any jurisdiction where it would not otherwise be required to be so qualified, (ii) execute or file any general consent
to service of process under the laws of any jurisdiction, (iii) take any action that would subject it to service of process in
suits other than those arising out of the offer and sale of Participating Shares covered by the Registration Statement in any jurisdiction
where it is not already subject to service of process, or (iv) subject itself to taxation in any jurisdiction where it would not
otherwise be obligated to do so.


 


ARTICLE III


 


MISCELLANEOUS


 


SECTION 3.01.     Effectiveness. The
terms and conditions set forth in this Agreement shall become effective as of the Closing Date and shall continue in effect until
all the Registrable Shares have either ceased to be Registrable Shares or ceased to be held by the Sellers, except for the provisions
of Section 2.04, Section 2.07 and all of this Article III, which shall survive any such termination.


 


SECTION 3.02.     Successors and Assigns;
Third Party Beneficiaries.


 


(a)     This Agreement shall be binding upon,
shall inure to the benefit of and shall be enforceable by the Company and by the Sellers and their respective successors and permitted
assigns, and no term or provision of this Agreement is for the benefit of, or intended to create any obligations to, any other
Person. Except as set forth in Section 3.02(b), this Agreement shall not be assigned and no obligations hereunder may be transferred
by any party hereto. Any attempted assignment or transfer, which does not comply with the provisions of this Section 3.02, shall
be null and void ab initio.


 


(b)     The rights to cause the Company to
register Participating Shares pursuant to Article II may be assigned (but only with all related obligations) (i) by a Holder to
a transferee or assignee of such Participating Shares that (A) is an affiliate, subsidiary, parent, member, retired member, partner,
limited partner, retired partner or stockholder of a Holder, (B) is a Person who received such securities from the Holder by will
or intestacy or (C) is a Holder’s family member or trust for the benefit of an individual Holder; provided that (x)
promptly after such transfer the Company is furnished with the Required Information regarding the transferee or assignee; (y) such
transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement by executing
and delivering to the Company a joinder agreement in form and substance satisfactory to the Company in its reasonable discretion;
and (z) no such assignment shall require the Company to include the Registrable Shares in any Registration Statement except as
and to the extent provided in Article II.


 


SECTION 3.03.     Amendments; Waiver.
This Agreement may be amended only by an agreement in writing. Any party may waive in whole or in part any benefit or right provided
to it under this Agreement, such waiver being effective only if contained in a writing executed by the waiving party.



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No failure by any party to insist upon the
strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent
upon breach thereof shall constitute a waiver of any such breach or of any other covenant, duty, agreement or condition, nor shall
any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.


 


SECTION 3.04.     Notices. All notices
and other communications hereunder shall be in writing and shall be deemed delivered, given and received (a) when delivered in
person, (b) when transmitted by facsimile (with written confirmation of completed transmission), (c) when sent by email (upon receipt
by sender of confirmation of receipt by recipient, which confirmation shall be promptly delivered by recipient if so requested
by sender in the applicable notice or other communication), or (d) when delivered by an express courier (with written confirmation
of delivery) to the parties hereto at the following addresses (or to such other address or facsimile number or email address as
such party may have specified in a written notice given to the other parties):


 


(a)     if to the Company, to:


 


Trans World Entertainment Corporation

38 Corporate Circle

Albany, New York 12203

Attention: John Anderson, Chief Financial Officer

Facsimile: 518-862-9747

E-mail: janderson@twec.com


 


with a copy to:


 


Cahill Gordon & Reindel LLP

80 Pine Street

New York, New York 10005

Attention: John Schuster, Esq.

Facsimile: 212-378-2332

E-mail: jschuster@cahill.com


 


(b)     if to the Sellers, to each Seller
address as set forth on its signature page hereto.


 


SECTION 3.05.     Governing Law; Forum.
This Agreement shall be governed by governed by the laws of the State of New York, without regard to its conflict of laws principles.
Subject to Section 3.06, each of the parties hereto irrevocably consents to the exclusive jurisdiction and venue of the courts
of the State of New York, County of New York, or, if it has or can acquire jurisdiction, in the United States District Court for
the Southern District of New York, in connection with any matter based upon or arising out of this Agreement or the matters contemplated
herein, agrees that process may be served upon them in any manner authorized by the laws of the State of New York for such Persons
and waives, and covenants not to assert or plead, any objection which they might otherwise have to such jurisdiction, venue and
such process. Subject to Section 3.06, each party agrees not to commence any legal proceedings related hereto except in such courts.


 


SECTION 3.06.     Resolution of Conflicts;
Arbitration. Any claim or dispute arising out of or related to this Agreement, or the interpretation, making, performance,
breach or termination thereof, shall (except as specifically set forth in this Agreement) be finally settled through a private
and confidential arbitration proceeding (the “Arbitration”) to be held in Manhattan, New York in accordance
with the AAA Rules and Procedures, except as they may be modified hereby. Notwithstanding anything to the



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contrary in the AAA Rules and Procedures:
(i) the Arbitration shall be held before a panel of three independent arbitrators none of whom shall be appointed by any party
hereto; (ii) the panel shall not have the authority to modify or change any of the terms of this Agreement; (iii) all parties hereto
and the panel shall maintain the confidentiality of any arbitration award (the “Award”) unless the Company,
in its sole discretion, elects to make the Award public; (iv) the Award shall be final and binding upon all parties; and (v) judgment
upon the Award may be entered in any federal or state court of competent jurisdiction in any state of the United States and/or
in any foreign court having jurisdiction over the Person or Persons liable to pay the Award. The parties agree that each party
shall pay its own costs and expenses (including counsel fees) of any such arbitration, and each party waives its right to seek
an order compelling the other party to pay its portion of its costs and expenses (including counsel fees) for any arbitration.


 


SECTION 3.07.     Headings. The heading
references herein and the table of contents hereof are for convenience purposes only, and shall not be deemed to limit or affect
any of the provisions hereof.


 


SECTION 3.08.     Integration. This
Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior
agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof.


 


SECTION 3.09.     Severability. If
any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy,
all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic
or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party hereto.
Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible
in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.


 


SECTION 3.10.     Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute
one and the same Agreement.


 


[Remainder of Page Intentionally Left
Blank]



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IN WITNESS WHEREOF, the parties have executed
and delivered this Agreement as of the date first written above.


 





	 	TRANS WORLD ENTERTAINMENT 

CORPORATION
	 	 
	 	By:	Name: /s/ Michael Feurer
	 	 	Title: President and Chief Executive Officer








    	 



    	



    




	 	[                  ], as a Seller
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 	 
	 	Address for notices:




    	 



    	



    

Schedule I


 


	Thomas
    C. Simpson
	Susanne
    Baab-Simpson
	Joshua
    A. Neblett
	Joseph
    L. Herzog
	Cowles
    Company
	WIN
    Partners, LLC
	Jean
    J. Balek-Miner
	KickStart,
    LLC
	Murray
    K. Huppin and Leslie S. Huppin
	Grabbing
    Gears, LLC
	Wayne
    Williams
	Scott
    Simpson
	Bill
    McAleer
	David
    Barbieri
	William
    Kinzel
	Tyler
    and Ciera Alvarado
	Sarah
    Neblett