Exhibit 4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") by and among Trans
World Entertainment Corporation, a New York corporation (the "COMPANY"), and
the parties listed as stockholders on the signature pages hereof (the
"STOCKHOLDERS" or the "HOLDERS"), dated October 26, 1998. Capitalized terms
used without definition in this Agreement have the meanings ascribed thereto
in the Agreement and Plan of Merger, dated as of October 26, 1998 (the
"MERGER AGREEMENT"), by and among the Company, CAQ Corporation, a Delaware
corporation, and Camelot Music Holdings, Inc., a Delaware corporation.
RECITALS
A. The Company and the Stockholders desire to enter into this
Agreement for the purpose of granting to the Stockholders certain rights
with respect to registering under the Securities Act of 1933, as amended,
shares of common stock, par value $.01 per share, of the Company.
B. Such common stock is being acquired by the Stockholders pursuant
to the transactions (the "TRANSACTIONS") contemplated by the Merger Agreement.
AGREEMENT
In consideration of the recitals, covenants and mutual promises
contained herein, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings:
"ADVICE" shall have the meaning set forth in Section 5 hereof.
"AFFILIATE" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For the purposes of this
definition, "control" when used with respect to any specified person, means
the power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or a
legal holiday on which the Nasdaq National Market is not scheduled to be
open for trading.
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"CAPITAL STOCK" means, with respect to any person, any and all
shares, interests, participations or other equivalents (however designated)
of corporate stock issued by such person, including each class of common
stock and preferred stock of such person.
"COMMON STOCK" means the common stock, par value $0.01 per share, of
the Company.
"COMPANY" shall have the meaning set forth in the heading hereof.
"COMPANY OFFERING" shall have the meaning set forth in Section 2(d)
hereof.
"DEMAND REGISTRATION" shall have the meaning set forth in Section
2(b) hereof.
"EFFECTIVENESS PERIOD" shall have the meaning set forth in Section
2(c) hereof.
"EFFECTIVE TIME" shall have the meaning set forth in the Merger
Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"INTERRUPTION PERIOD" shall have the meaning set forth in Section 5
hereof.
"MINIMUM NUMBER" means that number of Registrable Shares which would
yield $40 million or more in aggregate gross proceeds in any public offering
thereof, which minimum may be waived by the Company in its sole discretion.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PIGGYBACK REGISTRATION" shall have the meaning set forth in Section
3 hereof.
"PROSPECTUS" means the prospectus included in any Registration
Statement (including a prospectus that discloses information previously
omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A) and all other amendments and
supplements to such prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference
in such prospectus.
"REGISTRABLE SHARES" means any Common Stock issued to any Holder
named on the signature pages hereof in the Transactions or any other shares
of capital stock or other securities of the Company into which such shares of
Common Stock shall be reclassified,
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converted, exchanged or changed, including, without limitation, by reason of
a merger, consolidation, subdivision, stock combination, exchange,
reorganization or recapitalization. If the Common Stock has been so
reclassified or changed, or if the Company pays a dividend or makes a
distribution on the Common Stock in shares of capital stock or splits or
subdivides (or combines) its outstanding shares of Common Stock into a
greater (or smaller) number of shares of Common Stock, a share of Common
Stock shall be deemed to be such number of shares of stock and amount of
other securities to which a holder of a share of Common Stock outstanding
immediately prior to such change, conversion, reclassification, exchange,
dividend, distribution, subdivision, split or combination would be entitled.
As to any particular Registrable Shares, once issued such shares shall cease
to be Registrable Shares when (i) a Registration Statement with respect to
the sale of such shares shall have become effective under the Securities Act
and such shares shall have been disposed of in accordance with such
Registration Statement, (ii) (A) they shall have been distributed to the
public pursuant to Rule 145 (or any successor provision) under the Securities
Act or (B) they shall become eligible for sale to the public without volume
or manner of sale restrictions under Rule 145, (iii) they shall have been
otherwise transferred and new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of them shall not require registration or
qualification of them under the Securities Act or any state securities or
blue sky law then in force or (iv) they shall have ceased to be outstanding
or (v) when sold, or otherwise transferred to, any Person who is not a
Holder.
"REGISTRATION" means registration under the Securities Act of an
offering of Registrable Shares pursuant to a Demand Registration.
"REGISTRATION PERIOD" means, as to any Holder, the period beginning
on the date of the Effective Time and ending on the date which is the earlier
of (i) the first anniversary of the date of the Effective Time and (ii) the
date when such Holder no longer owns any Registrable Shares.
"REGISTRATION STATEMENT" means any registration statement of the
Company under the Securities Act that covers any of the Registrable Shares
pursuant to the provisions of this Agreement, including the related
Prospectus, all amendments and supplements to such registration statement,
including pre- and post-effective amendments, all exhibits thereto and all
material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
"SEC" means the Securities and Exchange Commission.
"SECURITIES Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
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"UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" means a
registration under the Securities Act in which securities of the Company are
sold to an underwriter for reoffering to the public.
"WAIVER AND LOCKUP AGREEMENT" means a Waiver and Lockup Agreement
substantially in the form of Annex A hereto, dated as of the date hereof,
duly executed and delivered by the applicable Stockholder.
2. DEMAND REGISTRATION.
(a) Any person designated by the Holders of at least 40% of the
Registrable Shares shall have the right during the Registration Period, by
written notice (the "DEMAND NOTICE") given to the Company, to request the
Company to register under and in accordance with the provisions of the
Securities Act all or any portion of the Registrable Shares designated by
such Holders; PROVIDED that the aggregate number of Registrable Shares
requested to be registered pursuant to any Demand Notice shall be at least
the Minimum Number. Upon receipt of any such Demand Notice, the Company
shall promptly notify all other Holders of the receipt of such Demand Notice
and allow them the opportunity, subject to the other terms of this Section 2,
to include Registrable Shares held by them in the proposed registration by
submitting their own written notice to the Company requesting inclusion of a
specified number of such Holders' Registrable Shares (the "INCLUSION
NOTICE"). The Holders as a group shall be entitled to two Demand
Registrations pursuant to this Section 2; PROVIDED that the Holders may not
give a Demand Notice to the Company (i) during any period in which the
Company shall not be required to File a Registration Statement pursuant to
Section 2(d)(i) or 2(d)(ii), (ii) during any Interruption Period or (iii)
during any Effectiveness Period or during the 90 day period immediately
thereafter. If any such Demand Registration does not become effective or is
not maintained for the period (whether or not continuous) required by Section
2(c), the affected Holders will not be deemed to have exercised a Demand
Registration pursuant hereto. It is agreed that the registration of
Registrable Shares pursuant to an Inclusion Notice shall not be deemed to be
a Demand Registration. Nothing in this Section 2(a) shall limit any rights
pursuant to Section 3 hereof.
(b) Subject to the other terms of this Section 2, the Company,
within 30 days of the date on which the Company receives a Demand Notice
given by Holders in accordance with Section 2(a) hereof, shall file with the
SEC, and the Company shall thereafter use best commercially reasonable
efforts to cause to be declared effective, a Registration Statement on the
appropriate form for the registration and sale of the total number of
Registrable Shares specified by the Holders in such Demand Notice (a "DEMAND
REGISTRATION").
(c) The Company shall use best commercially reasonable efforts to
cause the Registration Statement to be declared effective and to keep each
Registration State-
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ment filed pursuant to this Section 2 continuously effective and usable for
the resale of the Registrable Shares covered thereby for a period of 90 days
from the date on which the SEC declares such Registration Statement effective
; PROVIDED that (x) the Company shall have no further obligation to maintain
the effectiveness or usability of a Registration Statement following the date
all the Registrable Shares covered by such Registration Statement have been
sold pursuant to such Registration Statement, and (y) the Company shall
maintain the effectiveness and usability of a Registration Statement beyond
such 90 day period until such later date as may be extended pursuant to this
Section 2. The period during which the Company shall be obligated to
maintain the effectiveness or usability of a Registration Statement is
referred to herein as the "EFFECTIVENESS PERIOD".
(d) COMPANY'S ABILITY TO POSTPONE.
(i) If, upon receipt of a Demand Notice pursuant to this
Section 2, the Board of Directors of the Company determines in good
faith that a registration at the time and on the terms requested would
adversely affect any public offering of securities of the Company by the
Company (other than in connection with employee benefit and similar
plans) or by or on behalf of any stockholder of the Company exercising a
demand registration right (collectively, a "COMPANY OFFERING") with
respect to which the Company has commenced preparations for a
registration or received notice of the exercise of such demand
registration right prior to the receipt of a Demand Notice and the
Company furnishes the Holders with a certificate signed by the chief
financial officer of the Company to such effect (the "TRANSACTION DELAY
NOTICE") with 5 business days after such Demand Notice, the Company
shall not be required to file a Registration Statement pursuant to this
Section 2 until the earliest of (A) 45 days after the completion of such
Company Offering, (B) promptly after the abandonment of such Company
Offering or (C) 90 days after the date of the Transaction Delay Notice;
PROVIDED that in any event the Company shall not be required to file any
Registration Statement prior to the termination, waiver or reduction of
any "blackout period" or holdback period required by the underwriters to
be applicable to the Holders or the Company, if any, in connection with
any Company Offering or Section 4 hereof.
(ii) If upon receipt of a Demand Notice pursuant to this
Section 2 or while a registration requested pursuant to this Section 2
is pending, the Company determines in its good faith judgment after
consultation with the Company's principal securities counsel that the
filing of a Registration Statement would require disclosure of material
information which the Company has a bona fide business purpose for
preserving as confidential and the Company provides the Holders written
notice (the "INFORMATION DELAY NOTICE" and, together with the
Transaction Delay Notice, the "DELAY NOTICE") thereof promptly after the
Company makes such determination,
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which shall be made with 5 business days after the receipt of any
Demand Notice, the Company shall not be required to comply with its
obligations under this Section 2 until the earlier of (A) the date upon
which such material information is disclosed to the public or ceases to
be material or (B) 90 days after the Holders' receipt of such Delay
Notice.
(iii) Notwithstanding the foregoing provisions of this
Section 2(d), the Company shall be entitled to serve only one Delay
Notice during the Registration Period.
(iv) From any time after the 30th day when a Registration
Statement effected pursuant to this Section 2 relating to Registrable
Shares is effective, and a Prospectus relating thereto is required to be
delivered under the Securities Act in connection therewith, and the
Company becomes aware that the Prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing, to the extent that the amendment or
supplement to such prospectus necessary to correct such untrue
statement of a material fact or omission to state a material fact would
require disclosure of material information which the Company has a bona
fide business purpose for preserving as confidential and the Company
provides the Holders written notice thereof promptly after the Company
makes such determination, the Holders shall suspend sales of
Registrable Shares pursuant to such Registration Statement and the
Company shall not be required to comply with its obligations under
Sections 5(e) or 5(h) hereof until the earlier of (A) the date upon
which such material information is disclosed to the public or ceases to
be material or (B) 30 days after the Holders' receipt of such written
notice. If the Holders' disposition of Registrable Shares is suspended
pursuant to the foregoing sentence, unless the Company thereafter
extends the effectiveness of the Registration Statement to permit
dispositions of Registrable Shares by the Holders for the greater of (i)
an aggregate of 90 days or (ii) an aggregate of the number of days that
the Registration Statement was effective prior to the suspension of
sales of Registrable Shares plus pursuant to this Section 2(d)(iv) plus
30 days (or until such time as all Registrable Shares covered by such
Registration Statement have been sold pursuant thereto), the
Registration Statement shall not be counted for purposes of determining
the number of registrations permitted under Section 2 hereof.
(e) COMPANY AND OTHER HOLDERS. Subject to Section 2(f) hereof, the
Company and other holders of Common Stock may include Common Stock in any
Demand Registration; PROVIDED that Company and such holders of Common Stock
pay a PRO RATA portion of the costs incurred in the preparation and filing of
such Registration Statement based
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upon the number of shares of Common Stock registered pursuant to the
effective Registration Statement.
(f) REVOCATION. Holders of a majority in number of the Registrable
Shares to be included in a Registration Statement pursuant to this Section 2
may, at any time prior to the effective date of the Registration Statement
relating to such Registration, revoke such request by providing a written
notice to the Company revoking such request. The Holders of Registrable
Shares who revoke such request shall reimburse the Company for all its
out-of-pocket expenses incurred in the preparation, filing and processing of
the Registration Statement. In addition, if pursuant to the terms of this
Section 2(f), the Holders reimburse the Company for its out-of-pocket
expenses incurred in the preparation, filing and processing of any
Registration Statement requested and subsequently revoked by such Holder(s),
such Holder(s) registrations shall not count against the maximum number of
Demand Registrations to which the applicable Holder(s) are entitled under
Section 2(a).
(g) PRIORITY ON DEMAND REGISTRATIONS. Notwithstanding any other term
of this Section 2, if (i) a Registration pursuant to this Section 2 involves
an Underwritten Offering and the managing underwriter or underwriters of such
proposed Underwritten Offering advises Company that the number of securities
requested to be included in such Demand Registration exceeds the number which
can be sold in the offering covered by such Demand Registration without a
significant adverse effect on the price, timing or distribution of the
securities offered, then the Company will include in such Registration (A)
first, the number of Registrable Shares which, in the opinion of such
managing underwriter or underwriters, can be sold in the offering without a
significant adverse effect on the price, timing or distribution of the
securities offered, selected PRO RATA among the Holders which have requested
to be included in such Demand Registration based upon their relative
proportionate total holdings of Common Stock at such time, (B) second, the
number of shares of Common Stock which Company has requested be included in
such Registration, which, in the opinion of the managing underwriter or
underwriters, can be sold without such adverse effect referred to above, and
(C) third, the number of shares of Common Stock which other holders have
requested be included in such Registration, which, in the opinion of the
managing underwriter or underwriters, can be sold without such adverse effect
referred to above, selected PRO RATA among such other holders based upon
their relative proportionate holdings of Common Stock at such time.
(h) SELECTION OF UNDERWRITERS. If any offering pursuant to a Demand
Registration involves an Underwritten Offering, the Holders which have
requested to be included in such Underwritten Offering shall select a
managing underwriter or underwriters reasonably acceptable to the Company to
administer the offering.
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3. PIGGYBACK REGISTRATION.
(a) RIGHT TO PIGGYBACK. If at any time during the Registration
Period the Company proposes to file a registration statement under the
Securities Act with respect to a public offering of securities of the same
type as the Registrable Shares pursuant to a firm commitment underwritten
offering solely for cash for its own account (other than a registration
statement (i) on Form S-4 or S-8 or any successor forms thereto, or (ii)
filed solely in connection with a dividend reinvestment plan or employee
benefit plan of the Company or its Affiliates) or for the account of any
holder of securities of the same type as the Registrable Shares (to the
extent that the Company has the right to include Registrable Shares in any
registration statement to be filed by the Company on behalf of such holder),
then the Company shall give written notice of such proposed filing to the
Holders at least 15 days before the anticipated effective date. Such notice
shall offer the Holders the opportunity to register such amount of
Registrable Shares as they may request (a "PIGGYBACK REGISTRATION"). Subject
to Section 3(b) hereof, the Company shall include in each such Piggyback
Registration all Registrable Shares with respect to which the Company has
received written requests for inclusion therein within 10 days after notice
has been given to the Holders. Each Holder shall be permitted to withdraw
all or any portion of the Registrable Shares of such Holder from a Piggyback
Registration at any time prior to the effective date of such Piggyback
Registration; PROVIDED that if such withdrawal occurs after the filing of the
Registration Statement with respect to such Piggyback Registration, the
withdrawing Holders shall reimburse the Company for the portion of the
registration expenses payable with respect to the Registrable Shares so
withdrawn.
(b) PRIORITY ON PIGGYBACK REGISTRATIONS. Notwithstanding any
other term of this Section 3, if a Registration pursuant to this Section 3
involves an Underwritten Offering and the managing underwriter or
underwriters of such proposed Underwritten Offering advises Company that in
its opinion the number of securities requested to be included in such
Piggyback Registration exceeds the number which can be sold in the offering
covered by such Piggyback Registration without a significant adverse effect
on the price, timing or distribution of the securities offered, then the
Company will include in such Registration (i) first, the number of
Registrable Shares sought to be sold by the person(s) or entities (including
the Company) which initiated such Registration that, in the opinion of such
managing underwriter or underwriters, can be sold in the offering without a
significant adverse effect on the price, timing or distribution of the
securities offered, selected PRO RATA among the Company and such holders
based upon the relative proportionate shares they proposed to sell in such
Registration and (ii) second, the number of shares of Common Stock which
other holders (including the Holders) have requested be included in such
Registration, which, in the opinion of the managing underwriter or
underwriters, can be sold without such adverse effect referred
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to above, such amount to be allocated PRO RATA among such Holders and other
holders based upon the relative proportionate shares they propose to sell in
such Registration.
(c) RIGHT TO SUSPEND OR ABANDON. Nothing in this Section 3 or
Section 5 hereof (with respect to an offering under this Section 3) shall
create any liability or obligation on the part of the Company to the Holders
if the Company in its sole discretion should decide (i) not to file a
registration statement proposed to be filed pursuant to Section 3(a) hereof,
(ii) to withdraw such registration statement subsequent to its filing and
prior to the later of its effectiveness or the release of the Registrable
Shares for public offering by the managing underwriter, in the case of an
underwritten public offering or (iii) to suspend or terminate any offering or
the effectiveness of any registration statement by the Company or at the
request of any person, entity or governmental authority, regardless of any
action whatsoever that a Holder may have taken, whether as a result of the
issuance by the Company of any notice hereunder or otherwise.
4. HOLDBACK AGREEMENT. If (i) the Company shall file a registration
statement with respect an Underwritten Offering of Common Stock or similar
securities or securities convertible into, or exchangeable or exercisable
for, such securities and (ii) the managing underwriter or underwriters of
such Underwritten Offering advises the Company in writing (in which case the
Company shall notify the Holders) that a public sale or distribution of
Registrable Shares would have a significant adverse effect on the price,
timing or distribution of such offering, then each Holder shall, to the
extent not inconsistent with applicable law, refrain from effecting any
public sale or distribution of Registrable Shares during the 10 days prior to
the effective date of such registration statement and until the earliest of
(A) the abandonment of such offering, (B) 90 days from the effective date of
such registration statement and (C) if such offering is an Underwritten
Offering, the termination of any "hold back" period obtained by the
underwriter or underwriters in such offering from the Company in connection
therewith (each such period, a "HOLD BACK PERIOD").
5. REGISTRATION PROCEDURES. In connection with the registration
obligations of the Company pursuant to and in accordance with Sections 2 and
3 hereof (and subject to Sections 2 and 3 hereof), the Company shall use its
best efforts to effect such registration to permit the sale of such
Registrable Shares in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company shall as expeditiously
as possible (but subject to Sections 2 and 3 hereof):
(a) at least ten (10) business days before filing a Registration
Statement or Prospectus or any amendments or supplements thereto,
furnish to the Holders who are participating in such Registration
Statement and the underwriters, if any, copies of all such documents
proposed to be filed, which documents will be subject to the review of
such Holders and such underwriters, and one counsel selected by
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the Holders of a majority of the Registrable Shares participating in
such Registration Statement ("HOLDER COUNSEL") and the underwriters'
counsel, and, in the case of a Demand Registration, the Company will not
file any Registration Statement or amendment thereto or any Prospectus
or any supplement thereof to which the Holders of Registrable Shares
participating in such Registration Statement or the underwriters, if
any, shall reasonably object;
(b) prepare and file with the SEC a Registration Statement for
the sale of the Registrable Shares on any form for which the Company
then qualifies or which counsel for the Company shall deem appropriate
and, subject to the Company's right to suspend, terminate or abandon a
registration pursuant to Section 3(c) hereof, use best commercially
reasonable efforts to cause such Registration Statement to become
effective and remain effective as provided herein;
(c) prepare and file with the SEC such amendments (including
post-effective amendments) to such Registration Statement, and such
supplements to the related Prospectus, as may be required by the rules,
regulations or instructions applicable to the Securities Act during the
applicable period in accordance with the intended methods of disposition
specified by the Holders of the Registrable Shares covered by such
Registration Statement, make generally available earnings statements
satisfying the provisions of Section 11(a) of the Securities Act
(PROVIDED that the Company shall be deemed to have complied with this
clause if it has complied with Rule 158 under the Securities Act), and
cause the related Prospectus as so supplemented to be filed pursuant to
Rule 424 under the Securities Act; PROVIDED that before filing a
Registration Statement or Prospectus, or any amendments or supplements
thereto (other than reports required to be filed by it under the
Exchange Act), the Company shall furnish to the Holders of Registrable
Shares covered by such Registration Statement and the Holder Counsel for
review and comment, copies of all documents required to be filed;
(d) notify the Holders of any Registrable Shares covered by such
Registration Statement promptly and (if requested) confirm such notice
in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to such
Registration Statement or any post-effective amendment, when the same
has become effective, (ii) of any request by the SEC for amendments or
supplements to such Registration Statement or the related Prospectus or
for additional information regarding such Holders, (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of such
Registration Statement or the initiation of any proceedings for that
purpose, (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Shares for sale in any
jurisdiction or the initia-
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tion or threatening of any proceeding for such purpose, and (v) of the
happening of any event that requires the making of any changes in such
Registration Statement, Prospectus or documents incorporated or deemed
to be incorporated therein by reference so that they will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading;
(e) subject to Section 2(d), use its best efforts to obtain the
withdrawal of any order suspending the effectiveness of such
Registration Statement, or the lifting of any suspension of the
qualification or exemption from qualification of any Registrable Shares
for sale in any jurisdiction in the United States;
(f) furnish to the Holder of any Registrable Shares covered by
such Registration Statement, Holder Counsel and counsel for each
managing underwriter, if any, without charge, one conformed copy of such
Registration Statement, as declared effective by the SEC, and of each
post-effective amendment thereto, in each case including financial
statements and schedules and all exhibits and reports incorporated or
deemed to be incorporated therein by reference; and deliver, without
charge, such number of copies of the preliminary prospectus, any amended
preliminary prospectus, each final Prospectus and any post-effective
amendment or supplement thereto, as such Holder may reasonably request
in order to facilitate the disposition of the Registrable Shares of such
Holder covered by such Registration Statement in conformity with the
requirements of the Securities Act;
(g) prior to any public offering of Registrable Shares covered by
such Registration Statement, use best commercially reasonable efforts to
register or qualify such Registrable Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Holders of such
Registrable Shares shall reasonably request in writing; PROVIDED that
the Company shall in no event be required to qualify generally to do
business as a foreign corporation or as a dealer in any jurisdiction
where it is not at the time so qualified or to execute or file a general
consent to service of process in any such jurisdiction where it has not
theretofore done so or to take any action that would subject it to
general service of process or taxation in any such jurisdiction where it
is not then subject;
(h) subject to Section 2(d) hereof, upon the occurrence of any
event contemplated by paragraph 4(d)(iv) above, as promptly as
practicable prepare a supplement or post-effective amendment to such
Registration Statement or the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference and file
any other required document so that, as thereafter delivered to the
purchasers of the Registrable Shares being sold thereunder (including
upon the termina-
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tion of any Interruption Period), such Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(i) use its best efforts to cause all Registrable Shares covered
by such Registration Statement to be listed on each securities exchange
or automated interdealer quotation system, if any, on which similar
securities issued by the Company are then listed or quoted;
(j) use its best efforts to comply with all applicable rules and
regulations of the SEC and any securities exchange or regulatory body;
(k) on or before the effective date of such Registration
Statement, provide the transfer agent of the Company for the Registrable
Shares with printed certificates for the Registrable Shares covered by
such Registration Statement which are in a form eligible for deposit
with The Depository Trust Company;
(l) if such offering is an Underwritten Offering, make available
for inspection by any Holder of Registrable Shares included in such
Registration Statement, any underwriter participating in any offering
pursuant to such Registration Statement, and any attorney, accountant or
other agent retained by any such Holder or underwriter (collectively,
the "INSPECTORS"), such financial and other records and other
information, pertinent corporate documents and properties of any of the
Company and its subsidiaries and affiliates (collectively, the
"RECORDS"), as shall be reasonably necessary to enable them to exercise
their due diligence responsibilities; PROVIDED that the Records that the
Company determines, in good faith, to be confidential and which it
notifies the Inspector in writing are confidential shall not be
disclosed to any Inspector unless such Inspector signs a confidentiality
agreement reasonably satisfactory to the Company; and
(m) if such offering is an Underwritten Offering, enter into such
agreements (including an underwriting agreement in form, scope and
substance as is customary in underwritten offerings) and take all such
other appropriate and reasonable actions requested by the Holders of a
majority of the Registrable Shares being sold in connection therewith
(including those reasonably requested by the managing underwriters) in
order to expedite or facilitate the disposition of such Registrable
Shares, and in such connection, (i) use commercially reasonable efforts
to obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters and Holder Counsel), addressed
to each of the underwriters as to the matters
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customarily covered in opinions requested in underwritten offerings and
such other matters may be reasonably requested by such counsel and
underwriters, (ii) use commercially reasonable efforts to obtain "cold
comfort" letters and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in
the Registration Statement), addressed to each of the underwriters, such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings and (iii) if requested and if an underwriting
agreement is entered into, provide indemnification provisions and
procedures substantially to the effect set forth in Section 7 hereof
with respect to all parties to be indemnified pursuant to said Section
7. The above shall be done at each closing under such underwriting or
similar agreement, or as and to the extent required thereunder.
The Company may require each Holder of Registrable Shares covered by
a Registration Statement to furnish such information regarding such Holder
and such Holder's intended method of disposition of such Registrable Shares
as it may from time to time reasonably request in writing. If any such
information is not furnished within a reasonable period of time after receipt
of such request, the Company may exclude such Holder's Registrable Shares
from such Registration Statement.
Each Holder of Registrable Shares covered by a Registration Statement
agrees that, upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 5(d)(ii), 5(d)(iii), 5(d)(iv) or
5(d)(v) hereof, that such Holder shall forthwith discontinue disposition of
any Registrable Shares covered by such Registration Statement or the related
Prospectus until receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 5(h) hereof, or until such Holder is
advised in writing (the "ADVICE") by the Company that the use of the
applicable Prospectus may be resumed, and has received copies of any amended
or supplemented Prospectus or any additional or supplemental filings which
are incorporated, or deemed to be incorporated, by reference in such
Prospectus (such period during which disposition is discontinued being an
"INTERRUPTION PERIOD") and, if requested by the Company, the Holder shall
deliver to the Company (at the expense of the Company) all copies then in its
possession, other than permanent file copies then in such holder's
possession, of the Prospectus covering such Registrable Shares at the time of
receipt of such request.
Each Holder of Registrable Shares covered by a Registration Statement
further agrees not to utilize any material other than the applicable current
preliminary prospectus or Prospectus in connection with the offering such
Registrable Shares.
-14-
6. REGISTRATION EXPENSES. Except as set forth in Section 2(f)
whether or not any Registration Statement is filed or becomes effective, the
Company shall pay all costs, fees and expenses incident to the Company's
performance of or compliance with this Agreement, including (i) all
registration and filing fees, including NASD filing fees, (ii) all fees and
expenses of compliance with securities or Blue Sky laws, including reasonable
fees and disbursements of counsel in connection therewith, (iii) printing
expenses (including expenses of printing certificates for Registrable Shares
and of printing preliminary and final prospectuses if the printing of
prospectuses is requested by the Holders or the managing underwriter, if
any), (iv) messenger, telephone and delivery expenses, (v) fees and
disbursements of counsel for the Company, (vi) fees and disbursements of all
independent certified public accountants of the Company (including expense of
any "cold comfort" letters required in connection with this Agreement) and
all other persons retained by the Company in connection with this Agreement)
and all other persons retained by the Company in connection with such
Registration Statement, and (vii) all other costs, fees and expenses incident
to the Company's performance or compliance with this Agreement.
Notwithstanding the foregoing, (i) the fees and expenses of any persons
retained by any Holder, including any Holder Counsel, (ii) the fees and
expenses associated with any qualified independent underwriter required
pursuant to the rules and regulations of the NASD and any fees and expenses
of counsel incurred in connection with the qualification of any such
qualified independent underwriter with the NASD, any discounts, commissions
or brokers' fees or fees of similar securities industry professionals and
(iv) any transfer taxes relating to the disposition of the Registrable Shares
by a Holder, will be payable by such Holder and the Company will have no
obligation to pay any such amounts.
7. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company shall, without
limitation as to time, indemnify and hold harmless, to the full extent
permitted by law, each Holder of Registrable Shares whose Registrable Shares
are covered by a Registration Statement or Prospectus, each Affiliate of such
Holder, the officers, directors and agents and employees of each of them,
each Person who controls (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) each such Holder and the officers,
directors, agents and employees of each such controlling Person, to the
fullest extent lawful, from and against any and all losses, claims, damages,
liabilities, judgments, costs (including, without limitation, costs of
preparation and reasonable attorneys' fees) and expenses (collectively,
"LOSSES"), as incurred, arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in such Registration Statement
or Prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or based upon any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are based upon
information furnished in writing to the Company by such Holder expressly for
use therein in a
-15-
Demand Registration; PROVIDED that the Company shall not be liable to any
such Holder to the extent that any such Losses arise out of or are based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in any preliminary prospectus if (i) having previously been
furnished by or on behalf of the Company with copies of the Prospectus, such
Holder failed to send or deliver a copy of the Prospectus with or prior to
the delivery of written confirmation of the sale of Registrable Shares by
such Holder to the person asserting the claim from which such Losses arise
and (ii) the Prospectus would have corrected in all material respects such
untrue statement or alleged untrue statement or such omission or alleged
omission; and PROVIDED FURTHER that the Company shall not be liable in any
such case to the extent that any such Losses arise out of or are based upon
an untrue statement or alleged untrue statement or omission or alleged
omission in the Prospectus, if (x) such untrue statement or alleged untrue
statement, omission or alleged omission is corrected in all material respects
in an amendment or supplement to the Prospectus and (y) having previously
been furnished by or on behalf of the Company with copies of the Prospectus
as so amended or supplemented, such Holder thereafter fails to deliver such
Prospectus as so amended or supplemented, prior to or currently with the sale
of Registrable Shares. In connection with any Underwritten Offering, the
Company will also indemnify underwriters, selling brokers, dealer managers
and similar securities industry professionals participating in the
distribution, their officers and directors and each Person who controls
(within the meaning of Section 15 of the Securities Act) such persons to the
same extent as provided above with respect to indemnification of Holders of
Registrable Shares, or on such other terms as are reasonable and customary
and requested by the managing underwriter.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SHARES. In
connection with any Registration Statement in which a Holder is
participating, such Holder shall furnish to the Company in writing such
information as the Company reasonably requests for use in connection with
such Registration Statement or the related Prospectus and agrees to
indemnify, to the full extent permitted by law, the Company, its directors,
officers, agents and employees, each Person who controls (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act) the
Company and the directors, officers, agents and employees of such controlling
Persons, from and against all Losses arising out of or based upon any untrue
or alleged untrue statement of a material fact contained in such Registration
Statement or the related Prospectus or any amendment or supplement thereto,
or any preliminary prospectus, or arising out of or based upon any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, to the extent, but
only to the extent, that such untrue or alleged untrue statement or omission
or alleged omission is based upon any information so furnished in writing by
such Holder to the Company expressly for use in such Registration Statement
or Prospectus.
-16-
(c) If any Person shall be entitled to indemnity hereunder (an
"INDEMNIFIED PARTY"), the Indemnified Party shall give prompt notice to the
party from which such indemnity is sought (the "INDEMNIFYING PARTY") of any
claim or of the commencement of any proceeding with respect to which the
Indemnified Party seeks indemnification or contribution pursuant hereto;
PROVIDED that the delay or failure to so notify the Indemnifying Party shall
not relieve the Indemnifying Party from any obligation or liability except to
the extent that the Indemnifying Party has been prejudiced by such delay or
failure. The Indemnifying Party shall have the right, exercisable by giving
written notice to an Indemnified Party promptly after the receipt of written
notice from such Indemnified Party of such claim or proceeding, to assume, at
the Indemnifying Party's expense, the defense of any such claim or
proceeding, with counsel reasonably satisfactory to such Indemnified Party;
PROVIDED that (i) an Indemnified Party shall have the right to employ
separate counsel in any such claim or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless: (1) the Indemnifying Party agrees
to pay such fees and expenses; (2) the Indemnifying Party fails promptly to
assume the defense of such claim or proceeding or fails to employ counsel
reasonably satisfactory to such Indemnified Party; or (3) the named parties
to any proceeding (including impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnifying Party shall have been
advised by counsel that there may be one or more legal defenses available to
it that are inconsistent with those available to the Indemnifying Party or
that a conflict of interest is likely to exist among such Indemnified Party
and any other indemnified parties (in which case the Indemnifying Party shall
not have the right to assume the defense of such action on behalf of such
Indemnified Party); and (ii) subject to clause (3) above, the Indemnifying
Party shall not, in connection with any one such claim or proceeding or
separate but substantially similar or related claims or proceedings in the
same jurisdiction, arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one firm of
attorneys (together with appropriate local counsel) at any time for all of
the indemnified parties, or for fees and expenses that are not reasonable.
Whether or not such defense is assumed by the Indemnifying Party, such
Indemnified Party shall not be subject to any liability for any settlement
made without its consent, which shall not be unreasonably withheld. The
Indemnifying Party shall not consent to entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release,
in form and substance reasonably satisfactory to the Indemnified Party, from
all liability in respect of such claim or litigation for which such
Indemnified Party would be entitled to indemnification hereunder.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 7 is unavailable to an Indemnified Party in respect of any Losses
(other than in accordance with its terms), then each applicable Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to
the amount paid or payable by such Indemnified Party
-17-
as a result of such Losses, in such proportion as is appropriate to reflect
the relative fault of the Indemnifying Party, on the one hand, and such
Indemnified Party, on the other hand, in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying
Party, on the one hand, and Indemnified Party, on the other hand, shall be
determined by reference to, among other things, whether any action in
question, including any untrue statement of a material fact or omission or
alleged omission to state a material fact, has been taken by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent any such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall be
deemed to include any legal or other fees or expenses incurred by such party
in connection with any investigation or proceeding. The parties hereto agree
that it would not be just and equitable if contribution pursuant to this
Section 7(d) were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph. Notwithstanding the
provision of this Section 7(d), an Indemnifying Party that is a Holder shall
not be required to contribute any amount which is in excess of the amount by
which the total proceeds received by such Holder from the sale of the
Registrable Shares sold by such Holder (net of all underwriting discounts and
commissions) exceeds the amount of any damages that such Indemnifying Party
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
8. RULE 144. For so long as Company shall be subject to the
requirements of Section 12 of the Exchange Act or a registration statement
pursuant to the requirements of the Securities Act, the Company covenants
that it will timely file the reports required to be filed by it under the
Securities Act or the Exchange Act (including but not limited to the reports
under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph
(c)(1) of Rule 144 adopted by the SEC under the Securities Act) and the rules
and regulations adopted by the SEC thereunder (or if the Company is not
required to file such reports, the Company will, upon the request of any
Holder of Registrable Shares, make publicly available other information), and
will take such further action as any Holder of Registrable Shares may
reasonably request, all to the extent required from time to time to enable
such Holder of Registrable Shares to sell Registrable Shares within the
exemption provided by (i) Rule 144 under the Securities Act, as such Rule 144
may be amended from time to time, or (ii) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of any Holder of Registrable
Shares, the Company will deliver to such Holder, a written statement as to
whether it has complied with such requirements.
-18-
9. WAIVER AND LOCKUP AGREEMENT. In consideration of the Company's
obligations set forth in this Agreement each Stockholder agrees to duly
execute and deliver a Waiver and Lockup Agreement concurrently with the
execution and delivery of this Agreement.
10. TRANSFER OF RIGHTS UNDER THIS AGREEMENT; TRANSFERS OF
REGISTERABLE SHARES.
(a) At any time, a Holder may transfer its rights and obligations
under this Agreement, in whole or in part, to a transferee of Registerable
Shares; PROVIDED that (a) as promptly as practicable after such transfer, the
transferor shall have furnished the Company and the other Holders written
notice of the name and address of such transferee and the Registerable Shares
with respect to which such rights are being transferred and (b) on or prior
to the date of settlement of such transfer, such transferee shall furnish the
Company and the Holders (other than the transferor) (i) a copy of a duly
executed Supplemental Addendum substantially in the form of Annex B hereto
and (ii) if requested by the Company, a duly executed Company Affiliate
Letter substantially in the form of Exhibit A to the Merger Agreement.
Notwithstanding the foregoing, a Holder's transfer of its rights and
obligations under this Agreement in accordance with the preceeding sentence
shall not be effective unless the transfer is of at least 10% of the issued
and then outstanding Registerable Shares.
(b) Except with respect to transfers pursuant to paragraph (a)
above, a transferee of Registerable Shares shall neither assume any
liabilities or obligations nor enjoy any rights hereunder and shall not be
bound by any of the terms hereof.
11. MISCELLANEOUS.
(a) TERMINATION. This Agreement and the obligations of the
Company and the Holders hereunder (other than Section 7 hereof) shall
terminate on the first date on which no Registrable Shares remain outstanding.
(b) NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall
be in writing and shall be deemed to have been duly given when received if
personally delivered; when transmitted if transmitted by telecopy, electronic
or digital transmission method; the day after it is sent, if sent for next
day delivery to a domestic address by recognized overnight delivery service
(e.g., Federal Express); and upon receipt, if sent by certified or registered
mail, return receipt requested. In each case notice shall be sent, in the
case of the Company, to Trans World Entertainment Corporation, 00 Xxxxxxxxx
Xxxxxx, Xxxxxx, XX 00000, Telecopy: (000) 000-0000, Attention: Chief
Financial Officer, or, in the case of any Holder, to the address for such
party
-19-
set forth on the signature page or Supplemental Addendum hereto, as the case
may be, as such address may be changed by notice thereof conforming herewith.
(c) INTERPRETATION. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the word "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation". This Agreement shall not be construed for or against
either party by reason of the authorship or alleged authorship of any
provision hereof or by reason of the status of the respective parties. All
terms defined in this Agreement in the singular shall have the same
comparable meanings when used in the plural and vice versa, unless otherwise
specified.
(d) ENTIRE AGREEMENT, NO THIRD-PARTY BENEFICIARIES. This
Agreement constitutes the entire agreement and supersedes a prior agreements
and understandings, both written and oral, among the parties with respect to
the subject matter hereof and is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
(e) ASSIGNMENT. Except as expressly provided on Section 10
hereof, neither this Agreement nor any of the rights, interests, or
obligations hereunder shall be assigned (whether by operation of law or
otherwise) by any Holder without the consent of the Company, or by the
Company without the consent of Holders of at least a majority in number of
the Registrable Shares then outstanding. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns. In
no event shall any transferee of Common Stock be entitled, solely as a result
of such transfer, to any of the benefits of this Agreement or to enforce the
same.
(f) GOVERNING LAW. The Laws of the State of Delaware shall
govern the interpretation, validity and performance of the terms of this
Agreement, regardless of the law that might be applied under principles of
conflicts of law.
(g) SEVERABILITY. Each party agrees that, should any court or
other competent authority hold any provision of this Agreement or part hereof
to be null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or
required hereby, the validity, legality and enforceability of the remaining
provisions and obligations contained or set forth herein shall not in any way
be affected or impaired thereby. Upon any such holding that any provision of
this Agreement is null, void or unenforceable, the parties will negotiate in
good faith to modify this Agreement
-20-
so as to effect the original intent of the parties as closely as possible in
an acceptable manner to the end that the transactions contemplated by this
Agreement are consummated to the extent possible. Except as otherwise
contemplated by this Agreement, to the extent that a party hereto took an
action inconsistent herewith or failed to take action consistent herewith or
required hereby pursuant to an order or judgment of a court or other
competent authority, such party shall incur no liability or obligation unless
such party did not in good faith seek to resist or object to the imposition
or entering of such order or judgment.
(h) INJUNCTIVE RELIEF. The parties acknowledge that it will be
impossible to measure in money the damages that would be suffered if the
parties fail to comply with any of the obligations herein imposed on them and
that in the event of any such failure, an aggrieved person or entity will be
irreparably damaged and will not have an adequate remedy at law. Any such
person or entity shall, therefore, be entitled to injunctive relief,
including specific performance, to enforce such obligations, and if any
action should be brought in equity to enforce any of the provisions of this
Agreement, none of the parties shall raise the defense that there is an
adequate remedy at law.
(i) CUMULATIVE REMEDIES. All rights and remedies of either party
hereto are cumulative of each other and of every other right or remedy such
party may otherwise have at law or in equity, and the exercise of one or more
rights or remedies shall not prejudice or impair the concurrent or subsequent
exercise of other rights or remedies.
(j) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same instrument
and shall become effective when executed and delivered by each of the parties.
(k) AMENDMENTS AND WAIVERS. Except as otherwise provided herein,
the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, except in writing, by the Company and by the Holders
of at least a majority in number of the Registrable Shares then outstanding.
-21-
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
TRANS WORLD ENTERTAINMENT CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
STOCKHOLDERS:
XXX XXXXXX-XXXXXXX
PRIME RATE INCOME TRUST
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
Address: Xxx Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
FERNWOOD ASSOCIATES, L.P.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: General Partner
Address: 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
-22-
FERNWOOD RESTRUCTURING, LTD.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Director
Address: 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
FERNWOOD FOUNDATION FUND
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: General Partner
Address: 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
FERNWOOD RETURN HOLDINGS, LTD.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Director
Address: 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
-00-
XXXXXXX XXXXX, XXXXXX,
XXXXXX & XXXXX INCORPORATED
By: /s/ Xxxx Xxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxx
Title: Director
Address: World Financial Center, Xxxxx Xxxxx
Xxx Xxxx, XX 00000
OAKTREE CAPITAL MANAGEMENT, LLC
(in its capacity as general partner and investment
manager of OCM Opportunities Fund, L.P. and
Columbia/HCA Master Retirement Trust
(separate account I))
By: /s/ Xxxx Xxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxx
Title: Managing Director
Address: 000 Xxxxx Xxxx Xx.
Xxx Xxxxxxx, XX 00000
By: /s/ Xxx Xxxxx
-----------------------------------
Name: Xxx Xxxxx
Title: Managing Director and General Counsel
Address: 000 Xxxxx Xxxx Xx.
Xxx Xxxxxxx, XX 00000
ANNEX A
[Stockholder]
[ ]
[ ]
[ ]
October 26, 1998
Trans World Entertainment
Corporation
00 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Ladies and Gentlemen:
The undersigned understands that Camelot Music Holdings, Inc., a
Delaware corporation (the "Company"), and Trans World Entertainment Corporation,
a New York corporation ("Parent") have entered into an Agreement and Plan of
Merger, dated as of October 26, 1998 (the "Merger Agreement", capitalized terms
used herein but not otherwise defined shall have the meaning provided in the
Merger Agreement). The undersigned understands that the transactions
contemplated by the Merger Agreement require that the undersigned refrain from
entering into certain transactions with respect to Company Common Stock and with
respect to Parent Common Stock which the undersigned will receive as Closing
Consideration. In addition, at the Effective Time, the undersigned will derive
substantial benefit from the Registration Rights Agreement. Therefore in
consideration of the foregoing, the covenants and promises contained in the
Merger Agreement and in the Registration Rights Agreement and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the undersigned, intending to be legally bound hereby agrees as
follows:
1. WAIVER OF REGISTRATION RIGHTS. The undersigned hereby irrevocably
agrees that, as of the Effective Time (a) any and all registration rights which
the undersigned may have with respect to shares of Parent Common Stock or
Company Common Stock pursuant to the Registration Rights Agreement (the "Prior
Registration Rights Agreement") dated as of January 27, 1998 entered into by and
among the Company, the undersigned and the other stockholder parties thereto,
shall be forever waived, (b) the Prior Registration Rights Agreement shall cease
to be of any force or effect with respect to the undersigned and (c) no person
shall have any obligation whatsoever to the undersigned under the Prior
Registration Rights Agreement.
-2-
2. LOCKUP AGREEMENT. The undersigned hereby agrees not to offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option right or warrant to
purchase, or otherwise reduce undersigned's risk relative to any shares of (a)
Company Common Stock from December 15, 1998 through and including the Effective
Time and (b) Parent Common Stock received as Closing Consideration, from and
including the Effective Time until the day after Parent publicly reports
revenues and earnings covering at least 30 days of combined operations of Parent
and the Company following the Effective Time.
Yours truly,
--------------------------------
By:
-----------------------------
Name:
Title:
ANNEX B
SUPPLEMENTAL ADDENDUM
Reference is made to the Registration Rights Agreement, dated as of
October 26, 1998 (the "Registration Rights Agreement"), by and among Trans
World Entertainment, Inc. (the "Company") and certain holders of shares of
common stock of the Company ("Holders"). Capitalized terms used but not
defined herein have the meaning given them in the Registration Rights
Agreement.
The undersigned is a transferee of Registerable Shares. The
undersigned hereby agrees as follows:
The undersigned hereby accepts the terms of and becomes a party to
(as a Holder) the Registration Rights Agreement. In connection therewith,
the undersigned agrees to (a) assume all obligations and liabilities
thereunder, (b) enjoy all of the rights thereunder, (c) be bound thereby and
(d) perform and comply with the agreements and commitments on the part of the
undersigned, as a transferee of Registrable Shares, set forth in the
Registration Rights Agreement.
-----------------------------------
By:
--------------------------------
Name:
Title:
Address:
Date:
------------------------------
