<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>v037671_ex10-4.txt
<TEXT>
                        SETTLEMENT AGREEMENT AND RELEASE
                        --------------------------------

      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.


<PAGE>

      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.


<PAGE>

      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.


<PAGE>

      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.


<PAGE>

      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/ Bruce Bernstein           By: /s/ Daniel J. McNally
    ------------------------          ------------------------
Name:  Bruce Bernstein            Name: Daniel J. McNally
Title: Managing Partner           Its: General Counsel of its Investment Manager


BRISTOL INVESTMENT FUND, LTD.     ASCEND OFFSHORE FUND, LTD.
By: /s/ Paul Kessler              By: /s/ Malcolm Fairbairn
    ------------------------          ------------------------
Name:  Paul Kessler               Name:  Malcolm Fairbairn
Title: Director                   Title: Director

ASCEND PARTNERS LP                ASCEND PARTNERS SAPIENT LP
By: /s/ Malcolm Fairbairn         By: /s/ Malcolm Fairbairn
    ------------------------          ------------------------
Name:  Malcolm Fairbairn          Name:  Malcolm Fairbairn
Title: General Partner            Title: Director


THE SINGING MACHINE COMPANY, INC.


By: /s/ Yi Ping Chan
    ------------------------
Name:  Yi Ping Chan
Title: Interim CEO


<PAGE>

                                    EXHIBIT A

                                 ALLOCATIONS AND
                            WIRE TRANSFER INSRUCTIONS

--------------------------------------------------------------------------------
INVESTOR                                     BANK ACCOUNT          AMOUNT
--------------------------------------------------------------------------------
Omicron Master Trust                                               $1,250,000.00
--------------------------------------------------------------------------------
SF Capital Partners Ltd.                                             $250,000.00
--------------------------------------------------------------------------------
Bristol Investment Fund Ltd.                                         $150,000.00
--------------------------------------------------------------------------------
Ascend Offshore Fund Ltd.                                            $239,000.00
--------------------------------------------------------------------------------
Ascend Partners, LP                                                   $29,100.00
--------------------------------------------------------------------------------
Ascend Partners Sapient LP                                            $81,900.00
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
                                             TOTAL                 $2,000,000.00
--------------------------------------------------------------------------------
</TEXT>
</DOCUMENT>
