Exhibit 4.1


FIRST AMENDMENT TO CREDIT AGREEMENT


          This First
Amendment to Credit Agreement (this “Amendment”) is made as of May 4,
2012, 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
the date hereof, Bank of America has resigned as Administrative Agent,
Collateral Agent, Swingline Lender, Issuing Bank and Co-Borrowing Base Agent in
accordance with the terms of the Credit Agreement;


          WHEREAS,
Wells Fargo has been appointed successor Administrative Agent in accordance
with the terms of the Credit Agreement;


          WHEREAS,
Wells Fargo has been appointed successor Collateral Agent, Swingline Lender and
Issuing Bank in accordance with the terms of the Credit Agreement;


          WHEREAS,
contemporaneously herewith, the parties hereto have agreed to amend certain
provisions of the Credit Agreement as set forth herein.


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


1









	
  

 	
  

 	
  

 
	
 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 deleting the definition of
 “Administrative Agent” in its entirety and substituting the following new
 definition in its stead:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Administrative Agent” means Wells Fargo Bank, National Association,
 in its capacity as administrative agent under any of the Loan Documents, and
 its successors and assigns.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 By amending the definition of “Applicable Margin” by deleting the
 pricing grid in its entirety and substituting the following in its stead:

 






	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Level

 	
  

 	
 Average Excess

 Availability

 	
  

 	
 Applicable Margin

 for LIBO Loans

 	
  

 	
 Applicable Margin for

 Prime Rate Loans

 
	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 
	
 I

 	
  

 	
 Greater
 than $50,000,000

 	
  

 	
 2.25%

 	
  

 	
 0.75%

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 II

 	
  

 	
 Less
 than or equal to

 $50,000,000 but greater

 than $25,000,000

 	
  

 	
 2.50%

 	
  

 	
 1.00%

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 III

 	
  

 	
 Less
 than or equal to

 $25,000,000

 	
  

 	
 2.75%

 	
  

 	
 1.25%

 






	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 By deleting the definition of
 “Arrangers” in its entirety and substituting the following new definition in
 its stead

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Arranger” means Wells Fargo Capital Finance, LLC, in its capacity
 as sole lead arranger.

 


2









	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 By deleting the definition of
 “Borrowing Base” in its entirety and substituting the following new
 definition in its stead:

 
	
  

 	
  

 	
  

 
	
  

 	
  

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

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (a) the
 face amount of Eligible Credit Card Receivables multiplied by the Credit Card
 Advance Rate;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           plus

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (b) (i)
 the Cost of Eligible Inventory, net of Inventory Reserves (provided, however,
 that such Inventory Reserves shall not be duplicative of any reserve
 specifically provided for in the calculation of Appraised Value), multiplied
 by (ii) the Appraisal Percentage, multiplied by (iii) the
 Appraised Value of Eligible Inventory;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           plus 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (c) 90%
 of all Eligible Cash on Hand, provided that Eligible Cash on Hand
 included in the Borrowing Base may not be withdrawn from the Eligible Cash
 Blocked Account, thereby reducing the Borrowing Base, unless and until the
 Lead Borrower furnishes the Administrative Agent with (i) notice of such
 intended withdrawal and (ii) a Borrowing Base Certificate as of the date of
 such proposed withdrawal reflecting that, after giving effect to such
 withdrawal, no Overadvance will result;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           minus

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (d) the
 Borrowing Base Reserve;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           minus

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (e) the
 then amount of all Availability Reserves;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 provided, however, that if, at any
 time, the Loan Parties are conducting going-out-of-business or other liquidation
 sales at five (5) or more Stores, then (i) all Inventory located in each
 Store in which a Loan Party is conducting the going-out-of-business or other
 liquidation sales and related Store closures and Inventory dispositions
 (without assistance from an independent professional liquidation company
 reasonably acceptable to the Administrative Agent pursuant to a formal
 consulting arrangement reasonably acceptable to the Administrative Agent)
 shall be excluded from Eligible Inventory for purposes of calculating the
 Borrowing Base, and (ii) the Appraisal Percentage applicable to Eligible
 Inventory located in each Store in which an independent professional
 liquidation company reasonably acceptable to the Administrative Agent is
 conducting (or assisting the Loan Parties pursuant to a formal consulting
 arrangement reasonably acceptable to the Administrative Agent) the
 going-out-of-business or other liquidation sales and 

 


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 related Store closures and Inventory dispositions (which Eligible
 Inventory shall not be excluded for purposes of calculating the Borrowing
 Base) shall be subject to adjustment by the Administrative Agent in the
 Administrative Agent’s reasonable discretion. Upon the determination by the
 Administrative Agent that the Appraisal Percentage, should be adjusted, the
 Administrative Agent shall thereupon adjust the Appraisal Percentage.

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 By deleting the definition of “Cash Collateral Account” in its
 entirety and substituting the following new definition in its stead:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Cash Collateral Account” means an interest bearing account
 established by one or more of the Loan Parties with Wells Fargo, and in the
 name of, the Collateral Agent
 (or as the Collateral Agent
 shall otherwise direct), under
 the sole and exclusive dominion and control of the Collateral Agent and
 designated as the “Trans World Entertainment Cash Collateral Account”.

 
	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 By deleting the definition of “Collateral Agent” in its entirety
 and substituting the following new definition in its stead:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Collateral Agent” means Wells Fargo Bank, National Association,
 in its capacity as collateral agent under the Security Documents, and its
 successors and assigns.

 
	
  

 	
  

 	
  

 
	
  

 	
 (g)

 	
 By deleting the definition of “ Commercial Letter of Credit” in
 its entirety and substituting the following new definition in its stead:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Commercial Letter of
 Credit” means any Letter of Credit or similar instrument (including,
 without limitation, Banker’s Acceptances) issued for the purpose of
 providing the primary payment mechanism in connection with the purchase of
 any materials, goods or services by the Borrowers in the ordinary course of
 business of the Borrowers.

 
	
  

 	
  

 	
  

 
	
  

 	
 (h)

 	
 By deleting the definition of “Concentration Account” in its
 entirety and substituting the following new definition in its stead:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Concentration Account”
 means a concentration account maintained by the Lead Borrower at (i) until the date specified in Section
 2.21(j), Bank of America,
 and (ii) thereafter, Wells Fargo.

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 By deleting the definition of “Confirmation Agreement” in its
 entirety and substituting the following new definition in its stead:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Confirmation Agreement” means, collectively, (i) that certain
 Confirmation and Amendment of Ancillary Loan Documents, dated as of the
 Effective Date, among the Loan Parties and Bank of America, N.A., and (ii) that certain Confirmation and
 Amendment of Ancillary Loan Documents, dated as of the First Amendment

 


4









	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Effective Date, among the
 Loan Parties, the Administrative Agent and the Collateral Agent.

 
	
  

 	
  

 	
  

 
	
  

 	
 (j)

 	
 By deleting the definition of “Fee Letter” in its entirety and
 substituting the following new definition in its stead:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Fee Letter”
 means the letter agreement
 dated as of the First Amendment Effective Date among the Borrowers, Wells
 Fargo and WFCF, as such letter may from time to time be amended, restated, supplemented or otherwise
 modified.

 
	
  

 	
  

 	
  

 
	
  

 	
 (k)

 	
 By deleting the definition of “Issuing Bank” in its entirety and
 substituting the following new definition in its stead:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Issuing Bank” means Wells Fargo, in its capacity as
 the issuer of Letters of Credit hereunder, and any of its successors in such
 capacity. The Issuing Bank may, in its discretion, arrange for one or more
 Letters of Credit to be issued by an Affiliate of the Issuing Bank, in which
 case the term “Issuing Bank” shall include any such Affiliate with respect to
 Letters of Credit issued by such Affiliate.

 
	
  

 	
  

 	
  

 
	
  

 	
 (l)

 	
 By deleting the definition of “LIBO Rate” in its entirety and
 substituting the following new definition in its stead:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “LIBO Rate” means
 for any Interest Period with respect to a LIBO Rate Loan, the rate per annum
 equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as
 published by Reuters (or other commercially available source providing
 quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00
 a.m., London time, two Business Days prior to the commencement of such
 Interest Period, for Dollar deposits (for delivery on the first day of such
 Interest Period) with a term equivalent to such Interest Period. If such rate
 is not available at such time for any reason, then the “LIBO Rate” for such
 Interest Period shall be the rate per annum determined by the Administrative Agent to be the
 rate at which deposits in Dollars for delivery on the first day of such
 Interest Period in same day funds in the approximate amount of the LIBO Rate
 Loan being made, continued or converted by Wells Fargo and with a term
 equivalent to such Interest Period would be offered to Wells Fargo by major
 banks in the London interbank eurodollar market in which Wells Fargo
 participates at their request at approximately 11:00 a.m. (London time) two
 Business Days prior to the commencement of such Interest Period.

 
	
  

 	
  

 	
  

 
	
  

 	
 (m)

 	
 By deleting the definition of “Maturity Date” in its entirety and
 substituting the following new definition in its stead:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Maturity Date” means May 4, 2017.

 
	
  

 	
  

 	
  

 
	
  

 	
 (n)

 	
 By deleting the definition of “Permitted Dividends” in its
 entirety and substituting the following new definition in its stead:

 


5









	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Permitted Dividends” means (a) dividends with respect to a Loan
Party’s Capital Stock payable solely in additional shares of or warrants to
purchase its common stock, (b) splits or reclassifications of the Lead
Borrower’s stock into additional or other shares of its common stock, (c)
cash dividends of any Subsidiary (including any Loan Party) or the Excluded
Entity to any Borrower, and (d) so long as the Dividend Conditions have been satisfied, (i)
cash dividends by the Lead Borrower to its shareholders, and (ii) other
dividends or distributions (whether in cash, securities or other property) by
the Lead Borrower to its shareholders for the purposes of repurchasing,
redeeming, retiring, acquiring, cancelling or terminating any shares of
Capital Stock of any Loan Party. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (o)

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 By deleting the word “and” from the end of clause (k) thereof,
 re-lettering clause (l) as clause (m), and inserting the following new clause
 (l) after clause (k):

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (l) Liens consisting of (i) cash collateral maintained by the Lead
Borrower in a non-interest-bearing DDA with Bank of America, N.A. (the “BOA
Collateral Account”) as security for the Lead Borrower’s obligations with
respect to the letters of credit issued by Bank of America, N.A. for the
account of the Lead Borrower prior to the date hereof and identified on
Schedule 1.1(c) annexed hereto (the “Existing BOA Letters of Credit”),
in an amount not to exceed $575,000, but subject in all events to the terms
and conditions of the BOA Assignment, and (ii) cash collateral maintained by
the Lead Borrower in the BOA Collateral Account as security for the Lead
Borrower’s obligations with respect to the cash management services, hedging
agreements or other banking or financial services provided or furnished by
Bank of America, N.A. to or for the benefit of the Lead Borrower prior to the
date hereof and identified on Schedule 1.1(d) annexed hereto (the “Existing
BOA Cash Management Services”), in an amount not to exceed $6,000,000,
but subject in all events to the terms and conditions of the BOA Assignment;
provided, however, that in the case of each of clauses (i) and (ii), if at
any time the Lead Borrower’s obligations with respect to the Existing BOA
Letters of Credit or the Existing BOA Cash Management Services, as
applicable, are reduced as a result of any Existing BOA Letter of Credit
being returned undrawn or cancelled or the termination of any Existing BOA
Cash Management Service or otherwise, the Lead Borrower shall, upon such
event, cause any cash collateral in excess of the then remaining obligations
of the Lead Borrower in respect of the outstanding Existing BOA Letters of
Credit or Existing BOA Cash Management Services, as applicable, to be
transferred from the BOA Collateral Account to the Concentration Account; and  

 


6









	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 By deleting the phrase “clauses (a) through (l) above” from the
 proviso at the end of such definition and substituting in its stead the
 phrase “clauses (a) through (m) above”.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (p)

 	
 By deleting the definition of “Permitted Store Closings” in its
 entirety and substituting the following new definition in its stead.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Permitted Store Closings” means Store closures and related
 Inventory dispositions which, in the aggregate from and after the First
 Amendment Effective Date, do not exceed one hundred seventy five (175) Stores
 (net of new Store openings); provided, however, that Store
 closures and related Inventory dispositions that exceed the foregoing limits
 shall (i) require the consent of the Agents and the Required Lenders (which
 consent shall not be unreasonably withheld), and (ii) be in accordance with
 liquidation agreements or formal consulting arrangements with professional
 liquidators or liquidation consultants, in each case reasonably acceptable to
 the Administrative Agent.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (q)

 	
 By deleting the definition of “Prime Rate” in its entirety and
 substituting the following new definition in its stead: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Prime Rate” means, for any day, the highest of: (a) the
 variable rate of interest in effect for such day as publicly announced by
 Wells Fargo as its “prime rate”; (b) the Federal Funds Effective Rate in
 effect on such day plus 1⁄2 of 1% (0.50%) per annum; or (c) the Adjusted LIBO
 Rate (calculated utilizing the LIBO Rate for a one-month Interest Period) plus
 one percent (1.00%) per annum. The “prime rate” is a rate set by Wells Fargo
 based upon various factors including Wells Fargo’s costs and desired return,
 general economic conditions and other factors, and is used as a reference
 point for pricing some loans, which may be priced at, above, or below such
 announced rate. If for any reason the Administrative Agent shall have
 determined (which determination shall be conclusive absent manifest error)
 that it is unable to ascertain the Federal Funds Effective Rate or the LIBO
 Rate for any reason, including the inability or failure of the Administrative
 Agent to obtain sufficient quotations thereof in accordance with the terms
 hereof, the Prime Rate shall be determined without regard to clause (b) of
 the first sentence of this definition or clause (b)(i) of the definition of
 Adjusted LIBO Rate, as applicable, until the circumstances giving rise to
 such inability no longer exist. Any change in the Prime Rate due to a change
 in Wells Fargo’s “prime rate”, the Federal Funds Effective Rate or the
 Adjusted LIBO Rate shall be effective on the effective date of such change in
 Wells Fargo’s “prime rate”, the Federal Funds Effective Rate or the Adjusted
 LIBO Rate, respectively. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (r)

 	
 By deleting the definition of “Swingline Lender” in its entirety and
 substituting the following new definition in its stead:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Swingline Lender” means Wells Fargo, in its capacity as
 lender of Swingline Loans hereunder.

 


7









	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (s)

 	
 By amending the definition of “Total Commitments” by deleting the
 last sentence therefrom in its entirety and substituting the following new
 sentence in its stead:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 As of the First Amendment Effective Date, the Total Commitments shall
 be $75,000,000.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (t)

 	
 By deleting the definition of “Wells Fargo” in its entirety and
 substituting the following new definition in its stead:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
           “Wells
 Fargo” means Wells Fargo Bank, National Association, a national banking
 association, and its Subsidiaries, Affiliates, branches, and their
 respective successors and assigns.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (u)

 	
 By adding the following new definitions in appropriate alphabetical
 order:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
           “Applicable
 Commitment Fee Percentage” means the applicable percentage set forth in
 the grid below:

 






	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Level

 	
  

 	
 Average Daily Balance of Unused

 Commitment for the immediately

 preceding Quarter

 	
  

 	
 Applicable Commitment

 Fee Percentage

 
	

 


 	
  

 	

 


 	
  

 	

 


 
	
 I

 	
  

 	
 Greater
 than $25,000,000

 	
  

 	
 0.50%

 
	
 II

 	
  

 	
 Less
 than or equal to $25,000,000

 	
  

 	
 0.375%

 


 


	
  

 	
  

 	
  

 
	
  

 	
  

 	
           “Banker’s
 Acceptance” means a time draft or bill of exchange or other deferred
 payment obligation relating to a Commercial Letter of Credit which has been
 accepted by the Issuing Bank.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           “BOA
 Assignment” means that certain Assignment and Acceptance dated as of the
 First Amendment Effective Date by and between Bank of America, N.A., as
 Assignor, and Wells Fargo, as Assignee, and acknowledged by the Loan Parties.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           “Credit
 Card Advance Rate” means 80%.

 


8









	
  

 	
  

 
	
  

 	
           “Credit
 Card Issuer” means any person (other than a Borrower or other Loan Party)
 who issues or whose members issue credit cards, including, without
 limitation, MasterCard or VISA bank credit cards or other bank credit cards
 issued through MasterCard International, Inc., Visa, U.S.A., Inc. or Visa
 International and American Express, Discover, Diners Club, Carte Blanche and
 other non-bank credit cards, including, without limitation, credit cards
 issued by or through American Express Travel Related Services Company, Inc.,
 and Novus Services, Inc. and other issuers approved by the Administrative
 Agent, which approval shall not be unreasonably withheld.

 
	
  

 	
  

 
	
  

 	
           “Credit
 Card Processor” means any servicing or processing agent or any factor or
 financial intermediary who facilitates, services, processes or manages the
 credit authorization, billing transfer and/or payment procedures with respect
 to any Borrower’s sales transactions involving credit card or debit card
 purchases by customers using credit cards or debit cards issued by any Credit
 Card Issuer. For purposes of clarity, references to “credit card
 clearinghouses and processors” as used in clauses (b), (c) and (h) of Section
 2.21 shall mean and refer to Credit Card Processors.

 
	
  

 	
  

 
	
  

 	
           “Credit
 Card Receivables” means each “Account” (as defined in the UCC) together with
 all income, payments and proceeds thereof, owed by a Credit Card Issuer or
 Credit Card Processor to a Loan Party resulting from charges by a customer of
 a Loan Party on credit cards issued by such Credit Card Issuer in connection
 with the sale of goods by a Loan Party, or services performed by a Loan
 Party, in each case in the ordinary course of its business.

 
	
  

 	
  

 
	
  

 	
           “Dividend
 Conditions” means, at the time of determination with respect to
 any dividend or other distribution (whether in cash, securities or other
 property) of the type described in clause (d) of the definition of “Permitted
 Dividends”, that (a) no
 Default or Event of Default then exists or would arise as a result of the
 making of such dividend or other distribution, (b) (i) at no time during the
 six (6) month period ending on the date of such dividend or other
 distribution shall there have been any Borrowings, and (ii) after giving
 effect to the making of such dividend or other distribution, as projected on
 a pro-forma basis for the six (6) month period following the making of such
 dividend or other distribution, there are no anticipated Borrowings, (c)
 after giving effect to the making of such dividend or other distribution, the
 aggregate amount of all such dividends and other distributions made during
 the then current Fiscal Year does not exceed $5,000,000, and (d) in the case
 of dividends of the type described in clause (d)(i) of the definition of
 “Permitted Dividends”, such dividend is made in cash utilizing the Loan
 Parties’ cash on hand not consisting of Eligible Cash on Hand and not from
 proceeds of any Borrowings hereunder. Prior to undertaking any transaction or
 payment which is subject to the Dividend Conditions, the Loan Parties shall
 deliver to the Administrative Agent evidence of satisfaction of the
 conditions contained in clauses (b) and (c) above on a basis (including,
 without limitation,

 


9









	
  

 	
  

 
	
  

 	
 giving due consideration to results for prior periods) reasonably
 satisfactory to the Administrative Agent.

 
	
  

 	
  

 
	
  

 	
           “Eligible
 Cash Blocked Account” means a DDA in the name of the Lead Borrower
 maintained with Wells Fargo, which DDA (i) is controlled (within the meaning
 of the UCC) by Wells Fargo subject to a first perfected security interest in
 favor of the Collateral Agent, and (ii) is acknowledged in writing by the
 Collateral Agent to constitute the Eligible Cash Blocked Account hereunder.

 
	
  

 	
  

 
	
  

 	
           “Eligible
 Cash on Hand” means cash of a Borrower from time to time deposited in the
 Eligible Cash Blocked Account.

 
	
  

 	
  

 
	
  

 	
           “Eligible
 Credit Card Receivables” means at the time of any determination
 thereof, each Credit Card Receivable that satisfies the following criteria at
 the time of creation and continues to meet the same at the time of such
 determination: such Credit Card Receivable (a) has been earned by performance
 and represents the bona fide amounts due to a Borrower from a Credit Card
 Issuer or Credit Card Processor, and in each case originated in the ordinary
 course of business of such Borrower, and (b) in each case is acceptable to
 the Administrative Agent in its discretion, and is not ineligible for
 inclusion in the calculation of the Borrowing Base pursuant to any of clauses
 (i) through (ix) below. Without limiting the foregoing, to qualify as an
 Eligible Credit Card Receivable, an Account shall indicate no Person other
 than a Borrower as payee or remittance party. In determining the amount to be
 so included, the face amount of an Account shall be reduced by, without
 duplication, to the extent not reflected in such face amount, (i) the amount
 of all accrued and actual discounts, claims, credits or credits pending,
 promotional program allowances, price adjustments, finance charges or other
 allowances (including any amount that a Borrower may be obligated to rebate
 to a customer, a Credit Card Issuer or Credit Card Processor pursuant to the
 terms of any agreement or understanding (written or oral)) and (ii) the
 aggregate amount of all cash received in respect of such Account but not yet
 applied by the Loan Parties to reduce the amount of such Credit Card
 Receivable. Except as otherwise agreed by the Administrative Agent, any
 Credit Card Receivable included within any of the following categories shall
 not constitute an Eligible Credit Card Receivable: 

 
	
  

 	
  

 
	
  

 	
           (i)
 Credit Card Receivables which do not constitute an “Account” (as defined in
 the UCC);

 
	
  

 	
  

 
	
  

 	
           (ii)
 Credit Card Receivables that have been outstanding for more than five (5)
 Business Days from the date of sale;

 
	
  

 	
  

 
	
  

 	
           (iii)
 Credit Card Receivables (i) that are not subject to a perfected
 first-priority security interest in favor of the Collateral Agent, or (ii)
 with respect to which a Borrower does not have good, valid and marketable
 title thereto, free

 


10









	
  

 	
  

 	
  

 
	
  

 	
  

 	
 and
 clear of any Lien (other than Liens granted to the Collateral Agent pursuant
 to the Security Documents);

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (iv)
 Credit Card Receivables which are disputed, are with recourse, or with
 respect to which a claim, counterclaim, offset or chargeback has been asserted
 (to the extent of such claim, counterclaim, offset or chargeback); 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (v)
 Credit Card Receivables as to which the processor has the right under certain
 circumstances to require a Loan Party to repurchase the Accounts from such Credit
 Card Issuer or Credit Card Processor; 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (vi) Credit Card Receivables due from an
 issuer or payment processor of the applicable credit card which is the
 subject of any bankruptcy or insolvency proceedings;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (vii)
 Credit Card Receivables which are not a valid, legally enforceable
 obligation of the applicable issuer with respect thereto;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (viii)
 Credit Card Receivables which do not conform to all representations,
 warranties or other provisions in the Loan Documents relating to Credit Card
 Receivables; or

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (ix)
 Credit Card Receivables which the Administrative Agent determines in its discretion to be
 uncertain of collection or which do not meet such other reasonable
 eligibility criteria for Credit Card Receivables as the Administrative
 Agent may determine.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           “First
 Amendment Effective Date” means May 4, 2012.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           “Store
 Closing Threshold Amount” means (i) from and after the First Amendment
 Effective Date until (but not including) the first anniversary thereof, fifty
 (50), and (ii) from and after the first anniversary of the First Amendment
 Effective Date, thirty-five (35).

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           “WFCF”
 means Wells Fargo Capital Finance, LLC, a Delaware limited liability company,
 and its successors and assigns.

 
	
  

 	
  

 	
  

 
	
  

 	
 (v)

 	
 By deleting the definitions of “Bank of America”, “BAS”, “Borrowing
 Base Issues”, “Co-Borrowing Base Agent”, “Inventory Advance Rate”, “Line Fee”
 and “Voting Borrowing Base Agent” in their entirety. 

 
	
  

 	
  

 	
  

 
	
 3.

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

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 By amending Section 2.03 thereof as follows:

 


11











	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 By deleting the phrase “100 Federal Street, Boston, Massachusetts” in
 its entirety from clause (b) thereof and substituting in its stead the phrase
 “One Boston Place, 18th Floor, Boston, Massachusetts 02108”.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 By adding the following proviso at the end of the first sentence of
 clause (c) thereof:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 ; provided, however, that solely for purposes of
 determining whether the condition described in clause (b)(ii) of the
 definition of “Dividend Conditions” has been satisfied, any amounts so
 charged by the Administrative Agent to the Loan Account shall not be deemed
 to constitute a Borrowing.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 By deleting Section 2.12 in its entirety therefrom and substituting
 in its stead the following new Section 2.12:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
           Section
 2.12 Commitment Fees. The Borrowers shall pay to the Administrative Agent,
 for the account of each Lender in accordance with its Commitment Percentage,
 a commitment fee (the “Commitment Fee”) equal to the Applicable
 Commitment Fee Percentage times the average daily balance of the Unused
 Commitment for each day commencing on and including the Effective Date and
 ending on but excluding the Termination Date. The Commitment Fee shall be due
 and payable quarterly in arrears on the first day after the end of each
 calendar quarter, except that all Commitment Fees so accrued as of the
 Termination Date shall be payable on the Termination Date. The Commitment Fee shall be calculated
 quarterly in arrears.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 By amending Section 2.21 thereof as follows:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 By deleting the third and fourth sentences from clause (c) thereof in
 its entirety and substituting in their stead the following new sentences:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 The Blocked Account Agreements shall permit, subject to the terms and
 conditions of this Section 2.21(c), the Collateral Agent to direct the
 third parties to such agreements to sweep from the Blocked Accounts on each
 Business Day all available cash receipts from the sale of Inventory and other
 assets, all collections of Accounts, all proceeds of Collateral, and all
 other cash payments received by the Borrowers from any Person or from any
 source or on account of any sale or other transaction or event (all such cash
 receipts and collections, “Cash Receipts”), to the Concentration
 Account or such other account as otherwise directed by the Administrative
 Agent. In that regard, the Borrowers shall cause the ACH or wire transfer to
 a Blocked Account or to the Concentration Account, no less frequently than
 daily (and whether or not there is then an outstanding balance in the Loan
 Account) of (A) the then contents of each DDA (other than the BOA Collateral
 Account but subject to the proviso set forth in clause (l) of the

 


12









	
  

 	
  

 	
  

 
	
  

 	
  

 	
 definition of “Permitted Encumbrances”), each such transfer to be net
 of an amount not to exceed the lesser of (i) the product of $5,000 multiplied
 by the number of Stores that routinely deposit Cash Receipts into such DDA in
 the ordinary course of business, consistent with past practices, or (ii)
 $50,000, which lesser amount may remain on deposit in each DDA (other than
 the BOA Collateral Account but subject to the proviso set forth in clause (l)
 of the definition of “Permitted Encumbrances”) (unless the Collateral Agent
 is exercising its rights and remedies under the Security Documents with
 respect to a substantial portion of the Collateral, in which case the entire
 contents of each DDA (other than the BOA Collateral Account but subject to
 the proviso set forth in clause (l) of the definition of “Permitted
 Encumbrances”) shall be swept daily); and (B) the proceeds of all credit card
 charges (to be paid directly by any credit card clearinghouse or processor
 or, if received by any Loan Party, by such Loan Party) not otherwise provided
 for pursuant hereto.

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 By deleting clause (i) in its entirety therefrom and substituting in
 its stead the following new clause (i):

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (i)
 Annexed hereto as Schedule 2.21(i) is
 a list of all securities accounts at any institution in which any Loan Party
 holds any Investments (other than securities accounts located at the
 Administrative Agent, the Collateral Agent or an Affiliate of the
 Administrative Agent or the Collateral Agent) (collectively, with any such
 accounts hereafter established, the “Securities Accounts”). Within
 ninety (90) days after the First Amendment Effective Date, the Loan Parties
 shall have delivered to the Collateral Agent securities account control
 agreements or amendments to existing securities account control agreements,
 each in form and substance satisfactory to the Collateral Agent and duly
 executed by each securities intermediary and the other parties thereto, with
 respect to each Securities Account, pursuant to which, among other things,
 the Collateral Agent shall have obtained “control” (within the meaning of the
 UCC) of such Securities Account.

 
	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 by adding the following new clause (j) at the end thereof:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (j)
 Notwithstanding anything to the contrary contained herein, the Loan Parties
 shall, (i) within ninety (90) days following the First Amendment Effective
 Date, (A) cause the Loan Parties’ primary DDAs (including, without
 limitation, the Concentration Account) and disbursement accounts (including,
 without limitation, the Disbursement Accounts) to be maintained with Wells
 Fargo (it being understood that the Administrative Agent shall use
 commercially reasonable efforts to facilitate, and provide reasonably timely
 support to the Loan Parties with respect to, the establishment of such DDAs
 and disbursement accounts), and (B) deliver to the Administrative Agent such
 Blocked Account

 


13









	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Agreements with respect to such DDAs and disbursement accounts as the
 Administrative Agent may reasonably request, and (ii) on or before January
 31, 2013, deliver to the Administrative Agent evidence, in form and substance
 satisfactory to the Administrative Agent, that the DDAs identified on Schedule
 2.21(j) have been closed and any balances therein transferred to a
 Blocked Account maintained at Wells Fargo.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 By amending Section 2.22 thereof by adding the phrase “(which, for
 purposes of clarity, shall be a DDA other than the Eligible Cash Blocked
 Account or the Cash Collateral Account)” immediately following the phrase
 “separate cash collateral account” in clause (b) thereof. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 By amending Section 2.25 thereof by deleting the phrase “100 Federal
 Street, 9th Floor, Boston, Massachusetts 02110” in its entirety
 from clause (a) thereof and substituting in its stead the phrase “One Boston
 Place, 18th Floor, Boston, Massachusetts 02108”. 

 
	
  

 	
  

 	
  

 
	
 4.

 	
 Amendments to Article V of Credit Agreement.
 The provisions of Section 5.08 of the Credit Agreement are hereby amended as
 follows: 

 
	
  

 	
  

 
	
  

 	
 (a)

 	
 By deleting clause (b) therefrom in its entirety and substituting the
 following new clause (b) in its stead: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b) Each Loan Party will, and will cause each of its Subsidiaries to,
 from time to time upon the request of the Administrative Agent and after
 reasonable prior notice during normal business hours, permit the
 Administrative Agent or professionals (including investment bankers,
 consultants, accountants, lawyers and appraisers) retained by the
 Administrative Agent (and reasonably satisfactory to the Administrative
 Agent) 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, accruals and reserves. Subject to the
 limitations set forth in the following sentences, the Loan Parties shall pay
 the reasonable fees and expenses of the Administrative Agent or such
 professionals with respect to such evaluations and appraisals. The Loan
 Parties acknowledge and agree that the Administrative Agent may undertake up
 to one (1) Inventory appraisal and up to one (1) commercial finance
 examination during any Fiscal Year, and the Loan Parties shall reimburse the
 Administrative Agent for the reasonable cost thereof; provided, however, that during any twelve (12)
 month period in which (i) any Borrowings are outstanding for a period of
 thirty (30) consecutive days, or (ii) the aggregate Credit Extensions
 outstanding exceeds $10,000,000 at any time, then the Administrative Agent
 may undertake up to a total of three (3) Inventory appraisals and up to a
 total of three (3) commercial finance examinations during the subsequent
 twelve (12) month period, and the Loan Parties shall reimburse the
 Administrative Agent for the reasonable cost

 






14










	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 thereof; provided, however,
that during any twelve (12) month period in which Excess Availability at any
time is less than twenty percent (20%) of the lesser of (x) the Borrowing
Base (as reflected on the most recent Borrowing Base Certificate) or (y) the
Total Commitments, the Loan Parties acknowledge and agree that the
Administrative Agent may undertake up to a total of four (4) Inventory
appraisals and up to a total of four (4) commercial finance examinations
during the subsequent twelve (12) month period, and the Loan Parties shall
reimburse the Administrative Agent for the reasonable cost thereof; provided
further that the Administrative Agent shall be entitled to undertake
additional commercial finance examinations and Inventory appraisals each
Fiscal Year at the Administrative Agent’s own expense. Notwithstanding the
foregoing, upon the occurrence and during the continuance of a Default or
Event of Default, the Administrative Agent shall be entitled to undertake
such Inventory appraisals and commercial finance examinations during any
Fiscal Year as the Administrative Agent in its discretion deems necessary or
appropriate or as may be required by Applicable Law, in each case at the
expense of the Loan Parties.  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 By re-lettering clause (c) thereof as clause (d) and adding the
 following new clause (c) in its stead: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c) In addition to any rights to undertake Inventory appraisals at
 the Loan Parties’ expense pursuant to Section 5.08(b), if during any
 twelve (12) month period commencing on the First Amendment Effective Date (or
 any anniversary thereof), the Loan Parties have closed more than the Store
 Closing Threshold Amount for such twelve (12) month period, the Loan Parties
 acknowledge and agree that the Administrative Agent shall be entitled to undertake
 one (1) additional Inventory appraisal during the subsequent twelve (12)
 month period, and the Loan Parties shall reimburse the Administrative Agent
 for the reasonable cost thereof. The exercise of the Administrative Agent’s
 right to undertake an Inventory appraisal pursuant to this Section 5.08(c)
 shall not reduce or derogate from the Administrative Agent’s right to
 undertake appraisals under Section 5.08(b) above, and any such
 appraisal undertaken pursuant to this Section 5.08(c) shall not
 constitute an Inventory appraisal undertaken pursuant to Section 5.08(b).
 

 
	
  

 	
  

 	
  

 
	
 5.

 	
 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 thereof as follows: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 By deleting the phrase “$15,000,000” from the end of clause (a)(iv)
 thereof in its entirety and substituting in its stead the phrase
 “$30,000,000”.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 By deleting
 the phrase “$10,000,000” from the end of clause (a)(xii) thereof in its
 entirety and substituting in its stead the phrase “$15,000,000”.

 


15





 


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 By amending Section 6.05 thereof by deleting clause (k) therefrom in
 its entirety and substituting the following new clause (k) in its stead: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (k) the sale,
 transfer or other disposition of the South Beach Real Estate, as long as (i)
 all Cash Receipts received by the Loan Parties as consideration therefor are
 transferred to the Concentration Account in accordance with Section
 2.21(c) hereof, and (ii) all Instruments or other assets received by the
 Loan Parties as consideration therefor are pledged and delivered to the
 Collateral Agent to the extent required pursuant to the Security Agreement; 

 
	
  

 	
  

 	
  

 
	
 6.

 	
 Amendment to
 Article VIII of Credit Agreement. The provisions of
 Article VIII of the Credit Agreement are hereby amended as follows: 

 
	
  

 	
  

 
	
  

 	
 (a)

 	
 By deleting the first sentence of Section 8.01 therefrom in its
 entirety and substituting the following new sentence in its stead: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Each Lender, the Collateral Agent and the Issuing Bank hereby
 irrevocably designate Wells Fargo as Administrative Agent under this
 Agreement and the other Loan Documents.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 By deleting the first sentence of Section 8.02 therefrom in its
 entirety and substituting the following new sentence in its stead: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 The Lenders, the Administrative Agent and the Issuing Bank each
 hereby irrevocably (i) designate Wells Fargo as Collateral Agent under this
 Agreement and the other Loan Documents, (ii) authorize the Collateral Agent
 to enter into the Security Documents and the other Loan Documents to which it
 is a party and to perform its duties and obligations thereunder, together
 with all powers reasonably incidental thereto, and (iii) agrees and consents
 to all of the provisions of the Security Documents.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 By deleting
 Section 8.03 therefrom in its entirety and substituting in its stead the
 following new Section 8.03: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Section 8.03
 [Reserved.]

 
	
  

 	
  

 	
  

 
	
 7.

 	
 Amendment to Article IX of Credit Agreement.
 The provisions of Section 9.01 of the Credit Agreement are hereby amended by
 deleting clauses (b) and (c) therefrom in their entirety and substituting in
 their stead the following clauses (b) and (c): 

 
	
  

 	
  

 
	
  

 	
 (b) if to the Administrative Agent, the Collateral Agent, the
 Swingline Lender or the Issuing Bank, to Wells Fargo Bank, National
 Association, One Boston Place, 18th Floor, Boston, Massachusetts
 02108, Attention: Trans World Account Manager (Telecopy No. (855) 461-3726),
 with a copy to Riemer & Braunstein LLP, Three Center Plaza, Boston,
 Massachusetts 02108, Attention: David S. Berman, Esquire (Telecopy No. (617)
 880-3456); 

 
	
  

 	
  

 






16









	
  

 	
  

 	
  

 	
  

 
	
 8.

 	
 Amendments to Schedules to Credit Agreement. The Schedules to the
Credit Agreement are hereby amended as follows:  

 
	
  

 	
  

 
	
  

 	
 (a)

 	
 By deleting Schedule
 1.1(a) in its entirety therefrom and substituting in its stead the Schedule
 1.1(a) annexed hereto. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 By adding the following new Schedules thereto in the forms of such
 Schedules annexed hereto: Schedule 1.1(c) (Existing BOA Letters of
 Credit), Schedule 1.1(d) (Existing BOA Cash Management Services), and Schedule
 2.21(j) (DDAs to be Closed). 

 
	
  

 	
  

 	
  

 
	
  

 	
 The Loan Parties represent and warrant that the information set forth
 in the other Schedules annexed to the Credit Agreement are true and complete
 in all respects as of the date hereof, except to the extent such information
 has been updated in accordance with the Schedules annexed hereto as Exhibit
 A. 

 
	
  

 	
  

 
	
 9.

 	
 Amendment to Exhibits to Credit Agreement.
 The Exhibits to the Credit Agreement are hereby amended by deleting Exhibit
 D in its entirety therefrom and substituting in its stead the Exhibit
 D annexed hereto. 

 
	
  

 	
  

 
	
 10.

 	
 Additional Amendments to Credit Agreement.
 From and after the date hereof, any and all references to “Co-Borrowing Base
 Agents” or “Voting Borrowing Base Agent” in the Credit Agreement are hereby
 deleted; provided, however, that (i) each reference to the
 Administrative Agent or the Collateral Agent acting in consultation with the
 Co-Borrowing Base Agents shall be deemed to mean and refer to the
 Administrative Agent or the Collateral Agent, as applicable, acting without
 any requirement to consult with any such Person, (ii) each reference to the
 Administrative Agent or the Collateral Agent acting at the direction of the
 Co-Borrowing Base Agents shall be deemed to mean and refer to the
 Administrative Agent or the Collateral Agent, as applicable, acting in its
 own discretion, (iii) each reference to determination, establishment,
 approval or acceptance of, or judgment as to, any matter by the Co-Borrowing
 Base Agents shall mean and refer to determination, establishment, approval or
 acceptance of, or judgment as to, such matter by the Administrative Agent,
 and (iv) each reference to receipt of any item (including, without
 limitation, Borrowing Base Certificates, notices, appraisals or commercial
 finance examinations) or conducting by the Co-Borrowing Base Agents of any
 report or other diligence (including, without limitation, appraisals or
 commercial finance examinations) shall mean and refer to receipt or
 conducting thereof by the Administrative Agent. 

 
	
  

 	
  

 
	
 11.

 	
 Ratification; Representations and Warranties.
 Except as otherwise expressly provided herein, all terms and conditions of
 the Credit Agreement 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 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 that
 relate solely to an earlier date, in which case they are true and correct as
 of such earlier date, or (y)

 






17





 


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 representations
 and warranties qualified by materiality, in which case they are true and
 correct in all respects.

 
	
  

 	
  

 
	
 12.

 	
 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)

 	
 The Administrative Agent shall have received, in form and substance
 satisfactory to the Agents and duly executed by each of the parties thereto,
 an assignment of that certain Deposit Account Control Agreement dated as of
 June 10, 2010 with Bank of America, as depository bank, with respect to the
 Lead Borrower’s DDA number 4426491118, pursuant to which assignment Bank of America,
 as existing secured party, shall have assigned its rights in such Blocked
 Account Agreement to the Collateral Agent and Bank of America, as depository
 bank, shall have acknowledged and agreed to such assignment and waived any
 advance notice requirement set forth in such Blocked Account Agreement. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 The Administrative Agent shall have received, in form and substance
 satisfactory to the Agents and acceptable for recording with the United
 States Patent and Trademark Office, an assignment of Bank of America’s
 security interest with respect to the Loan Parties’ Trademarks and Patents
 (as such terms are defined in the Intellectual Property Security Agreement),
 duly executed by the Loan Parties and Bank of America. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

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

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 The Administrative Agent shall have received, in form and substance
 reasonably satisfactory to the Administrative Agent and duly executed by the
 Borrowers, a Note in favor of Wells Fargo and reflecting the Commitment of
 Wells Fargo after giving effect to this Amendment. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 The Administrative Agent shall have received a favorable opinion of
 Boies, Schiller & Flexner LLP, counsel to the Loan Parties, addressed to
 the Administrative Agent and each other Secured Party, as to such matters
 concerning the Loan Parties, this Amendment and the other Loan Documents as
 the Administrative Agent may reasonably request. 

 






18









	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (g)

 	
 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. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (h)

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

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 After giving effect to the transactions contemplated hereby
 (including, without limitation, the issuance of any Letters of Credit on or
 about the First Amendment Effective Date), there shall be no Borrowings
 outstanding. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (j)

 	
 The Borrowers shall have paid the fees set forth in the Fee Letter. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (k)

 	
 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. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (l)

 	
 The Administrative Agent shall have received those instruments,
 documents and agreements described on the First Amendment Document Agenda
 annexed hereto. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (m)

 	
 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.

 
	
  

 	
  

 	
  

 
	
 13.

 	
 Post-Closing
 Covenant. The Loan Parties shall use commercially
 reasonable efforts to deliver to the Administrative Agent, within sixty (60)
 days following the First Amendment Effective Date (or such later date as the
 Administrative Agent may agree in its sole discretion), evidence in form and
 substance satisfactory to the Administrative Agent, that a UCC-3 termination
 statement (or UCC-3 amendment) has been filed with the Delaware Secretary of
 State, terminating (or amending the collateral description thereof such that
 it is limited solely to furnishings, equipment and fixtures of Record Town
 USA, LLC located on the real estate leased by Record Town USA, LLC from
 Frontier Mall Associates Limited Partnership located at 1400 Dell Range
 Boulevard, Space 84, Cheyenne, Wyoming 82009) the UCC-1 financing statement
 number 20103699075, filed on October 21, 2010, listing “Record Town USA,
 LLC”, as debtor, and “Frontier Mall Associates Limited Partnership” as
 secured party. 

 
	
  

 	
  

 
	
 14.

 	
 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

 






19









	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 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, WITHOUT GIVING EFFECT TO THE
 CONFLICTS OF LAWS PRINCIPLES THEREOF. 

 



[SIGNATURE PAGES FOLLOW] 





20






          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/ Tom G. Seaver

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
 Name:

 	
 Tom G. Seaver

 	
  

 
	
  

 	
 Title:

 	
 Chief Financial Officer

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 RECORD TOWN, INC., as a
 Borrower

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  /s/ Tom G. Seaver

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
 Name:

 	
 Tom G. Seaver

 	
  

 
	
  

 	
 Title:

 	
 Chief Financial Officer

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 RECORD TOWN USA, LLC, as a
 Borrower

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Tom G. Seaver

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
 Name:

 	
 Tom G. Seaver

 	
  

 
	
  

 	
 Title:

 	
 Chief Financial Officer

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 TRANS WORLD NEW YORK, LLC,
 as a Borrower

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  /s/ Tom G. Seaver

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
 Name:

 	
 Tom G. Seaver

 	
  

 
	
  

 	
 Title:

 	
 Chief Financial Officer

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 TRANS WORLD FLORIDA, LLC,
 as a Borrower

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Tom G. Seaver

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
 Name:

 	
 Tom G. Seaver

 	
  

 
	
  

 	
 Title:

 	
 Chief Financial Officer

 	
  

 


Signature Page to First
Amendment to Credit Agreement









	
  

 	
  

 	
  

 	
  

 
	
  

 	
 MOVIES PLUS, INC., as a
 Borrower

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  /s/ Tom G. Seaver

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
 Name:

 	
 Tom G. Seaver

 	
  

 
	
  

 	
 Title:

 	
 Chief Financial Officer

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 RECORD TOWN UTAH, LLC, as
 a Borrower

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Tom G. Seaver

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
 Name:

 	
 Tom G. Seaver

 	
  

 
	
  

 	
 Title:

 	
 Chief Financial Officer

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 MEDIA LOGIC USA, LLC, as a
 Facility Guarantor

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 Record Town, Inc., its
 sole member

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  /s/ Tom G. Seaver

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
 Name:

 	
 Tom G. Seaver

 	
  

 
	
  

 	
 Title:

 	
 Chief Financial Officer

 	
  

 


Signature Page to First
Amendment to Credit Agreement









	
  

 	
  

 	
  

 	
  

 
	
  

 	
 WELLS FARGO BANK, NATIONAL
 ASSOCIATION, as Administrative Agent, Collateral Agent, Swingline Lender,
 Issuing Bank and Lender

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  /s/ Peter Foley

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
 Name:

 	
 Peter Foley

 	
  

 
	
  

 	
 Title:

 	
 Authorized Signatory

 	
  

 


Signature Page to First
Amendment to Credit Agreement