REVOLVING CREDIT AGREEMENT
This Revolving Credit Agreement (the “Agreement”), dated as of May 14, 2019 (the
“Closing Date”), is between Koss Corporation, a Delaware Corporation
(“Borrower”), and Town Bank, a Wisconsin banking corporation (“Bank”).
In consideration of the mutual covenants, conditions and agreements set forth
herein, and for other good and valuable consideration, Borrower and Bank agree
as follows:
ARTICLE I LOANS AND INTEREST
Subject to all the terms and conditions of this Agreement:
1.1    Revolving Credit Loans.
(a)    From time to time prior to the Maturity Date, or the earlier termination
of Bank’s obligation to make a Revolving Loan or issue a Letter of Credit in
accordance with this Agreement, Borrower may borrow from Bank, and Bank will
lend to Borrower, in accordance with this Agreement, up to the Revolving Credit
Limit. This credit facility may be referred to as the “Revolving Credit
Facility.”
(b)    Each advance under Section 1.1(a) or Letter of Credit issued under
Section 1.2 below is a “Revolving Loan.” The Revolving Loans shall be evidenced
by the promissory note of Borrower payable to the order of Bank in the principal
amount of Five Million Dollars ($5,000,000.00) dated as of the date of this
Agreement, in substantially the form of Exhibit 1.1 attached hereto (as it may
be amended, extended or modified, the “Revolving Credit Note”). Although the
Revolving Credit Note shall be expressed to be payable in the full amount of the
maximum Revolving Credit Limit, Borrower shall be obligated to pay only the
amounts actually disbursed to, or advanced on behalf of (including, without
limitation, Letters of Credit), Borrower thereunder, together with accrued
interest on the outstanding balance thereof at the rates and on the dates
specified in the Revolving Credit Note, and such other charges provided for
herein or therein.
(c)    Borrower may obtain Revolving Loans (other than Letters of Credit, as
such procedures for obtaining Letters of Credit are set forth in Section 1.2
below) under this Agreement in writing (electronically, via Bank’s online
banking platform, or otherwise) or by telephone request, specifying the date and
the amount of the Revolving Loan. Bank will make the requested Revolving Loan
available to Borrower by crediting the amount of the Revolving Loan to
Borrower’s account (Account No. 146430; the “Operating Account”) with Bank on
the same day as requested, providing notice is received by 2:00 p.m. (Milwaukee
time) on a Business Day. At Bank’s request, each oral request for a Revolving
Loan shall also be immediately confirmed by a written request sent to Bank by
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1.2    Letters of Credit.
(a)    General Terms. Subject to the terms and conditions of this Agreement and
the other the Loan Documents, prior to the Maturity Date, Bank shall, from time
to time issue, upon Borrower’s request, commercial and/or standby Letters of
Credit; provided, that the aggregate undrawn face amount of all such Letters of
Credit shall at no time exceed the Letter of Credit Sublimit. Each Letter of
Credit shall constitute usage of the Revolving Credit Facility and be treated
the same as a Revolving Loan (thereby reducing the amount available under the
Revolving Credit Facility). For the purposes of this Agreement, each Letter of
Credit shall be deemed outstanding as of any time in an amount equal to the
maximum amount which could be drawn on such Letter of Credit under any
circumstance and over any period of time plus any unreimbursed drawings then
outstanding with respect to such Letter of Credit. If and to the extent any
Letter of Credit expires or otherwise terminates without having been drawn upon,
the availability under the Revolving Credit Facility shall to such extent be
reinstated. Each Letter of Credit issued hereunder shall be payable in U.S.
Dollars, conform to the general requirements of Bank for the issuance of a
standby or commercial letter of credit, as the case may be, as to form and
substance, and be a letter of credit which Bank may lawfully issue. Payments
made by the Bank with regard to a Letter of Credit to any person on account of
any Letter of Credit shall be immediately payable by Borrower without notice,
presentment or demand and Borrower agrees that each payment made by the Bank of
a Letter of Credit in respect of a Letter of Credit shall constitute a request
by Borrower for a Revolving Loan to reimburse Bank. In the event such Revolving
Loan (to reimburse Bank for a payment by Bank on a Letter of Credit) is not
advanced by Bank for any reason, such reimbursement obligations shall become
part of the Obligations hereunder and shall bear interest at the rate then
applicable to Revolving Loans until repaid. Borrower shall remit to Bank a fee
for each Letter of Credit equal to the Letter of Credit Fee Amount in accordance
with Section 1.2(f) of this Agreement.
(b)    Requests for Letters of Credit. Borrower shall make requests for Letters
of Credit in writing at least fifteen (15) calendar days prior to the date such
Letter of Credit is to be issued. Each such request shall specify the date such
Letter of Credit is to be issued, the amount thereof, the name and address of
the beneficiary thereof and a description of the transaction to be supported,
thereby. Any such notice shall be accompanied by the form of Letter of Credit
requested and any application or reimbursement agreement required by the Bank.
To the extent any of the terms of this Agreement conflict with the terms of any
such application or reimbursement agreement, the terms of this Agreement shall
control. A Letter of Credit shall be issued, amended, renewed or extended only
if (and upon issuance, amendment, renewal or extension of each Letter of Credit
the Borrower shall be deemed to represent and warrant that), after giving effect
to such issuance, amendment, renewal or extension: (i) the Letter of Credit
Sublimit shall not be exceeded, and (ii) the outstanding Revolving Loans
(including, without limitation, the face amount of all Letters of Credit) shall
not exceed the Revolving Credit Limit at any time.
(c)    Obligations Absolute. Borrower shall be obligated to reimburse the Bank,
for all payments made in respect of any Letter of Credit, which obligation shall
be absolute, unconditional and irrevocable and shall be paid regardless of: (a)
any lack of validity or enforceability of any Letter of Credit or this
Agreement, or any term or provision therein or

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herein, (b) any amendment or waiver of or consent or departure from any
provisions of any Letter of Credit, this Agreement or any other Loan Document,
(c) the existence of any claim, set off, defense or other right which Borrower
or any other person may have against any beneficiary of any Letter of Credit or
Bank, (d) any draft or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid, or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect, (e) any payment
under any Letter of Credit against presentation of a draft or other document
that does not comply with the terms of such Letter of Credit, and (f) any other
event or circumstance, act or omission to act or delay of any kind whatsoever of
Bank or any other person or any other event or circumstance that might otherwise
constitute a legal or equitable discharge of, or provide a right of setoff
against, the Obligations hereunder. Bank shall have no liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of Bank; provided that the foregoing shall not be
construed to excuse Bank from liability to Borrower to the extent of any direct
damages (as opposed to consequential damages, claims in respect of which are
hereby waived by Borrower to the extent permitted by applicable law) suffered by
Borrower that are caused by Bank’s fraud or failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. Notwithstanding any provisions to the
contrary herein or in any other Loan Document, the parties hereto expressly
agree that, in the absence of bad faith or willful misconduct on the part of
Bank (as finally determined by a court of competent jurisdiction), Bank shall be
deemed to have exercised care in each such determination. In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, Bank may, in its
sole discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(d)    Expiration Dates of Letters of Credit. Each Letter of Credit issued
hereunder shall expire not later than the earlier of: (i) the one (1) year
anniversary of the date of issuance (or be cancelable not later than the one (1)
year anniversary of the date of issuance and each applicable renewal) and
(ii) the Maturity Date. Notwithstanding the foregoing, a Letter of Credit may
provide for automatic extensions of its expiration date for one or more one (1)
year periods, so long as Bank has the right to terminate the Letter of Credit at
the end of each one (1) year period and no extension period extends to a date
after the Maturity Date (except as otherwise consented to by Bank in writing in
its sole discretion).
(e)    Letter of Credit Fees. All Letters of Credit shall bear such application,
issuance, renewal, negotiation and other fees and charges, and bear such
interest as charged by the Bank and all such fees shall be payable on demand. In
addition to the foregoing, each Letter of Credit issued under and pursuant to
this Agreement shall bear an annual

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issuance fee equal to two percent (2.00%) of the face amount of such Letter of
Credit (the “Letter of Credit Fee Amount”), payable by the Borrower prior to the
issuance by the Bank of such Letter of Credit and annually thereafter (as
applicable), until: (i) such Letter of Credit has expired or has been returned
to the Bank, or (ii) the Bank has paid the beneficiary thereunder the full face
amount of such Letter of Credit. Said fee shall be calculated on the basis of a
360-day year.
(f)    Additional Letter of Credit Requirements. Borrower and Bank agree that
each draw under any Letter of Credit shall constitute a request for, and shall
be repaid by, a direct advance under the Revolving Loan on the date of such
draw; provided, that if for any reason, there is not sufficient availability for
a direct advance under the Revolving Loan, Borrower shall pay Bank the amount
due promptly upon demand by Bank. Each Letter of Credit requested by Borrower
shall be issued by Bank only after Bank has received a fully executed letter of
credit application on Bank’s standard form. If any Letter of Credit is not
returned or cancelled, or remains outstanding as of the Maturity Date, Borrower
shall provide Bank with: (i) cash collateral in form and substance acceptable to
Bank in an amount equal to one hundred ten percent (110%) of the aggregate
amount of the Letter of Credit Obligations, or (ii) a back-up letter of credit
from a financial institution reasonably acceptable to Bank in an amount equal to
the undrawn amount of the Letters of Credit. After all undrawn Letters of Credit
issued hereunder have expired, been cancelled, been drawn upon and paid, Bank
shall promptly release its lien on and return to Borrower said cash collateral,
or promptly return said back-up letter of credit to the issuing financial
institution.
1.3    Interest Rate; Fees; Payments.
(a)    Borrower agrees to pay to Bank, on all Revolving Loans, principal and
interest on the unpaid principal balance outstanding from time to time under
this Agreement in accordance with the Revolving Credit Note evidencing the
Revolving Loans.
(b)    The Revolving Credit Note shall accrue interest before the Maturity Date
at an annual rate equal to the One-Month LIBOR Rate (as defined below) plus 150
basis points (1.50%) which rate will change as of the first Business Day of each
month, if the One-Month LIBOR Rate has changed.
(c)    Interest on the Revolving Credit Note is computed on a 365/360 basis;
that is, by applying the ratio of the interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. All interest payable under the
Revolving Credit Note shall be computed using this method. This calculation
method results in a higher effective interest rate than the numeric interest
rate stated in the Revolving Credit Note. If any payment received is less than
interest due to the effective date of receipt of such payment, Bank reserves the
right to add any such deficiency to principal.
(d)    The interest rate listed in this Agreement and the Revolving Credit Note
may or may not be the lowest rate charged by Bank. Any change in the interest
rate resulting from a change in any indexed or variable interest rate described
in this Agreement or the Revolving Credit Note shall become effective without
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which such change in the index or variable interest rate described in this
Agreement or the Revolving Credit Note becomes effective. A change in the
interest rate as to Revolving Loans will apply both to the outstanding principal
balance and to new Revolving Loans.
(e)    Unpaid principal and unpaid interest each bear interest after an Event of
Default or maturity (whether by acceleration or lapse of time) until paid at the
lesser of: (i) the rate which would otherwise be applicable plus two hundred
(200) basis points (2%), or (ii) the highest rate permitted by law.
(f)    Bank is authorized to automatically charge payments due under this
Agreement to any account of Borrower with Bank. Bank is authorized to make book
entries evidencing Revolving Loans and payments under this Agreement and the
aggregate unpaid amount of all Revolving Loans as evidenced by those entries is
presumptive evidence that those amounts are outstanding and unpaid to Bank.
(g)    To the fullest extent permitted by law, Bank has sole discretion to apply
a payment received from Borrower on the Revolving Credit Note in any fashion it
deems appropriate.
(h)    If any payment of principal or interest due under the Revolving Credit
Note or any payment required under this Agreement is not fully paid within ten
(10) days after its due date, the Borrower shall pay to the Bank a late charge
equal to five percent (5%) of such payment amount to compensate Bank for the
extra cost of handling delinquent payments. Neither the requirement that such
late charge be paid, nor the payment of the late charge, will be deemed to be a
waiver of an Event of Default arising from the late payment.
1.4    Loans; Prepayment. The Revolving Credit Note may be prepaid in whole or
in part at any time without premium or penalty.
1.5    Non-Business Days. Whenever any payment to be made hereunder or under the
Revolving Credit Note shall be stated to be due on a day that is not a Business
Day, such payment may be made on the next succeeding Business Day, and such
extension of time shall be included in the computation of interest under the
Revolving Credit Note.
ARTICLE II CONDITIONS FOR LOANS
Without limiting any of the terms of this Agreement, Bank is not required to
make any Revolving Loan to Borrower or issue any Letter of Credit hereunder
unless all of the following conditions are satisfied:
2.1    Credit Requests.
(a)    Revolving Loan Requests. As to requests for Revolving Loans (other than a
Letter of Credit), Bank shall have received a request complying with
Section 1.1(c) above. Each request for a Revolving Loan is hereby deemed a
representation and warranty by Borrower that no Default or Event of Default has
occurred and all of the representations and warranties contained in Article III
of this Agreement are true and correct on the date of

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such a request, except to the extent such representation or warranty applies
only to the Closing Date.
(b)    Letter of Credit Requests. As to requests for the issuance of a Letter of
Credit, Bank shall have received a request complying with Section 1.2(b) above.
Each request for a Letter of Credit is hereby deemed a representation and
warranty by Borrower that no Default or Event of Default has occurred and all of
the representations and warranties contained in Article III of this Agreement
are true and correct on the date of such a request.
2.2    Revolving Credit Note. On or before the Closing Date and effective as of
the Closing Date, Borrower shall have executed and delivered to Bank the
Revolving Credit Note.
2.3    Security Agreement. On or before the Closing Date and effective as of the
Closing Date, Borrower shall have executed and delivered to Bank a general
business security agreement in substantially the form of Exhibit 2.3 attached
hereto (as it may be amended, extended or modified, the “Security Agreement”).
2.4    Closing Certificate of Secretary. On or before the Closing Date and
effective as of the Closing Date, Bank shall have received copies, certified by
the Secretary of Borrower as true and correct of:
(a)    the Articles of Incorporation and Bylaws of Borrower;
(b)    resolutions of Borrower authorizing the execution, issuance, delivery and
performance of this Agreement, the Revolving Credit Note, all Letters of Credit
requested by Borrower and issued by Bank, the Security Agreement, any document
related to the Revolving Credit Facility in any way and in any other document or
agreement securing or guarantying any or all of the foregoing (collectively, the
“Loan Documents”); and
(c)    a statement of the names and titles of representatives of Borrower
authorized to sign and deliver to Bank the Loan Documents and to request
Revolving Loans under this Agreement, together with true signatures of such
representatives.
2.5    Life Insurance. On or before the Closing Date and effective as of the
Closing Date, Bank shall have received assignments of the following Northwestern
Mutual life insurance policies on the lives of Michael J. Koss, John C. Koss and
John C. Koss, Jr., respectively, with an aggregate cash surrender value in an
amount not less than $5,000,000.00 (collectively, the “Life Insurance
Policies”): (i) 17554588; (ii) 12646250; (iii) 10783517; (iv) 6250469; (v)
17550731 and (vi) 12646210, in form and substance acceptable to Bank and Bank’s
counsel and that properly perfect Bank’s first lien security interest in said
Life Insurance Policies.
2.6    Proceedings Satisfactory. All proceedings taken in connection with the
transactions contemplated by this Agreement, and all instruments,
authorizations, consents, releases, terminations, title insurance and other
documents applicable thereto, shall be satisfactory in form and substance to
Bank and Bank’s counsel.
ARTICLE III REPRESENTATIONS AND WARRANTIES

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In order to induce Bank to make the loans as herein provided, Borrower
represents and warrants to Bank as follows:

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3.1    Organization. Borrower is a corporation duly organized and existing in
good standing under the laws of the State of Delaware and has all requisite
power and authority to conduct its business and to own its properties. Borrower
is duly licensed or qualified to do business and is in good standing in all
jurisdictions in which the nature of its business or the ownership of its
properties requires such qualification.
3.2    Authority. The execution, delivery and performance of the Loan Documents
are within the corporate powers of Borrower, have been duly authorized by all
necessary action and do not and will not (a) require any further consent or
approval of the directors or other interested parties of Borrower, (b) violate
any provision of the articles of incorporation or bylaws of Borrower or any law,
rule, charter, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to Borrower
except where the violation of which, individually or in the aggregate, could
reasonably be expected to have a materially adverse effect on Borrower or a
material portion of Borrower’s properties; (c) require the consent or approval
of, or filing or registration with, any governmental body, agency or authority
other than the ministerial act of recording a memorandum and filing a financing
statement; or (d) result in a breach of or constitute a default that could
reasonably be expected to have a material adverse effect on Borrower under, or
result in the imposition of any prohibited lien, charge or encumbrance upon a
material portion of the property of Borrower, pursuant to any indenture or
agreement or instrument under which Borrower is a party, or by which it or its
properties may be bound or affected. The Loan Documents when delivered will
constitute legal, valid and binding Obligations enforceable against Borrower and
its properties in accordance with their respective terms.
3.3    Investment Company Act of 1940. Borrower is not an “investment company”
or a company “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.
3.4    Regulation U. Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
“purchasing” or “carrying” any “margin stock” (all as defined in Regulation U of
the Board of Governors of the Federal Reserve System, as amended from time to
time). No part of the proceeds of any Revolving Loans will be used to purchase
or carry any such “margin stock.”
3.5    Employee Retirement Income Security Act. All Plans (as hereinafter
defined) which are maintained for employees of Borrower or any subsidiary, or
any member of the Controlled Group (as hereinafter defined), are in compliance
in all material respects with the applicable provisions of the Employee
Retirement Income Security Act of 1974 (“ERISA”), as the same may be in effect
from time to time. Neither Borrower nor any subsidiary has incurred any material
“accumulated funding deficiency,” within the meaning of Section 302(a)(2) of
ERISA in connection with any Plan. There has been no Reportable Event (defined
in Title IV of ERISA) for any Plan, the occurrence of which would have a
materially adverse effect on Borrower, nor has Borrower incurred any material
liability to the Pension Benefit Guaranty Corporation under Section 4062 of
ERISA in connection with any such Plan.
3.6    Liens. Borrower has good and marketable title or a valid leasehold or
licensed interest in all of its assets, real and personal, free and clear of all
liens, security interests, mortgages and encumbrances of any kind, except
Permitted Liens (as hereinafter defined) and liens to be

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discharged out of loan proceeds at the signing of this Agreement. All owned and
leased buildings and equipment of Borrower are in good condition, repair and
working order, other than ordinary wear and tear, and, to the best of Borrower’s
knowledge and belief, conform to all applicable laws, regulations and
ordinances.
3.7    Contingent Liabilities. Borrower has no guarantees or other contingent
liabilities outstanding (including, without limitation, liabilities by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment,
to supply funds to or otherwise invest in any debtor or otherwise to assure the
creditor against loss), except as permitted by Section 4.5 or as set forth in
the attached Exhibit 3.7.
3.8    Taxes. Borrower has no material outstanding unpaid tax liability (except
for taxes which are currently accruing from current operations and ownership of
property, which are not delinquent and taxes that are currently being contested
in good faith by appropriate proceedings), and, to the best knowledge of
Borrower no tax liens have been proposed or asserted against Borrower.
3.9    Absence of Litigation. As of the Closing Date or as otherwise disclosed
to Bank in writing or disclosed in Borrower’s public corporate filings, Borrower
is not a party to any litigation or administrative proceeding, nor so far as is
known by Borrower is any litigation or administrative proceeding threatened
against it in writing: (a) which relates to the execution, delivery or
performance of the Loan Documents, or (b) which would, if adversely determined,
cause any material adverse change in, or have a material adverse affect on the
property, financial condition or business operations of Borrower.
3.10    Absence of Default. No event has occurred which either of itself or with
the lapse of time or the giving of notice or both, would give any creditor of
Borrower the right to accelerate the maturity of any Indebtedness of Borrower,
except as set forth in the attached Exhibit 3.10. Borrower has not received
notice of any default under any other lease, agreement or instrument, or to the
best knowledge of Borrower any law, rule, regulation, order, writ, injunction,
decree, determination or award, non‑compliance with which would materially
adversely affect its property, financial condition or business operations.
3.11    No Burdensome Agreements. Borrower is not a party to any agreement,
instrument or undertaking, or subject to any other restriction: (a) which
materially adversely affects or may in the future so affect the property,
financial condition or business operations of Borrower, or (b) under or pursuant
to which Borrower is or will be required to place (or under which any other
person may place) a lien upon any of its properties securing Indebtedness either
upon demand or upon the happening of a condition, with or without such demand.
3.12    Trademarks, etc. Borrower possesses adequate trademarks, trade names,
copyrights, patents, permits, service marks and licenses, or rights thereto, for
the present and planned future conduct of its business substantially as now
conducted, without any known conflict with the rights of others which would, if
successfully prosecuted, result in a material adverse effect on Borrower.
3.13    Full Disclosure. No information, exhibit or report furnished by Borrower
to Bank in connection with the negotiation or execution of this Agreement
contained any material misstatement of fact as of the date when made, or omitted
to state a material fact or any fact necessary to make the statements contained
therein not misleading as of the date when made.

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3.14    Hazardous Substances. Except as disclosed in Exhibit 3.14: (a) there is
no substance which has been, is, or will be present, used, stored, deposited,
treated, recycled or disposed of on, under, in or about any real estate now or
at any time owned or occupied by Borrower (the “Property”) during the period of
Borrower’s ownership or use of the Property in a form, quantity or manner which,
if known to be present on, under, in or about the Property would require
clean‑up, removal or some other remedial action (each a “Hazardous Substance”)
under any federal, state or local laws, regulations, ordinances, codes or rules
(the “Environmental Laws”); (b) Borrower has no knowledge after due inquiry of
any prior use or existence of any Hazardous Substance on the Property by any
prior owner of or person using the Property; (c) without limiting the generality
of the foregoing, Borrower has no knowledge after due inquiry that the Property
contains asbestos, polychlorinated biphenyl components (PCBs) or underground
storage tanks; (d) Borrower has no knowledge after due inquiry of any conditions
existing currently or likely to exist during the term of this Agreement which
would subject Borrower to any damages, penalties, injunctive relief or clean‑up
costs in any governmental or regulatory action or third-party claim relating to
any Hazardous Substance; (e) Borrower is not subject to any court or
administrative proceeding, judgment, decree, order or citation relating to any
Hazardous Substance; and (f) Borrower in the past has been, at the present is,
and in the future will remain in compliance with all Environmental Laws, except
non-compliance which would not result in a material adverse effect on Borrower
or any material portion of Borrower’s properties. Borrower shall indemnify and
hold harmless Bank, its directors, officers, employees and agents from all loss,
cost (including, without limitation, attorneys’ fees and legal expenses),
liability and damage whatsoever directly or indirectly resulting from, arising
out of, or based upon: (i) the presence, use, storage, deposit, treatment,
recycling or disposal, at any time, of any Hazardous Substance described above,
on, under, in or about the Property, or the transportation of any Hazardous
Substance to or from the Property, (ii) the violation or alleged violation of
any Environmental Law, permit, judgment or license relating to the presence,
use, storage, deposit, treatment, recycling or disposal of any Hazardous
Substance on, under, in or about the Property, or the transportation of any
Hazardous Substance to or from the Property, or (iii) the imposition of any
governmental lien for the recovery of environmental clean‑up costs expended
under any Environmental Law. Borrower shall immediately notify Bank in writing
of any governmental or regulatory action or third-party claim instituted or
threatened in connection with any Hazardous Substance on, in, under or about the
Property.
3.15    Fiscal Year. The fiscal year of Borrower ends on each June 30.
3.16    Place of Business. Borrower’s principal place of business is 4129 N.
Port Washington Avenue, Milwaukee, Wisconsin 53212.
3.17    Use of Proceeds. Borrower will use the proceeds of the Revolving Loan to
refinance and existing revolving credit loans with JPMorgan Chase and for
working capital and other general business purposes.
ARTICLE IV NEGATIVE COVENANTS
While any part of the credit granted to Borrower hereunder is available or any
part of the principal of or interest on the Revolving Credit Note remains
unpaid, any Letter of Credit remains outstanding, or any other Obligations
remain outstanding, Borrower shall not do any of the following, without the
prior written consent of Bank:

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4.1    Liens. Create, incur, assume or permit to be created or allow to exist
any mortgage, pledge, encumbrance or other lien upon or security interest in any
of its assets or properties, except Permitted Liens.
4.2    Indebtedness. Issue, create, incur, assume or otherwise become liable
with respect to (or agree to issue, create, incur, assume or otherwise become
liable with respect to), or permit to remain outstanding, any Indebtedness
except: (a) the Revolving Loans and any other Indebtedness owed to Bank; (b)
operating leases, capital leases and purchase money Indebtedness, provided the
aggregate annual (per calendar year) payments for such operating leases, capital
leases and purchase money Indebtedness combined total less than or equal to
$500,000 per calendar year; (c) current liabilities of Borrower incurred in the
ordinary course of business which are not more than ninety (90) days overdue,
unless Borrower has previously negotiated a longer period of time with the
creditor, or unless such liability is being contested in good faith and with due
diligence; (d) contingent liabilities and indebtedness permitted by Section 4.5,
and (e) any other Indebtedness associated with the liens permitted in the
definition of Permitted Liens.
4.3    Guaranty. Guaranty, or otherwise in any way become or be responsible for,
obligations of any other person, whether by agreement for the furnishing of
funds to any other person, through the purchase of goods, supplies or services
(or by way of stock purchase, capital contributions advanced or loaned) for the
purpose of paying or discharging the Indebtedness of any person, or otherwise,
except for the endorsement of negotiable instruments for deposit or collection
in the ordinary course of business.
4.4    Liquidation; Merger; Disposition of Assets. Liquidate or dissolve; merge
with or into or consolidate with or into any other entity; or sell, lease,
transfer or otherwise dispose of all or any substantial part of its property,
assets or business (other than sales of inventory or equipment made in the
ordinary course of business). Except in the ordinary course of business (which
is limited to selling inventory and collecting accounts receivable), sell,
assign transfer or otherwise dispose of any Collateral in excess of $250,000 in
value in the aggregate for any calendar year to anyone other than Bank;
provided, however, that, in addition to the aforementioned limit, Borrower may
sell, assign, transfer or otherwise dispose of the assets (including the related
intellectual property) associated with the STRIVA technology.
4.5    Contingent Liabilities. Assume, guarantee, endorse or otherwise become
liable for obligations of another (except endorsements of negotiable instruments
for deposit or collection in the ordinary course of business), other than
indemnities and assurances given in the ordinary course of business with an
aggregate liability for all such indemnities and assurances of not more than
$250,000.
4.6    Sale of Notes or Receivables. Discount or sell any of its notes or
accounts receivable in a manner inconsistent with past practices that have been
disclosed to Bank.
4.7    Fiscal Year. Change its fiscal year end.
4.8    Change of Location. Change its principal place of business from 4129 N.
Port Washington Ave, Milwaukee, Wisconsin 53212.

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4.9    Payment Impairment. Take any action or permit any event to occur which
materially impairs Borrower’s ability to make payments under the Revolving
Credit Note or otherwise under this Agreement when due. Such events include,
without limitation, the fact that Borrower ceases to exist, becomes insolvent or
is the subject of a bankruptcy or insolvency proceeding, which, if involuntary,
is not dismissed within 60 days.
4.10    Life Insurance Policies. Assign any or all of the Life Insurance
Policies to any person other than Bank, or fail to make premium payments on (or
to otherwise maintain) any or all of the Life Insurance Policies.
ARTICLE V AFFIRMATIVE COVENANTS
While any part of the credit granted to Borrower hereunder is available or any
part of the principal of or interest on the Revolving Credit Note remains
unpaid, any Letter of Credit remains outstanding, or any other Obligations
remain outstanding, Borrower shall, unless waived in writing by Bank:
5.1    Accounting Records; Reports. Maintain a standard and modern system for
accounting in accordance with generally accepted accounting principles (“GAAP”)
consistently applied throughout all accounting periods; and furnish to Bank (or
make available online) such information respecting the business, assets and
financial condition of Borrower as Bank may reasonably request and, without
request, furnish to Bank:
(a)    Within forty-five (45) calendar days after the end of each calendar
quarter (i) balance sheets of Borrower as of the close of such calendar quarter
and of the comparable quarters in the immediately preceding fiscal year, and
(ii) statements of income, retained earnings, and cash flow of Borrower for such
quarter, for that part of the fiscal year ending with such quarter, and for the
corresponding periods of the preceding fiscal year and certified as true and
correct (subject to audit and normal year-end adjustments) by the chief
financial officer of Borrower;
(b)    As soon as available, and in any event within one hundred twenty (120)
calendar days after the close of each fiscal year of Borrower, a copy of
Borrower’s audited financial statements, including a balance sheet, and
statements of income, retained earnings and cash flow, as prepared by
independent public accountants of recognized standing selected by Borrower and
satisfactory to Bank, which audit shall be accompanied by an opinion of such
accountants, in form satisfactory to Bank, to the effect that the audit of
Borrower’s financial statements was conducted in accordance with standards
established by the American Institute of Certified Public Accountants and, based
on their audit, such accountants are not aware of any material modifications
that should be made to the accompanying financial statements in order for them
to be in accordance with GAAP;
(c)    As soon as available, and, in any event, no later than one hundred twenty
(120) calendar days after the close of each fiscal year of Borrower, a copy of
Borrower’s projected financial performance for the next, immediately succeeding,
fiscal year; and
(d)    Within ten (10) calendar days after Borrower’s first knowledge of any
Default, Event of Default or other act or omission that, after notice, lapse of
time or both,

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would constitute an Event of Default under this Agreement, immediately report to
Bank such Default, Event of Default or other act or omission.
5.2    Insurance. Maintain insurance coverage in the forms (together with any
lender loss payee or mortgagee clause requested by Bank), amounts and with
companies which would be carried by prudent management in connection with
similar properties and businesses, including, without limitation: (a) insure all
of its physical property against fire and extended coverage risks in amounts
satisfactory to Bank; (b) maintain such workers’ compensation and similar
insurance as may be required by law; and (c) maintain in amounts and with
deductibles at least equal to those generally maintained by businesses engaged
in similar activities in similar geographic areas, general public liability
insurance against claims for bodily injury, death or property damage occurring
on, in or about any property of Borrower, business interruption insurance and
product liability insurance.
5.3    Inspection of Property and Records. Keep complete and accurate books of
records and accounts and permit any representatives of Bank to examine, copy,
and/or audit any of the books or records and to visit and inspect any of
Borrower’s tangible or intangible properties as often as desired.
5.4    Taxes. Pay and discharge all lawful taxes, assessments and governmental
charges upon Borrower or against its properties prior to the date on which
penalties attach, unless and to the extent only that such taxes, assessments and
charges are being contested in good faith and by appropriate process by
Borrower.
5.5    Existence. Do all things necessary to maintain its existence, to preserve
and keep in full force and effect its rights and franchises necessary to
continue its business, and comply in all material respects with all applicable
laws, regulations and ordinances.
5.6    Management. Notify Bank of any change in the executive management of
Borrower within thirty (30) days after such change.
5.7    Accounts. At all times following the date that is forty-five (45) days
following the Closing Date, maintain all its operating and financial institution
depository (including, without limitation, all time, demand and money market)
accounts at Bank, other than accounts with less than $50,000.00 individually or
$150,000 in the aggregate.
5.8    Maintenance. Keep (or by contract require the landlord or owner to keep)
all Property, whether leased or owned, in good condition, repair and working
order (ordinary wear and tear excepted) and from time to time make or cause to
be made all needed and proper repairs, renewals, replacements, additions and
improvements in a commercially reasonable manner so that the business carried on
in connection therewith may be properly and advantageously conducted at all
times.
5.9    Use of Proceeds. Use the proceeds of the Revolving Loans for business
purposes only and limit such use to (i) refinance existing revolving credit
loans with JPMorgan Chase, and (ii) working capital and other general business
purposes.
5.10    Comply With, Pay and Discharge All Contracts. Materially comply with,
pay and discharge all material obligations under leases, indentures and any
other material contractual

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arrangements to which Borrower is a party in accordance with the respective
terms of such contracts so as to prevent any material default thereunder, unless
the obligation to pay or perform is contested in good faith and by appropriate
means by Borrower
5.11    Life Insurance Policy. Pay or cause to be paid all premiums for and
otherwise maintain the Life Insurance Policies in such amounts as in place as of
the date of this Agreement and ensure that Bank is the only assignee of such
Life Insurance Policies.
5.12    Fees and Costs. In addition to all other the fees and costs set forth in
this Agreement, Borrower shall pay promptly, after receipt of an invoice:
(a)    the reasonable fees and expenses incurred by Bank in connection with any
inspection pursuant to the terms of Section 5.3 limited to one time per calendar
year in the absence of an Event of Default;
(b)    all reasonable, out-of-pocket expenses (including, without limitation,
attorneys’ fees) incurred by Bank with respect to the preparation of this
Agreement and the other Loan Documents;
(c)    all reasonable, out-of-pocket expenses incurred by Bank with respect to
the advance of any Obligations, and any amendments, supplements, waivers and
consents related to this Agreement, any of the Loan Documents or both,
including, without limitation, attorneys’ fees, appraisal fees, appraisal review
fees, environmental inspection fees, filing fees, and title fees (including fees
and expenses as provided in Section 5.12(d)); and
(d)    all reasonable, out-of-pocket fees and expenses, including attorneys’
fees and costs, incurred by Bank with respect to the administration, protection
or enforcement (including field audits and collection and disposition of
Collateral) of Bank’s rights under this Agreement or the Loan Documents.
ARTICLE VI DEFAULTS
The following are each “Events of Default” or defaults under each of the Loan
Documents:

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6.1    Default in Payment. Borrower shall fail to pay any interest (within three
(3) Business Days of the date due) or principal when it is due under the
Revolving Credit Note, or any other amount payable under this Agreement, any
Letter of Credit, any other Loan Document or any other Obligation within three
(3) Business Days of the date due.
6.2    Default on Covenants. Borrower fails to timely perform or observe any of
the covenants set forth in Article IV or Article V of this Agreement.
6.3    Default in Performance of Other Agreements. Any default or event of
default occurs in the performance or observance of any of the other agreements,
covenants, conditions, provisions or terms in any Loan Document and such failure
to perform or observe continues for thirty (30) days, as the same may be
extended if the Borrower is diligently pursuing a cure or remedy but in no event
more than sixty (60) days from the date of such default or event of default.
6.4    Representations or Statements False. Any representation or warranty made
by Borrower in any Loan Document, or any certificate delivered pursuant hereto,
or any financial statement delivered to Bank hereunder, shall prove to have been
false, misleading, erroneous, inaccurate or breached in any material respect as
of the time when made or given.
6.5    Default on Other Obligations. Borrower shall fail to pay all or any part
of, the rentals due under any lease or sublease, and such default shall not be
cured within the period or periods of grace, if any, specified in the
instruments governing such obligations; or default shall occur under any other
evidence of Indebtedness, or any indenture, lease, sublease agreement, other
instrument representing Borrower’s obligation in excess of $250,000, or other
agreement governing or securing such obligation, and such default shall continue
for a period of time sufficient to permit the acceleration of the maturity of
any such Indebtedness or the termination of such lease, sublease or agreement.
6.6    Judgments. A final judgment which, together with other outstanding final
judgments against Borrower exceeds an aggregate of $250,000 shall be entered
against Borrower and shall remain outstanding and unsatisfied, unbonded or
unstayed after sixty (60) days after the date of entry thereof.
6.7    Bankruptcy; Insolvency. Borrower shall: (a) become insolvent or cease to
exist; (b) be unable, or admit in writing its inability to pay its debts as they
mature; (c) make a general assignment for the benefit of creditors or to an
agent authorized to liquidate any substantial amount of its property; (d) become
the subject of an “order for relief” within the meaning of the United States
Bankruptcy Code; (e) file a petition in bankruptcy, or for reorganization, or to
effect a plan or other arrangement with creditors; (f) file an answer to a
creditor’s petition (admitting the material allegations thereof) for
liquidation, reorganization or to effect a plan or other arrangement with
creditors; (g) apply to a court for the appointment of a receiver for any of its
assets; (h) have a receiver appointed for any of its assets (with or without its
consent); or (i) otherwise become the subject of any insolvency or liquidation
or other proceedings for the winding up of its business, and such proceedings
are not dismissed or abandoned within sixty (60) days after commencement.
6.8    Validity. Any Loan Document shall, at any time after its respective
execution and delivery, and for any reason, cease to be in full force and effect
or shall be declared null and void, or be revoked or terminated, or the validity
or enforceability thereof or hereof shall be contested

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by Borrower, or Borrower shall deny that it has any or further liability or
obligation thereunder or hereunder, as the case may be.
Upon the occurrence of any of the events described in Section 6.1, but before
the expiration of any applicable cure period, Bank is under no obligation to
make Revolving Loans (including, without limitation, to issue Letters of
Credit). In addition, upon the occurrence of any Event of Default:
(a)    As to any Event of Default under Sections 6.1 through 6.6 or under
Section 6.8, and at any time thereafter, and in each case, Bank may, by written
notice to Borrower, immediately terminate its obligation to make Revolving Loans
(including, without limitation, to issue Letters of Credit) hereunder and/or
declare the unpaid principal balance of the Revolving Credit Note, together with
all interest accrued thereon, and all other Obligations to be immediately due
and payable; and the unpaid principal balance of and accrued interest on the
Revolving Credit Note and all other Obligations shall thereupon be immediately
due and payable without presentment, demand, protest, or further notice of any
kind, all of which are hereby waived, and notwithstanding anything to the
contrary in any other Loan Document;
(b)    As to any Event of Default under Section 6.7, the obligation of Bank to
make Revolving Loans (including, without limitation, to issue Letters of Credit)
hereunder shall immediately terminate and the unpaid principal balance of the
Revolving Credit Note, together with all interest accrued thereon, and all other
Obligations shall immediately and forthwith be due and payable, all without
presentment, demand, protest, or further notice of any kind, all of which are
hereby waived, and notwithstanding anything to the contrary herein or in the
Revolving Credit Note contained; and
(c)    Bank shall also then, without limitation, have all rights and remedies
provided in any Loan Document, by law, or otherwise, including the right of
setoff, all without any further notice to Borrower. Bank may proceed to protect
its rights in or outside of court, by suit in equity or action at law, or by
other appropriate measures, including, without limitation, for the specific
performance of any covenant or agreement.
ARTICLE VII DEFINITIONS

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7.1    Accounting Terms; Definitions. Except as otherwise provided or defined
herein, all accounting terms shall be construed in accordance with GAAP
consistently applied, and financial data submitted pursuant to this Agreement
shall be prepared in accordance with such principles. As used herein:
(a)    “Business Day” means any day other than a Saturday, Sunday or other day
on which Bank is not open for business to the public.
(b)    “Controlled Group” means a controlled group of corporations as defined in
Section 1563 of the Internal Revenue Code of 1954, as amended.
(c)    “Default” shall mean any of the events specified in Article VI hereof,
whether or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition has been satisfied.
(d)    “Event of Default” shall mean any of the events specified in Article VI
hereof, provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition has been satisfied.
(e)    “Indebtedness” means, with respect to any person, as of the date of
determination thereof, all:
(i)
obligations for borrowed money for which the person is liable, contingently or
otherwise, as obligor, guarantor or otherwise;

(ii)
obligations which are evidenced by bonds, debentures, notes, acceptances or
other similar instruments;

(iii)
obligations as an account party, contingent or otherwise, including
reimbursement obligations with respect to letters of credit or in respect of
banker’s acceptances;

(iv)
obligations under leases which are or should be, in accordance with GAAP,
treated as capital leases; and

(v)
liabilities secured by any lien on any real estate owned by the person even
though it has not assumed or otherwise become liable for the payment thereof (it
being understood that the amount of Indebtedness under this clause (e) for
non-recourse Indebtedness shall be an amount equal to the lesser of such
liabilities and the value of such real estate).

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(f)    “Letter of Credit” means any letter of credit issued by Bank at the
request of Borrower.
(g)    “Letter of Credit Sublimit” means One Million Dollars ($1,000,000.00).
(h)    “Letter of Credit Obligations” means the aggregate undrawn face amount of
all unexpired Letters of Credit issued and outstanding on the Maturity Date or
the date on which the Revolving Credit Note is accelerated.
(i)    “Maturity Date” means May 14, 2021.
(j)    “Obligations” means all obligations of Borrower owed to Bank, whether
arising under this Agreement, the Revolving Credit Note or any other Loan
Document, and all other amounts owing by Borrower to any affiliate of Bank,
including, but not limited to, amounts owing under any guaranty executed by
Borrower. “Obligations” includes, but is not limited to, Letter of Credit
Obligations.
(k)    “One-Month LIBOR Rate” means the greater of: (a) zero percent (0%), and
(b) the rate of interest per annum in the “Money Rates” column or section of The
Wall Street Journal (Midwest Edition) as the London Interbank Offered Rates
(LIBOR) for loans with maturities of one month rounded to the nearest 1/16th of
1%, such rate to be reset as of the first day of the calendar month. If The Wall
Street Journal ceases publication of LIBOR, LIBOR shall be determined by the
Bank from such other major news source as the Bank reasonably selects and
promptly thereafter provides notice thereof to the Borrowers. If LIBOR is not
readily available to the Bank from another source, the Bank shall have the right
to choose a reasonably comparable index and shall promptly thereafter notify the
Borrowers thereof. If The Wall Street Journal or the replacement source
publishes: (a) more than one LIBOR, the higher or highest of such rates shall
apply; or (b) a retraction or correction of a previously published LIBOR, LIBOR
reported in the retraction or correction shall apply. LIBOR shall reset on the
first day of each calendar month and shall remain in effect until the last day
of such calendar month.
(l)    “Permitted Liens” shall mean:
(i)
with respect to real estate only, easements, restrictions, minor title
irregularities and similar matters which have no adverse effect as a practical
matter upon the ownership and use of the real estate;

(ii)
liens for taxes, assessments, fees or governmental charges, which are either not
delinquent or are being contested in good faith by Borrower by appropriate
proceedings which will prevent foreclosure of such liens, and against which
adequate reserves have been provided;

(iii)
liens or deposits in connection with worker’s compensation insurance, or to
secure customs’ duties, or deposits required by law or governmental regulations
as a condition to the transaction of Borrower’s business;

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(iv)
liens in favor of Bank;

(v)
carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s, repairmen’s or
other similar liens arising in the ordinary course of business of Borrower on
its property, provided they are not delinquent or remain payable without
penalty, or those which Borrower is contesting in good faith;

(vi)
liens consisting of pledges or deposits by Borrower required in the ordinary
course of business in connection with workers’ compensation, unemployment
insurance and other social security legislation;

(vii)
liens consisting of judgment or judicial attachment liens against Borrower,
provided that the enforcement of such liens is effectively stayed and all such
liens in the aggregate at any time outstanding for Borrower does not exceed
$250,000;

(viii)
purchase money security interests on any property acquired or held by Borrower
in the ordinary course of business, securing Indebtedness incurred or assumed
for the purpose of financing all or any part of the cost of acquiring such
property; provided that (1) any such lien attaches to such property concurrently
with or within twenty (20) days after the acquisition thereof, (2) such lien
attaches solely to the property so acquired in such transaction, (3) the
principal amount of the debt secured thereby does not exceed 100% of the cost of
such property, and (4) the principal amount of the Indebtedness secured by any
and all such purchase money security interests shall not at any time exceed
$250,000;

(ix)
liens securing obligations of Borrower in respect of operating or capital leases
on assets subject to such leases provided that the annual payments on such
leases does not exceed an aggregate of $250,000; and

(x)
rights reserved to or vested in any governmental authority to control or
regulate or use in any manner the business of Borrower which do not adversely
affect the business of Borrower, the rights or remedies of Bank or the value of
the collateral.

(m)    “Plan” means any employee pension benefit plan subject to Title IV of
ERISA maintained by Borrower or any member of the Controlled Group, or any such
Plan to which Borrower or any member of the Controlled Group is required to
contribute on behalf of any of its employees.
(n)    “Revolving Credit Limit” means Five Million Dollars ($5,000,000.00).
ARTICLE VIII MISCELLANEOUS

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8.1    Expenses and Attorneys’ Fees. Borrower shall be responsible for the
prompt payment of all fees and out-of-pocket disbursements incurred by Bank in
connection with the preparation, execution, delivery, administration,
interpretation, and enforcement of this Agreement, the Revolving Credit Note and
the other Loan Documents, including, without limitation, all costs of
collection, before and after judgment (including, without limitation, those
incurred in any bankruptcy or insolvency proceeding), and including, without
limitation, audit fees (except for the audit conducted prior to the signing of
this Agreement) and the reasonable fees and disbursements of attorneys for Bank.
8.2    Successors. The provisions of this Agreement shall inure to the benefit
of any holder of the Revolving Credit Note, and shall inure to the benefit of
and be binding upon any successor to any of the parties hereto. Notwithstanding
the foregoing, this Agreement is not assignable by Borrower.
8.3    Survival. All agreements, representations and warranties made herein
shall survive the execution of this Agreement, the making of the Revolving Loans
hereunder and the execution and delivery of the Revolving Credit Note.
8.4    Wisconsin Law. This Agreement and the Revolving Credit Note issued
hereunder shall be governed by and construed in accordance with the internal
laws of the State of Wisconsin, without regard to any conflict of laws
provisions.
8.5    Indemnification. Borrower agrees to defend, indemnify and hold harmless
Bank, its directors, officers, employees and agents (collectively, the
“Indemnitees”), from and against any and all loss, cost, expense, damage or
liability (including, without limitation, reasonable attorneys’ fees) incurred
in connection with any claim, counterclaim or proceeding brought as a result of,
arising out of, or relating to, any transaction financed or to be financed, in
whole or in part, directly or indirectly, with the proceeds of any Revolving
Loan or the entering into and performance of this Agreement or any document or
instrument relating to the Agreement by Bank; provided, that such indemnity
shall not be available to any Indemnitee to the extent that such losses, claims,
damages, penalties, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the fraud or willful misconduct of such Indemnitee. This indemnity will survive
termination of this Agreement, the repayment of all Revolving Loans and the
discharge and release of any other Loan Document.
8.6    Venue. To the extent not prohibited by law, venue for any legal
proceeding relating to enforcement of this Agreement shall be, at Bank’s option,
the county in which Bank has its principal office in Wisconsin.
8.7    Amendment. No amendment, modification, termination or waiver of any
provision of this Agreement, nor consent to any departure by Borrower from any
provision of this Agreement shall in any event be effective unless it is in
writing and signed by Bank, and then such waiver or consent shall be effective
only in the specific instance and for the specific purposes for which given.
8.8    Entire Agreement. This Agreement (including the Exhibits attached
hereto), the Revolving Credit Note and the other Loan Documents, are intended by
Borrower and Bank as a final expression of this Agreement and as a complete and
exclusive statement of its terms, there being no conditions to the full
effectiveness of this Agreement except as set forth in this Agreement.

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8.9    No Waiver; Remedies. No failure on the part of Bank to exercise, and no
delay in exercising, any right, power or remedy under this Agreement shall
operate as a waiver of such right, power or remedy; nor shall any single or
partial exercise of any right under this Agreement preclude any other or further
exercise of the right or the exercise of any other right. The remedies provided
in this Agreement are cumulative and not exclusive of any remedies provided by
law.
8.10    Counterparts. This Agreement may be signed in any number of counterparts
with the same effect as if the signatures thereto and hereto were upon the same
instrument. Electronic transmission of an executed Agreement shall be treated
the same as an original and a party may request the electronic transmission to
be followed by a physical, original, executed version of this Agreement.
8.11    Notices. All communications or notices required under this Agreement
shall be deemed to have been given on the date when deposited in the United
States mail, postage prepaid, and addressed as follows (unless and until any of
such parties advises the other in writing of a change in such address) or sent
electronically with a return receipt requested:
(a)    if to Borrower, to:
Koss Corporation
4129 N. Port Washington Ave
Milwaukee, WI 53212
Attn:  David Smith
Email: dsmith@koss.com

(b)    if to Bank, to:
Town Bank
731 N. Jackson Street, Suite # 100
Milwaukee, WI 53202
Attn:  Daniel P. Brenton
Email: dbrenton@wintrust.com

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8.12    Further Assurances. Borrower agrees to do such further acts and things,
and to execute and deliver such additional conveyances, assignments, agreements
and instruments, as Bank may at any time reasonably request and which are
consistent with the terms of this Agreement in connection with the
administration or enforcement of this Agreement or the Loan Documents or in
order better to assure and confirm unto Bank its rights, powers and remedies
hereunder.
8.13    Consent to Jurisdiction. Borrower consents to the jurisdiction of any
state or federal court situated in the county or federal jurisdiction of Bank’s
principal office in Wisconsin, and waives any objection based on forum non
conveniens, with regard to any actions, claims, disputes or proceedings relating
to this Agreement, the Note, any other Loan Document or any transactions arising
therefrom, or enforcement and/or interpretation of any of the foregoing. Nothing
in this Agreement will affect Bank’s rights to serve process in any manner
permitted by law, or limit Bank’s right to bring proceedings against Borrower in
the competent courts of any other jurisdiction or jurisdictions.
8.14    WAIVER OF TRIAL BY JURY. BORROWER AND BANK WAIVE TRIAL BY JURY IN ANY
SUIT OR PROCEEDING BROUGHT IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, INCLUDING TRIAL BY JURY WITH RESPECT TO A THIRD PARTY IN A SUIT OR
PROCEEDING IN WHICH BORROWER IS A PARTY.
1.1    [The remainder of this page is intentionally left blank with a signature
page to follow.]

BORROWER:

KOSS CORPORATION, a Delaware corporation

By:                        
David Smith, CFO and Secretary

BANK:

TOWN BANK, a Wisconsin banking corporation

By:                        
Daniel P. Brenton, Vice President

32962773_6.DOC

EXHIBIT 1.1
REVOLVING CREDIT NOTE

[SEE ATTACHED]

Revolving Credit Note

$5,000,000.00    As of May 14, 2019
FOR VALUE RECEIVED, KOSS CORPORATION, a Delaware corporation (“Borrower”),
hereby promises to pay to the order of TOWN BANK, a Wisconsin banking
corporation (“Bank”), on the Maturity Date the principal amount of Five Million
and 00/100 Dollars ($5,000,000.00) or, if less, the aggregate unpaid principal
amount of all Revolving Loans (including, without limitation, the aggregate
undrawn face amount of all Letters of Credit) made by Bank to Borrower pursuant
to the Loan Agreement (as defined below), in lawful money of the United States
of America in same day or other immediately available funds.

Borrower further promises to pay to the order of Bank accrued interest on the
aggregate unpaid principal amount of the Revolving Loans as set forth in the
Loan Agreement. Payments of interest only are due and payable commencing on July
1, 2019, and on the same day of each consecutive month thereafter until the
Maturity Date, unless sooner accelerated. All payments hereunder are to be made
in immediately available funds via an automatic withdrawal from an account with
Bank designated by the Borrower and approved by Bank (the initial account
designated for withdrawals shall be the Operating Account (as defined in the
Loan Agreement)). If, for whatever reason, Bank cannot accept automatic
withdrawal of payments from Borrower’s accounts as provided herein, all payments
of principal and interest due hereunder shall be mailed to Bank at Town Bank,
Attn: Loan Department, with “Koss Corporation” noted on the remittance, or to
such other person or at such other address as Bank may from time to time direct.
This Revolving Credit Note may be prepaid in whole or in part at any time
without premium or penalty.
Interest on this Revolving Credit Note is computed on a 365/360 basis; that is,
by applying the ratio of the interest rate over the year of 360 days, multiplied
by the outstanding principal balance, multiplied by the actual number of days
the principal balance is outstanding. All interest payable under this Revolving
Credit Note shall be computed using this method. This calculation method results
in a higher effective interest rate than the numeric interest rate stated in the
Loan Agreement. If any payment received is less than interest due to the
effective date of receipt of such payment, Bank reserves the right to add any
such deficiency to principal balance of this Revolving Credit Note. All payments
to be made hereunder shall be made in accordance with the Loan Agreement.
This Revolving Credit Note evidences Revolving Loans (including, without
limitation, Letters of Credit) under, is subject to, governed by and entitled to
the benefits of, that certain Revolving Credit Agreement between Borrower and
Bank dated contemporaneously herewith, as it may be amended, restated or
modified from time to time (the “Loan Agreement”). This Revolving Credit Note is
the Revolving Credit Note referenced in the Loan Agreement. This Revolving
Credit Note is secured by, among other things and without limitation, certain
terms and obligations as set forth in the Loan Agreement and the Security
Agreement.
Except as otherwise defined herein, all capitalized terms used in this Revolving
Credit Note shall have the meaning ascribed to such terms in the Loan Agreement.

Borrower hereby waives demand, presentment, protest and any and all notices in
connection with the delivery, acceptance, performance or enforcement of this
Revolving Credit Note.
This Revolving Credit Note is made under and governed by the laws of the State
of Wisconsin applicable to contracts made and to be performed entirely within
such State, without regard to any conflicts of law principles.
KOSS CORPORATION, a     Delaware corporation

EXHIBIT
By:                         
David Smith, CFO and Secretary

EXHIBIT 2.3

SECURITY AGREEMENT

[SEE ATTACHED]

GENERAL BUSINESS SECURITY AGREEMENT
(KOSS CORPORATION)

THIS GENERAL BUSINESS SECURITY AGREEMENT (this “Agreement”) is made and entered
into as of May 14, 2019 (the “Effective Date”) by KOSS CORPORATION, a Delaware
corporation (“Grantor”) for the benefit of TOWN BANK, a Wisconsin banking
corporation (“Bank”).
RECITALS
WHEREAS, Grantor wishes to secure the payment of all indebtedness and
liabilities under, and the performance of all the covenants and agreements
contained in the following (collectively, the “Obligations”):
(a)
a “Revolving Credit Agreement” dated contemporaneously herewith between Grantor
and Bank, as it may be amended, extended, restated or modified from time to time
(the “Credit Agreement”);

(b)
a “Revolving Credit Note” dated contemporaneously herewith in the face amount of
$5,000,000.00 from Grantor for the benefit of Bank as it may be amended,
extended, restated or modified from time to time (the “Revolving Credit Note”);

(c)
this Agreement, as this Agreement may be amended or modified;

(d)
all other agreements, loans, drafts, overdrafts, checks, notes and all other
debts, liabilities and obligations of every kind owing by Grantor to Bank,
whether direct or indirect, absolute or contingent, liquidated or unliquidated
whether of the same or a different nature and whether existing now or in the
future, including interest thereon and all costs, expenses and attorneys’ fees
paid or incurred by Bank at any time before or after judgment in attempting to
collect any of the foregoing, to realize on any collateral securing any of the
foregoing or this Agreement, and to enforce this Agreement; and

(e)
all costs, expenses, and attorneys’ fees at any time paid or incurred by Bank,
before or after judgment, in endeavoring to collect on or protect Bank’s rights
in all or part of any of the foregoing.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1.    Definitions. The following terms shall have the meanings set forth below:
“Account” shall have the meaning set forth in UCC Chapter 409.
“Chattel Paper” shall have the meaning set forth in UCC Chapter 409.
“Commercial Tort Claims” shall have the meaning set forth in UCC Chapter 409.
“Deposit Account” shall have the meaning set forth in UCC Chapter 409.
“Document” shall have the meaning set forth in UCC Chapter 409.
“Equipment” shall have the meaning set forth in UCC Chapter 409.
“Fixture” shall have the meaning set forth in UCC Chapter 409.
“General Intangible” shall have the meaning set forth in UCC Chapter 409.
“Instrument” shall have the meaning set forth in UCC Chapter 409.
“Inventory” shall have the meaning set forth in UCC Chapter 409.
“Investment Property” shall have the meaning set forth in UCC Chapter 409.
“Letter-of-Credit Right” shall have the meaning set forth in UCC Chapter 409.
“Collateral” shall mean and include all personal property in which Grantor has
an interest, whether now owned or hereafter acquired, and wherever located,
including, without limitation, all:
(a)    Accounts;
(b)    Chattel Paper;
(c)    Deposit Accounts;
(d)    Documents;
(e)    Equipment;
(f)    Fixtures;
(g)    General Intangibles;
(h)    Instruments;
(i)    Inventory;
(j)    Investment Property;
(k)    Letter-of-Credit Rights;
(l)    additions and accessions to, all spare and repair parts, special tools,
equipment and replacements for and software used in any of the foregoing;
(m)    leases, agreements, drafts, acceptances, bills of lading and receipts;
(n)    of Grantor’s right, title and interest in and to all goods and other
property, whether or not delivered, (i) the sale or lease of which gives or
purports to give rise to any Account, including, but not limited to, all
merchandise returned or rejected by or repossessed from customers, or
(ii) securing any Account, including all of Grantor’s rights as an unpaid vendor
or lien or, including stoppage in transit, replevin and reclamation with respect
to such goods and other properties;
(o)    guarantees, mortgages, security interests, and supporting obligations and
other agreements securing or relating to any Account or other Collateral, or
acquired for the purpose of securing and enforcing any item thereof;
(p)    documents, policies and certificates of insurance;
(q)    files, correspondence, computer programs, tapes, discs and related data
processing software (owned by Grantor or in which it has an interest) which
contain information identifying or pertaining to any of the Collateral or any
account debtor, or showing the amounts thereof or payments thereon or otherwise
necessary or helpful in the realization of Collateral or the collection thereof;
(r)    other or additional assets of Grantor in which Grantor may have
heretofore granted or may hereafter grant Bank a security interest; and
(s)    products and proceeds of the foregoing Collateral (including, but not
limited to, any claims to any items referred to in this definition, and any
claims of Grantor against third parties for loss of, damage to, or destruction
of, any or all of the Collateral or for proceeds payable under or unearned
premiums with respect to policies of insurance) in whatever form, including
cash, negotiable instruments and other instruments for the payment of money,
chattel paper, security agreements or other documents.
“Event of Default” shall have the meaning set forth in the Credit Agreement.
“Permitted Liens” shall have the meaning set forth in the Credit Agreement.
“Person” means an individual, partnership, limited liability partnership,
corporation, limited liability company, unlimited liability company, business
trust, joint stock company, trust, unincorporated association, joint venture or
governmental authority.
“UCC” shall mean Chapters 401 through 411 of the Wisconsin Statutes as now
enacted or hereafter in effect.
2.    Security Interest. To secure the payment and performance of the
Obligations and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Grantor hereby mortgages, pledges
and assigns all of the Collateral to Bank, and grants to Bank a continuing
security interest in all of the Collateral (the “Security Interest”).
3.    Continued Priority of Security Interest. Provided Bank properly perfects
the Security Interest as required by applicable law, the Security Interest shall
at all times be a valid and perfected security interest enforceable against
Grantor and all third parties, securing, in accordance with the terms of this
Agreement, the payment and performance of the Obligations, and the Collateral
shall not at any time be subject to any lien, charge or security interest that
is prior to, on a parity with or junior to the Security Interest, other than the
Permitted Liens. Bank’s Security Interest shall be automatically released on any
Collateral that is sold, transferred, assigned or otherwise disposed of in
accordance with, and as permitted in, the Loan Documents.
4.    Delivery; Filing; Refiling.
(a)    Grantor shall, at its sole cost and expense, take or cause to be taken
all action which Bank may reasonably request and which may be necessary or
desirable in order to assure that the Security Interest will at all times comply
with the provisions of Section 3 hereof and to enable Bank to exercise or
enforce rights hereunder, including, but not limited to: (i) delivering to Bank,
endorsed or accompanied by such instruments of assignment as Bank may specify,
and stamping and marking, in such manner as Bank may specify, any and all
chattel paper, instruments, letters and advices of credit, title certificates
and documents evidencing or forming a part of the Collateral; and (ii) executing
and delivering such pledges, designations, hypothecations, notices and
assignments, and obtaining such control agreements in each case in form and
substance satisfactory to Bank, relating to the creation, validity, perfection,
maintenance or continuation of the Security Interest under the UCC or other laws
as Bank may from time to time reasonably request.
(b)    Grantor authorizes Bank to file Uniform Commercial Code financing
statements describing the Collateral (including describing the Collateral as
“all assets,” “all personal property” or with words of similar effect) and
amendments to such financing statements. Grantor will cooperate with Bank in
obtaining control of Collateral (other than Grantor’s stock or member interest
in its subsidiaries) or other security for the Obligations for which control may
be required to perfect Bank’s Security Interest.
(c)    In the event that any repledge or reassignment, or any other action, is,
in Bank’s reasonable belief, helpful or required at any time to protect,
preserve or maintain the Security Interest, Grantor authorizes Bank to take any
such action, and at Bank’s request, Grantor shall, at its sole cost and expense,
cause the same to be done or taken at such time and in such manner as may be
reasonably requested by Bank.
5.    Certain Covenants as to Collateral. So long as any of the Obligations is
outstanding and unpaid and unless Bank shall otherwise expressly consent in
writing:
(a)    Grantor will:
(i)    at all times be the sole owner (or, if applicable, sole lessee or sole
licensee) of each and every item of Collateral free of all security interests
and other encumbrances, except the security interests created by this Agreement
and Permitted Liens;
(ii)    defend the Security Interest and its title (or, if applicable, other
interest) to the Collateral at its own expense;
(iii)    at all times keep materially accurate and complete records of the
Collateral, and permit Bank to enter upon Grantor’s place or places of business
at any time and from time to time during reasonable business hours, and without
hindrance or delay, to inspect the Collateral and to inspect, audit, check and
make extracts from and copies of the books, records, journals, orders, receipts
and correspondence which relate to the Collateral or other transactions between
the parties hereto and the general financial condition of Grantor, subject to
the provisions set forth in the Credit Agreement;
(iv)    upon the request of Bank, execute and deliver confirmatory written
assignments of Accounts to Bank, but any failure by Grantor to execute and
deliver such schedules and other materials or assignments shall not limit or
otherwise affect the Security Interest or Bank’s other rights in and to the
Collateral;
(v)    maintain all tangible property that constitutes Collateral in good
condition (ordinary wear and tear excepted) and exercise reasonable and proper
custody over all such property;
(vi)    procure and maintain insurance against loss, theft, destruction, or
damage to the Collateral for the reasonable value thereof, and business
interruption, with such insurers as are reasonably acceptable to Bank, plus
other insurance thereon in the amounts and against such risks as Bank may
reasonably specify, and promptly deliver an original copy of each policy to Bank
as well as endeavoring to obtain from such insurer a clause requiring the
insurer to provide Bank up to thirty (30) days’ (and at least ten (10) days’)
prior written notice of the cancellation, expiration, termination or any
material change in the coverage afforded under any such policy;
(vii)    not make any material adverse change in the Collateral nor knowingly
use nor permit the same to be used for any unlawful purpose whatsoever;
(viii)    pay and discharge all lawful taxes, assessments and government charges
upon Grantor or against its properties, including the Collateral, prior to the
date on which penalties arise, unless, and to the extent only that, such taxes,
assessments and charges are contested in good faith and by appropriate
proceedings by Grantor; and
(ix)    if any Collateral arose out of contracts with the United States or any
of its departments, agencies or instrumentalities, Grantor shall so notify Bank,
and shall, after an Event of Default and upon request of Bank, execute any
writings required by Bank in order that any amounts due or to become due under
such contracts shall be properly assigned to Bank, with proper notice of the
assignment being given under the Federal Assignment of Claims Act.
(b)    Grantor shall not, without Bank’s prior written consent:
(i)    except in the ordinary course of business or in accordance with its
current policies regarding collections and write-offs that have been disclosed
to Bank, and (in any instance) prior to an Event of Default, grant any extension
of time for payment of any Account or compromise, compound or settle the same
for less than the full amount thereof, or release wholly or partly any person
liable for the payment thereof, or allow any credit or discount whatsoever
thereon; and
(ii)    except in the ordinary course of business (which is limited to selling
inventory and collecting accounts receivable), sell, assign, transfer or
otherwise dispose of any Collateral in excess of $250,000 in value in the
aggregate for any calendar year to anyone other than Bank; provided, however,
that, in addition to the aforementioned limit, Grantor may sell, assign,
transfer or otherwise dispose of the assets (including the related intellectual
property) associated with the STRIVA technology.
6.    Grantor Representations and Warranties. Grantor represents, warrants and
covenants that:
(a)    Grantor’s chief executive office and the books and records relating to
the Collateral are located at Grantor’s place of business at 4129 N. Port
Washington Ave, Milwaukee, Wisconsin 53212.
(b)    Grantor will not move its chief executive office or the books and records
specified in Section 6(a) hereof, change its name or change the choice of legal
entity under which it operates or the state under whose laws it is organized,
without Bank’s prior written consent.
(c)    No Collateral is, or will be, maintained at any location other than as
specified in Section 6(a) hereof.
(d)    The information contained in the “Perfection Certificate” attached hereto
as Exhibit A and dated contemporaneously herewith from Grantor to Bank is true
and correct.
7.    Notice to Account Debtors or Obligors; Possession of Collateral. If there
shall occur any Event of Default, Bank may, in its sole discretion, do any or
all (or none) of the following:
(a)    Bank may (i) notify, or require Grantor to notify, in writing any account
debtor or other obligor with respect to any of the Collateral to make payment to
Bank or any agent or designee of Bank, at such address as may be specified by
Bank, or (ii) direct Grantor to hold all payments which it receives with respect
to any Collateral in trust for Bank, and Grantor shall so hold such funds
without commingling them with other funds of Grantor and shall, in accordance
with the direction of Bank, either (A) deliver the same to Bank, or any agent or
designee of Bank, immediately upon receipt by Grantor in the identical form
received, together with any necessary endorsements, or (B) immediately deposit
them in a separate account maintained with or by Bank, or any agent or designee
of Bank, in which only such payments and other proceeds of Collateral shall be
deposited. When any notice to make payments directly to Bank, or any such agent
or designee, shall have been given pursuant to clause (i) above, Grantor shall
no longer have any right to collect the affected Collateral. If, notwithstanding
the giving of any notice, any account debtor or other obligor shall make payment
to Grantor, Grantor shall hold all such payments it receives in trust for Bank,
without commingling the same with other funds of Grantor, and shall deliver the
same to Bank, or any such agent or designee, immediately upon receipt by Grantor
in the identical form received, together with any necessary endorsements. Bank
may settle or adjust disputes and claims directly with account debtors and other
obligors of Grantor for amounts and on terms which Bank considers advisable.
Nothing herein contained shall be construed as requiring or obligating Bank, or
any such agent or designee, to make any demand, or to make an inquiry as to the
nature or sufficiency of any payment received by it, or to present or file any
claim or notice or take any action with respect to any Accounts or the monies
due or to become due thereunder or to take any steps necessary to preserve any
rights against prior parties. Bank shall not have any liability to Grantor for
actions taken in good faith pursuant to this Section 7.
(b)    All amounts received or deposited with Bank pursuant to Section 7(a)
hereof shall be applied to the payment of the Obligations, in such order as Bank
determines, in its sole discretion. Bank may, but shall not be obligated to,
deliver any amounts received or deposited pursuant to Section 7(a) hereof to
Grantor for use by Grantor in the ordinary course of its business, but the
Security Interest in any such proceeds delivered to Grantor shall continue and
shall not be affected by such delivery and Grantor shall not commingle any
proceeds so delivered with any of its other funds.
(c)    Bank may at any time and from time to time, with or without judicial
process or the aid or assistance of others, enter upon any premises in which
Collateral may be located and, without resistance or interference by Grantor,
take physical possession of any items of Collateral and maintain such possession
on Grantor’s premises or move the Collateral or any part thereof to such other
places as Bank shall choose without being liable to Grantor on account of any
losses, damage or depreciation that may occur as a result thereof (so long as
Bank shall not breach the peace) dispose of all or any part of the Collateral on
any premises of Grantor, require Grantor to assemble and make available to Bank
at the expense of Grantor all or any part of the Collateral at any place and
time designated by Bank, or to remove all or any part of the Collateral from any
premises in which any part may be located for the purposes of effecting sale or
other disposition thereof.
8.    Appointment as Attorney and Agent for Grantor With Respect to Security
Interest. Grantor hereby irrevocably appoints Bank, or any agent or designee of
Bank, as its lawful attorney and agent, with full power of substitution, to
execute and deliver, on behalf of and in the name of Grantor, such financing
statements, assignments, mortgages, notices, pledges and other documents and
agreements, and to take such other action as Bank may deem necessary for the
purpose of the creation, perfection, maintenance or continuation of the Security
Interest, under any applicable law, and Bank is hereby authorized to file on
behalf of and in the name of Grantor, at Grantor’s expense, such financing
statements, assignments, mortgages, notices, pledges and other documents and
agreements in any appropriate governmental office. The right is expressly
granted to Bank in its discretion, to file one or more financing statements
under the UCC or the comparable Uniform Commercial Code of any other
jurisdiction, without any further authentication or authority from Grantor,
naming Grantor as debtor and naming Bank as secured party, and indicating
therein the types, or describing the items, of the Collateral and providing such
other information as may be required or requested by the filing office.
9.    Appointment to Act for Grantor After an Event of Default. Grantor,
effective immediately upon the occurrence of an Event of Default and notice
thereof given by Bank to Grantor (but without the necessity of further action),
and until the Event of Default is waived in writing:
(a)    irrevocably authorizes Bank, or any agent or designee of Bank, to perform
any and all of the acts that Bank is permitted to perform under any provision of
this Agreement;
(b)    constitutes and appoints Bank, or any agent or designee of Bank, as
Grantor’s true and lawful attorney and agent, with full power of substitution,
in the place and stead of Grantor and either in its own name or in the name of
Grantor, if any Event of Default shall have occurred and be continuing:
(i)    to endorse Grantor’s name on any checks, notes, acceptances, money
orders, drafts or other forms of payment or security that may come into Bank’s
possession;
(ii)    to sign Grantor’s name on any invoice or bill of lading relating to any
Collateral, on drafts against customers, on schedules and assignments of
Accounts, on notices of assignment, financing and continuation statements and
other public records, on verifications of accounts, on notices to or from
customers and on any and all documents necessary to effectuate drawings under
letters of credit;
(iii)    to notify the post office authorities to change the address for
delivery of Grantor’s mail to an address designated by Bank;
(iv)    to receive, open and dispose of all mail addressed to Grantor; and
(v)    to send requests for verification of Accounts to customers or account
debtors; and
(c)    ratifies and approves all actions taken pursuant to the foregoing power
of attorney whether taken by Bank or by any other person or persons designated
by Bank, and Bank will not be liable for any acts or omissions or for any error
of judgment or mistake of fact or law other than those occasioned by Bank’s
willful misconduct. This power shall be deemed coupled with an interest and
shall be irrevocable until the Obligations have been fully satisfied. Bank may
appoint such persons, firms or corporations as, in its sole discretion, it may
determine for the purpose of exercising any powers and taking any action
permitted to be exercised or taken by Bank under or pursuant to any of the
provisions of this Agreement.
10.    Acceleration of Obligations and Default. In addition to any other rights,
powers or privileges granted to Bank hereunder, upon the occurrence of an Event
of Default, Bank may, at its option, with or without notice, declare the whole
unpaid balance of any Obligation (or all Obligations) secured by this Agreement
immediately due and payable and may declare Grantor to be in default under this
Agreement.
11.    Marshalling, Etc. Bank shall not be required to make any demand upon or
pursue or exhaust any of its rights or remedies against Grantor or others with
respect to the payment of Obligations, and shall not be required to marshall the
Collateral or to resort to the Collateral in any particular order and all of the
rights of Bank hereunder shall be cumulative. To the extent that it lawfully
may, Grantor hereby agrees to waive, and does hereby absolutely and irrevocably
waive and relinquish the benefit and advantage of, and does hereby covenant not
to assert against Bank, any valuation, stay, appraisement, extension or
redemption laws now existing or which may hereafter exist which, but for this
provision, might be applicable to any sale made under the judgment, order or
decree of any court, or privately under the power of sale conferred by this
Agreement or in respect of the Collateral. To the extent it lawfully may,
without limiting the generality of the foregoing, Grantor hereby agrees that it
will not invoke or utilize any law which might cause delay in, or impede, the
enforcement of Bank’s rights under this Agreement and hereby waives the same.
12.    Nonwaiver, Extensions, etc. No course of dealing between Grantor and Bank
shall operate as a waiver of any rights of Bank under this Agreement or in
respect of the Collateral or the Obligations. No delay or omission on the part
of Bank in exercising any right under this Agreement in respect of the
Collateral or any Obligations shall operate as a waiver of such right or any
other right hereunder. A waiver on any one occasion shall not be construed as a
bar or waiver of any right or remedy on any other occasion. No waiver, amendment
to, or other modification of this Agreement shall be effective unless it is in
writing and signed by Bank. Any extension of time for payment of any installment
of any of the Obligations or the acceptance of only a part of such installment,
or the failure of Bank to enforce the strict performance of any covenant,
promise, or condition herein contained (or in any other note, obligation, or
agreement) on the part of Grantor to be performed, shall not operate as a waiver
of the right of Bank thereafter to require that the Obligations and the terms
herein be strictly performed according to the tenor thereof and hereof. Grantor
hereby waives presentment for payment, notice of nonpayment, protest, notice of
protest, and diligence in Bank bringing suit against Grantor. Furthermore,
Grantor agrees that Bank may, without thereby releasing Grantor, substitute,
release, alter, or make any other disposition of any Collateral and further
agree that Bank is not required to first resort for payment to any such
Collateral. No waiver of any provision of this Agreement shall be effective
unless in writing and signed by Bank.
13.    Sale. Any item of the Collateral may be sold for cash or other value in
any number of lots at public auction or private sale without demand or notice
(excepting only that Bank shall give Grantor at least ten (10) days’ prior
written notice of the time and place of any public sale, or the time after which
a private sale may be made (which notice each of Grantor and Bank hereby agrees
to be reasonable). At any sale or sales of the Collateral (except at private
sale) Bank may bid for and purchase the whole or any part of the property and
rights so sold and, upon compliance with the terms of such sale, may hold,
exploit, and dispose of such property and rights without further accountability
to Grantor except for the proceeds of such sale or sales. Grantor will execute
and deliver, or cause to be executed and delivered, such instruments, documents,
registrations statements, assignments, waivers, certificates and affidavits, and
supply or cause to be supplied such further information and take such further
action as Bank shall reasonably require in connection with such sale.
14.    Application of Proceeds. The proceeds of all sales and collections
hereunder, and any other monies (including any cash contained in the Collateral)
the application of which is not otherwise herein provided for, shall be applied
in such order as Bank determines, in its sole discretion.
15.    Setoff. In addition to any rights now or hereafter granted under the
provisions of any applicable law, rule or regulation, to the exercise of which
Grantor hereby consents, and not by way of limitation of any such rights, upon
the occurrence of any Event of Default, Bank is hereby authorized by Grantor, at
any time or from time to time, without notice, to set off and to appropriate and
to apply any and all deposits (general or special, time or demand, including,
but not limited to, indebtedness evidenced by certificates of deposit, in each
case whether matured or unmatured) and any other indebtedness at any time held
or owing by Bank to or for the credit or account of Grantor against and on
account of the Obligations, irrespective of whether or not (a) Bank shall have
made any demand under this Agreement, the Term Note or the Revolving Credit
Note, or (b) Bank shall have declared the principal of and interest on the Term
Note or the Revolving Credit Note to be due and payable.
16.    Attorneys’ Fees and Costs. All reasonable out-of-pocket costs and
expenses, including attorneys’ fees incurred by Bank in any and all efforts made
to enforce payment of the Obligations or otherwise to effect collection of or
against any of the Collateral, all Bank’s standard service charges for servicing
and auditing this Agreement or the Collateral, as well as all reasonable
out-of-pocket costs and expenses, including attorneys’ fees and legal expenses
incurred in connection with the entering into, modification, administration and
enforcement of this Agreement or the instituting, maintaining, preserving,
enforcing and foreclosing the Security Interest, whether through judicial
process (in or outside of bankruptcy proceedings) or otherwise shall be charged
to and paid by Grantor, upon demand by Bank, and shall be part of the
Obligations.
17.    Miscellaneous.
(a)     This Agreement shall be deemed to have been made in the State of
Wisconsin and shall be governed by the laws of the State of Wisconsin (without
regard to its conflicts of laws provisions), except to the extent superseded by
Federal law. Grantor consents to the jurisdiction of the Circuit Court of
Milwaukee County, Wisconsin and to the jurisdiction of the United States
District Court for the Eastern District of Wisconsin and waives any objection
based on inconvenience of the court (or forum non conveniens), with regard to
any actions, claims, disputes or proceedings relating to this Agreement, or any
transactions arising therefrom, or enforcement and/or interpretation of any of
the foregoing. Nothing in this Agreement will affect Bank’s rights to serve
process in any manner permitted by law, or limit Bank’s right, at the option of
Bank, to bring proceedings against any Grantor or Grantors in the competent
courts of any other jurisdiction or jurisdictions. All terms which are used in
this Agreement shall have the meanings set forth herein. Terms not defined
herein shall have the meanings given them in the Credit Agreement, or, if not
defined therein, in the UCC. The headings in this instrument are for convenience
of reference only and shall not limit or otherwise affect the meaning of any
provision thereof.
(b)     All communications or notices required under this Agreement shall be
deemed to have been given on the date when deposited in the United States mail,
postage prepaid, and addressed as follows (unless and until any of such parties
advises the other in writing of a change in such address):
if to Grantor, to:
Koss Corporation
4129 N. Port Washington Ave
Milwaukee, Wisconsin 53212
Attn:  David Smith
Email: dsmith@koss.com

if to Bank, to:
Town Bank
731 N. Jackson Street, Suite #100
Milwaukee, WI 53202
Attn:  Daniel P. Brenton
Email: dbrenton@wintrust.com

(c)     In the event that any provision hereof shall be deemed to be invalid by
reason of the operation of any law or by reason of the interpretation placed
thereon by any court, this Agreement shall be construed as not containing such
provision, but only as to such locations where such law or interpretation is
operative, and the invalidity of such provision shall not affect the validity of
any remaining provision hereof, and any and all provisions hereof which are
otherwise lawful and valid shall remain in full force and effect.
(d)     This Agreement is intended by Grantor and Bank as a final expression of
the intent of the parties with respect to its subject matter, and as a complete
and exclusive statement of its terms, there being no conditions to the
enforceability of this Agreement. This Agreement may not be supplemented or
modified except in writing, signed by both Grantor and Bank. This Agreement is
entered into contemporaneously with the Credit Agreement.
(e)     The RECITALS set forth above are true, accurate and incorporated herein
by reference.
[The remainder of this page is intentionally left blank with a signature page to
follow.]

IN WITNESS WHEREOF, Grantor has executed this General Business Security
Agreement as of the Effective Date.
                    
KOSS CORPORATION
EXHIBIT

By:         
David Smith, CFO and Secretary

EXHIBIT A
PERFECTION CERTIFICATE
The undersigned, being the Chief Financial Officer and Secretary of KOSS
CORPORATION (“Borrower”), hereby certifies to TOWN BANK (“Bank”) that the
information disclosed below is true and correct. Borrower understands that Bank
will rely on this information to perfect the security interest granted by
Borrower pursuant to the “General Business Security Agreement” from Borrower to
Bank dated contemporaneously herewith.

1.    Borrower’s exact legal name as it appears in its organizational documents
is:
Koss Corporation
2.    The mailing address of Borrower is:
4129 N. Port Washington Ave, Milwaukee, Wisconsin 53212.
3.    The address of Borrower’s place of business, or if it has more than one
place of business, its chief executive office, is:
4129 N. Port Washington Ave, Milwaukee, Wisconsin 53212.
4.    The address where Borrower keeps its books and records is:
4129 N. Port Washington Ave, Milwaukee, Wisconsin 53212.
5.    Was the address of Borrower’s place of business, or if it has more than
one place of business, its chief executive office, located in any other state
within the last 5 years?
        £ Yes S No. If yes, the addresses for those other locations are: N/A.
6.    Collateral consisting of equipment and other goods is located at the
following location(s):
4129 N. Port Washington Ave, Milwaukee, Wisconsin 53212        
7.    The Borrower is a £ general partnership £ limited partnership £ limited
liability company S corporation £ other: _____________________.

8.    The state under whose laws the Borrower is organized:
Delaware.
9.    The Borrower’s organizational identification number issued by the state
under whose laws it is organized is: 775643.
10.    Was the Borrower a successor by merger, consolidation, acquisition or
otherwise to another organization at any time during the past 5 years? £ Yes S
No.
11.    All other names (including trade names) used by the Borrower now or at
any time during the past five years are: None.
Dated as of May 14, 2019.            
KOSS CORPORATION
EXHIBIT
            
By:                         
David Smith, CFO and Secretary

EXHIBIT 3.7

CONTINGENT LIABILITIES

[BORROWER TO CONFIRM.]

EXHIBIT 3.10

DEFAULTS

[BORROWER TO CONFIRM.]

EXHIBIT 3.14

HAZARDOUS SUBSTANCES

[BORROWER TO CONFIRM.]

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