SETTLEMENT AGREEMENT AND RELEASE
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This Settlement Agreement and Release (the "Agreement") is dated as of
March 5, 2006 and is made by and between Omicron Master Trust, SF Capital
Partners, Ltd., Bristol Investment Fund, Ltd., Ascend Offshore Fund, Ltd.,
Ascend Partners LP, and Ascend Partners Sapient LP (collectively the
"Investors") and The Singing Machine Company, Inc., a Delaware corporation
("Singing Machine").
WHEREAS, Singing Machine, issued to the Investors an aggregate of
$4,000,000.00 principal amount 8% convertible debentures pursuant to the
Securities Purchase Agreement dated August 20, 2003 (collectively the
"Debentures");
WHEREAS, Singing Machine desires to redeem all outstanding Debentures,
including interest and penalties ("Remaining Debentures") in accordance with the
terms and conditions hereof; and
NOW, THEREFORE, in consideration of the mutual conditions and covenants
contained in this Agreement, and for other good and valuable consideration, the
sufficiency and receipt of which is hereby acknowledged, it is hereby
stipulated, consented to and agreed by and among the Investors and Singing
Machine as follows:
1. On or before March 10, 2006, Singing Machine shall (i) pay to the
Investors an aggregate of $2,000,000.00 (the "Funds") as set forth on Exhibit A
hereto, by wire transfer to the bank and account as set forth on Exhibit A
hereto, and (ii) reduce the exercise price to $0.85 per share for the warrants
on the attached Exhibit B in full satisfaction of the Remaining Debentures. Upon
receipt of the Funds, the Investors shall return, via overnight delivery, the
Remaining Debentures to Singing Machine.
2. In consideration of the foregoing, upon receipt by the Investors of the
Funds, the Investors release and discharge Singing Machine, Singing Machine's
officers, directors, principals, control persons, past and present employees,
insurers, successors, agents and assigns ("Singing Machine Parties") from all
actions, cause of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, extents,
executions, claims, and demands whatsoever, in law, admiralty or equity, which
against Singing Machine Parties ever had, now have or hereafter can, shall or
may, have for, upon, or by reason of any matter, cause or thing whatsoever,
whether or not known or unknown, from the beginning of the world to the day of
the date of this Release arising under the Debentures and Securities Purchase
Agreement dated August 20, 2003.
3. In consideration of the foregoing, upon receipt by the Investors of the
Funds, the Company releases and discharges the Investors, its officers,
directors, principals, control persons, past and present employees, insurers,
successors, agents and assigns ("Investor Parties") from all actions, cause of
action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, claims, and
demands whatsoever, in law, admiralty or equity, which against Investor Parties
ever had, now have or hereafter can, shall or may, have for, upon, or by reason
of any matter, cause or thing whatsoever, whether or not known or unknown, from
the beginning of the world to the day of the date of this Release arising under
the Debentures and Securities Purchase Agreement dated August 20, 2003.
4. Singing Machine and the Investors each understand and agree that this
Agreement (including all of its terms) is forever deemed confidential between
them. Except as required under the statutes, rules or regulations of any federal
or state government, government agency or court of competent jurisdiction, each
of Singing Machine and the Investors, and their respective counsel, shall not
disclose or divulge any of the matters underlying this Agreement, or any of the
terms or substance of this Agreement to others.
All inquiries, if any, regarding the other party's performance shall be
responded to promptly. Each party shall furnish the other party with a written
copy of each and every written response; or, if such response was oral the date,
time and person to whom a response was given.
5. All parties acknowledge and represent that: (a) they have read the
Agreement; (b) they clearly understand the Agreement and each of its terms; (c)
they fully and unconditionally consent to the terms of this Agreement; (d) they
have had the benefit and advice of counsel of their own selection; (e) they have
executed this Agreement, freely, with knowledge, and without influence or
duress; (f) they have not relied upon any other representations, either written
or oral, express or implied, made to them by any person; and (g) the
consideration received by them has been actual and adequate.
6. This Agreement contains the entire agreement and understanding
concerning the subject matter hereof between the parties and supersedes and
replaces all prior negotiations, proposed agreement and agreements, written or
oral. Each of the parties hereto acknowledges that neither any of the parties
hereto, nor agents or counsel of any other party whomsoever, has made any
promise, representation or warranty whatsoever, express or implied, not
contained herein concerning the subject hereto, to induce it to execute this
Agreement and acknowledges ands warrants that it is not executing this Agreement
in reliance on any promise, representation or warranty not contained herein.
7. This Agreement may not be modified or amended in any manner except by
an instrument in writing specifically stating that it is a supplement,
modification or amendment to the Agreement and signed by each of the parties
hereto.
8. Should any provision of this Agreement be declared or be determined by
any court or tribunal to be illegal or invalid, the validity of the remaining
parts, terms or provisions shall not be affected thereby and said illegal or
invalid part, term or provision shall be severed and deemed not to be part of
this Agreement.
9. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to principles of conflicts of
laws. Any action brought by either party against the other concerning the
transactions contemplated by this Agreement shall be brought only in the state
courts of New York or in the federal courts located in the state of New York.
Both parties and the individuals executing this Agreement and other agreements
on behalf of the Company agree to submit to the jurisdiction of such courts and
waive trial by jury. The prevailing party shall be entitled to recover from the
other party its reasonable attorney's fees and costs.
10. This Agreement may be executed in counterparts, each of which, when
all parties have executed at least one such counterpart, shall be deemed an
original, with the same force and effect as if all signatures were appended to
one instrument, but all of which together shall constitute one and the same
Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first indicated above.
OMICRON MASTER TRUST SF CAPITAL PARTNERS, LTD.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Partner Its: General Counsel of its Investment Manager
BRISTOL INVESTMENT FUND, LTD. ASCEND OFFSHORE FUND, LTD.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director Title: Director
ASCEND PARTNERS LP ASCEND PARTNERS SAPIENT LP
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: General Partner Title: Director
THE SINGING MACHINE COMPANY, INC.
By: /s/ Yi ▇▇▇▇ ▇▇▇▇
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Name: Yi ▇▇▇▇ ▇▇▇▇
Title: Interim CEO
EXHIBIT A
ALLOCATIONS AND
WIRE TRANSFER INSRUCTIONS
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INVESTOR BANK ACCOUNT AMOUNT
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Omicron Master Trust $1,250,000.00
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SF Capital Partners Ltd. $250,000.00
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Bristol Investment Fund Ltd. $150,000.00
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Ascend Offshore Fund Ltd. $239,000.00
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Ascend Partners, LP $29,100.00
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Ascend Partners Sapient LP $81,900.00
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TOTAL $2,000,000.00
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