Asset Purchase Agreement (2001)Full Document 

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                            ASSET PURCHASE AGREEMENT


                                  By and Among


                     Trans World Entertainment Corporation,


                                 Wax Works, Inc.


                               and Terry Woodward



                                TABLE OF CONTENTS


                                                                         PAGE

1.    Sale and Delivery of the Assets......................................1
       1.1. Delivery of the Assets.........................................1
       1.2. Further Assurances.............................................3
       1.3. Purchase Price.................................................3
       1.4. Assumption of Liabilities; Etc.................................3
       1.5. Allocation of Purchase Price...................................4
       1.6. The Closing....................................................4
       1.7. Apportionment and Adjustments..................................4

2.    Representations of the Seller and the Principal......................7
       2.1. Organization...................................................7
       2.2. Capitalization of the Seller...................................7
       2.3. Authorization..................................................7
       2.4. Ownership of the Assets........................................8
       2.5. Financial Statements...........................................9
       2.6. Absence of Undisclosed Liabilities.............................9
       2.7. Litigation.....................................................9
       2.8. Stores.........................................................9
       2.9. Fixed Assets...................................................9
       2.10.Leases........................................................10
       2.11.Change in Financial Condition and Assets......................10
       2.12.Tax Matters...................................................11
       2.13.Assets Complete...............................................12
       2.14.Books and Records.............................................12
       2.15.Contracts and Commitments.....................................12
       2.16.Compliance with Agreements and Laws...........................13
       2.17.Employee Relations............................................14
       2.18.Absence of Certain Changes or Events..........................14
       2.19.Suppliers.....................................................15
       2.20.Prepayments and Deposits......................................15
       2.21.Trade Names and Other Intangible Property.....................15
       2.22.Employee Benefit Plans........................................16
       2.23.Indebtedness to and from Officers, Directors and
               Shareholders...............................................17
       2.24.Powers of Attorney and Suretyships............................17
       2.25.Disclosure....................................................17
       2.26.Inventory.....................................................17
       2.27.Environmental Matters.........................................17

3.    Representations of the Buyer........................................18
       3.1. Organization and Authority....................................18
       3.2. Authorization.................................................18
       3.3. Regulatory Approvals..........................................19
       3.4. Disclosure....................................................19

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       3.5. Litigation....................................................19
       3.6. Financing.....................................................19

4.    Access to Information; Public Announcements.........................19
       4.1. Access to Management, Properties and Records..................19
       4.2. Confidentiality...............................................20
       4.3. Public Announcements..........................................20

5.    Covenants of the Seller.............................................20
       5.1. Conduct of Business...........................................20
       5.2. Absence of Material Changes...................................20
       5.3. Taxes.........................................................21
       5.4. Delivery of Interim Financial Statements and 2000
               Audited Financial Statements...............................21
       5.5. Compliance with Laws..........................................22
       5.6. Satisfaction of Conditions....................................22
       5.7. Continued Truth of Representations and Warranties of
               the Seller.................................................22
       5.8. Continuing Obligation to Inform...............................22
       5.9. Exclusive Dealing.............................................22
       5.10 Estoppel Certificates.........................................22

6.    Covenants of the Buyer..............................................22
       6.1. Satisfaction of Conditions....................................22
       6.2. Continued Truth of Representations and Warranties of
               the Buyer..................................................22
       6.3. Employees.....................................................23
       6.4. Supply Contract...............................................23
       6.5. Consulting Agreement..........................................23

7.    Conditions to Obligations of the Buyer..............................23
       7.1. Continued Truth of Representations and Warranties of
               the Seller; Compliance with Covenants and
               Obligations................................................24
       7.2. Corporate Proceedings.........................................24
       7.3. Governmental Approvals........................................24
       7.4. Consents of Lenders, Lessors and Other Third Parties..........24
       7.5. Adverse Proceedings...........................................24
       7.6. The Assets....................................................24
       7.7. Cash Available for Working Capital Purposes...................24
       7.8. Closing Deliveries............................................24
       7.9. Section 1445 Certificate......................................25

8.    Conditions to Obligations of the Seller.............................25
       8.1. Continued Truth of Representations and Warranties of
               the Buyer; Compliance with Covenants and
               Obligations................................................25
       8.2. Corporate Proceedings.........................................25
       8.3. Governmental Approvals........................................25
       8.4. Consents of Third Parties.....................................25
       8.5. Adverse Proceedings...........................................25


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9.    Indemnification.....................................................26
       9.1. By the Buyer and the Seller and the Principal.................26
       9.2A By the Seller and the Principal...............................26
       9.2B By the Buyer..................................................26
       9.3. Procedures for Indemnification................................27
       9.4. Payment of Indemnification Obligation.........................28
       9.5. Survival of Representations; Claims for
               Indemnification............................................28
       9.6. Damages and Related Matters...................................28

10.   Post-Closing Agreements.............................................29
       10.1.Proprietary Information.......................................29
       10.2.No Solicitation or Hiring of Former Employees.................29
       10.3.Non-Competition Agreement.....................................29
       10.4.Sharing of Data...............................................30
       10.5.Use of Name...................................................30
       10.6.Cooperation in Litigation.....................................30

11.   Termination of Agreement............................................30
       11.1.Termination by Lapse of Time..................................30
       11.2.Termination by Agreement of the Parties.......................31
       11.3.Termination by Reason of Breach...............................31

12.   Certain Tax Matters.................................................31

13.   Brokers.............................................................31

14.   Notices.............................................................32

15.   Consent to Jurisdiction.............................................32

16.   Successors and Assigns..............................................33

17.   Entire Agreement; Amendments; Attachments; Waivers..................33

18.   Expenses............................................................33

19.   No Third Party Beneficiaries........................................33

20.   Governing Law.......................................................34

21.   Section Headings....................................................34

22.   Severability........................................................34

23.   Counterparts........................................................34

24.   Terms Defined in This Agreement.....................................34


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EXHIBITS

A           -  Lease Assignment
B           -  Video Supply Contract
C           -  Consulting Agreement


SCHEDULES

1.1(a)(iii) -  Opening Cash
1.1(a)(ix)  -  Excluded Intangibles
1.1(b)      -  Excluded Assets
1.5         -  Allocation of Purchase Price
1.7(a)      -  Rent and Tax Adjustment
1.7(b)      -  Inventory Valuation
1.7(d)      -  Cooperative Advertising Adjustment
1.7(e)      -  Provisioning Expenditures
2.3         -  Seller Consents
2.4         -  Encumbrances
2.6         -  Undisclosed Liabilities
2.7         -  Litigation
2.8         -  Stores
2.9         -  Fixed Assets
2.10        -  Leases
2.11        -  Material Changes
2.12        -  Taxes
2.13        -  Missing Assets
2.15        -  Contracts
2.16        -  Permits
2.17        -  Employees
2.18        -  Absence of Changes
2.19        -  Suppliers
2.20        -  Prepayments and Deposits
2.21        -  Intangible Property
2.22        -  Employee Benefit Plans
2.23        -  Indebtedness to and from Affiliates
2.24        -  Powers of Attorney
2.27        -  Environmental
3.2         -  Buyer Consents
5.2         -  Absence of Material Changes
6.3         -  Excluded Employees


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                            ASSET PURCHASE AGREEMENT


      Agreement made as of September 9, 2000 among Trans World Entertainment
Corporation, a New York corporation with its principal office at 38 Corporate
Circle, Albany, NY 12203 (the "BUYER"), Wax Works, Inc., a Kentucky corporation
with its principal office at 325 E. Third Street, Owensboro, Kentucky 42303 (the
"SELLER"), and Terry Woodward, a natural person and the sole stockholder of the
Seller (the "PRINCIPAL").

                              PRELIMINARY STATEMENT

      The Buyer desires to purchase, and the Seller desires to sell,
substantially all of the assets of the Seller which relate to its retail audio
business including the retail stores identified on Schedule 2.8 (the "AUDIO
BUSINESS"), for the consideration set forth below and the assumption of certain
of the Seller's liabilities set forth below, subject to the terms and conditions
of this Agreement.

      NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:

      1.    SALE AND DELIVERY OF THE ASSETS

      1.1.  DELIVERY OF THE ASSETS.

      (a)   Subject to and upon the terms and conditions of this Agreement, at
the closing of the transactions contemplated by this Agreement (the "CLOSING"),
the Seller shall sell, transfer, convey, assign and deliver to the Buyer, and
the Buyer shall purchase from the Seller, the following properties, assets and
other claims, rights and interests (but not including the Excluded Assets, as
defined below):

            (i) all Store inventories and warehouse facility inventories held
      for future sale in the Stores (collectively, the "INVENTORY") on the date
      of the Inventory Count (as defined below) as adjusted pursuant to Section
      1.7(b);

            (ii) all office supplies, maintenance supplies, packaging materials,
      spare parts and similar items of the Seller designated for use in the
      Stores (collectively, the "SUPPLIES");

            (iii) opening cash for each Store in the amounts set forth on
      Schedule 1.1(a)(iii) and deposits relating to the Stores (including the
      deposits described on Schedule 2.20), existing on the Closing Date;

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