Document:

Exhibit 10.3

 

THIS
NOTE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THIS NOTE
HAS BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

MICRONET
ENERTEC TECHNOLOGIES, INC

 

ENERTEC
ELECTRONICS LTD

 

Secured
Promissory Note

 

	No.
    MICT-5	Original
    Principal Amount: $1,500,000
	Issuance
    Date:  August 22, 2017	 

 

 

FOR
VALUE RECEIVED, MICRONET ENERTEC TECHNOLOGIES, INC., a corporation organized and existing under the laws of the State of Nevada
(the “Company” or a “Borrower”), and ENERTEC ELECTRONICS LTD, a corporation organized and
existing under the laws of the State of Israel (“Enertec” or a “Borrower” and collectively
with the Company, the “Borrowers”), hereby promise to pay to the order of YA II PN, Ltd. or its registered
assigns (the “Holder”) (i) the outstanding portion of the amount set out above as the Original Principal Amount
(as reduced pursuant to the terms hereof pursuant to scheduled payment, redemption, conversion, or otherwise, the “Principal”)
when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance
with the terms hereof) and (ii) to pay interest (“Interest”) on any outstanding Principal at the applicable
Interest Rate (as defined below) from the date defined in Section 17 hereof as the Issuance Date until the same is paid, whether
upon the Maturity Date or acceleration, redemption or otherwise (in each case in accordance with the terms hereof) pursuant to
the terms of this Promissory Note (the “Note”).

 

This
Note is being issued pursuant to that certain Note Purchase Agreement dated as of October 28, 2016, as amended and supplemented
from time to time (the “Note Purchase Agreement“) among the Holder and the Borrowers. Certain capitalized terms
used herein but otherwise not defined herein are defined in Section 17 or in the Note Purchase Agreement.

 

(1)           GENERAL
TERMS

 

(a)          Maturity
Date. All amounts owed under this Note shall be due and payable on such date (the “Maturity Date”) that
is either (i) 90 days from the Issuance Date (the “Early Maturity Date”), or (ii) the date that is the one
year anniversary from the Issuance Date (the “Extended Maturity Date”), as applicable. On the Maturity Date,
the Borrowers shall pay to the Holder an amount in cash representing all then outstanding Principal and accrued and unpaid Interest.
The Borrowers may elect the Extended Maturity Date by providing written notice to the Holder within five Business Days of the
Early Maturity Date and by, on or before the Early Maturity Date, (i) paying to the Investor the Extension Fee (as defined in
Section 16), and (ii) issuing to the Investor the Extension Warrants (as defined in Section 16).

 

     

     

    

 

(b)          Interest.
Interest shall accrue on the outstanding Principal balance hereof at a rate equal to 7% per annum (“Interest Rate”)
beginning on the Early Maturity Date. Interest shall be calculated on the basis of a 365-day year and the actual number of days
elapsed, to the extent permitted by applicable law. No interest shall accrue before the Early Maturity Date.

 

(c)          Payments
of Principal and Interest. Except with respect to mandatory pre-payments as set forth below, not payments shall be due from
the Issuance Date through the Early Maturity Date. If the Borrower has elected the Extended Maturity Date and paid the Extension
Fee and issued the Extension Warrants on or before the Early Maturity Date, then the Borrower shall pay (i) $200,000 of Principal
on March 31, 2018 plus all accrued and unpaid Interest outstanding under this Note as of such payment date, and (ii) $200,000
of Principal on June 30, 2018 plus all accrued and unpaid Interest outstanding under this Note as of such payment date, and the
balance on the Maturity Date, in each case by wire transfer of immediately available funds to the account listed on Schedule I
hereto (or to any other account specified by the Holder to the Borrowers in writing).

 

(2)           NO
PREPAYMENT PENALTY, MANDATORY PRE-PAYMENTS. The Borrowers may prepay all or any part of the balance outstanding hereunder
at any time without penalty. The Borrowers shall use any cash proceeds received in connection with the sale or proposed sale of
any of its holdings in any of its subsidiary (if and to the extent such transaction is consummated) including without limitation,
installment payments or break-up fee payments, to make pre-payments hereunder as soon as such proceeds are received by the Borrower.

 

(3)           REPRESENTATIONS
AND WARRANTIES. The Borrowers hereby represents and warrants to the Investor that the following are true and correct as of
the date hereof:

 

(a) (i)
The Borrowers have the requisite corporate power and authority to enter into and perform its obligations under this Note and any
related agreements, in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Note and any related
agreements by the Borrowers and the consummation by it of the transactions contemplated hereby and thereby, have been duly authorized
by the each Borrower’s Board of Directors and no further consent or authorization is required by any Borrower, Board of
Directors, or stockholders, (iii) this Note and any related agreements have been duly executed and delivered by the Borrowers,
(iv) this Note and any related agreements, constitute the valid and binding obligations of the Borrowers enforceable against each
Borrower in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors’ rights and remedies.

 

    	 	2	 

     

    

 

(b) The
execution, delivery and performance by the Borrowers of its obligations under this Note will not (i) result in a violation of
any Borrower’s incorporation documents or any certificate of designation of any outstanding series of preferred stock or
(ii) conflict with or constitute a default (or an event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument
to which the Borrower or any of its subsidiaries is a party, or result in a violation of any law, rule, regulation, order, judgment
or decree (including federal and state securities laws and regulations and the rules and regulations of the Principal Market on
which the Common Stock is quoted) applicable to the Borrower or any of its subsidiaries or by which any material property or asset
of the Borrower is bound or affected and which would cause a Material Adverse Effect.

 

(4)           EVENTS
OF DEFAULT. 

 

(a)          An
“Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether
it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court,
or any order, rule or regulation of any administrative or governmental body) shall have occurred and be continuing:

 

(i)          the
Borrowers’ failure to pay to the Holder any amount of Principal, Interest or other amounts when and as due and payable under
this Note and such failure was not cure within 5 days following the Holder’s written notice to such effect;

 

(ii)          any
Borrower or any subsidiary of any Borrower shall commence, or there shall be commenced against any Borrower or any subsidiary
of any Borrower under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or
any Borrower or any subsidiary of any Borrower commences, or there shall be commenced against any Borrower or any subsidiary of
any Borrower, any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to any Borrower or any
subsidiary of any Borrower, in each case which remains un-dismissed for a period of 61 days; or any Borrower or any subsidiary
of any Borrower is adjudicated insolvent or bankrupt pursuant to a final, non-appealable order; or any order of relief or other
order approving any such case or proceeding is entered; or any Borrower or any subsidiary of any Borrower suffers any appointment
of any custodian, private or court appointed receiver or the like for it or any substantial part of its property which continues
un-discharged or un-stayed for a period of 61 days; or any Borrower or any subsidiary of any Borrower makes a general assignment
for the benefit of creditors; or any Borrower or any subsidiary of any Borrower shall admit in writing that it is unable to pay
its debts generally as they become due; or any Borrower or any subsidiary of any Borrower shall call a meeting of its creditors
with a view to arranging a composition, adjustment or restructuring of its debts; or any corporate or other action is taken by
any Borrower or any subsidiary of any Borrower for the purpose of effecting any of the foregoing;

 

    	 	3	 

     

    

 

(iii)          the
common stock of the Company shall cease to be authorized for quotation or trading on the Nasdaq Capital Market, or trading in
the common stock of the Company has been suspended for any reason, for a period of more than ten Trading Days, or the ordinary
shares of Micronet Ltd. shall cease to be authorized for trading on the Tel-Aviv Stock Exchange, or trading in the ordinary shares
of Micronet Ltd. has been suspended for any reason, for a period of more than ten Trading Days and in any such case the failure
was not cured within 20 days.

 

(iv)          the
Company is a party to any agreement memorializing (1) the consummation of any transaction or event (whether by means of a share
exchange or tender offer applicable to the Common Stock, a liquidation, consolidation, recapitalization, reclassification, combination
or merger of the Company or a sale, lease or other transfer of all or substantially all of the consolidated assets of the Company)
or a series of related transactions or events pursuant to which all of the outstanding shares of Common Stock are exchanged for,
converted into or constitute solely the right to receive, cash, securities or other property, (2) a consolidation or merger in
which the Company is not the surviving corporation, or (3) a sale, assignment, transfer, conveyance or other disposal of all or
substantially all of the properties or assets of the Company to another person or entity (each of (1), (2) and (3) a “Change
in Control”) unless in connection with such Change in Control, all Principal and accrued and unpaid Interest due under
this Note will be paid in full or the Holder consents to such Change in Control;

 

(v)          a
material event of default or material breach by any Borrower under the Note Purchase Agreement, any other Transaction Documents,
or any other material obligation, instrument, debenture, note or agreement for borrowed money occurring after the Issuance Date
of this Note and continuing beyond any applicable notice and/or grace period.

 

(5)           REMEDIES
UPON DEFAULT.

 

(a)          During
the time that any portion of this Note is outstanding, if (i) any Event of Default has occurred, the Holder, by notice in writing
to any Borrower, may at any time and from time to time declare the full unpaid Principal of this Note or any portion thereof,
together with Interest accrued thereon to be due and payable immediately (the “Accelerated Amount”) or (ii)
any Event of Default specified in Section 4(a)(ii) has occurred, the unpaid Principal of the Note and the Interest accrued thereon
shall be immediately and automatically due and payable without necessity of further action.

 

(6)           REISSUANCE
OF THIS NOTE. Upon receipt by any Borrower of evidence reasonably satisfactory to such Borrower of the loss, theft, destruction
or mutilation of this Note, and, in the case of loss, theft or destruction, of an indemnification undertaking by the Holder to
such Borrower in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Borrowers shall
execute and deliver to the Holder a new Note representing the outstanding Principal which Note (i) shall be of like tenor with
this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (iii) shall have
an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have
the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest from the Issuance Date.

 

    	 	4	 

     

    

 

(7)           NOTICES.
Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or
(iii) one (1) Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed
to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

 

	If
    to the Borrowers, to:	Micronet
    Enertec Technologies, Inc.
	 	28
    West Grand Avenue, Suite 3
	 	Montvale,
    NJ 07645
	 	Attention:  David
    Lucatz
	 	Email:
    David@micronet-enertec.com
	 	 
	With
    a copy to:	Zysman,
Aharoni, Gayer and Sullivan & Worcester LLP

	 	1633
Broadway

        New
York, NY 10019

        Attention:
Oded Har-Even, Esq.

        Telephone:
(212) 660-5002

        Email:
        ohareven@zag-sw.com

 

	If
    to the Holder:	YA
    II PN, Ltd.
	 	1012
    Springfield Avenue
	 	Mountainside,
    NJ  07092
	 	Attention:
    Mark     Angelo
	 	Telephone:
    (201)     985-830
	 	 
	With
    a copy to:	David
    Gonzalez, Esq.
	 	1012
    Springfield Avenue
	 	Mountainside,
    NJ  07092
	 	Telephone:
    (201)     985-8300
	 	Email:
    dgonzalez@yorkvilleadvisors.com

 

or
at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified
by written notice given to each other party three Business Days prior to the effectiveness of such change. Written confirmation
of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence
of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with
clause (i), (ii) or (iii) above, respectively.

 

(8)           No
provision of this Note shall alter or impair the obligations of the Borrowers, which are absolute and unconditional, to pay the
Principal of or Interest (if any) on, this Note at the time, place, and rate, and in the currency, herein prescribed. This Note
is a direct obligation of each Borrower. As long as this Note is outstanding, the Borrowers shall not and shall cause its subsidiaries
not to, without the consent of the Holder, (i) amend its articles of incorporation, bylaws or other charter documents so as to
adversely affect any rights of the Holder under this Note; or (ii) enter into any agreement with respect to any of the foregoing.

 

    	 	5	 

     

    

 

(9)           This
Note shall be governed by and interpreted in accordance with the laws of the State of New York, without regard to the principles
of conflict of laws. Each of the parties consents to the jurisdiction of the state courts of the State of New York and the U.S.
District Court for the District of New York sitting in Manhattan, in connection with any dispute arising under this Note and hereby
waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing
of any such proceeding in such jurisdictions.

 

(10)         If
an Event of Default has occurred, then the Borrowers shall reimburse the Holder promptly for all reasonable out-of-pocket fees,
costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses incurred by the Holder in any
action in connection with this Note, including, without limitation, those incurred: (i) during any workout, attempted workout,
and/or in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations, (ii) collecting
any sums which become due to the Holder in accordance with the terms of this Note, (iii) defending or prosecuting any proceeding
or any counterclaim to any proceeding or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies
of the Holder.

 

(11)         Any
waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict
adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.

 

(12)         If
any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision
is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.
If it shall be found that any Interest or other amount deemed Interest due hereunder shall violate applicable laws governing usury,
the applicable rate of Interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.
The Borrowers covenant (to the extent that it may lawfully do so) that each Borrower shall not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would
prohibit or forgive the Borrowers from paying all or any portion of the Principal of or Interest on this Note as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this
Note, and the Borrowers (to the extent they may lawfully do so) hereby expressly waive all benefits or advantage of any such law,
and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to
the Holder, but will suffer and permit the execution of every such as though no such law had been enacted.

 

(13)         Whenever
any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day.

 

    	 	6	 

     

    

 

(14)         Assignment
of this Note by the Borrowers shall be prohibited without the prior written consent of the Holder. Holder shall be entitled to
assign this Note in whole or in part to any person or entity without the consent of the Borrowers.

 

(15)         THE
PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’
ACCEPTANCE OF THE NOTE PURCHASE AGREEMENT AND THIS NOTE.

 

(16)         CERTAIN
DEFINITIONS For purposes of this Note, the following terms shall have the following meanings:

 

(a)          “Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in
the United States or a day on which banking institutions in the United States are authorized or required by law or other government
action to close.

 

(b)          “Extension
Fee” shall mean a fee in the amount of $50,000 U.S.

 

(c)          “Extension
Warrants” shall mean warrants in the form set forth on Exhibit B to the Supplemental Agreement between the Borrowers
and the Holder dated August 22, 2017 to purchase 158,000 shares of Common Stock at an exercise price of $1.50 per share and an
exercise period of 5 years from the issuance date.

 

(d)          “Issuance
Date” means the date this Note is executed and delivered by the Borrowers to the Holder as set forth on the first page
of this Note.

 

(e)          “Trading
Day” means a day on which the principal Trading Market is open for trading.

 

(f)          “Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange, OTCBB, or the OTC Markets (or any successors to any of the foregoing).

 

(g)          “Transaction
Documents” shall have the meaning set forth in the Note Purchase Agreement.

 

[Signature
Page Follows]

 

    	 	7	 

     

    

 

IN
WITNESS WHEREOF, each Borrower has caused this Note to be duly executed by a duly authorized officer as of August 22, 2017.

 

	 	BORROWERS:

	 	 
	 	MICRONET
ENERTEC TECHNOLOGIES, INC.

	 	 
	 	By:
	/s/
David Lucatz

	 	Name: 
	David
Lucatz

	 	Title:	Chairman,
    President and CEO
	 	 	 
	 	ENERTEC ELECTRONICS LTD

	 	 
	 	By:
	/s/
Tali Dinar

	 	Name:
	Tali
Dinar

	 	Title:	CFO
of Enertec Electronics Ltd.

 

    	 	 	 

     

    

 

Schedule
I

 

(Holder
Account Information)

 

YA
II PN, LTD.

 

-Wiring
Instructions-Exhibit

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

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

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