Fourth Amendment to Credit Agreement



 Exhibit 10.1 
  
 FOURTH AMENDMENT TO CREDIT AGREEMENT 
  
 THIS FOURTH AMENDMENT TO CREDIT AGREEMENT, dated as of January 10, 2005 (as amended or modified from time to time, this “Amendment”), is by and
among HANDLEMAN COMPANY, a Michigan corporation (the “Company”), each of the Subsidiaries of the Company designated in Section 1.1 as a Borrowing Subsidiary (individually, a “Borrowing Subsidiary” and, collectively, the
“Borrowing Subsidiaries”) (the Company and the Borrowing Subsidiaries may each be referred to as a “Borrower” and, collectively, as the “Borrowers”), the lenders party hereto from time to time, (the “Banks”
and individually, a “Bank”), STANDARD FEDERAL BANK N.A., as administrative agent for the Banks (in such capacity, the “Agent”), KEYBANK NATIONAL ASSOCIATION, as syndication agent (in such capacity, the “Syndication
Agent”) and US BANK, N.A., as documentation agent (in such capacity, the “Documentation Agent”). 
  
 R E C I T A L 
  
 The Company, the Subsidiary Borrowers, the Banks, the Agent, the Syndication Agent and the Documentation Agent are parties to a Credit Agreement dated as of August 8, 2001, as amended by a First Amendment to Credit
Agreement dated as of October 17, 2002, a Second Amendment to Credit Agreement dated as of October 18, 2003 and a Third Amendment to Credit Agreement dated as of July 30, 2004 (as amended, the “Credit Agreement”). The Company and the
Subsidiary Borrowers desire to amend the Credit Agreement, and the Agent, the Syndication Agent, the Documentation Agent and the Banks are willing to do so in accordance with the terms hereof. 
  
 T E R M S 
  
 In consideration of the premises and of the mutual agreements herein contained, the parties agree 
  
 ARTICLE 1. 
  
 AMENDMENTS 
  
 Upon the effectiveness of this Amendment, the Credit Agreement shall be
amended as follows: 
  
 1.1 The definitions of Adjusted EBITDA,
Debt Service Coverage Ratio and Net Interest Expense in Section 1.1 are restated as follows: 
  
 “Adjusted EBITDA” of any person shall mean, for any period, the Adjusted Net Income of such person for such period plus, without duplication (a) Net Interest Expense, (b) to the extent deducted in the
computation of such Net Income, federal, state and local income taxes and other equivalent taxes, including the Michigan single business tax, and (c) to the extent deducted in the computation of such Net Income, depreciation and amortization
expense, including without limitation recoupment of license expense, all as determined in accordance with Generally Accepted Accounting Principles. 
  
 “Debt Service Coverage Ratio” shall mean, as of any date, the ratio of (a) the consolidated Adjusted EBITDA for the Company and its
Subsidiaries, less capital expenditures, license advances and acquired rights, as calculated on a consolidated basis for the four most recently ended consecutive fiscal quarters of the Company, to (b) the greater of (i) one or (ii) the sum of the
consolidated Net Interest Expense of the Company and its Subsidiaries, as calculated on a consolidated basis for the same four fiscal quarters, plus the current maturities of all Indebtedness of the Company and its Subsidiaries as of such date.

  

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 Notwithstanding any interpretation of Generally Accepted Accounting Principles or anything herein to the contrary, any
payments due on any Advances or any payments on the Advances that the Borrowers may make or intend to make on the Advances will not be considered current maturities of any Indebtedness of the Company and its Subsidiaries as of any date if the
Termination Date is more than one year after such date. 
  
 “Net Interest Expense” of any person shall mean, for any period, all interest paid or payable by such person during such period, minus any interest income for such period. 
  
 ARTICLE 2. 
  
 REPRESENTATIONS 
  
 The Company represents and warrants to the Agent and the Banks that:

  
 2.1 The execution, delivery and performance by the Company of
this Amendment have been duly authorized by all necessary corporate action and are not in contravention of any material law, rule or regulation, or any judgment, decree, writ, injunction, order or award of any arbitrator, court or governmental
authority, or of the terms of the Company’s articles of incorporation or by-laws, or of any material contract or undertaking to which the Company is a party or by which the Company or its property is bound or affected and do not result in the
imposition of any Lien except for Permitted Liens. 
  
 2.2 This
Amendment is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms; except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors’ rights and except that the remedy of specific performance and injunctive and other forms of equitable relief are subject to equitable defenses and to the discretion of the court before which any proceedings may be
brought. 
  
 2.3 After giving effect to the amendments and waivers
herein contained, the representations and warranties contained in the Credit Agreement and the representations and warranties contained in the other Loan Documents are true on and as of the date hereof with the same force and effect as if made on
and as of the date hereof, except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct on and as of such earlier date, and no
Default or Unmatured Default exists or has occurred and is continuing on the date hereof. 
  
 ARTICLE 3. 
  
 MISCELLANEOUS. 
  
 3.1 This Amendment shall be
effective as of the date hereof when it is signed by the Company and the Required Banks and the each Guarantor shall have executed the Consent and Agreement attached hereto. References in any Loan Document to the Credit Agreement shall be deemed to
be references to the Credit Agreement as amended hereby and as further amended from time to time. 
  

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 3.2 The Company acknowledges and agrees that the Agent and the Banks have fully performed all of their
obligations under all documents executed in connection with the Loan Documents and all actions taken by the Agent and the Banks are reasonable and appropriate under the circumstances and within their rights under the Loan Documents. The Company
represents and warrants that it is not aware of any claims or causes of action against the Agent or any Bank, any participant lender or any of their successors or assigns. 
  
 3.3 Except as expressly amended hereby, the Company agrees that the Loan Documents are ratified and confirmed and shall
remain in full force and effect and that it has no set off, counterclaim, defense or other claim or dispute with respect to any Loan Document or any transactions in connection therewith. Terms used but not defined herein shall have the respective
meanings ascribed thereto in the Credit Agreement. 
  
 3.4 This
Amendment may be signed upon any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument, and telecopied signatures shall be enforceable as originals. 
  

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 IN WITNESS WHEREOF, the parties signing this Amendment have caused this Amendment to be executed and
delivered as of the day and year first above written. 
  

			
	 HANDLEMAN COMPANY

		
	 By:
	 	  


	 Title:
	 	  




  
  

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	 STANDARD FEDERAL BANK N.A., as a Bank
     and as Agent

		
	 By:
	 	  


	 Title:
	 	  




  
  

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	 KEYBANK NATIONAL ASSOCIATION, as a
     Bank and as Syndication Agent

		
	 By:
	 	  


	 Title:
	 	  




  
  

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	 US BANK, N.A., as a Bank
     and as Documentation Agent

		
	 By:
	 	  


	 Title:
	 	  




  
  

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	 HUNTINGTON NATIONAL BANK

		
	 By:
	 	  


	 Title:
	 	  




  
  

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	 COMERICA BANK

		
	 By:
	 	  


	 Title:
	 	  




  
  

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	 FIFTH THIRD BANK

		
	 By:
	 	  


	 Title:
	 	  




  
  

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 CONSENT AND AGREEMENT 
  
 As of the date and year first above written, each of the undersigned hereby: 
  
 (a) fully consents to the terms and provisions of the above Amendment and
the consummation of the transactions contemplated thereby, and agrees to all terms and provisions of the above Amendment applicable to it; 
  
 (b) agrees that its Guaranty and all other Loan Documents executed by the undersigned in connection with the Credit Agreement or otherwise in favor of the
Agent and/or the Banks (collectively, the “Documents”) are hereby ratified and confirmed and shall remain in full force and effect, and the undersigned acknowledges that it has no setoff, counterclaim, defense or other claim or dispute
with respect to any Document or any transactions in connection therewith; and 
  
 (c) acknowledges that it is in its interest and to its financial benefit to execute this consent and agreement. 
  

			
	 HANDLEMAN CATEGORY MANAGEMENT
 COMPANY

		
	 By:
	 	  


	 Title:
	 	  


	
	 HANDLEMAN DISTRIBUTION COMPANY

		
	 By:
	 	  


	 Title:
	 	  


	
	 HANDLEMAN ENTERTAINMENT RESOURCES LLC

		
	 By:
	 	  


	 Title:
	 	  




  
  

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	 LIFETIME HOLDING, INC.

		
	 By:
	 	  


	 Title:
	 	  


	
	 HANDLEMAN UK LIMITED

		
	 By:
	 	  


	 Title:
	 	  


	
	 HANDLEMAN COMPANY OF CANADA LIMITED

		
	 By:
	 	  


	 Title:
	 	  


	
	 HANDLEMAN ONLINE, INC.

		
	 By:
	 	  


	 Title:
	 	  




  

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