EXHIBIT 10.16

ASSET PURCHASE AGREEMENT

among

STRAWBERRIES INC.,
RECORD TOWN, INC.
and
TRANS WORLD ENTERTAINMENT CORPORATION

Dated as of September 24, 1997

                              TABLE OF CONTENTS

                                                                          Page

SECTION 1.  DEFINITIONS                                                      2
        1.1     General Terms                                                2
        1.2     Accounting Terms                                             7
        1.3     Other Definitional Conventions                               7

SECTION 2.  PURCHASE AND SALE OF ASSETS; LIABILITIES                         7
        2.1     Assets to be Transferred                                     7
        2.2     Excluded Assets                                              8
        2.3     Additional Purchased Assets                                  9
        2.4     Assignability and Consents                                   9
        2.5     Assumed Liabilities                                          9
        2.6     Excluded Liabilities                                        10

SECTION 3.  PURCHASE PRICE                                                  12
        3.1     Purchase Price                                              12
        3.2     Adjustment of Purchase Price                                13
        3.3     Allocation of Purchase Price                                13

SECTION 4.  CLOSING                                                         13
        4.1     General                                                     13
        4.2     Deliveries by the Debtor                                    13
        4.3     Deliveries by the Purchaser                                 14
        4.4     Other Documents to be Delivered                             15

SECTION 5.  REPRESENTATIONS AND WARRANTIES                                  15
        5.1     Representations and Warranties of Debtor                    15
        5.2     Representations and Warranties of Purchaser                 20
        5.3     General                                                     21

SECTION 6.  CONDITIONS                                                      21
        6.1     Conditions to Purchaser's Obligations                       21
        6.2     Conditions to Debtor's Obligations                          22
        6.3     Conditions to all Obligations                               23

SECTION 7.  COVENANTS                                                       24
        7.1     Confidentiality                                             24
        7.2     Access                                                      24
        7.3     Further Assurances; Customer and Supplier Relationships     24
        7.4     Transfer Taxes                                              25
        7.6     Maintenance of Insurance                                    25
        7.7     Accounts Receivable                                         25
        7.8     Name Change Filings                                         26
        7.9     WARN Act Obligations                                        26
        7.10    Press Releases and Disclosure                               26
        7.11    Cooperation in the Defense of Claims                        26
        7.12    Regulatory Approvals                                        27
        7.13    Purchased Lease Covenants                                   27

SECTION 8.  TERMINATION                                                     28
        8.1     Termination                                                 28
        8.2     Effect of Termination                                       28

SECTION 9.  INDEMNIFICATION                                                 30
        9.1     Indemnification by the Purchaser                            30
        9.2     Indemnification by the Debtor                               30
        9.3     Notice of Claim; Right to Participate in and Defend
                    Third Party Claim                                       31
        9.4     Termination                                                 32

SECTION 10.  MISCELLANEOUS                                                  32
        10.1    Amendments                                                  32
        10.2    Entire Agreement                                            32
        10.3    Governing Law                                               32
        10.4    Notices                                                     33
        10.5    Counterparts                                                33
        10.6    Assignment                                                  34
        10.7    Waivers                                                     34
        10.8    Severability                                                34
        10.9    Construction                                                34
        10.10   Third Parties                                               34
        10.11   Schedules and Exhibits                                      34
        10.12   Headings                                                    34
        10.13   References to Agreements                                    34
        10.14   Remedies Not Exclusive                                      35

Exhibits
--------

Exhibit A       Form of Instrument of Assignment and Assumption and Bill of Sale

Exhibit B       Form of Assignment and Assumption of Lease

Exhibit C       Form of Occupancy Agreement

Exhibit D       Form of Guaranty (Trans World)

Exhibit E       Procedures for the Physical Inventory Count

Schedules
---------

Schedule 2.1(E)     Real Property Leases

Schedule 2.1(I)     Purchased Contracts

Schedule 2.2(D)     Excluded Assets

Schedule 2.4        Material Consents

Schedule 3.3        Allocation of Purchase Price

Schedule 5.1(A)     Jurisdictions that Debtor is Qualified as a Foreign
                    Corporation

Schedule 5.1(E)     Encumbrances on Purchased Assets

Schedule 5.1(G)     Litigation Matters

Schedule 5.1(I)     Intellectual Property

Schedule 5.1(J)     Material Permits

Schedule 5.1(L)     Debtor Employee Plan Matters

Schedule 5.1(O)     Taxes

Schedule 5.1(Q)     Brokers, Finders and Agents (Debtor)

Schedule 5.1(R)     Insurance Matters

Schedule 5.1(S)     Material Consents Not Obtained

Schedule 5.2(B)     Required Governmental Consents (Purchaser)

Schedule 5.2(C)     Brokers, Finders and Agents (Purchaser)

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement, made as of September 24, 1997 (this "Agreement"), is among Strawberries Inc., a Delaware corporation (the "Debtor"), Record Town, Inc., a New York Corporation (the "Purchaser"), and Trans World Entertainment Corporation, a New York corporation ("Trans World").

1. The Debtor is engaged in the business of the retail distribution of pre-recorded music and other home entertainment products, including compact discs, audio and video cassettes and cassette and compact disc holders (the "Business").

2. On February 19, 1997 (the "Petition Date"), the Debtor and Strawberries Holding, Inc., a Delaware corporation ("Strawberries Holding"), filed petitions for relief under chapter 11 of the United States Bankruptcy Code, 11 U.S.C. SS 101-1330 (the "Bankruptcy Code"), in the United States Bankruptcy Court for the District of Delaware. The bankruptcy cases are currently pending before the United States District Court for the District of Delaware (the "Court") and are being jointly administered under Case No. 97-309 (RRM) (collectively, the "Chapter 11 Case"). The Debtor is currently operating the Business as debtor-in-possession under the authority of Sections 1107(a) and 1108 of the Bankruptcy Code.

3. On August 19, 1997, the Debtor and Trans World entered into a letter of intent (the "Letter of Intent") to provide, among other things, for the payment of a break-up fee in favor of Trans World under certain circumstances specified in the Letter of Intent. On the same date, the Court entered an order authorizing the Debtor to enter into the Letter of Intent and approving the break-up fee provisions thereof.

4. The Purchaser desires to purchase from the Debtor, and the Debtor desires to sell to the Purchaser, substantially all of the Debtor's assets, properties, rights and interests.

5. The Debtor desires to transfer to the Purchaser, and the Purchaser desires to accept and assume from the Debtor, certain liabilities and obligations of the Debtor specifically disclosed in this Agreement.

6. The execution and delivery of this Agreement and the consummation of the transactions set forth in this Agreement are conditioned, among other things, upon the entry of an order of the Court approving this Agreement and the transactions contemplated by this Agreement under sections 363 and 365 of the Bankruptcy Code (the "Sale Order").

In consideration of the foregoing and the mutual agreements contained in this Agreement, the Debtor and the Purchaser agree as follows:

following terms have the following meanings:

"Accounts Receivable" means (i) all trade and customer accounts and notes receivable arising out of the sale of goods or the rendition of services (including, without limitation, all amounts due (including any established reserves) from credit card issuers and credit card processors), (ii) all unused and unapplied credits and refunds relating to inventory (and any associated vendor advertising programs) purchased by the Debtor after the Petition Date and relating to any other post-Petition Date liability or obligation being assumed under Section 2.5(A), (iii) all amounts receivable in connection with employee loans and the Debtor's manager conference and (iv) any payments received with respect to the foregoing after the Closing Date, unpaid interest accrued thereon and any security or collateral relating thereto.

"Affiliate" means any Person that directly, or indirectly through one or more entities, controls, is controlled by or is under control with the person specified or, directly or indirectly, is related to or otherwise associated with any such Person.

"Agreement" means this Asset Purchase Agreement.

"Assumed Liabilities" has the meaning set forth in Section 2.5.

"Bankruptcy Code" has the meaning set forth in the second Preliminary Statement.

"Business" has the meaning set forth in the first Preliminary Statement.

"Chapter 11 Case" has the meaning set forth in the second Preliminary Statement.

"Claim" has the meaning assigned to such term in section 101(5) of the Bankruptcy Code.

"Closing" means the date and time at which the Debtor consummates the sale, assignment, transfer and delivery of the Purchased Assets to the Purchaser as provided in this Agreement by the contemporaneous (i) execution and delivery by the Debtor of the documents and instruments referred to in Section 4.2, (ii) delivery by the Purchaser of the documents and payments provided in Sections 3.1 and 4.3 and (iii) delivery by the Debtor, the Purchaser and the other Persons referred to in this Agreement of the additional documents referred to in Section 4.4.

"Closing Date" means the business day following the day on which notice is given by the Debtor to the Purchaser or by the Purchaser to the Debtor that all of the conditions contained in Section 6 have been satisfied or waived by the Debtor or the Purchaser, as the case may be, or at such other time and on such other day as is mutually agreed upon in writing by the parties to this Agreement.

"Consents" means all consents, novations, approvals, authorizations, requirements (including filing and registration requirements), waivers and agreements from any Persons necessary to authorize, approve or permit the full and complete sale, conveyance, assignment, sublease or transfer of the Purchased Assets and to consummate and make effective the transactions contemplated by this Agreement.

"Contracts" means all contracts, agreements, commitments, instruments, guaranties, bids, orders and proposals to which the Debtor is a party (including, without limitation, the Leases).

"Court" has the meaning set forth in the second Preliminary Statement.

"Debtor" means Strawberries Inc., a Delaware corporation.

"Debtor Employee Plans" has the meaning set forth in Section 5.1(L).

"Deposit" means the $500,000 deposit made by Trans World with the Debtor under the Letter of Intent as an earnest money deposit and maintained in a segregated, interest-bearing account.

"DOJ" means the Antitrust Division of the United States Department of Justice.

"Environmental Law" means any and all laws, statues, judgments, orders, decrees, ordinances, rules, regulations, permits, concessions, grants, franchises or licenses regulating Hazardous Materials, health, safety, the environment or the release of any Hazardous Material into the environment.

"Equipment Leases" means all of the Debtor's interest in the machinery and equipment used or held for use by the Debtor under equipment leases (other than the Debtor's point of sale equipment or AS400 computer system).

"Excluded Assets" has the meaning set forth in Section 2.2.

"Excluded Liabilities" has the meaning set forth in Section 2.6.

"FTC" means the Federal Trade Commission.

"Fixed Assets" means all machinery, equipment, furniture, fixtures, motor vehicles, leasehold and other improvements and other tangible personal property, including, without limitation, the Equipment Leases included in the Contracts; provided, that "Fixed Assets" does not include any leasehold or other improvements on property subject to real property leases listed on Schedule 2.2(D) that cannot be removed without damaging the underlying property.

"Foothill Facility" has the meaning set forth in Section 3.1.

"Governmental Authority" means any government or political subdivision, whether federal, state, local or foreign, or any agency or instrumentality of any such government or political subdivision, or any federal state, local or foreign court or arbitrator.

"H-S-R Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

"Hazardous Materials" means any chemical, substance, material, object, condition, waste or combination thereof known to be hazardous to human health or safety or to the environment due to its reactivity, explosiveness, toxicity, carcinogenicity, infectiousness or other harmful or properties or effects including, without limitation, all of those defined or regulated by any Environmental Law.

"Intellectual Property" means all know-how, trademarks, service marks, trade names (including all right, title and interest of the Debtor in and to the names "Strawberries," "Waxie Maxie's" and all derivations thereof), designs, logos, art work, copyrights, patents, licenses, developments, research data, designs, technology, test procedures, marketing plans, processes, confidential information and all other intellectual and intangible property rights, inventions (whether or not patentable), discoveries, business methods and trade secrets of the Debtor whatsoever (and applications for, and extensions and reissuances of, any of the foregoing and rights therein).

"Inventory" means all of the Debtor's inventories of products, work-in-process, finished goods, raw materials and supplies.

"Leased Real Property" means all of the Debtor's rights and incidents of interest in and to any deposits or other security given or made in respect of the Real Property Leases and all of the buildings, structures, improvements, fixtures and other property attached thereto or located thereon.

"Leases" means the Real Property Leases and the Equipment Leases.

"Letter of Intent" has the meaning set forth in the third Preliminary Statement.

"Liens" means any mortgage, lien, pledge, security interest, charge and other encumbrances other than Permitted Liens.

"Losses" has the meaning set forth in Section 9.1.

"Material Adverse Effect" means a material adverse effect on the Business or in the condition or value of the Purchased Assets, in each case taken as a whole, other than as has been previously forecasted and disclosed to the Purchaser by the Debtor.

"Material Consent" means any Consent (i) needed in connection with the Real Property Leases or the Contracts listed on Schedule 2.1(I) or (ii) of which the failure to obtain could reasonably be expected to have a Material Adverse Effect.

"Permits" means all licenses, permits, approvals, franchises, authorizations, variances, waivers or consents issued to the Debtor by any Governmental Authority.

"Permitted Lien" means all easements and similar rights of third parties and all defects in title that do not, individually or in the aggregate, have a Material Adverse Effect.

"Person" means an individual, partnership, corporation, association, joint stock company, trust, joint venture, limited liability company or Governmental Authority.

"Petition Date" has the meaning set forth in the second Preliminary Statement.

"Purchased Assets" has the meaning set forth in Section 2.1.

"Purchase Price" has the meaning set forth in Section 3.1.

"Purchaser" means Record Town, Inc., a New York corporation.

"Real Property Leases" means the real property leased by the Debtor under the real property leases listed on Schedule 2.1(E) and the additional real property leases identified by the Purchaser under the terms of
Section 2.3.

"Records" means all books, records, ledgers, files, documents, forms, correspondence, lists, plats, drawings, diagrams, designs, creative materials, advertising and promotional materials (including, without limitation, catalogs, brochures, customer and supplier lists, manuals, handbooks and labels and packaging), studies, reports and other printed or written materials (including, without limitation, any of such materials held or produced by third parties for the Debtor) relating to the Business or the Purchased Assets (including, without limitation, any confidential or other business information that has been reduced to writing or other medium).

"Sale Order" has the meaning set forth in the sixth Preliminary Statement.

"Strawberries Holding" means Strawberries Holding, Inc., a Delaware corporation of which the Debtor is a wholly owned subsidiary.

"Taxes" means income, gross receipts, property, sales, use, license, excise, franchise, employment, social security, governmental pension or insurance, withholding or similar taxes or contributions, together with any interest, additions or penalties with respect thereto and any interest in

respect of such additions or penalties.

"Termination Date" means October 31, 1997.

"Third Party Claim" has the meaning set forth in Section 9.3(A).

"Trans World" means Trans World Entertainment Corporation, a New York corporation of which the Purchaser is a wholly owned subsidiary.

"Warehouse Facility" means the Debtor's warehouse, administrative and office facility located in Milford, Massachusetts.

"WARN Act" means the Worker Adjustment and Retraining Notification Act of 1988, as amended.

(B) All terms defined in this Agreement in the singular have comparable meanings when used in the plural and vice versa, unless otherwise specified.

(A) all cash on hand (including, without limitation, any and all cash in the possession of, controlled by, or held in any bank account or safe deposit box maintained by the Debtor), certificates of deposit, bankers' acceptances, commercial paper and government or other securities of any kind;

(B) all Inventory, including, without limitation, all Inventory located at the Warehouse Facility and the leased real property listed on Schedules 2.1(E) and 2.2(D);

(C) all Accounts Receivable;

(D) all Fixed Assets;

(E) the Real Property Leases, including the Leased Real Property;

(F) all Records;

(G) all Intellectual Property;

(H) all Permits;

(I) all Contracts identified on Schedule 2.1(I);

(J) all rights arising from advance payments, prepaid expenses, prepaid rents (including any prepaid fixed rents) and deposits made to or owing from suppliers, licensors, utilities, taxing authorities (to the extent related to the overpayment of sales or use taxes and net of any offsets) and landlords (other than security deposits made in connection with real property leases listed on Schedule 2.2(D)), but excluding any such rights and claims that are created by actions taken by the Debtor after the Closing Date that are outside the ordinary course of business or do not relate to the transactions contemplated by this Agreement;

(K) all unfilled purchase and sale orders (including releases of quantities pursuant thereto);

(L) all rights and benefits of the Debtor in, to or under all insurance policies maintained by the Debtor for the Business or the Purchased Assets through the expiration date of such policies, but excluding any such rights and claims that are created by actions taken by the Debtor after the Closing Date that are outside the ordinary course of business or do not relate to the transactions contemplated by this Agreement; and

(M) the goodwill of the Debtor as a going concern, if any.

SECTION 2.2 Excluded Assets. Notwithstanding any other provision of this Agreement but subject to Section 2.3, the following rights, properties and assets are not included in the Purchased Assets (collectively, the "Excluded Assets"):

(A) the Warehouse Facility;

(B) any and all rights, claims, demands and causes of action of the Debtor, including any avoidance claims, fraudulent conveyance claims and causes of action of the Debtor's bankruptcy estate under the Chapter 11 Case;

(C) the Debtor's minute books, stock books, stock ledger and corporate seal;

(D) all of the assets, properties, rights and interests identified on Schedule 2.2(D) (which schedule includes, subject to Section 2.3, all real property leases not included on Schedule 2.1(E) and all Contracts not included on Schedule 2.1(I)); provided, that such schedule may be amended by the Purchaser at any time on or prior to the Closing Date to include such additional assets that the Purchaser, without adjustment to the Purchase Price, elects, in its sole discretion, not to have included in the Purchased

Assets);

(E) any and all credits, refunds and rights that are specifically excluded from Purchased Assets in Section 2.1; and

(F) all security deposits made in connection with real property leases listed on Schedule 2.2(D)).

(A) those liabilities and obligations of the Debtor, net of any credits, refunds or like adjustment applicable or related thereto, that arose after the Petition Date due to those vendors and suppliers (or in connection with those product sources and services) and as listed on a schedule to the instrument of assignment and assumption and bill of sale described in Section 4.3(E); provided, however, that the aggregate amount of such liabilities and obligations will not exceed $4,000,000 on the Closing Date;

(B) those liabilities and obligations of the Debtor arising under the Debtor's employee retention program as such program applies to each full-time employee of the Debtor, including Designated Employees (as defined in the motion filed with the Court by the Debtor on June 20, 1997);

(C) those liabilities and obligations of the Debtor arising from gift certificates issued by the Debtor prior to the Closing Date and returns of merchandise sold by the Debtor prior to the Closing Date; and

(D) with respect to any employee employed by the Debtor at the Warehouse Facility immediately prior to the Closing Date, any liabilities or

obligations relating to, based in whole or in part on events or conditions occurring or existing in connection with, or arising out of, the shutdown or relocation of any operations and facilities utilized by the Debtor in connection with the Business, including, without limitation, any action which could be construed as a "plant closing" or "mass layoff," as those terms are defined in the WARN Act or any "employment loss," as defined in the WARN Act, which any such employee may suffer or may be deemed to suffer;

(A) any liability or obligation of the Debtor or its directors, officers, stockholders or agents (acting in such capacities), arising out of, or relating to, this Agreement or the transactions contemplated by this Agreement, whether incurred prior to, at or subsequent to the Closing Date, including, without limitation, all finder's or broker's fees and expenses and any and all fees and expenses of any attorneys and accountants of the Debtor;

(B) all liabilities and obligations relating to events or conditions occurring or existing in connection with or arising out of, the Business as operated prior to the Closing Date, or the ownership, possession, use, operation or sale or other disposition prior to the Closing Date of any Purchased Assets (or any other assets, properties, rights or interests associated, at any time prior to the Closing Date, with the Business);

(C) all liabilities and obligations to any persons at any time employed by the Debtor or its predecessors-in-interest at any time or to any such person's spouses, children, other dependents or beneficiaries, with respect to incidents, events, exposures or circumstances occurring at any time during the period or periods of any such persons' employment by the Debtor or its predecessors-in-interest, whenever such claims mature or are asserted (other than those assumed by the Purchaser under Section 2.5(D)), including, without limitation, all liabilities and obligations arising (i) under a Debtor Employee Plan, except as specifically set forth in Section 2.5(B), (ii) under any employment, wage and hour restriction, equal opportunity, discrimination, plant closing or immigration and naturalization laws, (iii) under any collective bargaining Laws, agreements or arrangements or (iv) in connection with any workers' compensation or any other employee health, accident, disability or safety claims;

(D) all liabilities and obligations relating to the Purchased Assets based on events or conditions occurring or existing prior to the Closing Date and connected with, arising out of or relating to (i) any dispute for services rendered or goods manufactured, including, without limitation, product warranty claims and product liability claims, and claims for refunds, returns, personal injury and property damage (other than as set forth in Section 2.5(C)), (ii) Hazardous Materials or Environmental Laws, (iii) claims relating to employee health and safety, including claims for injury, sickness,

disease or death of any Person or (iv) compliance with any Laws relating to any of the foregoing;

(E) all liabilities and obligations, known or unknown, fixed, contingent or otherwise, the existence of which is a breach of, or inconsistent with, any representation, warranty, covenant, obligation or agreement of the Debtor set forth in this Agreement or in any of the other documents or agreements contemplated by this Agreement;

(F) any liability, claim or obligation relating to any litigation or legal proceeding pending on the Closing Date, or instituted thereafter, based on events or conditions occurring or existing in connection with, or arising out of, the Business as operated by the Debtor, or the ownership, possession, use or sale of the Purchased Assets or the Leased Real Property, prior to the Closing Date;

(G) any liability or obligation for any federal, state or local taxes attributable to periods prior to the Closing Date together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties, including, without limitation, (i) Taxes, (ii) capital gain, income and other taxes imposed on, or accruing as a result of the purchase and sale of the Purchased Assets and (iii) taxes attributable to, or resulting from, recapture, or otherwise arising from the transactions contemplated by this Agreement;

(H) any liability or obligation relating to events or conditions occurring or existing in connection with, or arising out of, the Excluded Assets;

(I) any liability or obligation incurred by the Debtor or their respective directors, officers, stockholders, agents or employees (acting it such capacities) after the date of this Agreement;

(J) with respect to any employee not employed by the Debtor at the Warehouse Facility immediately prior to the Closing Date, any liabilities or obligations relating to, based in whole or in part on events or conditions occurring or existing in connection with, or arising out of, the shutdown or relocation of any operations and facilities utilized by the Debtor in connection with the Business, including, without limitation, any action which could be construed as a "plant closing" or "mass layoff," as those terms are defined in the WARN Act or any "employment loss," as defined in the WARN Act, which any such employee may suffer or may be deemed to suffer;

(K) any liabilities and obligations of the Debtor arising under the mortgage for the Warehouse Facility; and

(L) any liability, obligation or claim of or against the Debtor that has been filed under section 521 of the Bankruptcy Code and Federal Rule of Bankruptcy Procedure 1007(b).

the transfer of the Purchased Assets and the other undertakings of the Debtor contained in this Agreement (including, without limitation, Section 6) is (i) an amount (the "Purchase Price") in cash, adjusted as described in Section 3.2, equal to the sum of (a) $9,500,000 (of which $5,000,000 will be paid at the Closing and the remainder of which, after making the adjustment described in
Section 3.2, will be paid, if necessary, no later than the first business day after the physical inventory count described in Section 6.3(B) is completed),
(b) an amount equal to the amount necessary to pay all obligations outstanding under the Debtor's debtor in possession credit facility with Foothill Capital Corporation (capped at 60.5% of the book value of all of the Debtor's Inventory) (the "Foothill Facility") and (c) an amount equal to the lesser of (1) the Court approved fees and expenses charged by persons rendering professional services to the Debtor or to any committee in connection with the Chapter 11 Case from the Petition Date through the Closing Date, less any amounts already paid on account of such services on or subsequent to the Petition Date and (2) $200,000 and (ii) the assumption of the Assumed Liabilities under Section 2.5. The Deposit will be credited towards the Purchase Price.

(B) If the Purchaser elects to acquire additional real property leases of the Debtor under Section 2.3, the Purchaser will pay the requisite cure amounts due to the lessors under such real property leases as required under section 365(b)(1) of the Bankruptcy Code.

will deliver to the Purchaser the following items:

(A) copies of (i) resolutions of the board of directors of the Debtor authorizing and approving this Agreement and all other transactions and agreements contemplated by this Agreement, (ii) the Debtor's certificate of incorporation and (iii) the Debtor's by-laws, all certified by an officer of the Debtor;

(B) a long-form good standing certificate for the Debtor from Secretary of the State of Delaware and from the appropriate state and tax authorities in each jurisdiction in which the Debtor is qualified to do business as a foreign corporation with respect to the ownership, possession, use or operation of any of the Purchased Assets, dated not more than ten days prior to the Closing Date;

(C) an incumbency certificate of the officers of the Debtor;

(D) an executed copy of an instrument of assignment and assumption and bill of sale, in substantially the form of Exhibit A, assigning the Assumed Liabilities and transferring the Purchased Assets to the Purchaser, free and clear of any and all Liens;

(E) an executed copy of an assignment of leases for the Leases, in substantially the form of Exhibit B, relating to Leased Real Property and any other documents necessary, in the sole discretion of the Purchaser, to assign the Leases to the Purchaser;

(F) to the extent required under the Bankruptcy Code, copies of all Material Consents;

(G) evidence satisfactory to the Purchaser of the release and termination of any and all Liens on the Purchased Assets (which condition is satisfied by the entry of the Sale Order);

(H) instruments of assignment to the Purchaser of all of the Intellectual Property identified on Schedule 5.1(I);

(I) evidence of the due filing by the Debtor with the FTC and the DOJ under the H-S-R Act and the expiration of the waiting period thereunder;

(J) such other deeds, bills of sale, endorsements, assignments, affidavits and other good and sufficient instruments of sale, assignment, conveyance and transfer, in form and substance reasonably satisfactory to the Purchaser and its counsel, as are required to effectively vest in the Purchaser good and marketable title and all of the Debtor's right, title and interest in and to all of the Purchased Assets, free and clear of any and all Liens.

(A) copies of (i) resolutions of the board of directors of the Purchaser authorizing and approving this Agreement and all other transactions and agreements contemplated by this Agreement, (ii) the Purchaser's certificate of incorporation and (iii) the Purchaser's by-laws, all certified

by an officer of the Purchaser;

(B) a long-form good standing certificate for the Purchaser from Secretary of the State of New York dated not more than ten days prior to the Closing Date;

(C) an incumbency certificate of the officers of the Purchaser;

(D) evidence of the due filing by the Purchaser with the FTC and the DOJ under the H-S-R Act and the expiration of the waiting period thereunder; and

(E) an executed copy of an instrument of assignment and assumption and bill of sale, in substantially the form of Exhibit A, assuming the Assumed Liabilities.

(A) the Purchaser and the Debtor will execute and deliver an occupancy agreement substantially in the form of Exhibit C; and

(B) Trans World will execute and deliver a guaranty substantially in the form of Exhibit D.

Order and sections 363 and 365 of the Bankruptcy Code, the execution and delivery of this Agreement by the Debtor, and the consummation of the transactions contemplated by this Agreement and compliance with the terms of this Agreement do not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation under, or loss of a benefit relating to the Business under, or result in the creation of any Lien upon any of the Purchased Assets, any provision of (i) the certificate of incorporation or by-laws of the Debtor, (ii) subject to applicable bankruptcy law provisions, any agreement or obligation to which the Debtor is a party or by which any of the Purchased Assets are bound or (iii) any law, statute, judgment, decree, order, rule or regulation of any Governmental Authority.

default under, the terms of any rules or regulations of any Governmental Authority or of any judgment, decree, order or writ of any Governmental Authority, whether at law or in equity.

agreements or arrangements for the benefit of the employees of the Debtor (collectively, "Employee Plans"), nor has the Debtor or any of its officers or directors taken any action, directly or indirectly, to obligate the Debtor to institute any such Employee Plan. The Debtor and the Subsidiaries have complied with all material terms and conditions of the Debtor Employee Plans. The Debtor has made all contributions required to be made to the Employee Plans, or properly accrued for such contribution. All of the Debtor Employee Plans have been maintained in material compliance with all laws, regulations and orders of all Governmental Authorities, including, without limitation, ERISA that apply to such Plans. Each of the Debtor Employee Plans that is intended to be qualified within the meaning of Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended, has received a favorable determination from the Internal Revenue Service.

1997, has not:

(1) sold, transferred, licensed or otherwise disposed of or agreed to sell, transfer, license or otherwise dispose of any Purchased Assets, other than sales of Inventory in the ordinary and normal course of business;

(2) entered into any other agreements, commitment, contracts or undertakings, except agreements, commitments, contracts or understandings made in the ordinary and normal course of business; or

(3) waived or released any of its rights under, amended or otherwise modified any Leases, Contracts or any other agreements, commitments, contracts or understandings to which it is a party.

Purchaser and Trans World each is a corporation duly organized, validly existing and in good standing under the laws of the State of New York. The Purchaser and Trans World each has all requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations under this Agreement and to consummate the transactions contemplated by this Agreement. This Agreement and the transactions and other agreements and instruments contemplated by this Agreement have been duly approved by all necessary corporate action on the part of the Purchaser and Trans World, have been executed and delivered by the Purchaser and Trans World, as applicable, and constitutes the valid and binding obligations of the Purchaser or Trans World, as applicable, enforceable in accordance with their respective terms.

parties to this Agreement made in this Agreement, subject to the exceptions thereto, will not be affected by any information furnished to, or any investigation conducted by, any of them or their representatives in connection with the subject matter of this Agreement. The representations and warranties set forth in Sections 5.1(E), 5.1(F), 5.1(I), 5.1(N), 5.1(Q), 5.2(C) and 5.2(E) survive the Closing and continue until the date that is sixty days after the Closing Date. All other representations and warranties do not survive the Closing.

attested to by its Secretary or an Assistant Secretary and dated the Closing Date to the effect that to the best of the knowledge and belief of such officers the conditions specified in Sections 6.1(A), (B), (C) and (D) have been fulfilled.

both the Purchaser and the Debtor to consummate the transactions provided for by this Agreement are subject, on or prior to the Closing Date, of each of the following additional conditions:

checks or other documents received by the Debtor on account of any such Accounts Receivable. The Debtor or such Affiliate will advise the Purchaser (promptly following the Debtor's becoming aware thereof) of any counterclaims or set-offs that may arise subsequent to the Closing Date with respect to any Account Receivable.

to events or conditions occurring or existing in connection with, or arising out of, the operation of the Business prior to the Closing or the ownership, possession, use or sale of the Purchased Assets prior to the Closing, the Debtor will cooperate with the Purchaser in the defense of any such claim. In the event that a claim is asserted against the Debtor or its Affiliates with respect to events or conditions occurring or existing in connection with, or arising out of, the operation of the Business after the Closing or the ownership, possession, use or sale of the Purchased Assets after the Closing, the Purchaser will cooperate with the Debtor in the defense of any such claim.

Closing:

(A) by mutual written consent of the Debtor and the Purchaser;

(B) by the Purchaser if the Closing has not occurred on or before the Termination Date;

(C) by the Purchaser, if there has been a material breach by the Debtor of any of its representations, warranties, covenants, obligations or agreements set forth in this Agreement or in any writing delivered by the Debtor under this Agreement;

(D) by the Debtor, if there has been a material breach by the Purchaser of any of its representations, warranties, covenants, obligations or agreements set forth in this Agreement or in any writing delivered by the Purchaser under this Agreement;

(E) by the Debtor or the Purchaser if consummation of the transactions contemplated by this Agreement violates any non-appealable final order, decree or judgment of any court or Governmental Authority having competent jurisdiction, including, without limitation, the Court;

(F) by the Purchaser, if since the date of this Agreement there has been a material adverse change in the condition (financial or otherwise), business, assets, properties, operations or prospects of the Debtor or the Business, other than those changes that have been previously forecasted and disclosed to the Purchaser by the Debtor;

(G) by the Purchaser, if any condition precedent to the Purchaser's obligation to effect the Closing as set forth in Section 6.1 is not satisfied, or has become incapable of fulfillment, and such condition is not waived, if waivable, by the Purchaser on or prior to the Termination Date; and

(H) by the Debtor, if any condition precedent to the Debtor's obligation to effect the Closing as set forth in Section 6.2 is not satisfied, or has become incapable of fulfillment, and such condition is not waived, if waivable, by the Debtor on or prior to the Termination Date.

(A) each party will return all documents, workpapers and other material of any other party relating to the transactions contemplated by this Agreement, whether so obtained before or after the execution of this Agreement, to the party furnishing the same, and all confidential information received by any party to this Agreement with respect to the business of any other party will be treated in accordance with Section 7.1.

(B) If this Agreement is terminated under Section 8.1 and the Debtor accepts, or the Court approves, another transaction in which substantially all of the Debtor's stock or assets are sold, transferred or otherwise disposed of, including, without limitation, a stand alone plan of reorganization for the Debtor, the Debtor will (i) reimburse the Purchaser and its Affiliates for their actual, reasonable and documented out-of-pocket expenses in connection with the transaction contemplated by this Agreement, including, without limitation, amounts incurred in connection with their due diligence investigation and their legal fees and (ii) pay the Purchaser a fee equal to 2.75% of the total value to the Debtor of the winning bidder's bid (up to but not exceeding $27 million) plus 10% of the amount by which the total value to the Debtor (as agreed by the parties or determined by the Court) of the winning bidder's bid exceeds $27 million, in cash (collectively, the "Break-Up Fee"). The Break-Up Fee will be payable upon consummation of such other transaction and the Break-Up Fee will be granted administrative expense priority in the Debtor's bankruptcy estate. In addition, the Deposit will be returned to Trans World if the Purchaser is not the winning bidder for the Purchased Assets, within 3 business days of entry of an order by the Court approving such other bidder's bid. Notwithstanding the foregoing, if the transactions contemplated by this Agreement are not approved by the Court for any reason other than the existence of a competing offer, the Break-Up Fee will not be payable if there is subsequently approved a stand alone plan of reorganization for the Debtor.

(C) If the Closing does not occur as the result of the Debtor's willful and material breach of any of the obligations set forth in this Agreement, provided that the Purchaser either has satisfied or is reasonably likely to satisfy the conditions set forth in this Agreement which are within the Purchaser's control to satisfy, the Debtor will pay to the Purchaser $740,000 as liquidated damages for such breach or default.

(D) If the Closing does not occur as the result of the Purchaser's willful and material breach of any of the obligations set forth in this Agreement, provided that the Debtor either has satisfied or is reasonably likely to satisfy the conditions set forth in this Agreement which are within the Debtor's control to satisfy, the Deposit will be held by the Debtor pending resolution of any dispute with respect to this Agreement and if such dispute is resolved in favor of the Debtor, the Debtor will be entitled to retain the Deposit to apply towards any damages it may incur as a result of such breach or default.

permitted by law and accounting fees and investigation costs) (collectively, "Losses") that may be incurred by any such indemnified party and, directly or indirectly, resulting or arising from, related to or incurred in connection with
(i) the use or operation of the Purchased Assets or the conduct of the Business after the Closing Date, (ii) the Assumed Liabilities, (iii) those liabilities and obligations arising after the Closing Date under the Contracts and Leases included in the Purchased Assets and acquired by the Purchaser under Section 2.1; provided, however, that this Section 9.1 does not apply to any such liabilities and obligations arising from breaches of such Leases or Contract or defaults under such Leases or Contracts by the Debtor, except to the extent set forth in Section 2.5(A) and (iv) any breach of any representation or warranty that expressly survives the Closing under Section 5.3 or any covenant, obligation or agreement of the Purchaser contained in this Agreement other than those to be performed on or before the Closing Date.

(A) The indemnifying party has the right to control the defense, compromise or settlement of the Third Party Claim with counsel of its choosing if the indemnifying party delivers written notice to the indemnified party within seven calendar days following the indemnifying party's receipt of notice of the Third Party Claim from the indemnified party acknowledging its obligations to indemnify the indemnified party with respect to such Third Party Claim in accordance with this Section 9 and establishes security in form and substance reasonably satisfactory to the indemnified party to secure the indemnifying party's obligations under this Section 9 with respect to such Third Party Claim. In its defense, compromise or settlement of any Third Party Claim, the indemnifying party will provide the indemnified party, in a timely manner, with such information with respect to such defense, compromise

or settlement as the indemnified party requests and will not assume any position or take any action that would impose an obligation of any kind or restrict the actions of the indemnified party. The indemnified party will be entitled (at the indemnified party's expense) to participate in the defense by the indemnifying party of any Third Party Claim with its own counsel. Notwithstanding the foregoing, if the indemnifying party fails, in the reasonable opinion of the indemnified party, to take reasonable steps necessary to defend a Third Party Claim within ten calendar days after receiving notice from the indemnified party that the indemnified party believes the indemnifying party has failed to take such steps, the indemnified party may assume its own defense, and the indemnifying party will be responsible for any reasonable expenses therefor. Without the prior written consent of the indemnified party, the indemnifying party will not enter into any settlement or compromise of any Third Party Claim which could lead to liability or create any financial or other obligation on the part of the indemnified party for which the indemnified party is not entitled to reimbursement under this Agreement.

(B) In the event that the indemnifying party does not undertake the defense, compromise or settlement of a Third Party Claim, the indemnified party has the right to control the defense or settlement of such Third Party Claim with counsel of its choosing at the cost of the indemnifying party; provided, however, that the indemnified party will not settle or compromise any Third Party Claim without the indemnifying party's prior written consent, unless (i) the terms of such settlement or compromise release the indemnified party and the indemnifying party from any and all liability with respect to the Third Party Claim or (ii) the indemnifying party has not (a) acknowledged its obligations to indemnify the indemnified party with respect to such Third Party Claim in accordance with this Section 9 and (b) established security in form and substance reasonably satisfactory to the indemnified party to secure the indemnifying party's obligations under this Section 9 with respect to such Third Party Claim.

(C) Any indemnifiable claim under this Agreement that is not a Third Party Claim will be asserted by the indemnified party by promptly delivering notice thereof to the indemnifying party. If the indemnifying party does not respond to such notice within 30 calendar days after its receipt, it has no further right to contest the validity of such claim.

Agreement and supersede all prior contracts, agreements, arrangements, communications and discussions whether oral or written with respect thereto.

To the Debtor:              Strawberries Inc.
                            205 Fortune Boulevard
                            Milford, Massachusetts  01757
                            Attn:
                            Telephone:
                            Facsimile:

With a copy to:             Kaye, Scholer, Fierman,
                            Hays & Handler, LLP
                            425 Park Avenue
                            New York, New York  10022
                            Attn:  Mitchel H. Perkiel, Esq.
                            Telephone:  (212) 836-8000
                            Facsimile:  (212) 836-8689

To the Purchaser

  or Trans World:           Record Town, Inc. or

                            Trans World Entertainment Corporation
                            38 Corporate Circle
                            Albany, New York  12203
                            Attn:  Robert J. Higgins

                            John J. Sullivan
                            Telephone:  (518) 452-1242
                            Facsimile:  (518) 452-7833

With a copy to: Jones, Day, Reavis & Pogue 77 West Wacker Chicago, Illinois 60601 Attn: Timothy R. Pohl, Esq.

Telephone: (312) 782-3939
Facsimile: (312) 782-8585

Any party by written notice to the others given in accordance with this Section 10.4 may change the address or the persons to whom notices or copies

thereof are to be directed.

* * *

Executed as of the day and year first above written.

STRAWBERRIES INC.

By: /s/ROBERT L. KLIEWE
   -------------------------
Name: Robert L. Kliewe
Title: Chief Financial Officer

RECORD TOWN, INC.

By: /s/JOHN J. SULLIVAN
   -------------------------
Name: John J. Sullivan

Title: Senior Vice President of Finance and
       Chief Financial Officer

TRANS WORLD ENTERTAINMENT CORPORATION

By:/s/ JOHN J. SULLIVAN
   -------------------------
Name: John J. Sullivan

Title: Senior Vice President of Finance and
       Chief Financial Officer