-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WK53PoTzFe4CycJHovlGrA1kwtJ+dZukMsLDfVhhXTFziOVqKESsM5HanL3IPHnN VOhMRoMHHy6eJtJOY//BJQ== 0001116502-03-000953.txt : 20030522 0001116502-03-000953.hdr.sgml : 20030522 20030522134254 ACCESSION NUMBER: 0001116502-03-000953 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20030512 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030522 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SINGING MACHINE CO INC CENTRAL INDEX KEY: 0000923601 STANDARD INDUSTRIAL CLASSIFICATION: PHONOGRAPH RECORDS & PRERECORDED AUDIO TAPES & DISKS [3652] IRS NUMBER: 953795478 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24968 FILM NUMBER: 03715980 BUSINESS ADDRESS: STREET 1: 6601 LYONS ROAD STREET 2: BLDG A-7 CITY: COCONUT CREEK STATE: FL ZIP: 33073 BUSINESS PHONE: 9545961000 MAIL ADDRESS: STREET 1: 6601 LYONS ROAD BLDG CITY: COCONUT CREEK STATE: FL ZIP: 33073 8-K 1 singingmachine-8k.txt CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): May 12, 2003 THE SINGING MACHINE COMPANY, INC. ------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware ------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 0-24968 95-3795478 ------- ---------- (Commission File Number) (IRS Employer Identification No.) 6601 Lyons Road, Bldg. A-7 Coconut Creek, FL 33073 ------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (954) 596-1000 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) - -------------------------------------------------------------------------------- (Former Name or Former Address, if Change Since Last Report) ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE CREDIT AGREEMENT WITH LASALLE On February 20, 2003, The Singing Machine Company, Inc. (the "Company") entered into a seventh amendment to the Loan and Security Agreement with LaSalle Business Credit, LLC ("LaSalle") dated April 26, 2001(the "Credit Agreement") in which it amended the formula for determining the Company's borrowing base. On March 14, 2003, the Company received a letter ("Letter") from LaSalle informing the Company that it was in default of the minimum tangible net worth requirement, set forth in subparagraph 11(o) of the Credit Agreement. In this Letter, LaSalle informed the Company that as a result of this event of default, it could accelerate payment of all amounts that had been advanced to the Company under the Credit Agreement. The Company acknowledged receipt of this Letter and since March 14, 2003, the Company has been accruing interest at the default rate of 6.75%, which is the prime rate plus 2.5%. On March 18, 25 and 28, 2003, the Company entered into three other amendments to the Credit Facility, two of which reduced the Company's borrowing base and one amendment restated the Company's business and collateral locations. Copies of these amendments and Letter have been attached hereto as Exhibits 10.1 through 10.5. CORRECTION OF PRESS RELEASE On May 12, 2003, the Company issued a press release in which it stated that it had achieved $100 million in sales milestone for the first time in its history. A copy of this press release is attached as Exhibit 99.1. However, the Company's auditors have not completed their audit of the Company's financial statements for the fiscal year ended March 31, 2003 so at this time, the Company can not confirm sales for fiscal 2003. The Company, therefore, wishes to qualify the statement that it achieved the $100 million sales milestone. The Company will have record sales for fiscal 2003. The exact dollar amount will be reported in June 2003. 2 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits. 10.1 Seventh Amendment dated February 20, 2003 to the Loan and Security Agreement dated April 26, 2001 by and between LaSalle Business Credit, LLC. and The Singing Machine Company, Inc. 10.2 Letter dated March 14, 2003 from LaSalle Business Credit, LLC to The Singing Machine Company, Inc. 10.3 Eight Amendment dated March 18, 2003 to the Loan and Security Agreement dated April 26, 2001 by and between LaSalle Business Credit, LLC. and The Singing Machine Company, Inc. 10.4 Ninth Amendment dated March 25, 2003 to the Loan and Security Agreement dated April 26, 2001 by and between LaSalle Business Credit, LLC and The Singing Machine Company, Inc. 10.5 Tenth Amendment dated March 28, 2003 to the Loan and Security Agreement dated April 26, 2001 by and between LaSalle Business Credit, LLC. and The Singing Machine Company, Inc. 99.1 Press Release dated May 12, 2003 regarding strengthening and expanding its sales and marketing team. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized. THE SINGING MACHINE COMPANY, INC. Date:May 21, 2003 By: /s/ April Green ----------------------- April Green Chief Financial Officer EXHIBIT INDEX Exhibit No. Description 10.1 Seventh Amendment dated February 20, 2003 to the Loan and Security Agreement dated April 26, 2001 by and between LaSalle Business Credit, LLC. and The Singing Machine Company, Inc. 10.2 Letter dated March 14, 2003 from LaSalle Business Credit, LLC to The Singing Machine Company, Inc. 10.3 Eight Amendment dated March 18, 2003 to the Loan and Security Agreement dated April 26, 2001 by and between LaSalle Business Credit, LLC and The Singing Machine Company, Inc., 10.4 Ninth Amendment dated March 25, 2003 to the Loan and Security Agreement dated April 26, 2001 by and between LaSalle Business Credit, LLC and The Singing Machine Company, Inc. 10.5 Tenth Amendment dated March 28, 2003 to the Loan and Security Agreement dated April 26, 2001 by and between LaSalle Business Credit, LLC and The Singing Machine Company, Inc. 99.1 Press Release dated May 12, 2003 regarding the expansion of the Company's sales and marketing team. EX-10.1 3 seventhamendment.txt SEVENTH AMENDMENT Exhibit 10.1 LaSalle Business Credit, Inc. Member ABN AMRO Group 135 South LaSalle Street Suite 425 Chicago, Illinois 60603 (312) 904-8490 FEBRUARY 20, 2003 The Singing Machine Company, Inc. 6601 Lyons Road Suite A-7 Coconut Creek, Florida 33073 Re: Seventh Amendment Gentlemen: The Singing Machine Company, Inc., a Delaware corporation ("Borrower") and LaSalle Business Credit, LLC, a Delaware limited liability company, successor by merger to LaSalle Business Credit, Inc., a Delaware corporation (""Lender") have entered into that certain Loan and Security Agreement dated April 26, 2001 (the "Security "Agreement"). From time to time thereafter, Borrower and Bank may have executed various amendments (each an "Amendment" and collectively the "Amendments") to the Security Agreement (the Security Agreement and the Amendments hereinafter are referred to, collectively, as the "Agreement"). Borrower and Lender now desire to further amend the Agreement as provided herein, subject to the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. The Agreement hereby is amended as follows: (a) Paragraph (1) of Exhibit A of the Agreement is deleted in its entirety and the following is substituted in its place: (1) LOANS: Subject to the terms and conditions of the Agreement and the Other Agreements, Lender shall, absent the occurrence of an Event of Default, advance an amount up to the sum of the following sublimits (the "Loan Limit"): (a) Up to seventy percent (70%), or such lesser percentage as determined by Lender in its sole discretion exercised in good faith, of the face (less maximum discounts, credits and allowances which may be taken LaSalle Business Credit, Inc. Member ABN AMRO Group The Singing Machine Company, Inc. February 20, 2003 Page 2 by or granted to Account Debtors in connection therewith in the ordinary course of Borrower's business) of Borrower's Eligible Accounts; plus (b) Subject to subparagraph (3)(a) of this Exhibit A, the lesser of: up to ten percent (10%), or such Lesser percentage as determined by Lender in its sole discretion exercised in good faith, of the lower of the cost or market value of Borrower's Eligible Inventory or Two Million and No/100 Dollars ($2,000,000.00) during the period of February 11, 2003, said sublimit shall reduce to Zero and No/100 Dollars ($0.00), and during which time said advance rate shall reduce to zero percent (0%); plus (c) "Intentionally Omitted"; minus (d) Such reserves as Lender elects, in its sole discretion exercised in good faith, to establish from time to time, including without limitation, (i) a seasonal dilution reserve in the amount of One Million and No/100 Dollars ($1,000,000.00) against Borrower's "Eligible Accounts" during the periods of October 1, 2002 until March 15, 2003 and October 1st of each subsequent calendar year until the "Clean Up Period" (as defined below), and (ii) to the extent that the ration of Free on Board sales to domestic sales increases, Lender in its sole discretion may create a reserve to account for the additional dilution; provided, that the Loan Limit shall in no event exceed (i) Twenty-Five Million and No/100 Dollars ($25,000,000.00) during teh period of August 1st through December 15th of each calendar year; (ii) Twenty Million and No/100 Dollars ($20,000,000.00) during the period of December 16th through LaSalle Business Credit, Inc. Member ABN AMRO Group The Singing Machine Company, Inc. February 20, 2003 Page 3 December 31st of each calendar year; and (iii) Ten Million and No/100 Dollars ($10,000,000.00) during the period of January 1st through July 31st of each calendar year; and (iv) zero ($0) during any consecutive ninety (90) day period between December 15th of each year through April 30th of each following year (the "Clean Up Period") as determined by Borrower (the "Maximum Loan Limit"), except as such amount may be increased or, following the occurrence of an Event of Default, decreased by Lender, in its sole discretion, exercised in good faith, from time to time. (b) Paragraph (5)(c) of Exhibit A of the Agreement is deleted in its entirety and the following is substituted in its place: (c) One-Time Amendment Fees: Borrower shall pay to Bank a one-time amendment fee of Five Thousand and No/100 Dollars ($5,000.00), which fee shall be deemed fully earned on the date of this Amendment and payable on February 28, 2003. (c) Paragraph (6) of Exhibit A of the Agreement is amended to add the following provision: (6).(1) CHANGE OF LENDER'S NAME: All references to LaSalle Business Credit, Inc. LaSalle Business Credit, Inc. Member ABN AMRO Group The Singing Machine Company, Inc. February 20, 2003 Page 4 contained in this Agreement and the Other Agreements are hereby deemed to read "LaSalle Business Credit, LLC". 2. This Amendment shall not become effective until fully executed by all parties hereto. 3. Except as expressly amended hereby and by any other supplemental documents or instruments executed by either party hereto in order to effectuate the transactions contemplated hereby, the Agreement and Exhibit A thereto hereby are ratified and confirmed by the parties hereto and remain in full force and effect in accordance with the terms thereof. LASALLE BUSINESS CREDIT, LLC, A DELAWARE LIMITED LIABILITY COMPANY, SUCCESSOR BY MERGER TO LASALLE BUSINESS CREDIT, INC. By /s/ Casey Orlowski ---------------------------- Title Vice President -------------------------- ACKNOWLEDGED AND AGREED TO this 20th day of February, 2003. The Singing Machine Company, Inc. By /s/ John F. Klecha - ----------------------- John F. Klecha Title President/Secretary EX-10.2 4 loans-march14.txt LASALLE LOANS - MARCH 14, 2003 Exhibit 10.2 LASALLE BUSINESS CREDIT, LLC Member ABN AMIRO 135 South LaSalle Street Suite 425 March 14, 2003 Chicago, Illinois 60603 (312) 904-8490 VIA FEDERAL EXPRESS & - --------------------- CERTIFIED MAIL - -------------- RETURN RECEIPT REQUESTED - ------------------------ The Singing Machine Company, Inc. 6601 Lyons Road Suite A-7 Coconut Creek, Florida 33473 Re: LOANS BY LASALLE BUSINESS CREDIT, LLC Dear Sirs: This letter shall serve as notice that THE SINGING MACHINE COMPANY, INC. ("Borrower") is and remains in default (the "Default"), under that certain Loan and Security Agreement dated April 26, 2001, as amended, amended and restated or otherwise modified from time to time (the "Agreement"), by and between Borrower and LaSalle Business Credit, LLC, a Delaware limited liability company, ("Lender"), as a result of Borrower's breach of the requirement in subparagraph 11(o) of the Agreement that Borrower maintain a certain Minimum Tangible Net Worth. Each term set out herein and not otherwise defined shall have the meaning ascribed to such term in the Agreement. The terms of the Agreement provide that Lender may, as a result of any Event of Default, including the Default, accelerate the payment of all Liabilities. Borrower acknowledges the existence of the Default. Borrower hereby (a) ratifies and affirms its obligations under the Agreement; (b) denies and waives the existence of any defenses relating to its obligations under the Agreement; and (c) waives and releases any claims or causes or action against Lender which may now or hereafter be available to it arising out of (i) the administration of the Agreement or the Other Agreements, (ii) the negotiation and execution of this letter, or (iii) any other matter pertaining to the Agreement or the Other Agreements. By this letter Lender does not waive the Default, nor any previous Events of Default about which you have been notified. This letter is being written with Lender reserving all of its rights to exercise any and all of Lender's remedies, as provided in the Agreement and in all the Other Agreements, at such time and in such manner as provided therein. Nothing herein shall be construed or interpreted as being a waiver of any of Lender's rights or remedies {as provided to Lender under the terms of LASALLE BUSINESS CREDIT, LLC Member ABN AMIRO THE SINGING MACHINE COMPANY, INC. MARCH 14, 2003 Page 2 the Other Agreements, the Uniform Commercial Code or otherwise), by virtue of its forbearance or extension with respect thereto. Very truly By /s/ Casey Orlowski ---------------------- Its Vice President --------------------- Accepted and agreed to this 19th day of March, 2003 The Singing Machine Company, in By: /s/ John F. Klecha -------------------------- John F. Klecha Its president EX-10.3 5 eighthamendment.txt EIGHTH AMENDMENT Exhibit 10.3 LASALLE BUSINESS CREDIT, LLC MEMBER ABN AMRO GROUP 135 South LaSalle Street Suite 425 Chicago, Illinois 60603 (312) 004-8490 The Singing Machine Company, 8601 Lyons Road Suite A-7 Coconut Greek, Florida 33073 Re: Eighth AMENDMENT Gentlemen: THE SINGING MACHINE COMPANY, Inc., a Delaware corporation ("BORROWER") AND LASALLE BUSINESS CREDIT, LLC, A DELAWARE LIMITED LIABILITY COMPANY ("LENDER") have entered into that certain Loan and Security Agreement dated April 26, 2001 (the "Security Agreement"). From time to time thereafter, Borrower and Bank may have executed various amendments (each an "AMENDMENT" and collectively the "Amendments") to the Security Agreement (the Security Agreement and the Amendments hereinafter are referred to, collectively, as the "AGREEMENT"). Borrower and Lender now desire to further amend the Agreement as provided herein, subject to the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. The Agreement hereby is amended as follows: (a) Paragraph (1) of Exhibit A of the Agreement is deleted in its entirety and the following is substituted in its place: (1) LOANS: Subject to the terms and conditions of the Agreement and the Other Agreements, Lender shall, absent the occurrence of an Event of Default, advance an amount up to the sum of the following sublimits (the "LOAN LIMIT"): (a) Up to seventy percent (7Q%), or such lesser percentage as determined by Lender in its sole discretion exercised in good faith, of the face amount (less maximum discounts, credits and allowances which may be taken by or granted to Account Debtors in [GRAPHIC OMITTED][GRAPHIC OMITTED] LASALLE BUSINESS CREDIT, LLC MEMBER ABN AMRO GROUP The SINGING MACHINE COMPANY, INC. MARCH 18, 2003 PAGE 2 connection therewith in the ordinary course of Borrower's business) of Borrower's Eligible Accounts; plus (b) Subject to subparagraph (3)(a) of this Exhibit A, the lesser of: up to ten percent (10%), or such lesser percentage as determined by Lender in its sole discretion exercised in good faith, of the lower of the cost or market value of Borrower's Eligible Inventory or Two Million and No/100 Dollars ($2,000,000.00) during the period of March 15, 2003 through March 31, 2003; plus (C) "INTENTIONALLY OMITTED"; minus (d) Such reserves as Lender elects, in its sole discretion exercised in good faith, to establish from tine to time, including without limitation, (i) a seasonal dilution reserve in the amount of One Million and No/100 Dollars ($1,000,000.00) against Borrower's "Eligible Accounts" during the period of March 15, 2003 until March 31, 2003, and (ii) to the extent that the ratio of Free on Board sales to domestic sales increases, Lender in its sole discretion may create a reserve to account for the additional dilution; provided, that the Loan Limit shall in no event exceed Ten Million and No/100 Dollars ($10,000,000.00) during the period of March 15, 2003 through March 31, 2003, (the "Maximum Loan Limit"), except as such amount may be increased or, following the occurrence of an event of default, decreased by Lender, in its sole discretion, exercised in good faith, from time to time. (b) Paragraph (5)(c) of Exhibit A of the Agreement is deleted in its entirety and the following is substituted in its place: (c) (Borrower shall pay to fee of Five Thousand LASALLE BUSINESS CREDIT, LLC MEMBER ABN AMRO GROUP The SINGING MACHINE COMPANY, INC. MARCH 18, 2003 PAGE 3 and no/100 dollars ($6,000.00), which fee shall be deemed fully earned on the date of this amendment and payable on March 31, 2003. 2. This amendment shall not become effective until fully executed by all parties hereto. 3. Except as expressly amended hereby and by any other supplemental documents or instruments executed by either party hereto in order to effectuate the transactions contemplated hereby, the agreement and Exhibit A thereto hereby are ratified and confirmed by the parties hereto and remain in full force and effect in accordance with the terms thereof. LASALLE BUSINESS CREDIT, LLC, A DELAWARE LIMITED LIABILITY COMPANY By /s/ Casey Orlowski ------------------------------- Title Vice President ----------------------------- ACKNOWLEDGED AND AGREED TO THIS 18TH DAY OF MARCH, 2003. THE SINGING MACHINE COMPANY, INC. By /s/ John F. Klecha ------------------------- John F. Klecha Title President/Secretary EX-10.4 6 ninthamendment.txt NINTH AMENDMENT Exhibit 10.4 LaSalle Business Credit, LLC Member ABN AMRO Group 135 South LaSalle Street Suite 425 Chicago, Illinois 60603 (312) 904-8490 March 25, 2003 The Singing Machine Company, Inc. 6601 Lyons Road Suite A-7 Coconut Creek, Florida 33073 Re: Ninth Amendment Gentlemen: The Singing Machine Company, Inc., a Delaware corporation ("Borrower") and LaSalle Business Credit, LLC, a Delware limited liability company ("Lender")have entered into that certain Loan and Security Agreement dated April 26, 2001 (the "Security Agreement"). From time to time thereafter, Borrower and Bank may have executed various amendments (each an "Amendment" and collectively the "Amendments") to the Security Agreement (the Security Agreement and the Amendments hereinafter are referred to, collectively, as the "Agreement"). Borrower and Lender now desire to further amend the Agreement as provided herein, subject to the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. The Agreement hereby is amended as follows: (a) Exhibit B to the Agreement is amended and restated as the Third Amended and Restated Exhibit B as attached hereto and made a part hereof. 2. This Amendment shall not become effective until fully executed by all parties hereto. 3. Except as expressly amended hereby and by any other supplemental documents or instruments executed by either party hereto in order to effectuate the transactions contemplated hereby, the Agreement and Exhibit A thereto hereby are ratified and confirmed by the parties hereto and remain in full force and effect in accordance with the terms thereof. LaSalle Business Credit, LLC Member ABN AMRO Group The Singing Machine Company, Inc. March 25, 2003 Page 2 LASALLE BUSINESS CREDIT, LLC, A DELAWARE LIMITED LIABILITY COMAPANY By /s/ Thomas Hirsh -------------------------------- Title: 1st VP/Counsel ACKNOWLEDGED AND AGREED TO this 25th day of March, 2003. The Singing Machine Company, Inc. By /s/ John F. Klecha - ----------------------- John F. Klecha Title President/Secretary THIRD AMENDED AND RESTATED EXHIBIT B - BUSINESS AND COLLATERAL LOCATIONS - --------------------------------------------- Attached to and made a part of that certain Loan and Security Agreement as it may be amended in accordance with its terms from time to time, including all exhibits attached thereto (the "Agreement") dated April 26, 2001 between THE SINGING MACHNE COMPANY, INC. ("Borrower") and LASALLE BUSINESS CREDIT LLC, A DELAWARE LIMITED LIABILITY COMPANY, SUCCESSOR BY MERGER TO LASALLE BUSINESS CREDIT, INC. ("Lender"). A. Borrower's Business Locations (please indicate which location is the principle place of business and at which locations originals and all copies of Borrower's books, records and accounts are kept). 1. 6601 Lyons Road Suite A-7 (including Suite A-6 and Suite A-8) Coconut Creek, Florida 33073 (leased location/principal place of business) B. Other locations of Collateral (including, without limiitation, warehouse locations, processing locations, consignment locations) and all post office boxes of Borrower. Please indicate the relationship of such location to Borrower (i.e. public warehouse, processor, etc.). 1. Mirror Tower 2. c/o El Mar Plastics 61 Mody Road 840 Walnut Street Tsimshatsui East Carson City, California 90746 Units 2 and 3 of the Lower One Floor (public warehoue location) Kowloon, Hong Kong (bailed equipment location of subsidiary) 3. c/o Hanmi Express Corp. 4. c/o Hanmi Express Corp. 623 East Walnut Street 969 East Sandhill Carson City, California 90746 Carson City, California 90746 (public warehouse location) (public warehouse location) 5. 303 West Artesia Blvd. 6. 1975 Charles Willard Street Compton, California 90220 Los Angeles, California (leased location) (leased location) 7. Ocean Centre 5 Canton Rd, Suite 1210 TST Hong Kong (lease office space) THIRD AMENDED AND RESTATED EXHIBIT B - BUSINESS AND COLLATERAL LOCATIONS - --------------------------------------------- PAGE 2 C. Bank Accounts of Borrower: Bank (with address) Account Number Type of Account 1. Republic Securities 0323002325 Operating I Account 7400 West Camino Real Drive Boca Raton, FL 33433 2. Republic Securities Bank 0323002323 Payroll Account 7400 West Camino Real Drive Boca Raton, FL 33433 Borrower's Initials: /s/ JK -------- Officer's Initials: /s/ TH -------- EX-10.5 7 tenthamendment.txt TENTH AMENDMENT Exhibit 10.5 LaSalle Business Credit, LLC Member ABN AMRO Group 135 South LaSalle Street Suite 425 Chicago, Illinois 60603 March 28, 2003 (312) 904-8490 The Singing Machine Company, Inc. 6601 Lyons Road Suite A-7 Coconut Creek, Florida 33073 Re: Tenth Amendment Gentlemen: The Singing Machine Company, Inc., a Delaware corporation ("Borrower") and LaSalle Business Credit, LLC, a Delaware limited liability company ("Lender") have entered into that certain Loan and Security Agreement dated April 26, 2001 (the "Security Agreement"). From time to time thereafter, Borrower and Bank may have executed various amendments (each an "Amendment" and collectively, as the "Agreement"). Borrower and Lender now desire to further amend the Agreement as provided herein, subject to the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto herby agree as follows: 1. The Agreement hereby is amended as follows: (a) Paragraph (1) of Exhibit A of the Agreement is deleted in its entirety and the following is substituted in its place: (1) LOANS: Subject to the terms and conditions of the Agreement and the Other Agreements, Lender shall, absent the occurrence of an Event of Default, advance an amount up to the sum of the following sublimits (the "Loan Limit"): (a) Up to seventy percent (70%), or such lesser percentage as determined by Lender in its sole discretion exercised in good faith, of the face amount (less maximum discounts, credits and allowances which may be taken by or granted to Account Debtors in LaSalle Business Credit, LLC Member ABN AMRO Group The Singing Machine Company, Inc. March 28, 2003 Page 2 connection therewith in the ordinary course of Borrower's business) of Borrower's Eligible Accounts; plus (b) Subject to subparagraph (3)(a) of this Exhibit A, the lesser of: up to ten percent (10%), or such lesser percentage as determined by Lender in its sole discretion exercised in good faith, of the lower of the cost or market value of Borrower's Eligible inventory or Two Million and No/100 Dollars ($2,000,000.00) during the period of (March 31, 2003 through May 31, 2003; plus (c) "Intentionally Omitted"; minus (d) Such reserves as Lender elects, in its sole discretion exercised in good faith, to establish from time to time, including without limitation, (i) a seasonal dilution reserve in the amount of One Million and No/100 Dollars ($1,000,000.00) against Borrower's "Eligible Accounts" during the period of March 31, 2003 until May 31, 2003, and (ii) to the extent that the ratio of Free on Board sales to domestic sales increases, Lender in its sole discretion may create a reserve to account for the additional dilution; provided, that the Loan Limit shall in no event exceed Ten Million and No/100 Dollars ($10,000,000.00) during the period of March 31, 2003 through May 31, 2003, (the "Maximum Loan Limit"), except as such amount may be increased or, following the occurrence of an Event of Default, decreased by Lender, in its sole discretion, exercised in good faith, from time to tune. 2. This Amendment shall not become effective until fully executed by all parties hereto. 3. Except as expressly amended hereby and by any other supplemental documents or instruments executed by either party hereto in LaSalle Business Credit, LLC Member ABN AMRO Group The Singing Machine Company, Inc. March 28, 2003 Page 3 order to effectuate the transactions contemplated hereby, the Agreement and Exhibit A thereto hereby are ratified and confirmed by the parties hereto and remain in full force and effect in accordance with the terms thereof. LASALLE BUSINESS CREDIT, LLC, A DELAWARE LIMITED LIABILITY COMPANY By /s/ Casey Orlowski ---------------------------- Title Vice President -------------------------- ACKNOWLEDGED AND AGREED TO this 31st day of March, 2003. The Singing Machine Company, Inc. By /s/ John F. Klecha - ----------------------- John F. Klecha Title President/Secretary EX-99.1 8 pressrelease.txt PRESS RELEASE DATED MAY 12, 2003 [GRAPHIC OMITTED] INVESTOR CONTACT: COMPANY CONTACT: Neil Berkman Y.P. Chan Berkman Associates Chief Operating Officer (310) 277 - 5162 (954) 596 - 1000 info@BerkmanAssociates.com www.SingingMachine.com FOR IMMEDIATE RELEASE THE SINGING MACHINE COMPANY STRENGTHENS AND EXPANDS ITS SALES AND MARKETING TEAM COCONUT CREEK, FLORIDA, May 12, 2003 -- THE SINGING MACHINE COMPANY (ASE:SMD) announced today that it has strengthened and expanded its sales and marketing organization to accommodate the company's continued growth. "Singing Machine's success has been driven by the quality of our sales and marketing organization," said Chairman and Chief Executive Officer Eddie Steele. "With its impressive credentials in consumer electronics, toys, music and accessories, our world-class sales and marketing team was the key to achieving the $100 million sales milestone for the first time in our history last year. We are continuing to add strength and capability to our team to enhance our market leadership in the years to come." In connection with this expansion, Steele announced the following promotions and appointments: o Jack Dromgold has been promoted to executive vice president, sales & marketing. Dromgold previously served as senior vice president, sales & marketing. Dromgold, joined the Singing Machine in April 2002 after serving since 1993 as vice president of sales for Hasbro Games, where he was responsible for the sale of Milton Bradley and Parker Brothers games and puzzles. Dromgold has more than thirty-five years of sales experience in the toy industry with close relationships with major retailers and distributors in the United States. o John Steele has been promoted to vice president, international sales from his previous position as national sales director. Since he joined The Singing Machine in 1999, Steele has been instrumental in the company's rapid growth and expansion into international markets. He led the company's successful expansion into the European market last year and has since established distribution in Asia, South and Latin America and Canada. Steele has more than 10 years of experience in the karaoke industry. Prior to joining The Singing Machine, he was managing director, international division of Nikkodo Co. Ltd., where he was responsible for commercial karaoke system sales throughout Europe. (more) THE SINGING MACHINE COMPANY, INC. 6601 Lyons Road o Building A-7 o Coconut Creek, Florida 33073 o (954) 596-1000 o Fax (954) 596-2000 _______________________________________________________________________________ THE SINGING MACHINE COMPANY STRENGTHENS AND EXPANDS ITS SALES AND MARKETING TEAM May 12, 2003 Page Two o Dennis Norden has joined Singing Machine as sales director. Norden joins the company from Recoton Corporation where he was vice president of sales for the southern region. He has over twenty-five years of successful selling experience in the consumer electronics industry with solid relationships with major mass market retailers. Norden will focus much of his attention on the company's growing karaoke music business. o Robert O'Connor has been hired as sales director. O'connor joins Singing Machine from leading video game manufacturer Konami of America where he served as vice president of sales. O'Connor brings more than thirty years of consumer electronics selling experience to his new position at Singing Machine. He will be responsible for managing karaoke hardware and accessories sales to the company's key mass retail accounts, and for identifying and developing new channels of distribution. o John DeNovi has been promoted to director of marketing. He joined the company in 2001 as sales manager, national accounts. Previously, he was national sales manager for Tecmo, Inc., a leading developer of home video games for Sony PlayStation 2, Nintendo GameBoy Advance and Microsoft Xbox. He began his career at Aldrich & Associates, Inc., a Los Angeles-based marketing & communications agency where, as senior account supervisor he represented a wide variety of consumer electronics clients. ABOUT THE SINGING MACHINE COMPANY Incorporated in 1982, The Singing Machine Company develops and distributes a full line of consumer-oriented karaoke machines and music under The Singing MachineTM, MTVTM, NickelodeonTM, Hardrock AcademyTM and MotownTM brand names. The first to provide karaoke systems for home entertainment in the United States, Singing Machine sells its products in North America, Europe and Asia, and has increased sales by 10 times to $100 million in the past five years. SAFE HARBOR STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. This press release contains forward-looking statements. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions, including but not limited to those relating to product demand, pricing, market acceptance, the effect of economic conditions and other risks identified in the Company's filings with the Securities and Exchange Commission. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, should one or more of these risks or uncertainties materialize, or should underlying assumptions provide incorrect, actual future results or events may vary materially from those described herein. * * * * * #3309 -----END PRIVACY-ENHANCED MESSAGE-----