License Agreement [Amendment No. 8] - Koss Corp. and Jiangsu Electronics Industries Ltd.
Jiangsu Electronics Industries Limited
c/o Koss Audio & Video Electronics
11733 Missouri Bottom Road
Hazelwood, Missouri 63042
July 31, 2002
Mr. Michael J. Koss
Koss Corporation
4129 North Port Washington Avenue
Milwaukee, Wisconsin 53212
Re: Eighth Amendment to License Agreement
Dear Michael:
Koss Corporation, a Delaware corporation ("Licensor"), and Jiangsu
Electronics Industries Limited, a British Virgin Islands company ("Licensee"),
are (by way of assignment) parties to a certain License Agreement between
Licensor and Trabelco N.V. dated November 15, 1991, as amended (as amended, the
"License Agreement"). Licensor and Licensee now desire to further amend certain
terms and conditions of the License Agreement and agree as follows:
1. Section 7.3 of the License Agreement (as amended by the Third
Amendment and Assignment of License Agreement dated as of March 31, 1997, the
Fourth Amendment to License Agreement dated May 29, 1998, the Fifth Amendment
to License Agreement dated March 30, 2001 and the Sixth Amendment to License
Agreement dated August 15, 2001) 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:
Year Minimum Royalties
---- -----------------
2003 $500,000
2004 $525,000
2005 $551,250
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.
2. Section 7.6 of the License Agreement (as amended by the Fifth
Amendment to License Agreement dated March 30, 2001) is hereby deleted in its
entirety and the following inserted in its place:
7.6 This Agreement shall automatically renew for an additional two
(2) year period at the end of each Contract Year (unless this
Agreement is sooner terminated in accordance with the provisions
hereof). The parties agree that Minimum Royalties shall increase by
five percent (5%) each Contract Year
<PAGE>
Mr. Michael J. Koss
July 31, 2002
Page 2
commencing with the Contract Year starting January 1, 2006.
LICENSEE shall have the right to terminate this Agreement at any time
by giving written notice to LICENSOR during the course of any
Contract Year, in which case this Agreement shall continue in full
force and effect for an additional one (1) Contract Year after
December 31 of the Contract Year in which the notice of termination
was given. The Minimum Royalties in effect at the time of the notice
of termination shall remain constant for the remaining Contract Years
of this Agreement.
Commencing with the Contract Year starting January 1, 2005, LICENSOR
shall have the right to terminate this Agreement during the course of
any Contract Year if one of the following thresholds is not met with
regard to Royalties paid by LICENSEE for the periods referenced below:
(i) LICENSEE's average Royalties from the two (2) most recent Contract
Years do not exceed one hundred ten percent (110%) of the average
Minimum Royalties from the same two (2) year period, or (ii)
LICENSEE's actual Royalties for the most recent Contract Year do not
exceed seventy percent (70%) of the actual Royalties for the
immediately preceding Contract Year. In the event of such notice of
termination by LICENSOR this Agreement shall continue in full force
and effect for an additional one (1) Contract Year after December 31
of the Contract Year in which the notice of termination was given. The
Minimum Royalties in effect at the time of the notice of termination
shall remain constant for the remaining Contract Years of this
Agreement.
3. The parties hereto agree that this letter agreement has been jointly
drafted by the parties, that the language used in this letter agreement
reflects their mutual intent, and that no term or provision shall be construed
more or less favorably to either party hereto on the grounds that it was
drafted or authorized by such party.
4. Except as hereby amended, the License Agreement shall remain in full
force and effect.
<PAGE>
Mr. Michael J. Koss
July 31, 2002
Page 3
To evidence your agreement with the provisions set forth in this letter,
please execute this letter below.
Very truly yours,
JIANGSU ELECTRONICS INDUSTRIES LIMITED
BY: Poon Ka Hung
------------------------------------
Name: Poon Ka Hung
Title: Chief Executive Officer
AGREED TO THIS 31 DAY
OF JULY, 2002.
KOSS CORPORATION
By: Michael J. Koss
--------------------------------
Michael J. Koss, President