Trans World Entertainment (TWMC)

On December 9, 2011, Trans World Entertainment Corporation (the “Company”) entered into a Separation Agreement and Release (the “Agreement”) with John J. Sullivan, the Principal Accounting Officer and former Chief Financial Officer of the Company. Pursuant to the Agreement, on January 6, 2012, Mr. Sullivan will resign from his position as Principal Accounting Officer, as an employee of the Company and from all other positions that Mr. Sullivan holds with the Company and its affiliates.

Subject to his providing a general release of claims and complying with the terms and conditions of the Agreement, Mr. Sullivan will be entitled to the separation payments and benefits under the Agreement. In particular, Mr. Sullivan will be entitled to payment of his base salary for a period of one year following his date of separation, payment of the 2011 annual bonus that he would otherwise be entitled to receive, continuation of his health and life insurance benefits for a period of one year following separation, and payment of his benefit under the Trans World Entertainment Corporation Supplemental Executive Retirement Plan, in accordance with and subject to the terms and conditions of the Plan. In addition, Mr. Sullivan will be entitled to exercise certain of the stock options previously granted to him by the Company for an additional period ending December 12, 2012.

In order to receive the payments and benefits under the Agreement, in addition to his providing a release of claims, Mr. Sullivan must comply with specified restrictions relating to confidentiality, noncompetition and nonsolicitation, and must cooperate with the Company and provide certain transition services to the Company at the Company’s request.

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