EIGHTH AMENDMENT TO CREDIT AND GUARANTY AGREEMENT

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].”

               (j) Section 6.24 of the Credit Agreement is hereby amended by adding a new section to the end thereof to read in its entirety as follows:

“6.24 Crave Business Plan. Holdings shall not fail to deliver to Agents (a) by not later than May 15, 2008, a business plan for Crave Entertainment Group, Inc., Crave Entertainment, Inc. and SVG Distribution, Inc. (collectively, the “Crave Entities”), in form and substance satisfactory to Agents, and (b) by not later than September 15, 2008, a historical and projected return on investment report for each title owned by the Crave Entities, which report shall be in form and substance satisfactory to Agents.”

               (k) Article VI of the Credit Agreement is hereby amended by adding the following new section to the end thereof to read in its entirety as follows:

“6.26 Wal-Mart U.S. Music Inventory Returns. By not later than Monday of each week, the Credit Parties shall not fail to deliver to Collateral Agent, a report, in form and substance satisfactory to Agents, listing (a) all music-related Inventory in the United States that Wal-Mart Stores, Inc. or any of its Affiliates has returned, or indicated that it will return to any Credit Party, and the value of the Accounts owing to Credit Parties represented thereby, (i) during the prior week (ending on the last Business Day of the immediately-preceding week) and (ii) in the aggregate from the Initial Anderson Closing Date until the last Business Day of the immediately preceding week, and (b) the Accounts that

Wal-Mart Stores, Inc. and any of its Affiliates were required to pay to the Credit Parties as of the prior week (ending on the last Business Day of the immediately-preceding week), compared with the amount of Accounts actually paid during such week, accompanied by a reasonably-detailed summary of all past-due Accounts then owing from Wal-Mart Stores, Inc. and any of its Affiliates to the Credit Parties.”

          3. 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 Credit Documents shall be correct on and as of the date of this Amendment as 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) Administrative Agent shall have received counterparts of this Amendment that bear the signatures of each of Credit Parties, Agents and Lenders.

          (c) Administrative Agent shall have received a copy of an amendment (or similar agreement), in form and substance reasonably satisfactory to Agents, duly executed by Credit Parties, Working Capital Agent, and Working Capital Lenders amending and waiving the corresponding provisions of the Working Capital Agreement.

          4. Credit Parties’ Representations and Warranties. Each Credit Party represents and warrants to Agents and Lenders as follows:

          (a) Such Credit Party (i) is duly organized, validly existing and in good standing under the laws of the state of its organization and (ii) has all requisite power, authority and legal right to execute, deliver and perform this Amendment and to perform the Credit Agreement, as amended hereby.

          (b) The execution, delivery and performance by such Credit Party of this Amendment and the Purchase Documents and the performance by such Credit Party of the Credit Agreement, as amended hereby (i) have been duly authorized by all necessary action, (ii) do not and will not violate or create a default under such Credit Party’s organizational documents, any applicable law or any contractual restriction binding on or otherwise affecting such Credit Party or any of such Credit Party’s properties, and (iii) except as provided in the Credit Documents, do not and will not result in or require the creation of any Lien, upon or with respect to such Credit Party’s property.

          (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority is required in connection with the due execution, delivery and performance by such Credit Party of this Amendment or the Purchase Documents or the performance by such Credit Party of the Credit Agreement, as amended hereby.

          (d) This Amendment and the Credit Agreement, as amended hereby, and the Purchase Documents constitute the legal, valid and binding obligations of such Credit Party, enforceable against such Credit Party in accordance with their terms except to the extent the

enforceability thereof may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws from time to time in effect affecting generally the enforcement of creditors’ rights and remedies and by general principles of equity.

          (e) Immediately after giving effect to this Amendment, (i) the representations and warranties contained in the Credit Agreement are correct on and as of the date of this Amendment as though made on and as of the date hereof (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 has occurred and is continuing (or would result from this Amendment becoming effective in accordance with its terms).

          5. Continued Effectiveness of Credit Agreement. Each Credit Party hereby confirms and agrees that (a) the Credit Agreement and each other Credit Document to which it is a party is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects except that on and after the Amendment Effective Date all references in any such Credit Document to “the Credit Agreement”, “hereto”, “hereof”, “hereunder”, “thereto”, “thereof”, “thereunder” or words of like import referring to the Credit Agreement shall mean the Credit Agreement as amended by this Amendment, (b) to the extent that any such Credit Document purports to assign or pledge to Collateral Agent, for the ratable benefit of Lenders, or to grant to Collateral Agent, for the ratable benefit of Lenders a security interest in or Lien on, any Collateral as security for the Obligations of the Credit Party, or any of their respective Subsidiaries from time to time existing in respect of the Credit Agreement and the other Credit Documents, such pledge, assignment and/or grant of the security interest or Lien is hereby ratified and confirmed in all respects, (c) the execution and delivery of this Amendment does not limit any other action that the Administrative Agent is entitled to take, or that the Credit Parties are required to perform, under the Fifth Amendment Fee Letter, and (d) no amendment or waiver of any terms or provisions of the Credit Agreement, or the amendments or waivers granted hereunder, shall relieve any Credit Party from complying with such terms and provisions other than as expressly amended or waived hereby or from complying with any other term or provision thereof or herein.

          6. Release. Each Credit Party hereby acknowledges and agrees that: (a) neither it nor any of its Affiliates has any claim or cause of action against any Agent or any Lender (or any of their respective Affiliates, officers, directors, employees, attorneys, consultants or agents) and (b) each Agent and each Lender has heretofore properly performed and satisfied in a timely manner all of its obligations to Credit Parties and their Affiliates under the Credit Agreement and the other Credit Documents. Notwithstanding the foregoing, Credit Parties wish (and Agents and Lenders agree) to eliminate any possibility that any past conditions, acts, omissions, events or circumstances would impair or otherwise adversely affect any Agent’s or any Lenders’ rights, interests, security and/or remedies under the Credit Agreement and the other Credit Documents. Accordingly, for and in consideration of the agreements contained in this Amendment and other good and valuable consideration, each Credit Party (for itself and its Affiliates and the successors, assigns, heirs and representatives of each of the foregoing) (collectively, the “Releasors”) does hereby fully, finally, unconditionally and irrevocably release and forever discharge each Agent and each Lender and each of their respective Affiliates, officers, directors, employees, attorneys, consultants and agents (collectively, the “Released Parties”) from any and all debts, claims, obligations, damages, costs, attorneys’ fees, suits, demands, liabilities, actions, proceedings and causes of action, in each case, whether known or unknown, contingent or fixed, direct or indirect, and of whatever nature or description, and whether in law or in equity, under contract, tort, statute or otherwise, which any Releasor has heretofore had or now or hereafter can, shall or may have against any Released Party by reason of any act, omission or thing whatsoever done or omitted to be done, arising out of, connected with or related in any way to the Credit Agreement or any other Credit Document, or any act, event or transaction related or attendant thereto, or the agreements of any Agent or any Lender contained therein,

or the possession, use, operation or control of any of the assets of any Credit Party, or the making of any Loans or other advances, or the management of such Loans or advances or the Collateral.

          7. Miscellaneous.

          (a) This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Amendment by telefacsimile or electronic method shall be equally as effective as delivery of an original executed counterpart of this Amendment.

          (b) Section and paragraph headings herein are included for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

          (c) This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York. Each of the parties to this Amendment hereby irrevocably waives all rights to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Amendment.

          (d) Borrowers will pay on demand all reasonable fees, costs and expenses of Agents and Lenders in connection with the preparation, execution and delivery of this Amendment or otherwise payable under the Credit Agreement, including, without limitation, reasonable fees disbursements and other charges of counsel to Agents and Lenders.

          (e) This Amendment is a Credit Document executed pursuant to the Credit Agreement and shall be construed, administered and interpreted in accordance with the terms thereof. Accordingly, it shall be an Event of Default under the Credit Agreement if any representation or warranty made or deemed made by any Credit Party under or in connection with this Amendment shall have been incorrect when made or deemed made or if any Credit Party fails to perform or comply with any covenant or agreement contained herein.

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