November 27, 2012
Trans World
Entertainment Corporation, as Lead Borrower
38 Corporate Circle
Albany, New York 12203
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Re:
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Specified Real Estate Sale and Specified Restricted Payment (each as
defined below) – Trans World Entertainment Corporation, et al
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Ladies and
Gentlemen:
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,
Trans World Entertainment Corporation, Record Town, Inc. (“Record Town”),
Record Town USA, LLC, Trans World New York, LLC, Trans World Florida, LLC,
Movies Plus, Inc. and Record Town Utah, LLC (each such Person, individually a “Borrower”
and collectively the “Borrowers”), Media Logic, USA, LLC, (individually
a “Facility Guarantor” and collectively with any other Person now or
hereafter party thereto as a Facility Guarantor, the “Facility Guarantors”)
(the Borrowers and the Facility Guarantors are hereinafter referred to as the “Loan
Parties”), the Lenders party thereto from time to time, and Wells Fargo
Bank, National Association (as successor to Bank of America, N.A.), as
Administrative Agent and Collateral Agent (in such capacities, the “Agent”),
Swingline Lender and Issuing Bank. Capitalized terms used herein but not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement.
The Lead
Borrower has advised the Administrative Agent that (i) Record Town desires to
sell the South Beach Real Estate to 501 Collins Owner, LLC for consideration equal to
$30,000,000 in cash (the “Specified Real Estate Sale”), and (ii) the
Lead Borrower desires to make a Restricted Payment to its shareholders in the
amount of $15,000,000 (the “Specified Restricted Payment”), utilizing
$5,000,000 consisting of cash on hand and $10,000,000 constituting proceeds of
the Specified Real Estate Sale. Section 6.05(k) of the Credit Agreement permits
the sale of the South Beach Real Estate so long as, among other things, all
Cash Receipts received by the Loan Parties as consideration therefor are
transferred to the Concentration Account in accordance with Section 2.21(c) of
the Credit Agreement. Section 6.06(a) of the Credit Agreement prohibits the making
of Restricted Payments except to the extent constituting Permitted Dividends.
Absent the consent of the Required Lenders, (i) the Lead Borrower’s use of a
portion of the proceeds of the Specified Real Estate Sale to make the Specified
Restricted Payment would constitute an Event of Default under Section 7.01(d)
as a result of a violation of Section 6.05(k) of the Credit Agreement, and (ii)
the making of the Specified Restricted Payment would constitute an Event of
Default under Section 7.01(d) as a result of a violation of Section 6.06(a) of
the Credit Agreement. Accordingly, the Lead Borrower has requested that the
Administrative Agent and the Lenders consent to the making of the Specified
Restricted Payment and to the use of $10,000,000 of proceeds of the Specified
Real Estate Sale as a portion of the Specified Restricted Payment (the
foregoing, collectively, the “Specified Transactions”) notwithstanding
the requirements and restrictions set forth in Section 6.05(k) and 6.06(a) of
the Credit
Trans World
Entertainment Corporation, as Lead Borrower
November 27, 2012
Page 2
Agreement. The Administrative Agent and the Lenders have agreed to
provide such consent, subject to the terms and conditions hereof.
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Accordingly, the parties hereto hereby agree as follows:
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1.
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Consent.
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a.
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Subject to the terms and conditions of this letter agreement (this “Letter
Agreement”), the Administrative Agent and the Lenders hereby consent to
the Specified Transactions; provided that such consent shall be
rescinded and of no further force and effect if the Specified Transactions
have not occurred on or before December 31, 2012. The consent provided herein
shall in no way constitute a modification or waiver of any other obligations
of the Loan Parties under the Credit Agreement or any other Loan Documents,
each of which remains in full force and effect. It is hereby agreed to and
understood by the parties that this consent is a one-time consent related to
the making of the Specified Restricted Payment made with $10,000,000 in
proceeds of the Specified Real Estate Sale only and is not an amendment to
the Credit Agreement with respect to any other requirements or restrictions
on asset sales, Restricted Payments or applications of proceeds received by
the Loan Parties on any other occasion, nor is it a waiver of any Default or
Event of Default now existing or hereafter arising under the Credit
Agreement.
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b.
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Notwithstanding the foregoing, prior to the making of the Specified
Restricted Payment, each of the following conditions shall be satisfied:
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i.
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no Default or Event of
Default then exists or would arise as a result of the making of
the Specified Restricted Payment other than as a result of a violation of
Section 6.06(a) of the Credit Agreement as described above,
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ii.
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(x) at no time during the six (6) month period ending on the date of
the Specified Restricted Payment shall there have been any Borrowings, and
(y) after
giving effect to the making of the Specified Restricted Payment, 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,
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iii.
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the Specified Restricted Payment shall be made in cash utilizing the
Loan Parties’ cash on hand not consisting of Eligible Cash on Hand and not
from proceeds of any Borrowings under the Credit Agreement,
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iv.
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the Administrative Agent shall have received evidence of satisfaction of the
conditions contained in clauses (ii) and
(iii) above on a basis
(including, without limitation, giving due consideration to results for prior
periods) reasonably satisfactory to the Administrative Agent,
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Trans World Entertainment
Corporation, as Lead Borrower
November 27, 2012
Page 3
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v.
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the Administrative Agent shall have received duly executed copies of
any purchase and sale agreements and settlement statements with respect to
the Specified Real Estate Sale, which shall provide that the Loan Parties
shall receive consideration of not less than $30,000,000 for the South Beach
Real Estate,
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vi.
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the Borrowers shall have transferred the net cash proceeds received
on account of the Specified Real Estate Sale in excess of $10,000,000 to the
Concentration Account in accordance with Section 2.21(c) of the Credit
Agreement.
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c.
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The Loan Parties hereby acknowledge that notwithstanding the
provisions of Section 6.06(a) to the contrary, during the remainder of the
Fiscal Year ending February 2, 2013, the Loan Parties shall not make any
Restricted Payments (including, without limitation, any Permitted Dividend
described in clause (d) of the definition of such term) other than the
Specified Restricted Payment.
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2.
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Miscellaneous.
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a.
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The Loan Parties represent and warrant that, after giving effect to
this Letter Agreement, no Default or Event of Default now exists and is
continuing.
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b.
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Except as expressly waived or modified herein, all other terms and
conditions of the Credit Agreement and the other Loan Documents remain in
full force and effect. This Letter Agreement shall constitute a Loan Document
for all purposes.
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c.
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This Letter Agreement and the other Loan Documents constitute the
entire contract among the parties relating to the subject matter hereof and
supersede any and all contemporaneous or previous agreements and
understandings, oral or written, relating to the subject matter hereof.
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d.
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This Letter Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall constitute
an original, but all of which when taken together shall constitute a single
contract. Delivery of an executed counterpart of a signature page of this
Letter Agreement by telecopy or other electronic transmission shall be
effective as delivery of a manually executed counterpart of this Letter
Agreement.
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e.
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Any provision of this Letter Agreement 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.
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Trans World Entertainment
Corporation, as Lead Borrower
November 27, 2012
Page 4
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f.
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The Loan Parties represent and warrant that they have consulted with
independent legal counsel of their selection in connection with this Letter
Agreement 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 Letter Agreement.
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g.
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This Letter Agreement 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.
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[SIGNATURE PAGES FOLLOW]
Trans World
Entertainment Corporation, as Lead Borrower
November 27, 2012
Page 5
If
the foregoing correctly sets forth our understanding, please indicate your
agreement by signing below.
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Very truly
yours,
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WELLS FARGO
BANK, NATIONAL
ASSOCIATION, as Administrative Agent,
Collateral Agent, and a
Lender
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By:
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/s/ Peter Foley
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Name:
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Peter Foley
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Title:
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Authorized Signatory
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Trans World
Entertainment Corporation, as Lead Borrower
November 27, 2012
Page 6
The foregoing
is acknowledged, agreed and accepted:
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TRANS WORLD
ENTERTAINMENT
CORPORATION, as Lead Borrower and as
a Borrower |
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By: |
/s/ Edwin Sapienza |
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Name: |
Edwin Sapienza |
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Title: |
Corporate Secretary |
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RECORD TOWN,
INC., as a Borrower |
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By: |
/s/ Edwin Sapienza |
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Name: |
Edwin Sapienza |
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Title: |
Corporate Secretary |
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RECORD TOWN
USA, LLC, as a Borrower |
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By: |
/s/ Edwin Sapienza |
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Name: |
Edwin Sapienza |
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Title: |
Corporate Secretary |
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TRANS WORLD
NEW YORK, LLC, as a Borrower |
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By: |
/s/ Edwin Sapienza |
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Name: |
Edwin Sapienza |
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Title: |
Corporate Secretary |
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TRANS WORLD
FLORIDA, LLC, as a Borrower |
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By: |
/s/ Edwin Sapienza |
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Name: |
Edwin Sapienza |
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Title: |
Corporate Secretary |
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Trans World
Entertainment Corporation, as Lead Borrower
November 27, 2012
Page 7
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MOVIES PLUS,
INC., as a Borrower |
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By: |
/s/ Edwin Sapienza |
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Name: |
Edwin Sapienza |
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Title: |
Corporate Secretary |
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RECORD TOWN
UTAH, LLC, as a Borrower |
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By: |
/s/ Edwin Sapienza |
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Name: |
Edwin Sapienza |
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Title: |
Corporate Secretary |
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MEDIA LOGIC
USA, LLC, as a Facility Guarantor |
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By: |
Record Town,
Inc., its sole member |
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By: |
/s/ Edwin Sapienza |
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Name: |
Edwin Sapienza |
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Title: |
Corporate Secretary |
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Signature Page to Letter Agreement
regarding
Specified Real Estate Sale and Specified Restricted Payment
