Exhibit 10.1
LaSalle Business Credit, Inc. Member ABN AMRO Group
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
(000) 000-0000 FEBRUARY 20, 2003
The Singing Machine Company, Inc.
0000 Xxxxx Xxxx
Xxxxx X-0
Xxxxxxx Xxxxx, Xxxxxxx 00000
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/ Xxxxx Xxxxxxxx
----------------------------
Title Vice President
--------------------------
ACKNOWLEDGED AND AGREED TO
this 20th day of February, 2003.
The Singing Machine Company, Inc.
By /s/ Xxxx X. Xxxxxx
-----------------------
Xxxx X. Xxxxxx
Title President/Secretary
