TRANS WORLD ENTERTAINMENT CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

EXHIBIT 10.1

TRANS WORLD ENTERTAINMENT CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

ARTICLE 1

PURPOSE

          Trans World Entertainment Corporation has established the Trans World Entertainment Corporation Supplemental Executive Retirement Plan (the "Plan") with the intention of retaining executives whose skills and talents are important to the Company's operations by providing a monthly retirement income that supplements benefits under other retirement arrangements.

ARTICLE 2

DEFINITIONS

          A. "Company" means Trans World Entertainment Corporation, a New York corporation, and its Subsidiaries.

          B. "Subsidiary" means a corporation, or other form of business organization, the majority interest of which is owned, directly or indirectly, by the Company.

          C. "Board of Directors" means the Board of Directors of the Company.

          D. "Change in Control" means the occurrence of any one of the following events that occur after the date, if ever, that fewer than twenty percent of the outstanding shares of common stock of the Company in the aggregate are beneficially owned (as defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the "Exchange Act")) by Robert J. Higgins, members of his immediate family and one or more trusts established for the benefit of such individual or family members for a period of 60 consecutive calendar days: (i) the sale of the Company substantially as an entirety (whether sale by stock, sale of assets, merger, consolidation, liquidation, dissolution or similar occurrence) occurs, where the shareholders of the Company, immediately prior to a consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, shares representing in the aggregate at least one-half of the voting stock of the corporation issuing cash or securities in a consolidation or merger (or its ultimate parent corporation, if any); (ii) any tender offer or exchange offer subject to the regulations of the Securities and Exchange Commission is made by which any person or group, other than Robert J. Higgins, members of his immediate family and one or more trusts established for the benefit of such individual or family members, as "person" or "group" is defined within the meaning of Section 13(d) of the Exchange Act, becomes the beneficial owner, directly or indirectly, of more than one-half of the outstanding shares of common stock of the Company; or (iii) fifty percent or more of the directors elected to the Board of Directors of the Company are persons who were not nominated by management or the Board of Directors of the Company in the most recent proxy statement of the Company, excluding from such computation the replacement of any director or directors who resign voluntarily and not as a result of any disagreement expressed in writing with the Company's operations, policies or practices. Notwithstanding the

foregoing, a "Change in Control" shall not be deemed to have occurred for purposes of clause (i) above solely as the result of an acquisition of securities by the Company which, by reducing the number of shares of common stock outstanding, increases the proportionate number of shares of common stock beneficially owned by any person to 40% or more of the shares of common stock of the Company then outstanding; provided , however , that if any person referred to in this sentence shall thereafter become the beneficial owner of any additional shares of common stock of the Company (other than pursuant to a stock split, stock dividend or similar transaction), then a "Change in Control" shall be deemed to have occurred for purposes hereof.

          E. "Committee" means the Compensation Committee of the Board of Directors or such other persons or group as the Board of Directors may appoint to serve as the Committee.

          F. "Participant" means an executive listed on Exhibit A hereto.

          G. "Beneficiary" means a person who is designated by a Participant to receive a Benefit under the Plan in respect of the Participant following his or her death. A Beneficiary shall not be considered a Participant by virtue of this definition.

          H. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.

          I. "Plan Year" means the calendar year.

          J. "Normal Retirement Age" means age 65.

          K. "Early Retirement Age" means age 60.

          L. "Benefit" means a series of payments made or due under the Plan.

ARTICLE 3

COVERAGE AND EFFECT

          This document states the terms of the Plan as established by Resolution of the Board of Directors and first effective on March 1, 1997. Participation is limited to the executives listed on Exhibit A hereto.

ARTICLE 4

MANAGEMENT AND ADMINISTRATION; AMENDMENT

          The Plan may be amended from time to time or terminated at any time by written resolution of the Board of Directors; provided, however , that no such amendment or termination shall retroactively impair or otherwise adversely affect the rights of any person to Benefits under the Plan which have accrued and are vested prior to the date of the amendment or termination.

          The Committee shall have the authority to control and manage the operation and administration of the Plan. The Committee shall have the full power and authority, in its sole discretion: (a) to promulgate and enforce such rules and regulations as it shall deem necessary or appropriate for the administration of the Plan;

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(b) to interpret the Plan consistent with the terms and intent thereof; and (d) to resolve any possible ambiguities, inconsistencies and omissions in the Plan.

         The Committee may engage the services of accountants, attorneys, actuaries, consultants and such other professional personnel as they deem necessary or advisable to assist them in fulfilling their responsibilities under the Plan. The Committee and their delegates and assistants shall be entitled to act on the basis of all tables, valuations, certificates, opinions and reports furnished by such professional personnel.

ARTICLE 5

CLAIMS PROCEDURE

          If a Participant or Beneficiary believes he or she is entitled to Benefits and has not received them, the Participant or Beneficiary must submit a written claim to the Committee. If the Committee denies a claim for Benefits in whole or in part, the claimant may appeal the denial of the claim in writing within 60 days of receiving the Committee's decision.

ARTICLE 6

VESTING

          A Participant's Benefits hereunder shall vest as follows, based on the Participant's full years of continuous service with the Company or age attained prior to termination of employment with the Company, whichever results in the highest percentage of vested Benefit:

           In addition, a Participant's Benefits shall become vested in full upon the death of the Participant prior to his or her termination of employment with the Company or upon a Change in Control of the Company prior to his or her termination of employment with the Company. Any unvested portion of a Participant's Benefit shall be forfeited upon termination (other than by reason of his or her death) of the Participant's employment with the Company.

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ARTICLE 7

BENEFITS

     A. Normal Retirement Benefit

          The Normal Retirement Benefit for each Participant shall be the annual benefit set forth on Exhibit A hereto for the Participant, to the extent vested in accordance with Article 6 above. Such annual Normal Retirement Benefit shall be payable in equal monthly installments for a period of 20 years, beginning on the later of (i) the first business day of the month following the Participant's attainment of Normal Retirement Age, or (ii) the first business day of the month following the Participant's termination of employment with the Comapny.

     B. Early Retirement Benefit

          (a) A Participant whose employment with the Company terminates before attainment of Normal Retirement Age shall be eligible to receive an Early Retirement Benefit under the Plan, but only if the Committee, in its sole discretion, consents in writing to such Early Retirement Benefit. A Participant's Early Retirement Benefit shall be an amount payable in equal monthly installments for a period of 20 years beginning on the date set forth below, the present value of which (using a discount rate of 5%, compounded annually) is equal to the present value (using a discount rate of 5%, compounded annually) of the Participant's vested Normal Retirement Benefit, as set forth in paragraph A of this Article 7. Such Early Retirement Benefit shall be payable in equal monthly installments for a period of 20 years, beginning on the latest of (i) the first business day of the month following the Participant's attainment of Early Retirement Age, (ii) the first business day of the month following the Participant's termination of employment with the Company, or (iii) the date agreed in writing by the Participant and the Company.

     C. Benefits for Disabled Participants

          A Participant who (i) becomes totally and permanently disabled (as determined in accordance with the terms of the Company's Long Term Disability Plan), (ii) remains so disabled until Normal Retirement Age, and (iii) receives benefits under the Company's Long Term Disability Plan, shall be eligible to receive his or her Normal Retirement Benefit upon reaching Normal Retirement Age computed as though the Participant retired at Normal Retirement Age. Such Benefits shall commence on the later of (i) the first business day of the month following the Participant's attainment of Normal Retirement Age or (ii) the first business day of the month following discontinuance of payments to the Participant under the Company's Long Term Disability Plan.

ARTICLE 8

DEATH BENEFITS

 A. Pre-Retirement Death Benefits

          In the event a Participant dies prior to termination of his or her employment with the Company, the Participant's Beneficiary shall be entitled to a Pre-Retirement Survivor Benefit payable in equal monthly

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installments for a period of 20 years beginning on the first business day of the month following the Participant's death, the present value of which (using a discount rate of 5%, compounded annually) is equal to the present value (using a discount rate of 5%, compounded annually) of the Participant's Normal Retirement Benefit, as set forth in paragraph A of Article 7 taking into account full vesting due to the death of the Participant prior to termination of employment.

     B. Post-Termination Death Benefits

          (a) In the event a Participant dies after termination of his or her employment with the Company but prior to the commencement of Benefit payments hereunder, the Participant's Beneficiary shall be entitled to a Post-Termination Survivor Benefit payable in equal monthly installments for a period of 20 years beginning on the first business day of the month following the Participant's death, the present value of which (using a discount rate of 5%, compounded annually) is equal to the present value (using a discount rate of 5%, compounded annually) of the Participant's vested Normal Retirement Benefit, as set forth in paragraph A of Article 7.

          (b) In the event a Participant dies after termination of his or her employment with the Company and after commencement of Benefit payments hereunder, the Participant's Beneficiary shall be entitled to receive any remaining Benefits of the Participant in the same amounts and at the same times as would have been paid to the Participant if he or she had survived.

          (c) In the event a Participant's Beneficiary dies after commencement of Benefit payments to such Beneficiary hereunder, the Beneficiary's estate shall be entitled to receive any remaining Benefits of the Participant in the same amounts and at the same times as would have been paid to the Participant if he or she had survived.

ARTICLE 9

FORFEITURE

     A. Competitive Conduct

          In consideration for the supplemental retirement benefits provided for herein, for a period of five years following a Participant's termination of employment with the Company and at all times when Benefits are being paid to the Participant hereunder, a Participant shall not render services for any organization, or engage directly or indirectly in any business, which organization or business is engaged in the sale or distribution of music, movies or related accessories in the continental United States. A Participant who has terminated employment shall be free, however, to purchase as an investment or otherwise, stock or other securities of such organization or business so long as they are listed upon a recognized securities exchange or traded over the counter, and such investment does not represent a greater than 10 percent equity interest in the organization or business. The restrictions set forth in this paragraph A shall not apply to a Participant whose employment with the Company terminates after a Change in Control.

     B. Nonsolicitation

          In further consideration for the supplemental retirement benefits provided for herein, for a period of five years following a Participant's termination of employment with the Company and at all times when

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Benefits are being paid to the Participant hereunder, a Participant shall not, on behalf of himself or any other pe