THE SINGING MACHINE COMPANY, INC.

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of January 16,
2007, among The Singing Machine Company, Inc., a Delaware corporation (the
“Company”), and the purchasers identified on the signature pages hereto (each a
“Purchaser” and collectively the “Purchasers”).

RECITALS

WHEREAS, the Company has authorized the sale and issuance to the Purchasers of
an aggregate of up to 480,000 shares (the “Shares”) of the Company’s Common
Stock, par value $0.01 (the “Common Stock”); and

WHEREAS, Purchasers desire to purchase and the Company desires to sell the
Shares on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises, representations, warranties and covenants hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

AGREEMENT

1. Purchase and Sale. Pursuant to the terms and conditions set forth in this
Agreement, the Company agrees to sell to the Purchasers, and the Purchasers
hereby agree to purchase the Shares at a purchase price of $0.833 per share, for
a total purchase price equal to $400,000 US Dollars (the “Purchase Price”).
 
2. Closing, Delivery and Payment. 
 
2.1. Closing. Subject to the terms and conditions herein, the closing of the
transactions contemplated hereby (“Closing”) shall take place on the first
business day following such date as the Company and each Purchaser has satisfied
all of the closing conditions set forth herein (the “Closing Date”) at the
offices of Sichenzia Ross Friedman Ference LLP, located at 1065 Avenue of the
Americas, New York, New York. The Shares sold and issued on the Closing Date
will be, and will be distributed among the Purchasers, as set forth on Exhibit
A.
 
2.2. Closing Deliverables. 
 
(a) At the Closing, and as a condition to the Purchaser’s obligations hereunder,
the Company will deliver the following to the Purchasers:
 
(i) an executed copy of this Agreement;
 
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(ii) an executed copy of corporate resolutions and Board authorizations which
pursuant to Delaware law authorize the issuance of the Shares to Purchasers as
set forth herein;
 
(iii) Such documents from the American Stock Exchange, and any other applicable
regulatory bodies (collectively “AMEX”) which set forth that Purchasers’
purchase of the Shares on the terms set forth in this Agreement and the Related
Agreements (as hereinafter defined) has been approved by the AMEX such that
Purchasers’ purchase of the Shares is completely free and clear of any voting
restrictions which may be imposed by the AMEX pursuant to Section 713, and any
other applicable sections, of the American Stock Exchange Company Guide, and any
additional applicable and related regulations (collectively “Regulatory
Approval”);
 
(iv) an opinion of Company counsel that the Shares have been properly
authorized, conform with all laws relating to their issuance, and are free and
clear of all liens, charges, or assessments of any form and character as of the
Closing Date;
 
(v) stock certificates representing the Shares purchased at the Closing; and
 
This Agreement are referred to herein as the “Related Agreements.”
 
(b) At the Closing, each Purchaser will deliver the following to the Company:
 
(i) an executed copy of this Agreement; and
 
(ii) the purchase consideration for the Shares to be purchased by such Purchaser
at the Closing, via wire transfer to an account designated by the Company.
 
3. Representations and Warranties of the Company. Except as set forth in the
Company’s filings under the Securities Exchange Act of 1934 (collectively, the
“Exchange Act Filings”), copies of which have been made available to the
Purchasers, the Company hereby represents and warrants to the Purchaser as
follows:
 
3.1. Organization, Good, Standing and Qualification. Each of the Company and its
active Subsidiaries (as defined below) is an entity duly incorporated or
otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted. Set forth on the attached Schedule
3.1 is a list identifying the name of the Company and each Subsidiary, its
jurisdiction of incorporation and foreign status registration(s) as well as its
directors and officers. Neither the Company nor any active Subsidiary is in
violation of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the active Subsidiaries is duly qualified to do business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate: (i)
adversely affect the legality, validity or enforceability of this Agreement or
the Related Agreements, (ii) have or result in or be reasonably likely to have
or result in a material adverse effect on the results of operations, assets,
business or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) adversely impair the Company's ability
to perform fully on a timely basis its obligations under this Agreement or the
Related Agreements (any of (i), (ii) or (iii), a “Material Adverse Effect”).
 
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3.2. Subsidiaries. Each direct and indirect Subsidiary of the Company, the
direct owner of such Subsidiary and its percentage ownership thereof, is set
forth on the attached Schedule 3.2. For the purpose of this Agreement, a
“Subsidiary” of any person or entity means (i) a corporation or other entity
whose shares of stock or other ownership interests having ordinary voting power
(other than stock or other ownership interests having such power only by reason
of the happening of a contingency) to elect a majority of the directors of such
corporation, or other persons or entities performing similar functions for such
person or entity, are owned, directly or indirectly, by such person or entity or
(ii) a corporation or other entity in which such person or entity owns, directly
or indirectly, more than 50% of the voting interests at such time.
 
3.3. Capitalization; Voting Rights.  
 
(a) The authorized capital stock of the Company, as of the date hereof consists
of 100,000,000 shares of common stock par value $0.01 of which 25,274,883 are
issued and outstanding and 1,000,000 shares of preferred stock $0.10 par value,
of which none are issued and outstanding. All issued and outstanding shares of
the Company’s Common Stock: (a) have been duly authorized and validly issued and
are fully paid and nonassessable; and (b) were issued by the Company in full
compliance with all applicable state and federal laws concerning the issuance of
securities.
 
(b) The rights, preferences, privileges and restrictions of the shares of the
Common Stock are as stated in the Company’s Certificate of Incorporation, as
amended (the “Charter”) and pursuant to applicable law.
 
3.4. Authorization and Binding Obligations. All corporate, partnership or
limited liability company, as the case may be, action on the part of the Company
(including the respective officers and directors) necessary for the
authorization of this Agreement and the Related Agreements, the performance of
all obligations of the Company hereunder and under the other Related Agreements
at the Closing and, the authorization, sale, issuance and delivery of the Shares
has been taken or will be taken prior to the Closing. This Agreement and the
Related Agreements, when executed and delivered will be valid and binding
obligations of each of the Company enforceable against the Company in accordance
with their terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors’ rights and general principles of equity that restrict
the availability of equitable or legal remedies.
 
3.5. Liabilities. Neither the Company nor any of its Subsidiaries has any
material contingent liabilities, except current liabilities incurred in the
ordinary course of business and liabilities disclosed in the Company’s Exchange
Act Filings .
 
3.6. Agreements; Action. 
 
(a) there are no agreements, understandings, instruments, contracts, proposed
transactions, judgments, orders, writs or decrees to which the Company or any of
its Subsidiaries is a party or by which it is bound which may involve: (A)
obligations (contingent or otherwise) of, or payments to, the Company in excess
of $100,000; or (B) provisions restricting the development, manufacture or
distribution of the Company’s products or services.
 
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(b) For the purposes of this Section 3.6, all indebtedness, liabilities,
agreements, understandings, instruments, contracts and proposed transactions
involving the same person or entity (including persons or entities the Company
has reason to believe are affiliated therewith) shall be aggregated for the
purpose of meeting the individual minimum dollar amounts of such subsections.
 
3.7. Obligations to Related Parties. There are no obligations of the Company or
any of its Subsidiaries to officers, directors, stockholders or employees of the
Company or any of its Subsidiaries other than:
 
(a) for payment of salary for services rendered and for bonus payments;
 
(b) reimbursement for reasonable expenses incurred on behalf of the Company and
its Subsidiaries; and
 
(c) for other standard employee benefits made generally available to all
employees (including stock option agreements outstanding under any stock option
plan approved by the Board of Directors of the Company).
 
Further, except as described above, none of the officers, directors or, to the
best of the Company’s knowledge, key employees or stockholders of the Company or
any members of their immediate families, are indebted to the Company,
individually or in the aggregate, in excess of $5,000 or have any direct or
indirect ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation which competes with the Company, other than passive investments in
publicly traded companies (representing less than one percent (1%) of such
company) which may compete with the Company. Except as described above, no
officer, director or stockholder, or any member of their immediate families, is,
directly or indirectly, interested in any material contract with the Company and
no agreements, understandings or proposed transactions are contemplated between
the Company and any such person. Except as set forth on Schedule 3.7, the
Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.

3.8. Changes. Since September 30, 2006, except as disclosed or any other
Schedule to this Agreement or to any of the Related Agreements, there has not
been:
 
(a) any change in the business, assets, liabilities, condition (financial or
otherwise), properties or operations of the Company or any of its Subsidiaries,
which individually or in the aggregate has had, or could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect;
 
(b) any resignation or termination of any officer, key employee or group of
employees of the Company or any of its Subsidiaries;
 
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(c) any material change, except in the ordinary course of business, in the
contingent obligations of the Company or any of its Subsidiaries by way of
guaranty, endorsement, indemnity, warranty or otherwise;
 
(d) any damage, destruction or loss, whether or not covered by insurance, has
had, or could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect;
 
(e) any waiver by the Company or any of its Subsidiaries of a valuable right or
of a material debt owed to it;
 
(f) any direct or indirect loans made by the Company or any of its Subsidiaries
to any stockholder, employee, officer or director of the Company or any of its
Subsidiaries, other than advances made in the ordinary course of business;
 
(g) any material change in any compensation arrangement or agreement with any
employee, officer, director or stockholder of the Company or any of its
Subsidiaries;
 
(h) any declaration or payment of any dividend or other distribution of the
assets of the Company or any of its Subsidiaries;
 
(i) any labor organization activity related to the Company or any of its
Subsidiaries;
 
(j) any debt, obligation or liability incurred, assumed or guaranteed by the
Company or any of its Subsidiaries, except those for immaterial amounts and for
current liabilities incurred in the ordinary course of business;
 
(k) any sale, assignment, hypothecation or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets owned by the Company or any
of its Subsidiaries;
 
(l) any change in any material agreement to which the Company or any of its
Subsidiaries is a party or by which either the Company or any of its
Subsidiaries is bound which either individually or in the aggregate has had, or
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect;
 
(m) any other event or condition of any character that, either individually or
in the aggregate, has had, or could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect; or
 
(n) any arrangement or commitment by the Company or any of its Subsidiaries to
do any of the acts described in subsection (a) through (m) above.
 
3.9. Title to Properties and Assets; Liens, Etc. Except as set forth on Schedule
3.9, the Company and each of its Subsidiaries has good and marketable title to
its properties and assets, and good title to its leasehold estates, in each case
subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than:

(a) those resulting from taxes which have not yet become delinquent;
 
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(b) minor liens and encumbrances which do not materially detract from the value
of the property subject thereto or materially impair the operations of the
Company or any of its Subsidiaries; and
 
(c) those that have otherwise arisen in the ordinary course of business.
 
All facilities, machinery, equipment, fixtures, vehicles and other properties
owned, leased or used by the Company and its Subsidiaries are in good operating
condition and repair and are reasonably fit and usable for the purposes for
which they are being used. Except as set forth on Schedule 3.9, the Company and
its Subsidiaries are in compliance with all material terms of each lease to
which it is a party or is otherwise bound except where such failure to be in
compliance, either individually or in the aggregate has had, or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.

3.10. Intellectual Property. 
 
(a) Each of the Company and each of its Subsidiaries owns or possesses
sufficient legal rights to all patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information and other proprietary rights
and processes necessary for its business as now conducted, as presently proposed
to be conducted (the “Intellectual Property”), without any infringement of the
rights of others. There are no outstanding options, licenses or agreements of
any kind relating to the foregoing proprietary rights, nor is the Company or any
of its Subsidiaries bound by or a party to any options, licenses or agreements
of any kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information and other proprietary rights
and processes of any other person or entity other than such licenses or
agreements arising from the purchase of “off the shelf” or standard products.
 
(b) Neither the Company nor any of its Subsidiaries are in breach of any
intellectual property right of any third party nor have they received any
communications alleging that the Company or any of its Subsidiaries has violated
any of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity, nor is the
Company or any of its Subsidiaries aware of any basis therefor.
 
(c) The Company does not and will not utilize any inventions, trade secrets or
proprietary information of any of its employees made prior to their employment
by the Company or any of its Subsidiaries, except for inventions, trade secrets
or proprietary information that have been rightfully assigned to the Company or
any of its Subsidiaries.
 
3.11. Compliance with other Instruments. Neither the Company nor any of its
Subsidiaries is in violation or default of (i) any material term of its Charter
or Bylaws, or (ii) of any provision of any indebtedness, mortgage, indenture,
contract, agreement or instrument to which it is party or by which it is bound
or of any judgment, decree, order or writ, which violation or default, in the
case of this clause (ii), has had, or could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect. The
execution, delivery and performance of and compliance with this Agreement and
the Related Agreements to which it is a party, and the issuance and sale of the
Shares by the Company pursuant hereto, will not, with or without the passage of
time or giving of notice, result in any such material violation, or be in
conflict with or constitute a default under any such term or provision, or
result in the creation of any mortgage, pledge, lien, encumbrance or charge upon
any of the properties or assets of the Company or any of its Subsidiaries or the
suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to the Company, its business or
operations or any of its assets or properties.
 
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3.12. Filings, Consents and Approvals. Neither the Company nor any Subsidiary is
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other person in connection with
the execution, delivery and performance by the Company of this Agreement or the
Related Agreements, other than (i) a current report on Form 8-K announcing the
transactions contemplated under this Agreement, (ii) the filing of a
registration statement with the SEC as required under the Registration Rights
Agreement, (iii) the notice and/or application(s) to the American Stock Exchange
(“AMEX”) for the issuance and sale of the Shares for trading thereon in the time
and manner required thereby, and (iv) the filing of Form D with the SEC and
applicable Blue Sky filings (collectively, the “Required Approvals”).
 
3.13. Litigation. There is no action, suit, proceeding or investigation pending
or, to the Company’s knowledge, currently threatened against the Company or any
of its Subsidiaries that prevents the Company or any of its Subsidiaries from
entering into this Agreement or the other Related Agreements, or from
consummating the transactions contemplated hereby or thereby, or which has had,
or could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect or any change in the current equity
ownership of the Company or any of its Subsidiaries, nor is the Company aware
that there is any basis to assert any of the foregoing. Neither the Company nor
any of its Subsidiaries is a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company or any of its Subsidiaries currently pending or which the Company or any
of its Subsidiaries intends to initiate.
 
3.14. Tax Returns and Payments. Except as set forth on Schedule 3.14, the
Company and each of its Subsidiaries have timely filed all tax returns (federal,
state, local, and foreign) required to be filed by it. All taxes shown to be due
and payable on such returns, any assessments imposed, and all other taxes due
and payable by the Company or any of its Subsidiaries on or before the Closing,
have been paid or will be paid prior to the time they become delinquent. Except
as set forth on Schedule 3.14, neither the Company nor any of its Subsidiaries
has been advised:
 
(a) that any of its returns, federal, state, local, foreign, or other, have been
or are being audited as of the date hereof; or
 
(b) of any deficiency in assessment or proposed judgment to its federal, state,
local, foreign, or other taxes.
 
The Company has no knowledge of any liability for any tax to be imposed upon its
properties or assets as of the date of this Agreement that is not adequately
provided for.
 
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3.15. Employees. Neither the Company nor any of its Subsidiaries has any
collective bargaining agreements with any of its employees. There is no labor
union organizing activity pending or, to the Company’s knowledge, threatened
with respect to the Company or any of its Subsidiaries. Neither the Company nor
any of its Subsidiaries is a party to or bound by any currently effective
employment contract with its corporate officers, deferred compensation
arrangement, bonus plan, incentive plan, profit sharing plan, retirement
agreement or other employee compensation plan or agreement. To the Company’s
knowledge, no employee of the Company or any of its Subsidiaries, nor any
consultant with whom the Company or any of its Subsidiaries has contracted, is
in violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, the Company or any of its Subsidiaries
because of the nature of the business to be conducted by the Company or any of
its Subsidiaries; and to the Company’s knowledge the continued employment by the
Company or any of its Subsidiaries of its present employees, and the performance
of the Company’s and its Subsidiaries’ contracts with its independent
contractors, will not result in any such violation. Neither the Company nor any
of its Subsidiaries is aware that any of its employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with their duties to the Company or
any of its Subsidiaries. Neither the Company nor any of its Subsidiaries has
received any notice alleging that any such violation has occurred. Except for
employees who have a current effective employment agreement with the Company or
any of its Subsidiaries, no employee of the Company or any of its Subsidiaries
has been granted the right to continued employment by the Company or any of its
Subsidiaries or to any material compensation following termination of employment
with the Company or any of its Subsidiaries. The Company is not aware that any
officer, key employee or group of employees intends to terminate his, her or
their employment with the Company or any of its Subsidiaries, nor does the
Company or any of its Subsidiaries have a present intention to terminate the
employment of any officer, key employee or group of employees.
 
3.16. Compliance with Laws; Permits. Neither the Company nor any of its
Subsidiaries is in violation of any applicable statute, rule, regulation, order
or restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties which has had, or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect. No governmental
orders, permissions, consents, approvals or authorizations are required to be
obtained and no registrations or declarations are required to be filed in
connection with the execution and delivery of this Agreement or any other
Related Agreement and the issuance of any of the Shares, except such as has been
duly and validly obtained or filed, or with respect to any filings that must be
made after the Closing, as will be filed in a timely manner. Each of the Company
and its Subsidiaries has all material franchises, permits, licenses and any
similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
 
3.17. Environmental and Safety Laws. Neither the Company nor any of its
Subsidiaries is in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety and no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation except for such violations that individually, or in
the aggregate, have had, or could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect. No Hazardous Materials (as
defined below) are used or have been used, stored, or disposed of by the Company
or any of its Subsidiaries or, to the Company’s knowledge, by any other person
or entity on any property owned, leased or used by the Company or any of its
Subsidiaries. For the purposes of the preceding sentence, “Hazardous Materials”
shall mean:
 
(a) materials which are listed or otherwise defined as “hazardous” or “toxic”
under any applicable local, state, federal and/or foreign laws and regulations
that govern the existence and/or remedy of contamination on property, the
protection of the environment from contamination, the control of hazardous
wastes, or other activities involving hazardous substances, including building
materials; or
 
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(b) any petroleum products or nuclear materials.
 
3.18. Insurance. Each of the Company and each of its Subsidiaries have general
commercial, fire and casualty insurance policies with coverages which the
Company believes are customary for companies similarly situated to the Company
and its Subsidiaries in the same or similar business.
 
3.19. SEC Reports. The Company has timely filed all proxy statements, reports
and other documents required to be filed by it under the Securities Exchange Act
1934, as amended (the “Exchange Act”). The Company has made available to the
Purchaser copies of: (i) its Annual Reports on Form 10-K for its fiscal year
ended March 31, 2006; (ii) its quarterly reports on Form 10-Q for the fiscal
quarters ended June 30, 2004, September 30, 2004, December 31, 2004, June 30,
2005, September 30, 2005, December 31, 2005, June 30, 2006 and September 30,
2006 and (iii) its reports on Form 8-K which have been filed from July 31, 2006
to date (collectively, the “SEC Reports”). Each SEC Report was, at the time of
its filing, in substantial compliance with the requirements of its respective
form and none of the SEC Reports, nor the financial statements (and the notes
thereto) included in the SEC Reports, as of their respective filing dates,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
 
4. Representations, Warranties and Covenants of the Purchaser. Each Purchaser
hereby represents, warrants and covenants to the Company as follows:
 
4.1. Authorization; Enforceability. Each Purchaser has the power and authority
to purchase the Shares and to execute and deliver this Agreement and the Related
Agreements to which such Purchaser is a party and to perform the provisions
hereof and thereof. This Agreement constitutes, and upon execution and delivery
thereof, each other Related Agreement to which such Purchaser is a party will
constitute, such Purchaser’s valid and legally binding obligation, enforceable
in accordance with its terms, subject to (i) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar laws of general
application relating to or affecting the enforcement of creditors’ rights
generally and (ii) general principles of equity.
 
4.2. No Conflict with Other Instruments. The (i) execution, delivery and
performance of this Agreement by each Purchaser and the other Related Agreements
to which such Purchaser is a party, and (ii) consummation of the transactions
contemplated hereby and thereby by such Purchaser has not and will not result in
default (and to the knowledge of such Purchaser, no event has occurred which,
with notice or lapse of time or both, would constitute a default) under any
provision of any instrument or contract to which such Purchaser is a party or by
which such Purchaser or any of its property is bound, or in violation of any
provision of any governmental requirement applicable to such Purchaser.
 
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4.3. Consent. Filings, Consents and Approvals. No Purchaser is required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other person in connection with the
execution, delivery and performance by the Purchaser of this Agreement or the
Related Agreements, other than the Required Approvals or any other filing or
notice required under federal or state securities laws to report the
transactions contemplated in this Agreement and the Related Agreements.
 
4.4. Investment for Own Account. Such Purchaser will hold the Shares for their
own account for investment purposes only, and not with a view to, or for resale
in connection with, any distribution that would require registration under the
Securities Act or the securities laws of any state. Such Purchaser does not
presently have any reason to anticipate any change in circumstances or other
particular occasion or event which would require selling the Shares or any part
thereof or interest therein. Such Purchaser understands that there will be no
established market for the Shares and that such Purchaser may be restricted from
selling the Shares except in a sale exempt under federal and state securities
laws.
 
4.5. No Registration. Such Purchaser understands that: (a) the Shares (i) have
not been registered under the Securities Act or any state securities laws, (ii)
will be issued in reliance upon an exemption from the registration and
prospectus delivery requirements of the Securities Act which relate to private
offerings, (iii) may be required to be held by such Purchaser indefinitely, and
(b) such Purchaser must therefore bear the economic risk of such investment
indefinitely unless a subsequent disposition thereof is registered under the
Securities Act and applicable state securities laws or is exempt therefrom. Such
Purchaser further understands that such exemptions depend upon, among other
things, the accuracy of such Purchaser’s representations set forth in this
Section 4.
 
4.6. Access to Information. Such Purchaser has had an opportunity to ask
questions of, and receive satisfactory answers from, the Company and its
representatives or agents concerning the terms of this investment and the
undersigned’s potential acquisition of the Shares, and all such questions have
been answered to such Purchaser’s full satisfaction. Such Purchaser has been
furnished by the Company all information (or provided access to all information)
regarding the business and financial condition of the Company, the attributes of
the Shares and the merits and risks of an investment in the Shares which such
Purchaser has requested or otherwise needs to evaluate the investment in the
Shares, and such Purchaser does not desire any further information or data
concerning the Company. Specifically, such Purchaser acknowledges receipt from
the Company of, without limitation, the following information (collectively, the
“Investment Information”):
 
(a) the Company’s Exchange Act Filings; and
 
(b) the Company’s Charter and Bylaws. 
 
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Such Purchaser has received, read and understands the Investment Information.
Such Purchaser has examined all written materials furnished by the Company, or
caused the same to be examined by such Purchaser’s representatives, to the
extent such Purchaser deemed necessary or appropriate. The undersigned
acknowledges that the Company has made available to the undersigned the
opportunity to obtain additional information to verify the accuracy of any
material shown to the undersigned by the Company and to evaluate the merits and
risks of this investment.

4.7. Accredited Investor. Such Purchaser is an “accredited investor” as defined
in Rule 501 of Regulation D promulgated under the Securities Act, and such
Purchaser, or those persons retained by such Purchaser, have knowledge, skill
and experience in financial, business and investment matters relating to an
investment of this type and are capable of evaluating the merits and risks of
such investment and protecting such Purchaser in connection with an investment
in the Shares. At such Purchaser’s own expense, the undersigned has, to the
extent deemed necessary by such Purchaser, retained and relied upon appropriate
professional advice regarding the investment, tax and legal merits and
consequences of an investment in the Shares. Such Purchaser has not received any
legal, business, tax or other advice from the Company, its counsel or other
representatives.
 
4.8. Risk of Investment. Such Purchaser acknowledges that (i) it has been called
to such Purchaser’s attention that such Purchaser’s investment in the Shares
involves a high degree of risk, (ii) any investment in the Company is not
insured by any governmental or other entity, and (iii) such Purchaser
understands that the Shares will be an illiquid investment. Further, such
Purchaser acknowledges that there are certain tax risks associated with the
proposed investment and no assurances are being made that existing tax laws and
regulations will not be modified in the future, thus altering tax consequences
associated with this potential investment. The Company has never made any
representation, guarantee or warranty (a) as to the approximate or exact length
of time that such Purchaser will be required to remain an owner of the Shares
(or any other securities of the Company); (b) the percentage of profit, amount
of or type of consideration and/or profit or loss, if any, that will result from
an investment in the Shares; or (c) that any future expectations relating to the
Company’s performance indicate in any way what the Company’s financial condition
or results of operations will be in the future. Such Purchaser understands the
speculative nature of an investment in the Shares and the financial risks
associated with the Shares.
 
4.9. Restrictions on Transfer. The Offering is being made in reliance upon
exemptions from registration under the Securities Act and applicable state
securities laws for an offer and sale of securities not involving a public
offering. The Shares may not be sold, transferred or otherwise disposed of
without satisfaction of certain conditions, including registration under, or the
availability of an exemption from registration under, the Securities Act and
applicable state securities laws. Such Purchaser agrees that the Company may
permit the transfer of the Shares out of such Purchaser’s name only when any
request for transfer is accompanied by an opinion of counsel acceptable in form
and substance to Company counsel to the effect that the proposed transfer
results in no violation of the Securities Act or any applicable state securities
laws. A legend to this effect will be placed upon each certificate representing
the Shares.
 
4.10. Representations and Warranties. No person or entity, other than the
Company, has been authorized to give any information or to make any
representations on behalf of the Company in connection with the offering of the
Shares and, if given or made, such information or representations have not been
relied upon by the undersigned as having been made or authorized by the Company.
The only representations, warranties and information made by the Company in
connection with the Offering are those contained in this Agreement and the
Investment Information.
 
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4.11. General Solicitation. The solicitation of an offer to buy the Shares was
communicated to such Purchaser in such a manner that at no time was such
Purchaser presented with or solicited by or through any leaflet, public
promotional meeting, television, radio, internet or other published
advertisement or any other form of general or public advertising or
solicitation.
 
4.12. Purchaser’s Experience. By reason of such Purchaser’s business and
financial experience, such Purchaser has the capacity to protect such
Purchaser’s own interests in investments of this nature. Such Purchaser has
evaluated such Purchaser’s financial resources and investment position, and the
risks associated with the proposed investment and concluded that such Purchaser
has the ability to bear the economic risks associated with this proposed
investment.
 
4.13. Non-public Information. After the date hereof, such Purchaser agrees to
hold in strict confidence any non-public information of the Company (the
“Information”) acquired by such Purchaser, and not to use such Information for
any competitive purpose. Such Purchaser may transmit Information to its
partners, directors, officers, employees, agents or representatives, including
attorneys, accountants and consultants (collectively, “Representatives”), but
only to such Representatives who are informed of the confidential nature of the
Information and are directed to treat such Information as confidential.
Notwithstanding anything to the contrary herein, such Purchaser may disclose any
Information to the extent such Information or portion thereof (i) is or becomes
generally available to the public other than as a result of a disclosure by the
undersigned or its Representatives in breach of the terms hereof, (ii) is or
becomes available to such Purchaser on a non-confidential basis from a source,
other than the Company or its representatives, without violation of a duty of
confidentiality to the Company, or (iii) was known to such Purchaser on a
non-confidential basis prior to the disclosure to such Purchaser by the Company
or any of its representatives.
 
5. Covenants of the Company and Purchaser.  
 
5.1 Registration Rights. If at any time after the date hereof, the Company shall
determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than on Form S-4 or Form
S-8 (each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, then the Company
shall use its best efforts to include in such registration statement all of such
Shares to the extent the Company may do so without violating registration rights
of others which exist as of the date of this Agreement, subject to customary
underwriter cutbacks applicable to all holders of registration rights and
subject to obtaining any required the consent of any selling stockholder(s) to
such inclusion under such registration statement. The Company shall have a right
to postpone, delay or withdraw any registration pursuant to this Section 5.1
without obligation to the Holder.
 
5.2. Listing. The Company shall as promptly as practicable after Closing secure
the listing of the Shares on the AMEX (subject to official notice of issuance)
and shall maintain such listing so long as any other shares of Common Stock
shall be so listed. The Company will use commercially reasonable best efforts to
maintain the listing of its Common Stock on AMEX, and will comply with the
Company’s reporting, filing and other obligations under the bylaws or rules of
the National Association of Securities Dealers (“NASD”) and such exchanges, as
applicable.
 
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5.3. Market Regulations. The Company shall notify the SEC, NASD and applicable
state authorities, in accordance with their requirements, of the transactions
contemplated by this Agreement, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Shares to the Purchasers and
promptly provide copies thereof to the Purchasers.
 
5.4. Reporting Requirements; Reports for Purchasers. The Company will timely
file with the SEC all reports required to be filed pursuant to the Exchange Act
and refrain from terminating its status as an issuer required by the Exchange
Act to file reports thereunder even if the Exchange Act or the rules or
regulations thereunder would permit such termination. The Company will prepare
and timely file with the Commission, at the Company’s expense, any filings
pursuant to Section 13 or 16 of the Exchange Act that are required for
Purchasers in connection with this transaction in the future; provided, however,
that Purchasers agree to deliver any necessary information required to complete
such filings to the Company no later than the next business day after the
transaction requiring such filing occurs.   
 
5.5. Restrictions. If required by law, until this Agreement and the Related
Agreements are approved by the holders a majority of the outstanding shares of
capital stock of the Company entitled to vote (“Shareholder Approval”), no
holder of Shares shall be entitled to vote such holder’s Shares, if such holder
will hold more than 9.99% of the outstanding Common Stock or voting power of the
Company on the date of such vote or exercise.
 
6. Indemnification.
 
6.1. Company Indemnification. The Company agrees to indemnify, hold harmless,
reimburse and defend the Purchasers, each Purchaser’s officers, directors,
agents, affiliates, control persons, and principal shareholders, against any
claim, cost, expense, liability, obligation, loss or damage (including
reasonable legal fees) of any nature, incurred by or imposed upon the Purchasers
which results, arises out of or is based upon: (i) any misrepresentation by the
Company or any of its Subsidiaries or breach of any warranty by the Company or
any of its Subsidiaries in this Agreement, any other Related Agreement or in any
exhibits or schedules attached hereto or thereto; or (ii) any breach or default
in performance by Company or any of its Subsidiaries of any covenant or
undertaking to be performed by Company or any of its Subsidiaries hereunder,
under any other Related Agreement or any other agreement entered into by the
Company and/or any of its Subsidiaries and Purchasers relating hereto or
thereto.
 
6.2. Purchasers’ Indemnification. Each Purchaser agrees to indemnify, hold
harmless, reimburse and defend the Company and each of the Company’s officers,
directors, agents, affiliates, control persons and principal shareholders, at
all times against any claim, cost, expense, liability, obligation, loss or
damage (including reasonable legal fees) of any nature, incurred by or imposed
upon the Company which results, arises out of or is based upon: (i) any
misrepresentation by the Purchasers or breach of any warranty by the Purchasers
in this Agreement, any other Related Agreement or in any exhibits or schedules
attached hereto or thereto; or (ii) any breach or default in performance by the
Purchasers of any covenant or undertaking to be performed by the Purchasers
hereunder, under any other Related Agreement or any other agreement entered into
by the Company and/or any of its Subsidiaries and Purchasers relating hereto or
thereto.
 
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7. Miscellaneous.

 
7.1. Entire Agreement. This Agreement, the Related Agreements, the exhibits and
schedules hereto and thereto and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
 
7.2 Choice of Law. This Agreement shall be governed under the laws of the State
of New York, without regard to conflicts of law. The parties agree that the
venue for the resolution of any conflicts arising under this Agreement or for
the interpretation of this Agreement shall be in New York, New York and that the
Courts of the State of New York shall have jurisdiction over any such disputes
and over the parties hereto.
 
7.3 Attorney’s Fees. In the event any litigation, arbitration, mediation, or
other proceeding (“Proceeding”) is initiated by any party(ies) against any other
party(ies) to enforce, interpret or otherwise obtain judicial or quasi-judicial
relief in connection with this Agreement, the prevailing party(ies) in such
Proceeding shall be entitled to recover from the unsuccessful party(ies) all
costs, expenses, actual attorney’s and expert witness fees, relating to or
arising out of: (i) such Proceeding (whether or not such Proceeding proceeds to
judgment), and (ii) any post-judgment or post-award proceeding including,
without limitation, one to enforce any judgment or award resulting from any such
Proceeding. Any such judgment or award shall contain a specific provision for
the recovery of all such subsequently incurred costs, expenses, actual attorney
and expert witness fees.
 
7.4 Counterparts. This Agreement may be signed in one (1) or more counterparts,
each of which shall constitute an original but all of which together shall be
one (1) and the same document. Signatures received by facsimile shall be deemed
to be original signatures.
 
7.5 Partial Invalidity. Each provision of this Agreement will be valid and
enforceable to the fullest extent permitted by law. If any provision of this
Agreement or the application of the provision to any person or circumstance
will, to any extent, be invalid or unenforceable, the remainder of this
Agreement, or the application of the provision to persons or circumstances other
than those as to which it is held invalid or unenforceable, will not be affected
by such invalidity or unenforceability, unless the provision or its application
is essential to this Agreement.
 
7.6 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
 
7.7 Drafting Ambiguities. Each party to this Agreement and their legal counsel
have reviewed and revised this Agreement. The rule of construction that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any amendments or exhibits to this
Agreement.
 
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7.8 Notices. Any notice from one party to another shall be delivered either
personally, via facsimile or by United States mail, postage fully prepaid,
addressed as follows:

Purchasers:
 
To the respective addresses set forth below the Purchaser’s signature at the
foot of this Agreement.
     
With a copy (not
constituting notice):
         
Company:
 
The Singing Machine Company, Inc.
   
Attention: Danny Zheng
   
6601 Lyons Road, Building A-7
   
Coconut Creek, FL 33073
     
With a copy to (not
constituting notice):
 
Sichenzia Ross Friedman Ference LLP
   
Attention: Darrin M. Ocasio, Esq.
   
1065 Avenue of the Americas
   
New York, NY 10018

 
Any notice being delivered within the continental United States shall be deemed
delivered upon (a) personal service, or (b) transmission via facsimile (with the
original thereof to be immediately sent via mail, postage prepaid), or (c) forty
eight (48) hours after the time of deposit in the mail, as the case may be. In
the event any Party changes its address, such change of address shall be
communicated to the other Party in the manner set forth in this Section.
 
7.8a Definition of Knowledge. For the purposes of this Agreement, the Company
shall only be deemed to have “knowledge” of a particular fact or other matter,
if an executive officer of the Company is actually aware of such fact or matter,
or a reasonably prudent individual operating in the capacity of an executive
officer of the Company could be expected to discover or otherwise become aware
of such fact or matter in the ordinary course of fulfilling the responsibilities
of an executive officer.
 
7.9 Interpretation/Representation. Wherever the context of this Agreement
requires, all words used in the singular shall be construed to have been used in
the plural, and vice versa, and the use of any gender specific pronoun shall
include any other appropriate gender. The term “person” shall refer to any
individual, corporation or legal entity having standing to bring an action in
its own name under applicable state law. The conjunctive “or” shall mean
“and/or” unless otherwise required by the context in which the conjunctive “or”
is used.
 
7.10 Survival. The representations, warranties, covenants and agreements made
herein shall survive any investigation made by the Purchaser and the closing of
the transactions contemplated hereby to the extent provided therein. All
statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.
 
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7.11 Successors. Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
heirs, executors and administrators of the parties hereto and shall inure to the
benefit of and be enforceable by each person who shall be a holder of the Shares
from time to time, other than the holders of Common Stock which has been sold by
the Purchasers pursuant to Rule 144 or an effective registration statement.
 
7.12 Amendment and Waiver. 
 
(a) This Agreement may be amended or modified only upon the written consent of
the Company and a majority in interest of the Purchasers.
 
(b) The obligations of the Company and the rights of the Purchasers under this
Agreement may be waived only with the written consent of a majority in interest
of the Purchasers.
 
(c) The obligations of the Purchasers and the rights of the Company under this
Agreement may be waived only with the written consent of the Company.
 
7.2. Delays or Omissions. It is agreed that no delay or omission to exercise any
right, power or remedy accruing to any party, upon any breach, default or
noncompliance by another party under this Agreement or the Related Agreements,
shall impair any such right, power or remedy, nor shall it be construed to be a
waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of or in any similar breach, default or noncompliance thereafter
occurring. All remedies, either under this Agreement or the Related Agreements,
by law or otherwise afforded to any party, shall be cumulative and not
alternative.
 
[Remainder of Page Intentionally Left Blank.]
 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth in the first paragraph hereof.
 
COMPANY:

The Singing Machine Company, Inc. 
a Delaware corporation

/s/ Danny Zheng 

--------------------------------------------------------------------------------

Danny Zheng, Interim Chief Executive Officer
 

PURCHASERS:
 
Timemate Industries Limited
 
By:

--------------------------------------------------------------------------------

Name:
Its:
 
Address: Rooms 1002-5 Peninsula Square
 18 Sung On Street
 Hunghom, Kowloon
 Hong Kong
 
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EXHIBIT A

Closing Share Distribution Schedule
 

Timemate Industries Limited    
480,000 shares for total of US$400,000.00
 

 

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Schedule 3.1: Company and Subsidiary Identification

The Singing Machine Holdings Ltd. (A BVI Corporation)
 
100% owned by The Singing Machine Company, Inc.
Registered Office: C/O Trident Trust Company (B.V.I.) Limited, Trident Chambers,
P.O. Box 146, Road Town, Tortola, British Virgin Islands

SMC (Comercial Offshore de Macau) Limitada (A Macau Corporation)
 
100% owned by The Singing Machine Holdings Ltd.
Office address: Alameda Dr. Carlos d’Assumpcao, No. 263, Efificio China Civil
Plaza, 20 andar, Macau
 

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Schedule 3.2: Ownership of Subsidiaries

(See Above at Schedule 4.1)
 

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Schedule 3.9 Title to Properties and Assets; Liens, Etc

Properties pledged as collateral to Crestmark Bank, a lender

All personal properties of The Singing Machine Company, Inc., which including:
 

 
1)
Accounts receivable

 
2)
Inventory

 
3)
Chattel paper (N/A)

 
4)
Equipment

 
5)
Investment property (N/A)

 
6)
Deposit account

 
7)
General Intangible

 
As of December 31, 2006, our loan balance with the Crestmark Bank was
$1,157,806.
 

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Schedule 3.14: Tax Returns and Payments

All the tax liabilities has been included in our latest consolidated financial
statements filed with SEC dated September 30, 2006.
 

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