<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>seventhamendment.txt
<DESCRIPTION>SEVENTH AMENDMENT
<TEXT>
                                                                    Exhibit 10.1


LaSalle Business Credit, Inc.                             Member ABN AMRO Group

135 South LaSalle Street
Suite 425
Chicago, Illinois  60603
(312) 904-8490                                FEBRUARY 20, 2003


The Singing Machine Company, Inc.
6601 Lyons Road
Suite A-7
Coconut Creek, Florida  33073

           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

<PAGE>

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

<PAGE>

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.

<PAGE>

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/ Casey Orlowski
                                                   ----------------------------
                                                Title    Vice President
                                                     --------------------------


ACKNOWLEDGED AND AGREED TO
this 20th day of February, 2003.

The Singing Machine Company, Inc.


By /s/ John F. Klecha
-----------------------
John F. Klecha

Title  President/Secretary


</TEXT>
</DOCUMENT>
