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Wisconsin-Milwaukee-4129 and 4189 North Port Washington Road Partial Assignment, Termination and Modification of Lease - John C. Koss, Koss Corp and Home Depot USA Inc.

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            PARTIAL ASSIGNMENT, TERMINATION AND MODIFICATION OF LEASE


         THIS PARTIAL ASSIGNMENT, TERMINATION AND MODIFICATION OF LEASE (this
"MODIFICATION") is made by and among JOHN C. KOSS, an individual resident of the
State of Wisconsin ("ASSIGNOR"), KOSS CORPORATION, a Delaware corporation
("TENANT") and HOME DEPOT U.S.A., INC., a Delaware corporation ("ASSIGNEE") as
of the 20th day of January, 1999.

                                    RECITALS

         A. By Building Lease dated December 31, 1985, Hi-Tran, Inc. as landlord
and Tenant entered into a written lease (the "BUILDING LEASE") for certain
premises commonly known as 4129 and 4189 North Port Washington Road and legally
described on EXHIBIT A attached hereto (the "ORIGINAL PREMISES").

         B. The Building Lease was subsequently amended by: (i) that certain
Amendment to Lease dated February 28, 1986 between Junior House, Inc. (as
successor to Hi-Tran, Inc. by merger) and Tenant (the "FIRST AMENDMENT"); (ii)
that certain Addendum to Lease dated December ___, 1987 (the foregoing date
intentionally left blank to reflect the exact reference to the date in said
document) between Assignor (as successor by assignment to Junior House, Inc.)
and Tenant (the "SECOND AMENDMENT"); and (iii) that certain Third Lease
Amendment dated as of June 25, 1993 between Assignor and Tenant (the "THIRD
AMENDMENT" which, together with the Building Lease, the First Amendment and the
Second Amendment is sometimes collectively referred to herein as the "LEASE").

         C. The landlord's rights under the Lease are now vested in Assignor,
the current owner of the Original Premises.

         D. Assignor previously granted Assignee an option to purchase a portion
of the Original Premises consisting of approximately 15.211 acres, legally
described on EXHIBIT B attached hereto (the "HD PARCEL") and approximately as
depicted on the site plan attached hereto as EXHIBIT C (the "SITE PLAN"). The HD
Parcel consists of all of Parcel 2 and a portion of Parcel 1 from Exhibit A.
Following the closing of the sale transaction contemplated under said option
(the "CLOSING"), the remaining portion of the Original Premises owned by
Assignor shall sometimes be referred to herein as the "KOSS PARCEL". The option
contemplated that certain access, parking and signage rights on and over the HD
Parcel would be reserved for the benefit of the Koss Parcel.

         E. In connection with Tenant's use of the Original Premises, there are
two existing signs which, following the Closing, will be located on the HD
Parcel approximately as shown on the Site Plan consisting of: (i) an existing
billboard sign located in the northwesterly portion of the HD Parcel (the "KOSS
BILLBOARD SIGN"); and (ii) an existing monument sign located in the southwest
corner of the HD Parcel (the "KOSS SOUTH SIGN" which, together with the Koss
Billboard Sign is collectively referred to herein as the "KOSS SIGNS"). In
connection with the Closing, Assignee has agreed to permit Tenant to continue to
maintain the Koss Signs in their present locations as more particularly
hereinafter described.


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         F. In the Third Amendment, Assignor reserved the right to sell portions
of Parcel 2 of Exhibit A (and to delete same from the Original Premises)
provided that certain parking rights were reserved thereon for the use of Tenant
and its employees and customers. In connection with the Closing, Assignor and
Assignee are concurrently herewith entering into a Reciprocal Easement Agreement
("REA") to, among other things, reserve certain parking rights on the HD Parcel
for the benefit of the Koss Parcel and the owner and occupant thereof from time
to time.

         G. In connection with the Closing and in consideration of the rights
reserved for the benefit of the Koss Parcel pursuant to the REA, this
Modification and the Restated Lease (as hereinafter defined), Assignor, Tenant
and Assignee now desire to enter into this Modification for purposes of: (i)
terminating the Lease as to all portions of the HD Parcel except for the Koss
Signs and the real estate beneath the Koss Signs as shown on the Site Plan
(collectively, the "KOSS SIGN PADS" which, together with the Koss Signs are
sometimes collectively referred to herein as the "KOSS SIGN PREMISES"); (ii)
Assignor's assignment to Assignee of its rights and obligations as landlord
under the Lease with respect to the Koss Sign Premises; (iii) ratifying the
terms of the Lease between Assignor and Tenant with respect to the Koss Parcel,
as modified herein; and (iv) the agreement of Tenant and Assignee to certain
modifications of the Lease with respect to the Koss Sign Premises as provided in
the Restated Lease executed concurrently herewith. For purposes of this
Modification, the term "KOSS LEASE" shall refer to the Lease, as modified
herein, as between Assignor and Tenant with respect to the Koss Parcel, and the
term "HD LEASE" shall refer to the Lease, as modified and partially assigned
herein and in the Restated Lease, as between Assignee and Tenant with respect to
the Koss Sign Premises.

         NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
covenants and agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Assignor, Tenant and Assignee hereby agree as follows:

         1. Assignor and Tenant agree, as between themselves and to and for the
benefit of Assignee, that (i) the Lease and all of Tenant's rights thereunder
are hereby terminated as to all portions of the HD Parcel except for the Koss
Sign Premises, (ii) the HD Parcel (excluding the Koss Sign Premises) is hereby
deleted from the Original Premises, (iii) for purposes of the Koss Lease, the
use of the term "Leased Premises" shall refer only to the Koss Parcel, (iv)
concurrently herewith they shall enter into an amendment to the Koss Lease (the
"KOSS LEASE AMENDMENT") to, among other things, grant Tenant the benefit of
certain access and parking easements established under the REA as a Permittee
thereunder (as that term is defined in the REA), (v) except as modified herein
and in the Koss Lease Amendment, the Koss Lease shall remain in full force and
effect with respect to the Koss Parcel only, and all terms, covenants,
conditions, agreements and provisions thereof are hereby ratified, confirmed and
approved, and (vi) Assignee shall have no obligations or liabilities of any kind
whatsoever under the Koss Lease with respect to the Koss Parcel.

         2. Assignor hereby assigns to Assignee all of its right, title and
interest as landlord under the Lease with respect to the Koss Sign Premises
only, and acknowledges and agrees that following the Closing, Assignor shall
have no further right, title or interest in and to the HD Parcel except pursuant
to the REA as the Owner of the Koss Parcel (as that term is defined in the REA).
Assignee hereby accepts the foregoing partial assignment, and Tenant hereby



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acknowledges and consents to such partial assignment, and Assignee and Tenant
hereby agree that (i) the term "Leased Premises" for purposes of the HD Lease
shall refer only to the Koss Sign Premises, (ii) concurrently herewith they
shall enter into that certain Restated Lease attached hereto as EXHIBIT D (the
"RESTATED LEASE") for purposes of amending and restating the HD Lease as to the
Koss Sign Premises, (iii) except as modified herein and in the Restated Lease,
the HD Lease shall remain in full force and effect with respect to the Koss Sign
Premises only, and all terms, covenants, conditions, agreements and provisions
thereof are hereby ratified, confirmed and approved, and (iv) Assignee shall
have no obligations or liabilities of any kind whatsoever under the HD Lease
with respect to any portion of the HD Parcel, except for the Koss Sign Premises
as expressly provided in the Restated Lease and the REA.

         3. Each of the parties hereto represents, warrants and covenants unto
the other that: (i) this Modification has been duly authorized, executed and
delivered, is a valid and binding obligation of such party and is enforceable
against such party in accordance with its terms; (ii) to the best of their
knowledge as of the date of execution hereof, there exist no agreements, leases,
licenses, certificates, documents, instruments, governing charter, operating
agreement or by-laws, actions, proceedings, judgments, legal requirements or any
other matter or thing to which each such party is a party to or otherwise bound
by, or to which they have received notice of, that in any way would be deemed to
limit, modify or otherwise adversely affect any of the terms of this
Modification; and (iii) other than the Mortgagee Consent attached hereto and the
parties hereto, there exist no other parties possessing any applicable right,
title or interest in and to any portion of the Original Premises that is
required to be a party to this Modification in order to render any of the terms
hereof effective and binding as to such party or which has or may have any right
to consent or approve the terms hereof.

         4. In the event of any conflict between the terms of the Lease and the
terms of this Modification, the terms of this Modification shall in all
instances govern and control.

         5. If any provision of this Modification, or portion thereof, or the
application thereof to any person or circumstances, shall, to any extent be held
invalid, inoperative or unenforceable, the remainder of this Modification, or
the application of such provision or portion thereof to any other persons or
circumstances, shall not be affected thereby; it shall not be deemed that any
such invalid provision affects the consideration for this Modification; and each
provision of this Modification shall be valid and enforceable to the fullest
extent permitted by law.

         6. This Modification shall be construed in accordance with the laws of
the State of Wisconsin.

         7. This Modification shall be binding upon and inure to the benefit of
the successors and assigns of the parties hereto.

         8. This Modification may be executed in several counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same document.




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<PAGE>   4


         IN WITNESS WHEREOF, this Modification has been executed by the parties
is made as of the date first above written.



         ASSIGNOR:                    /s/ John C. Koss
                                      -----------------
                                      JOHN C. KOSS


         TENANT:                    KOSS CORPORATION



                                    By:  /s/ Michael J. Koss
                                         -------------------------------------
                                         Michael Koss, Chief Executive Officer


         ASSIGNEE:                  HOME DEPOT U.S.A., INC.


                                    By: /s/ Kathryn E. Lee
                                        ------------------
                                    Print Name: Kathryn E. Lee
                                    Title: Senior Corporate Counsel







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