|
EXHIBIT
10.1
EXECUTION
VERSION
WAIVER AND FIRST AMENDMENT
TO CREDIT AGREEMENT
WAIVER AND FIRST AMENDMENT,
dated as of June 28, 2007 (this “ Amendment
”), to the Credit Agreement, dated as of April 30, 2007,
by and among Handleman Company, a Michigan corporation (“
Holdings ”), Handleman Entertainment Resources L.L.C.,
a Michigan limited liability company (“ Handleman
Entertainment ”), the other subsidiaries of Holdings
identified on the signature page thereto as “Borrowers”
(such Subsidiaries, together with Handleman Entertainment, are
referred to individually as a “ Borrower ” and
collectively, jointly and severally, as “ Borrowers
”), certain subsidiaries of Holdings identified on the
signature page thereto as “Credit Parties”, as Credit
Parties (as defined therein), the Lenders (as defined therein)
party thereto from time to time, and General Electric Capital
Corporation (“ GE Capital ”), as administrative
agent for the Lenders (in such capacity, together with its
successors and assigns in such capacity, the “ Agent
”).
Handleman Entertainment, in
its capacity as Borrower Representative, has advised the Agent that
(a) certain Events of Default have occurred under
Section 8.1(c) of the Credit Agreement due to (i) the
failure of the Credit Parties to deliver to the Agent by
May 31, 2007, evidence satisfactory to the Agent that
(A) the Liens reflected on the records of the Patent and
Trademark Office against the Collateral in favor of Sanwa Business
Credit Corporation have been removed of record, and (B) the
UCC-1 financing statements filed in favor of the Secretary of State
of California against one or more of the Credit Parties have been
terminated of record, as required by Section 5.21 of the
Credit Agreement, and (ii) the aggregate Cash and Cash
Equivalents of Holdings and its Subsidiaries exceeding the amounts
specified in Section 6.6(a)(iv) (such Events of Default, the
“ Specified Events of Default ”), and
(b) certain of the Credit Parties desire to amend their
Organizational Documents.
At the request of the Credit
Parties, the Agent and the Lenders have agreed to waive the
Specified Events of Default, amend the corresponding covenants
contained in the Credit Agreement and consent to certain amendments
of the Organizational Documents of certain of the Credit Parties,
subject to the terms and conditions set forth herein.
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 5.21 of the
Credit Agreement is hereby amended and restated to read in its
entirety as follows:
“ 5.21 Post-Closing
Matters . Provide evidence, satisfactory in form and substance
to Agent, by not later than (a) May 31, 2007 that
(i) the Liens reflected on the records of the Patent and
Trademark Office against the Collateral in favor of Heller
Financial, Inc. have been removed of record, and (ii) an
estoppel letter has been issued by GE VFF Canada Limited
Partnership confirming that the Lien reflected by the PPSA
financing statement registered in favor of GE VFF Canada Limited
Partnership, as
secured party, against
Canadian OpCo is secured only by certain specified equipment, and
(b) August 31, 2007 that (i) the Liens reflected on
the records of the Patent and Trademark Office against the
Collateral in favor of Sanwa Business Credit Corporation have been
removed of record, and (ii) the UCC-1 financing statements
filed in favor of the Secretary of State of California against one
or more of the Credit Parties have been terminated of
record.”
(b) Clauses (iv) and
(v) of Section 6.6(a) of the Credit Agreement are hereby
amended and restated to read in their entirety as
follows:
“(iv) maintained in
Canada, whether or not in Blocked Accounts, but excluding any
Blocked Cash, will not exceed (A) from May 17, 2007 until
August 31, 2007, $2,500,000 plus an amount sufficient to fund
any checks written on such Canadian Blocked Accounts that have not
yet cleared, and (B) on and after August 31, 2007,
$2,500,000, and (v) maintained in the United Kingdom, whether
or not in Blocked Accounts, but excluding any Blocked Cash, will
not exceed (A) from May 17, 2007 until August 31,
2007, $5,000,000 plus an amount sufficient to fund any checks
written on such United Kingdom Blocked Accounts that have not yet
cleared, and (B) on and after August 31, 2007,
$5,000,000;”
3. Waivers and
Consents .
(a) At the request of the
Credit Parties, effective upon the Amendment Effective Date (as
defined below), each of the Agent and the Lenders hereby
(i) waives each Specified Event of Default that occurred prior
to the date hereof, and (ii) consents to the amendment of the
operating agreements of (A) Artist To Market Distribution LLC,
(B) Handleman Entertainment, (C) Handleman Real Estate
LLC and (D) REPS, L.L.C. (each Credit Party identified in
clauses (A) through (D) above, a “ Specified
Credit Party ”); provided that such amendments are
adopted in the form attached hereto as Exhibit A
.
(b) The waivers and consents
set forth in Section 3(a) above shall (i) be effective
only in this specific instance and for the specific purposes set
forth herein, and (ii) do not allow for any other or further
departure from the terms and conditions of the Credit Agreement
(including, without limitation, any further violation of Sections
5.21 or Section 6.6(a) of the Credit Agreement (each as
amended hereby), or any further amendment of the Organizational
Documents of the Specified Credit Parties (or any other Credit
Party)) or any other Loan Document, which terms and conditions
shall continue in full force and effect.
4. Conditions to
Effectiveness . This Amendment shall become effective (the
“ Amendment Effective Date ”) upon satisfaction
in full of the following conditions precedent:
(a) Immediately after giving
effect to this Amendment, (i) the representations and
warranties contained in this Amendment, the Credit Agreement and
the other Loan Documents shall be correct on and as of the date of
this Amendment as
2
though made on and as of such
date (except where such representations and warranties relate to an
earlier date in which case such representations and warranties
shall be true and correct as of such earlier date) and (ii) no
Default or Event of Default shall have occurred and be continuing
(or would result from this Amendment becoming effective in
accordance with its terms).
(b
|
