$3.8 million deal made during auction.

Entrepreneur Bill Sagan and his Wolfgang’s Vault Web site, operating under the name Norton LLC, will acquire the Tower.com online store and other assets from the retailer. A Chapter 11 auction recently liquidated the troubled Tower Records chain.

There had been some doubt as to whether or not Sagan would acquire the assets. During the Oct.5-6 auction, Sagan agreed to pay $3.8 million in a deal that also gave him the assets to Pulse! magazine and the chain’s 33rd Street record label. But a dispute about the terms of the deal emerged and had to be settled by an Oct. 11 court hearing.

That hearing was triggered by Norton’s concern over an agreement Tower Records made with the Federal Trade Commission. It stated that in the event of a sale in which customer information would be included, customers must be given a 30-day notice with an opt-out option, which if exercised would exclude their information from the sale.

In addition, according to court documents, Norton was concerned that the Web site had been stripped of all content and believed that the IT staff responsible for maintaining the site had been discharged. But those matters were resolved at the hearing and the acquisition is proceeding, sources say, after it was determined that the deal should close as initially agreed upon.

Norton’s bid was part of the $134.3 million winning offer put together by Great American, which also included real estate firms, to outbid Trans World Entertainment's $133.8 million bid. Since Trans World was the only suitor looking to buy all of Tower’s assets, individual auctions were held for separate assets, with the winners forming the group led by Great American.

In addition to Sagan, one-stop distributor Super D placed a qualifying bid by Sept. 25 on Tower.com. On the Oct. 5 auction date, Web giant Amazon.com participated via phone, according to court documents. But after hearing Norton’s initial qualifying bid of $3.4 million, the other bidders dropped out without making an offer.

When the winners of the separate auctions were combined to bid against Trans World, Norton upped its part of the offer to $3.8 million. In increasing the offer, other Tower assets would be included, such as the 33rd Street label and Pulse! magazine.

Sagan entered the online retail music retail world after he paid more than $5 million in 2003 for a cache of the late Bill Graham’s concert memorabilia, which he sells at the Wolfgang's Vault site, along with other assets and merchandise he has since acquired.

A spokeswoman for Wolfgang’s Vault declines to comment.