Exhibit 10.20


 


October 6, 2003


 


Jack M. Zackin


Sills Cummis Radin Tischman
Epstein & Gross


One Riverfront Plaza


Newark, NJ 07102


 


 


Re:          Global Offer for CD
World


 


Dear Jack:


 


This letter
(this “Letter Agreement”) is submitted to you in your capacity as counsel for
CD World, as debtor in possession (the “Debtor”) in a chapter 11 case (the
“Case”), pending before the United States Bankruptcy Court for the District of
New Jersey (the “Court”).


 


On behalf of
Trans World Entertainment Corporation (“TWEC”) (or one of its subsidiaries),
this letter constitutes an offer to dispose of certain assets, conduct certain
sales and assume specified liabilities of the Debtor on and subject to the
terms and conditions set forth below (including all exhibits and other attachments
to this Letter Agreement, which are incorporated herein by reference).


 


1.             (a)           Guaranteed Amount.  TWEC will guarantee that the Debtor will
receive the sum of $1.8 million as consideration for the disposition of the
Assets (hereinafter defined), exclusive of those costs and expenses to be borne
by the Debtor, as specified in this Letter Agreement (the “Guaranteed Amount”);
provided, however, that the Cost Value (hereinafter defined) of the Debtor’s
inventory to be sold in accordance with this Letter Agreement shall be no less
than $5.4 million.  In the event that
the Cost Value of the Inventory (hereinafter defined) is less than $5.4
million, then the Guaranteed Amount will be reduced in an amount equal to
one-third of the difference between the Cost Value of the Inventory and $5.4
million.  “Cost Value” shall mean, with
respect to inventory (the “Inventory”) physically located at the Debtor’s
retail stores set forth on Exhibit A attached hereto (the “Stores”) or the
Debtors distribution center that is salable in the ordinary course, the cost
previously represented to TWEC by Debtor in the cost file submitted by item,
except for damaged, defective, display, or rental Inventory where TWEC shall
mutually agree upon Cost Value.  Prior
to the date on which the transactions contemplated hereby are consummated (the
“Closing Date”), a physical inventory (the “Physical Inventory”) shall be taken
by an independent inventory service jointly designated by the Debtor and TWEC,
and the costs of the Physical Inventory shall be paid equally by the Debtor and
TWEC; provided, however, that in no event shall Debtor be required to pay in
excess of $7,500 in respect of the Physical Inventory.  If, in the course of taking the Physical Inventory,
any items of Inventory are determined to be non-saleable, such items will be
assigned no Cost Value for purposes of calculating the aggregate dollar value
of the Inventory.  In addition, to the
extent that Debtor and TWEC


 

















 


are unable to agree on a Cost
Value for damaged, defective, display, or rental Inventory, the Cost Value of
such shall be zero.  To the extent that
the Debtor, with the prior Agreement of TWEC, receives additional Inventory on
or before ten days after the Closing Date, such additional Inventory shall be
valued in the same manner as the Inventory that was in the Debtor’s possession
as of the Closing Date.


 


In addition,
TWEC shall post an irrevocable letter of credit in the face amount equal to
$139,900.00.  In the event that TWEC
does not pay amounts due under a Lease as specified herein, Debtor shall be
entitled to draw upon such letter of credit to satisfy Debtor’s obligations
under such Lease.  Upon payment by TWEC
of all amounts due under the Leases as provided herein, Debtor shall cooperate
with TWEC in order to terminate the letter of credit required to be posted
under this paragraph.


 


(b)           Payment of the
Guaranteed Amount.  No later than
two (2) business days following the Closing Date, TWEC shall (i) pay 75% of the
Guaranteed Amount in cash and (ii) deliver to Debtor an irrevocable standby
letter of credit in the original face amount of 25% of the Guaranteed
Amount.  Subject to the adjustments of
the Guaranteed Amount described in paragraph 1(a) above, TWEC shall pay the unpaid
and undisputed balance of the Guaranteed Amount in cash to Debtor no later than
ten (10) business days following the reconciliation by TWEC and Debtor of the
Inventory Taking.  Upon payment of the
Guaranteed Amount, Debtor shall cooperate with TWEC in order to terminate the
letter of credit required to be posted under this paragraph.  To the extent that the amount paid pursuant
to clause (i) above is in excess of the Guaranteed Amount (after adjustment as
described herein), Debtor shall pay to TWEC such excess within two (2) business
days following the reconciliation by Debtor and TWEC of the Inventory Taking.


 


2.             TWEC Return.  From and after the Closing Date, TWEC shall
be entitled to all proceeds (the “Proceeds”) of the sale of the Assets.


 


3.             (a)           Assets .  The assets to be disposed of by TWEC shall consist of all of the
Debtor’s right, title and interest in and to the assets set forth below
(collectively, the “Assets”), which shall be conveyed by TWEC to third parties
or affiliated designees free and clear of all liens, claims and encumbrances
(except specifically assumed liabilities):


 


i.              The
Inventory, signage, supplies, parts, machinery, equipment, vehicles and goods
located at any of the Stores, the Debtor’s headquarters office and its
warehouses (including any third-party warehouses that the Debtor leases or
rents), as well as in transit thereto or therefrom;


 


ii.             The leases for the
Stores (the “Leases”), including, without limitation, any deposits or other
security given or made in respect of the Leases, which shall be assumed and
assigned or rejected at the direction of TWEC pursuant to section 365 of
the Bankruptcy Code in accordance with paragraph 4 hereof.  Any amounts received by the Debtor as
consideration for the assignment of any Leases assigned after


 


2

















 


the date hereof and without the
involvement of TWEC (in each case net of expenses incurred in connection with
such Lease assignment) shall be credited against the Guaranteed Amount;


 


iii.            All
furniture, store fixtures and improvements located at or related to the Stores,
store warehouses, distribution centers and headquarters office, as well as all
other fixtures;


 


iv.            All
other personal property, tangible or intangible, wherever located, including
all intellectual property;


 


v.             All
guarantees, warranties, licenses and other governmental permits, approvals and
permissions;


 


vi.            All
contracts that are to be assumed and assigned at the direction of TWEC pursuant
to section 365 of the Bankruptcy Code; and


 


vii.           All
prepaid expenses, deposits (other than security deposits posted pursuant to the
Leases), credits, notes, utility deposits and insurance refunds relating to the
Stores, Leases or Owned Property.


 


(b).          Excluded Assets.  Accounts receivable (inclusive of tax
refunds), cash (other than deposits defined as Assets pursuant to
section 3.a.vii), Debtor’s 2002 Ford E-150 Van, and causes of action shall
be deemed “Excluded Assets,” and TWEC shall not acquire any rights thereto.


 


4.             Contracts and
Leases.


 


(a)           Until January 31,
2004, TWEC shall have the right, which right may be exercised at any time and
from time to time in its sole and absolute discretion, to request that Debtor,
under section 365 of the Bankruptcy Code, assume and assign to a third
party designated by TWEC, including TWEC, or an affiliate thereof (a “Lease
Assignee”) any or all of the Leases at no additional cost or expense to
TWEC.  Promptly following receipt of a
written notice (the “Assignment Notice”) delivered by TWEC to Debtor, at any
time and from time to time prior to January 31, 2004, directing the
assumption and assignment of any Lease to a Lease Assignee, Debtor shall use
its best efforts to obtain the entry of an order of the Bankruptcy Court
approving the assumption of the Lease(s) identified in the Assignment Notice
and the assignment of such Lease(s) to the Lease Assignee.(1)  It is understood and agreed that the term
“reasonable commercial efforts,” as used in this subparagraph 4(a), shall
require the Debtor to pay any and all cure amounts required under section 365(b)(1)
of the Bankruptcy Code and expend or incur reasonable fees, costs and expenses
for the payment of attorneys and other professionals whose services may
reasonably be required in connection with the prosecution of any 


 












(1)           The Motion (the “Approval
Motion”) filed by the Debtor upon receipt of an Assignment Notice shall comply
in all respects with the requirements set forth in Exhibit B hereto.


 


3

















 


motion seeking the entry of any
such order.  The Lease Assignee shall
provide adequate assurance of future performance with respect to any Lease
assigned to it.  TWEC shall not be
required to pay any cure amounts under section 365(b)(1) of the Bankruptcy
Code in respect of any of the Leases TWEC elects to require the Debtor to
assume and assign to a Lease Assignee. 
The applicable Lease Assignee shall pay all amounts, liabilities, or
other obligations due and owing under a Lease assigned to it from and after the
date that the court order approving the assumption and assignment is entered
(or otherwise allocable to the period on and after such date, including,
without limitation, base rent, taxes, and percentage rent).  Notwithstanding anything contained herein, Debtor
covenants and agrees to pay to the lessors under the Leases when due all
amounts payable under the Leases through and including the earlier of
January 31, 2004 and the date TWEC provides the designation of rejection
for any such Lease, including, without limitation, base rent, taxes, and percentage
rent, subject to TWEC’s reimbursement obligations hereunder.  The Debtor shall promptly reject, pursuant
to section 365 of the Bankruptcy Code, any Leases so designated by TWEC,
and all obligations of TWEC related to a Lease that TWEC has designated to be
rejected shall terminate on the fifth business day following notification
(each, a “Rejection Notification”) by TWEC that a particular Lease is
designated to be rejected.


 


(b) (x)      From and after the Closing
Date, as consideration for TWEC’s right to use and occupy the premises covered
by the Leases and designate the assumption or rejection of such Leases until
January 31, 2004, TWEC shall pay when due, on behalf of Debtor, all
amounts for the payment of rent, CAM, taxes, maintenance and repairs (as
limited pursuant to subparagraph 4(c) below), all other amounts due and owing
by Debtor under the Leases, and utilities and all other usual and customary
operating costs incurred in connection with the Leases and consistent with
Debtor’s prior practices (in all respects limited to the amounts set forth in
the Occupancy Expenses attached as Exhibit C hereto); and (y) from and after
the date hereof, Debtor shall not extend, reject or otherwise terminate (or
assume and assign to a third party, without TWEC’s prior written consent) any
of the Leases. TWEC’s obligations under clause (x) above, and the limitations
on the Debtor under clause (y) above shall expire upon the earlier to occur of
(i) five (5) business days following the delivery by TWEC to Debtor of written
notice indicating that TWEC waives its right to require Debtor to assume and
assign to it or a third party (and, if applicable, directing Debtor to obtain
the entry of an order rejecting) any one or more of the Leases specified in
such notice (provided that the terms of clauses (x) and (y) above shall then
terminate only with respect to the specified Leases), provided that, such
notice is received by the Debtor at least six (6) days prior to the date on
which the next installment of rent becomes due with respect to such Lease and
(ii) January 31, 2004.  Upon the
occurrence of either of the events specified in clauses (i) or (ii) of the
preceding sentences, (A) TWEC shall have no further obligation or liability of
any nature for any amounts payable to the lessor under the applicable Lease(s),
or for any costs associated with the Store(s) to which such Lease(s) relate;
and (B) Debtor shall be solely responsible for all amounts payable or other
obligations or liabilities that may be owed to the lessor under or in
connection with such applicable Lease(s), including without limitation any
damages resulting from the rejection of such Lease(s) under section 365 of
the Bankruptcy Code or otherwise. 
Notwithstanding any other provision of this Letter


 


4

















 


Agreement, TWEC may not seek to
terminate its liability in respect of a Lease (pursuant to this paragraph 4)
that relates to a Store for as long as TWEC is continuing to conduct a Store
Closing Sale in such Store (and until TWEC can deliver such Store’s premises in
the condition contemplated by paragraph 6 below).  If TWEC fails to pay, on a timely basis, any of the amounts set
forth in clause (x) of this subparagraph 4(b) (as limited pursuant to
subparagraph 4(c) below) with respect to any Lease, then following the
expiration of a five day cure period after receipt by TWEC of written notice
from the Debtor or the landlord of such failure to pay, Debtor shall be
entitled to revoke TWEC’s right to use and occupy the premises covered by such
Lease and to reject such Lease.  This
right of revocation shall be in addition to, and not in lieu of, any rights or
remedies that may be available to the Debtor at law or in equity.  Regardless of whether TWEC directs Debtor to
reject any one or more Leases at any time, the cost and expenses of the
rejection at any time of any one or more Leases, including the filing and
prosecuting of any motions or other papers with respect to the same, shall be
borne solely by Debtor and its chapter 11 estate and paid for solely by Debtor
and its chapter 11 estate.  The Debtor
agrees to pay all amounts in respect of the Leases not payable by TWEC pursuant
to this Letter Agreement.


 


(c)           Notwithstanding
anything contained in subparagraph 4(b) or elsewhere in this Letter Agreement,
TWEC shall have no obligation to pay for extraordinary or structural
maintenance and repairs.  The definitive
agreement between the parties shall define specifically what constitutes an
“extraordinary” repair.  By signing below,
Debtor represents that it is not aware of any existing repair or maintenance
problems with respect to any of the premises covered by the Leases or any of
the furniture, fixtures, equipment and other personal property covered by the
Leases.


 


5.             Transfer of Assets.  The transfer and sale of any of the Assets
by TWEC shall be effected by delivery by the Debtor to the designee of TWEC at
any time TWEC so directs of such agreements, general warranty deeds, bills of
sale, endorsements, assignments, and other good and sufficient instruments of
sale, transfer, assignment, conveyance, and warrant and all consents of third
parties necessary thereto as shall be, in the judgment of TWEC, reasonable and
necessary to effectively vest in the designee of TWEC good, marketable and
insurable title to the Assets, free and clear of all liens, claims,
encumbrances and security interests of any nature or kind whatsoever (except
for specifically assumed liabilities), pursuant to Court order under sections
363 and 365 of the Bankruptcy Code and other applicable bankruptcy law.  The Debtor will, to the extent required
after the Closing Date, upon the request of TWEC, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and delivered, all such
additional documents as may reasonably be required by TWEC to effectuate the
sale, conveyance, transfer, assignment and delivery by the Debtor of the Assets
and the ownership by the members of TWEC of the Assets.


 


6.             Cost of Store
Closing Sales.  TWEC may, in its discretion,
conduct “going-out-of business” sales of the Inventory at a portion of the
Stores (the “Store Closing Sales”). 
From the date the Store Closing Sales begin through the date the Store
Closing Sales conclude at each Store, TWEC shall bear all direct costs and
expenses


 


5

















 


incurred in connection with the
Store Closing Sales on a per diem, per store basis, limited to payroll costs
and benefits actually accruing during the term of the Store Closing Sale,
insurance, supervision costs (inclusive of fees, travel and bonuses) armored
car services, mutually agreed upon central office costs, bank fees and
chargebacks, telephone expenses, trash collection, security costs, advertising
and promotional expenses and TWEC’s payroll expenses and costs.  TWEC’s obligations under this paragraph are
Store specific and cease at each Store on a per  diem basis upon
vacation of the Store premises in broom clean condition.  Notwithstanding the foregoing, nothing
herein shall prohibit TWEC from operating the Stores as going concerns.


 


7.             Debtor’s Employees.  On the Closing Date, Debtor shall terminate
those employees (“TWEC Store Employees”) employed at the Stores.  TWEC, in its sole and complete discretion,
shall offer employment to such employees on terms and conditions substantially
similar to those that existed as of the Closing Date.  Nothing herein shall obligate TWEC to hire any employee employed
at a location other than a Store.


 


8.             Entry of the Order.  The Closing Date shall occur as soon as
practicable after the entry of a final order of the Court in the Case (i.e.,
an order that has not been reversed, stayed, modified or amended and as to
which (a) the time to appeal or seek review, reargument or rehearing has
expired and as to which no appeal or petition for certiorari, review or
rehearing is pending, or (b) if appeal, review, reargument, rehearing or
certiorari of such order has been sought, such order has been affirmed and the
request for further review, reargument, rehearing or certiorari has expired, as
a result of which such order has become final and nonappealable in accordance
with applicable law), in form and substance satisfactory to TWEC, (i) approving
this Letter Agreement, (ii) extending, if necessary, the time within which the
Debtor may assume or reject those executory contracts or unexpired leases of
real property that are Assets hereunder no earlier than January 31, 2004,
and (iii) authorizing the Debtor to consummate the transactions contemplated hereby
(the “Order”).  Notwithstanding the
foregoing sentence, TWEC, in its sole discretion, may close the transactions
contemplated herein prior to the Order becoming final; provided that the Court
enters an order in form and substance satisfactory to TWEC approving this
Letter Agreement and authorizing the Debtor to consummate the transactions
contemplated hereby, in which order the Court finds that the transactions
contemplated by this Letter Agreement were negotiated at arms-length and in
good faith and TWEC acted in good faith in all respects, and such order is not
stayed pending appeal.


 


9.             Termination.  If the Order approving the transactions
contemplated by this Letter Agreement is not entered by September 29,
2003, or the Closing Date has not occurred by October 7, 2003, TWEC may
terminate this Letter Agreement or any agreements based upon this Letter
Agreement.  Neither party shall have any
obligation or liability to the other in respect of any withdrawal or termination
of this Letter Agreement or any agreement based on this Letter Agreement
pursuant to this paragraph 11.


 


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10.           Debtor’s
Obligations.  The Debtor shall use
its reasonable commercial efforts to obtain the entry of the Order and the
consummation of the transactions contemplated hereby.


 


11.           Material
Adverse Change.  From the date
hereof and through the Closing Date, the Debtor’s business shall be conducted
in the ordinary course consistent with past practices, including, without
limitation, with ordinary and customary mark-down policies; provided, however,
that the Debtor shall not be permitted to enter into real estate
contracts, renew Leases, enter into leases, terminate Leases, reject Leases,
amend Leases, consent to the assignment of Leases or grant or terminate any
other interests in the Stores without TWEC’s prior written consent.  If there has been, occurred or arisen (a)
any damage or destruction in the nature of a casualty loss, whether covered by
insurance or not, in an amount in excess of $100,000 affecting any of the
Assets, or (b) (i) any material adverse change in the overall sale or
liquidation prospects of the Debtor’s businesses or Store Closing Sales, or
(ii) any event that has materially impaired or would reasonably be expected to materially
impair the ability of TWEC to carry on the sale or liquidation of the Assets
(including, without limitation, the Store Closing Sales), then, and in such
event, TWEC may withdraw or terminate this Letter Agreement or any agreement
based on this Letter Agreement.  In such
event, neither party shall have any liability or obligation to the other in
respect of the withdrawal or termination of this Letter Agreement and any
agreement based on this Letter Agreement.


 


12.           Conditions
Precedent.  In addition to the usual
and customary conditions precedent to be contained in the Agency Agreement, it
shall be a condition precedent to any and all obligations of TWEC and the
Debtor to consummate the transactions contemplated by this Letter Agreement
that:


 


a.             the
Court shall have entered the Order;


 


b.             the
Order shall specifically authorize the Store Closing Sales contemplated hereby
in a manner satisfactory to TWEC in its sole discretion; and


 


c.             the
Physical Inventory is performed by a recognized inventory service and the Cost
Value of the Inventory shall have been agreed to by the parties.


 


13.           Other
Conditions.  The obligations of TWEC
hereunder are subject to and conditioned upon TWEC’s satisfaction, in its sole
discretion, that (a) there exist no material and adverse environmental
conditions with respect to the Owned Property or the real property subject to
the Leases, (b) there exist no violations of federal, state, or local laws,
statutes, regulations or codes of any kind or nature whatsoever that, individually
or in the aggregate, would constitute a Material Adverse Change pursuant to
paragraph 11 above, (c) the Assets and the Inventory are in condition and the
mix and balance of the Inventory is consistent with historical levels and (d)
the Debtor has obtained an extension of its deadline to assume or reject all
executory contracts and unexpired leases that to no


 


7

















 


earlier than January 31,
2004.  If TWEC, in its sole discretion,
is not so satisfied, then, and in such event, TWEC may withdraw or terminate
this Letter Agreement, and in such event neither party shall have any further
liability or obligation to the other.


 


13.           Liabilities of TWEC.  TWEC shall not assume any debt, liability or
obligation of the Debtor, including claims for unpaid taxes, except the
obligations TWEC agrees to pay pursuant to the terms of this Letter
Agreement.  Without limiting the
foregoing, TWEC shall not have any obligation to employ (except those TWEC
agrees specifically to employ), or in any manner be responsible for any
compensation, pension or retirement, severance, termination or other benefit
plan liability or other obligation relating to, any employee of the Debtor or
to any labor organization under any labor or collective bargaining agreement.


 


*     *     *


 


If this Letter
Agreements meets with your approval, kindly indicate such acceptance by having
the enclosed copy of this letter executed and returned to the undersigned.


 


	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
  TRANS WORLD
  ENTERTAINMENT CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  



 


 


AGREED, ACKNOWLEDGED, ACCEPTED


AND CONSENTED:


 


CD WORLD


 


	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  



 


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Exhibit A


 


Stores


 


	
  Store Number

  	
   

  	
  City, State

  	
   

  
	
  12

  	
   

  	
  Paramus, NJ

  	
   

  
	
  13

  	
   

  	
  Union, NJ

  	
   

  
	
  14

  	
   

  	
  Totowa, NJ

  	
   

  
	
  15

  	
   

  	
  Cherry Hill, NJ

  	
   

  
	
  16

  	
   

  	
  Menlo Park, NJ

  	
   

  
	
  17

  	
   

  	
  Princeton, NJ

  	
   

  
	
  18

  	
   

  	
  E. Hanover, NJ

  	
   

  
	
  19

  	
   

  	
  Eatontown, NJ

  	
   

  
	
  26

  	
   

  	
  Crestwood, MO

  	
   

  
	
  28

  	
   

  	
  Kansas City, MO

  	
   

  
	
  31

  	
   

  	
  University City, MO

  	
   

  
	
  32

  	
   

  	
  Ferguson, MO

  	
   

  
	
  35

  	
   

  	
  Columbia, MO

  	
   

  
	
  Warehouse

  	
   

  	
  Plainfield, NJ

  	
   

  



 


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Exhibit B


 


Approval Motion Standards


 


An “Approval
Motion” shall mean a motion served upon all affected parties (including,
without limitation, landlords under Leases and any parties to reciprocal
easement agreements or other similar agreements (each, an “REA”)
affecting the applicable Property) for an order of the Bankruptcy Court (an “Approval
Order”) (i) approving of the sale of the applicable Owned Property or the
assumption and assignment of the applicable Lease to the proposed designee,
(ii) confirming that the assumption and assignment of the Lease or transfer of
the Owned Property to the proposed designee shall be free and clear of any
claims of defaults and that Merchant shall be responsible for curing any and
all monetary defaults accruing prior to the applicable Property Closing Date,
and which may exist at the time of the assignment or transfer (as applicable),
to the extent such cure is required pursuant to Section 365 of the Bankruptcy
Code; (iii) ruling that, in accordance with the provisions of Section 363
of the Bankruptcy Code, the Owned Property or Lease, as applicable, shall be
transferred and assigned to the proposed designee free and clear of all liens,
claims, mortgages and encumbrances (with same to attach to the proceeds of the
sale, transfer and assignment); (iv) permitting the proposed designee to
perform alterations and remodeling to the extent necessary to operate its
retail operations, and to replace and modify existing signage notwithstanding
any provision in the Lease, any REA or local law to the contrary, (v) ordering
that any extension or renewal option in the Lease or in any REA which purports
to be “personal” only to Merchant or to be exercisable only by Merchant is an
unenforceable restriction on assignment and, in fact, may be freely exercised
by the proposed designee to its full extent, (vi) allowing Agent’s proposed
designee to remain “dark” with respect to properties for up to an additional
twelve (12) months after assignment despite any Lease restriction, REA
restriction or local law to the contrary, (vii) ordering that if no objection
to the assumption and assignment of a Lease or to the transfer of an Owned
Property is timely made and filed with the Bankruptcy Court prior to the
expiration of the applicable objection period, or such objection involves a
“cure issue” (with it being deemed that any such objection regarding a “cure
issue” will not affect the assumption and assignment), the assumption and
assignment or transfer (as applicable) shall be deemed effective and binding
upon the applicable affected parties and shall require no further order of the
Bankruptcy Court to take place, (viii) ordering that any provisions contained
in the Lease or any REAs which are, or would have the effect of being,
provisions which restrict “going dark”, recapture provisions, provisions which
impose a fee or a penalty or a profit sharing upon assignment, provisions which
seek to increase the rent or impose a penalty or to modify or terminate a Lease
or a REA as a result of going dark or upon assignment, provisions which
directly or indirectly limit or condition or prohibit assignment, continuous
operating covenants, and similar provisions contained in the Leases or REAs
shall not restrict, limit or prohibit the sale and assumption and assignment of
the Owned Property or Lease the proposed designee and are deemed and are found
to be unenforceable anti-assignment provisions within the meaning of Sections
365(f) and (l) of the Bankruptcy Code,  (ix)
approving the proposed designee’s contemplated use of the Store governed by the
Lease irrespective of whether such use is prohibited by the Lease,


 


10

















 


including, without limitation,
in the case of any Lease transferred to TWEC, the use clause attached hereto as
Appendix 1, and (x) approving the tradename(s) that the proposed
designee intends to utilize at the Store covered by such Lease, including,
without limitation, in the case of any Lease transferred to TWEC, the following
tradenames: Coconuts, Strawberries, Second Spin, FYE (For Your Entertainment),
Planet Music, and Spec’s.


 


11

















 


Appendix A


 


Permitted Use:
Only for the retail sale or rental of new and used:


 


(a)   pre-recorded
entertainment products, now known or hereafter developed, including, but not
limited to pre-recorded music, video and sound, records, pre-recorded and blank
audio and video tapes and video discs, compact discs, cassettes, music-related
CD ROMs, music-related digital software and digital downloads and other forms
of recorded music, video and sound, compact disc and record care products, and
video recordings; and


 


(b)   the
display and sale at retail of audio/video equipment and devices, now known or
hereafter developed for the display, transmission, interception and
reproduction of visual images and/or sound, accessories and/or component parts
such as headphones, jacks and wires; video and computer game hardware and
software; musical instruments and synthesizers; sheet music and music books;
tickets for entertainment events; and other entertainment and related products
sold in substantially all of Tenant’s stores operated under the same trade name
used by Tenant for its business operations in the Leased Premises.  In addition, Tenant shall be permitted to
display and sell, at retail, audio/video equipment including but not limited to
tape players, compact disc players and stereos provided, that, said audio/video
equipment is sold in substantially all of Tenant’s other stores operated under
the same trade name used by Tenant for its business operations in the Leased
Premises; and


 


(c)   the
display and sale at retail of related products including, but not limited to,
computer hardware, software, wireless phones, soft drink coolers, posters,
pictures, buttons, stickers, books, magazines, stationary, cards, games, note
pads, stuffed animals, decorated wearing apparel, costume jewelry, sunglasses,
key rings and lighters provided that the related products are associated with
the records, tapes, discs and video recordings sold or rented from the Leased
Premises; and any legal use not prohibited.


 


12