Korean Joint Venture Agreement

EXHIBIT 10.45
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JOINT VENTURE AGREEMENT
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THIS AGREEMENT, made and entered into this day _______of March,
1998, by and among:


Kopin Corporation, a corporation organized and existing under the laws of
the State of Delaware, having its principle place of
business at Taunton, Massachusetts, U.S.A. ("Foreign Investor"),


Kowon Technology Co., Ltd., a corporation organized and existing
under the laws of the Republic of Korea, having its principle
place of business at 142-8, Kimryangjang-dong, Yongin-si,
Kyunggi-do, Korea ( the "JVC"), and


Korean Shareholders listed in Schedule A hereto, all being the
current shareholders of the JVC, being either citizens of the
Republic of Korea or corporations organized and existing under
the laws of the Republic of Korea with the addresses set forth in
Schedule A opposite their names ("Korean Investors"), represented
by one of such Korean Investors, Kim Young-Sook ("Kim"),


WITNESSETH THAT:


WHEREAS, Foreign Investor is engaged in the development,
manufacture and distribution of certain semiconductor materials
and devices in the worldwide market; and


WHEREAS, the JVC was incorporated by the Korean Investors with
the business purposes to engage in the manufacture and marketing
of certain semiconductor materials and device products in Korea;


WHEREAS, the Korean Investors are currently the shareholders of
the JVC; and


WHEREAS, Foreign Investor and Korean Investors desire to operate
the JVC's business as a joint venture and thus, Foreign Investor
desires to subscribe for certain shares to be newly issued by the
JVC and the JVC and the Korean Investors agree to issue the
additional shares to Foreign Investor as hereinafter set forth.


NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the parties agree as follows:


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Article 1. Definitions
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1.1 The terms defined in this Article shall have the meaning
ascribed to them herein whenever they are used in this
Agreement, unless otherwise clearly indicated by the con-
text.


1.2 An "affiliate" shall mean any corporation, association, or
other entity which, directly or indirectly, controls a party
hereto or is controlled by said party or is under common
control with said party, where "control" means power and
ability to direct the management and policies of the con-
trolled enterprise through ownership of voting shares of the
controlled enterprise or by contract or otherwise.


1.3 "Government Approval" of any action to be taken by either
party or by the JVC herein shall mean such approval of,
confirmation of, or consent to said action, together with
such licenses, permits, or other permissions reasonably
required for said action, all as the statutes, decrees,
regulations, and rulings of governmental authority (collec-
tively "legal authority") within Korea may require to be
obtained in connection with said action from such govern-
mental authority or from political subdivisions thereof.
Whenever any form of "Government Approval" is used herein,
it shall be interpreted and construed to include the re-
quirement that such approval be in form and substance ac-
ceptable to the parties hereto.


1.4 "Product" shall mean semiconductor materials and devices to
be agreed upon by the parties from time to time as the
products to be manufactured and sold by the JVC.


1.5 "Party" or "Parties" shall mean the Korean Investors or the
Foreign Investors acting as if they were a single entity,
respectively, or the both Investors acting so.


Article 2. Purpose of the Agreement
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The purpose of this Agreement is to provide for the ownership,
and operation by the parties of the JVC.


Article 3. Purpose of the JVC
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3.1 The purpose of the JVC will be to engage in the following
business activities:


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(a) the manufacture, sale, export and distribution of semiconductor
materials and devices; and


(b) any and all acts, things, business and activities which are related,
incidental or conducive directly or indirectly to the attainment of
the foregoing objectives.


3.2 The JVC's Articles of Incorporation shall be as agreed to by and
between the parties, and the parties shall cause them to be amended
from time to time as may be required to ensure that they at all times
conform with the terms and conditions of this Agreement and any
amendments to this Agreement.


3.3 The duration of the JVC shall be perpetual subject to the provisions
of the Articles of Incorporation and of this Agreement.


Article 4. Subscription for and Issuance of Shares
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4.1 Subject to the Government Approval of this Agreement, the
JVC shall issue to Foreign Investors and Foreign Investors
shall acquire from the JVC, the shares of the JVC in
accordance with terms and conditions hereunder.


4.2 The total initial investment and the total number of common
shares to be initially subscribed for by the Foreign
Investors under this Agreement shall be 1.8 billion Won in
exchange for 114,000 common shares of the JVC, five thousand
(5,000) Won par value per share.


4.3 The total initial investment amount of Foreign Investor set
forth in Article 4.2 above shall be paid within twenty-four
(24) months from receipt of Government Approval of this
Agreement. The schedule of the initial investment by
Foreign Investor shall be mutually agreed upon by Foreign
Investor and the Korean Investors.


4.4 Upon completion of the initial investment by the Foreign
Investor as contemplated in Article 4.2 above, the parties
will hold shares of the JVC as follows:


Korean Investors: 120,000 shares (51%)
Foreign Investor: 114,000 shares (49%)


Unless the parties otherwise agree in writing, each party (together
with such lawful transferees as are permitted


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herein) shall hold, throughout the life of the JVC, the above-
mentioned proportion of the voting common shares of the JVC.


4.5 All shares to be issued to Foreign Investor by the JVC pursuant to
this Agreement shall be common shares of one class registered in
nominative form evidenced by share certificates and shall rank pari
passu in all respects with all other common shares issued by the
JVC.


4.6 Any shares of stock subscribed for and accepted by Foreign Investor
shall be fully paid for prior to issuance thereof. Cash amounts
payable by any party shall be paid by wire transfer of funds to such
bank accounts as the JVC (or its promoters) shall by writing
designate.


4.7 During 'the term of the Agreement, each stock certificate issued
hereunder will bear the following words:


"Sale, transfer or pledge of the shares of stock
represented by this certificate is restricted
subject to the Joint Venture Agreement dated
______________________, 1998, between Kopin
Corporation and Korean Individual Investors,
a copy of which is on file at the principal
office of the Company."


4.8 Future financing needs of the JVC shall be met primarily through a
combination of equity borrowing and application of internally
generated funds consistent with a general philo-sophy of maintaining
a prudent capital structure.


4.9 The parties shall have the preemptive right to subscribe for any
shares to be issued by the JVC in proportion to their shareholding
ratio. In the event that additional capital contributions by the
parties are needed above and beyond those set forth in Article 4.2
above, each Foreign Investor and each Korean Investor will have the
right to contribute sufficient capital to keep the percentage of its
ownership interest in JVC constant.


4.10 Notwithstanding anything contained in this Article 4 to the contrary
(including without limitation Articles 4.4, 4.8 and 4.9), following
the completion of the initial investment by the Foreign Investor as
contemplated in Article 4.2 above, the Foreign Investor will have
the right to subscribe for an additional 108,858 common shares (or
to acquire notes of the JVC convertible into such number of common
shares) in exchange for 1.2 billion Won. The parties will use their
best efforts to obtain Government Approval of such


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additional investment promptly following the initial investment by
the Foreign Investor. Following receipt of Government Approval, the
schedule of the additional investment by Foreign Investor shall be
mutually agreed upon by Foreign Investor and the Korean Investors.
Upon completion of the additional investment by the Foreign Investor
as contemplated by this Article 4.10, the parties will hold shares
of the JVC as follows:


Korean Investors: 120,000 shares (35%)
Foreign Investors: 222,858 shares (65%)


In the event that Foreign Investor is unable to complete the
additional investment contemplated hereby for any reason (other than
due to the election by the Foreign Investor or a breach of Foreign
Investor's obligations hereunder) within six (6) months following
the completion of its initial investment under Article 4.2, then
Foreign Investor will have the right to sell and transfer, and the
JVC will purchase, all or a portion of Foreign Investor's shares in
the JVC at the fair market price of the shares to be determined by
an appraiser mutually acceptable to the parties concerned. The JVC
will pay the Foreign Investor promptly following the final
determination of the purchase price in cash or at its election by
delivery of a promissory note having a maturity of not more than two
years from the closing, bearing a commercial rate of interest and
secured by a pledge of the sold shares.


Article 5. Representations and Warranties of the Parties
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5.1 The JVC and Korean Investors hereby jointly make each of the
representations, warranties and agreements set forth in Schedule B
attached to this Agreement.


5.2 Foreign Investor hereby makes each of the representations,
warranties and agreements set forth in Schedule C to this Agreement.


Article 6. Conditions Precedent to Issuance of Shares
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All obligations of the JVC to issue to Foreign Investor, and of Foreign
Investor to acquire from the JVC, shares pursuant to the provisions of
Article 4 hereof are subject to and conditioned upon fulfillment of each
of the following conditions:


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(a) All Government Approvals of this Agreement have been obtained in
form and substance satisfactory to Foreign Investor and the Korean
Investors;


(b) Korean Investors are satisfied that all representations and
warranties made by Foreign Investor under Article 5.2 above, as set
forth in Schedule C hereto, were true when made and are true and
accurate in all respects at the time of the JVC's issuance of shares
under Article 4.1 hereof; and


(c) Foreign Investor is satisfied that all representations and
warranties made by the JVC or and the Korean Investors under Article
5.1 above, as set forth in Schedule B hereto, were true when made
and are true and accurate in all respects at the time of its
subscription for shares under Article 4.1 hereof.


(d) New Articles of Incorporation of the JVC in the form and substance
agreed upon by the parties should have been adopted by the JVC prior
to the subscription of the shares by the Foreign Investor.


Article 7. Indemnification
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7.1 Each of the Korean Investors and the JVC, jointly and sever-ally,
agrees to indemnify, defend and hold harmless Foreign Investor (and
its directors, officers, employees, affiliates, agents,
representatives, successors and assigns) from and against any and
all losses, liabilities, damages, deficiencies, demands, claims,
actions, judgments or causes of action, assessments, costs or
expenses (including, with-out limitation, bonds, interest, penalties
and reasonable attorneys' fees and disbursements) ("Losses") based
upon, arising out of or otherwise in respect of any inaccuracy in or
any breach of any representation, warranty, covenant or agreement of
the Korean Investors contained in this Agreement or any Schedule
hereto, or any document or other papers delivered by the Korean
Investors to Foreign Investor in connection with this Agreement.


7.2 Foreign Investor agrees to indemnify, defend and hold harmless the
Korean Investors (and their agents, representatives, heirs,
executors, administrators, successors and assigns) from and against
any and all Losses based upon, arising out of or otherwise in
respect of any inaccuracy in or any breach of any representation,
warranty, covenant or agreement of Foreign Investor contained in
this


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Agreement or any Schedule hereto, or in any document or other papers
delivered by Foreign Investor to the Korean Investors in connection
with this Agreement.


7.3 Any material losses and any liabilities in any form whatsoever that
arise in connection with acts or omissions of the JVC or any of its
shareholders, directors, officers or employees prior to the date
Foreign Investor first sub-scribes for shares of the JVC that are
discovered within one (1) year from the date Foreign Investor first
subscribes for shares of the JVC (whether actually paid or merely
claimed or disclosed within that period), and that were not dis-
closed fully and accurately in the representations and warranties of
the JVC and Korean Investors set forth in Schedule B hereto, shall
be at the Korean Investors' own expense and they shall fully and
without delay satisfy all claims and hold harmless Foreign Investor
and the JVC for any such losses or liabilities.


Article 8. Transfer of Shares
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8.1 If either party hereto desires to sell, assign or other-wise
transfer all or any portion of its shares in the JVC, such party
("selling party") shall offer all such shares by written notice
first to the other party ("offeree party") specifying price, terms
and conditions of sale; provided, however, that if, pursuant to the
-------- --------
policies of the Korean Government, Foreign Investor is
required to sell or transfer any portion of its shares of the JVC,
Foreign Investor shall be free to sell or transfer such portion of
its shares free of the restrictions of this Article 8.1;


(a) If the offeree party does not accept the offer with- in sixty
(60) days from the date of its dispatch ("acceptance period"),
then the selling party shall thereafter be free to dispose of
its shares within a period of sixty (60) days ("free sale
period") after the expiration of said acceptance period;
provided, however, that the selling party shall not sell such
-------
shares to any third party either (i) at a lower price than the
price at which such shares were offered to the offeree party,
or (ii) on other terms or conditions more favorable than those
on which shares were offered to the offeree party, except for
such other terms and conditions as are reasonably necessary to
meet foreign exchange or foreign investment regulations of
Korea.


(b) If the shares are not sold or transferred to third parties
upon the terms established herein and within


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the free sale period, then they shall automatically become
subject once more to the terms of this Article as if they had
never before been offered for sale.


(c) The Foreign Investor shall have the right to designate a third
party acceptable to the Korean Government who may exercise the
right granted to the Foreign Investor as offeree party
hereunder.


8.2 Notwithstanding the foregoing Article 8.1, (i) transfer or
assignment of all or any portion of its shares in the JVC by any
Foreign Investor to or among its affiliates or the other Foreign
Investor, or (ii) transfer or assignment of all or any portion of
its shares in the JVC by any Korean Investor to or among the other
Korean Investors will not be subject to the restrictions or
requirements under this Article 8.


8.3 In the event of the death, bankruptcy, insolvency, termination from
the JVC employment, or mental or physical disability an individual
JVC shareholder, his shares that are not otherwise subject to the
JVC's repurchase right under Article 8.5 shall be offered in the
first instance to the Foreign Investor, and in the second instance
to the Korean Investors, at a purchase price equal to two times the
individual JVC shareholder's purchase price for his shares.


8.4 Anything to the contrary notwithstanding, any sale or transfer
contemplated by this Article 8 shall be subject to Government
Approval, if required. If necessary, the ac-ceptance period and/or
the free sale period referred to in Article 8.1 above shall be
extended until such Approval has been obtained or officially and
finally denied, provided that the party seeking to extend such
-------- ----
acceptance period shall have used due diligence in soliciting
such Approval.


8.5 Notwithstanding any other rights which may be granted by this
Agreement or otherwise, each Korean Investor hereby agrees that
he/it shall not sell or otherwise transfer, or cause to be sold or
transferred, his/its ownership, or any part of his/its ownership, in
the JVC to more than one individual, without the express prior
approval of Foreign Investor. The shares of the JVC held by any such
Korean investor who is an employee of the JVC (a "Founding
Employee") shall be subject to a right of repurchase by the JVC or a
party designated by the JVC at the price originally paid therefor by
the Founding Employee. Such repurchase right shall be exercisable at
any time within ninety (90) days after the termination of the
Founding Employee's employment with the JVC for any reason by
delivery to the Founding Employee or his or her estate, personal


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representative, or beneficiary with a check in the amount of the
purchase price for the shares being repurchased. 33 1/3% of each
Founding Employee's shares shall be released from the repurchase
option under this Article 8.5 on each of the next three (3)
successive anniversaries of this Agreement.


8.6 If either party hereto shall sell or otherwise transfer all or any
part of its shares to a third party (other than the offeree party's
designee), such selling party shall cause the third party acquiring
such shares, as a condition of such acquisition, to furnish a
written undertaking to the other party and the JVC agreeing to
observe and be bound by all provisions of this Agreement as if it
had executed this Agreement in place of the party who sold the
shares. In addition, such selling party shall (so long as it owns
any shares in the JVC) be responsible to the offeree party in
respect of such purchaser or transferee, to secure complete and
timely observance of the provisions of this Agreement by such
purchaser or transferee.


8.7 No party shall pledge or hypothecate the shares of the JVC nor
otherwise use them as collateral nor for any other purpose which
could result in an involuntary transfer or assignment of such shares
to third parties, unless consent to such pledge, hypothecation or
other such application has been received in writing from the other
party.


8.8 Since damages arising from breach of the above-mentioned obligations
under Article 8 may be difficult to compute with precision, the
parties agree that any party found to have sold or transferred any
shares in violation of the terms of this Article shall pay to the
non-breaching party twice the value of the shares transferred in
violation of this Article (as appraised by the Korea Appraisal
Board) or twice the consideration received for said shares,
whichever shall be greater. The parties agree that such computation
of damages is fair and reasonable. Application of this provision
shall not prevent a party hereto from enforcing its rights or
augmenting its protection by such other remedies as may be
available.


Article 9. General Meetings of Shareholders
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9.1 The Board of Directors shall decide the time and place for convening
all meetings of the shareholders subject to the Articles of
Incorporation and applicable requirements of Korean law.


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9.2 The Ordinary General Meeting of Shareholders shall be held within
three (3) months after the end of each fiscal year.


9.3 An Extraordinary General Meeting of Shareholders may be held at any
time in compliance with resolutions of the Board of Directors and
applicable requirements of Korean law.


9.4 Except as otherwise required by Korean law, or by this Agreement,
all actions and resolutions of the shareholders shall be adopted by
the vote of a majority of the total number of shares issued and
outstanding entitled to vote thereon.


9.5 Notwithstanding the foregoing Article 9.4, the following corporate
actions shall be adopted by the vote of two-thirds or more of the
total issued and outstanding shares of the JVC entitled to vote:


(a) any change to the Articles of Incorporation of JVC


(b) any increase of, or reduction in, the authorized share capital
of JVC or variation of the rights attaching to any shares of
JVC;


(c) any reduction of the issued share capital of JVC;


(d) the dissolution or liquidation of JVC or its merger into, or
consolidation or amalgamation with, any other company;


(e) the dismissal of a director or of a statutory auditor;


(f) transfer or pledge of the whole or a substantial part of the
assets or undertakings of JVC or the acquisition by JVC of the
whole or part of the undertaking of any other person or
entity, or the capital stock or loan capital of any company,
or entry by JVC into any joint venture or partnership;


(g) any other matters the adoption of which requires a special
resolution of the shareholders at a general meeting under the
Korean Commercial Code.


9.6 The Representative Director elected in accordance with Article 9.1
shall preside at all General Meetings of Share holders. In the event
that the Representative Director is absent or fails to serve as
Presiding Officer of any General Meeting of Shareholders, the
directors shall elect someone from among themselves to preside in
his place.


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