Exhibit 10.12
LaSalle Business Credit, Inc.
LASALLE BANKS
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
November 20, 2001
The Singing Machine Company, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Second Amendment
The Singing Machine Company, Ind., a 'Delaware corporation ("Borrower")
and LaSalle Business Credit, Inc., a Delaward 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-five percent (75%), 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
LaSalle Business Credit Inc.
--------------------------------------------------------------------------------
LASALLE BANKS
The Singing Machine Company, Inc.
November 9, 2001
Page 2
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, up to forty percent (40%), 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 Borrowers Eligible
Inventory; plus
(c) Subject to subparagraph (3)(a) of this
Exhibit A, up to forty percent (40%), or
such lesser percentage as determined by
Lender in its sole discretion exercised in
good faith, against the face amount of
commercial Letters of Credit issued or
guaranteed by Lender for the purpose of
purchasing Eligible Inventory; provided,
that such commercial Letters of Credit are
in form and substance satisfactory to
Lender; 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 initial amount of One Hundred
Fifty Thousand and No/100 Dollars
($150,000.00) against Borrower's "Eligible
Accounts" during the period of September 1st
of each calendar year through January 31st
of each following calendar year, which shall
increase by One Hundred Fifty Thousand and
No/100 Dollars ($150,000.00) a week
commencing September 8th and continuing on
the same day of each week thereafter until
said reserve equals One Million Two Hundred
Thousand and No/100 Dollars ($1,200,000.00);
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 aggregate amount of
advances made pursuant to subparagraphs (b)
and (c) above shall in no event exceed Two
Million Five Hundred Thousand and No/100
Dollars ($2,500,000.00); provided, that the
availability pursuant to subparagraphs (b)
and (c) above shall reduce to zero during
the period of December 1st of each calendar
year through April 30th of each following
calendar year, and
LaSalle Business Credit Inc.
--------------------------------------------------------------------------------
LASALLE BANKS
The Singing Machine Company, Inc.
November 9, 2001
Page 3
further provided, that the Loan Limit shall
in no event exceed (i) Ten Million and
No/100 Dollars ($10,000,000.00) during the
period of January 1, 2001 through December
20, 2001; (ii) Seven Million Five Hundred
Thousand and No/100 Dollars ($7,500,000,00)
during the period of December 21, 2001
through January 10, 2002; (iii) Five Million
and No/100 Dollars ($5,000,000.00) during
the period of January 11, 2002 through
January 20, 2002; (iv) Ten Million and
No/100 Dollars ($10,000,000.00) during the
period of January 21, 2002 through October
31, 2002 and during the period of January
1st through October 31st of each calendar
year thereafter; (v) Seven Million Five
Hundred Thousand and No/100 Dollars
($7,500,000.00) during the month of November
of each calendar year; (vi) Five Million and
No/100 Dollars ($5,000,000.00) during the
month of December of each calendar year; and
(vii) zero ($0) during any consecutive
ninety (90) day period between December 1e
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) of Exhibit A of the Agreement is amended to add the
following provision:
(c) One-Time Fee: Borrower shall pay to Bank a one-time
fee of Two Thousand Five Hundred and No/100 Dollars
($2,500.00), which fee shall be fully earned by Bank
on the date of this Amendment and payable on November
30, 2001.
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
LaSalle Business Credit Inc.
--------------------------------------------------------------------------------
LASALLE BANKS
The Singing Machine Company, Inc.
November 9, 2001
Page 4
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, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------
Title Vice President
-------------------------
ACKNOWLEDGED AND AGREED TO
this 20th day of November, 2001.
The Singing Machine Company, Inc.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Title President/Secretary