Exhibit 10.5
LaSalle Business Credit, LLC Member ABN AMRO Group
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000 March 28, 2003
(000) 000-0000
The Singing Machine Company, Inc.
0000 Xxxxx Xxxx
Xxxxx X-0
Xxxxxxx Xxxxx, Xxxxxxx 00000
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/ Xxxxx Xxxxxxxx
----------------------------
Title Vice President
--------------------------
ACKNOWLEDGED AND AGREED TO
this 31st day of March, 2003.
The Singing Machine Company, Inc.
By /s/ Xxxx X. Xxxxxx
-----------------------
Xxxx X. Xxxxxx
Title President/Secretary
