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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000950124-01-501235.txt : 20010516
<SEC-HEADER>0000950124-01-501235.hdr.sgml : 20010516
ACCESSION NUMBER:		0000950124-01-501235
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20010331
FILED AS OF DATE:		20010515

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			KOSS CORP
		CENTRAL INDEX KEY:			0000056701
		STANDARD INDUSTRIAL CLASSIFICATION:	HOUSEHOLD AUDIO & VIDEO EQUIPMENT [3651]
		IRS NUMBER:				391168275
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		
		SEC FILE NUMBER:	000-03295
		FILM NUMBER:		1637755

	BUSINESS ADDRESS:	
		STREET 1:		4129 N PORT WASHINGTON AVE
		CITY:			MILWAUKEE
		STATE:			WI
		ZIP:			53212
		BUSINESS PHONE:		4149645000

	MAIL ADDRESS:	
		STREET 1:		C/O WHYTE HIRSCHBOECK DUDEK S C
		STREET 2:		111 EAST WISCONSIN AVENUE
		CITY:			MILWAUKEE
		STATE:			WI
		ZIP:			53202

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	KOSS ELECTRONICS INC
		DATE OF NAME CHANGE:	19721005

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	REK O KUT CO INC
		DATE OF NAME CHANGE:	19680124
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>c62470e10-q.txt
<DESCRIPTION>FORM 10-Q FOR QUARTER ENDING MARCH 31, 2001
<TEXT>

<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q

         [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934
                  for the quarterly period ended March 31, 2001
                                       OR
         [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-3295
- --------------------------------------------------------------------------------

KOSS CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)


A DELAWARE CORPORATION                                    39-1168275
- --------------------------------------------------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
  incorporation or organization)


4129 North Port Washington Avenue, Milwaukee, Wisconsin         53212
- --------------------------------------------------------------------------------
(Address of principal executive office)                       (Zip Code)


Registrant's telephone number, including area code:  (414) 964-5000
                                                     ---------------------------


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 YES X  NO
                                    ---    ---

At March 31, 2001, there were 2,002,678 shares outstanding of the Registrant's
common stock, $0.01 par value per share.





                                     1 of 11


<PAGE>   2

                        KOSS CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                                 March 31, 2001


                                      INDEX


<TABLE>
<CAPTION>
                                                                                      Page
PART I   FINANCIAL INFORMATION
<S>                                                                                   <C>
                  Item 1     Financial Statements

                             Condensed Consolidated Balance Sheets
                             March 31, 2001 (Unaudited) and June 30, 2000               3

                             Condensed Consolidated Statements
                             of Income (Unaudited)
                             Three months and nine months ended
                             March 31, 2001 and 2000                                    4

                             Condensed Consolidated Statements of Cash
                             Flows (Unaudited)
                             Nine months ended March 31, 2001 and 2000                  5

                             Notes to Condensed Consolidated Financial
                             Statements (Unaudited) March 31, 2001                      6-7

                  Item 2     Management's Discussion and Analysis of
                             Financial Condition and Results of Operations              8-10


PART II           OTHER INFORMATION

                  Item 6     Exhibits and Reports on Form 8-K                           11
</TABLE>








                                     2 of 11


<PAGE>   3


                        KOSS CORPORATION AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                    March 31, 2001          June 30, 2000
                                                                                     (Unaudited)
                                                                          -----------------------------------------------
<S>                                                                       <C>                               <C>
ASSETS
     Current Assets:
          Cash                                                                         $   644,617           $ 3,164,401
          Accounts receivable                                                            7,321,632             8,228,185
          Inventories                                                                    8,357,527             9,414,036
          Income taxes receivable                                                          687,219               244,755
          Other current assets                                                           1,131,644             1,201,001
- -------------------------------------------------------------------------------------------------------------------------
               Total current assets                                                     18,142,639            22,252,378

     Property and Equipment, net                                                         1,630,681             1,564,302
     Intangible and Other Assets                                                         1,284,223             1,227,627
- -------------------------------------------------------------------------------------------------------------------------
                                                                                       $21,057,543           $25,044,307
=========================================================================================================================


LIABILITIES AND STOCKHOLDERS' INVESTMENT
     Current Liabilities:
          Accounts payable                                                             $   644,906           $   570,567
          Accrued liabilities                                                            1,204,851             1,007,443
- -------------------------------------------------------------------------------------------------------------------------
               Total current liabilities                                                 1,849,757             1,578,010

     Deferred compensation and other liabilities                                         1,568,974             1,482,664
     Contingently redeemable equity interest                                             1,490,000             1,490,000
     Stockholders' investment                                                           16,148,812            20,493,633
- -------------------------------------------------------------------------------------------------------------------------
                                                                                       $21,057,543           $25,044,307
=========================================================================================================================
</TABLE>


See accompanying notes.





                                     3 of 11



<PAGE>   4

                        KOSS CORPORATION AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                   Three Months                          Nine Months
Period Ended March 31                             2001            2000              2001             2000
- ---------------------------------------------------------------------------------------------------------------
<S>                                           <C>              <C>              <C>               <C>
Net sales                                     $ 8,035,929      $ 8,289,742      $28,018,086       $25,265,601
Cost of goods sold                              4,619,742        4,748,926       16,571,510        14,948,760
- ---------------------------------------------------------------------------------------------------------------
Gross profit                                    3,416,187        3,540,816       11,446,576        10,316,841
Selling, general and
  administrative expense                        1,553,013        1,999,384        5,841,620         5,756,994
- ---------------------------------------------------------------------------------------------------------------
Income from operations                          1,863,174        1,541,432        5,604,956         4,559,847
Other income (expense)
  Royalty income                                  116,277          240,802          789,969           972,181
  Interest income                                  21,965           22,363           80,847            57,735
  Interest expense                                (3,282)                0         (14,479)                 0
- ---------------------------------------------------------------------------------------------------------------
Income before income
  tax provision                                 1,998,134        1,804,597        6,461,293         5,589,763
Provision for income taxes                        762,432          701,949        2,466,649         2,164,289
- ---------------------------------------------------------------------------------------------------------------
  Net income                                  $ 1,235,702      $ 1,102,648      $ 3,994,644       $ 3,425,474
===============================================================================================================
Earnings per common share:
  Basic                                       $      0.59      $      0.45      $      1.86       $      1.32
  Diluted                                     $      0.56      $      0.44      $      1.76       $      1.29
- ---------------------------------------------------------------------------------------------------------------
Dividends per common share                           None             None             None              None
- ---------------------------------------------------------------------------------------------------------------
</TABLE>


See accompanying notes.







                                     4 of 11

<PAGE>   5

                        KOSS CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


<TABLE>
<CAPTION>
Nine Months Ended March 31                                                 2001               2000
- -------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
     Net income                                                        $  3,994,644        $ 3,425,474
     Adjustments to reconcile net
          income to net cash provided
          by operating activities:
               Depreciation and amortization                                468,337            635,011
               Deferred compensation                                         86,310             86,310
               Net changes in operating assets and
                    liabilities                                           1,788,635          2,145,325
- -------------------------------------------------------------------------------------------------------
     Net cash provided by operating
           activities                                                     6,337,926          6,292,120
- -------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
     Acquisition of equipment
          and leasehold improvements                                      (518,245)          (279,405)
- -------------------------------------------------------------------------------------------------------
CASH FLOWS FROM
FINANCING ACTIVITIES:
     Purchase and retirement of common stock                            (8,512,653)        (5,392,754)
     Exercise of stock options                                              173,188            482,080
- -------------------------------------------------------------------------------------------------------
     Net cash used in financing
               activities                                               (8,339,465)        (4,910,674)
- -------------------------------------------------------------------------------------------------------
Net decrease in cash                                                    (2,519,784)          1,102,041
Cash at beginning of period                                               3,164,401          1,171,504
- -------------------------------------------------------------------------------------------------------
Cash at end of period                                                  $    644,617        $ 2,273,545
=======================================================================================================
</TABLE>


See accompanying notes.






                                     5 of 11

<PAGE>   6

                        KOSS CORPORATION AND SUBSIDIARIES
                                 March 31, 2001
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.       CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

         The financial statements presented herein are based on interim amounts
         and are subject to audit. In the opinion of management, all adjustments
         (consisting only of normal recurring accruals) necessary to present
         fairly the financial position, results of operations and cash flows at
         March 31, 2001 and for all periods presented have been made. The income
         from operations for the quarter ended March 31, 2001 is not necessarily
         indicative of the operating results for the full year.

         Certain information and footnote disclosures normally included in
         financial statements prepared in accordance with accounting principles
         generally accepted in the United States of America have been condensed
         or omitted. It is suggested that these condensed consolidated financial
         statements be read in conjunction with the financial statements and
         notes thereto included in the Registrant's June 30, 2000, Annual Report
         on Form 10-K.

2.       EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE

         Basic earnings per share are computed based on the weighted average
         number of common shares outstanding. The weighted average number of
         common shares outstanding for the quarters ending March 31, 2001 and
         2000 were 2,083,638 and 2,460,567, respectively. For the nine months
         ended March 31, 2001 and 2000, weighted average number of common shares
         outstanding were 2,150,456 and 2,595,184, respectively. When dilutive,
         stock options are included as share equivalents using the treasury
         stock method. Common stock equivalents of 130,398 and 60,052 related to
         stock option grants were included in the computation of the average
         number of shares outstanding for diluted earnings per share for the
         quarters ended March 31, 2001 and 2000, respectively. Common stock
         equivalents of 116,310 and 59,432 related to stock option grants were
         included in the computation of the average number of shares outstanding
         for diluted earnings per share for the nine months ended March 31, 2001
         and 2000, respectively.








                                     6 of 11

<PAGE>   7

3.       INVENTORIES

         The classification of inventories is as follows:
<TABLE>
<CAPTION>
                                                                    March 31, 2001     June 30, 2000
                    ---------------------------------------------------------------------------------
<S>                                                                <C>                  <C>
                    Raw materials and
                      work in process                                 $3,552,970         $ 4,355,016
                    Finished goods                                     5,880,668           6,135,131
                    ---------------------------------------------------------------------------------
                                                                       9,433,638          10,490,147
                    LIFO Reserve                                      (1,076,111)         (1,076,111)
                    ---------------------------------------------------------------------------------
                                                                      $8,357,527         $ 9,414,036
                    =================================================================================
</TABLE>


4.       STOCK PURCHASE AGREEMENT

         The Company has an agreement with its Chairman to repurchase stock from
         his estate in the event of his death. The repurchase price is 95% of
         the fair market value of the common stock on the date that notice to
         repurchase is provided to the Company. The total number of shares to be
         repurchased shall be sufficient to provide proceeds which are the
         lesser of $2,500,000 or the amount of estate taxes and administrative
         expenses incurred by his estate. The Company is obligated to pay in
         cash 25% of the total amount due and to execute a promissory note,
         payable over 4 years, at the prime rate of interest for the balance.
         The Company maintains a $1,150,000 life insurance policy to fund a
         substantial portion of this obligation. At March 31, 2001 and June 30,
         2000, $1,490,000 has been classified as a Contingently Redeemable
         Equity Interest reflecting the estimated obligation in the event of
         execution of the agreement.

5.       DEFERRED COMPENSATION

         In 1991, the Board of Directors agreed that after age 70, Mr. John C.
         Koss shall receive his current base salary for the remainder of his
         life. Mr. Koss has turned 70 and the Company is currently recognizing
         an annual expense of $150,000 in connection with this agreement. At
         March 31, 2001 and June 30, 2000, respectively, the related liabilities
         in the amounts of $1,131,620 and $1,045,310 have been included in
         deferred compensation and other liabilities on the accompanying balance
         sheets.







                                     7 of 11

<PAGE>   8

                        KOSS CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                                 March 31, 2001
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Condition and Liquidity

Cash used by operating activities during the nine months ended March 31, 2001
amounted to $6,337,926. The decrease in working capital of $4,381,486 from the
balance at June 30, 2000 represents primarily the net effect of a decrease in
cash, inventories and accounts receivable with an increase in accounts payable
and accrued liabilities.

Capital expenditures for new property and equipment (including production
tooling) were $518,245 for the nine months. Budgeted capital expenditures for
fiscal year 2001 are $1,123,100. The Company expects to generate sufficient
funds through operations to fund these expenditures.

Stockholders' investment decreased to $16,148,812 at March 31, 2001, from
$20,493,633 at June 30, 2000. The decrease reflects the effect of net income,
the purchase and retirement of common stock, and the exercise of stock options
for the quarter.

The Company amended its existing credit facility in December 1999, extending the
maturity date of the unsecured line of credit to November 1, 2001. This credit
facility provides for borrowings up to a maximum of $10,000,000. The Company can
use this credit facility for working capital purposes or for the purchase of its
own stock pursuant to the Company's stock repurchase program. Borrowings under
this credit facility bear interest at the bank's prime rate, or LIBOR plus
1.75%. This credit facility includes certain financial covenants that require
the Company to maintain a minimum tangible net worth and specified current,
interest coverage, and leverage ratios. There was no utilization of this credit
facility at March 31, 2001 and June 30, 2000.

In April of 1995, the Board of Directors approved a stock repurchase program
authorizing the Company to purchase from time to time up to $2,000,000 of its
common stock for its own account. In January of 1996, the Board of Directors
approved an increase in the stock repurchase program from $2,000,000 to
$3,000,000. In July of 1997, the Board of Directors again approved an increase
in the stock repurchase program from $3,000,000 to $5,000,000. In January of
1998, the Board of Directors approved an increase of an additional $2,000,000,
increasing the total stock repurchase program from $5,000,000 to $7,000,000. In
August of 1998, the Board of Directors approved an increase of $3,000,000 in the
Company's stock repurchase program, thereby increasing the total amount of stock
repurchases from $7,000,000 to $10,000,000. In April of 1999, the Board of
Directors again approved an increase in the stock repurchase program from
$10,000,000 to $15,000,000. In October of 1999, the Board of Directors increased
the stock repurchase program by another $5,000,000, up to a maximum of
$20,000,000, and in July of 2000 the Board increased the program by an
additional $5,000,000, for a maximum of $25,000,000. In January of 2001, the
Board of Directors approved an additional $3,000,000 for the stock repurchase
program, increasing the maximum amount of repurchases under the entire
repurchase program to $28,000,000, calculated on a net purchase price basis. The
Company intends to effectuate all stock purchases either on the open market or
through privately negotiated transactions, and intends to finance all stock
purchases through its own cash flow or by borrowing for such purchases. All
shares repurchased by the Company are retired and returned to the status of
authorized but unissued shares.

                                     8 of 11

<PAGE>   9


For the quarter ended March 31, 2001, the Company purchased 116,441 shares of
its common stock in multiple transactions for a total purchase price of
$3,462,689, representing an average price of $29.73 per share.

From the commencement of the Company's stock repurchase program through March
31, 2001, the Company has purchased and retired a total of 2,185,939 shares for
a total gross purchase price of $30,047,308 (representing an average gross
purchase price of $11.21 per share) and a total net purchase price of
$27,150,586 (representing an average net purchase price of $10.13 per share).
The difference between the total gross purchase price and the total net purchase
price reflects the lower cost to the Company of purchasing stock from certain
employees who have exercised stock options pursuant to the Company's stock
option program. In determining the total dollar amount available for purchases
under the stock repurchase program, the Company uses the total net purchase
price paid by the Company for all stock purchases, as authorized by the Board of
Directors.

The Company also has an Employee Stock Ownership and Trust ("ESOP") pursuant to
which shares of the Company's stock are purchased by the ESOP for allocation to
the accounts of ESOP participants. For the quarter ended March 31, 2001, the
ESOP did not purchase any shares of the Company's stock.


Results of Operations

Net sales for the third quarter ended March 31, 2001 fell 3% to $8,035,925 from
$8,289,742 for the same period in 2000. Net sales for the nine months ended
March 31, 2001 were $28,018,086 up 11% compared with $25,265,601 during the same
nine months one year ago.

Gross profit as a percent of net sales was 43% for the quarter ended March 31,
2001 compared with 43% for the same period in the prior year. For the nine month
period ended March 31, 2001, the gross profit percentage was 41% compared with
41% for the same period in 2000.

Selling, general and administrative expenses for the quarter ended March 31,
2001 were $1,553,013 or 19% of net sales, as against $1,999,384 or 24% of net
sales for the same period in 2000. For the nine month period ended March 31,
2001, such expenses were $5,841,620 or 21% of net sales, as against $5,756,994
or 23% of net sales, for the same period in 2000.

For the third quarter ended March 31, 2001, income from operations was
$1,863,174 versus $1,541,432 for the same period in the prior year. Income from
operations for the nine months ended March 31, 2001 was $5,604,956 as compared
to $4,559,847 for the same period in 2000.

Interest expense amounted to $3,282 for the quarter as compared to $0 for the
same period in the prior year. For the nine month period, the interest expense
amounted to $14,479 compared with $0 for the same period in the prior year.





                                     9 of 11
<PAGE>   10

The Company has a License Agreement with Jiangsu Electronics Industries Limited
("Jiangsu"), a subsidiary of Orient Power Holdings Limited, by way of an
assignment of a previously existing License Agreement with Trabelco N.V. Orient
Power is based in Hong Kong and has an extensive portfolio of audio and video
products. This License Agreement was recently amended to cover the territories
of the United States, Canada and Mexico. This License Agreement was also renewed
through December 31, 2001, and is subject to renewal for additional 1 year
periods upon mutual agreement of the parties thereto. The products covered by
this License Agreement include various consumer electronics products.

Effective July 1, 1998, the Company entered into a License Agreement and an
Addendum thereto with Logitech Electronics Inc. ("Logitech") of Ontario, Canada
whereby the Company licensed to Logitech the right to sell multimedia/computer
speakers under the Koss brand name. This License Agreement covers North America
and certain countries in South America and Europe. This License Agreement was
recently amended and extended, and requires royalty payments by Logitech
through June 30, 2008, subject to certain minimum royalty amounts due
each year.












                                    10 of 11
<PAGE>   11

PART II  OTHER INFORMATION


Item 6            Exhibits and Reports on Form 8-K

                  (a)   Exhibits Filed
                        Fifth Amendment to License Agreement
                        Consent of Guarantor
                        Amendment and Extension Agreement

                  (b)   Reports on Form 8-K
                        There were no reports on Form 8-K filed by the
                        Company during the period covered by this report.





                                   Signatures

                  Pursuant to the requirements of the Securities and Exchange
                  Act of 1934, the Registrant has duly caused this report to be
                  signed on its behalf by the undersigned thereunto authorized.


                                                     KOSS CORPORATION



                  Dated: 5/14/01                      /s/ Michael J. Koss
                         -------                     ---------------------------
                                                     Michael J. Koss
                                                     Vice Chairman, President,
                                                     Chief Executive Officer,
                                                     Chief Financial Officer

                  Dated: 5/14/01                     /s/ Sue Sachdeva
                         -------                     ---------------------------
                                                     Sue Sachdeva
                                                     Vice President--Finance







                                    11 of 11
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>c62470ex10-1.txt
<DESCRIPTION>FIFTH AMENDMENT TO LICENSE AGREEMENT
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 10.1

                      FIFTH AMENDMENT TO LICENSE AGREEMENT


         THIS FIFTH AMENDMENT TO LICENSE AGREEMENT ("Fifth Amendment") is made
and entered into this 30th day of March, 2001, effective as of
December 31, 2000, by and between KOSS CORPORATION, a Delaware corporation
("LICENSOR"), and JIANGSU ELECTRONICS INDUSTRIES LIMITED, a British Virgin
Islands company ("LICENSEE").

                                    RECITALS

         WHEREAS, LICENSOR and LICENSEE (by way of assignment) are parties to a
certain License Agreement between LICENSOR and Trabelco N.V. dated November 15,
1991 ("Original License Agreement"), as amended by an Amendment to License
Agreement dated November 15, 1991 ("First Amendment"), a Second Amendment to
License Agreement dated September 29, 1995 ("Second Amendment"), a Third
Amendment and Assignment of License Agreement dated as of March 31, 1997 ("Third
Amendment"), and a Fourth Amendment to License Agreement dated May 29, 1998
("Fourth Amendment") (the Original License Agreement, the First Amendment, the
Second Amendment, the Third Amendment, and the Fourth Amendment are hereinafter
collectively referred to as the "License Agreement"); and

         WHEREAS, the parties now desire to further amend certain terms and
provisions of the License Agreement as hereinafter provided; and

         WHEREAS, as an inducement to LICENSOR to amend the License Agreement
and enter into this Fifth Amendment, Orient Power Holdings Limited, a Bermuda
company ("Orient Power"), desires to reaffirm its guarantee of the obligations
of LICENSEE under the License Agreement and this Fifth Amendment by executing
the Consent of Guarantor in the form of EXHIBIT F attached hereto.

                                    AGREEMENT

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

         1.   Section 1.2 of the License Agreement (as amended by the Fourth
Amendment) is hereby deleted in its entirety and the following inserted in its
place:


              1.2  "Products" mean the consumer electronic products of LICENSEE
                   set forth in EXHIBIT B hereto, subject to any limitations
                   referenced in the License Agreement or this Fifth Amendment
                   (including but not limited to Section 18.6 and EXHIBIT B) and
                   the additional limitation that those Products not sold by
                   LICENSEE in every country in the Territory, bearing any of
                   the Licensed Trademarks, by December 31, 2001, shall be
                   deleted from EXHIBIT B as of January 1, 2002, with respect to
                   those countries in the Territory where such Products were not
                   sold by December 31, 2001, and as of that date such Products
                   shall not be considered to be part of the License Agreement
                   or this Fifth Amendment with respect to those countries in
                   the Territory where such


<PAGE>   2


                   Products were not so sold. A sale for the purpose of this
                   Section 1.2 shall be a sale in the normal course of business,
                   and not merely to preserve any rights under the License
                   Agreement or this Fifth Amendment. Minimum Royalties shall
                   not be affected by the deletion of any Products from the
                   License Agreement or this Fifth Amendment.

                   "Core Products" shall mean the following Products set forth
                   on Exhibit B hereto:

                        Non-mobile clock radios;

                        Non-mobile AM/FM radios (excluding clock radios and
                        audio systems incorporating clock radios) without a
                        cassette or compact disc player;

                        Non-mobile audio systems of any nature (excluding clock
                        radios and audio systems incorporating clock radios)
                        with a cassette player but without a compact disc
                        player; and

                        Non-mobile audio systems of any nature (excluding clock
                        radios and audio systems incorporating clock radios)
                        with a compact disc player.

                   "Non-Core Products" shall mean all Products set forth on
                   Exhibit B hereto that are not Core Products.

                   Any reference to non-mobile Products in this Section 1.2 or
                   on any Exhibit hereto shall mean those products which are not
                   designed for use in automobiles.

         2.   Section 1.3 of the License Agreement is hereby deleted in its
 entirety and the following inserted in its place:

              1.3  "Licensed Products" mean all Products of LICENSEE which have
                   any of the Licensed Trademarks affixed or attached thereto in
                   any manner or which are advertised, promoted, distributed or
                   sold in connection with the Licensed Trademarks.

         3.   Section 1.4 of the License Agreement (as amended by the Fourth
Amendment) is hereby deleted in its entirety and the following inserted in its
place:

              1.4  "Territory" shall mean the United States, Canada, and Mexico.

         4.   The following Section 3.5 is hereby added to the License
Agreement:

              3.5  Upon written instructions from LICENSOR to LICENSEE to cease
                   using any or all of the Licensed Trademarks in connection
                   with any or all of the Products as a result of any actual or
                   potential claim, suit, demand, or action relating to said
                   use, LICENSEE shall immediately cease said use as so

                                       2

<PAGE>   3

                   instructed. LICENSOR shall have the right to so instruct
                   LICENSEE to so cease use of the Licensed Trademarks only if
                   LICENSOR believes in good faith that LICENSEE'S continued use
                   of the Licensed Trademarks could give rise to a claim, suit,
                   demand, or action resulting in liability to LICENSOR.

         5.   Section 7.1 of the License Agreement (as amended by the Second
Amendment) is hereby deleted in its entirety and the following inserted in its
place:

              7.1  During the term of the License Agreement (including this
                   Fifth Amendment), LICENSEE will pay to LICENSOR as royalties
                   ("Royalties") an amount equal to the sum of the respective
                   percentage (as set forth on EXHIBIT B) of net sales of each
                   category of the Licensed Products, less 2% of the itemized
                   discounts, rebates and shipping costs as stated on LICENSEE's
                   invoices regarding such sales of the Licensed Products (2%
                   representing an average of such amounts), and as further
                   exemplified on EXHIBIT D attached hereto. The term "net
                   sales" with respect to each category of the Licensed Products
                   shall be defined as the total amount invoiced by LICENSEE for
                   sales of the Licensed Products in such category less the
                   total amount of returns of the Licensed Products in such
                   category, and shall include sales of the Licensed Products to
                   LICENSOR as provided in Section 14.2 hereof. In calculating
                   Royalties, no deduction shall be made for advertising
                   allowances, uncollectible accounts or any other form of
                   discount (other than volume rebates) which does not appear on
                   the customer's invoice. Volume rebates allowed a customer
                   will be credited on a separate invoice to the customer, and
                   an annual adjustment of 2% of such rebates shall be made to
                   the Royalties regarding all volume rebates allowed during the
                   respective Contract Year.

         6.   Section 7.3 of the License Agreement (as amended by the Third
Amendment and the Fourth Amendment) is hereby deleted in its entirety and the
following inserted in its place:

              7.3  LICENSEE shall pay to LICENSOR the following Minimum
                   Royalties for the Contract Years set forth below:
<TABLE>
<CAPTION>


                              Year                      Minimum Royalties
                              ----                      -----------------
                         <S>                         <C>
                              2000                           $850,000
                              2001                           $500,000
</TABLE>


                   If the sum of the total Royalties paid with respect to a
                   Contract Year does not equal or exceed the Minimum Royalties
                   for such Contract Year, the difference between the Minimum
                   Royalties and the Royalties for such Contract Year shall be
                   due and payable on each January 20 following such Contract
                   Year.


                                       3
<PAGE>   4



         7.   Section 7.6 of the License Agreement is hereby deleted in its
entirety and the following inserted in its place:

              7.6  LICENSEE shall not have the automatic right and option of
                   renewing the License Agreement (including this Fifth
                   Amendment). The License Agreement and this Fifth Amendment,
                   however, shall be renewed at the end of the Contract Year
                   ending on December 31, 2000 for a period of one (1) year
                   only, at which time, as of January 1, 2002, the License
                   Agreement and this Fifth Amendment shall automatically expire
                   and terminate (unless sooner terminated in accordance with
                   the provisions of the License Agreement and this Fifth
                   Amendment) unless LICENSOR and LICENSEE agree, by June 30,
                   2001, on the amount of Minimum Royalties to be paid by
                   LICENSEE for the calendar year beginning January 1, 2002, in
                   which case the License Agreement and this Fifth Amendment
                   shall be renewed for the 2002 calendar year. Similarly, if
                   LICENSOR and LICENSEE agree on the amount of Minimum
                   Royalties to be paid by LICENSEE for any subsequent calendar
                   year by June 30 of the immediately preceding calendar year,
                   and the License Agreement and this Fifth Amendment have not
                   previously expired or terminated, the License Agreement and
                   this Fifth Amendment shall be renewed for that subsequent
                   calendar year only.

         8.   Section 10.1 of the License Agreement (as amended by the Fourth
Amendment) is hereby deleted in its entirety and the following inserted in its
place:

              10.1 LICENSOR shall be required to file trademark applications and
                   to seek trademark registrations for the Licensed Trademarks
                   in the Territory in order to encompass the Non-Core Products,
                   but only if specifically so requested in writing by LICENSEE.
                   All costs and expenses (including reasonable attorneys' fees)
                   associated with the preparation, filing, prosecution,
                   registration and maintenance of such applications and
                   registrations shall be paid by LICENSOR. LICENSEE shall
                   cooperate with LICENSOR by providing necessary samples,
                   invoices or other documents necessary to support all
                   applicable applications and registrations for the Licensed
                   Trademarks in connection with the Licensed Products.

                   If LICENSOR is unable to register or maintain its
                   registrations for one or more of the Licensed Trademarks in
                   connection with any Products in any jurisdictions in the
                   Territory, then the parties agree to negotiate in good faith
                   a mutually acceptable resolution with respect to such
                   jurisdictions, with the understanding that neither LICENSOR
                   nor LICENSEE shall have any liability to the other for such
                   inability to register or to maintain such registrations for
                   any such trademarks; provided, however, that if any trademark
                   application or registration for Core Products is successfully
                   opposed in the United States or Canada, and as a result of
                   such successful opposition LICENSEE is prohibited, pursuant
                   to a final, non-appealable order from a court of


                                       4
<PAGE>   5



                   competent jurisdiction, from selling Core Products in either
                   the United States or Canada, then LICENSOR shall reimburse
                   LICENSEE for the amount of Royalties theretofore paid by
                   LICENSEE relating to the sale of the prohibited Core Products
                   only, in the prohibited jurisdiction of the United States
                   and/or Canada only, during the three (3) year period
                   immediately preceding such prohibition, subject to the
                   following limitations on such reimbursements: (i) all such
                   reimbursements shall not exceed a total of Three Million
                   Dollars ($3,000,000) for all prohibited sales of Core
                   Products in both jurisdictions, (ii) LICENSOR shall not be
                   required to make any such reimbursement to LICENSEE if any
                   such successful opposition and subsequent prohibition in
                   either jurisdiction would not have occurred if LICENSOR had
                   not lost any trademark rights due to LICENSEE's non-use or
                   misuse of any of the Licensed Trademarks, and (iii) LICENSOR
                   shall not be required to make any such reimbursement to
                   LICENSEE in the event LICENSEE is prohibited from selling any
                   Non-Core Products in either jurisdiction. LICENSEE shall be
                   permitted to terminate the License Agreement and this Fifth
                   Amendment if LICENSEE's total net sales of Core Products in
                   the Territory decrease by ten percent (10%) or more and such
                   decrease is the direct result of a successful opposition,
                   cancellation or infringement action prohibiting the use of
                   the Licensed Trademarks in connection with the Core Products
                   in the Territory; provided, however, that LICENSEE shall not
                   be able to so terminate the License Agreement and this Fifth
                   Amendment if any opposition, cancellation or infringement
                   action resulting in any such prohibition as to use would not
                   have occurred if LICENSOR had not lost any trademark rights
                   due to LICENSEE's non-use or misuse of the Licensed
                   Trademarks.

         9.   Section 11 of the License Agreement is hereby amended as follows:

              The heading for Section 11 of the License Agreement is hereby
deleted in its entirety and the following inserted in its place:

              11.  REPRESENTATIONS AND INDEMNITIES; LIMITATIONS OF LIABILITY.


              Section 11.1 of the License Agreement (as amended by the Fourth
Amendment) is hereby deleted in its entirety and the following inserted in its
place:

              11.1 LICENSOR represents that, as of the date of this Fifth
                   Amendment, LICENSOR owns at least one application or
                   registration for at least one of the Licensed Trademarks in
                   each jurisdiction in the Territory. Listed in EXHIBIT E to
                   the License Agreement are, as of the date of this Fifth
                   Amendment, LICENSOR's trademark registrations relating to the
                   License Agreement for the Licensed Trademarks in the
                   Territory. If LICENSEE complies with the notice, cooperation
                   and assistance requirements of this



                                       5
<PAGE>   6



                   Section 11.1, LICENSOR agrees to indemnify LICENSEE, its
                   parent, subsidiaries and affiliates, and all officers,
                   directors, agents and employees thereof, and any of them,
                   from any and all expenses, damages, claims, suits, actions,
                   judgments and costs whatsoever (including reasonable
                   attorneys' fees) (collectively, "Damages") which LICENSEE may
                   hereinafter incur, suffer or be required to pay in connection
                   with any third-party claim, suit or action resulting from the
                   use by LICENSEE of the Licensed Trademarks on the Core
                   Products in the Territory in accordance with the License
                   Agreement and this Fifth Amendment (collectively,
                   "Third-Party Claim"); provided, however, that LICENSOR's
                   obligation to so indemnify LICENSEE (i) shall not apply to
                   any Damages incurred by LICENSEE as a result of LICENSEE's
                   non-use or misuse of any of the Licensed Trademarks, (ii)
                   shall not include any Damages attributable to LICENSEE's
                   failure to cease using the Licensed Trademarks, pursuant to
                   LICENSOR's written instructions, as a result of any actual or
                   potential Third-Party Claim, (iii) shall not result in any
                   liability to LICENSOR in excess of the amount of Royalties
                   paid by LICENSEE during the three (3) year period immediately
                   preceding initiation of the Third-Party Claim for sales of
                   only Core Products in those countries in which a final
                   settlement or a final, non-appealable order has been entered
                   against LICENSEE relating to LICENSEE'S use of the Core
                   Products in the Territory, and (iv) shall not include any
                   Damages which are attributable to any Non-Core Products.
                   NOTWITHSTANDING ANY PROVISIONS IN THE LICENSE AGREEMENT OR
                   THIS FIFTH AMENDMENT TO THE CONTRARY, THE INDEMNIFICATION
                   OBLIGATIONS OF LICENSOR SHALL ONLY COVER ACTUAL,
                   OUT-OF-POCKET DAMAGES INCURRED BY LICENSEE IN CONNECTION WITH
                   A FINAL SETTLEMENT INVOLVING LICENSEE, OR A FINAL,
                   NON-APPEALABLE ORDER AGAINST LICENSEE, ARISING OUT OF A
                   THIRD-PARTY CLAIM, BUT SHALL NOT INCLUDE ANY INCIDENTAL,
                   CONSEQUENTIAL (INCLUDING, BUT NOT LIMITED TO, LOSS OF ACTUAL
                   OR ANTICIPATED PROFITS OR REVENUES), INDIRECT, SPECIAL,
                   EXEMPLARY OR PUNITIVE DAMAGES INCURRED BY LICENSEE. LICENSEE
                   SHALL GIVE LICENSOR PROMPT WRITTEN NOTICE, COOPERATION AND
                   ASSISTANCE IN CONNECTION WITH ANY THIRD-PARTY CLAIM, AND
                   LICENSOR SHALL HAVE COMPLETE CONTROL OVER THE DEFENSE AND
                   SETTLEMENT THEREOF.

              The following Section 11.4 is hereby added to the License
Agreement:

              11.4 Notwithstanding any other provisions of, and without
                   diminishing any liabilities or obligations of LICENSEE under,
                   the License Agreement or this Fifth Amendment, LICENSOR shall
                   have no liability or obligation to LICENSEE whatsoever
                   arising out of the License Agreement or this Fifth Amendment
                   (i) relating to LICENSEE'S sale or use of any Non-Core
                   Products (including, without limitation, the royalty
                   reimbursement obligations under Section 10.4 and the
                   indemnification obligations under Section 11.1), or (ii)
                   relating to any other liabilities or obligations incurred by


                                       6
<PAGE>   7

                   LICENSEE as a result of LICENSEE's use of the Licensed
                   Trademarks, other than those liabilities or obligations of
                   LICENSOR set forth in the License Agreement or this Fifth
                   Amendment.

              The following Section 11.5 is hereby added to the License
Agreement:

              11.5 In the event LICENSEE requests LICENSOR to file trademark
                   applications and seek trademark registrations in the
                   Territory for the Non-Core Products, LICENSOR shall take the
                   actions necessary to comply with such request. If LICENSOR is
                   successful in obtaining trademark registrations for all
                   Non-Core Products in all jurisdictions in the Territory, this
                   Fifth Amendment shall be amended to delete the distinction
                   between Core Products and Non-Core Products so that Non-Core
                   Products are treated the same as Core Products under this
                   Fifth Amendment. If LICENSOR is successful in obtaining
                   trademark registrations for some (but not all) of the
                   Non-Core Products in some (but not all) of the jurisdictions
                   in the Territory, then the distinction between Core Products
                   and Non-Core Products shall be deleted only for those
                   Non-Core Products and for those jurisdictions in the
                   Territory for which LICENSOR is successful in obtaining
                   trademark registrations. LICENSEE shall cease all sale or use
                   of the Licensed Trademarks on those Non-Core Products in
                   those jurisdictions in which LICENSOR is not able to obtain
                   trademark registrations.

         10.  Sections 3.1, 5.3 and 11.2 of the License Agreement are hereby
amended by adding the following sentence to the end of each of said Sections:

                   LICENSEE's obligations under this Section shall not be
                   released or limited in any way as a result of LICENSOR's
                   approval of Licensed Products, any packaging therefor, or any
                   advertising relating thereto.

         11.  The License Agreement is hereby amended by adding the following
Section 18.6:

              18.6 LICENSEE shall not manufacture, distribute or sell (i) any
                   speakers, except as a prepackaged component of an audio
                   system that is commonly expected by the consuming public to
                   include such speakers with such audio system, or (ii) any
                   speaker accessories (including, but not limited to, AC or DC
                   adaptors, mounting brackets, or assemblies, etc.), whether or
                   not as part of a prepackaged component of an audio system
                   that is commonly expected by the consuming public to include
                   such speaker accessories with such audio system.

         12.  The License Agreement is hereby amended by adding the following
Section 18.7 to the License Agreement:

              18.7 The parties hereto agree that the License Agreement and this
                   Fifth Amendment have been jointly drafted by the parties,
                   that the language used in the License Agreement and this
                   Fifth Amendment reflect their mutual intent, and that no term
                   or provision shall be construed more


                                       7
<PAGE>   8


                   or less favorably to either party hereto on the grounds that
                   it was drafted or authorized by such party.

         13.  EXHIBIT B to the License Agreement (as amended by the Fourth
Amendment) is hereby deleted in its entirety and the EXHIBIT B attached hereto
shall be inserted in its place.

         14.  EXHIBIT D to the License Agreement (as amended by the Fourth
Amendment) is hereby deleted in its entirety and the EXHIBIT D attached hereto
shall be inserted in its place.

         15.  EXHIBIT E to the License Agreement (as amended by the Fourth
Amendment) is hereby deleted in its entirety and the EXHIBIT E attached hereto
shall be inserted in its place.

         16.  Except as hereby amended, the License Agreement shall remain in
full force and effect.

         IN WITNESS WHEREOF, the parties hereto have duly executed this Fifth
Amendment on the day and year first above written.

                                   KOSS CORPORATION


                              By:    Michael J. Koss
                                     ------------------------------------------

                         Print Name:
                                     ------------------------------------------

                              Title: CEO/President
                                     ------------------------------------------



                                   JIANGSU ELECTRONICS INDUSTRIES  LIMITED


                              By:    /s/ Poon Ka Hung
                                     ------------------------------------------

                         Print Name:
                                     ------------------------------------------

                              Title: Chief Executive Officer

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




                                       8
<PAGE>   9







                                    EXHIBIT B
<TABLE>
<CAPTION>


         MOBILE PRODUCTS*                                                                        Royalty
         ---------------                                                                         -------
<S>                                                                                            <C>
         Audio systems of any nature (excluding clock radios and audio systems                      2.0%
         incorporating clock radios) with a cassette player but without a
         compact disc player

         Audio systems of any nature (excluding clock radios and audio systems
         incorporating clock radios) with a compact disc player and/or a CD                         1.5%
         changer

         Power amplifiers                                                                           1.5%

         Power inverters                                                                            1.5%

         Receivers                                                                                  2.0%
<CAPTION>

         HOME AND PORTABLE PRODUCTS**                                                            Royalty
         ----------------------------                                                            -------
<S>                                                                                            <C>
         Clock radios                                                                               2.0%

         AM/FM radios (excluding clock radios and audio systems incorporating
         clock radios) without a cassette or compact disc player                                    3.0%

         Audio systems of any nature (excluding clock radios and audio systems
         incorporating clock radios) with a cassette player but without a                           2.0%
         compact disc player

         Audio systems of any nature (excluding clock radios and audio systems
         incorporating clock radios) with a compact disc player and/or a CD                         1.5%
         changer

         Power amplifiers                                                                           1.5%

         Receivers                                                                                  2.0%
</TABLE>

*        All products listed under Mobile Products in this EXHIBIT B shall mean
         only those products which are designed for use in automobiles only.

**       Home and portable products listed in this EXHIBIT B shall not include
         products designed for use in automobiles.

         LICENSEE shall not manufacture, distribute or sell (i) any speakers,
         except as a prepackaged component of an audio system that is commonly
         expected by the consuming public to include such speakers with such
         audio system, or (ii) any speaker accessories (including, but not
         limited to, AC or DC adaptors, mounting brackets, or assemblies, etc.),
         whether or not as part of a prepackaged component of an audio system
         that is commonly expected by the consuming public to include such
         speaker accessories with such audio system.



<PAGE>   10



                                    EXHIBIT D

                   Calculation of Quarterly Royalties Payment
<TABLE>
<CAPTION>


                                        Total Sales         Returns           Net Sales        Royalty Rate    Subtotal
                                        -----------         -------           ---------        ------------    --------
<S>                                   <C>                <C>               <C>               <C>              <C>

MOBILE PRODUCTS*
- ---------------

Audio systems of any nature             ___________       _____________       ___________          2.0%       _________
(excluding  clock radios and
audio  systems  incorporating
clock radios) with a cassette
player but without a compact
disc player

Audio systems of any nature             ___________       _____________       ___________          1.5%       _________
(excluding  clock radios and audio
systems  incorporating  clock radios)
with a compact disc player and/or
a CD changer

Power Amplifiers                        ___________       _____________       ___________          1.5%       _________


Power Inverters                         ___________       _____________       ___________          1.5%       _________


Receivers                               ___________       _____________       ___________          2.0%

</TABLE>




<PAGE>   11

<TABLE>
<CAPTION>


                                        Total Sales         Returns           Net Sales       Royalty Rate    Subtotal
                                        -----------         -------           ---------       ------------    --------
<S>                                   <C>                <C>               <C>               <C>              <C>

HOME AND PORTABLE PRODUCTS**
- --------------------------

Clock Radios                            ___________       _____________       ___________           2.0%      _________


AM/FM radios (excluding clock           ___________       _____________       ___________           3.0%      _________
radios and audio systems incorporating
clock radios) without a cassette or
compact disc player

Audio systems of any nature             ___________       _____________       ___________           2.0%      _________
(excluding clock radios and audio
systems incorporating clock radios)
with a cassette player but without
a compact disc player

Audio systems of any nature             ___________       _____________       ___________           1.5%      _________
(excluding clock radios and audio
systems incorporating clock radios)
with a compact disc player and/or
a CD changer

Power Amplifiers                        ___________       _____________       ___________           1.5%      _________


Receivers                               ___________       _____________       ___________           2.0%      _________


                                                                                                    Subtotal  $________
                Subtotal                                             $___________

                Less 2% of itemized discounts, rebates
                and shipping costs                                   (___________)

                ROYALTIES PAYMENT                                    $___________

</TABLE>


*    All products listed under Mobile Products in this EXHIBIT D shall mean only
     those products which are designed for use in automobiles only.

**   Home and portable products listed in this EXHIBIT D shall not include
     products designed for use in automobiles.

<PAGE>   12



                                    EXHIBIT E

<TABLE>
<S>                             <C>                         <C>
                                  UNITED STATES
KOSS (Plain Block Letters)         Registered                 Registration No. 1,821,035
KOSS (Stylized)                    Registered                 Registration No. 1,850,556
KOSS & Design                      Registered                 Registration No. 2,070,098


                                     CANADA
KOSS (Plain Block Letters)         Registered                 Registration No. 454,503
KOSS (Stylized)                    Registered                 Registration No. 454,504
KOSS & Design                      Registered                 Registration No. 454,505


                                     MEXICO
KOSS (Plain Block Letters)         Registered                 Registration No. 442439
KOSS (Stylized)                    Registered                 Registration No. 514637
KOSS & Design                      Registered                 Registration No. 516421
</TABLE>




<PAGE>   13


                                    EXHIBIT F

                              CONSENT OF GUARANTOR

         The undersigned, Orient Power Holdings Limited, a Bermuda company
("Orient Power"), for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, hereby consents to the foregoing
Fifth Amendment to License Agreement ("Fifth Amendment") and reaffirms its
guarantee of the performance by Jiangsu Electronics Industries Limited ("Jiangsu
Electronics") or any sublicensee of Jiangsu Electronics (Jiangsu Electronics and
any sublicensee are hereinafter collectively referred to as "Jiangsu") of all of
Jiangsu's obligations under (a) the Fifth Amendment and (b) that certain License
Agreement between Koss Corporation, as Licensor, and Trabelco N.V., as Licensee,
dated November 15, 1991, as amended by an Amendment to License Agreement dated
November 15, 1991, and a Second Amendment to License Agreement dated September
29, 1995, and a Third Amendment and Assignment of License Agreement dated as of
March 31, 1997 between Trabelco N.V., Jiangsu Electronics, Hagemeyer Electronics
(N.A.), Inc., Hagemeyer Consumer Products, Inc. d/b/a/ Koss Electronics
Products, KCP Limited and Koss Corporation, and a Fourth Amendment to License
Agreement dated May 29, 1998 (collectively, that certain License Agreement and
the amendments thereto are hereinafter collectively referred to as the "License
Agreement"). Orient Power also guarantees the payment to Koss Corporation of any
and all amounts owed to Koss Corporation by Jiangsu under the Fifth Amendment
and the License Agreement, including but not limited to, the royalty obligations
and indemnity obligations of Jiangsu thereunder.

                          ORIENT POWER HOLDINGS LIMITED



Dated: ___________________     By: ___________________________________________

                             Name: ___________________________________________

                            Title: ___________________________________________




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>c62470ex10-2.txt
<DESCRIPTION>CONSENT OF GUARANTOR
<TEXT>

<PAGE>   1

                                                                    EXHIBIT 10.2

                              CONSENT OF GUARANTOR


         The undersigned, Orient Power Holdings Limited, a Bermuda company
("Orient Power"), for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, hereby consents to the foregoing
Fifth Amendment to License Agreement ("Fifth Amendment") and reaffirms its
guarantee of the performance by Jiangsu Electronics Industries Limited ("Jiangsu
Electronics") or any sublicensee of Jiangsu Electronics (Jiangsu Electronics and
any sublicensee are hereinafter collectively referred to as "Jiangsu") of all of
Jiangsu's obligations under (a) the Fifth Amendment and (b) that certain License
Agreement between Koss Corporation, as Licensor, and Trabelco N.V., as Licensee,
dated November 15, 1991, as amended by an Amendment to License Agreement dated
November 15, 1991, and a Second Amendment to License Agreement dated September
29, 1995, and a Third Amendment and Assignment of License Agreement dated as of
March 31, 1997 between Trabelco N.V., Jiangsu Electronics, Hagemeyer Electronics
(N.A.), Inc., Hagemeyer Consumer Products, Inc. d/b/a/ Koss Electronics
Products, KCP Limited and Koss Corporation, and a Fourth Amendment to License
Agreement dated May 29, 1998 (collectively, that certain License Agreement and
the amendments thereto are hereinafter collectively referred to as the "License
Agreement"). Orient Power also guarantees the payment to Koss Corporation of any
and all amounts owed to Koss Corporation by Jiangsu under the Fifth Amendment
and the License Agreement, including but not limited to, the royalty obligations
and indemnity obligations of Jiangsu thereunder.

                                   ORIENT POWER HOLDINGS LIMITED



Dated: March 30, 2001          By: /s/ Poon Ka Hung
       -------------------        --------------------------------------------

                             Name:
                                  -------------------------------------------

                            Title: Chief Executive Officer

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





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>c62470ex10-3.txt
<DESCRIPTION>AMENDMENT AND EXTENSION AGREEMENT
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 10.3

                        AMENDMENT & EXTENSION AGREEMENT

     THIS AMENDMENT & EXTENSION AGREEMENT is made as of the 1 day of May, 2001,
by and between KOSS CORPORATION, a Delaware corporation with its principal place
of business at 4129 North Port Washington Avenue, Milwaukee, WI 53212 (the
"LICENSOR") and LOGITECH ELECTRONICS INC., an Ontario company, with its
principal place of business at 60 Bell Farm Road, Barrie, Ontario L4M 5G6 (the
"LICENSEE")

         WITNESSETH:

         WHEREAS LICENSOR and LICENSEE are parties to a certain License
Agreement dated the 30th day of June, 1998 (the "LICENSE AGREEMENT") and are
furthermore parties to a certain Addendum Agreement dated the 30th day of June,
1998 (the "ADDENDUM") with respect to the License Agreement;

         AND WHEREAS the parties now desire to amend and extend the terms and
conditions of the License Agreement and the Addendum as hereinafter provided;

         NOW THEREFORE for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

     1.  AMENDMENT TO ROYALTY.

         Section 6.1 of the License Agreement is hereby amended to replace the
         definition of "Royalties" as "an amount equal to ten percent (10%) of
         net sales" to read "AN AMOUNT EQUAL TO SIX AND ONE-HALF PERCENT (6.5%)
         OF NET SALES", said amendment to be effective as of the 1st day of
         July, 2000.

     2.  AMENDMENT TO MINIMUM ANNUAL ROYALTIES:

         Section 6.2 of the License Agreement is hereby amended to replace the
         "annual minimum Royalties" as referred to therein, for the period from
         July 1, 2000, to June 30, 2003, as follows:

<TABLE>
<CAPTION>
                "CONTRACT YEAR                MINIMUM ROYALTIES
                 --------------               -----------------
<S>                                   <C>
         JULY 1, 2000 - JUNE 30, 2001 U.S. $210,000
         JULY 1, 2001 - JUNE 30, 2002 U.S. $220,000
         JULY 1, 2002 - JUNE 30, 2003 U.S. $230,000"
</TABLE>
<PAGE>   2
                                      -2-

    3.   EXTENSION OF LICENSE AGREEMENT & ADDENDUM.

         It is agreed that the License Agreement and Addendum shall be renewed
         and extended for a further five (5) year term from the 1st day of July,
         2003, to the 30th day of June, 2008.  It is furthermore agreed that
         Section 6.3 of the License Agreement is hereby amended to replace the
         "Minimum Royalties for the first renewal period" as referred to
         therein, for the period from July 1, 2003, to June 30, 2008, as
         follows:
<TABLE>
<CAPTION>
              "CONTRACT YEAR                    MINIMUM ROYALTIES
              ---------------                   -----------------
<S>                                        <C>
              JULY 1, 2003 - JUNE 30, 2004 U.S. $241,000
              JULY 1, 2004 - JUNE 30, 2005 U.S. $252,000
              JULY 1, 2005 - JUNE 30, 2006 U.S. $265,000
              JULY 1, 2006 - JUNE 30, 2007 U.S. $278,000
              JULY 1, 2007 - JUNE 30, 2008 U.S. $292,000"
</TABLE>

    4.   MISCELLANEOUS

         Save and except as amended and extended herein, the License Agreement
         and Addendum shall remain in full force and effect, binding upon the
         parties thereto and hereto in accordance with the terms therein.

         IN WITNESS WHEREOF the parties hereto have caused this Amendment &
Extension Agreement to be executed as of the date set forth above. The
effective date of this Amendment & Extension Agreement is the 1st day of July,
2000.

                                             KOSS CORPORATION

                                             BY: /s/ Michael J. Koss
                                                     MICHAEL J. KOSS
                                                     PRESIDENT AND CEO

                                             LOGITECH ELECTRONICS INC.

                                             BY: /s/ Greg Bell
                                                     GREG BELL
                                                     PRESIDENT AND CEO

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
