EX-10.4







Exhibit 10.4









HANDLEMAN COMPANY ENTERS INTO DEFINITIVE AGREEMENT ON

THE SALE OF ITS CANADIAN MUSIC OPERATIONS, REACHES

AGREEMENT IN PRINCIPLE TO SELL UK SUBSIDIARY




Troy, Michigan – July 29, 2008 – In its continuing efforts to address the rapid and fundamental
changes under way in the music industry, Handleman Company (Pink Sheets: HDLM) today announced that
it has entered into definitive agreement to sell its Canadian music operations to Anderson
Merchandisers, L.P. (“Anderson”) of Amarillo, Texas. The sale includes Handleman’s music inventory
and other selected assets related to its Canadian operations. Anderson will also be retaining
Handleman’s Canadian workforce of approximately 230 employees. Completion of the sale will occur
shortly after receipt of Canadian regulatory approval, which the parties expect to receive in the
near future.



In June, Handleman announced its decision to exit the North American music business and entered
into a definitive agreement pursuant to which it sold music inventory and selected other assets
related to its Wal-Mart business in the U.S. to Anderson. Since then, Handleman has been working
with its other U.S. music customers to assist them in achieving a smooth transition to other music
suppliers. This transition is progressing and is expected to be substantially completed by the end
of August.



Separately, Handleman announced today that it has reached an agreement in principle to sell a
majority of its assets and operations of its United Kingdom (UK) subsidiary to a subsidiary of
Tesco PLC (Tesco). Completion of that transaction is expected in the coming weeks. Tesco is
expected to retain a majority of Handleman’s UK-based employees once the contemplated transaction
is complete. Handleman UK Limited has been a leading UK-based distributor and store merchandiser of
books, music, computer games and other products.



Handleman has also closed on the sale of its Artist to Market Distribution unit (“A2M”) to Eurpac
Service, Inc. A2M is an independent music distributor that works directly with branded artists and
artists’ management to streamline the supply chain and deliver new music product to the
marketplace. Handleman’s other businesses, which are not involved in or affected by the
transactions announced today, will continue normal operations as it explores opportunities to
maximize value for the benefit of the Company’s stakeholders. These other businesses are Crave
Entertainment Group, Inc. (“Crave”), a leading full-service distributor of video game software,
hardware, and related accessories and a specialty video game publisher, and REPS LLC, a national
in-store merchandiser. Handleman has retained the investment banking firm W.Y. Campbell & Company
for the purpose of exploring a sale or other strategic options for Crave and REPS.



Albert A. Koch, President and Chief Executive Officer of Handleman, said, “We are continuing to
make good progress in our efforts to complete the wind-down of our North American music business,
operate our ongoing businesses, and explore opportunities to maximize the value of other assets and
operations for the benefit of our stakeholders. We continue to explore how best to maximize the
economic return to our shareholders.”



 









 







As
previously announced, Handleman will consider a distribution to the
Company's shareholders of cash proceeds generated from the asset
dispositions in excess of what is needed to satisfy the Company's
obligations. Whether there will be any excess cash proceeds for
distribution to shareholders is subject to a number of material risks
and uncertainties that may prevent any such distribution from
occurring. In addition, the Company is exploring other alternatives
to maximize shareholder recoveries. Accordingly, while the Company
believes that a cash distribution is a possibility, actual results
may differ from current estimates, perhaps materially. The Company
will provide information about future cash distributions, if any, at
such time as it believes that they are reasonably estimable.



Cautionary Comment Regarding Forward-Looking Statements





This press release contains forward-looking statements, which are not historical facts. These
statements involve risks and uncertainties and are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Actual results, events and performance could
differ materially from those contemplated by these forward-looking statements because of factors
affecting any of a number of critical objectives, including, without limitation, obtaining all
required regulatory approvals to sell the assets and operations of our Canadian subsidiary to
Anderson, the completion of an agreement to sell a substantial portion of the Company’s UK assets
to TESCO, our ability to transition our U.S. music customers other than Wal-Mart to other vendors
smoothly, maintaining satisfactory working relationships with our lenders, customers and vendors,
maintaining sufficient liquidity to fund our day-to-day operations, retaining key personnel,
satisfactory resolution of any outstanding claims or claims which may arise, finding and
capitalizing on opportunities to maximize the value of the Company’s non-music operations, selling
certain of the Company’s assets in a timely manner and for amounts reasonably consistent with the
Company’s valuation of those assets, and other factors discussed in this press release and those
detailed from time to time in the Company’s filings with the Securities and Exchange Commission.
Handleman Company notes that the preceding conditions are not a complete list of risks and
uncertainties. The Company undertakes no obligation to update any forward-looking statement to
reflect events or circumstances after the date of this press release.



Handleman Company:




	 	 	 	 	 
	 

	 	Rozanne Kokko,
	 	Greg Mize,
	 

	 	Senior Vice President and CFO
	 	Vice President, Investor Relations
	 

	 	(248) 362-4400, Ext. 3998
	 	and Treasurer
	 

	 	 	 	(248) 362-4400, Ext. 211