Exhibit 10.1
LASALLE BUSINESS CREDIT, LLC
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MEMBER ABN AMRO GROUP
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The Singing Machine Company, Inc.
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Re: ELEVENTH 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 (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
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MEMBER ABN AMRO GROUP
THE SINGING MACHINE COMPANY, INC.
May 30, 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 May 31,
2003 through June 30, 2003; plus
(C) "INTENTIONALLY OMITTED"; minus
(d) Such reserves as tender 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 May 31, 2003 until June 30, 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 May
31, 2003 through June 30, 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) ONE-TIME AMENDMENT FEE: Borrower shall pay to Bank a one-time
amendment fee of Ten Thousand
LASALLE BUSINESS CREDIT, LLC
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MEMBER ABN AMRO GROUP
The Singing Machine Company, Inc.
May 30, 2003
Page 3
and No/100 Dollars (10,000.00), which fee shall be deemed
fully earned on the date of this Amendment and payable on or
before June 30, 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 ire
full force and effect in accordance with the terms thereof.
LASALLE BUSINESS CREDIT, LLC, A
DELAWARE LIMITED LIABILITY COMPANY
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Title Vice President
ACKNOWLEDGED AND AGREED TO this 30th day of May, 2003.
THE SINGING MACHINE COMPANY, INC.
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Title CHIEF EXECUTIVE OFFICER
/s/ ▇▇▇▇▇ ▇▇▇▇▇
CFO