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                                MASTER AGREEMENT

         This Master Agreement dated as of July 31, 1999 is by and between The
Singing Machine Company, Inc. a Delaware corporation (the "Manager") and EPK
Financial Corporation, a Texas corporation ("EPK").

                               PRELIMINARY MATTERS

            A. The Manager may, from time to time, identify trading
opportunities involving the purchase and resale of goods.

            B. The Parties wish to set forth their agreement regarding the terms
upon which EPK may agree to purchase and resell such goods and the provision of
management services by, and compensation of, the Manager in connection
therewith.

                                    AGREEMENT

         In consideration of the premises, and of the representations,
warranties, covenants, agreements, and conditions contained herein, and for
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Manager and EPK hereby agree as follows:

                                    ARTICLE I
                                 INTERPRETATION

         1.1  Certain Definitions. As used in this Agreement, the following
terms have the meanings specified:

              "Affiliate" when used with respect to a Person, means any other
         Person whom directly or indirectly through one or more intermediaries
         controls, or is controlled by, or is under common control with, such
         Person. The term "control" (including the correlative term
         "controlled") means the possession, directly or indirectly, of the
         power to direct or cause the direction of the management and policies
         of a Person, whether through the ownership of voting stock, by contract
         or otherwise.

              "Agreement" has the meaning specified in Section 1.4.

              "Business Day" means any day which is not a Saturday, a Sunday or
         a day on which national banks in the State of Texas are authorized or
         required by law to be closed.

              "Confirmation" means a confirmation in the form of Exhibit A or
         such other form of written instrument as to which the Parties may
         agree.

              "Credit Enhancement," with respect to a Transaction and if
         applicable, means the letter of credit, guaranty, bond or other form of
         credit support with respect to the obligations of the Purchaser under
         such Transaction, provided by the Credit Enhancer for such Transaction.


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              "Credit Enhancer" with respect to a Transaction, means the
         Person, if any, identified as such in the Confirmation with respect to
         such Transaction.

              "EPK" has the meaning specified in the preamble to this Agreement.

              "EPK Minimum Proceeds" with respect to a Transaction, has the
         meaning specified in the Confirmation for such Transaction.

              "EPK Purchase Price," with respect to a Transaction, means the
         aggregate purchase price payable to the Vendor for the Goods under such
         Transaction as set forth in the Vendor Invoice for such Transaction and
         the Confirmation with respect to such Transaction.

              "Event of Default" has the meaning specified in Section 4.1.

              "FCPA" means the U.S. Foreign Corrupt Practices Act, 15 U.S.C.
         78a, et seq., as amended, supplemented and replaced from time to time.

              "Governmental Authority" means any government or any political
         subdivision or agency, department or instrumentality thereof,
         including, without limitation any court or administrative body.

              "Goods," with respect to a Transaction, means the goods identified
         as such in the Confirmation with respect to such Transaction.

              "Guarantor" means Edward Steele and John Klecha. The Guarantor
         constitutes a Credit Enhancer with respect to all Transactions
         hereunder.

              "Guaranty" means the guaranty of the Guarantor, in form acceptable
         to EPK, delivered pursuant to Section 5.14. The Guaranty shall
         constitute Credit Enhancement with respect to all Transactions
         hereunder.

              "Manager's Compensation," with respect to a Transaction and
         subject to Section 2.5, the compensation of the Manager for performing
         his obligations in respect of such Transaction under the Agreement, as
         specified in the Confirmation with respect to such Transaction.

              "Party" means EPK or the Manager.

              "Person" means collectively, any individual, partnership,
         corporation, limited liability company, business trust, joint stock
         company, trust, unincorporated organization, joint venture, firm or
         other entity, or Governmental Authority.


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              "Purchase Order" with respect to a Transaction, means the
         agreement referring to purchase orders from the Purchaser for the Goods
         with respect to such Transaction.

              "Purchaser" with respect to a Transaction, means the Person
         identified as such in the Confirmation with respect to such
         Transaction.

              "Purchaser Purchase Price," with respect to a Transaction, means
         the aggregate purchase price payable by the Purchaser for the Goods
         under such transaction as set forth in the Purchase Order for such
         Transaction and the Confirmation with respect to such Transaction.

              "Solvent," as to any Person, such Person (a) owns property whose
         fair salable value is greater than the amount required to pay all of
         such Person's indebtedness (including contingent debts), (b) is able to
         pay all of the indebtedness as such indebtedness matures and (c) has
         capital sufficient to carry on its business and transactions and all
         business and transactions in which it is about to engage.

              "Taxes" means all taxes, tariffs, duties, stamp taxes or fees of
         any description due any Governmental Authority arising out of or in
         connection with any Transaction, excepting only United States federal
         income taxation of EPK and any State of Texas tax based on the net
         income of EPK.

              "Transaction" means a particular transaction governed by the terms
         of this Agreement, including the terms set forth in the Confirmation
         with respect to such transaction.

              "Vendor" with respect to a Transaction, means the Person
         identified as such in the Confirmation with respect to such
         Transaction.

              "Vendor Pro Forma Invoice" with respect to a Transaction, means
         the contract from the Vendor for the Goods with respect to such
         Transaction.

         1.2  Other Definitional Provisions.

              a. Unless otherwise specified therein, all terms defined in this
Agreement have the above-defined meanings when used in any Confirmation,
certificate, amendment, report or other document made or delivered pursuant
hereto.

              b. Each term defined in the singular form in Section 1.1 shall
mean the plural thereof when the plural form of such term is used in this
Agreement or any Confirmation, certificate, amendment, report or other document
made or delivered pursuant hereto, and each term defined in the plural form in
Section 1.1 shall mean the singular thereof when the singular form of such term
is used herein or therein.




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              c. The words "hereof," "herein," "hereunder" and similar terms
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and section, schedule and exhibit
references herein are references to sections, schedules and exhibits to this
Agreement unless otherwise specified.

              d. The word "including" when used herein shall mean "including
without limitation."

              e. Unless otherwise specified herein, all times set forth herein
are Dallas, Texas time.

         1.3  Inconsistency. In the event of any inconsistency between the
provisions of any Confirmation and this Agreement, such Confirmation will
prevail for the purpose of (but only for the purpose of) the relevant
Transaction.

         1.4  Single Agreement. All Transactions are entered into in reliance on
the fact that this Master Agreement and all Confirmations form a single
agreement between the Parties (collectively referred to as this "Agreement"),
and the parties would not otherwise enter into any Transactions.


                                   ARTICLE II
                                  TRANSACTIONS

         2.1  Offer. The Manager may, from time to time propose a Transaction by
submitting to EPK a proposed Confirmation setting forth for such Transaction the
Goods, the EPK Minimum Proceeds, the Manager's Compensation, the EPK Purchase
Price, the Vendor, the Purchaser Purchase Price, the Purchaser, information
sufficient to enable to EPK to determine the relative credit worthiness of the
Purchaser, the Purchaser's terms and method of payment in the transaction, and,
if applicable, the Credit Enhancer, and attaching copies of the Vendor Invoice,
the Purchase Order and, if applicable, the Credit Enhancement (other than the
Guaranty) with respect to the proposed Transaction.

         2.2 Acceptance. EPK shall have no obligation to enter into any proposed
Transaction. In the event that EPK and the Manager agree upon a proposed
Transaction, such agreement shall be evidenced by the execution and delivery
(which may be by telecopy) of a Confirmation setting forth the terms of such
Transaction. The Confirmation with respect to a Transaction shall become
effective upon all of the following having occurred (i) execution and delivery
thereof by both of the Parties; (ii) assignment (or other means of transfer) to
EPK acceptable to EPK of any Credit Enhancement with respect to the Transaction;
(iii) if requested by EPK, deliver to EPK a letter from each and every creditor
of Manager that now or hereafter holds a security interest in or lien on any and
all of Manager's Inventory and Accounts whereunder each of them shall have
consented to the Transactions contemplated by this Agreement and shall have
acknowledged EPK's sole and exclusive ownership in the Goods and all proceeds
thereof, and (iv) if requested by EPK, the establishment of a lock box account
over which EPK shall have sole access, dominion and control at a state or
national bank located in Dallas, Texas acceptable to EPK (the "Lock Box") at the
sole cost and expense of Manager.


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         2.3  Services of the Management. Unless otherwise specified in the
Confirmation relevant to a Transaction, the Manager shall: (a) cause the Goods
to be shipped to the Purchaser in accordance with the Purchase Order relevant to
such Transaction and bear all costs, including any shipping costs and messenger
expenses and legal costs, incidental to such Transaction; (b) indemnify and hold
EPK harmless from and against any loss caused by the failure of (i) the Vendor
or any shipper timely to deliver Goods which conform to the requirements of the
Vendor Invoice, the Purchase Order and applicable law, or (ii) the Manager to
truthfully represent the Purchaser's credit information or the terms and method
of payments in the transaction as contemplated in Section 3.1; (c) indemnify
and hold EPK harmless from and against any claim of or liability to any Person
arising out of the Transaction, including without limitation any claim of or
liability to the Purchaser or any other Person in respect of the Goods; (d) pay,
and indemnify and hold EPK harmless from and against, any Taxes due in
connection with such Transaction; and (e) be responsible for performing all
administrative and ministerial tasks relating to the collection of such invoices
to the Purchaser; provided, however, that the foregoing shall in no way limit
EPK's right at any time and from time to time to collect amounts owing under
such invoices directly; and provided, further, that the foregoing shall not
constitute a guaranty by Manager of the payment or collection of such invoices.

         2.4  Maximum EPK Purchase Price. Unless otherwise specified in the
Confirmation relevant to a Transaction, the maximum EPK Purchase Price shall be
$ 1,000,000.00.

         2.5  Compensation of the Manager. The compensation of the Manager in
respect of its services in connection with a particular Transaction shall be the
Manager's Compensation set forth in the Confirmation with respect to such
Transaction; provided, that unless otherwise specified in the Confirmation with
respect to such Transaction, the compensation of the Manager in respect of a
particular Transaction shall be payable solely from the proceeds received by EPK
from the Purchaser and, if applicable, the Credit Enhancer with respect to such
Transaction and only to the extent that such proceeds exceed the EPK Minimum
Proceeds for such Transaction.

         2.6  Further Assurances. The Manager hereby agrees that at any time and
from time to time after the execution of this Agreement, Manager shall, upon
request of EPK, execute and deliver such further acts and things as EPK may
request in order to fully effect the purposes of this Agreement and to protect
EPK's interests in the Goods and/or Credit Enhancements, including, but not
limited to, furnishing any and all documents necessary to enable EPK or its
insurer to defend itself in any litigation arising in connection herewith.
Manager shall give EPK written notice of any action known by Manager to have
been taken by a third party which may jeopardize EPK's rights in the Goods
and/or Credit Enhancement promptly after Manager becomes aware of the same.
Manager hereby agrees to reimburse EPK for all out-of-pocket costs and expenses
(including but not limited to reasonable attorneys fees) incurred by EPK in
connection with (i) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by EPK, the Vendor, the Purchaser, Manager or any other
person) in any way relating to the Goods, the transactions or this Agreement,
(ii) any attempt to enforce any of EPK's rights in the Goods or Credit


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Enhancements in the transactions or under this Agreement against Manager, the
Vendor, the Purchaser or any other person, and/or (iii) any attempt to verify,
protect, sell, liquidate or otherwise dispose of the Goods and/or Credit
Enhancements.

         2.7  Title. All Goods shall at all times be and remain the sole and
exclusive property of EPK and titled in the name of EPK or such tradestyle as
may be acceptable to EPK.

         2.8  Insurance on Goods. Manager shall obtain insurance on behalf of
EPK which insures the Goods against all risks or physical loss or damage with
warehouse to warehouse coverage. All such policies of insurance shall name EPK
as the sole insured party and as exclusive loss-payee thereunder.

         2.9  Collection of Purchaser Purchase Price. All invoices shall
instruct the Purchaser to remit their payments directly to the Lock Box. Without
limiting the foregoing, in the event that Manager shall receive any remittances
from any Purchaser from time-to-time on account of transactions, such
remittances shall be and remain EPK's property and Manager shall hold such
remittances as trustee of an express trust for EPK's benefit and immediately
deliver over to EPK for deposit or cause to be deposited the same in the Lock
Box or to EPK or to such other account designated by EPK. Manager acknowledges
that such remittances are the sole and exclusive property of EPK. All payments
of the Purchaser's Purchase Price which are made through presentment of a letter
of credit shall instruct the collecting or paying bank of said letter of credit
to make payment by wire transfer of immediately available funds to the Lock Box,
to EPK or to such other account designated by EPK. All funds deposited in said
special account are the sole and exclusive property of EPK. EPK and its
directors, officers and agents shall have the right to sign and endorse on
behalf of Manager all checks, drafts and other forms of payment received by EPK
in connection with the payment of any account. Manager appoints EPK or any other
person EPK may from time to time designate, as Manager's attorney-in-fact with
power to:

              (a) endorse Manager's name on any checks, drafts or other forms of
                  payment or security that may come into possession;

              (b) sign Manager's name on notices of assignment, financing
                  statements, verifications of Accounts and notices to Account
                  Debtors;

              (c) receive, open and dispose of all mail addressed to Manager and
                  received by EPK;

              (d) send requests for verification of Contracts/Purchase Orders,
                  Accounts to current and/or potential future Accounts Debtors;
                  and

              (e) do all things necessary to carry out the terms of this
                  agreement.


         2.10 Access to Information and Control Over Goods. Manager shall
provide EPK with any and all information which EPK may reasonably request
concerning the Goods, the Purchaser, the Vendors, Manager, and/or any other


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parties involved with the Goods, including, but not limited to, the inspection
of the books and records of Manager by EPK and its representatives. Manager
shall provide EPK with immediate access to any and all Goods in Manager's
possession, actual or constructive, upon request by EPK. In the event that EPK
determines in good faith that it is necessary for EPK to assert or enforce its
rights as owner of the Goods in order to adequately protect its interests, EPK
shall be permitted to take, and Manager shall assist EPK in taking any and all
action as EPK deems necessary, including, but not limited to, (i) notifying
freight forwarders, the Purchasers, the Vendors and other third parties of EPK's
interest in the Goods, and (ii) taking immediate and complete physical control
over the Goods as the proceeds thereof

         2.11 NO WARRANTIES ON GOODS. ALL GOODS COVERED BY THE AGREEMENT ARE
RESOLD BY EPK "AS IS" AND "WITH ALL FAULTS," AND MANAGER ACKNOWLEDGES THAT NO
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE ARE TO BE
IMPLIED IN THE AGREEMENT. EPK GIVES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE
DESCRIPTION, QUALITY, MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE,
PRODUCTIVENESS, OR ANY OTHER MATTER OF ANY OF THE GOODS. EPK SHALL BE IN NO WAY
RESPONSIBLE FOR THE PROPER USE OR SERVICE OF THE GOODS.


                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

         3.1  The Manager. The Manager hereby represents and warrants, and the
delivery by the Manager of each Confirmation shall constitute the further
representation and warranty of the Manager, that:

              (a) The Manager is a corporation duly organized and validly
         existing and in good standing under the laws of Delaware.

              (b) the Manager has all requisite authority to enter into this
         Agreement and to perform all the obligations required to be performed
         by it hereunder;

              (c) neither the execution and delivery by the Manager of this
         Agreement, nor the consummation of any of the Transactions herein
         contemplated, nor compliance with the terms and provisions hereof, will
         (i) materially contravene or conflict with the articles of
         incorporation or bylaws of the Manager, any requirement of law to which
         the Manager is subject, or any indenture, mortgage, deed of trust, or
         other agreement or instrument to which the Manager is a party or by
         which the Manager may be bound, or to which the property of the Manager
         may be subject, or (ii) result in the creation or imposition of any
         lien on the property of the Manager;



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              (d) this Agreement is the legal, valid and binding obligation of
         the Manager, enforceable against the Manager in accordance with its
         terms;

              (e) there is no material fact relevant to the transactions
         contemplated by this Agreement (and in the case of each Confirmation,
         there is no material fact relevant to the Transaction set forth in such
         Confirmation) known to the Manager that the Manager has not disclosed
         to EPK;

              (f) the Manager is not (and in the case of each Confirmation, to
         the knowledge of the Manager after due inquiry, neither the Purchaser
         nor the Vendor thereunder is) in default under any loan agreement,
         mortgage, security agreement or other material agreement or obligation
         to which it is a party or by which any of its property is bound;

              (g) there are no material actions, suits or legal, equitable,
         arbitration or administrative proceedings pending, or to the knowledge
         of the Manager threatened, against the Manager (and in the case of each
         Confirmation, to the knowledge of the Manager after due inquiry, there
         are no material actions, suits or legal, equitable, arbitration or
         administrative proceedings pending, or threatened, against the
         Purchaser or the Vendor thereunder);

              (h) all tax returns required to be filed by the Manager in any
         jurisdiction have been filed and all taxes, assessments, fees and other
         governmental charges upon the Manager or upon any of its properties,
         income or franchises have been paid prior to the time that such taxes
         could give rise to a lien thereon;

              (i) neither the execution and delivery of this Agreement nor the
         consummation of any of the transactions contemplated hereby requires
         the consent or approval of, the giving of notice to, or the
         registration, recording or filing by the Manager or any other Person of
         any document with, or the taking of any other action in respect of, any
         Governmental Authority which has jurisdiction over the Manager (or, in
         the case of each Confirmation, the Purchaser or the Vendor thereunder)
         or any of its property;

              j) the Manager has delivered to EPK a list of all creditors of the
         Manager, copies of the income statement and balance sheet of the
         Manager as of December 31, 1997, the balance sheet of the Manager as
         of February 28, 1998 and the US Federal income tax returns of the
         Manager for the years 1995 and 1996, such lists, statements, balance
         sheets and tax returns are accurate in all material respects;

              (k) the Manager (and, in the case of each Confirmation, to the
         best knowledge of the Manager, the Purchaser and the Vendor thereunder)
         is Solvent;

              (1) none of the Purchaser, the Vendor or the Credit Enhancer with
         respect to any Transaction is an Affiliate of the Manager; and


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              (m) all information furnished by the Manager in each Confirmation
         is true and correct.

All representations and warranties by the Manager herein shall survive until all
obligations of the Manager under this Agreement have been irrevocably paid in
full, and any investigation at any time made by or on behalf of EPK shall not
diminish the right of EPK to rely thereon.


                                   ARTICLE IV
                                DEFAULT; REMEDIES

         4.1  Event of Default. An Event of Default shall exist if any one or
more of the following occurs:

              (a) The Manager fails to make any payment due hereunder on the
         date that such payment is due;

              (b) the Manager fails to observe or perform any other term,
         covenant or agreement set forth in this Agreement on its part to be
         performed or observed and such failure continues unremedied for five
         (5) Business Days past the date when such observance or performance is
         due;

              (c) any material statement, warranty or representation by or on
         behalf of the Manager contained this Agreement, (including any
         Confirmation or other writing furnished in connection with this
         Agreement) proves to have been incorrect or misleading in any material
         respect when made or deemed made;

              (d) any provision of this Agreement shall for any reason cease to
         be in full force and effect, or be declared null and void or
         unenforceable in whole or in part, or the validity or enforceability of
         any such document shall be challenged or denied; or

              (e) (i) the commencement by the Manager or any Credit Enhancer as
         debtor of any case or proceeding under any bankruptcy, insolvency,
         reorganization, liquidation, dissolution or similar law, or the seeking
         by the Manager or any Credit Enhancer of the appointment of a receiver,
         trustee, custodian or similar official for such Person or any
         substantial part of its property, (ii) the commencement of any such
         case or proceeding against the Manager, (iii) the making by the Manager
         or any Credit Enhancer of a general assignment for the benefit of its
         creditors, or (iv) the admission in writing by the Manager or any
         Credit Enhancer that it is unable to pay its debts as they become due.

         4.2  Remedies. Upon the occurrence of an Event of Default, all
obligations of EPK hereunder shall be suspended and EPK may exercise all rights
and remedies granted in this Agreement in any Credit Enhancement and/or under
applicable law, and may offset all Manager's compensation then due against any
sums due EPK.




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                                    ARTICLE V
                                  MISCELLANEOUS

         5.1  Term. This Agreement may be terminated by EPK immediately upon
written notice to the Manager or by the Manager upon 30 days after Manager
delivers written notice to EPK and shall terminate without notice by either
Party on July 31, 2001; provided, that notwithstanding the termination of this
Agreement, this Agreement shall continue in full force and effect with respect
to any Transactions with respect to which Manager has not fully performed its
obligations hereunder until such time as such performance is completed.

         5.2  Entire Agreement. Amendments. etc. This Agreement constitutes the
entire agreement and understanding of the Manager with respect to its subject
matter and supersedes all oral communications and prior writings with respect
thereto. No amendment or waiver of any provision of this Agreement nor any
consent to any departure by either Party herefrom shall in any event be
effective unless the same shall be in writing and signed by the Party against
whom enforcement of such amendment, waiver or consent is sought, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.

         5.3  No Waiver, Remedies. No failure on the part of EPK to exercise,
and no delay on the part of EPK in exercising, any right hereunder shall operate
as a waiver of such right; nor shall any single or partial exercise of any right
by EPK preclude any further or subsequent exercise of the same or any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

         5.4  Notices. etc. Any notice or other communication in respect of this
Agreement may be given in any form set forth below to the address or number or
in accordance with the electronic messaging system details provided on Schedule
I and will be deemed effective as indicated:

              (i) If in writing and delivered in person or by courier, on the
         date it is delivered;

              (ii) if sent by facsimile transmission, on the date that
         transmission is received by a responsible employee of the recipient in
         legible form (it being agreed that the burden of proving receipt will
         be on the sender and will not be met by a transmission report generated
         by the sender's facsimile machine); or

              (iii) if sent by certified or registered mail or the equivalent
         (return receipt requested) on the date it is delivered.

Either Party may by written notice to the other change the address or facsimile
number or electronic messaging system details at which notices are to be given
to it.




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         5.5 Captions. The captions in this Agreement are for convenience of
reference only and are not to be given any substantive meaning or significance
whatever in construing the terms and provisions of this Agreement.

         5.6 Transfer. Neither this Agreement nor any interest or obligation in
or under this Agreement may be transferred (whether by way of security or
otherwise) by the Manager without the prior written consent EPK. EPK may, with
written notice to the Manager, assign or transfer all or any part of its
interests and obligations herein to any other Person, and such other Person
shall thereupon become vested with all rights and obligations in respect thereof
granted to and assumed by EPK herein or otherwise.

         5.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF TEXAS.

         5.8 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
DALLAS COUNTY, TEXAS. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND
REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR OTHER PRINCIPAL PLACE OF
BUSINESS OF MANAGER OR EPK, MANAGER HEREBY CONSENTS AND AGREES THAT THE DISTRICT
COURT OF DALLAS COUNTY, TEXAS, OR, AT EPK'S OPTION, THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN MANAGER AND
EPK PERTAINING TO THIS AGREEMENT OR TO ANY OTHER MATTER ARISING OUT OF OR
RELATED TO THIS AGREEMENT. MANAGER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND MANAGER
HEREBY WAIVES ANY OBJECTION WHICH MANAGER MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. MANAGER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO MANAGER AT THE ADDRESS LAST KNOWN TO EPK AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON THE EARLIER OF MANAGER'S ACTUAL RECEIPT THEREOF
OR 3 DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN
THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF EPK TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE
ENFORCEMENT BY MANAGER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE



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TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER
APPROPRIATE FORUM OR JURISDICTION.

         5.9  JURY TRIAL; DAMAGES. THE MANAGER AND EPK HEREBY (a) IRREVOCABLY
AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN; (b) IRREVOCABLY WAIVES, TO THE EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT THEY MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR
IN ADDITION TO, ACTUAL DAMAGES; (c) CERTIFY THAT NO PARTY HERETO NOR ANY
REPRESENTATIVE OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVERS; AND (d) ACKNOWLEDGE THAT THEY ENTERED
INTO THE AGREEMENT, AND THE TRANSACTIONS CONTEMPLATED HEREBY, BASED UPON, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.

         5.10 Attorneys' Fees. Each Party agrees that in the event of any
litigation concerning this Agreement, the non-prevailing Party shall pay the
fees and expenses of the prevailing Party. Except as set forth in the preceding
sentence, and subject to Sections 2.3 and 2.6, each Party shall pay its own
legal fees and expenses in connection herewith.

         5.11 No Rights Conferred Upon Third Parties. This Agreement is for
the benefit of the Parties hereto and nothing contained herein shall be
construed to give any third party any benefits or rights hereunder.

         5.12 Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original but all of which together shall constitute one and
the same instrument.

         5.13 COMPLIANCE WITH LAWS. MANAGER SHALL STRICTLY OBSERVE AND COMPLY
WITH ALL FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS WHICH GOVERN THE
MANUFACTURE, SALE, HANDLING AND DISPOSAL OF ANY PRODUCTS HEREIN SPECIFIED.
MANAGER ALSO AGREES TO COMPLY WITH THE PROVISIONS RELATING TO THE FCCA SET FORTH
IN EXHIBIT B. IF MANAGER VIOLATES ANY OF SUCH LAWS OR REGULATIONS OR IS
OFFICIALLY CHARGED WITH SUCH VIOLATIONS, EPK IN ITS SOLE DISCRETION MAY TREAT
THIS CONDUCT AS A BREACH OF THIS WHOLE AGREEMENT AND IN ADDITION TO ANY OTHER
REMEDIES, MAY IMMEDIATELY TERMINATE THIS AGREEMENT.




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<PAGE>




         5.14 Guaranty. The Manager shall cause the Guarantor to execute and
deliver the Guaranty and take all actions reasonably requested by EPK to cause
the Guarantor to perform its obligations under the Guaranty.






                     [REMAINDER OF PAGE INTENTIONALLY BLANK]






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<PAGE>




         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date set forth above.

                                               MANAGER:

                                               THE SINGING MACHINE COMPANY, INC.

                                               By: /s/ John Klecha
                                                   -----------------------------
                                                   John Klecha
                                                   Title: Secretary/Treasurer


                                               EPK:

                                               EPK FINANCIAL CORPORATION

                                               By: /s/ Edward P. King
                                                   -----------------------------
                                                   Edward P. King
                                                   Title: President



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<PAGE>




                                   SCHEDULE I
                                       TO
                                MASTER AGREEMENT
            EXECUTED AND DELIVERED AS OF ______________ 1999 BETWEEN
                THE SINGING MACHINE COMPANY, INC. (the "Manager")
                                       AND
                        EPK FINANCIAL CORPORATION ("EPK")


                              ADDRESSES FOR NOTICES


Address for notices to the Manager:

         Address: 6601 Lyons Road, Building A-7 Coconut Creek, FL 33073

         Attention: John Klecha

         Facsimile (954) 596-2000  Phone: (954) 596-1000


Address for notices to EPK:

         Address: 2711 Cedar Springs Dallas, TX 75201

         Attention: Edward P. King

         Facsimile: 214/999-0289   Phone: 214/871-0055


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