Document:

Exhibit 10.5

SEVERANCE AGREEMENT

          SEVERANCE
AGREEMENT (this “Agreement”), dated as of March 7, 2012 (the “Effective
Date”), by and between TheStreet, Inc., a Delaware corporation (the “Company”
or “TheStreet”), and Elisabeth E. DeMarse (“DeMarse” and together
with the Company, each a “Party” and collectively the “Parties”).

                    WHEREAS,
the Company desires that DeMarse enter into this Agreement, and DeMarse desires
to enter into this Agreement, on the terms and conditions set forth herein;

                    WHEREAS,
the Company granted DeMarse stock options pursuant to two stock option
agreements, each dated as of March 7, 2012 (collectively, the “Option
Agreements”);

                    WHEREAS,
DeMarse agreed to be bound by certain restrictive covenants in the Option
Agreements; and

          NOW
THEREFORE, the parties hereto agree as follows:

          Section
1. Severance Benefits.

          (a)
General Severance. In the event that the Company (or Successor (as
defined below), if applicable) terminates DeMarse’s employment with the Company
(or Successor, if applicable) without Cause (as defined in the Option
Agreements), on or before the fifth (5th) anniversary of the
Effective Date (the date of such termination, the “Termination Date”),
then:

	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 the Company
 (or Successor, if applicable) shall (A) pay DeMarse an amount equal to twelve
 (12) months of DeMarse’s base salary (at the annual rate in effect
 immediately prior to termination, but in no event less DeMarse’s original annual
 rate of $400,000); and (B) pay on DeMarse’s behalf (for a period of eighteen
 (18) months or such lesser period as DeMarse may elect) the full cost of
 premiums for continuation of any benefits that DeMarse is eligible under
 COBRA to elect to (and does elect to) continue (unless doing so would violate
 any anti-discrimination provision or other legal requirement applicable to
 the Company or to any of the Company’s health plans, in which event the
 Company and you shall agree in good faith on the terms of an alternative
 arrangement pursuant to which the Company would provide you with
 substantially similar economic value); and

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 for purposes
 of determining the number of vested (and, in the case of stock options and
 stock appreciation rights, exercisable) shares of restricted stock,
 restricted stock units, stock options, stock appreciation rights or other
 stock-based awards under each stock-based award agreement outstanding on the
 Termination Date between the Parties (the “Stock-Based Award Agreements”),
 (X) DeMarse shall be treated on the Termination Date as if her full-time
 employment with the Company had continued through the first (1st)
 anniversary of the Termination Date (the “First Anniversary”) and been
 terminated by the Company without Cause (as defined in each Stock-Based Award
 Agreement for the purposes of such agreement) immediately thereafter and (Y)
 the vesting of any shares of restricted stock, restricted stock units, stock
 options, stock appreciation rights or other stock-based awards under the
 Stock-Based Award Agreements that would not have vested (or, in the case of
 stock options and stock appreciation rights, become exercisable) had DeMarse
 remained in employment through the First Anniversary shall be suspended and
 such shares of restricted stock, restricted stock units, stock options, stock
 appreciation rights or other stock-based awards shall be automatically
 forfeited and expire on the six (6) month anniversary of the Termination Date
 (the “Six-Month Anniversary”) unless a definitive agreement, tender
 offer or a letter of intent respecting a Change of Control (as defined in the
 Company’s 2007 Performance Incentive Plan) transaction involving the Company
 (a “Change of Control Agreement”) is entered into or received (as the
 case may be) by the Company subsequent to the date of this Agreement but 

 

57

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 prior to the
 Six-Month Anniversary, in which case such shares of restricted stock,
 restricted stock units, stock options, stock appreciation rights or other
 stock-based awards shall be automatically forfeited and expire on the First
 Anniversary unless a Change of Control as contemplated by the Change in
 Control Agreement is consummated by the First Anniversary in which case such
 shares of restricted stock, restricted stock units, stock options, stock
 appreciation rights or other stock-based awards shall immediately vest (and
 in the case of stock options or stock appreciation rights become immediately
 exercisable) upon the consummation of the Change of Control. Nothing
 contained herein is intended to adversely affect any of DeMarse’s rights
 under the Stock-Based Award Agreements.

 

For purposes
of this Agreement, “Successor” shall mean any person or entity that
acquires all or substantially all of the Company’s assets or into which the Company
is merged or combined with the Company ceasing to exist (or the successor to
any such entity, whether by merger, assignment or otherwise).

          (b)
Payment of Benefits. If DeMarse becomes entitled to a payment under
Section 1(a)(i)(A), the Company (or Successor, if applicable) shall pay DeMarse
the applicable amount in a lump sum within thirty (30) days of DeMarse’s
becoming entitled to such payment.

          Section
2. Parachute Payment Limitation.

          Anything
in this Agreement or the Option Agreements to the contrary notwithstanding, in
the event that:

          (a)
the aggregate payments or benefits to be made or distributed by the Company or
its affiliates to or for the benefit of DeMarse (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise) which are deemed to be parachute payments as defined in Internal
Revenue Code (“Code”) Section 280G or any successor thereto (the “Change
of Control Benefits”) would be deemed to include an “excess parachute
payment” under Code Section 280G; and

          
(b) if such Change of Control Benefits were reduced to an amount (the “Non-Triggering
Amount”), the value of which is one dollar ($1.00) less than an amount
equal to three (3) times DeMarse’s “base amount,” as determined in accordance
with Code Section 280G and the Non-Triggering Amount less the product of the
marginal rate of any applicable state and federal income tax times the
Non-Triggering Amount would be greater than the aggregate value of the Change
of Control Benefits (without such reduction) minus (x) the amount of tax
required to be paid by DeMarse thereon by Code Section 4999 and further minus
(y) the product of the Change of Control Benefits times the marginal rate of
any applicable state and federal income tax, then the Change of Control
Benefits shall be reduced to the Non-Triggering Amount. Any reduction made
pursuant to this Section 2(b) shall be made in accordance with the following
order of priority: (i) stock options whose exercise price exceeds the fair
market value of the optioned stock (“Underwater Options”), (ii) Full Credit
Payments (as defined below) that are payable in cash, (iii) non-cash Full
Credit Payments that are taxable, (iv) non-cash Full Credit Payments that are
not taxable, (v) Partial Credit Payments (as defined below) and (vi) non-cash
employee welfare benefits. In each case, reductions shall be made in reverse
chronological order such that the payment or benefit owed on the latest date
following the occurrence of the event triggering the excise tax will be the
first payment or benefit to be reduced (with reductions made pro-rata in the
event payments or benefits are owed at the same time). “Full Credit Payment”
means a payment, distribution or benefit, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, that if reduced in value by one dollar reduces the amount of the
parachute payment (as defined in Code Section 280G) by one dollar, determined
as if such payment, distribution or benefit had been paid or distributed on the
date of the event triggering the excise tax. “Partial Credit Payment” means any
payment, distribution or benefit that is not a Full Credit Payment. In no event
shall DeMarse have any discretion with respect to the ordering of payment
reductions.

58

          Section
3. Certain Covenants.

          In
partial consideration for the right to receive the benefits described in
Section 1, DeMarse agrees as follows. For avoidance of doubt, the covenants set
forth below are independent of the covenants set forth in the Option Agreements
and any covenants that may be set forth in any subsequent written agreements
between the Parties:

          (a)
Non-competition. During her employment by the Company or any subsidiary
and through the end of one (1) year after the cessation of her employment with
the Company or any subsidiary, DeMarse will not engage in a Competitive
Activity (as defined below) with the Company or any of its subsidiaries. As used
herein, “Competitive Activity” means DeMarse’s service as a director,
officer, employee, principal, agent, stockholder, member, owner or partner of,
or DeMarse permitting her name to be used in connection with the activities of,
any other business or organization anywhere in the United States, or in any
other geographic area in which the Company or any of its subsidiaries operates
or with respect to which the Company provides financial news and commentary
coverage (or from which such other business or organization provides financial
news and commentary coverage of the United States), which engages in a business
that competes with any business in which the Company or any subsidiary is
engaged (a “Competing Business”); provided, however, that,
notwithstanding the foregoing, it shall not be a Competitive Activity for
DeMarse to (i) become the registered or beneficial owner of up to three percent
(3%) of any class of capital stock of a competing corporation registered under
the Securities Exchange Act of 1934, as amended, provided that DeMarse does not
otherwise participate in the business of such corporation or (ii) work in a
non-competitive business of a company which is carrying on a Competing
Business, the revenues of which represent less than twenty percent (20%) of the
consolidated revenues of that company, or, as a result thereof, owning
compensatory equity in that company.

          (b)
Non-solicitation of Employees. During her employment by the Company or
any subsidiary and through the end of one (1) year after the cessation of her
employment with the Company or any subsidiary, DeMarse will not solicit for
employment or hire, in any business enterprise or activity, any employee of the
Company or any subsidiary who was employed by the Company or a subsidiary
during DeMarse’s period of employment by the Company or a subsidiary; provided
that (a) the foregoing shall not be violated by any general advertising not
targeted at any Company or subsidiary employees nor by DeMarse serving as a
reference upon request, and (b) DeMarse may solicit and hire any one or more
former employees of the Company or its subsidiaries who had ceased being such
an employee for a period of at least six (6) months prior to any such
solicitation or hiring.

          (c)
Non-solicitation of Clients and Vendors. During her employment by the
Company or any subsidiary and through the end of one (1) year after the
cessation of her employment with the Company or any subsidiary, DeMarse will
not solicit, in any business enterprise or activity, any client, customer,
licensee, licensor, third-party service provider or vendor (a “Business
Relation”) of the Company or any subsidiary who was a Business Relation of
the Company or any subsidiary during DeMarse’s period of employment by the
Company or any subsidiary to (i) cease being a Business Relation of the Company
or any subsidiary or (ii) become a Business Relation of a Competing Business
unless (without you having solicited such third party to cease such
relationship) such third party ceased being a Business Relation of the Company
or any subsidiary for a period of at least six (6) months prior to such
solicitation.

          (d)
The parties acknowledge that the restrictions contained in this Section 3 are a
reasonable and necessary protection of the immediate interests of the Company,
and any violation of these restrictions could cause substantial injury to the
Company and that the Company would not have entered into this Agreement,
without receiving the additional consideration offered by DeMarse in binding
herself to these restrictions. In the event of a breach or threatened breach by
DeMarse of any of these restrictions, the Company shall be entitled to apply to
any court of competent jurisdiction for an injunction restraining DeMarse from
such breach or threatened breach; provided, however, that the right to apply
for an injunction shall not be construed as prohibiting the Company from
pursuing any other available remedies for such breach or threatened breach.

59

          Section
4. Notices.

          Unless
otherwise provided herein, any notice, exercise of rights or other
communication required or permitted to be given hereunder shall be in writing
and shall be given by overnight delivery service such as Federal Express or
personal delivery against receipt, or mailed by registered or certified mail
(return receipt requested), to the party to whom it is given at, in the case of
the Company, Compensation Committee Chair, TheStreet, Inc., 14 Wall Street, 15th
Floor, New York, NY 10005, or, in the case of DeMarse, at her principal
residence address as then reflected on the records of the Company or such other
address as such party may hereafter specify by notice to the other party
hereto. Any notice or other communication shall be deemed to have been given as
of the date so personally delivered or transmitted by telecopy or like
transmission or on the next business day after sent by overnight delivery
service for next business day delivery or on the fifth business day after sent
by registered or certified mail.

          Section
5. Representations.

          The
Company hereby represents and warrants that the execution and delivery of this
Agreement and the performance by the Company of its obligations hereunder have
been duly authorized by all necessary corporate action of the Company.

          Section
6. Amendment.

          This
Agreement may be amended only by a written agreement signed by the parties
hereto.

          Section
7. Binding Effect.

          The
rights and duties under this Agreement are not assignable by DeMarse other than
as a result of her death. None of DeMarse’s rights under this Agreement shall
be subject to any encumbrances or the claims of DeMarse’s creditors. This
Agreement shall be binding upon and inure to the benefit of the Company and any
successor organization which shall succeed to the Company by merger or
consolidation or operation of law, or by acquisition of all or substantially
all of the assets of the Company.

          Section
8. Governing Law.

          This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York applicable to contracts to be performed wholly
within the state and without regard to its conflict of laws provisions that
would defer to the laws of another jurisdiction.

          Section
9. Severability.

          If
any provision of this Agreement shall for any reason be held invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions hereof shall not be affected or impaired thereby. Moreover, if any
one or more of the provisions of this Agreement shall be held to be excessively
broad as to duration, activity or subject, such provisions shall be construed
by limiting and reducing them so as to be enforceable to the maximum extent
allowable by applicable law. To the extent permitted by applicable law, each
party hereto waives any provision of law that renders any provision of this
Agreement invalid, illegal or unenforceable in any way.

          Section
10. Execution in Counterparts.

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

60

          Section
11. Entire Agreement.

          This
Agreement, together with the Option Agreements, sets forth the entire
agreement, and supersedes all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof and
thereof.

          Section
12. Titles and Headings.

          Titles
and headings to Sections herein are for purposes of reference only, and shall
in no way limit, define or otherwise affect the meaning or interpretation of
any of the provisions of this Agreement. 

          Section
13. Consent to Jurisdiction.

          The
parties hereto each hereby irrevocably submit to the exclusive jurisdiction of
any New York State or Federal court sitting in the Borough of Manhattan, City
of New York in any action or proceeding to enforce the provisions of this
Agreement, and waives the defense of inconvenient forum to the maintenance of
any such action or proceeding.

          Section
14. No Duty to Mitigate.

          DeMarse
shall have no duty to mitigate or have any off-set made against amounts payable
by the Company to DeMarse hereunder. 

          Section
15. Release.

          As
a condition to the obligation of the Company to make the payments provided for
in this Agreement and otherwise perform its obligations hereunder to DeMarse
upon termination of DeMarse’s employment (other than due to her death), DeMarse
or her legal representatives shall deliver to the Company a written release,
substantially in the form attached hereto as Exhibit A, and the time for
revocation of such release shall have expired, no later than thirty (30) days
following termination of DeMarse’s employment; provided, however, that such
release shall be enforceable only if the Company executes such release (for
avoidance of doubt, DeMarse’s time to revoke her signature shall be seven (7)
days from the date she executes the release, regardless of the timing of the
Company’s execution of the release).

          Section
16. Section 409A.

          (a)
Notwithstanding anything to the contrary in this Agreement, no severance pay or
benefits to be paid or provided to DeMarse, if any, pursuant to this Agreement
that, when considered together with any other severance payments or separation
benefits, are considered deferred compensation not exempt under Section 409A
(together, the “Deferred Payments”) will be paid or otherwise provided until
DeMarse has a “separation from service” within the meaning of Section 409A.
Similarly, no severance payable to DeMarse, if any, pursuant to this Agreement
that otherwise would be exempt from Section 409A pursuant to Treasury
Regulation Section 1.409A-1(b)(9) will be payable until DeMarse has a
“separation from service” within the meaning of Section 409A. For purposes of
this Agreement, “Section 409A” means Section 409A of the Internal Revenue Code
of 1986, as amended or any regulations or Treasury guidance promulgated
thereunder (“Section 409A”).

          (b)
Notwithstanding any provision of this Agreement to the contrary, if DeMarse is
a “specified employee” as determined by the Board or the Compensation Committee
of the Board in accordance with Section 409A, DeMarse shall not be entitled to
any Deferred Payments until the earlier of (i) the date which is six (6) months
and one (1) day after her termination of employment for any reason other than
death (except that during such six (6) month period DeMarse may receive total
payments from the Company that do not exceed the amount specified in Treas.
Reg. Section 1.409A-1(b)(9) or that constitute a short-term deferral within the
meaning of Section 409A), or (ii) the date of her death. 

61

          (c)
The foregoing provisions are intended to be exempt from or comply with the
requirements of Section 409A so that none of the severance payments and
benefits to be provided hereunder will be subject to the additional tax imposed
under Section 409A, and any ambiguities or ambiguous terms herein will be
interpreted to be exempt or so comply. If any provision of this Agreement or of
any award of compensation, including equity compensation or benefits would
cause DeMarse to incur any additional tax or interest under Section 409A, the
parties agree to negotiate in good faith to reform such provision in such
manner as to maintain, to the maximum extent practicable, the original intent
and economic terms of the applicable provision without violating the provisions
of Section 409A. 

          (d)
To the extent that reimbursements or in-kind benefits under this Agreement
constitute non-exempt “nonqualified deferred compensation” for purposes of
Section 409A, (1) all reimbursements hereunder shall be made on or prior
to the last day of the calendar year following the calendar year in which the
expense was incurred by DeMarse, (2) any right to reimbursement or in-kind
benefits shall not be subject to liquidation or exchange for another benefit,
and (3) the amount of expenses eligible for reimbursement or in-kind benefits
provided in any calendar year shall not in any way affect the expenses eligible
for reimbursement or in-kind benefits to be provided, in any other calendar
year.

          (e)
Notwithstanding any provision of this Agreement to the contrary, to the extent
any compensation or award which constitutes deferred compensation within the
meaning of Section 409A shall vest upon the occurrence of a Change of Control
and such Change of Control does not constitute a “change in the ownership or
effective control” or a “change in the ownership of a substantial portion of
the assets” of the Corporation within the meaning of Section 409A, then
notwithstanding such vesting, payment will be made to DeMarse on the earliest
of (i) DeMarse’s “separation from service” with the Company (determined in
accordance with Section 409A) or, if DeMarse is a specified employee
within the meaning of Section 409A, such later date as provided in paragraph
(b) of this Section 16, (ii) the date payment otherwise would have been
made, or (iii) DeMarse’s death.

          IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of March 7,
2012.

	
  

 	
  

 	
  

 
	
 /s/
 Elisabeth DeMarse

 	
  

 
	

 

 	
  

 
	
 Elisabeth
 DeMarse

 	
  

 
	
  

 	
  

 	
  

 
	
 THESTREET,
 INC. 

 

	
  

 	
  

 	
  

 
	
 By:

 	
 /s/ William
 R. Gruver

 	
  

 
	
  

 	

 

 	
  

 
	
 Name:
 William R. Gruver

 	
  

 
	
 Title:
 Chairman, Compensation Committee

 

62

EXHIBIT A

Form of Release

This Release
(this “Release”) is entered into by Elisabeth E. DeMarse (“DeMarse”) and
TheStreet, Inc., a Delaware corporation (the “Company”), effective as of
[DATE] (the “Effective Date”).

In
consideration of the promises set forth in the Severance Agreement between
DeMarse and the Company, dated as of March 7, 2012 (the “Agreement”),
DeMarse and the Company agree as follows:

          1.
General Releases and Waivers of Claims.

                    (a)
DeMarse’s Release of Company. In consideration of the payments and
benefits provided to DeMarse under the Agreement and after consultation with
counsel, DeMarse on behalf of herself and each of her respective heirs,
executors, administrators, representatives, agents, successors and assigns
(collectively, the “DeMarse Parties”) hereby irrevocably and
unconditionally release and forever discharge the Company and its current and
former subsidiaries and affiliates and each of their respective current and
former officers, employees, directors, shareholders and agents (“Company
Parties”) from any and all claims, actions, causes of action, rights,
judgments, fees and costs (including attorneys’ fees), obligations, damages,
demands, accountings or liabilities of whatever kind or character
(collectively, “Claims”), including, without limitation, any Claims
based upon contract, tort, or under any federal, state, local or foreign law,
that the DeMarse Parties may have, or in the future may possess, arising out of
any aspect of DeMarse’s employment relationship with and service as an
employee, officer, director or agent of the Company, or the termination of such
relationship or service, that occurred, existed or arose on or prior to the
date hereof; provided, however, that DeMarse does not release, discharge or
waive (i) any rights to payments and benefits provided under the Agreement,
(ii) any right DeMarse may have to enforce this Release or the Agreement, (iii)
DeMarse’s eligibility for indemnification in accordance with the Company’s
certificate of incorporation, bylaws or other corporate governance document,
any applicable insurance policy or any contract or provision to which DeMarse
is a party or as to which DeMarse otherwise is entitled to indemnification
benefits, with respect to any liability she incurred or might incur as an
employee, officer or director of the Company, (iv) any claims for accrued,
vested benefits under any employee benefit or pension plan of the Company
Parties subject to the terms and conditions of such plan and applicable law
including, without limitation, any such claims under COBRA or the Employee
Retirement Income Security Act of 1974, or (v) any rights under or in respect
of the Agreement for Grant of Non-Qualified Stock Options between DeMarse and
the Company, dated as of March 7, 2012 (the “Non-Qualified Option
Agreement”), the Agreement for Grant of Incentive Stock Option Pursuant to
2007 Performance Incentive Plan between DeMarse and the Company, dated as of
March 7, 2012 (the “Incentive Option Agreement” and together with the
Non-Qualified Option Agreement, the “Option Agreements”) or any written
agreements that may be executed by the parties after the date of the Option
Agreements (collectively, the “Applicable Agreements”).

                    (b)
Executive’s Specific Release of ADEA Claims. In further consideration of
the payments and benefits provided to DeMarse under the Agreement, DeMarse on
behalf of herself and the other DeMarse Parties hereby unconditionally release
and forever discharge the Company Parties from any and all Claims that the
DeMarse Parties may have as of the date DeMarse signs this Release arising
under the Federal Age Discrimination in Employment Act of 1967, as amended, and
the applicable rules and regulations promulgated thereunder (“ADEA”). By
signing this Release, DeMarse hereby acknowledges and confirms the following:
(i) DeMarse was advised by the Company in connection with her termination
to consult with an attorney of her choice prior to signing this Release and to
have such attorney explain to her the terms of this Release, including, without
limitation, the terms relating to her release of claims arising under ADEA, and
DeMarse has in fact consulted with an attorney; (ii) DeMarse was given a
period of not fewer than twenty-one (21) days to consider the terms of this
Release and to consult with an attorney of her choosing with respect thereto;
and (iii) DeMarse knowingly and voluntarily accepts the terms of this
Release. DeMarse also understands that she has seven (7) days following
the date on which she signs this Release within which to revoke the release
contained in this paragraph, by providing the Company a written notice of her
revocation of the release and waiver contained in this paragraph.

63

                    (c)
Company’s Release of Executive. The Company for itself and on behalf of
the Company Parties hereby irrevocably and unconditionally release and forever
discharge the DeMarse Parties from any and all Claims, including, without
limitation, any Claims based upon contract, tort, or under any federal, state,
local or foreign law, that the Company Parties may have, or in the future may
possess, arising out of any aspect of DeMarse’s employment relationship with
and service as an employee, officer, director or agent of the Company, or the
termination of such relationship or service, that occurred, existed or arose on
or prior to the date hereof, excepting (i) any Claim which would constitute or
result from conduct by DeMarse that constituted the basis for termination for
Cause under the Agreement or could be a crime of any kind, or (ii) rights
arising under or in respect of the Option Agreements. Anything to the contrary
notwithstanding in this Release, nothing herein shall release DeMarse or any
other DeMarse Party from any Claims based on any right the Company may have to
enforce this Release or the Agreement or any of the Applicable Agreements. 

                    (d)
No Assignment. The parties represent and warrant that they have not
assigned any of the Claims being released under this Release.

          2.
Proceedings. Neither DeMarse nor the Company have filed any complaint,
charge, claim or proceeding against the other party before any local, state or
federal agency, court or other body relating to DeMarse’s employment or the
termination thereof (each, individually, a “Proceeding”).

          3.
Remedies. 

                    (a)
In the event DeMarse initiates or voluntarily participates in any Proceeding
involving any of the matters waived or released in this Release, or if she
fails to abide by any of the terms of this Release, or if she revokes the ADEA
release contained in Paragraph 1(b) of this Release within the seven
(7)-day period provided under Paragraph 1(b), the Company may, in addition
to any other remedies it may have, reclaim any amounts paid to her, and
terminate any benefits or payments that are due pursuant to the termination
provisions of the Agreement, without waiving the release granted herein. In
addition, in the event that DeMarse has failed to comply with Section 3 of the
Agreement or with Sections 11 and/or 12 of either or both of the Option Agreements
(other than as a result of an unintentional and immaterial disclosure of
confidential information), the Company may, in addition to any other remedies
it may have, to the extent permitted in the Agreement and the Option Agreements
reclaim any amounts paid to her pursuant to the Agreement or the Option
Agreements, without waiving the release granted herein. DeMarse acknowledges
and agrees that the remedy at law available to the Company for breach of any of
her post-termination obligations under the Agreement or any of the Applicable
Agreements or her obligations hereunder or thereunder would be inadequate and
that damages flowing from such a breach may not readily be susceptible to being
measured in monetary terms. Accordingly, DeMarse acknowledges, consents and
agrees that, in addition to any other rights or remedies that the Company may
have at law or in equity, the Company shall be entitled to seek a temporary
restraining order or a preliminary or permanent injunction, or both, without
bond or other security, restraining DeMarse from breaching her post-termination
obligations under the Agreement or any of the Applicable Agreements or her
obligations hereunder or thereunder. Such injunctive relief in any court shall
be available to the Company, in lieu of, or prior to or pending determination
in, any arbitration proceeding.

                    (b)
DeMarse understands that by entering into this Release she will be limiting the
availability of certain remedies that she may have against the Company and
limiting also her ability to pursue certain claims against the Company.

                    (c)
The Company acknowledges and agrees that the remedy at law available to DeMarse
for breach of any of its post-termination obligations under the Agreement or
any of the Applicable Agreements or its obligations hereunder or thereunder
would be inadequate and that damages flowing from such a breach may not readily
be susceptible to being measured in monetary terms. Accordingly, the Company
acknowledges, consents and agrees that, in addition to any other rights or
remedies that DeMarse may have at law or in equity, DeMarse shall be entitled
to seek a temporary restraining order or a preliminary or permanent injunction,
or both, without bond or other security, restraining the Company from breaching
its post-termination obligations under the Agreement or any of the Applicable
Agreements or its obligations hereunder or thereunder. Such injunctive relief
in any court shall be available to DeMarse, in lieu of, or prior to or pending
determination in, any arbitration proceeding.

64

                    (d)
The Company understands that by entering into this Release it will be limiting
the availability of certain remedies that it may have against DeMarse and
limiting also its ability to pursue certain claims against DeMarse.

          4.
Severability Clause. In the event any provision or part of this Release
is found to be invalid or unenforceable, only that particular provision or part
so found, and not the entire Release, will be inoperative.

          5.
Nonadmission. Nothing contained in this Release will be deemed or
construed as an admission of wrongdoing or liability on the part of the Company
or DeMarse.

          6.
Governing Law. All matters affecting this Release, including the
validity thereof, are to be governed by, and interpreted and construed in
accordance with, the laws of the New York applicable to contracts executed in
and to be performed in that State.

          7.
Notices. All notices or communications hereunder shall be made in
accordance with Section 4 of the Agreement.

          DEMARSE
ACKNOWLEDGES THAT SHE HAS READ THIS RELEASE AND THAT SHE FULLY KNOWS,
UNDERSTANDS AND APPRECIATES ITS CONTENTS, AND THAT SHE HEREBY EXECUTES THE SAME
AND MAKES THIS RELEASE AND THE RELEASE AND AGREEMENTS PROVIDED FOR HEREIN
VOLUNTARILY AND OF HER OWN FREE WILL.

          IN
WITNESS WHEREOF, the parties have executed this Release as of _______________. 

	
  

 	
  

 	
  

 	
  

 
	
  

 	

 

 	
  

 
	
  

 	
 Elisabeth
 DeMarse

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 THESTREET,
 INC.

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	

  

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
 Name:

 	

  

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
 Title:

 	

  

 	
  

 
	
  

 	
  

 	

 

 	
  

 

65Exhibit 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 

 

3

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00203-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00203-of-00352.parquet"}]]