AMENDMENT NO. 7 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 7 TO CREDIT AGREEMENT (this “Amendment”), entered into as of
June 29, 2017, is by and between Koss Corporation, a Delaware corporation
(“Borrower”), and JPMorgan Chase Bank, N.A. (“Lender”) under the Credit
Agreement defined below.
W I T N E S S E T H:
WHEREAS, Borrower and Lender entered into that certain Credit Agreement dated as
of May 12, 2010 (as amended to date, the “Credit Agreement”), pursuant to which
Lender agreed to extend credit to Borrower upon the terms and subject to the
conditions set forth therein; and
WHEREAS, Borrower has requested that Lender enter into this Amendment for the
purpose of making certain modifications and amendments to the Credit Agreement
as described herein, and Lender is willing to agree to such modifications, all
on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the terms and conditions contained herein,
the parties hereto hereby agree as follows:
1.Definitions. All capitalized terms used and not otherwise defined herein shall
have the meanings given to such terms by the Credit Agreement as amended hereby.
2.    Amendments. Upon satisfaction of the conditions set forth in Section 3
below, the Credit Agreement shall be amended as follows:
a.
All references to the Credit Agreement in the Credit Agreement or any of the
Loan Documents shall refer to the Credit Agreement as amended hereby.

b.
Section 1.01 (Defined Terms) shall be amended as follows:

a.
The definition of “Availability” set forth therein shall be revised to read as
follows:

“Availability” means, at any time, an amount equal to the Revolving Commitment
minus the Revolving Exposure.
b.
The definition of “Borrowing Base” set forth therein shall be deleted in its
entirety.

c.
The definition of “Borrowing Base Certificate” set forth therein shall be
deleted in its entirety.

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d.
The definition of “CSV” set forth therein shall be deleted in its entirety.

e.
The definition of “Debt Service Coverage Ratio” set forth therein shall be
deleted in its entirety.

f.
The definition of “Eligible Accounts” set forth therein shall be deleted in its
entirety.

g.
The definition of “Eligible Finished Goods” set forth therein shall be deleted
in its entirety.

h.
The definition of “Eligible Inventory” set forth therein shall be deleted in its
entirety.

i.
The definition of “Eligible Life Insurance Policy” set forth therein shall be
deleted in its entirety.

j.
The definition of “Revolving Commitment” set forth therein shall be revised to
read as follows:

“Revolving Commitment” means the commitment of Lender to make Revolving Loans
and issue Letters of Credit, as such commitment may be reduced from time to time
pursuant to Section 2.08. Effective as of the Seventh Amendment Effective Date,
the amount of Lender’s Revolving Commitment is $4,000,000.
k.
The definition of “Tangible Net Worth” set forth therein shall be deleted in its
entirety.

l.
A new definition shall be added to Section 1.01 in appropriate alphabetical
order as follows:

“Seventh Amendment Effective Date” means the date on which the conditions to
effectiveness of the Amendment No. 7 to Credit Agreement dated as of June 29,
2017 are satisfied.
c.    Section 2.01 shall be amended in its entirety to read as follows:
Subject to the terms and conditions set forth herein, Lender agrees to make
Revolving Loans to Borrower from time to time during the Availability Period in
an aggregate principal amount that will not result in  the Revolving Exposure
exceeding the Revolving Commitment, subject to Lender’s authority, in its sole
discretion, to make Protective Advances pursuant to the terms of Section 2.04,
by making immediately available funds available to the account designated by
Borrower in writing. Within the foregoing limits

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and subject to the terms and conditions set forth herein, Borrower may borrow,
prepay and reborrow Revolving Loans.
d.    Section 2.05(b) shall be amended to delete the last sentence thereof and
replace it with the following:
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 Borrower
shall be deemed to represent and warrant that), after giving effect to such
issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed
the Letter of Credit Sublimit and (ii) the total Revolving Exposure shall not
exceed the total Revolving Commitment.
e.    Section 2.08(d) shall be amended in its entirety to read as follows:
(d)    Borrower may permanently reduce the Revolving Commitment, upon at least 5
days’ prior written notice to Lender, which notice shall specify the amount of
the reduction and shall be irrevocable once given. Each reduction shall be in a
minimum amount of $500,000, or an increment of $100,000 in excess thereof.
Borrower may not reduce the Revolving Commitment to less than $3,000,000.
f.    Section 2.10(b) shall be amended in its entirety to read as follows:
(b)    In the event and on such occasion that the Revolving Exposure exceeds the
Revolving Commitment, Borrower shall prepay the Revolving Loans and LC Exposure
in an aggregate amount equal to such excess.
g.    Section 4.01(h) shall be amended in its entirety to read as follows:
(h)    Reserved.
h.    The title of Section 5.01 shall be amended in its entirety to read as
follows:
SECTION 5.01    Financial Statements and Other Information
i.    Section 5.01(c) shall be amended in its entirety to read as follows:
(c)    concurrently with any delivery of financial statements under clause
(a) or (b) above, a certificate of a Financial Officer of Borrower in
substantially the form of Exhibit B (i) certifying, in the case of the financial
statements delivered under clause (b), as presenting fairly in all material
respects the financial condition and results of operations of Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes, (ii)  stating whether any change in GAAP or in the
application thereof has occurred since the date of the

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audited financial statements referred to in Section 3.04 and, if any such change
has occurred, specifying the effect of such change on the financial statements
accompanying such certificate and (iii) setting forth any right, title or
interest in registered Patents, Trademarks or Copyrights (each as defined in the
Security Agreement) acquired by the Borrower during such period;
j.    Section 5.01(e) shall be amended in its entirety to read as follows:
(e)    Reserved.
k.    Section 6.12(a) shall be amended in its entirety to read as follows:
(a)    Reserved.
l.    Section 6.12(b) shall be amended in its entirety to read as follows:
(b)    Reserved.
m.    Exhibit A is hereby deleted in its entirety.
n.    Exhibit B shall be replaced by Exhibit B attached hereto.
3.    Conditions: Notwithstanding the foregoing, this Amendment shall not become
effective unless and until Lender receives:
a.    a fully-executed copy of this Amendment; and
b.    such other certificates or documents as Lender or its counsel may
reasonably request.
4.    Representations and Warranties. Borrower repeats and reaffirms the
representations and warranties set forth in Article III of the Credit Agreement
as though made on and as of the date hereof, except for representations or
warranties that are made as of a particular date. Borrower also represents and
warrants that the execution, delivery and performance of this Amendment, and the
documents required herein, are within the corporate powers of Borrower, have
been duly authorized by all necessary corporate action and do not and will not
(i) require any consent or approval of the shareholders of Borrower; (ii)
violate any provision of the articles of incorporation or by-laws of Borrower or
of any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to Borrower or
any subsidiary of Borrower; (iii) require the consent or approval of, or filing
a registration with, any governmental body, agency or authority, other than
routine filings with the U.S. Securities and Exchange Commission other than that
which has been obtained or filed; or (iv) result in any breach of or constitute
a default under, or result in the imposition of any lien, charge or encumbrance
upon any property of Borrower or any subsidiary of Borrower pursuant to, any
indenture or other agreement or instrument under which Borrower or any
subsidiary of Borrower is a party or by which it or its properties may be bound
or affected, other than as permitted by the Loan Documents. This Amendment
constitutes the legal, valid and binding obligation of

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Borrower enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy or similar laws affecting the enforceability of
creditors’ rights generally.
5.    Obligations Enforceable, Etc. Borrower acknowledges and agrees that its
obligations under the Credit Agreement are not subject to any offset, defense or
counterclaim assertable by Borrower and that the Credit Agreement and the Loan
Documents are valid, binding and fully enforceable according to their respective
terms. Except as expressly provided above, the Credit Agreement and the Loan
Documents shall remain in full force and effect, and this Amendment shall not
release, discharge or satisfy any present or future debts, obligations or
liabilities to Lender of Borrower or of any debtor, guarantor or other person or
entity liable for payment or performance of any of such debts, obligations or
liabilities of Borrower, or any security interest, lien or other collateral or
security for any of such debts, obligations or liabilities of Borrower or such
debtors, guarantors, or other persons or entities, or waive any default, and
Lender expressly reserves all of its rights and remedies with respect to
Borrower and all such debtors, guarantors or other persons or entities, and all
such security interests, liens and other collateral and security. This is an
amendment and not a novation. Without limiting the generality of the foregoing,
all present and future debts, obligations and liabilities of Borrower under the
Credit Agreement, as amended, are and shall continue to be secured by the
Security Agreement and any other Collateral Documents.
6.    Fees and Expenses. As contemplated by Section 8.03(a) of the Credit
Agreement, Borrower shall be responsible for the payment of all reasonable fees
and out-of-pocket disbursements incurred by Lender in connection with the
preparation, execution and delivery of this Amendment. Borrower further
acknowledges and agrees that, pursuant to and on the terms set forth in such
Section 8.03(a), Borrower is and shall be responsible for the payment of other
fees, expenses, costs and charges arising under or relating to the Credit
Agreement, as amended hereby, and the Loan Documents, as set forth in such
Section 8.03(a).
7.    Entire Agreement. This Amendment and the other documents referred to
herein contain the entire agreement between Lender and Borrower with respect to
the subject matter hereof, superseding all previous communications and
negotiations, and no representation, undertaking, promise or condition
concerning the subject matter hereof shall be binding upon Lender unless clearly
expressed in this Agreement or in the other documents referred to herein.
8.    Miscellaneous. The provisions of this Amendment shall inure to the benefit
of any holder of any Obligations, and shall inure to the benefit of and be
binding upon any successor to any of the parties hereto. All agreements,
representations and warranties made herein shall survive the execution of this
Amendment and the making of the loans under the Credit Agreement, as so amended.
This Amendment shall be governed by and construed in accordance with the
internal laws of the State of Wisconsin. This Amendment may be signed in any
number of counterparts with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Amendment is solely for the benefit
of the parties hereto and their permitted successors and assigns. No other
person or entity shall have any rights under, or because of the existence of,
this Amendment.

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9.    

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IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year
first above written.

KOSS CORPORATION

By: /s/ David Smith_            
Name: David Smith
Title: Executive Vice President and Chief          Financial Officer

JPMORGAN CHASE BANK, N.A.

By: /s/ Casey Wendt    
Name: Casey C. Wendt
Title: Authorized Signatory

[Signature Page to Amendment No. 7 to Credit Agreement]

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EXHIBIT B
COMPLIANCE CERTIFICATE
To:    JPMorgan Chase Bank, N.A.
This Compliance Certificate is furnished pursuant to that certain Credit
Agreement dated as of May 12, 2010 (as amended, modified, renewed or extended
from time to time, the “Agreement”) between Koss Corporation, a Delaware
corporation (the “Borrower”), and JPMorgan Chase Bank, N.A., as Lender. Unless
otherwise defined herein, capitalized terms used in this Compliance Certificate
have the meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1.I am the duly elected ____________________ of Borrower;
2.I have reviewed the terms of the Agreement and I have made, or have caused to
be made under my supervision, a detailed review of the transactions and
conditions of Borrower and its Subsidiaries during the accounting period covered
by the attached financial statements [for quarterly financial statements add:
and such financial statements present fairly in all material respects the
financial condition and results of operations of Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes];
3.The examinations described in paragraph 2 did not disclose, except as set
forth below, and I have no knowledge of any change in GAAP or in the application
thereof that has occurred since the date of the audited financial statements
referred to in Section 3.04 of the Agreement;
4.I hereby certify, in my capacity as ______________, that the Borrower has not
changed (i) its name, (ii) its chief executive office, (iii) principal place of
business, (iv) the type of entity it is or (v) its state of incorporation or
organization without having given the Lender the notice required by the Security
Agreement;
5.Schedule I hereto sets forth the computations necessary to determine the
Applicable Rate commencing on the Business Day this certificate is delivered.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the (i) nature of the condition or event, the period during which it has
existed and the action which Borrower has taken, is taking, or proposes to take
with respect to each such condition or event or (i) the change in GAAP or the
application thereof and the effect of such change on the attached financial
statements:
    
    

6.Except as set forth on Schedule II hereto, the Borrower has not acquired any
additional right, title or interest in any registered Patents, Trademarks or
Copyrights.

Exhibit B Page 1

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The foregoing certifications, together with the computations set forth in
Schedule I and the information set forth on Schedule II hereto, and the
financial statements delivered with this Certificate in support hereof, are made
and delivered this _______ day of ___________________.
KOSS CORPORATION

By:     
Name:     
Title:     

Exhibit B Page 2