Exhibit 10.1





Personal and Confidential


May 4, 2010 


 


Dear Mike: 


I am pleased
to offer you the position of “President and Chief Operating Officer” with Trans
World Entertainment Corporation. 


This position
is offered on and subject to the following terms and conditions: 


	
  

 	
  

 
	
 1.

 	
 Base Salary: $500,000 for the first year
 of service, $550,000 for the second year of service, and $600,000 for the
 third year of service with an annual performance reviews each year and annual
 compensation reviews beginning in 2013. The annual review cycle runs from
 February 1 through January 31 with any merit increases being awarded May 1 of
 that year. 

 
	
  

 	
  

 
	
 2.

 	
 Bonus Program: For fiscal year 2010, you
 will be eligible for the greater of $100,000 or participation in a EBITDA
 based bonus plan for 2010 which for your position would pay 40% of base
 salary at target EBITDA of -$6.5M, 60% at -$4.0M, 80% at -$2.5M, with a
 maximum 100% of base salary at an EBITDA of break-even. Any bonus payment
 under this 2010 EBITDA based plan will be pro-rated based on time in
 position. You will also be eligible for discretionary bonus if applicable. For fiscal year 2011 and forward, you will be
 eligible to participate in the Board approved bonus program. Board approved
 bonus programs remain in effect regardless of a change in control.
 

 
	
  

 	
  

 
	
 3.

 	
 Stock Equity Program: On your start
 date, you will receive 700,000 shares of stock options. Of these, 300,000
 will vest ratably over four years of continued service. 200,000 will cliff
 vest after 3 years of service, with the remaining 200,000 to cliff vest after
 4 years of service. The stock agreement presently provides for full vesting
 if there is a change in control.

 
	
  

 	
  

 
	
 4.

 	
 Group Health Insurance: You may begin
 coverage through the Company plan on the first day of the month following
 your date of hire. Cost of this protection including both medical and dental
 is $28 per week for individual coverage and $55 for family

 













	
  

 	
  

 
	
 5.

 	
 401-K Plan: You have the opportunity to
 participate in the Trans World Entertainment 401(k) Profit Sharing Program.
 You will be eligible for plan participation on the first day of the month
 following thirty days of employment. The Company matches 50% against the
 first 6% of your eligible contributions, which will begin after one year of
 employment. You are eligible to immediately roll over an existing 401(k)
 balance into the Company plan. 

 
	
  

 	
  

 
	
 6.

 	
 Group Life Insurance: You are eligible for $50,000 group life
 insurance provided at no cost to you. Supplemental group life insurance is
 available to you through payroll deduction and you may purchase additional
 insurance up to $450,000. Supplemental dependent insurance is also available.

 
	
  

 	
  

 
	
 7.

 	
 Vacation: You will be entitled to two
 weeks of vacation and 10 PTO days within your first year of service and
 thereafter. After 11 years of service, you will be eligible for three weeks
 of vacation and 10 PTO days.

 
	
  

 	
  

 
	
 8.

 	
 Company Vehicle: You will be provided
 with a Company vehicle with guidelines for business related expense
 reimbursement. 

 
	
  

 	
  

 
	
 9.

 	
 Temporary Housing: You will be provided
 with fully furnished temporary housing from your commencement date through
 the end of fiscal 2010. 

 
	
  

 	
  

 
	
 10.

 	
 Severance Pay: Severance will be granted
 due to separation from the Company apart from voluntary resignation or
 willful / gross misconduct constituting Cause. You will be eligible for
 severance as follows. From your start date until February 1, 2012 you will be
 eligible for 9 months of severance, and will be eligible for 12 months after
 February 1, 2012. To the extent that compensation received through other
 employment, severance pay will be offset. Non-compete and non-solicitation
 provisions will be in effect for the duration of the severance period. This
 agreement remains in effect if there is a change in control. 

 
	
  

 	
  

 
	
 11.

 	
 Pre-Employment Drug Testing and Background Check:
 This offer is contingent upon the successful completion and results of a drug
 screening and background check. You
 must report for this drug screening within 2 days of accepting this offer. 

 
	
  

 	
  

 
	
 12.

 	
 Employment at Will: This agreement does
 not and shall not constitute any guarantee of employment and, as such, your
 employment with the Company is “at will.” Your employment with the Company
 may be separated by you or the Company at any time without cause. 

 
	
  

 	
  

 
	
 13.

 	
 Commencement Date: This agreement will
 take effect upon you joining the Company. 

 



Confidential –
pg. 2 









	
  

 	
  

 
	
 14.

 	
 Confidentiality: In consideration of
 this offer of employment, you agree not to disclose Confidential Information
 to any third party or misappropriate any Confidential Information, unless you
 are required by law to make any such disclosure. The covenant shall run for
 the period of your employment and survive your separation from the Company
 for any reason whatsoever. “Confidential Information” shall include trade
 secrets and other non-public or proprietary Company information, reports,
 material and documents, including but not limited to any information about
 sales, financial reports, employee information including compensation, store
 profitability, product costs, and any information relating to accounting and
 reporting matters of the Company. 

 
	
  

 	
  

 
	
  

 	
 You also
 agree to keep the terms of this agreement confidential and not to disclose
 its contents, in whole or in part, to any persons other than to your family
 members and advisors, unless the Company shall have publicly disclosed the
 contents hereof. 

 



Mike, I truly
am looking forward to you joining our team and working together. I know you
will be a great addition and provide the innovation and leadership that we
desire. 


I look forward
to us working together as partners in leading Trans World Entertainment to
great success in the future. 


If you have any
questions, please do not hesitate to contact me. Or feel free to contact Jeff
Davis if you have HR-related questions. Also, the signed offer acceptance
should be returned to Jeff as well. 


Sincerely, 





Robert J.
Higgins 

Chairman and Chief Executive Officer 


ACKNOWLEDGED
AND AGREED TO: 


	
  

 
	
 /s/ Mike
 Honeyman

 
	

 


 
	
 Mike
 Honeyman 

 
	
 May 4, 2010

 



Confidential –
pg. 3