Exhibit 10.1
EIGHTH AMENDMENT TO CREDIT AND GUARANTY AGREEMENT
EIGHTH
AMENDMENT TO CREDIT AND GUARANTY AGREEMENT, dated as of June ___,
2008 (this “ Amendment ”), to the Credit and
Guaranty Agreement, dated as of April 30, 2007 (as amended,
restated, supplemented or modified from time to time, the “
Credit Agreement ”), by and among Handleman Company, a
Michigan corporation (“ Holdings ”), Handleman
Services Company, a Michigan corporation (“ Handleman
Services ”), certain subsidiaries of Holdings identified
on the signature page hereto as “Borrowers” (such
Subsidiaries, together with Handleman Services, are referred to
individually as a “ Borrower ” and collectively,
jointly and severally, as “ Borrowers ”),
certain subsidiaries of Holdings identified on the signature page
hereto as “Guarantors” (such subsidiaries, together
with Holdings, are referred to individually as a “
Guarantor ” and collectively, jointly and severally,
as “ Guarantors ”), the lenders party hereto
from time to time (“ Lenders ”), and Silver
Point Finance, LLC (“ Silver Point ”), as
administrative agent for Lenders (in such capacity, together with
its successors and assigns in such capacity, the “
Administrative Agent ”) and as collateral agent for
Lenders (in such capacity, together with its successors and assigns
in such capacity, the “ Collateral Agent ” and
together with Administrative Agent, each an “ Agent
” and collectively the “ Agents ”).
WHEREAS,
Borrowers and Guarantors have requested that Agents and Lenders
agree to amend certain terms and conditions of the Credit
Agreement, in each case, as more fully set forth herein; and
WHEREAS,
Agents and Lenders have agreed to make such amendments to the
Credit Agreement, in each case, subject to the terms and conditions
set forth herein.
NOW,
THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1.
Definitions . All terms used herein which are defined in the
Credit Agreement and not otherwise defined herein are used herein
as defined therein.
2.
Amendments to Credit Agreement .
(a) Section 1.1
of the Credit Agreement is hereby amended by adding the following
new definitions thereto, in appropriate alphabetical order, to read
in its entirety as follows:
“‘Eighth Amendment’ means the Eighth
Amendment to Credit and Guaranty Agreement, dated as of June ___,
2008, by and among Credit Parties, Lenders and Agents.”
“‘Eighth Amendment Effective Date’ has the
meaning ascribed to the term ‘Amendment Effective Date’
in the Eighth Amendment.”
(b) Section 1.1
of the Credit Agreement is hereby amended by amending and restating
the definitions of the following terms contained therein to read in
their entirety as follows:
“‘
Minimum Availability Amount ’ means, at any time, the
aggregate principal amount of the Tranche B Term Loan outstanding
at such time.”
““Revolving Commitment Termination Date”
means the earliest to occur of (i) May 1, 2007, if the
Term Loans are not made on or before
that date;
(ii) April 30, 2012; (iii) the date the Revolving
Commitments are permanently reduced to zero pursuant to Section
2.12(b) or 2.13; (iv) the date of the termination of the
Revolving Commitments pursuant to Section 8.1; and
(v) the date on which the outstanding principal amount of the
Tranche B Term Loan is reduced to zero.”
(c) Clause
(G) of Section 2.12(c)(i) and clause (G) of
Section 2.12(c)(ii) of the Credit Agreement are each hereby
amended and restated to read in their entirety as follows:
“(G) as a
result of the occurrence of the Revolving Commitment Termination
Date or as a result of the occurrence of the Term Loan Maturity
Date or under any other circumstance”
(d) The
first sentence of Section 2.13(k) of the Credit Agreement is
hereby amended and restated to read in its entirety as
follows:
“Concurrently with any prepayment of the Loans and/or
reduction of the Revolving Commitments pursuant to
Sections 2.13(a)-(g), Holdings shall deliver to Administrative
Agent a certificate of an Authorized Officer demonstrating the
calculation of the amount of the applicable net proceeds,
Consolidated Excess Cash Flow or other applicable financial tests
or proceeds giving rise to the prepayment, as the case may be;
provided , that such certificate with respect to the
calculation of Consolidated Excess Cash Flow for the Fiscal Year of
the Credit Parties ended May 3, 2008 shall not be required to
be delivered until September 15, 2008.”
(e) Clause
(ii) of Section 5.1(c) of the Credit Agreement is hereby
amended and restated to read in its entirety as follows:
“(ii)
with respect to such consolidated financial statements an opinion
thereon of PricewaterhouseCoopers LLP or other independent
certified public accountants of recognized national standing
selected by Holdings, and reasonably satisfactory to Administrative
Agent, which shall state that such consolidated financial
statements fairly present, in all material respects, the financial
position of Holdings and its Subsidiaries as at the dates indicated
and the results of their operations and their cash flows for the
periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants
in connection with such consolidated financial statements has been
made in accordance with the standards of the Public Company
Accounting Oversight Board (United States)) together with, if
Holdings is then subject to Section 404(b) of the Sarbanes Oxley
Act of 2002, a report on the effectiveness of Holdings’
internal control over financial reporting;”
(f) Section 5.21
of the Credit Agreement is hereby amended by deleting the phrase
“August 31, 2008” contained therein and inserting
the phrase “September 15, 2008” in its
stead.
(g) Section 6.7(a)
of the Credit Agreement is hereby amended and restated to read in
its entirety as follows:
“(a)
[Intentionally Omitted].”
(h) Section 6.7(e)
of the Credit Agreement is hereby amended and restated to read in
its entirety as follows:
“(e)
Minimum Asset Coverage . Credit Parties shall not permit, at
any time (i) between the Eighth Amendment Effective Date
through (but not including) September 15, 2008, the positive
difference between (A) the Working Capital Borrowing Base at
such time (without taking into account the Term Loan Reserve, the
Minimum Availability Amount or any other Reserves (as defined in
the Working Capital Agreement)) and (B) the principal amount
of all Indebtedness outstanding (including without limitation, all
undrawn letters of credit) under the Working Capital Agreement and
this Agreement at such time (such positive difference, the
“Minimum Asset Coverage” ) to be less than an
amount equal to the greater of (x) the principal amount of all
Indebtedness outstanding (including without limitation, all undrawn
letters of credit) under the Working Capital Agreement and this
Agreement at such time, and (y) $15,000,000, and (ii) on and
after September 15, 2008, the Minimum Asset Coverage to be
less than $80,000,000.”
(i) Section 6.7(f)
of the Credit Agreement is hereby amended and restated to read in
its entirety as follows:
“(f)
[Intentionally Omitted].”
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