UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549  

 

 

 

FORM 8-K  

 

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): May 3, 2019 

 

 

TRANS WORLD ENTERTAINMENT CORPORATION

(Exact Name of Registrant as Specified in Charter)  

 

 

 

New York   0-14818   14-1541629
         
 
 
 
 
 
(State or Other Jurisdiction
of Incorporation) 		  (Commission
File Number) 		  (I.R.S. Employer
Identification No.)

 

38 Corporate Circle,

Albany, New York 12203

 

 

(Address of Principal Executive Offices, and Zip Code)

 

(518) 452-1242

 

 

Registrant’s Telephone Number, Including Area Code

 

Not Applicable

 

 

(Former Name or Former Address, if Changed Since Last Report)  

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

  ¨ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  ¨ Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  ¨ Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common shares, $0.01 par value per share TWMC NASDAQ Stock Market
 

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

 

As previously reported, on January 17, 2017, Trans World Entertainment Corporation (the “Company”) entered into a Second Amended and Restated Credit Agreement (as amended by that certain letter agreement dated as of October 29, 2018 (the “October Letter Agreement”), the “Credit Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent, under which the lenders party thereto committed to provide up to $75 million in loans under a five-year, secured revolving credit facility.

 

In accordance with Section 6.01(a) of the Credit Agreement, the Company is required to deliver to the administrative agent within 90 days after the end of each fiscal year of the Company (which for this fiscal year such due date was May 3, 2019), a consolidated and consolidating balance sheet of the Company and its subsidiaries as at the end of each fiscal year, and the related consolidated and consolidating statements of income or operations, shareholders’ equity, and cash flows for each fiscal year, including a report and opinion shall be prepared in accordance with generally accepted auditing standards which shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit (collectively, the “Annual Financial Statements”).

 

As reported by the Company, it was not able to file its Audited Financial Statements by such date. On May 3, 2019, the Company entered into a letter agreement (the “Letter Agreement”) with Wells Fargo in accordance with Section 10.01 of the Credit Agreement in which Wells Fargo provided consent to the late filing of the Audited Financial Statements and conditional waiver of any default or event of default that otherwise would be occasioned by such late filing (the “Consent and Waiver”) so long as the Company actually delivers the Annual Financial Statements in accordance with the terms and conditions of the Credit Agreement no later than May 20, 2019.

 

The Consent and Waiver provided in the Letter Agreement is a one-time consent and conditional waiver related to the delivery of the Annual Financial Statements in May, 2019 only, and is not an amendment to the Credit Agreement with respect to the timely delivery of any other Annual Financial Statements on any other occasion, nor is it a waiver of (x) the requirement to comply with any other term or condition of the Credit Agreement or the other loan documents, or (y) any other default or event of default whether now existing or hereafter arising under the Credit Agreement.  

 

The preceding descriptions of the Credit Agreement, the October Letter Agreement and the Letter Agreement are qualified in their entirety, respectively, by reference to the copy of the Credit Agreement filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2017, the copy of the October Letter Agreement filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 1, 2018 and the copy of the Letter Agreement filed as Exhibit 10.1 to this Current Report on Form 8-K, which is incorporated herein by reference.

 

ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.

 

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

ITEM 9.01 – FINANCIAL STATEMENTS AND EXHIBITS

 

The following exhibit is filed herewith:

 

Exhibit
No. 		  Description
     
10.1   Letter Agreement between Trans World Entertainment Corporation, and certain of its subsidiaries and Wells Fargo Bank, National Association dated as of May 3, 2019.
 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: May 6, 2019 TRANS WORLD ENTERTAINMENT CORPORATION
     
  By:  /s/ Edwin Sapienza    
    Name: Edwin Sapienza
    Title: Chief Financial Officer
 

Exhibit 10.1

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

One Boston Place

Boston, MA 02108

 

May 3, 2019

 

Trans World Entertainment Corporation, as Lead Borrower

38 Corporate Circle

Albany, New York 12203

 

Re:     Consent and Conditional Waiver
With Respect to Late Delivery of Annual Financial Statements

 

Ladies and Gentlemen:

 

Reference is made to that certain Second Amended and Restated Credit Agreement, dated as of January 17, 2017 (as amended, restated, supplemented, or otherwise modified and in effect from time to time, the “ Credit Agreement ”), by and among Trans World Entertainment Corporation, Record Town, Inc., Record Town USA, LLC, Trans World New York, LLC, Trans World Florida, LLC, Record Town Utah, LLC, and Etailz Inc., the Guarantors party thereto from time to time, the Lenders party thereto from time to time, and Wells Fargo Bank, National Association, as Administrative Agent and Collateral Agent (in such capacities, the “ Agent ”), L/C Issuer, and Swingline Lender. (Capitalized terms used herein but not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement).

 

In accordance with Section 6.01(a) of the Credit Agreement, the Lead Borrower is required to deliver to the Agent within 90 days after the end of each Fiscal Year of the Lead Borrower, a Consolidated and consolidating balance sheet of the Lead Borrower and its Subsidiaries as at the end of each Fiscal Year, and the related consolidated and consolidating statements of income or operations, Shareholders’ Equity, and cash flows for each Fiscal Year (collectively, the “ Annual Financial Statements ”). At this time, the Annual Financial Statements are required to be delivered on or before May 3, 2019. The Lead Borrower has requested consent to the late delivery of the Annual Financial Statements, and the Agent is willing to provide such consent, but only on the terms and conditions set forth herein.

 

Therefore, in accordance with Section 10.01 of the Credit Agreement, the Agent, with the Consent of the Required Lenders, hereby Consents to the late delivery of the Annual Financial Statements and conditionally waives any Default or Event of Default that otherwise would be occasioned thereby, so long as the Annual Financial Statements actually have been delivered in accordance with the terms and conditions of the Credit Agreement no later than May 20, 2019.

 

Trans World Entertainment Corporation, as Lead Borrower

May 3, 2019

Page 2

 

The Agent expressly reserves all rights and remedies under the Credit Agreement, if the Annual Financial Statements have not been received by that date, including the right to declare the occurrence of an Event of Default under the Credit Agreement.

 

The Consent and conditional waiver provided herein is a one-time Consent and conditional waiver related to the delivery of the Annual Financial Statements in May, 2019 only, and is not an amendment to the Credit Agreement with respect to the timely delivery of any other Annual Financial Statements on any other occasion, nor is it a waiver of (x) the requirement to comply with any other term or condition of the Credit Agreement or the other Loan Documents, or (y) any other Default or Event of Default whether now existing or hereafter arising under the Credit Agreement. The Consent and conditional waiver 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.

 

In order to induce the Agent and the Required Lenders to provide this letter agreement, 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. Except as expressly conditionally 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.

 

Each of the Loan Parties hereby acknowledges and agrees that there is no basis or set of facts as to which any of the Obligations (or any portion thereof) owed by the Loan Parties under the Loan Documents could be reduced, offset, waived, or forgiven, by rescission or otherwise; nor is there any claim, counterclaim, offset, or defense (or other right, remedy, or basis having a similar effect) available to the Loan Parties with respect thereto; nor is there any basis on which the terms and conditions of any of the Obligations could be claimed to be other than as stated on the written instruments which evidence such Obligations.

 

In consideration of the Consent and conditional waiver provided herein, each of the Loan Parties hereby acknowledges and agrees that it has no offsets, defenses, claims, or counterclaims against the Agent or any Lender, or any of their respective affiliates, predecessors, successors, or assigns, or any of their respective officers, directors, employees, attorneys, or representatives, with respect to the Obligations, or otherwise, and that if any of the Loan Parties now has, or ever did have, any offsets, defenses, claims, or counterclaims against the Agent or any Lender, or any of their respective affiliates, predecessors, successors, or assigns, or their respective officers, directors, employees, attorneys, or representatives, whether known or unknown, at law or in equity, from the beginning of the world through this date and through the time of execution of this letter agreement, all of them are hereby expressly WAIVED , and each of the Loan Parties hereby RELEASES the Agent and each Lender and their respective officers, directors, employees, attorneys, representatives, affiliates, predecessors, successors, and assigns from any liability therefor.

 

[ Remainder of Page Intentionally Left Blank ]

 

Trans World Entertainment Corporation, as Lead Borrower

May 3, 2019

Page 3

 

If the foregoing correctly sets forth our understanding, please indicate your agreement by signing below.

 

  Very truly yours,  
       
  WELLS FARGO BANK, NATIONAL
ASSOCIATION , as Administrative Agent,
Collateral Agent, and Lender
       
  By: /s/ Peter Foley  
  Name: Peter Foley
  Title: Director
 

Trans World Entertainment Corporation, as Lead Borrower

May 3, 2019

Page 4

 

The foregoing is acknowledged, agreed, and accepted:

 

TRANS WORLD ENTERTAINMENT
CORPORATION , as Lead Borrower and
as a Borrower

 

By: /s/ Edwin Sapienza  
Name:   Edwin Sapienza  
Title: Chief Financial Officer  

 

RECORD TOWN, INC. , as a Borrower

 

By: /s/ Edwin Sapienza  
Name:   Edwin Sapienza  
Title: Chief Financial Officer  

 

RECORD TOWN USA, LLC , as a
Borrower

 

By: /s/ Edwin Sapienza  
Name:   Edwin Sapienza  
Title: Chief Financial Officer  

 

TRANS WORLD NEW YORK, LLC , as a
Borrower

 

By: /s/ Edwin Sapienza  
Name:   Edwin Sapienza  
Title: Chief Financial Officer  

 

TRANS WORLD FLORIDA, LLC , as a
Borrower

 

By: /s/ Edwin Sapienza  
Name:   Edwin Sapienza  
Title: Chief Financial Officer  
 

Trans World Entertainment Corporation, as Lead Borrower

May 3, 2019

Page 5

 

RECORD TOWN UTAH, LLC , as a
Borrower

 

By: /s/ Edwin Sapienza  
Name:   Edwin Sapienza  
Title: Chief Financial Officer  

 

ETAILZ INC. , as a Borrower

 

By: /s/ Edwin Sapienza  
Name:   Edwin Sapienza  
Title: Chief Financial Officer