Kopin Corp S-1, filed Nov 7, 2025
Kopin Corp (KOPN)
As filed with the Securities and Exchange Commission on November 6, 2025.
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Kopin Corporation
(Exact name of registrant as specified in its charter)
| Delaware | 3674 | 04-2833935 | ||
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
125 North Drive
Westborough, Ma. 01581
(508) 870-5959
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
John J. Concannon III, Esq.
Morgan, Lewis & Bockius LLP
One Federal Street, Boston Ma. 02110
(617) 951-8000
(Name, address including zip code, and telephone number, including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule l2b-2 of the Exchange Act.
| Large accelerated filer ☐ | Smaller reporting company ☒ |
| Accelerated filer ☐ | Emerging Growth Company ☐ |
| Non-accelerated filer ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offeror sale is not permitted.
| SUBJECT TO COMPLETION | DATED November 6, 2025 |
PRELIMINARY PROSPECTUS
Kopin Corporation.
Up to 19,545,950 Shares of Common Stock
This prospectus relates to the resale from time to time by the selling stockholders identified herein (the “Selling Stockholders”) of up to an aggregate of 19,545,950 shares of our common stock, par value $0.01 per share (the “Common Stock”). The shares of Common Stock to which this prospectus relates consists of shares that we have issued to the Selling Stockholders pursuant to that certain Share Purchase Agreement (as defined herein) we entered into with the Selling Stockholders on September 29, 2025. The shares were issued and sold pursuant to a private placement (the “Private Placement”), which was priced at a purchase price per share of Common Stock of $2.10. We are filing the registration statement pursuant to that certain registration rights agreement (the “Registration Rights Agreement”), dated as of September 29, 2025, entered into by the Company and the Selling Stockholders in the Private Placement.
We are not selling any securities under this prospectus and will not receive any proceeds from the sale of Common Stock by the Selling Stockholders. We will bear all of the registration expenses incurred in connection with the registration of these shares of Common Stock. The Selling Stockholders will pay discounts, commissions, fees of underwriters, selling brokers or dealer managers and similar expenses, if any, incurred for the sale of these shares of Common Stock. The Selling Stockholders may sell or otherwise dispose of the shares of Common Stock described in this prospectus in a number of different ways and at varying prices. Information about how the Selling Stockholders may sell or otherwise dispose of the shares is described in this prospectus under the caption “Plan of Distribution.”
Our Common Stock is listed on The Nasdaq Capital Market under the symbol “KOPN”. On November 5, 2025, the last reported sale price of our Common Stock on The Nasdaq Capital Market was $3.12 per share.
Investing in our Common Stock involves a high degree of risk. You should carefully review the risks and uncertainties referenced under the heading “Risk Factors” of this prospectus and in the other documents that are incorporated by reference into this prospectus before purchasing any of the shares offered by this prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2025.
TABLE OF CONTENTS
You may only rely on the information contained in this prospectus or that we have referred you to. Neither we nor the selling stockholders have authorized anyone to provide you with different information. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the Common Stock offered by this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any Common Stock in any circumstances or in any jurisdictions in which such offer or solicitation is unlawful. You should assume that the information appearing in this prospectus is accurate as of the date on the front cover of this prospectus only.
| i |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus, including the documents incorporated by reference herein, may contain “forward-looking statements” within the meaning of the federal securities laws. Our forward-looking statements include, but are not limited to, statements about us and our industry, as well as statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. Additionally, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. We intend the forward-looking statements to be covered by the safe harbor provisions of the federal securities laws. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as well as statements in future tense, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or management’s good faith belief as of that time with respect to future events, and are subject to significant risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:
| ● | our ability to source semiconductor components and other raw materials used in the manufacturing of our products amidst continued intermittent shortages, including from new and alternative suppliers; | |
| ● | our ability to prosecute and defend our proprietary technology aggressively or successfully; | |
| ● | our ability to recruit and retain personnel with experience and expertise relevant to our business; | |
| ● | our ability to invest in research and development to achieve profitability even during periods when we are not profitable; | |
| ● | any disruptions or delays in our supply chains, particularly with respect to semiconductor components, whether resulting from regional or global geopolitical developments, changes imposed by the new U.S. presidential administration, or otherwise; costs and outcomes relating to any disputes, governmental inquiries or investigations, regulatory proceedings, legal proceedings or litigation; | |
| ● | our ability to continue to introduce new products in our target markets; | |
| ● | our ability to generate revenue growth and positive cash flow, and reach profitability; | |
| ● | the strengthening of the U.S. dollar and its effects on the price of our products in foreign markets; | |
| ● | the impact of new regulations and customer demands relating to conflict minerals; | |
| ● | our ability to obtain a competitive advantage in the wearable technologies market through our extensive portfolio of patents, trade secrets and non-patented know-how; | |
| ● | our ability to grow within our targeted markets; | |
| ● | the importance of small form factor displays in the development of defense, consumer, and industrial products such as thermal weapon sights, safety equipment, virtual and augmented reality gaming, training and simulation products and metrology tools; | |
| ● | the suitability of our properties for our needs for the foreseeable future; | |
| ● | our need to achieve and maintain positive cash flow and profitability. | |
| ● | our anticipated uses of net proceeds from our financings; | |
| ● | the increased expenses associated with being a public company; and | |
| ● | other factors discussed elsewhere in this prospectus. |
Many of the foregoing risks and uncertainties, as well as risks and uncertainties that are currently unknown to us, are or may be exacerbated by factors such as the ongoing conflict between Ukraine and Russia, escalating tensions between China and Taiwan, the war in the Middle East, increasing economic uncertainty and inflationary pressures, and any consequent worsening of the global business and economic environment. New factors emerge from time to time, and it is not possible for us to predict all such factors. Should one or more of the risks or uncertainties described in this prospectus or any other filing with the SEC occur, or should the assumptions underlying the forward-looking statements we make herein and therein prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
You should read this prospectus, the documents incorporated by reference herein, and the documents that we reference within it with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect.
Website and Social Media Disclosure
We use our website (www.kopin.com) to share Company information. Information contained on or that can be accessed through our websites is not, however, incorporated by reference in this prospectus. Investors should not consider any such information to be part of this prospectus.
| ii |
This summary provides an overview of information appearing elsewhere in this prospectus and highlights the key aspects of this offering. This summary does not contain all of the information you should consider prior to investing in our Common Stock. You should read this entire prospectus carefully, including the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes appearing at the end of this prospectus, before making any investment decision. Some of the statements made in this prospectus discuss future events and developments, including our future strategy and our ability to generate revenue, income and cash flow. These forward-looking statements involve risks and uncertainties which could cause actual results to differ materially from those contemplated in these forward-looking statements. Our fiscal year ends on the last Saturday in December. Unless the context otherwise requires, references to “Kopin,” the “Company,” “we,” “us,” and “our” in this prospectus refer to Kopin Corporation. and our consolidated subsidiaries.
Company Overview
Kopin Corporation, a Delaware corporation that was incorporated in 1984 and is headquartered in Westborough, Massachusetts, is renowned for its innovative microdisplay technologies and optical systems, catering to defense, enterprise, industrial, consumer, and medical sectors. Our portfolio, as evidenced by our official website www.kopin.com, includes four types of miniature active-matrix liquid crystal displays (“AMLCDs”), liquid crystal on silicon (“LCOS”) displays, organic light emitting diode (“OLED”) displays, and emerging micro light emitting diode (“MicroLED”) displays, in addition to optics, electronics, and housings for subsystems which we call Application Specific Optical Solutions (“ASOS”). These microdisplays and subsystem solutions are all geared toward enhancing human performance when it matters most – in critical applications.
While microdisplays are at the heart of everything we make, we also bring value to our customers through the design and manufacture of high-performance subsystems of ASOS which include optics, electronics, and housings that are designed to meet the rigorous performance, size, weight, power, and cost requirements of the applications into which they are used.
These products are critical for applications ranging from weapon mounted thermal sights to spatial computing devices and medical headsets. We have been supplying our microdisplays and ASOS to the U.S. Department of Defense for many years for solider centric systems, rotary and fixed wing aircraft and are developing products for armored vehicles and soldier carried missile systems. Our market reach now extends globally, with significant operations in the Americas, Asia-Pacific, and Europe. This global footprint and strategic focus underscore our capability to serve diverse and demanding markets, particularly in defense, where it supports both U.S. and international customers with development and production programs..
Recent Developments
On September 29, 2025, Kopin Corporation (the “Company”) announced that it has entered into a securities purchase agreement (the “Purchase Agreement”) for a private investment in public equity financing (the “PIPE”) for 19,545,950 shares (the “Placement Shares”) of its common stock, par value $0.01 per share (the “Shares”). The net proceeds to the Company from the offering are estimated to be approximately $38.1 million, after deducting placement agent fees and commissions and estimated offering expenses payable by the Company. The transaction closed on September 30, 2025. The issuance of the Placement Shares was not registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws. The Placement Shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) under the Securities Act and/or Regulation D promulgated thereunder for transactions not involving a public offering. The Company is required to file a registration statement providing for the resale of the Placement Shares by November 9, 2025. The registration statement, of which this prospectus forms a part of, is being filed pursuant to a Registration Rights Agreement. Pursuant to the Purchase Agreement and the Registration Rights Agreement, for the period between September 29, 2025 and until ten (10) days after the date that the registration statement has been declared effective by the Securities and Exchange Commission, the Company has agreed not to (1) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock, convertible securities or options, or (2) file any registration statement or any amendment or supplement thereto, in each case other than as contemplated pursuant to the Registration Rights Agreement or a post-effective amendment to an existing registration statement necessary to continue such registration without provided, however, that this shall not apply to customary exceptions, without the consent of the Placement Agent.
The Company also entered into a Placement Agency Agreement (the “Placement Agency Agreement”) with Stifel, Nicolaus & Company, Incorporated, LLC (the “Placement Agent”), dated June 10, 2025 and amended on September 23, 2025, pursuant to which the Placement Agent acted as the exclusive placement agent for the Company in connection with the Placement. The Company paid the Placement Agent a cash fee based on the total size of the Placement according to a formula set forth in the Placement Agency Agreement.
In connection with the Placement, pursuant to lock-up agreements, the Company’s directors and executive officers agreed for a period of 90 days after the closing date of the Placement, subject to certain exceptions, not to offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any of the Lock-Up Shares (as defined below), enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of such Lock-Up Shares, whether any of these transactions are to be settled by delivery of any such Lock-Up Shares, in cash or otherwise, publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement with respect to any security of the Company. “Lock-Up Shares” shall mean those shares of the Company’s common stock or any securities convertible into or exercisable or exchanged for common stock, whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition.
On September 15, 2025 we announced we were awarded a transformative $15.4 million Other Transaction Agreement (OTA) from the Office of the Secretary of Defense (OSD) through the U.S. Army Contracting Command (ACC) under the Industrial Base Analysis and Sustainment (IBAS) program. This landmark award accelerates Kopin’s development of ultra-bright, full-color MicroLED displays optimized for ground soldier augmented reality (AR) applications, positioning the company as a cornerstone of America’s defense innovation and domestic manufacturing ecosystem.
On September 5, 2025, a post-trial order was entered in the U.S. District Court for the District of Colorado in the matter of BlueRadios, Inc. v. Kopin Corporation, Inc. finding for the plaintiff, BlueRadios, Inc. and awarding approximately $19.7 million in damages but denying a permanent injunction and prejudgment interest. In the second quarter of 2024 the Company had previously accrued $24.8 million as possible damages. On October 7, 2025 Kopin Corporation (Kopin or the Company) filed an appeal of the $19.7 million judgement against the Company in the matter of Blue Radios Inc. v. Kopin Corporation. The bond was for the amount of $23.0 million which consisted of the$19.7 million judgement, legal expenses and interest that would accrue over the expected term of the appeal. To post the bond the Company entered into loan agreements (the “Agreements”) with its bank which provides the bank with a security interest in the $23.0 million the Company deposited with the bank. The bank then issued a Letter of Credit (LOC) to a surety company who then issued the bond to the court. The Agreement provides for standard representations and warranties and allows the bank to use the $23.0 million to satisfy the LOC in the event the LOC is called.
On August 14, 2025 we announced the award of an approximate $9 million follow-on production contract in support of a custom thermal imaging assembly build for a major U.S. defense prime contractor.
On August 11, 2025 we announced a $15.0 million strategic investment by Theon International Plc (“Theon”) (Euronext Amsterdam: THEON), a globally recognized developer and manufacturer of advanced thermal imaging and night vision systems for global defense and thermal imaging markets subject to standard closing conditions including obtaining necessary regulatory approval. On October 16, 2025 the parties announced that the transaction had closed. The parties entered into a licensing and development agreement and funding agreements. Theon invested $8.0 million into Kopin’s subsidiary, Kopin Europe Limited (“Kopin Europe”) in Dalgety Bay, Scotland, supporting co-developed products for Europe, Southeast Asia, and NATO countries, enabling collaborative initiatives across key global regions. In exchange for the $8.0 million Theon received a 49% equity interest in Kopin Europe. The parties anticipate performing joint development and production activities at Kopin’s wholly owned subsidiary in Reston, Virginia USA. In addition, Theon purchased $7.0 million worth of shares of Series A Convertible Preferred Stock, par value $0.01 per share, of Kopin (the Preferred Stock”). Each share of the Preferred Stock is convertible into shares of our Common Stock at an initial fixed conversion price of $3.00 per share, pursuant to the terms of the Certificate of Designation for Series A Convertible Preferred Stock of the Company (the “Certificate of Designation”). Kopin has the ability to force the conversion of the Preferred Stock into Common Stock, once Kopin’s stock trades at $5.50 per share or higher for at least 10 trading days within a 30 consecutive trading day period as defined in the agreements. The Preferred Stock carries an annual dividend of 4% payable in cash and stock.
| 1 |
Corporate Information
We were incorporated in the State of Delaware on April 23, 1984. Our principal executive office is located at 125 North Drive, Westborough, MA. 01581, and our telephone number is (508) 870-5959. Our website address is https://www.kopin.com/. Information contained on or that can be accessed through our website is not incorporated by reference into this prospectus. Investors should not consider any such information to be part of this prospectus.
Implications of Being a Smaller Reporting Company
We are a “smaller reporting company” as defined in the Exchange Act and have elected to take advantage of certain of the scaled disclosures available to smaller reporting companies including exemption from compliance with the auditor attestation requirements pursuant to the Sarbanes-Oxley Act of 2002 (“SOX”) and reduced disclosure about our executive compensation arrangements. We will continue to be a “smaller reporting company” until we have $250 million or more in public float (based on our Common Stock) measured as of the last business day of our most recently completed second fiscal quarter or, in the event we have no public float (based on our Common Stock) or a public float (based on our Common Stock) that is less than $700 million, annual revenues of $100 million or more during the most recently completed fiscal year.
We may choose to take advantage of some, but not all, of the available exemptions. We have taken advantage of certain reduced reporting obligations in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.
Summary of Risk Factors
An investment in our securities involves a number of risks. Before deciding to invest in our securities, you should carefully consider the risks described below, together with all of the other information included in this prospectus and the information incorporated by reference herein, including the discussion under the sections captioned “Risk Factors” contained in our most recent Annual Report on Form 10-K and any other subsequently filed document that is also incorporated or deemed to be incorporated by reference in this prospectus. If any of these risks actually occurs, our business, financial condition, results of operations or cash flow could be harmed. This could cause the trading price of our Common Stock to decline, resulting in a loss of all or part of your investment. The risks described in the documents referenced above are not the only ones that we face. Additional risks not presently known to us or that we currently deem immaterial may also affect our business.
Risks Related to This Offering
| ● | The Selling Stockholders may sell their shares of Common Stock being registered in this offering in the public market. This means that up to 19,545,950 shares of Common Stock, the number of shares being registered in this offering for sale by the Selling Stockholders, may be sold in the public market. Such sales will likely cause our stock price to decline. | |
| ● | The significant downward pressure on the price of our Common stock caused by the sale of material amounts of Common Stock could encourage short sales by third parties. Such an event could place further downward pressure on the price of our Common Stock. | |
| ● | Our Common Stock could be subject to extreme volatility. |
Risks Related to Our Financial Position and Internal Controls
| ● | We have experienced a history of losses, have a significant accumulated deficit, have had negative cash flow from operating activities in fiscal years 2024, 2023, and 2022, and expect to have negative cash flow from operating activities in fiscal year 2025. | |
| ● | We may need to raise additional capital to fund our operations in order to continue as a going concern. | |
| ● | Raising additional funds by issuing securities may cause dilution to our existing stockholders or restrict our operations. | |
| ● | As of December 28, 2024 management identified material weaknesses in our internal controls over financial reporting, and we may be unable to develop, implement and maintain appropriate controls in future periods. |
| 2 |
Risks Related to our Operations
| ● | Our revenues and cash flows could be negatively affected if sales of our display products for defense applications significantly decline or the current defense development programs are either cancelled or ultimately do not result in future product sales. | |
| ● | A decline in the U.S. Government defense budget, changes in spending or budgetary priorities, a prolonged U.S. Government shutdown or delays in contract awards may significantly and adversely affect our future revenues, cash flow and financial results. | |
| ● | We may be unable to manufacture our products cost effectively to meet contractual specifications or customer requirements. | |
| ● | Most of our defense sales are on a fixed-price basis, which could subject us to losses if there are cost overruns. | |
| ● | Our investments in the development and sale of MicroLED and OLED microdisplays may not be successful, which may materially adversely affect our sales, profitability and cash flow. | |
| ● | Our business and financial performance may be adversely affected by cyber-attacks on information technology infrastructure and products, as well as changes in cybersecurity and if our information technology security systems were infiltrated and confidential and/or proprietary information were taken, we could be subject to fines, lawsuits and loss of customers. | |
| ● | Supply shortages have and could continue to impair the quality, reduce the availability or increase the cost of raw materials, which could harm our business. | |
| ● | Geopolitical tensions and any conflicts resulting therefrom may negatively affect our ability to source materials and components required to manufacture our products | |
| ● | We are in the process of transitioning from using a Chinese deposition foundry to a European foundry for certain OLED products for defense applications and the products from the European foundry may not be of the same quality and may not get accepted by our customers. | |
| ● | Our business, results of operations and financial condition could be adversely affected by events beyond our control, such as natural disasters, public health crises, political crises, negative global climate patterns, or other catastrophic events. | |
| ● | We generally do not have long-term contracts with our customers, which makes forecasting our revenues and operating results difficult. | |
| ● | Our customers who purchase display products for defense applications typically incorporate our products into their products, which are sold to the U.S. Government under contracts. U.S. Government contracts generally are not fully funded at inception and may be terminated or modified prior to completion, which could adversely affect our business. | |
| ● | We recognize revenue for some of our defense contracts and some commercial contracts on the over-time method which requires significant management judgment, and errors in our judgment could result in our revenue being overstated or understated and the profits or loss reported could be subject to adjustment. | |
| ● | Our ability to manufacture and distribute our display products would be severely limited if the foundries that we rely on manufacture integrated circuits for our display products fail to provide those services. | |
| ● | We may be unable to adequately control purchase pricing of certain critical materials, which may materially adversely affect our sales or profitability. | |
| ● | The markets in which we operate are highly competitive and rapidly changing and we may be unable to compete successfully. | |
| ● | Disruptions of our production could adversely affect our operating results. |
| ● | A disruption to our information technology systems could significantly impact our operations, revenue and profitability | |
| ● | We may not achieve some or all of the anticipated benefits of our equity investments. | |
| ● | If we are unable to obtain or maintain existing software license relationships or other relationships relating to the intellectual property we use, our ability to grow revenue and achieve profitability and positive cash flow may be negatively affected. | |
| ● | Our business could suffer if we fail to recruit and retain key personnel. | |
| ● | If we fail to keep pace with changing technologies, we may lose customers. | |
| ● | We may be unable to successfully integrate new strategic acquisitions and investments, which could materially adversely affect our business, results of operations and financial condition. |
| 3 |
Risks Related to Intellectual Property Rights
| ● | We may incur substantial costs in defending our intellectual property and may not be successful in protecting our intellectual property and proprietary rights. | |
| ● | The process of seeking patent protection can be time consuming and expensive and we cannot be certain that patents will be issued from currently pending or future patent applications. We cannot be certain that domestic or foreign intellectual property laws will allow the protection of our intellectual property rights or that others will not independently develop similar products, duplicate our products or design around any patents issued or licensed to us. | |
| ● | Our competitive position depends on protection of our intellectual property. Diagnostic tests and therapeutic products we develop could be subject to infringement claims. | |
| ● | We also attempt to protect our proprietary information with contractual arrangements and under trade secret laws. We believe that our future success will depend primarily upon the technical expertise, creative skills and management abilities of our officers and key employees in addition to patent ownership. | |
| ● | Changes in patent law could impair our ability to protect our tests and product candidates. | |
| ● | Our patent protection could be reduced or eliminated for non-compliance with governmental requirements. | |
| ● | Patent terms may be inadequate to protect our diagnostic tests or therapeutic product candidates. | |
| ● | Issued patents could be found invalid or unenforceable. | |
| ● | If we do not obtain patent term extension, our business may be harmed. | |
| ● | We enjoy only limited geographical protection with respect to certain patents. | |
| ● | If our trademarks and trade names are not adequately protected, we may not be able to build name recognition. |
Risks Related to Government Regulations
| ● | Changes in government trade policies may increase the cost of our products, which may materially adversely affect our sales or profitability | |
| ● | If we fail to comply with complex procurement laws and regulations, we could lose business and be liable for various penalties or sanctions. | |
| ● | Customer demands and new regulations related to conflict-free minerals may adversely affect us | |
| ● | Changes in tax laws, an unfavorable resolution of tax examinations, or exposure to additional tax liabilities could have a material adverse effect on our results of operations, financial condition and liquidity. | |
| ● | We may incur significant liabilities if we fail to comply with stringent environmental laws and regulations and the ITAR, or if we did not comply with these regulations in the past | |
| ● | We may be unable to modify our products to meet regulatory or customer requirements | |
| ● | Changes in China’s laws, legal protections or government policies on foreign investment in China may harm our business. | |
| ● | As a publicly traded company, we are subject to a significant body of regulation, including the Sarbanes-Oxley Act of 2002 |
Risks Related to Ownership of Our Common Stock
| ● | Fluctuations in operating results make financial forecasting difficult and could adversely affect the price of our common stock. | |
| ● | We do not intend to pay dividends on our common stock in the foreseeable future and, consequently, your only opportunity to achieve a return on your investment during that time is if the price of our common stock appreciates. | |
| ● | The financial and operational projections that we may make from time to time are subject to inherent risks. | |
| ● | Our stock price has fluctuated in the past, has recently been volatile, and may be volatile in the future. | |
| ● | Our Common Stock has often been thinly traded. | |
| ● | An investment in our Company may involve tax implications. | |
| ● | Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. | |
| ● | Our Board can designate classes of Preferred Stock without stockholder approval. | |
| ● | Provisions in our corporate charter documents and under Delaware law could make an acquisition of the Company more difficult. | |
| ● | Provisions in our Charter and Amended and Restated (“A&R”) Bylaws could make a merger, tender offer, or proxy contest difficult. | |
| ● | Certain provisions of Delaware’s General Corporation Law (“DGCL”) may have anti-takeover effects. | |
| ● | Our Charter designates Delaware state or federal courts as the exclusive forum for disputes. | |
| ● | Provisions in our Charter and A&R Bylaws may discourage stockholders from bringing a lawsuit against our directors and officers. | |
| ● | If analysts publish unfavorable research, or none at all, about our business, our stock price and trading volume could decline. | |
| ● | Any inability to report and file our financial results accurately and timely could harm our business. |
| 4 |
THE OFFERING
| Common stock offered by the Selling Stockholders | Up to 19,545,950 shares of Common Stock. | |
| Shares of Common Stock outstanding prior to this offering | 184,755,629 shares of Common Stock. | |
| Use of Proceeds | We will not receive any of the proceeds from the sale of the Shares by the Selling Stockholders. See the section titled “Use of Proceeds.” | |
| Risk Factors | Investing in our Common Stock involves a high degree of risk. See the section titled “Risk Factors” on page 6 of this prospectus and the section titled “Risk Factors” in the documents incorporated by reference herein for a discussion of factors you should carefully consider before investing in our Common Stock. | |
| Nasdaq symbol for our Common Stock | “KOPN” |
The number of shares of our Common Stock outstanding prior to and to be outstanding immediately after this offering, as set forth in the table above, is based on 182,422,296 shares outstanding as of September 30, 2025 plus 2,333,333 shares of common stock issuable upon the conversion of our Series A Preferred Stock but excludes:
| ● | 591,366 shares of our Common Stock issuable upon the exercise of stock options outstanding as of September 30, 2025, at a weighted average exercise price of $1.76 per share; | |
| ● | 7,700,092 shares of Common Stock reserved for future issuance under our 2020 Equity Incentive Plan (the “2020 Plan”); and | |
| ● | 10,000,000 shares of Common Stock issuable upon the exercise of outstanding prefunded warrants with an exercise price equal to $0.01 per share. |
| 5 |
We operate in a changing global environment that involves numerous known and unknown risks and uncertainties that could materially adversely affect our financial condition, results of operations, cash flows, and competitive position. Accordingly, our business and financial results are subject to a number of risks and uncertainties, including those set forth below. Prior to making a decision about investing in our securities, you should carefully consider the specific factors discussed under the heading “Risk Factors” in our Annual Report on Form 10-K, as amended, for the fiscal year ended December 28, 2024 and other filings we make with the SEC from time to time, which are incorporated by reference herein in their entirety, together with other information in this prospectus and the information incorporated by reference herein. Additional risks and uncertainties that are not currently known to us or that we currently do not believe to be material may also negatively affect our business and financial results. The risk factors set forth below describe what we believe to be the material risks and uncertainties related to our financial condition, results of operations, cash flows, and competitive position. We have included the risk factors below without any reflection on the relative importance of, or likelihood of, any particular risk factor.
Risks Related to this Offering:
The Selling Stockholders may sell their shares of Common Stock being registered in this offering in the public market. This means that up to 19,545,950 shares of Common Stock, the number of shares being registered in this offering for sale by the Selling Stockholders, may be sold in the public market. Sales of a substantial number of our shares of Common Stock in the public market by the Selling Stockholders and/or by our other existing stockholders, or the perception that those sales might occur, could depress the market price of our shares of Common Stock.
The significant downward pressure on the price of our Common stock caused by the sale of material amounts of Common Stock could encourage short sales by third parties. To the extent that the Selling Securityholders sell shares of our Common Stock pursuant to this prospectus, the market price of our Common Stock may decrease due to the additional selling pressure in the market. Short selling is a method used to capitalize on an expected decline in the market price of a security and could depress the price of our Common Stock, which could further increase the potential for future short sales. Sales of our Common Stock could encourage short sales by market participants, which could create negative market momentum. Continued short selling may bring about a temporary, or possibly long term, decline in the market price of our Common Stock. The Company cannot predict the size of future issuances or sales of Common Stock or the effect, if any, that future issuances and sales of Common Stock will have on its market price or the activities of short sellers. Sales involving significant amounts of Common Stock, including issuances made in the ordinary course of the Company’s business, or the perception that such sales could occur, may materially and adversely affect prevailing market prices of the Common Stock.
Risks Related to Our Financial Position and Internal Controls
We have experienced a history of losses, have a significant accumulated deficit, have had negative cash flow from operating activities in fiscal years 2024, 2023, and 2022, and expect to have negative cash flow from operating activities in fiscal year 2025. Since inception, we have incurred significant net operating losses. As of December 28, 2024, we had an accumulated deficit of $402.0 million. At December 28, 2024 and December 30, 2023, we had $36.6 million and $17.9 million of cash and cash equivalents, including restricted cash, and marketable securities, respectively. For the years 2024 and 2023, net cash used in operating activities was $14.2 million and $15.3 million, respectively. The increase in our cash and cash equivalents and marketable securities is primarily due to gross proceeds of $33.9 million received from the sale of 43.0 million shares of common stock and the pre-funded warrants to purchase up to 4,000,000 shares of common stock at a public offering price of $0.65 per share ($0.64) per share for the pre-funded warrants). We have also accrued $24.8 million for a litigation issue and as a result we have concluded that there is substantial doubt about our ability to continue as a going concern within one year following the issuance of our annual report. We plan to continue to invest in research and development even during periods when we are not profitable, which may result in our incurring losses from operations and negative cash flow. If we do not soon achieve and maintain positive cash flow and profitability, our financial condition will ultimately be materially and adversely affected, and we will be required to raise additional capital. We may not be able to raise any necessary capital on commercially reasonable terms or at all. If we fail to achieve or maintain profitability on a quarterly or annual basis within the timeframe expected by investors, the market price of our common stock may decline.
Raising additional funds by issuing securities may cause dilution to our existing stockholders or restrict our operations. To the extent that we raise additional capital by issuing equity securities, the share ownership of existing stockholders will be diluted. The terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity or debt, or the possibility of such issuance, may cause the market price of our shares to decline. We may sell shares or other securities in other offerings at a price per share that is less than the prices per share paid by other investors, and investors purchasing shares of our common stock or other securities in the future could have rights superior to existing stockholders. The sale of additional equity or convertible securities would dilute all of our stockholders, and the terms of these securities may include liquidation or other preferences that adversely affect our existing stockholders.
| 6 |
Management has identified material weaknesses in our internal controls over financial reporting, and we may be unable to develop, implement and maintain appropriate controls in future periods.
The Sarbanes-Oxley Act of 2002 and SEC rules require that management annually report on the effectiveness of our internal control over financial reporting and our disclosure controls and procedures. As more fully described within Item 9A, “Controls and Procedures,” of this Form 10-K, in the fourth quarter of 2024 management identified material weaknesses in internal control over financial reporting. As a result, our Chief Executive Officer and Chief Financial Officer concluded that our internal controls over financial reporting were not effective as of December 28, 2024. The specific material weaknesses are described in Part II - Item 9A. “Controls and Procedures” of this 2024 Form 10-K in “Management’s Report on Internal Control over Financial Reporting.” A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements would not be prevented or detected. We cannot assure you that additional material weaknesses in our internal control over financial reporting will not be identified in the future. Any failure to maintain or implement required new or improved controls, or any difficulties we encounter in their implementation, could result in additional material weaknesses, or could result in material misstatements in our financial statements, which could cause us to fail to meet our reporting obligations or cause investors to lose confidence in our reported financial information, leading to a decline in our stock price.
We are in the process of developing and implementing our remediation plan for the identified material weaknesses, and we expect that this work will continue in 2025. There can be no assurance, however, as to when the remediation plan will be fully developed, when it will be fully implemented and/or the cost of its implementation. Until our remediation plan is fully implemented, we will continue to devote significant time and attention to these efforts. If we do not complete our remediation in a timely fashion, or at all, or if our remediation plan is inadequate, there is a risk that we will be unable to timely file future periodic reports with the SEC and/or that our future financial statements could contain undetected errors. Until the remediation plan is complete and implemented, we will rely upon additional interim control procedures prescribed by management, including the utilization of manual mitigating control procedures to help ensure that we fairly state our financial statements in all material respects. However, the establishment of these interim controls does not provide the same degree of assurance as a fully remediated control environment. For more information relating to our internal control over financial reporting and disclosure controls and procedures, and the remediation plan that we have undertaken, see Part II - Item 9A. “Controls and Procedures” of this 2024 Form 10-K.
We may be unable to manufacture our products cost effectively to meet contractual specifications or customer requirements. Our products are required to meet specifications agreed to in purchase orders and related agreements with our customers. Our ability to produce products which meet these specifications is dependent on a number of factors including but not limited to our manufacturing processes and our vendors providing raw materials that meet the specifications we have agreed to with them. In addition, while there may be agreement with our customers on the specifications there may be ambiguity with the method to measure compliance with meeting the specifications. When we commence production of new products, we normally go through a period of low production efficiency as we modify our production processes for higher volume output and train more production employees on how to make the product. Low production efficiency means that the cost to make the product is more than what we anticipated when we accepted the purchase order from the customer. In addition, after we commence selling our products customers may request changes to the products which may also result in low production efficiency starting again. We currently have several new products and new product configurations going to production. If the products we deliver are found to have undetected defects or latent defects when we ship them, we may incur the cost to recall the products. Product recalls and product liability and warranty claims can result in significant damages and costs, including fines, as well as other harm to our business. If we are unable to manufacture our products cost effectively, our revenue and ability to obtain profitability will be adversely affected.
Our revenues and cash flows could be negatively affected if sales of our display products for defense applications significantly decline or the current defense development programs are either cancelled or ultimately do not result in future product sales. The sale of our display products to the military for use in thermal weapon sights and avionic helmets has been a primary source of our defense revenues and cash flows over the last several years. We currently are included in the Family Weapon Sight (“FWS”) Individual program and the Joint Strike Fighter (F-35) jet fighter program. In 2023 and 2024, we experienced quality issues with the products we supplied for the FWS-I program. These quality issues resulted in suspension of shipments to our customer at various times during 2023 and 2024 as we made modifications to our production processes. We are continuing to make modifications to our production processes as we resolve certain issues. We are in development and qualification of additional defense programs related to avionic helmets, armored vehicles and soldier rifle scopes. Our ability to generate revenues and cash flow from sales to the U.S. military and our customers depends on our Display products remaining qualified in the F-35 Joint Strike Fighter, FWS and other U.S. defense programs, our customers continuing to serve as the suppliers for those programs, and on the U.S. Government/military funding these programs. We may not be awarded contracts for the systems we are in qualification for, and for the systems we are qualified for, we may only be awarded a portion of the program as the U.S. military looks to have multiple sources when possible. Even if our products qualify for these programs, the U.S. Government can opt to change suppliers, in which case demand for our products could be negatively affected. In addition, the government could postpone or cancel these programs. We believe the DoD is evaluating alternative display technologies for the F-35 Strike Fighter program and other defense programs, and we will need to develop and qualify any replacement display technologies. Our ability to generate revenues and cash flow from sales to the U.S. military also depends on winning contracts over our competitors. If we are unable to be qualified into new U.S. defense programs, remain qualified in existing programs, or win orders against our competition, or if defense programs are not funded, then our ability to generate revenues and achieve profitability and positive cash flow will be materially and negatively impacted.
| 7 |
A decline in the U.S. Government defense budget, changes in spending or budgetary priorities, a prolonged U.S. Government shutdown or delays in contract awards may significantly and adversely affect our future revenues, cash flow and financial results. In addition to the Anti-Deficiency Act, in recent years U.S. Government appropriations have been affected by larger U.S. Government budgetary issues, including reductions or shifts in the capital resources or government funding, and related legislation. As a result, DoD funding levels have fluctuated and have been difficult to predict. Future spending levels are subject to a wide range of factors, including Congressional action and changes to governmental policies and programs, including loans, grants, guarantees and other subsidies, and changes to government spending policies, including shifts in funding priorities. In addition, in recent years the U.S. Government has been unable to complete its budget process before the end of its fiscal year, resulting in both a government shutdown and continuing resolutions to extend sufficient funds only for U.S. Government agencies to continue operating. Most recently, the federal government was shut down due to a lack of funding for over one month between late 2018 and early 2019. Additionally, the national debt has recently threatened to reach the statutory debt ceiling in 2024, and such an event in future years could result in the U.S. Government defaulting on its debts.
As a result, defense spending levels are difficult to predict beyond the near term due to numerous factors, including the external threat environment, future government priorities and changes to funding of government agencies, and the state of government finances. Significant changes in defense spending or changes in U.S. Government priorities, policies and requirements could have a material adverse effect on our results of operations, financial condition or liquidity.
Most of our defense sales are on a fixed-price basis, which could subject us to losses if there are cost overruns. Under a fixed-price contract, we receive only the amount indicated in the contract, regardless of the actual cost to produce the goods. While firm fixed-price contracts allow us to benefit from potential cost savings, they also expose us to the risk of cost overruns. If the initial estimates that we use to calculate the sales price and the cost of performing the work prove to be incorrect, we could incur losses. We have had situations where we have underestimated the cost of a program and incurred losses in fulfilling the contract. As discussed above, we are seeing a global shortage of semiconductors and other raw materials which is resulting in a significant increase in some raw material prices. In addition, the U.S. recently experienced inflation levels not seen in many years which drove higher labor costs and there is an expectation that tariffs may result in additional inflation in the future. Some of our contracts have specific provisions relating to cost, scheduling, and performance. If we fail to meet the terms specified in those contracts, then our cost to perform the work could increase, which would adversely affect our financial position and results of operations. Some of the contracts we bid on have Indefinite Delivery, Indefinite Quantity (“IDIQ”) provisions. This means we are bidding a fixed price but are not assured of the quantity the government will buy or when it will buy during the term of the contract. This means we are exposed to the risk of price increases for labor, overhead and raw materials during the term of the contract. We may incur losses on fixed-price and IDIQ contracts that we had expected to be profitable, or such contracts may be less profitable than expected, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
Our investments in the development and sale of OLED microdisplays may not be successful, which may materially adversely affect our sales, profitability and cash flow. Historically, we have sold products that incorporate our proprietary AMLCDs. We believe that for certain applications, OLED microdisplays have performance advantages and we have received future display product needs from some customers that plan to switch from AMCLDs to OLED microdisplays in the next two to three years. We are in the process of designing and developing OLED microdisplays and establishing foundry relationships to manufacture them. We expect to make additional monetary investments in their commercialization, though our plan is to outsource their production. We have little experience in production outsourcing. If we are unsuccessful in designing and developing OLED microdisplays or if we are unable to find cost-effective third-party production partners, our sales and profitability may be negatively affected.
Changes in government trade policies may increase the cost of our products, which may materially adversely affect our sales or profitability. We depend on a Taiwanese foundry for the manufacture of integrated circuits for our AMLCD display products and on Chinese, Korean, and European foundries for our OLED display products. In recent years the U.S. has imposed, among other actions, new or higher tariffs, including those that have been or may be imposed by the new presidential administration in the U.S. on specified imported products originating from China in response to what it characterizes as unfair trade practices, and China has responded by proposing or implementing new or higher tariffs on specified products imported from the U.S. Tariffs on components that we import from China or other nations that have imposed, or may in the future impose, tariffs have in some cases and may in the future cause our expenses to increase, which would adversely affect our profitability unless we were able to exclude our products from the tariffs or we raise prices for our products, which may result in our products becoming less attractive relative to products offered by our competitors. In addition, future actions or escalations by either the U.S. or China that affect trade relations may also affect our business or that of our suppliers or customers, and we cannot provide any assurances as to whether such actions will occur or the form that they may take. Moreover, it is uncertain to what extent, if any, the U.S. tariffs on components that we import from China will affect the Taiwanese foundries on which we depend, in part because many Taiwanese foundries conduct parts of their manufacturing in China. Kopin has completed and continues to transition several OLED device deposition steps to European supply chain partners for U.S. DoD source of supply requirements and duplicity to reduce the risk of Chinese supply and potential tariffs.
A protectionist trade environment in either the U.S. or those foreign countries in which we do business, such as a change in the current tariff structures, export compliance or other trade policies, may materially adversely affect our ability to sell our products in foreign markets. To the extent that our sales or profitability are affected negatively by any such tariffs or other trade actions, our business and results of operations may be materially adversely affected.
| 8 |
Our business and financial performance may be adversely affected by cyber-attacks on information technology infrastructure and products, as well as changes in cybersecurity and if our information technology security systems were infiltrated and confidential and/or proprietary information were taken, we could be subject to fines, lawsuits and loss of customers. Significantly larger organizations with much greater resources than us have been the victim of cybercrimes. We routinely receive emails probing our Internet security, and our Internet security systems have detected outside organizations attempting to install Trojan virus software packages in our systems. We rely on our electronic information systems to perform routine transactions to run our business. We transact business over the Internet with customers, vendors and our subsidiaries and have implemented security measures to protect against unauthorized access to this information. We have also implemented security policies that limit access via the Internet from the Company to the outside world based on the individual’s position in the Company. We routinely receive security patches from software providers for the software we use. Our primary concerns are inappropriate access to personnel information, information covered under the International Traffic in Arms Regulation, product designs and manufacturing information, financial information and our intellectual property, trade secrets and know-how. Our business may be impacted by disruptions to our own or third-party information technology (IT) infrastructure, which could result from, among other causes, cyberattacks on or failures of such infrastructure or compromises to its physical security. Cybersecurity threats are continuously evolving and include, but are not limited to, both attacks on our IT infrastructure and attacks on the IT infrastructure of our customers, suppliers, subcontractors and other third parties with whom we do business routinely, both on premises and in the cloud, attempting to gain unauthorized access to our confidential, proprietary, or otherwise protected information, classified information, or information relating to our employees, customers and other third parties, or to disrupt our systems or the systems of third parties. We are also exposed to the risk of insider threat attacks. Any such attacks could disrupt our systems or those of third parties, impact business operations, result in unauthorized release of confidential, proprietary, or otherwise protected information, and corrupt our data or that of third parties. The threats we face are continuously evolving and vary in degree of severity and sophistication. These threats include advanced persistent threats from highly organized adversaries, including but not limited to cyber criminals, nation states and so-called hacktivists, particularly those adverse to the security interests of the U.S. and its allies, which target us and other defense contractors. These types of threats are related to the geopolitical environment and have, therefore, grown in number due to recent geopolitical conflicts. In addition, because of the rapid pace of technological change, we and our customers, suppliers, subcontractors and other third parties with whom we conduct business continue to rely on legacy systems and software, which can be more vulnerable to cyber threats and attacks. Moreover, we, like other companies, see an unprecedented number of previously unknown vulnerabilities, for which there are no known mitigations being revealed by new attacks. Further, the sophistication, availability and use of artificial intelligence by threat actors present an increased level of risk. Due to the evolving threat landscape, we have experienced and expect to continue to experience more frequent and increasingly advanced cyber-attacks. In addition, changes in domestic and international cybersecurity-related laws and regulations have expanded cybersecurity-related compliance requirements, and cybersecurity regulatory enforcement activity has grown. We expect the regulatory environment to continue to evolve, and staying apace with these regulatory changes could increase our operational and compliance expenditures and those of our suppliers, and lead to new or additional information technology and product development expenses. We also face reputational, litigation and financial risks in relation to potential required disclosures and increased risk of enforcement. We continue to make investments and adopt measures designed to enhance our protection, detection, response, and recovery capabilities, and to mitigate potential risks to our technology, products, services and operations from potential cybersecurity threats, as well as to comply with evolving regulations. However, given the unpredictability, nature and scope of cyber-attacks, it is possible that we are unable to defend against all cyber-attacks, that potential vulnerabilities could go undetected and persist in the environment for an extended period, or that we may otherwise be unable to mitigate customer losses and other potential consequences of these attacks. In some cases, we must rely on the safeguards put in place by our customers, suppliers, subcontractors and other third parties to protect against and report cyber threats and attacks. We could potentially be subject to production downtimes, operational delays, other detrimental impacts on our operations or ability to provide products and services to our customers, the compromise of confidential information, intellectual property or otherwise protected information, misappropriation, destruction or corruption of data, security breaches, other manipulation or improper use of our or third-party systems, networks or products, financial losses from remedial actions, loss of business, or potential liability, penalties, fines and/or damage to our reputation. Any of these could have a material adverse effect on our competitive position, results of operations, financial condition or liquidity. Due to the evolving nature of such risks, the impact of any potential incident cannot be predicted.
| 9 |
Supply shortages have and could continue to impair the quality, reduce the availability or increase the cost of raw materials, which could harm our business. We rely on third-party independent contractors for certain integrated circuit chip sets, backlights, and other critical raw materials such as special glasses, wafers, and chemicals. Lead times for the parts and components that we order vary significantly and depend on factors such as manufacturing cycle times, manufacturing yields, and the availability of raw materials used to produce the parts or components. The semiconductor industry has been and continues to experience a shortage of semiconductor components. We have experienced intermittent shortages of raw materials, which has affected our ability to manufacture and ship units. These shortages have also resulted in an increase in the cost of raw materials and semiconductor components. Our products sold for defense applications go through an expensive and long qualification period before the government will accept the products. Once the product for a defense application is accepted there are restrictions on our ability to substitute a different raw material or component for the one used in the qualification of the product. If these shortages were to further affect our supply of raw materials, our ability to manufacture and distribute our products could continue to be adversely affected, which in turn would adversely affect our results of operations or financial condition.
Geopolitical tensions and any conflicts resulting therefrom may negatively affect our ability to source materials and components required to manufacture our products. We depend principally on a Taiwanese foundry for the fabrication of integrated circuits for our AMLCD defense display products. We use a Chinese foundry for the deposition process in creating our OLED displays. Our reliance on these foundries involves several risks, including reduced control over availability, capacity utilization, delivery schedules, manufacturing yields, and costs. Geopolitical changes in China-Taiwan or China-U.S. relations could disrupt these foundries’ operations and cause these risks to materialize, which would adversely affect our ability to manufacture our display products. If these foundries were to become unable to provide the required capacity, services or quality on a timely basis due to a military or other form of conflict, geopolitical tensions, including in Ukraine, the Middle East, China, Taiwan and other regions, financial market volatility and disruption, inflationary concerns, changes in tax laws and regulations, interest and currency exchange rates, uncertain economic conditions in the United States and abroad, and additional tariffs, including those imposed or that may be imposed by the new presidential administration in the U.S., or other reasons relating thereto, we may not be able to manufacture and ship our display products, or we may be forced to manufacture them in limited quantities until replacement foundry services can be obtained. Furthermore, we cannot assure that we would be able to establish alternative manufacturing and packaging relationships on acceptable terms or at all.
We are in the process of transitioning from using a Chinese deposition foundry to a European foundry for certain OLED products for defense applications. We depend principally on a Chinese foundry for the deposition process in creating our OLED displays but we are in the process of having the deposition process performed by a European foundry. If we are unsuccessful in executing our transition plan or if the transition is significantly delayed, our ability to manufacture and distribute our products could continue to be adversely affected, which in turn would adversely affect our results of operations or financial condition.
Our business, results of operations and financial condition could be adversely affected by events beyond our control, such as natural disasters, public health crises, political crises, negative global climate patterns, or other catastrophic events. Our business and operations, or those of our suppliers, could be negatively affected by various events beyond our control, including, without limitation, natural disasters, such as hurricanes, tornadoes, floods, earthquakes, extreme cold events and other adverse weather conditions; political crises, such as terrorist attacks, war, labor unrest, and other political instability (including, without limitation, the ongoing conflicts between Russia and Ukraine and Israel and Hamas); negative global climate patterns, or other catastrophic events, such as fires or other disasters occurring at our suppliers’ manufacturing facilities, whether occurring in the United States or internationally; and public health crises, such as pandemics, epidemics, or any other public health crisis that results in economic and trade disruptions, including the disruption of global supply chains. These events could disrupt areas in which our offices, suppliers, customers, distribution centers, and warehouses are located, as well as the operations of our global supply chain and those of our third-party partners. Furthermore, these types of events could negatively impact consumer spending in the impacted regions or, depending upon the severity, globally. To the extent any of these events occur, our operations and financial results could be adversely affected.
We generally do not have long-term contracts with our customers, which makes forecasting our revenues and operating results difficult. We generally do not enter into long-term agreements with our customers obligating them to purchase our products. Our business is characterized by short-term purchase orders with shipment schedules within one year, and we generally permit commercial orders to be cancelled or rescheduled before shipment without significant penalty. As a result, our customers may cease purchasing our products at any time, which makes forecasting our revenues difficult. In addition, due to the absence of a substantial non-cancellable backlog, we typically plan our production and inventory levels based on internal forecasts of customer demand, which are highly unpredictable and can fluctuate substantially. The uncertainty of product orders makes it difficult for us to forecast our sales and allocate our resources in a manner consistent with our actual sales. Moreover, our expense levels and the amounts we invest in capital equipment and new product development costs are based in part on our expectations of future sales and, if our expectations regarding future sales are inaccurate, we may be unable to reduce costs in a timely manner to adjust for sales shortfalls, and our results of operations and financial condition could be materially adversely affected.
Fluctuations in operating results make financial forecasting difficult and could adversely affect the price of our common stock. Our quarterly and annual revenues and operating results may fluctuate significantly for numerous reasons, including:
| ● | The timing of the initial selection of our display products as components in our customers’ new products; | |
| ● | Availability of interface electronics for our display products; | |
| ● | Competitive pressures on selling prices of our products; | |
| ● | The timing and cancellation of customer orders; | |
| ● | Our ability to introduce new products and technologies on a timely basis; | |
| ● | Our ability to successfully reduce costs; | |
| ● | The cancellation of U.S. Government contracts; and | |
| ● | Our ability to secure agreements from our major customers for the purchase of our products. |
| 10 |
As a result of these and other factors, investors should not rely on our revenues and our operating results for any one quarter or year as an indication of our future revenues or operating results. If our quarterly revenues or results of operations fall below the expectations of investors or public market analysts, the price of our common stock could fall substantially.
Our customers who purchase display products for defense applications typically incorporate our products into their products, which are sold to the U.S. Government under contracts. U.S. Government contracts generally are not fully funded at inception and may be terminated or modified prior to completion, which could adversely affect our business. Congress funds much of the federal budget on an annual basis, and Congress often does not provide agencies with all the money requested in their budget. Many of our customers’ contracts cover multiple years and, as such, are not fully funded at the contract award. If Congress or a U.S. Government agency chooses to spend money on other programs, including as a result of changes to governmental policies and programs imposed or that may be imposed by the new presidential administration in the U.S., our customers’ contracts may be terminated for convenience. The Anti-Deficiency Act prohibits involving the government in any obligation to pay money before funds have been appropriated for that purpose, unless otherwise allowed by law. Therefore, the Anti-Deficiency Act indirectly regulates how agencies award our contracts and pay our invoices. Federal government contracts generally contain provisions that provide the federal government rights and remedies not typically found in commercial contracts, including provisions permitting the federal government to, among other things: terminate our existing contracts; modify some of the terms and conditions in our existing contracts; subject the award to protest or challenge by competitors; suspend work under existing multiple year contracts and related delivery orders; and claim rights in technologies and systems invented, developed or produced by us.
The federal government may terminate a contract with us or our customers either “for convenience” (for instance, due to a change in its perceived needs) or if we default due to our failure or the failure of a general or subcontractor to perform under the contract. If the federal government terminates a contract with one of our customers, our contract with our customers would entitle us to recover only our incurred or committed costs, settlement expenses and retain any profit on the work that was completed prior to termination. However, under certain circumstances, our recovery costs upon termination for convenience of such a contract may be limited. As is common with government contractors, we have experienced occasional performance issues under some of our contracts. We have received Stop Work Orders wherein work is suspended pending a review of the program. We may in the future receive show-cause or cure notices under contracts that, if not addressed to the federal government’s satisfaction, could give the government the right to terminate those contracts for default or to cease procuring our services under those contracts.
In addition, U.S. Government contracts and subcontracts typically involve long purchase and payment cycles, competitive bidding, qualification requirements, delays or changes in funding, extensive specification and performance requirements, price negotiations and milestone requirements. Each U.S. Government agency often also maintains its own rules and regulations with which we must comply, and which can vary significantly among agencies.
We recognize revenue for some of our defense contracts and some commercial contracts on the over-time method which requires significant management judgment, and errors in our judgment could result in our revenue being overstated or understated and the profits or loss reported could be subject to adjustment. For certain contracts with the U.S. Government, we recognize revenue over time as we perform services or manufacture the goods. The continuous transfer of control to, or performance of services for, the customer is subject to liability clauses in the contract that allow the U.S. Government to unilaterally terminate the contract for convenience, pay us for costs incurred and may allow a reasonable profit, and take control of any work in process. Contracts with commercial customers may have a similar liability clause. In situations where control transfers or services are performed over time, revenue is recognized based on the extent of progress toward completion of the performance obligation. We use the cost-to-cost approach to measure the extent of progress towards the completion of the contractual obligation for our contracts. Under the cost-to-cost measure approach, the extent of progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred. Accounting for design, development and production contracts requires judgment related to assessing risks, estimating contract revenues and costs and making assumptions for schedule and technical issues. Due to the size and nature of the work required to be performed on many of our contracts, the estimation of total revenue and cost at completion is complex and subject to many variables. Contract costs include material, labor and subcontracting costs, as well as an allocation of indirect costs. We must make assumptions regarding the number of labor hours required to complete a task, the complexity of the work to be performed, the availability, delivery date and cost of materials and the performance of our subcontractors. Due to the number of significant factors affecting revenue recognition, forecasting revenue at a point in time in the future is difficult. For contract change orders, claims or similar items, we apply judgment in estimating the amounts and assessing the potential for realization. These amounts are only included in the contract value when they can be reliably estimated, and realization is considered probable. If our estimate of total contract costs or our determination of whether the customer agrees that a milestone is achieved is incorrect, our revenue could be overstated or understated, and the profits or loss reported could be subject to adjustment. If our revenues and costs require adjustment, our stock price could decline.
| 11 |
If we fail to comply with complex procurement laws and regulations, we could lose business and be liable for various penalties or sanctions. We must comply with laws and regulations relating to the formation, administration and performance of federal government contracts. These laws and regulations affect how we conduct business with our federal government customers. In complying with these laws and regulations, we may incur additional costs, and non-compliance may result in fines and penalties, including contractual damages. Among the more significant laws and regulations affecting our business are:
| ● | The Federal Acquisition Regulation, which comprehensively regulates the formation, administration and performance of federal government contracts; | |
| ● | The Truth in Negotiations Act, which requires certification and disclosure of all cost and pricing data in connection with contract negotiations; | |
| ● | The Cost Accounting Standards and Cost Principles, which impose accounting requirements that govern our right to reimbursement under certain cost-based federal government contracts; and | |
| ● | Laws, regulations and executive orders restrict the use and dissemination of information classified for national security purposes and the export of certain products, services and technical data. We engage in international work falling under the jurisdiction of U.S. export control laws. Failure to comply with these control regimes can lead to severe penalties, both civil and criminal, and can include debarment from contracting with the U.S. Government. |
Our contracting agency customers may review our performance under and in compliance with the terms of our federal government contracts. If a government review or investigation uncovers improper or illegal activities, we may be subject to civil or criminal penalties or administrative sanctions, including:
| ● | Termination of contracts; | |
| ● | Forfeiture of profits; | |
| ● | Cost associated with triggering price reduction clauses; | |
| ● | Suspension of payments; | |
| ● | Fines; and | |
| ● | Suspension or debarment from doing business with federal government agencies. |
Additionally, the False Claims Act provides for substantial civil penalties where, for example, a contractor presents a false or fraudulent claim to the government for payment or approval. Civil actions under the False Claims Act may be brought by the government or by other people on behalf of the government (who may then share a portion of any recovery).
If we fail to comply with these laws and regulations, we may also suffer harm to our reputation, which could impair our ability to win awards of contracts in the future or receive renewals of existing contracts. If we are subject to civil or criminal penalties and administrative sanctions or suffer harm to our reputation, our current business, future prospects, financial condition or operating results could be materially harmed.
The U.S. Government may also revise its procurement practices or adopt new contracting rules and regulations, including cost accounting standards, at any time. Any new contracting methods could be costly to satisfy, be administratively difficult for us to implement and could impair our ability to obtain new contracts.
Our ability to manufacture and distribute our display products would be severely limited if the foundries that we rely on manufacture integrated circuits for our display products fail to provide those services. We depend principally on a Taiwanese foundry for the fabrication of integrated circuits for our defense display products. In addition, we use a Chinese foundry’s services for OLED deposition and processing of OLED displays. We also use foundries in Korea and France and are evaluating other European foundries. We have no long-term contracts with the foundries we use and from time to time we have been put on allocation, which means the foundry will limit or delay the number of wafers they will process for us. If foundries were to terminate or amend their arrangement with us or become unable to provide the required capacity, services and or quality on a timely basis, we may not be able to manufacture and ship our display products or we may be forced to manufacture them in limited quantities until replacement foundry services can be obtained. Furthermore, we cannot assure that we would be able to establish alternative manufacturing and packaging relationships on acceptable terms.
Our reliance on these foundries involves certain risks, including but not limited to:
| ● | Lack of control over production capacity and delivery schedules; | |
| ● | Limited control over quality assurance, manufacturing yields and production costs; | |
| ● | The risks associated with international commerce, including unexpected changes in legal and regulatory requirements supply chain interruptions or increased costs, changes in tariffs and trade policies, including those imposed or that may be imposed by the new presidential administration in the U.S., and political and economic instability, international hostilities and resulting sanctions, acts of terrorism and governmental restrictions, inflation, trade relationships and military and political alliances; and | |
| ● | Natural disasters such as earthquakes, tsunamis, mudslides, drought, hurricanes and tornadoes. |
Due to natural disasters such as earthquakes and typhoons that have occasionally occurred in Asia, many Taiwanese companies, including the Taiwanese foundry we use, have experienced related business interruptions. Our business could suffer significantly if any of the foundries we use have their operations disrupted for an extended period due to natural disasters, political unrest or financial instability.
| 12 |
We may be unable to adequately control purchase pricing of certain critical materials, which may materially adversely affect our sales or profitability. We have no long-term pricing contracts on foundry wafers and certain other materials that represent a significant portion of our product bill of material costs. We cannot provide assurance against supplier price increases that negatively impact the cost of producing products, which may adversely affect sales or profitability. Finding and/or qualifying a more cost-effective replacement supplier may take significant time.
The markets in which we operate are highly competitive and rapidly changing and we may be unable to compete successfully. There are several companies that develop or may develop products that compete in our targeted markets. The individual components that we offer for sale (displays, optical lenses, backlights and ASICs) are also offered by companies whose sole business focuses on that individual component. For example, there are companies whose sole business is to sell optical lenses. Accordingly, our strategy requires us to develop technologies and to compete in multiple markets. Some of our competitors are much larger than we are and have significantly greater financial, development and marketing resources than we do. The competition in these markets could adversely affect our operating results by reducing the volume of the products we sell or the prices we can charge. These competitors may be able to respond more rapidly than us to new or emerging technologies, including artificial intelligence technologies, or changes in customer requirements. They may also devote greater resources to the development, promotion and sale of their products than we do.
Our success will depend substantially upon our ability to enhance our products and technologies and to develop and introduce, on a timely and cost-effective basis, new products and features that meet changing customer requirements and incorporate technological enhancements. For example, we believe there is a growing demand for microLED display products and if microLEDs can be successfully commercialized they may reduce demand for our AMLCD and OLED displays. We are investing in the development of microLED display and the cost of such development we believe will be substantial. We are competing against larger companies with greater resources than us in the development of microLED displays. If we are unable to develop new products and enhance functionalities or technologies to adapt to these changes or secure any necessary regulatory approvals to roll out such new technologies on a timely basis, our business may suffer. In addition, our use of new or emerging technologies, such as artificial intelligence, may result in substantial integration and maintenance costs and may expose us to additional risks. For example, the content, analyses, or recommendations generated by artificial intelligence programs, if deficient, inaccurate, or biased, could adversely impact our business, financial condition, and operational results, as well as our reputation. Moreover, ethical concerns associated with artificial intelligence could lead to brand damage, competitive disadvantages, or legal repercussions. Any problems with our implementation or use of artificial intelligence or other technological advancements could also negatively impact our business or results of our operations.
Disruptions of our production could adversely affect our operating results. If we were to experience any significant disruption in the operation of our facilities, we would be unable to supply our products to our customers. Many of our sales contracts include financial penalties for late delivery. In the past, we have experienced power outages at our facilities, which ranged in duration from one to four days. We have certain critical pieces of equipment necessary to operate our facilities that are no longer offered for sale and we may not have service contracts or spare parts for the equipment. Additionally, as we introduce new equipment into our manufacturing processes, our display products could be subject to especially wide variations in manufacturing yields and efficiency. We may experience manufacturing problems that would result in delays in product introduction and delivery or yield fluctuations.
A disruption to our information technology systems could significantly impact our operations, revenue and profitability. Our data processing systems and our Enterprise Resource Planning (“ERP”) software are cloud-based and hosted by third parties. We also use software packages that are no longer supported by their developer. We have experienced short-term (i.e., a few days) interruptions in our Internet connection. An interruption of the third-party systems or the infrastructure that allows us to connect to the third-party systems for an extended period may affect our ability to operate our business and process transactions, which could result in a decline in sales and affect our ability to achieve or maintain profitability.
We may not achieve some or all of the anticipated benefits of our equity investments. On December 28, 2024, we had equity investments in companies totaling $3.6 million, where we have limited, if any, control over their governance, financial reporting and operations. As a result, we face certain operating, financial and other risks relating to these investments, including risks related to the financial strength of the investments. We are required to periodically review the value of these investments for impairment. For example, in the third quarter of 2024, we reviewed the financial condition and other factors of our investment in a customer and as a result, we recorded an impairment charge of $0.7 million to reduce the carrying value of our investment. These investments may not contribute to our earnings or cash flows. In addition, these investments may be required to raise additional capital, which may result in our ownership percentage being decreased.
If we are unable to obtain or maintain existing software license relationships or other relationships relating to the intellectual property we use, our ability to grow revenue and achieve profitability and positive cash flow may be negatively affected. Our headset systems include software that we license from other companies. Should we violate the terms of a license, our license could be cancelled. Companies may decide to stop supporting the software we license, or new versions of the software may not be compatible with our software, which would require us to rewrite our software, which we may not be able to do. Moreover, the license fees we pay may be increased, which would negatively affect our ability to achieve profitability and positive cash flow.
| 13 |
We may incur substantial costs in defending our intellectual property and may not be successful in protecting our intellectual property and proprietary rights. Our success depends in part on our ability to protect our intellectual property and proprietary rights. We rely on a combination of patents, trademarks, copyrights, trade secrets, nondisclosure agreements, IT security systems, internal controls and compliance systems, and other measures to protect our intellectual property. We also rely on nondisclosure agreements, confidentiality obligations in contracts, IT security systems, and other measures to protect certain customer and supplier information and intellectual property that we have in our possession or to which we have access. We have obtained certain domestic and foreign patents and we intend to continue to seek patents on our inventions when appropriate. We also attempt to protect our proprietary information with contractual arrangements and under trade secret laws. Our employees and consultants generally enter into agreements containing provisions with respect to confidentiality and the assignment of rights to us for inventions made by them while in our employ or consulting for us. These measures may not adequately protect our intellectual property or proprietary rights. Existing trade secret, trademark and copyright laws afford only limited protection and our patents could be invalidated, held to be unenforceable or circumvented. Moreover, the laws of certain foreign countries in which our products are or may be manufactured or sold may not provide full protection of our intellectual property rights. Misappropriation of our technology and the costs of defending our intellectual property rights from misappropriation could substantially impair our business. If we are unable to protect our intellectual property or proprietary rights, our business may not be successful, and the price of our common stock may decline.
The process of seeking patent protection can be time consuming and expensive and we cannot be certain that patents will be issued from currently pending or future patent applications. We cannot be certain that domestic or foreign intellectual property laws will allow the protection of our intellectual property rights or that others will not independently develop similar products, duplicate our products or design around any patents issued or licensed to us. We may be subject to or may initiate contested patent or patent application proceedings in the United States Patent and Trademark Office, foreign patent offices or the courts, which can demand significant financial and management resources. Patent applications in the U.S. typically are maintained in secrecy until they are published about 18 months after their earliest claim to priority. As publication of discoveries in the scientific and patent literature lags behind actual discoveries, we cannot be certain that we were the first to conceive of inventions covered by our pending patent applications or the first to file patent applications on such inventions. We also cannot be certain that our pending patent applications or those of our licensors will result in issued patents or that any issued patents will provide adequate protection against a competitor. In addition, we cannot be certain that others will not obtain patents that we would need to license or could force us to retool or cease manufacturing and sales of products covered by these patents, nor can we be sure that licenses, if needed, would be available to us on favorable terms, if at all.
We also attempt to protect our proprietary information with contractual arrangements and under trade secret laws. We believe that our future success will depend primarily upon the technical expertise, creative skills and management abilities of our officers and key employees in addition to patent ownership. Our employees enter into agreements containing provisions with respect to confidentiality and the assignment of rights to us for inventions made by them while in our employ. Agreements with consultants generally provide that rights to inventions made by them while consulting for us will be assigned to us unless the assignment of rights is prohibited by the terms of any of their prior agreements. Agreements with employees, consultants and collaborators contain provisions intended to further protect the confidentiality of our proprietary information. To date, we have had no experience in enforcing these agreements. We cannot be certain that these agreements will not be breached or that we would have adequate remedies for any breaches. Our trade secrets may not be secure from discovery or independent development by competitors, in which case we may not be able to rely on these trade secrets to prevent our competitors from using them.
Our business could suffer if we fail to recruit and retain key personnel. To continue to provide quality products in our rapidly changing business, we believe it is important to retain personnel with experience and expertise relevant to our business. Our success depends in large part upon several key management and technical employees. The loss of the services of one or more key employees, including Mr. Murray, our President and Chief Executive Officer, could seriously impede our success. We do not maintain any “key-man” insurance policies on Mr. Murray or any other employees. In addition, due to the level of technical and marketing expertise necessary to support our existing and new customers, our success will depend upon our ability to recruit and retain highly skilled management, technical, and sales and marketing personnel. Competition for highly skilled personnel is intense and there may be only a limited number of people with the requisite skills to serve in these positions. Due to the competitive nature of the labor markets in which we operate, we may be unsuccessful in attracting and retaining these personnel. Our inability to attract and retain key personnel could adversely affect our ability to develop and manufacture our products.
If we fail to keep pace with changing technologies, we may lose customers. Rapidly changing customer requirements and evolving technologies and industry standards characterize our industries. To achieve our goals, we need to enhance our existing products and develop and market new products that keep pace with continuing changes in industry standards, requirements and customer preferences. We may be unable to bring to market technologies and products that are attractive to our customers, and as a result, our business, financial condition and results of operations may be materially adversely affected.
| 14 |
Customer demands and new regulations related to conflict-free minerals may adversely affect us. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) imposes disclosure requirements regarding the use of “conflict” minerals mined from the Democratic Republic of Congo and adjoining countries in products, whether these products are manufactured by third parties. These requirements could affect the pricing, sourcing and availability of minerals used in the manufacture of semiconductor devices (including our products). We have incurred additional costs associated with complying with the disclosure requirements, such as costs related to determining the source of any conflict minerals used in our products. Our supply chain is complex, and we may be unable to verify the origins of all the metals used in our products. We purchase materials from foreign sources that may not cooperate and provide us with the necessary information to allow us to comply with the Dodd-Frank Act. This may require us to find alternative sources which could delay product shipments. We may also encounter challenges with our customers and stockholders if we are unable to certify that our products are conflict-free.
Changes in tax laws, an unfavorable resolution of tax examinations, or exposure to additional tax liabilities could have a material adverse effect on our results of operations, financial condition and liquidity. We are subject to taxes in the U.S., Korea, China and the United Kingdom. Governments in the jurisdictions in which we operate implement changes to tax laws and regulations periodically. Any implementation of tax laws that fundamentally changes the taxation of corporations in the U.S. or in the foreign jurisdictions in which we operate could materially affect our effective tax rate and could have a significant adverse impact on our financial results.
We may incur significant liabilities if we fail to comply with stringent environmental laws and regulations and the ITAR, or if we did not comply with these regulations in the past. We are subject to a variety of federal, state and local government regulations related to the use, storage, discharge and disposal of toxic or other hazardous chemicals used in our manufacturing process. We are also subject to federal International Traffic in Arms Regulations (ITAR) laws that regulate the export of technical data and export of products to other nations that may use these products for defense purposes. Failure to comply with present or future regulations could result in fines, suspension of production, or a cessation of operations. Any failure on our part to control the use of, or adequately restrict the discharge of, hazardous substances, or otherwise comply with environmental regulations, could subject us to significant future liabilities. Any failure on our part to obtain any required licenses for the export of technical data and/or export of our products or to otherwise comply with ITAR, could subject us to significant future liabilities. In addition, we cannot be certain that we have not violated applicable laws or regulations in the past, which violations could result in required remediation or other liabilities. We also cannot be certain that past use or disposal of environmentally sensitive materials in conformity with the existing environmental laws and regulations will protect us from required remediation or other liabilities under current or future environmental laws or regulations.
We may be unable to modify our products to meet regulatory or customer requirements. From time to time our display products are subject to new domestic and international requirements, such as the European Union’s Restriction on Hazardous Substances Directive. Our customers’ terms and conditions require us to follow “all laws.” If we are unable to comply with these regulations, we may not be permitted to ship our products, which would adversely affect our revenue and ability to maintain profitability. In addition, if we are found to be in violation of laws, we may be subject to fines and penalties.
We may be unable to successfully integrate new strategic acquisitions and investments, which could materially adversely affect our business, results of operations and financial condition. In the past, we have made, and in the future, we may make acquisitions of, and investments in, businesses, products and technologies that could complement or expand our business. If we identify an acquisition candidate, we may not be able to successfully integrate the acquired businesses, products or technologies into our existing business and products. Future acquisitions could result in potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities, amortization expenses and write-downs of acquired assets.
Additionally, we have several investments where we may have limited, if any, control over their governance, financial reporting, and operations. As a result, we face certain operating, financial and other risks relating to these investments, including risks related to the financial strength of the investments. As a result, these investments may not contribute to our earnings or cash flows. In addition, these investments may be required to raise additional capital, which may result in our ownership percentage being decreased.
Changes in China’s laws, legal protections or government policies on foreign investment in China may harm our business. Our Chinese investments are subject to laws and regulations applicable to foreign investment in China as well as laws and regulations applicable to foreign-invested enterprises. These laws and regulations frequently change, including as a result of the new presidential administration in the U.S., and their interpretation and enforcement involve uncertainties that could limit the legal protections available to us. Regulations and rules on foreign investments in China impose restrictions on the means that a foreign investor like us may apply to facilitate corporate transactions we may undertake. In addition, the Chinese legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, that may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. If any of our past operations are deemed to be non-compliant with Chinese law, we may be subject to penalties. For instance, under the catalogue for the Guidance of Foreign Investment Industries, some industries are categorized as sectors that are encouraged, restricted or prohibited for foreign investment. As the Catalogue for the Guidance of Foreign Investment Industries is updated every few years, there can be no assurance that China’s government will not change its policies in a manner that would render part or all of our investment to fall within the restricted or prohibited categories. If we cannot obtain approval from relevant authorities to engage in businesses that have become prohibited or restricted for foreign investors, we may be forced to sell our investment if possible. Moreover, uncertainties in the Chinese legal system may impede our ability to enforce contracts with our business partners, customers and suppliers, or otherwise pursue claims in litigation to recover damages or loss of property, which could adversely affect our business and operations.
| 15 |
We do not intend to pay dividends on our common stock in the foreseeable future and, consequently, your only opportunity to achieve a return on your investment during that time is if the price of our common stock appreciates. Historically, our earnings, if any, have been retained for the development of our businesses. Any recommendation by our Board of Directors to pay dividends will depend on many factors, including our financial condition, results of operations, and other factors. Accordingly, if the price of our common stock declines in the foreseeable future, you will incur a loss on your investment, without the likelihood that this loss will be offset in part or at all by potential future cash dividends.
As a publicly traded company, we are subject to a significant body of regulation, including the Sarbanes-Oxley Act of 2002. While we have developed and instituted a corporate compliance program based on what we believe are the current best practices in corporate governance and continue to update this program in response to newly implemented or changing regulatory requirements, we cannot provide assurance that we are or will be in compliance with all potentially applicable corporate regulations. If we fail to comply with any of these regulations, we could be subject to a range of regulatory actions, fines or other sanctions or litigation. If we must disclose any material weakness in our internal control over financial reporting, our stock price could decline.
We will not receive any proceeds from the sale of shares of our Common Stock by the Selling Stockholders. We will bear all of the registration expenses incurred in connection with the registration of these shares of Common Stock. The Selling Stockholders will pay discounts, commissions, fees of underwriters, selling brokers or dealer managers and similar expenses, if any, incurred for the sale of these shares of Common Stock.
We have never declared or paid any cash dividends on our shares of Common Stock and do not anticipate paying any cash dividends on our shares of Common Stock in the foreseeable future. Payment of cash dividends, if any, in the future will be at the discretion of our board of directors and will depend on applicable law and then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant.
DETERMINATION OF OFFERING PRICE
The prices at which the shares of Common Stock covered by this prospectus may actually be sold will be determined by the prevailing public market price for shares of our Common Stock or by negotiations between the Selling Stockholder and buyers of our Common Stock in private transactions or as otherwise described in “Plan of Distribution.”
This prospectus relates to the resale from time to time of 19,545,950 shares of Common Stock. We are registering the shares of our Common Stock included in this prospectus pursuant to the provisions of the Registration Rights Agreement we entered into with the Selling Stockholders on September 29, 2025 in order to permit the Selling Stockholders to offer the shares included in this prospectus for resale from time to time.
When we refer to the “Selling Stockholders” in this prospectus, we mean the persons listed in the table below, and the pledgees, donees, transferees, assignees, successors, designees and others who later come to hold any of the Selling Stockholders’ interest in the Common Stock other than through a public sale. The following table sets forth the names of the Selling Stockholders, and other information regarding the beneficial ownership (as determined under Section 13(d) of the Exchange Act of 1934, as amended, and the rules and regulations thereunder) of the shares of Common Stock held by each of the Selling Stockholders, as of the date of this prospectus,. The third column lists the aggregate number of shares of Common Stock that the Selling Stockholders may offer pursuant to this prospectus.
| Name of Selling Stockholders | Number of securities Owned Prior to Offering | Maximum Number of shares of Common Stock to be Sold Pursuant to this Prospectus (2) | Number of shares of Common Stock Owned After Offering | |||||||||||||||||
| Number | Percent (1) | Number | Percent | |||||||||||||||||
| Herald Investment Trust Plc(3) | 2,000,000 | 1.1 | 465,000 | 1,535,000 | * | |||||||||||||||
| Iroquois Capital Investment Group LLC(4) | 1,400,577 | * | 1,238,095 | 162,482 | * | |||||||||||||||
| Iroquois Master Fund Ltd. (“IMF”) (5) | 2,793,849 | 1.5 | 1,142,857 | 1,650,992 | * | |||||||||||||||
| Jon D. and Linda W. Gruber Trust(6) | 700,000 | * | 700,000 | - | * | |||||||||||||||
| Lytton-Kambara Foundation(7) | 1,428,571 | * | 1,428,571 | - | * | |||||||||||||||
| Ondas Holdings Inc.(8) | 2,380,952 | 1.3 | 2,380,952 | - | * | |||||||||||||||
| AWM Investment Company Inc.(9) | 11,960,129 | 6.5 | 4,000,000 | 7,960,129 | 4.3 | |||||||||||||||
| Telemark Fund, LP(10) | 7,000,000 | 3.8 | 2,000,000 | 5,000,000 | 2.7 | |||||||||||||||
| Theon International Plc(11) | 10,028,513 | 5.4 | 3,809,523 | 6,218,990 | 3.4 | |||||||||||||||
| Unusual Machines, Inc.(12) | 2,380,952 | 1.3 | 2,380,952 | - | * | |||||||||||||||
* Represents beneficial ownership of less than 1.0% of the outstanding shares of our Common Stock.
| (1) | Applicable percentage ownership is based on 182,422,296 shares of our Common Stock outstanding as of September 30, 2025 plus 2,333,333 shares of common stock issuable upon the full conversion of the outstanding shares of our Series A Convertible Preferred Stock (assuming conversion at the initial fixed conversion price of $3.00 per share and no dividends on the Series A Convertible Preferred Stock accrued pr payable). |
| (2) | Assumes the sale of all shares of our Common Stock being offered for resale pursuant to this prospectus. |
| (3) | Peter Jenkin is the Investment Manager of Herald Investment Management Limited, which serves as the investment manager to Herald Investment Trust Plc. The business address of Herald Investment Trust Plc is 10-11 Charterhouse Square, London, EC1 M 6EE, United Kingdom. |
| 16 |
| (4) | Richard Abbe is the managing member of Iroquois Capital Investment Group LLC. Mr. Abbe has voting control and investment discretion over securities held by Iroquois Capital Investment Group LLC. As such, Mr. Abbe may be deemed to be the beneficial owner (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the securities held by Iroquois Capital Investment Group LLC |
| (5) | Iroquois Capital Management L.L.C. is the investment manager of Iroquois Master Fund, Ltd. Iroquois Capital Management, LLC has voting control and investment discretion over securities held by Iroquois Master Fund. As Managing Members of Iroquois Capital Management, LLC , Richard Abbe and Kimberly Page make voting and investment decisions on behalf of Iroquois Capital Management, LLC in its capacity as investment manager to Iroquois Master Fund Ltd. As a result of the foregoing, Mr. Abbe and Mrs. Page may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the securities held by Iroquois Capital Management and Iroquois Master Fund. The registered address of IMF is 18 Forum Lane, 2nd Floor, Camana Bay, Grand Cayman KY1-1003, Cayman Islands. |
| (6) | The securities are directly held by Gruber Trust and may be deemed to be beneficially owned by Jon D Gruber, as Trustee. The address of the Gruber Trust is 300 Tamal Plaza, Ste. 215, Corte Madera, CA 94925 |
| (7) | Laurence Lytton is the President of the Lytton-Kambara Foundation and has sole voting and dispositive power with respect to the shares held by the Lytton-Kambara Foundation. The address of the Lytton-Kambara Foundation is 467 Central Park West, 17-A, New York, NY 10025. |
| (8) | Eric Brock, Chief Executive Officer of Ondas Holdings Inc., and Neil Laird, Chief Financial Officer of Ondas Holdings Inc., have shared voting and dispositive power over the shares set forth in the table. The address of Ondas Holdings Inc. is One Marina Park Drive, Suite 1410, Boston, MA 02210. |
| (9) | The shares registered for resale hereby represent (i) 1,618,303 shares of Common Stock held directly by Special Situations Fund III QP, L.P.; (ii) 461,923 shares of Common Stock held directly by Special Situations Cayman Fund, L.P.; (iii) 270,828 shares of Common Stock held directly by Special Situations Private Equity Fund, L.P; (iv) 300,349 shares of Common Stock held directly by Special Situations Technology Fund, L.P.; and (v) 1,348,597 shares of Common Stock held directly by Special Situations Technology Fund II, L.P. AWM Investment Company, Inc. (“AWM”) is the investment adviser to each of the Special Situations Funds. In addition to the common stock of the Company held by AWM Investment Company Inc. they also own 10 million prefunded warrants which allow for the purchase of 10 million shares of the Company for $0.01 per share. The warrants include a 9.99% blocker. David Greenhouse and Adam Stettner are the principal owners of AWM. Through their control of AWM, Messrs. Greenhouse and Stettner share voting and investment control over the portfolio securities of each of the Special Situations Funds. Messrs. Greenhouse and Stettner disclaim any beneficial ownership of the reported shares other than to the extent of any pecuniary interest each of them may have therein. The address of AWM, each of the Special Situations Funds and Messrs. Greenhouse and Stettner is 527 Madison Avenue, Suite 2600, New York, NY 10022. |
| (10) | Colin McNay is the President and sole owner of Telemark Asset Management, LLC. He disclaims beneficial ownership of any of the shares of Common Stock held by Telemark Fund, LP except to the extent of his pecuniary interest therein. The address of the foregoing entities is One International Place, Suite 4620 Boston, MA, 02110. |
| (11) | Includes (i) 7,695,180 shares of Common Stock and (ii) 2,333,333 shares of Common Stock issuable upon full conversion of shares of Series A Convertible Preferred Stock (assuming conversion at the initial fixed conversion price of $3.00 per share and no dividends on the Series A Convertible Preferred Stock accrued and payable) held by Theon International Plc (“Theon”), which is majority-owned by Venetus Ltd., which in turn is majority-owned by CHRE Investments Ltd (“CHRE Investments”). Christianos Hadjiminas is the sole shareholder of CHRE Investments and has voting and dispositive control over CHRE Investments. The address of Theon is 5 Agiou Antoniou, Muskita Building 2, Office 102, 2002 Nocosia, Cyprus |
| (12) | Allan Thomas Evans, the Chief Executive Officer of Unusual Machines, Inc., has voting and dispositive power over the shares set forth in the table. The address of Unusual Machines, Inc. is 4677 LB McLeod Road, Orlando, Florida 32811 |
The following table sets forth our capitalization:
| ● | on an actual basis as of June 28, 2025; |
| ● | on a pro forma basis to give effect to: (i) an aggregate of 19,545,950 shares of Common Stock that we issued on September 30, 2025, at $2.10 per share, and our receipt of approximately $38,094,170 in net proceeds |
| As of June 28, 2025 | ||||||||
| Actual | Pro Forma, As Adjusted (1) | |||||||
| Cash and cash equivalents, restricted cash and marketable securities | $ | 27,837,187 | $ | 65,931,357 | ||||
| Stockholders’ equity: | ||||||||
| Preferred stock, par value $0.01 per share; 3,000 shares authorized; no shares issued and outstanding at June 28, 2025, | — | - | ||||||
| Common Stock, par value $0.01 per share; 275,000,000 shares authorized; 163,422,995 issued and 156,589,462 outstanding at June 28, 2025, 182,968,945 shares issued and 176,135,412 outstanding pro forma | 1,570,086 | 1,765,546 | ||||||
| Additional paid-in capital | 423,604,168 | 461,502,878 | ||||||
| Treasury stock (419,279 shares) | (459,669 | ) | (459,669 | ) | ||||
| Accumulated comprehensive income | 1,638,345 | 1,638,345 | ||||||
| Accumulated deficit | (410,313,096 | ) | (410,313,096 | ) | ||||
| Total stockholders’ equity | $ | 16,039,834 | $ | 54,134,004 | ||||
| Total capitalization | $ | 16,039,834 | $ | 54,134,004 | ||||
| (1) | The number of shares of Common Stock to be outstanding immediately after this offering is based on 156,589,462 shares of Common Stock outstanding as of June 28, 2025, and excludes, as of such date: |
| ● | 10,000,000 shares of Common Stock issuable upon the exercise of outstanding prefunded warrants with an exercise price equal to $0.01 per share; | |
| ● | 1,000 shares of Series A Preferred stock issued in connection with the August 11, 2025 strategic investment agreement by Theon International Plc at $7,000 per share; | |
| ● | 6,414,254 shares of non-vested restricted common stock awards issued under our 2020 Equity Incentive Plan; |
| ● | 591,366 shares of Common Stock issuable upon the exercise of stock options issued under our equity incentive plans with a weighted average exercise price equal to $1.76 per share; and |
| ● | 7,700,092 shares of our Common Stock that are reserved for equity awards that may be granted under our 2020 Equity Incentive Plan. |
| 17 |
The Selling Stockholders of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the principal trading market or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling securities:
| ● | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; | |
| ● | distributions to members, partners, stockholders or other equity holders of the selling stockholders; |
| ● | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| ● | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| ● | an exchange distribution in accordance with the rules of the applicable exchange; |
| ● | privately negotiated transactions; |
| ● | settlement of short sales that are not in violation of Regulation SHO; |
| ● | in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security; |
| ● | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| ● | a combination of any such methods of sale; or |
| ● | any other method permitted pursuant to applicable law. |
The selling stockholders may, from time to time, pledge or grant a security interest in some or all of shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act, amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling stockholders for purposes of this prospectus.
In addition, a selling stockholder that is an entity may elect to make an in-kind distribution of securities to its members, partners or stockholders pursuant to the registration statement of which this prospectus is a part by delivering a prospectus with a plan of distribution. Such members, partners or stockholders would thereby receive freely tradeable securities pursuant to the distribution through a registration statement. To the extent a distributee is an affiliate of ours (or to the extent otherwise required by law), we may file a prospectus supplement in order to permit the distributees to use the prospectus to resell the securities acquired in the distribution.
In connection with the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The aggregate proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering.
The selling stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act, provided that they meet the criteria and conform to the requirements of that rule, or another available exemption from the registration requirements under the Securities Act.
The selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be “underwriters” within the meaning of Section 2(a)(11) of the Securities Act (it being understood that the selling stockholders shall not be deemed to be underwriters solely as a result of their participation in this offering). Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who are “underwriters” within the meaning of Section 2(a)(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act.
| 18 |
To the extent required, the shares of common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agent, dealer or underwriter, and any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.
We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling stockholders and their affiliates. In addition, to the extent applicable, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.
We have agreed to indemnify the selling stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares of common stock offered by this prospectus.
General
The following description summarizes some of the terms of our amended and restated certificate of incorporation and our amended and restated bylaws, and of the Delaware General Corporation Law. Because it is only a summary, it does not contain all the information that may be important to you. For a complete description, you should refer to our amended and restated certificate of incorporation, amended and restated bylaws, copies of which have been filed as exhibits to the registration statement of which this prospectus is part.
Our authorized capital stock consists of 275,000,000 shares of Common Stock, par value of $0.01 per share, and 3,000 shares of preferred stock, par value $0.01 per share. Our Common Stock is listed on Nasdaq under the symbol “KOPN.”
Common Stock
Holders of Common Stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders and do not have cumulative voting rights. Subject to any preferential rights of any outstanding preferred stock, holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by our board of directors out of funds legally available therefor. In the event of a dissolution, liquidation or winding-up of the Company, holders of Common Stock are entitled to share ratably in all assets remaining after payment of liabilities and any preferential rights of any outstanding preferred stock.
Holders of Common Stock have no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to our Common Stock. All outstanding shares of Common Stock are fully paid and non-assessable. The rights, preferences and privileges of the holders of Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock which may be designated and issued in the future.
Dividends
Subject to preferences that may apply to any outstanding preferred stock, the holders of our Common Stock are entitled to receive dividends, if and when declared by our board of directors, out of funds legally available therefor.
Liquidation
In the event of a liquidation, dissolution or winding up, our stockholders will be entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the Common Stock.
Rights, Preferences and Privileges
The rights, preferences and privileges of the holders of our Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock that we may designate and issue in the future.
Preferred Stock
Our amended and restated certificate grants our board of directors the authority, without further stockholder authorization, to issue from time to time up to 3,000 shares of preferred stock in one or more series and to fix the terms, limitations, voting rights, relative rights and
preferences and variations of each series.
| 19 |
Below is a summary of the terms of our Series A Convertible Preferred Stock (the “Preferred Stock”). The Certificate of Designation of Series A Convertible Preferred Stock of Kopin Corporation is incorporated by reference in this Prospectus.
The Preferred Stock shall, with respect to payment of dividends, redemption payments or rights (including as to the distribution of assets) upon Liquidation (as defined below), (i) rank senior and prior to the Corporation’s common stock, par value $0.01 per share (the “Common Stock”) and each other class or series of equity securities of the Corporation, whether currently issued or issued in the future, that by its terms does not expressly rank senior to, or on parity with, the Preferred Stock as to payment of dividends, redemption payments, rights (including as to the distribution of assets) upon Liquidation, or otherwise (all such equity securities, including the Common Stock, are collectively referred to herein as “Junior Securities”) (ii) rank junior to the Corporation’s debt obligations and each class or series of equity securities of the Corporation, whether currently issued or issued in the future in accordance with the terms hereof, that by its terms expressly ranks senior to the Preferred Stock as to payment of dividends, redemption payments, rights (including as to the distribution of assets) upon Liquidation, or otherwise (all such equity securities are collectively referred to herein as “Senior Securities”) and (iii) rank on parity with each class or series of equity securities of the Corporation, whether currently issued or issued in the future in accordance with the terms hereof, that expressly provides that it ranks on parity with the Preferred Stock as to payment of dividends, redemption payments, rights (including as to the distribution of assets) upon Liquidation, or otherwise (all such equity securities are collectively referred to herein as “Parity Securities”). The respective definitions of Junior Securities, Senior Securities and Parity Securities shall also include any securities, rights or options exercisable or exchangeable for or convertible into any of the Junior Securities, Senior Securities or Parity Securities, as the case may be.
Liquidation preference per share means, with respect to each Preferred Stock, $7,000 per share.
Purchase price is $7,000 per share.
Base rate of the Preferred Dividends is 2.00% per annum payable in cash and is 2.00% per annum payable in Preferred Stock. Preferred Dividends on each Preferred Stock shall accrue and accumulate on a semi-annual basis from the date of issuance of such Preferred Stock, whether or not declared and whether or not the Corporation has funds legally available for the payment of such dividends, shall compound semi-annually on each Preferred Dividend Payment Date (to the extent not paid in cash on or prior to such Preferred Dividend Payment Date) and shall be payable semi-annually in arrears on each Preferred Dividend Payment Date, commencing on the first Preferred Dividend Payment Date following the Issuance Date of such share.
The holder of a Preferred Stock may convert it into the Company’s Common Stock at any time at a conversion price of $3.00.
If at any time after the original issuance date the Company’s Common Stock Trading Price is $5.50 (such price subject to proportionate adjustment for share dividends, share splits or share combinations with respect to the Common Stock) (the “Mandatory Conversion Price”) or more for at least ten (10) Trading Days (whether or not consecutive) during any thirty (30) consecutive Trading Day period (such period, the “Conversion Option Measurement Period”) and the Corporation, at its option, delivers a written notice to the Holders of the Preferred Stock within five (5) Business Days following the conclusion of the applicable Conversion Option Measurement Period, then each outstanding Preferred Stock shall be converted (the “Conversion Option”) as of the Business Day immediately prior to the date of such notice (the “Conversion Option Date”) into such number of fully paid and non-assessable shares of Common Stock (calculated as to each conversion to the nearest 1/10,000th of a share) equal to the quotient of (A) the sum of (1) the Liquidation Preference and (2) the Accrued Dividends on such share as of the Conversion Option Date, divided by (B) 80% of the Mandatory Conversion Price.
Warrants
As of June 28, 2025, there were outstanding 10,000,000 prefunded warrants to purchase an aggregate of 10,000,00 shares of our Common Stock at a weighted average exercise price of $0.01 per share. The warrants contain provisions which allow for adjustment in the number of warrants in certain circumstances.
Certain Anti-Takeover Provisions of Delaware Law
Some provisions of Delaware law, our amended and restated certificate of incorporation and our amended and restated bylaws contain provisions that could make the following transactions more difficult: an acquisition of us by means of a tender offer; an acquisition of us by means of a proxy contest or otherwise; or the removal of our incumbent officers and directors. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in our best interests, including transactions that provide for payment of a premium over the market price for our shares.
Transfer Agent
The transfer agent and registrar for our Common Stock is Computershare . The transfer agent’s address is 150 Royall Street, Suite 101, Canton, MA, 02021, United States.
The validity of the issuance of the securities offered hereby will be passed upon for us by Morgan, Lewis & Bockius LLP Boston, MA. 01581.
The consolidated financial statements of Kopin Corporation, as of December 30, 2023 and for each of the years in the two-year period ended December 30, 2023, incorporated in this prospectus by reference from the Kopin Corporation Form 10-K for the year ended December 28, 2024, have been audited by RSM US LLP, an independent registered public accounting firm, as stated in their report thereon, incorporated herein by reference and have been incorporated in this prospectus and registration statement in reliance upon such report and upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Kopin Corporation (the Company) as of December 28, 2024 and for the year then ended incorporated by reference in this Prospectus and in the Registration Statement have been so incorporated in reliance on the report of BDO USA, P.C., an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. The report on the consolidated financial statements contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus constitutes a part of a registration statement on Form S-1 filed under the Securities Act. As permitted by the SEC’s rules, this prospectus and any prospectus supplement, which form a part of the registration statement, do not contain all the information that is included in the registration statement. You will find additional information about us in the registration statement and its exhibits. Any statements made in this prospectus or any prospectus supplement concerning legal documents are not necessarily complete, and you should read the documents that are filed as exhibits to the registration statement or otherwise filed with the SEC for a more complete understanding of the document or matter.
| 20 |
You can read our electronic SEC filings, including such registration statement, on the internet at the SEC’s website at www.sec.gov. We are subject to the information reporting requirements of the Exchange Act, and we file reports, proxy statements and other information with the SEC. These reports, proxy statements and other information will be available at the website of the SEC referred to above. We also maintain a website at https://www.kopin.com/, at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. However, the information contained in or accessible through our website is not part of this prospectus or the registration statement of which this prospectus forms a part, and investors should not rely on such information in making a decision to purchase our securities in this offering.
INCORPORATION OF DOCUMENTS BY REFERENCE
We have filed a registration statement on Form S-1 with the SEC under the Securities Act. This prospectus is part of the registration statement, however the registration statement includes and incorporates by reference additional information and exhibits. The SEC permits us to “incorporate by reference” the information contained in documents we file with the SEC, which means that we can disclose important information to you by referring you to those documents rather than by including them in this prospectus. Information that is incorporated by reference is considered to be part of this prospectus, and you should read it with the same care that you read this prospectus. Information that we file later with the SEC will automatically update and supersede the information that is either contained, or incorporated by reference, in this prospectus, and will be considered to be a part of this prospectus from the date those documents are filed. We have filed with the SEC, and incorporate by reference in this prospectus:
| ● | Current Reports on Form 8-K or 8-K/A, filed with the SEC on January 8, 2025, January 24, 2025, May 29, 2025, June 30, 2025, August 7, 2025, August 12, 2025, August 14, 2025, September 5, 2025, September 30, 2025, October 3, 2025, October 10, 2025 and October 16, 2025. |
| ● | Annual Report on Form 10-K for the year ended December 28, 2024 filed with the SEC on April 17, 2025, as amended by the Form 10-K/A filed on May 13, 2025, and as amended by the Form 10-K/A filed on May 20, 2025 (amendment #2); |
| ● | Quarterly Reports on Form 10-Q for the quarterly periods ended March 29, 2025, and June 28, 2025, filed with the SEC on May 13, 2025 and August 12, 2025, respectively,; |
| ● | Proxy Statement on Schedule 14A filed on May 20, 2025; and |
| ● | Description of Securities of the Company incorporated hereby by reference to Exhibit 4.2 to the Annual Report on Form 10-K, as amended, of the Company for the fiscal year ended December 28, 2024. |
In addition, all documents subsequently filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the offering (excluding any information furnished rather than filed) shall be deemed to be incorporated by reference into this prospectus.
Notwithstanding the statements in the preceding paragraphs, no document, report or exhibit (or portion of any of the foregoing) or any other information that we have “furnished” to the SEC pursuant to the Exchange Act shall be incorporated by reference into this prospectus.
We will furnish without charge to you, on written or oral request, a copy of any or all of the documents incorporated by reference in this prospectus, including exhibits to these documents. You should direct any requests for documents to:
Kopin Corporation
125 North Drive
Westborough, Ma 01581
(508) 870-5959
Attn: Chief Financial Officer
You also may access these filings on our website at www.kopin.com under the heading “Investor Relations—SEC Filings.” We do not incorporate the information on our website into this prospectus or any supplement to this prospectus, and you should not consider any information on, or that can be accessed through, our website as part of this prospectus or any supplement to this prospectus (other than those filings with the SEC that we specifically incorporate by reference into this prospectus or any supplement to this prospectus).
Any statement contained in a document incorporated or deemed to be incorporated by reference in this prospectus will be deemed modified, superseded or replaced for purposes of this prospectus to the extent that a statement contained in this prospectus modifies, supersedes or replaces such statement. Any statement contained herein or in any document incorporated or deemed to be incorporated by reference shall be deemed to be modified or superseded for purposes of the registration statement of which this prospectus forms a part to the extent that a statement contained in any other subsequently filed document which also is or is deemed to be incorporated by reference modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed to constitute a part of the registration statement of which this prospectus forms a part, except as so modified or superseded.
| 21 |
Kopin Corporation
Up to 19,545,950 Shares of Common Stock
PROSPECTUS , 2025.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth an estimate of the fees and expenses relating to the issuance and distribution of the securities being registered hereby, other than underwriting discounts and commissions, all of which shall be borne by the registrant. All of such fees and expenses, except for the SEC registration fee, are estimated:
| SEC registration fee | $ | 8,340.83 | ||
| Legal fees and expenses | $ | 150,000 | ||
| Accounting fees and expenses | $ | 50,000 | ||
| Miscellaneous fees and expenses | $ | 25,000 | ||
| Total | $ | 233,340.83 |
Item 14. Indemnification of Officers and Directors.
Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions, or (iv) for any transaction from which the director derived an improper personal benefit. Our amended certificate of incorporation provides that, to the maximum extent permitted by law, no director shall be personally liable to us or our shareholders for monetary damages for breach of fiduciary duty as director.
Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to the corporation. The Delaware General Corporation Law provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise. Our bylaws provide for indemnification by us of our directors, officers and employees to the fullest extent permitted by the Delaware General Corporation Law.
Insofar as indemnification for liabilities arising under the Securities Act may be provided for directors, officers, employees, agents or persons controlling an issuer pursuant to the foregoing provisions, the opinion of the SEC is that such indemnification is against public policy as expressed in the Securities Act, and is therefore unenforceable. In the event that a claim for indemnification by such director, officer or controlling person of us in the successful defense of any action, suit or proceeding is asserted by such director, officer or controlling person in connection with the securities being offered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
No pending material litigation or proceeding involving our directors, executive officers, employees or other agents as to which indemnification is being sought exists, and we are not aware of any pending or threatened material litigation that may result in claims for indemnification by any of our directors or executive officers.
| II-1 |
Item 15. Recent Sales of Unregistered Securities.
The Company has not issued unregistered securities to any person within the last three years, except as described below. None of these transactions involved any underwriters, underwriting discounts or commissions, except as specified below, or any public offering, and, unless otherwise indicated below, the Company believes that each transaction was exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, Rule 701 of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder. All recipients had adequate access, though their relationships with the Company, to information about the Company.
On October 16, 2025, Theon International Plc (“Theon”) purchased 1,000 shares of Series A Convertible Preferred Stock, par value $0.01 per share, of the Company (“Preferred Stock”) at a price of $7,000 pursuant to that certain Series A Convertible Preferred Stock Purchase Agreement, dated August 8, 2025, by and between the Company and Theon, as amended by the First Amendment to Series A Convertible Preferred Stock Purchase Agreement, dated September 30, 2025. Each share of the Preferred Stock is convertible into shares of the Company’s Common Stock, at an initial conversion price of $3.00 per share subject to a 9.99% beneficial ownership blocker. If the Common Stock of the Company trades at $5.50 (“Mandatory Conversion Price”) for at least 10 trading days within a 30 consecutive trading day period, the Company can force conversion at 80% of the Mandatory Conversion Price. The Preferred Stock earns 4% annual dividends (2% payable in cash and 2% payable in Preferred Stock). The Preferred Stock shall vote on an “if converted” basis with the Common Stock of the Company.
On September 29, 2025, Kopin Corporation (the “Company”) announced that it has entered into a securities purchase agreement (the “Purchase Agreement”) for a private investment in public equity financing (the “PIPE”) for 19,545,950 shares (the “Placement Shares”) of its common stock, par value $0.01 per share (the “Shares”). The net proceeds to the Company from the offering are estimated to be approximately $38.1 million, after deducting placement agent fees and commissions and estimated offering expenses payable by the Company. The transaction closed on September 30, 2025. The issuance of the Placement Shares was not registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws. The Placement Shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) under the Securities Act and/or Regulation D promulgated thereunder for transactions not involving a public offering. The Company is required to file a registration statement providing for the resale of the Placement Shares by November 9, 2025. The registration statement, of which this prospectus forms a part of, is being filed pursuant to a Registration Rights Agreement. Pursuant to the Purchase Agreement and the Registration Rights Agreement, for the period between September 29, 2025 and until ten (10) days after the date that the registration statement has been declared effective by the Securities & and Exchange Commission, the Company has agreed not to (1) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock, convertible securities or options, or (2) file any registration statement or any amendment or supplement thereto, in each case other than as contemplated pursuant to the Registration Rights Agreement or a post-effective amendment to an existing registration statement necessary to continue such registration without provided, however, that this shall not apply to customary exceptions, without the consent of the Placement Agent.
On September 4, 2025, Kopin Corporation (the “Company”) entered into an Inducement Restricted Stock Award Agreement (the “Agreement”) with Erich Manz. Pursuant to the Agreement, the Company granted to Mr. Manz 400,000 restricted shares of Kopin common stock, subject to certain restrictions. 25% of the restricted shares will vest on each December 10 beginning in 2026, subject to Mr. Manz’s continued employment with the Company on the applicable vesting date.
Item 16. Exhibits.
The list of exhibits in the Exhibit Index to this registration statement is incorporated herein by reference.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
| (1) | to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement; |
| (i) | to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended; | |
| (ii) | to reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of the securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and | |
| (iii) | to include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement; |
provided, however, that the undertakings set forth in paragraphs (1)(i), (1)(ii) and (1)(iii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended, that are incorporated by reference in this registration statement or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of this registration statement;
| (2) | that, for the purpose of determining any liability under the Securities Act of 1933, as amended, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; |
| (3) | to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; |
| (4) | that, for the purpose of determining liability under the Securities Act of 1933, as amended, to any purchaser: |
| (i) | each prospectus filed by the registrant pursuant to Rule 424 (b)(3) shall be deemed to be part of this registration statement as of the date the filed prospectus was deemed part of and included in this registration statement; and | |
| (ii) | each prospectus required to be filed pursuant to Rule 424 (b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(l)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933, as amended, shall be deemed to be part of and included in the registration statement as of the earlier of the date such prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; |
| II-2 |
| (5) | that, for the purpose of determining liability of the registrant under the Securities Act of 1933, as amended, to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
| (i) | any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; | |
| (ii) | any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; | |
| (iii) | the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and | |
| (iv) | any other communication that is an offer in the offering made by the undersigned registrant to the purchaser; |
| (6) | that, for purposes of determining any liability under the Securities Act of 1933, as amended, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; |
| (7) | insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such issue. |
| II-3 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.
| Kopin Corporation | ||
| By: | /s/ Michael Murray | |
| Michael Murray | ||
| Chairman of the Board, Chief Executive Officer, President and Director (Principal Executive Officer) | ||
KNOW ALL BY THESE PRESENTS that each individual whose signature appears below constitutes and appoints Michael Murray and Erich Manz our true and lawful attorneys and agents with full power of substitution and resubstitution, with full power to sign for us, and in our names in the capacities indicated below, any and all amendments to this registration statement, any subsequent registration statements pursuant to Rule 462 of the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. This power of attorney may be executed in counterparts.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities held on the dates indicated.
| Signature | Title | Date | ||
|
/s/ Michael Murray |
Chairman of the Board, Chief Executive Officer, President and Director |
November 6, 2025 | ||
| Michael Murray | (Principal Executive Officer) | |||
| /s/ Jill Avery | Director | November 6, 2025 | ||
| Jill Avery | ||||
| /s/ David Nieuwsma | Director | November 6, 2025 | ||
| David Nieuwsma | ||||
| /s/ Margaret Seif | Director | November 6, 2025 | ||
| Margaret Seif | ||||
| /s/ Paul Walsh Jr. | Director | November 6, 2025 | ||
| Paul Walsh Jr. | ||||
| /s/ Erich Manz | Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) | November 6, 2025 | ||
| Erich Manz |
| II-4 |
EXHIBIT INDEX
| II-5 |
| II-6 |
EXHIBIT 3.6
CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
KOPIN CORPORATION
(Pursuant to Section 151 of the
Delaware General Corporation Law)
The following resolutions were duly adopted by the Board of Directors (the “Board of Directors”) of Kopin Corporation, a Delaware corporation (the “Corporation”), pursuant to the provisions of Section 151 of the General Corporation Law of the State of Delaware:
WHEREAS, the Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), provides for a class of its authorized stock known as preferred stock, consisting of 3,000 shares, $0.01 par value, issuable from time to time in one or more series;
WHEREAS, pursuant to the Certificate of Incorporation, the Board of Directors is authorized to establish and designate the different series of preferred stock and to fix and determine the voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof, as shall be stated in a resolution or resolutions providing for the issue of such series adopted by the Board of Directors, which powers, preferences, rights, qualifications, limitations and restrictions need not be uniform among series; and
WHEREAS, it is the desire of the Board of Directors to fix the designations, preferences rights and other matters relating to a new series of preferred stock, which shall consist of 1,500 shares of preferred stock which the Corporation has the authority to issue as follows:
NOW, THEREFORE, BE IT RESOLVED, that, pursuant to the authority set forth in Article IV.B of the Certificate of Incorporation of the Corporation, the Board of Directors hereby fixes the designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations and restrictions thereof, of a series of the preferred stock as follows:
TERMS OF SERIES A CONVERTIBLE PREFERRED STOCK
Section 1. Designation and Amount. There is hereby authorized for issuance a series of preferred stock, par value $0.01 per share. The shares of such series shall be designated as “Series A Convertible Preferred Stock” (the “Preferred Stock”) and the number of shares constituting the Preferred Stock shall be One Thousand Five Hundred (1,500). Subject to and in accordance with the provisions of Section 11(b), such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Preferred Stock.
Section 2. Rank. Each share of Preferred Stock shall rank equally in all respects and shall be subject to the provisions herein. The Preferred Stock shall, with respect to payment of dividends, redemption payments or rights (including as to the distribution of assets) upon Liquidation (as defined below), (i) rank senior and prior to the Corporation’s common stock, par value $0.01 per share (the “Common Stock”) and each other class or series of equity securities of the Corporation, whether currently issued or issued in the future, that by its terms does not expressly rank senior to, or on parity with, the Preferred Stock as to payment of dividends, redemption payments, rights (including as to the distribution of assets) upon Liquidation, or otherwise (all such equity securities, including the Common Stock, are collectively referred to herein as “Junior Securities”) (ii) rank junior to the Corporation’s debt obligations and each class or series of equity securities of the Corporation, whether currently issued or issued in the future in accordance with the terms hereof, that by its terms expressly ranks senior to the Preferred Stock as to payment of dividends, redemption payments, rights (including as to the distribution of assets) upon Liquidation, or otherwise (all such equity securities are collectively referred to herein as “Senior Securities”) and (iii) rank on parity with each class or series of equity securities of the Corporation, whether currently issued or issued in the future in accordance with the terms hereof, that expressly provides that it ranks on parity with the Preferred Stock as to payment of dividends, redemption payments, rights (including as to the distribution of assets) upon Liquidation, or otherwise (all such equity securities are collectively referred to herein as “Parity Securities”). The respective definitions of Junior Securities, Senior Securities and Parity Securities shall also include any securities, rights or options exercisable or exchangeable for or convertible into any of the Junior Securities, Senior Securities or Parity Securities, as the case may be.
Section 3. Definitions.
(a) As used herein, the following terms shall have the meanings set forth below or in the Section cross-referenced below, as applicable, whether used in the singular or the plural:
“Accrued Dividends” means, as of any date, with respect to any Preferred Stock, all dividends that have accrued in respect of such share pursuant to Section 4(a)(i) but that have not been paid as of such date as Cash Dividends.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with, such Person.
“Base Amount” means, with respect to any Preferred Stock, as of any date, the sum of (x) the Liquidation Preference and (y) the Base Amount Accrued Dividends with respect to such share as of such date.
“Base Amount Accrued Dividends” means, with respect to any Preferred Stock, as of any date, (i) if a Preferred Dividend Payment Date has occurred since the issuance of such share, the Accrued Dividends with respect to such share as of the preceding Preferred Dividend Payment Date (taking into account the payment of Preferred Dividends in respect of such period ending on such preceding Preferred Dividend Payment Date, if any, as of such Preferred Dividend Payment Date) or (ii) if no Preferred Dividend Payment Date has occurred since the issuance of such share, zero.
| 2 |
“Base Dividend Rate” means, for any day, 2.00% per annum.
“Beneficially Own” and “Beneficial Ownership” has the meaning given such term in Rule 13d-3 under the Exchange Act, and a Person’s beneficial ownership of Equity Interests of any Person shall be calculated in accordance with the provisions of such rule, but without taking into account any contractual restrictions or limitations on voting or other rights; provided, that for purposes of determining beneficial ownership, a Person shall be deemed to be the beneficial owner of any security which may be acquired by such Person, whether within sixty (60) days or thereafter, upon the conversion, exchange or exercise of any warrants, options, rights or other securities.
“Beneficial Ownership Limitation” shall have the meaning set forth in Section 10(a).
“Board of Directors” means the board of directors of the Corporation or any committee thereof duly authorized to act on behalf of such board of directors for the purposes in question.
“Business Day” means any day that is not a Saturday, a Sunday or any other day on which commercial banks are generally required or authorized by Law to be closed in the State of Delaware.
“By-Laws” means the Sixth Amended and Restated By-Laws of the Corporation, as amended from time to time.
“Cash Dividend” has the meaning set forth in Section 4(a)(i).
“Certificate of Incorporation” means the Amended and Restated Certificate of Incorporation of the Corporation, as amended from time to time.
“Change of Control” means the occurrence, directly or indirectly, of any of the following:
(i) any purchase, merger, acquisition or other transaction or series of related transactions immediately following which any Person or Group (excluding the Investor or its Affiliates or any Group including the Investor or its Affiliates) shall Beneficially Own, directly or indirectly, Voting Stock entitling such Person or Group to exercise more than 50% of the total voting power of all classes of Voting Stock of the Corporation, other than as a result of any such transaction in which (x) the holders of securities that represented 100% of the Voting Stock of the Corporation immediately prior to such transaction are substantially the same as the holders of securities that represent a majority of the total voting power of all classes of Voting Stock of the surviving Person or any parent entity thereof immediately after such transaction and (y) the holders of securities that represented 100% of the Voting Stock of the Corporation immediately prior to such transaction own directly or indirectly Voting Stock of the surviving Person or any parent entity thereof in substantially the same proportion to each other as immediately prior to such transaction;
| 3 |
(ii) any transaction or series of related transactions immediately following which the Persons who Beneficially Own the Voting Stock of the Corporation immediately prior to such transaction or transactions cease to Beneficially Own more than 50% of the Voting Stock of the Corporation, any successor thereto or any parent entity thereof immediately following such transaction or transactions; or
(iii) (x) the Corporation merges or consolidates with or into any other Person, another Person merges with or into the Corporation, or the Corporation conveys, sells, transfers or leases all or substantially all of the Corporation’s assets to another Person (other than a wholly-owned Subsidiary of the Corporation), or (y) the Corporation engages in any recapitalization, reclassification or other transaction in which all or substantially all of the Common Stock are exchanged for or converted into cash, securities or other property, in each case of clauses (x) and (y), other than any such transaction: (A) that does not result in a reclassification, conversion, exchange or cancellation of the outstanding Common Stock; (B) which is effected solely to change the Corporation’s jurisdiction of incorporation and results in a reclassification, conversion or exchange of outstanding Common Stock solely into shares of common stock (or equivalent) of the surviving entity; or (C) where the Voting Stock of the Corporation outstanding immediately prior to such transaction remains, or is converted into or is exchanged for, Voting Stock of the surviving or transferee Person constituting a majority of the outstanding shares of Voting Stock of such surviving or transferee Person (immediately after giving effect to such merger or consolidation).
“Change of Control Effective Date” has the meaning set forth in Section 8(a).
“Change of Control Redemption” has the meaning set forth in Section 8(a).
“Change of Control Redemption Notice” has the meaning set forth in Section 8(b).
“COC Redemption Price” has the meaning set forth in Section 8(a).
“COI Amendment” means an amendment to the Certificate of Incorporation.
“Common Stock Trading Price” means, as of any Trading Day, the closing price of a Common Stock on such Trading Day (as reported on Bloomberg, based on composite transactions for the Trading Market).
“Common Stock” has the meaning set forth in Section 2.
“control” (including the terms “controlling” “controlled by” and “under common control with”) with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.
“Conversion Date” has the meaning set forth in Section 6(b)(iv).
“Conversion Notice” has the meaning set forth in Section 6(b)(ii).
“Conversion Option” has the meaning set forth in Section 6(a)(i)(A).
| 4 |
“Conversion Option Date” has the meaning set forth in Section 6(a)(i)(A).
“Conversion Option Measurement Period” has the meaning set forth in Section 6(a)(i)(A).
“Conversion Price” means, as of any date, the Initial Conversion Price, as adjusted pursuant to Section 9.
“Conversion Right” has the meaning set forth in Section 6(a)(i)(B).
“Convertible Preferred Stock Purchase Agreement” means that certain Series A Convertible Preferred Stock Purchase Agreement, dated as of August 8, 2025, by and between the Corporation and the Investor, as may be amended from time to time.
“Convertible Securities” means indebtedness or Equity Interests convertible into or exchangeable for Common Stock.
“Corporation” means Kopin Corporation, a Delaware corporation.
“Dividend Payment Record Date” has the meaning set forth in Section 4(a)(ii).
“Dividend Rate” means, for any day, the Base Dividend Rate as increased by the Noncompliance Additional Rate, if any, applicable on such day pursuant to Section 4(b).
“Equity Interests” of any Person means any and all shares, interests (including partnership interests), rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any preferred stock, but excluding any debt securities convertible into such equity.
“Ex-Date” means, when used with respect to any distribution, the first date on which the Common Stock or other securities in question do not have the right to receive the distribution giving rise to an adjustment to the Conversion Price.
“Excess Amount” shall have the meaning set forth in Section 10(b).
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
“Exchange Property” has the meaning set forth in Section 7(a).
“Governmental Entity” means any transnational, multinational, domestic or foreign federal, state, provincial or local governmental, regulatory or administrative authority, instrumentality, department, court, arbitrator, agency, commission or official, including any political subdivision thereof, any state-owned or state-controlled enterprise, or any non-governmental self-regulatory agency, commission or authority.
“Group” means any “group” as such term is used in Section 13(d)(3) of the Exchange Act.
| 5 |
“Holder” means, at any time, any Person in whose name Preferred Stock are registered, which may be treated by the Corporation as the absolute owner of such Preferred Stock for the purpose of making payment and settling the related conversions and for all other purposes.
“Holder COC Redemption Price” has the meaning set forth in Section 8(a).
“Initial Conversion Price” means (i) with respect to each Preferred Stock issued on the Original Issuance Date, the conversion price shall be $3.00 and (ii) with respect to each Preferred Stock issued after the Original Issuance Date, the Conversion Price in effect immediately prior to the issuance of such share.
“Investor” means Theon International PLC.
“Issuance Date” means, with respect to a Preferred Stock, the date of issuance of such Preferred Stock.
“Issued Underlying Shares” means the aggregate number of shares of Common Stock issued since the Original Issuance Date upon the conversion of Preferred Stock.
“Junior Securities” has the meaning set forth in Section 2.
“Law” means any statute, law, ordinance, treaty, rule, code, regulation or other binding directive issued, promulgated or enforced by any Governmental Entity.
“Liquidation” means the voluntary or involuntary liquidation, dissolution or winding up of the Corporation.
“Liquidation Preference” means, with respect to each Preferred Stock, $7,000 per share.
“Mandatory Conversion Price” has the meaning set forth in Section 6(a)(i)(A).
“Market Price” means, with respect to any particular security on any particular date, (i) if such security is listed or quoted on a principal U.S. national or regional securities exchange or traded on an over-the-counter market, the volume weighted average price per share (as reported on Bloomberg based, in the case of a listed security, on composite transactions for the principal U.S. national or regional securities exchange on which such security is listed or quoted) of such security for the period of ten (10) consecutive Trading Days preceding (and excluding) the date of determination (or for any other period specified for this purpose in the applicable provision hereof), or (ii) if such security is not listed or quoted on a principal U.S. national or regional securities exchange or traded on an over-the-counter market, the fair market value of such security on the date of determination, as determined pursuant to the Valuation Methodology.
“NASDAQ” means the NASDAQ Stock Market (or its successor).
“Noncompliance Additional Rate” means 3.00% per annum, which shall automatically increase by 0.5% per annum semiannually for so long as any Triggering Event is continuing, provided in no event shall the Noncompliance Additional Rate exceed 4.00% per annum.
| 6 |
“NYSE” means the New York Stock Exchange (or its successor).
“Options” means rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.
“Original Issuance Date” means the date of closing pursuant to the Convertible Preferred Stock Purchase Agreement.
“Parity Securities” has the meaning set forth in Section 2.
“Payment Period” means, with respect to a Preferred Stock, the period beginning on the day after the preceding Preferred Dividend Payment Date (or if no Preferred Dividend Payment Date has occurred since the Issuance Date of such Preferred Stock, the day that would have been the day after the preceding Preferred Dividend Payment Date had the Issuance Date with respect to such Preferred Stock occurred prior to such date) to and including the next Preferred Dividend Payment Date.
“Person” means an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).
“Preferred Dividend Payment Date” means January 1 and July 1 of each year (each, a “Semi-Annual Date”), commencing on the first Semi-Annual Date immediately following the Original Issuance Date; provided, that if any such Semi-Annual Date is not a Business Day, then the “Preferred Dividend Payment Date” shall be the next Business Day immediately following such Semi-Annual Date.
“Preferred Dividends” has the meaning set forth in Section 4(a)(i).
“Preferred Stock” has the meaning set forth in Section 1.
“Pro Rata Repurchase” means any acquisition (whether effected by repurchase or redemption) of Common Stock by the Corporation or any Affiliate thereof (other than, if applicable, the Investor or any of its Affiliates) pursuant to any tender offer or exchange offer subject to Section 13(e) of the Exchange Act, or pursuant to any other offer available to substantially all holders of Common Stock, whether for cash, Equity Interests or other securities of the Corporation, evidences of indebtedness of the Corporation or any other Person or any other property (including Equity Interests, other securities or evidences of indebtedness of a Subsidiary of the Corporation), or any combination thereof, effected while any Preferred Stock are outstanding; provided that “Pro Rata Repurchase” shall not include any acquisition (whether effected by repurchase or redemption) of shares by the Corporation or any Affiliate thereof made in accordance with the requirements of Rule 10b-18 as in effect under the Exchange Act. The “Effective Date” of a Pro Rata Repurchase means the date of acceptance of shares for purchase or exchange under any tender or exchange offer which is a Pro Rata Repurchase or the date of acquisition (whether effected by repurchase or redemption) with respect to any Pro Rata Repurchase that is not a tender or exchange offer.
| 7 |
“Recognized Exchange” means any of the following: the NASDAQ, The Nasdaq Global Market, The Nasdaq Global Select Market, the New York Stock Exchange, the NYSE American, the NYSE Arca, or the OTCQB or the OTCQX operated by OTC Markets Group, Inc. (or any nationally recognized successor to any of the foregoing).
“Register” means the securities register maintained in respect of the Preferred Stock by the Corporation, or to the extent the Corporation has engaged a transfer agent, such transfer agent.
“Reorganization Event” means any of the following transactions:
(i) any reorganization, consolidation, merger, share exchange, statutory exchange, tender or exchange offer or other similar business combination involving the Corporation with or into another Person, in each case, pursuant to which the Common Stock will be converted into, or exchanged for, cash, securities or other property of the Corporation or another Person;
(ii) any reclassification, recapitalization or reorganization of the Common Stock into securities other than the Common Stock; or
(iii) any direct or indirect sale, assignment, conveyance, transfer, lease or other disposition (including in connection with any Liquidation) by the Corporation of all or substantially all of its assets or business, in each case under this clause (iii), pursuant to which the Common Stock will be converted into cash, securities or other property.
“Securities Act” means the Securities Act of 1933, as amended.
“Share Cap” means 19.99% of the outstanding shares of Common Stock as of the Original Issuance Date (such number of shares subject to proportionate adjustment for share dividends, share splits or share combinations with respect to the Common Stock).
“Subsidiary” or “Subsidiaries” means, with respect to any Person, any other Person of which (i) if a corporation, a majority of the total voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more other Subsidiaries of that Person or a combination thereof and for this purpose, a Person or Persons owns a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be or control any managing director or general partner of such business entity (other than a corporation). For the purposes hereof, the term “Subsidiary” shall include all Subsidiaries of such Subsidiary.
1 NTD: To be equal to 19.99% of the outstanding shares of Common Stock as of the Original Issuance Date.
| 8 |
“Trading Day” means a day on which the Trading Market is open for the transaction of business.
“Trading Market” means the NASDAQ (or any nationally recognized successor thereto); provided, however, that in the event the Common Stock are not listed on the NASDAQ (or any nationally recognized successor thereto) but are then listed or traded on a Recognized Exchange, then the “Trading Market” shall mean such Recognized Exchange on which the Common Stock are then listed or traded.
“Triggering Event” means any of the following:
| (i) | the Corporation’s failure to (x) comply with its obligations to effect the conversion of Preferred Stock in compliance with Section 6, or (y) to comply with the terms of Section 7; | |
| (ii) | the Corporation taking any action which requires the prior affirmative vote or written consent of any Holder pursuant to the terms of hereof, including any action described in Section 11(b) without the prior affirmative vote or written consent of such required affirmative vote or written consent; | |
| (iii) | the Corporation’s failure to maintain the listing of the Common Stock on the Nasdaq or NYSE; | |
| (iv) | subject to the provisions of Section 170 of the Delaware General Corporation Law, the Board fails to declare any Preferred Dividend to be paid on the applicable Preferred Dividend Payment Date in accordance with Section 4; | |
| (v) | the Corporation’s failure to pay any Holder any Preferred Dividend on any Preferred Dividend Payment Date (whether or not declared by the Board) or any other amount when and as due under this Certificate of Designation (including, without limitation, the Corporation’s failure to pay any redemption payments or amounts hereunder), except, in the case of a failure to pay Preferred Dividends and Late Charges when and as due, in each such case only if such failure remains uncured for a period of at least thirty (30) days; or | |
| (vi) | any other noncompliance with the terms set forth hereof by the Corporation that, in case of this clause (vi) is not cured within thirty (30) days of the Corporation’s receipt of written notice from the Holders representing at least a majority of the then-issued and outstanding Preferred Stock. |
“Valuation Methodology” means (i) if, within ten (10) Business Days following notice from the Corporation of a good faith determination by the Board of Directors, the Holders of a majority of the outstanding Preferred Stock deliver written notice to the Corporation that they object to such determination, then determined by a nationally recognized independent investment banking firm that has for this purpose (x) been selected by the Board of Directors, and (y) been consented to by Holders of a majority of the outstanding Preferred Stock or (ii) otherwise the good faith determination of the Board of Directors as set forth in the notice described in clause (i).
| 9 |
“Voting Stock” means Equity Interests of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances (determined without regard to any classification of directors) to elect one or more members of the Board of Directors (without regard to whether or not, at the relevant time, Equity Interests of any other class or classes (other than Common Stock) shall have or might have voting power by reason of the happening of any contingency).
(b) In addition to the above definitions, unless the context requires otherwise:
(i) any reference to any statute, regulation, rule or form as of any time shall mean such statute, regulation, rule or form as amended or modified and shall also include any successor statute, regulation, rule or form from time to time;
(ii) the word “including” shall be deemed to be followed by the words “without limitation”;
(iii) references to “$” or “dollars” means the lawful coin or currency of the United States of America;
(iv) the phrase “to the extent” means the degree to which something extends (and not “if’); and
(v) references to “Section” are references to Sections hereof.
Section 4. Dividends.
(a) Holders of the issued and outstanding Preferred Stock shall be entitled to receive, out of assets legally available for the payment of dividends, dividends on the terms described below:
(i) On each Preferred Dividend Payment Date, the Corporation shall, to the extent permitted by applicable Law, (A) pay in cash out of funds legally available therefor, dividends on each outstanding share of Preferred Stock (any Preferred Dividend paid in such manner, a “Cash Dividend”) and (B) allow dividends, automatically and without any action of the Corporation, to accumulate with respect to each outstanding share of Preferred Stock for such Payment Period, thereby constituting a Base Amount Accrued Dividend and increase to the Base Amount (such dividends in accordance with clause (A) or clause (B) above, collectively, the “Preferred Dividends”) in each case at a rate per annum equal to the Dividend Rate. Preferred Dividends on each Preferred Stock shall accrue and accumulate on a semi-annual basis from the Issuance Date of such share, whether or not declared and whether or not the Corporation has funds legally available for the payment of such dividends, shall compound semi-annually on each Preferred Dividend Payment Date (to the extent not paid in cash on or prior to such Preferred Dividend Payment Date) and shall be payable semi-annually in arrears on each Preferred Dividend Payment Date, commencing on the first Preferred Dividend Payment Date following the Issuance Date of such share.
| 10 |
(ii) Each Preferred Dividend shall be paid pro rata to the Holders of Preferred Stock entitled thereto and shall be payable to the Holders of Preferred Stock as they appear on the Register at the close of business on the record date designated by the Board of Directors for such dividends (each such date a “Dividend Payment Record Date”) which shall be not more than thirty (30) days nor less than ten (10) days preceding the applicable Preferred Dividend Payment Date.
(b) Upon the occurrence of a Triggering Event, (i) the Corporation shall as soon as practicable but in no event later than five (5) Business Days deliver written notice thereof via electronic mail or overnight courier to each Holder that includes (A) a reasonable description of the applicable Triggering Event and (B) a certification as to whether, in the opinion of the Corporation, such Triggering Event is capable of being cured and, if applicable, a reasonable description of any existing plans of the Company to cure such Triggering Event and (ii) the Dividend Rate shall increase by the Noncompliance Additional Rate from and including the date on which the Triggering Event shall occur and be continuing through but excluding the date on which all then occurring Triggering Events are no longer continuing. Except as otherwise explicitly provided in this Certificate of Designation, the Dividend Rate shall not be increased further pursuant to this Section 4(b).
(c) At any time during which a Triggering Event shall be occurring, without the consent of the Holders representing at least a majority of the then-issued and outstanding Preferred Stock, (x) no dividends shall be declared or paid or set apart for payment, or other distributions declared or made, upon any Junior Securities, nor shall any Junior Securities be redeemed, purchased or otherwise acquired for any consideration (nor shall any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such Junior Securities) by the Corporation, directly or indirectly (other than repurchases or redemptions of Common Stock from employees, officers or directors of the Corporation or any of its Subsidiaries in the ordinary course of business and, subject to and in accordance with the provisions of Section 6 hereof, by conversion into or exchange for Junior Securities or the payment of cash in lieu of fractional shares in connection therewith (collectively “Permitted Junior Repurchases”)) and (y) the Corporation shall not consummate a Change of Control unless the Corporation provides each Holder the option to either (i) receive the consideration it would have received in such Change of Control if all of its Preferred Stock had been converted into Common Stock pursuant to Section 6 immediately prior to the effective time of the Change of Control or (ii) have all of its then-outstanding Preferred Stock redeemed in full at a redemption price per share in cash equal to 150% of the sum of (A) the aggregate Liquidation Preference and (B) the aggregate Accrued Dividends of such Preferred Stock as of the date of such redemption.
(d) Without the consent of the Holders representing at least a majority of the then-issued and outstanding Preferred Stock, the Corporation shall not (i) declare, pay or set aside for payment any dividends or distributions upon any Junior Securities or (ii) repurchase, redeem or otherwise acquire any Junior Securities (other than Permitted Junior Repurchases) for any consideration or pay any moneys or make available for a sinking fund for the redemption of any shares of such Junior Securities, unless, in each case, (A) immediately before and after the taking of such action, the fair value of the Corporation’s assets would exceed the sum of its debts (including for this purpose the aggregate Liquidation Preference and the aggregate Accrued Dividends of the Preferred Stock), (B) immediately after the taking of such action, the Corporation, in its good faith judgment, would be able to pay all of its debts (including the aggregate Liquidation Preference and the aggregate Accrued Dividends of the Preferred Stock) as they are reasonably expected to come due and (C) such action is otherwise in compliance with applicable Law.
| 11 |
Section 5. Liquidation Rights.
(a) In the event of any Liquidation, each Holder shall be entitled to receive liquidating distributions out of the assets of the Corporation legally available for distribution to its shareholders, before any payment or distribution of any assets of the Corporation shall be made or set apart for holders of any Junior Securities, including the Common Stock, for such Holder’s Preferred Stock in an amount equal to the greater of (i) the sum of (A) the aggregate Liquidation Preference and (B) the aggregate Accrued Dividends of such Preferred Stock as of the date of the Liquidation and (ii) the amount such Holder would have received had such Preferred Stock, immediately prior to such Liquidation, been converted into Common Stock pursuant to Section 6, without regard to any of the limitations on conversion or convertibility contained therein.
(b) In the event the assets of the Corporation available for distribution to shareholders upon a Liquidation shall be insufficient to pay in full the amounts payable with respect to all outstanding Preferred Stock pursuant to Section 5(a), such assets, or the proceeds thereof, shall be distributed among the Holders ratably in proportion to the full respective liquidating distributions to which they would otherwise be respectively entitled upon such Liquidation.
(c) Neither the sale, conveyance, exchange or transfer (for cash, equity securities, other securities or other consideration) of all or substantially all of the assets, capital stock or business of the Corporation (other than in connection with the liquidation, dissolution or winding up of the Corporation) nor the merger, consolidation, share exchange, statutory exchange or any other business combination transaction of the Corporation into or with any other Person shall by itself be deemed to be a Liquidation for purposes of this Section 5.
Section 6. Conversion.
(a) Conversion of Preferred Stock.
(i) Subject to and in accordance with the provisions of this Section 6 Preferred Stock may be converted into Common Stock as follows:
(A) If at any time after the Original Issuance Date, the Common Stock Trading Price is $5.50 (such price subject to proportionate adjustment for share dividends, share splits or share combinations with respect to the Common Stock) (the “Mandatory Conversion Price”) or more for at least ten (10) Trading Days (whether or not consecutive) during any thirty (30) consecutive Trading Day period (such period, the “Conversion Option Measurement Period”) and the Corporation, at its option, delivers a written notice to the Holders of the Preferred Stock within five (5) Business Days following the conclusion of the applicable Conversion Option Measurement Period, then each outstanding Preferred Stock shall be converted (the “Conversion Option”) as of the Business Day immediately prior to the date of such notice (the “Conversion Option Date”) into such number of fully paid and non-assessable shares of Common Stock (calculated as to each conversion to the nearest 1/10,000th of a share) equal to the quotient of (A) the sum of (1) the Liquidation Preference and (2) the Accrued Dividends on such share as of the Conversion Option Date, divided by (B) 80% of the Mandatory Conversion Price.
| 12 |
(B) Each Holder shall have the right (the “Conversion Right”) at any time and from time to time at such Holder’s option, to convert all or any portion of such Holder’s Preferred Stock into fully paid and non-assessable Common Stock. Upon a Holder’s election to exercise its Conversion Right, each Preferred Stock for which the Conversion Right is exercised shall be converted into such number of Common Stock (calculated as to each conversion to the nearest 1/10,000th of a share) equal to the quotient of (A) the sum of (1) the Liquidation Preference and (2) the Accrued Dividends on such share as of the Conversion Date, divided by (B) the Conversion Price of such share in effect at the time of conversion.
(ii) No fractional shares of Common Stock shall be issued upon the conversion of any shares of Preferred Stock. If more than one shares of Preferred Stock subject to conversion is held by the same Holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the sum of (A) the aggregate Liquidation Preference and (B) the aggregate Accrued Dividends as of the Conversion Date on all shares of Preferred Stock so subject. If the conversion of any share or Preferred Stock results in a fractional share of Common Stock issuable after application of the immediately preceding sentence, the Corporation shall pay a cash amount in lieu of issuing such fractional share in an amount equal to the value of such fractional interest multiplied by the Market Price of a share of Common Stock on the Trading Day immediately prior to the Conversion Date.
(iii) The Corporation shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of the Preferred Stock, such number of shares of Common Stock equal to 110% of the number of shares of Common Stock issuable upon the conversion of all the shares of Preferred Stock then outstanding. The Corporation shall take all commercially reasonable actions permitted by law, including calling meetings of stockholders of the Corporation and soliciting proxies for any necessary vote of the stockholders of the Corporation, to amend the Certificate of Incorporation to increase the number of authorized and unissued shares of Common Stock, if at any time there shall be insufficient authorized and unissued shares of Common Stock to permit such reservation or to permit the conversion of all outstanding shares of Preferred Stock. The Corporation covenants that the Preferred Stock and all Common Stock that may be issued upon conversion of Preferred Stock shall upon issuance be duly authorized, fully paid and non-assessable and will not be subject to preemptive rights or subscription rights of any other shareholder of the Corporation. The Corporation further covenants that the Corporation shall, from time to time, at its sole expense, cause to be authorized for listing or quotation on the Trading Market (to the extent permitted by the Trading Market), the maximum number of Common Stock issued and issuable upon conversion of the Preferred Stock, subject to official notice of issuance.
(b) Mechanics of Conversion.
(i) If the Corporation exercises the Conversion Option and delivers notice thereof in accordance with Section 6(a)(i)(A), the Corporation shall notify the Holders of Preferred Stock in writing of the Conversion Option promptly (and in any event within three (3) Business Days) following the Conversion Option Date by delivery of written notice to such Holders and shall update or cause to be updated the Register, effective as of the Conversion Option Date, to reflect the shares of Common Stock held by such Holders as a result of the Conversion Option and shall, as promptly as practicable thereafter, re-designate or issue or cause to be issued to each such Holder the number of validly issued, fully paid and non-assessable Common Stock to which such Holder shall be entitled and deliver or cause to be delivered to each such Holder evidence of such re-designation or issuance reasonably satisfactory to such Holders.
| 13 |
(ii) The Conversion Right of a Holder of Preferred Stock shall be exercised by the Holder by delivering written notice to the Corporation that the Holder elects to convert all or a portion of the shares of Preferred Stock held by such Holder (a “Conversion Notice”) and specifying the name or names (with address or addresses) in which shares of Common Stock are to be issued and (if so required by the Corporation or the Corporation’s transfer agent) by a written instrument or instruments of transfer in form reasonably satisfactory to the Corporation or the transfer agent, as applicable, duly executed by the Holder or its legal representative.
(iii) As promptly as practicable after the receipt of the Conversion Notice, and the payment of required taxes or duties pursuant to Section 13(i) if applicable, and in no event later than one (1) Trading Day thereafter, the Corporation shall update or cause to be updated the Register to reflect the Common Stock held by such Holder as a result of such conversion and shall issue and shall deliver or cause to be issued and delivered to such Holder, or to such other Person on such Holder’s written order (A) evidence of such issuance reasonably satisfactory to such Holder, and (B) cash for any fractional interest in respect of a Common Stock arising upon such conversion settled as provided in Section 6(a)(ii).
(iv) The conversion of any Preferred Stock shall be deemed to have been made (i) in connection with any Conversion Option, at the close of business on the Conversion Option Date, and (ii) in connection with any exercise of the Conversion Right, at the close of business on the date of giving the Conversion Notice (the “Conversion Date”). Until the Conversion Date with respect to any Preferred Stock has occurred, such Preferred Stock will remain outstanding and will be entitled to all of the powers, designations, preferences and other rights provided herein, including that such share shall (A) accrue and accumulate Preferred Dividends pursuant to Section 4 and (B) entitle the Holder thereof to the voting rights provided in Section 10Section 10.
| 14 |
Section 7. Reorganization Events.
(a) Treatment of Preferred Stock Upon a Reorganization Event. Subject to applicable Law, upon the occurrence of any Reorganization Event, (i) if the Corporation is the surviving company in such Reorganization Event, each Preferred Stock outstanding immediately prior to such Reorganization Event shall remain outstanding following such Reorganization Event (or be exchanged for an equivalent Preferred Stock governed by the terms herein) (provided, that (x) each Preferred Stock shall become convertible into the kind and amount of securities, cash and other property that the Holder of such Preferred Stock (other than the counterparty to the Reorganization Event or an Affiliate of such other party) would have received in such Reorganization Event had such Preferred Stock, immediately prior to such Reorganization Event, been converted into the applicable number of Common Stock using (i) the Conversion Price immediately prior to such Reorganization Event and (ii) the Liquidation Preference, together with the Accrued Dividends thereon, applicable at the time of such subsequent conversion (such securities, cash and other property, the “Exchange Property”) (provided, further that any Exchange Property that is not cash shall consist of marketable securities listed on the NASDAQ or NYSE), and (y) appropriate adjustments shall be made to the conversion provisions set forth in Section 6 and the adjustment to conversion price provisions set forth in Section 9 as determined reasonably and in good faith by the Board of Directors to place the Holders in as nearly as equal of a position as possible with respect to such matters following such Reorganization Event as compared to immediately prior to such Reorganization Event) or (ii) if the Corporation is not the surviving entity in such Reorganization Event or will be dissolved in connection with such Reorganization Event, each Preferred Stock outstanding immediately prior to such Reorganization Event shall be converted or exchanged into a security of the Person surviving such Reorganization Event or such other continuing entity in such Reorganization Event having rights, powers and preferences, and the qualifications, limitations and restrictions thereof, as nearly equal as possible to those provided herein (including with respect to any securities or other property to which the holders of Common Stock become entitled as a result of such Reorganization Event, which shall be determined in a manner similar to the rights in respect of Exchange Property in accordance with the preceding clause (i)) (with such adjustments as are appropriate to place the Holders in as nearly as equal of a position as possible following such Reorganization Event as compared to immediately prior to such Reorganization Event) (provided, for the avoidance of doubt, that any Exchange Property that is not cash shall consist of marketable securities listed on the NASDAQ or NYSE).
(b) Form of Consideration. In the event that Preferred Stock become convertible into Exchange Property in connection with a Reorganization Event and the holders of Common Stock have the opportunity to elect the form of consideration to be received in such transaction, the Exchange Property shall be based on the types and amounts of consideration received by the holders of Common Stock in the same proportion as was selected in the aggregate by the holders of Common Stock; provided that, to the extent the applicable transaction agreement provides for adjustments to such elected types and amounts of consideration that are generally applicable to holders of Common Stock making such elections, the Exchange Property will be subject to such adjustments.
(c) Successive Reorganization Events. The provisions of this Section 7 shall similarly apply to successive Reorganization Events.
(d) Notice of Reorganization Events. The Corporation (or any successor) shall, no later than ten (10) days following the consummation of any Reorganization Event, provide written notice to the Holders of such consummation of such event and of the kind and amount of the cash, securities or other property that constitutes the Exchange Property. Failure to deliver such notice shall not affect the operation of this Section 7.
| 15 |
(e) Requirements of Reorganization Events. The Corporation shall not, without consent of the Holders representing at least a majority of the then-issued and outstanding Preferred Stock, enter into any agreement for, or consummate, any transaction or series of transactions constituting a Reorganization Event unless (A) (i) such agreement provides for or does not interfere with or prevent (as applicable) conversion of the Preferred Stock into the Exchange Property in a manner that is consistent with and gives effect to this Section 7 (including by reserving Exchange Property that allows any conversion of the Preferred Stock (or replacement securities) into Exchange Property to be completed in accordance with the terms of this Section 7), and (ii) to the extent that the Corporation is not the surviving company in such Reorganization Event or will be dissolved in connection with such Reorganization Event, proper provision shall be made in the agreements governing such Reorganization Event for the conversion of the Preferred Stock into a security of the Person surviving such Reorganization Event or such other continuing entity in such Reorganization Event, which security shall meet the requirements of this Section 7 and (B) immediately following such Reorganization Event, neither the Preferred Stock (or any share of preferred equity into which the Preferred Stock are exchanged) nor any Exchange Property is subject to any limitations on conversion or voting pursuant to the rules of the applicable stock exchange or applicable Law. For the avoidance of doubt, no consent of any Holder shall be required if in connection with any Reorganization the Holder is paid in full the Liquidation Preference amount plus all Accrued Dividends.
(f) Change of Control. For the avoidance of doubt, if a Reorganization Event constitutes a Change of Control, then Section 8 shall take precedence over this Section 7 to the extent there is any inconsistency between such sections.
Section 8. Change of Control.
(a) Change of Control Redemption. In the event of a Change of Control, the Corporation shall have the option, in its sole discretion and in accordance with applicable Law and subject to compliance with the notice requirements set forth in Section 8(b) and the Corporation having sufficient legally available funds to comply with its obligations hereunder (including pursuant to a binding commitment by the counterparty to any Change of Control Agreement (as defined below) to provide the necessary funds), to at any time following the execution of the definitive agreement contemplating the Change of Control until ten (10) Business Days prior to the effective date of the Change of Control (the effective date of the Change of Control, the “Change of Control Effective Date”) irrevocably elect to redeem on the Change of Control Effective Date, but immediately prior, and subject to, consummation of the Change of Control, all (and not less than all) of the outstanding Preferred Stock (a “Change of Control Redemption”) for a price in cash per Preferred Stock equal to 100% of the sum of (x) the Liquidation Preference of such Preferred Stock plus (y) the aggregate Accrued Dividends of such Preferred Stock in each case, as of the Change of Control Effective Date (the “COC Redemption Price”); provided that a Holder may, at any time following the receipt of a Change of Control Redemption Notice until the date that is five (5) Business Days prior to the Change of Control Effective Date elect (by irrevocable written notice to the Corporation) to instead receive, at the Change of Control Effective Date, consideration of the kind and amount that such Holder of such Preferred Stock would have received in such Change of Control had such Preferred Stock, immediately prior to the Change of Control Effective Date, been converted into the applicable number of Common Stock using the Conversion Price on the Change of Control Effective Date and the Liquidation Preference, together with Accrued Dividends thereon, applicable at the time of such conversion (the “Holder COC Redemption Price”).
| 16 |
(b) Change of Control Notice. On or before the twentieth (20th) Business Day prior to the date on which the Corporation anticipates consummating any Change of Control (or, if later, promptly after the Corporation discovers that the Change of Control will occur but in no event later than ten (10) Business Days prior to the actual consummation of the Change of Control), the Corporation shall deliver to each Holder (as appearing in the Register of the Corporation) a written notice setting forth a description of the anticipated Change of Control and the date on which the Change of Control is anticipated to be effected (or, if applicable, the date on which a Schedule TO or other schedule, form or report disclosing a Change of Control was filed). On or before the tenth (10th) Business Day prior to the date on which the Corporation anticipates consummating a Change of Control, the Corporation shall deliver to each Holder (as appearing in the Register of the Corporation) a written notice (the “Change of Control Redemption Notice”) setting forth the Corporation’s intention to exercise its right to effect a Change of Control Redemption and the expected Change of Control Effective Date. Any such Change of Control Redemption Notice shall also set forth the amount of (or methodology for determining) the COC Redemption Price and the Holder COC Redemption Price, together with the calculation of each and reasonable supporting details which shall include the Conversion Price used in such calculations. Upon a Change of Control, the Corporation shall (i) if the Preferred Stock are to be redeemed in accordance with this Section 8 in exchange for the COC Redemption Price, deliver or cause to be delivered to the Holder by wire transfer the COC Redemption Price substantially concurrent with the consummation of the Change of Control and (ii) if the Preferred Stock are to be redeemed in accordance with this Section 8 in exchange for the Holder COC Redemption Price, deliver or cause to be delivered to the Holder the Holder COC Redemption Price concurrently with when the consideration in such Change of Control is delivered to the holders of Common Stock.
(c) Change of Control Agreements. The Corporation shall not enter into any definitive agreement for a Change of Control (such an agreement, a “Change of Control Agreement”), or otherwise engage in or consummate, a transaction constituting a Change of Control, unless (i) such Change of Control Agreement provides for or does not interfere with or prevent (as applicable) the exercise by the Holders of their rights and the Corporation’s obligations under this Certificate of Designation, including this Section 8 and (ii) the acquiring or surviving Person in such Change of Control represents and covenants, in form and substance reasonably satisfactory to the Board of Directors acting in good faith, that at the consummation of such Change of Control, to the effect that such Person shall have sufficient funds (which may include, without limitation, cash and cash equivalents on the Corporation’s balance sheet, the proceeds of any debt or equity financing, available lines of credit or uncalled capital commitments) to consummate such Change of Control (taking into account the satisfaction of any indebtedness required in connection with the Change of Control), including making all required payments to the Holders hereunder, including the payment of the COC Redemption Price or the Holder COC Redemption Price, as elected by each Holder.
(d) Conversion Prior to Redemption. In the event that the Preferred Stock has been called for redemption under this Section 8, notwithstanding anything to the contrary in this Certificate of Designation, a Holder shall remain entitled, pursuant to Section 6(a)(i)(B) and subject to the limitations thereof, to convert all or any portion of such Holder’s Preferred Stock into fully paid and non-assessable Common Stock until the close of business on the fifth (5th) Business Day following receipt of a Change of Control Redemption Notice. To the extent that a Holder exercises such conversion right, the number of such Holder’s share of Preferred Stock subject to the Corporation’s Change of Control Redemption Notice shall be reduced by the same amount as converted by such Holder.
| 17 |
Section 9. Adjustments to Conversion Price.
(a) Adjustments to Conversion Price. Except as provided in Section 9(d), the Conversion Price shall be subject to the following adjustments:
(i) In-Kind Dividends and Distributions. If the Corporation declares a dividend or makes an in-kind distribution on the Common Stock payable in Common Stock, then the Conversion Price in effect at the opening of business on the Ex-Date for such dividend or distribution shall be adjusted to the price determined by multiplying the Conversion Price at the opening of business on such Ex-Date by the following fraction:
Where,
OS0 = the number of Common Stock outstanding at the close of business on the Business Day immediately preceding the Ex-Date for such dividend or distribution.
OS1 = the sum of the number of Common Stock outstanding at the close of business on the Business Day immediately preceding the Ex-Date for such dividend or distribution plus the total number of Common Stock constituting such dividend or distribution.
If any dividend or distribution described in this Section 9(a)(i) is declared but not so paid or made, the Conversion Price shall be readjusted, effective as of the date and time the Board of Directors determines not to make such dividend or distribution, to such Conversion Price that would be in effect if such dividend or distribution had not been declared.
(ii) Subdivisions, Splits and Combination of the Common Stock. If the Corporation subdivides, splits or combines the Common Stock, then the Conversion Price in effect immediately prior to the effective date of such share subdivision, split or combination shall be adjusted to the price determined by multiplying the Conversion Price in effect immediately prior to the effective date of such share subdivision, split or combination by the following fraction:
Where,
OS0 = the number of Common Stock outstanding immediately prior to the effective date of such share subdivision, split or combination.
OS1 = the number of Common Stock outstanding immediately after the opening of business on the effective date of such share subdivision, split or combination.
| 18 |
If any subdivision, split or combination described in this Section 9(a)(ii) is announced but the outstanding Common Stock are not subdivided, split or combined, the Conversion Price shall be readjusted, effective as of the date the Board of Directors determines not to subdivide, split or combine the outstanding Common Stock, to such Conversion Price that would be in effect if such subdivision, split or combination had not been announced.
(iii) Other Distributions. If the Corporation distributes to all holders of shares of Common Stock any Convertible Securities or Options or any other assets for which there is no corresponding distribution in respect of the Preferred Stock pursuant to Section 4(a)(i) (which excludes, for the avoidance of doubt, any distribution of cash or non-cash property for which there is a corresponding distribution in respect of the Preferred Stock pursuant to Section 4(a)(i)), then the Conversion Price in effect immediately prior to the Ex-Date for such distribution shall be adjusted to the price determined by multiplying the Conversion Price in effect immediately prior to the Ex-Date for such distribution by the following fraction:
Where,
SP0=the Market Price of a share of Common Stock on the date immediately prior to the Ex-Date for such distribution.
FMV = the fair market value of the portion of the distribution applicable to one share of Common Stock on the Ex-Date for such distribution, in the case of a non-cash distribution or with respect to the non-cash portion of a distribution, if any, as determined pursuant to the Valuation Methodology; provided, that such value, whether determined pursuant to the foregoing clause (i) or (ii), shall not for the purposes hereof in any event be equal to or greater than the Market Price of a share of Common Stock on such date.
In a “spin-off,” where the Corporation makes a distribution to all holders of shares of Common Stock consisting of capital stock of any class or series, or similar equity interests of, or relating to, a Subsidiary of the Corporation or other business unit, the Conversion Price will be adjusted on the 15th Trading Day after the effective date of the distribution by multiplying such Conversion Price in effect immediately prior to such 15th Trading Day by the following fraction:
| 19 |
Where,
MP0 = (i) if the Common Stock are listed or quoted on a principal U.S. national or regional securities exchange or traded on an over-the-counter market, the Market Price of a share of Common Stock for the period ending on and including the tenth Trading Day following the effective date of such distribution, or (ii) if the Common Stock are not listed or quoted on a principal U.S. national or regional securities exchange or traded on an over-the-counter market, the Market Price of a share of Common Stock on the effective date of such distribution.
MPs = (i) if the capital stock or equity interests distributed to the holders of shares of Common Stock are listed or quoted on a principal U.S. national or regional securities exchange or traded on an over-the-counter market, an amount equal to the product of (x) the number of shares of such capital stock or equity interests representing the portion of the distribution applicable to one share of Common Stock and (y) the Market Price of such capital stock or equity interests for the period ending on and including the tenth Trading Day following the effective date of such distribution, or (ii) if such capital stock or equity interests are not listed or quoted on a principal U.S. national or regional securities exchange or traded on an over-the-counter market, the Market Price of the capital stock or equity interests representing the portion of the distribution applicable to one share of Common Stock on the effective date of such distribution (after giving effect to such distribution).
In the event that such distribution described in this Section 9(a)(iii) is not so paid or made, the Conversion Price shall be readjusted, effective as of the date the Board of Directors publicly announces its decision not to pay, make or consummate such dividend or distribution, to the Conversion Price that would then be in effect if such dividend or distribution had not been declared.
(iv) Certain Repurchases of Common Stock. If the Corporation effects a Pro Rata Repurchase of Common Stock that involves the payment by the Corporation of consideration per share of Common Stock that exceeds the Market Price of a share of Common Stock on the Effective Date of such Pro Rata Repurchase (provided that if part or all of the consideration is not cash, the fair market value of the non-cash consideration shall be determined pursuant to the Valuation Methodology, then the Conversion Price in effect immediately prior to the Effective Date of such Pro Rata Repurchase shall be adjusted (such adjustment to become effective immediately prior to the opening of business on the day following the Effective Date of such Pro Rata Repurchase) by multiplying the Conversion Price in effect immediately prior to the Effective Date of such Pro Rata Repurchase by the following fraction:
Where,
SP0 = the Market Price of a share of Common Stock on the Trading Day immediately preceding the first announcement of the intent to effect such Pro Rata Repurchase.
| 20 |
OS0 = the number of shares of Common Stock outstanding at the Effective Date of such Pro Rata Repurchase, including, if applicable, any shares validly tendered and not withdrawn or exchanged shares.
OS1= the number of shares of Common Stock outstanding at the Effective Date of such Pro Rata Repurchase, including, if applicable, any shares validly tendered or exchanged and not withdrawn, minus the number of shares purchased in such Pro Rata Repurchase (which shares shall equal the Purchased Shares (as defined below) if such Pro Rata Repurchase is effected pursuant to a tender offer or exchange offer).
AC = the aggregate cash and fair market value of the other consideration payable in such Pro Rata Repurchase, and in the case of non-cash consideration, as determined pursuant to the Valuation Methodology, based, in the case of a tender offer or exchange offer, on the number of shares actually accepted for purchase (the “Purchased Shares”).
In the event that the Corporation, or one of its Affiliates, is obligated to purchase shares of Common Stock pursuant to any such Pro Rata Repurchase, but the Corporation, or such Affiliate, is permanently prevented by applicable law from effecting any such purchases, or all such purchases are rescinded, then the Conversion Price shall be readjusted to be such Conversion Price that would then be in effect if such Pro Rata Repurchase had not been made.
(v) Rights Plans. To the extent that the Corporation has a rights plan in effect with respect to the Common Stock on any Conversion Date, upon conversion of any shares of the Preferred Stock into Common Stock, the Holders will receive, in addition to the shares of Common Stock, the rights under the rights plan, unless, prior to such Conversion Date, the rights have separated from the shares of Common Stock, in which case the Conversion Price will be adjusted at the time of separation as if the Corporation had issued the rights to all holders of the Common Stock in an issuance triggering an adjustment pursuant to Section 9(a)(iii), subject to readjustment in the event of the expiration, termination or redemption of such rights
(b) Other Adjustments.
(i) The Corporation may make decreases in the Conversion Price, in addition to any other decreases required by this Section 9 if the Board of Directors deems it advisable to avoid or diminish any income tax to holders of the Common Stock resulting from any in-kind dividend or distribution of Common Stock (or issuance of Options for Common Stock) or from any event treated as such for income tax purposes.
(ii) If the Corporation takes any action affecting the Common Stock, other than an action described in Section 9(a) which upon a determination by the Board of Directors, in its good faith discretion, would materially adversely affect the Conversion Rights of the Holders of Preferred Stock, the Conversion Price shall be adjusted, to the extent permitted by Law, in such manner, if any, and at such time, as the Board of Directors determines in good faith to be equitable in the circumstances.
| 21 |
(c) Successive Adjustments. Successive adjustments in the Conversion Price shall be made, without duplication, whenever any event specified in Section 9(a) or Section 9(b) shall occur.
(d) Rounding of Calculations; Minimum Adjustments. All adjustments to the Conversion Price shall be calculated to the nearest one-tenth (1/10th) of a cent. No adjustment in the Conversion Price shall be required if such adjustment would be less than $0.01; provided that any adjustment which by reason of this Section 9(d) is not required to be made shall be carried forward and taken into account in any subsequent adjustment; provided, further, that on any Conversion Date adjustments to the Conversion Price will be made with respect to any such adjustment carried forward and which has not been taken into account before such date.
(e) Statement Regarding Adjustments; Notices. Whenever the Conversion Price is to be adjusted in accordance with one or more of Section 9(a) or Section 9(b), the Corporation shall the Corporation shall, as soon as practicable following the occurrence of an event that requires an adjustment to the Conversion Price pursuant to one or more of Section 9(a) or Section 9(b), taking into account the one cent threshold set forth in Section 9(d) (or if the Corporation is not aware of such occurrence, as soon as practicable after becoming so aware), provide, or cause to be provided, a written notice to the Holders of the occurrence of such event showing in reasonable detail the facts requiring such adjustment, the Conversion Price that shall be in effect after such adjustment and the method by which the adjustment to the Conversion Price was determined.
Section 10. Limitation on Conversion Rights
(a) Notwithstanding anything to the contrary in this Certificate of Designations, no shares of Common Stock will be issued or delivered upon any proposed conversion of any Preferred Stock of any Holder thereof, and no Preferred Stock of any Holder thereof will be convertible, in each case to the extent, and only to the extent, that such issuance, delivery, conversion or convertibility would cause such Holder to Beneficially Own a number of shares of Common Stock in excess of 9.99% of the total number of shares of Common Stock issued and outstanding immediately following such conversion (the “Beneficial Ownership Limitation”).
(b) Notwithstanding anything to the contrary in this Certificate of Designations, no shares of Common Stock will be issued or delivered upon any proposed conversion of any Preferred Stock of any Holder thereof, and no Preferred Stock of any Holder thereof will be convertible, in each case to the extent, and only to the extent the number of shares of Common Stock deliverable upon conversion of the Preferred Stock would cause the aggregate number of Issued Underlying Shares to exceed the Share Cap.
(c) If shares of Common Stock are not delivered as a result of the Beneficial Ownership Limitation or the Share Cap, then the Corporation will deliver, in lieu of any shares of Common Stock otherwise deliverable, an amount of cash per share equal to the volume weighted average per share price of a share of Common Stock on the Trading Day immediately preceding the Conversion Date (such cash amount, the “Excess Amount”) and the relevant shares of Preferred Stock shall be deemed converted.
| 22 |
Section 11. Voting Rights.
(a) General. The Holders of Preferred Stock shall be entitled to vote with the holders of the Common Stock on all matters submitted to a vote of shareholders of the Corporation, except as otherwise provided herein or as required by applicable Law, voting together with the holders of Common Stock as a single class. For such purposes, each Holder shall be entitled to a number of votes in respect of the Preferred Stock owned of record by it equal to the number of Common Stock into which such Preferred Stock could be converted, applied ratably with respect to each outstanding Preferred Stock) as of the record date for the determination of shareholders entitled to vote on such matters or, if no such record date is established, as of the date such vote is taken or any written consent of shareholders is solicited. The Holders of Preferred Stock shall be entitled to notice of any shareholders’ meeting in accordance with the Certificate of Incorporation and the By-Laws as if they were holders of record of Common Stock for such meeting.
(b) Class Voting Rights. So long as any Preferred Stock are outstanding, in addition to any other vote required by applicable Law, the Corporation may not take any of the following actions (including by means of merger, consolidation, reorganization, recapitalization or otherwise) without the prior affirmative vote or written consent of the Holders representing at least a majority of the then-issued and outstanding Preferred Stock, voting as a separate class:
(i) amend, alter, repeal or otherwise modify any provision of the Certificate of Incorporation, the By-Laws or the terms hereof in a manner that would alter or change the terms or the powers, preferences, rights or privileges of the Preferred Stock as to affect them adversely and in a manner different to the manner in which the Holders of Common Stock are affected; or
(ii) enter into any merger, reorganization or other consolidation or business combination that would treat the Preferred Stock in a manner inconsistent with the terms hereof.
(c) The consent or votes required in Section 11(b) shall be in addition to any approval of shareholders of the Corporation which may be required by Law or pursuant to any provision of the Certificate of Incorporation or the By-Laws. Each Holder will have one vote per share on any matter on which Holders of Preferred Stock are entitled to vote separately as a class, whether at a meeting or by written consent.
Section 12. Transfer Agent Certification of Preferred Stock.
(a) The Corporation may, in its sole discretion, appoint a transfer agent and remove its transfer agent in accordance with the agreement between the Corporation and such transfer agent; provided that the Corporation shall appoint a successor transfer agent of recognized standing who shall accept such appointment prior to the effectiveness of such removal. Upon any such removal or appointment, the Corporation shall send notice thereof by first-class mail, postage prepaid, to the Holders. When a Holder requests to register the transfer of Preferred Stock (provided that such transfer is not in violation of the transfer restrictions herein or the Convertible Preferred Stock Purchase Agreement), the Corporation or the Corporation’s transfer agent, as applicable, shall register the transfer as requested if its reasonable requirements for such transaction are met. Any transfer made not in compliance with the foregoing shall be disregarded and deemed void.
| 23 |
(b) The Preferred Stock shall initially be uncertificated and issued in book-entry form; provided that, the Corporation shall reasonably promptly, following the request by the Holder, at any time, issue certificates under seal of the Corporation specifying the number of Preferred Stock held by the Holder; provided that this obligation shall be subject always to the provisions of the Certificate of Incorporation and the By-Laws, and any other applicable Law.
Section 13. Miscellaneous.
(a) Taxes. All payments and distributions (or deemed distributions) on the Preferred Stock (and any Common Stock or cash issued or paid upon the conversion of any Preferred Stock) shall be subject to withholding and backup withholding of taxes to the extent required by applicable Law, subject to applicable exemptions, and amounts withheld, if any, shall be treated as received by the Holders.
(b) Good Faith. The Corporation shall not, by amendment of the Certificate of Incorporation or through reorganization, consolidation, merger, dissolution, sale of assets, or otherwise, avoid or seek to avoid the observance or performance of any of the terms hereof, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holders of Preferred Stock against dilution or other impairment as set forth herein.
(c) Status of Shares. Preferred Stock which have been redeemed (or, if applicable, repurchased) shall be cancelled and have the status of authorized and unissued Preferred Stock, par value $0.01 per share, without designation as to series until such shares are once more, subject to and in accordance with the provisions of Section 10 designated as part of a particular series of Preferred Stock by the Board of Directors.
(d) Notices. All notices referred to herein shall be in writing, and, unless otherwise specified herein, all notices hereunder shall be deemed to have been given and received (whether actually received or not) on the date of actual delivery thereof, if personally delivered or delivered by email (if receipt is confirmed at the time of such transmission by telephone or electronically), or three (3) Business Days after the mailing thereof if sent by registered or certified mail (or by first class mail if the same shall be specifically permitted for such notice under the terms hereof) with postage prepaid, addressed: (i) if to the Corporation, to its office at 125 North Drive, Westborough, MA, Attention: President and Chief Executive Officer or (ii) if to any Holder, to such Holder at the address of such Holder as listed in the Register or (iii) to such other address as the Corporation or any such Holder, as the case may be, shall have designated by written notice similarly given.
| 24 |
(e) Severability. If any right, preference or limitation of the Preferred Stock set forth herein (as amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule of Law or public policy, all other rights, preferences and limitations set forth herein (as so amended) which can be given effect without the invalid, unlawful or unenforceable right, preference or limitation shall, nevertheless, remain in full force and effect, and no right, preference or limitation herein set forth shall be deemed dependent upon any other such right, preference or limitation unless so expressed herein.
(f) Other Rights. Except as expressly provided in any agreement between a Holder and the Corporation, the Preferred Stock shall not have any voting powers, preferences or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Certificate of Incorporation or as provided by applicable Law.
(g) Headings. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.
(h) Effectiveness. The terms herein shall become effective upon the filing thereof with the Secretary of State of the State of Delaware.
(i) Waiver and Modifications. Notwithstanding any provision herein to the contrary, the powers (including voting powers) of the Preferred Stock and the preferences and relative, participating, optional, special or other rights, if any, and the qualifications, limitations or restrictions of the Preferred Stock may be waived or modified as to all Preferred Stock in any instance (without the necessity of calling, noticing or holding a meeting of stockholders) with the written consent of the Holders representing at least a majority of the then-issued and outstanding Preferred Stock.
* * *
IN WITNESS WHEREOF, the undersigned has caused this Certificate of Designations to be signed by its duly authorized officer on this 15th day of October, 2025.
KOPIN CORPORATION | |
| /s/ Michael Murray | |
| Michael Murray | |
| President and Chief Executive Officer |
Exhibit 5.1
November 6, 2025
Kopin Corporation
125 North Drive
Westborough, MA 01581
Ladies and Gentlemen:
We have acted as counsel to Kopin Corporation in connection with the filing of the Registration Statement on Form S-1 (the “Registration Statement”) with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”). The Registration Statement relates to the resale from time to time by selling stockholders named in the Registration Statement of up to 19,545,950 shares of the Company’s common stock, par value $0.01 per share (the “Shares”).
In connection with this opinion letter, we have examined the Registration Statement and originals, or copies certified or otherwise identified to our satisfaction, of the Amended and Restated Certificate of Incorporation, as amended through the date hereof, and the Sixth Amended and Restated Bylaws, as in effect on the date hereof, of the Company and such other documents, records and other instruments as we have deemed appropriate for purposes of the opinion set forth herein.
We have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of the documents submitted to us as originals, the conformity with the originals of all documents submitted to us as certified, facsimile or photostatic copies and the authenticity of the originals of all documents submitted to us as copies.
Based upon the foregoing and subject to the qualifications and assumptions stated herein, we are of the opinion that the Shares are validly issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as Exhibit 5.1 to the Registration Statement and to the reference to us under the caption “Legal Matters” in the prospectus included in the Registration Statement. In giving such consent, we do not hereby admit that we are acting within the category of persons whose consent is required under Section 7 of the Securities Act or the rules or regulations of the SEC thereunder.
Very truly yours,
/s/ Morgan, Lewis & Bockius LLP
| Morgan, Lewis & Bockius llp | ||
| One Federal Street | ||
| Boston, MA 02110-1726 | 
+1.617.341.7700 | |
| United States | 
+1.617.341.7701 | |
Exhibit 10.23
DATED October 16 2025
SHAREHOLDERS’ AGREEMENT IN RELATION TO KOPIN EUROPE LIMITED
|
between
KOPIN CORPORATION
and
THEON INTERNATIONAL PLC
and
KOPIN EUROPE LIMITED
Condor House
5-10 St. Paul’s Churchyard
London EC4M 8AL
Tel. +44 (0)20 3201 5000
Fax: +44 (0)20 3201 5001
www.morganlewis.com
| 1 |
TABLE OF CONTENTS
| Clause | Headings | Page |
| 1. | DEFINITIONS AND INTERPRETATION | 3 |
| 2. | BUSINESS AND OBJECTIVES | 11 |
| 3. | MANAGEMENT OF THE COMPANY | 11 |
| 4. | THE BOARD | 13 |
| 5. | MEETINGS OF SHAREHOLDERS OF THE COMPANY | 16 |
| 6. | RESERVED MATTERS | 17 |
| 7. | Deadlock | 17 |
| 8. | FINANCIAL MATTERS AND INFORMATION | 19 |
| 9. | ethics, bribery and corruption | 22 |
| 10. | FINANCING | 23 |
| 11. | TRANSFERS OF SHARES | 23 |
| 12. | RIGHT OF FIRST REFUSAL | 26 |
| 13. | TAG ALONG RIGHTS | 27 |
| 14. | DRAG ALONG RIGHTS | 27 |
| 15. | DEFAULT | 28 |
| 16. | Issues of New SECURITIES | 29 |
| 17. | NOTICES | 30 |
| 18. | process agents | 31 |
| 19. | TERM | 31 |
| 20. | Announcements and Confidentiality | 32 |
| 21. | MISCELLANEOUS | 33 |
| 22. | GOVERNING LAW AND Arbitration | 36 |
| Schedule 1 DEED OF ADHERENCE | 38 | |
| Schedule 2 Transfer terms | 39 | |
| Schedule 3 PARTY WARRANTIES | 40 | |
| Schedule 4 CALL OPTION | 41 | |
| Schedule 5 PUT OPTION | 42 | |
| Schedule 6 RESERVED MATTERS | 43 | |
| Schedule 7 INitial BUdget AND Business Plan | 44 | |
| 2 |
THIS AGREEMENT (this “Agreement”) is made as a DEED on October 16 2025.
BETWEEN:
| (1) | KOPIN CORPORATION, a Delaware corporation, whose registered office is at 125 North Drive, Westborough, MA, 01581, United States (“Kopin”); |
| (2) | THEON INTERNATIONAL PLC, a company incorporated in Cyprus with registered number HE 424549, whose registered office is at 5, Agios Antonios Street, Muskita Building 2, Strovolos, Nicosia, 2002, Cyprus (“Theon”); and |
| (3) | KOPIN EUROPE LIMITED, a company registered in England & Wales with company number 05220480 whose registered office is at One Eleven, Edmund Street, Birmingham, B3 2HJ (the “Company”), |
(each a “Party” and together the “Parties”).
RECITALS:
| (A) | At the date of this Agreement, the authorised and issued share capital of the Company is 21,250,000 Shares all of which are held by Kopin. |
| (B) | On August 8 2025, the Company and Theon entered into a subscription agreement pursuant to which, subject to the satisfaction of certain conditions, Theon agreed to subscribe for 21,281,350 Shares in the Company (the “Subscription Agreement”). |
| (C) | Following Completion, Kopin holds 22,150,000 Shares, amounting to 51.0% of the fully diluted issued share capital of the Company, and Theon holds 21,281,350 Shares, amounting to 49.0% of the fully diluted issued share capital of the Company. |
| (D) | It is intended that the Company shall carry on the Business (as defined below). |
| (E) | Kopin and Theon hereby wish to set forth their agreement concerning the governance of the Company, their relationship as shareholders of the Company and certain aspects of the affairs of, and the shareholders’ dealings with, the Company. |
IT IS AGREED as follows:
| 1. | DEFINITIONS AND INTERPRETATION |
| 1.1 | In this Agreement, the following words and expressions shall have the following meanings: |
“ABC Laws” means the Bribery Act 2010 and any equivalent Applicable Law in any relevant jurisdiction concerning anti-bribery and corruption;
“Acceptance Period” has the meaning given in Clause 16.2;
“Affiliate” means, in respect of any person, a person that directly, or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the person specified, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a person, whether through the ownership of voting securities, by contract, as trustee or executor, or otherwise (including any fund or other investment vehicle managed by such person), and in respect of any individual, his or her spouse, or civil partner, and his or her grandparents (and those of his spouse or civil partner) and all descendants of those grandparents, provided that, for the purposes of this Agreement, no Shareholder is to be regarded as an Affiliate of any other Shareholder;
“Agreed Form” means, in relation to any document, the form of that document which has been initialled for the purpose of identification by Theon (or Theon’s legal adviser on behalf of Theon) and Kopin (or Kopin’s legal adviser on behalf of Kopin) on or prior to the date of this Agreement;
| 3 |
“Applicable Law” means all applicable legislation, statutes or statutory instruments, directives, regulations, judgments, decisions, decrees, orders, instruments, by-laws, and other legislative measures or decisions having the force of law, treaties, conventions and other agreements between states, or between states and the European Union or other supranational bodies, rules of common law, customary law and equity and all civil or other codes and all other laws of, or having effect in, any jurisdiction from time to time;
“Articles” means the memorandum and articles of association of the Company, as amended or otherwise restated from time to time;
“Board” means the board of Directors from time to time;
“Board Reserved Matter” means any matter set out in Part B of Schedule 6;
“Budget” means the budget of the Company for a particular financial year in a format approved from time to time by the Shareholders in accordance with Clauses 8.6-8.13 (inclusive), including profit and loss, cashflow and balance statements and key performance indicators;
“Business” means the design, development and manufacture of ferroelectric liquid crystal on silicon micro-displays / spatial light modulators and associated drive electronics, along with any matters ancillary thereto, the back end packaging of ***, development of the ***. module, or such other business as may be determined in accordance with this Agreement;
“Business Day” means a day on which banks are open for general commercial business in London, UK, Boston, USA and Nicosia, Cyprus (excluding Saturdays, Sundays and public holidays);
“Business Plan” means a business plan for the Company for a particular period of time, in a format approved from time to time by the Shareholders in accordance with Clauses 8.6-8.13 (inclusive) including items such as strategic initiatives, sales projections, technology roadmap, forecasted financial statements, key performance indicators, staffing, and material commitments required to deliver that business plan;
“Buyer” means the purchaser of any Shares in accordance with the terms of this Agreement;
“Call Option Notice” means a written notice given by the Other Shareholder to the Defaulting Shareholder pursuant to Clause 15.5, following which the provisions of Schedule 4 shall apply;
“Chairperson” means such Kopin Director as may be designated as chairperson of the Board from time to time by Kopin;
“Completion” has the meaning given in the Subscription Agreement;
“Confidential Information” means the existence and contents of this Agreement and the other Transaction Documents and Agreed Form documents, the arrangements contemplated by this Agreement and the other Transaction Documents and Agreed Form documents, and:
| (a) | any information of whatever nature concerning the Business; | |
| (b) | any information of whatever nature concerning the business, finance, assets, liabilities, dealings, transactions, know-how, customers, suppliers, processes or affairs of the other Parties and any of their group undertakings from time to time; and | |
| (c) | any information which is expressly indicated to be confidential in relation to the Party disclosing it (or in relation to any of its group undertakings) from time to time, |
| 4 |
which any Party may from time to time receive or obtain (verbally or in writing or in disk or electronic form) from any other Party as a result of negotiating, entering into, or performing its obligations pursuant to this Agreement or any other Transaction Document or Agreed Form document;
“Conflict Matter” means any matter relating to a dispute between the Company on the one hand and any of the Shareholders (or any Affiliate of any of the Shareholders) on the other hand including, without limitation, the commencement, compromise or settlement of any litigation or arbitration proceedings;
“Conflicted Director” means any Director appointed by the Shareholder to whom the Conflict Matter applies;
“Control” means the ability of a person to secure, directly or indirectly, (whether by the holding of shares or other equity interests, possession of voting rights, the ability to appoint a majority of its board of directors or by virtue of any other power conferred by the articles of association, constitution, partnership deed, trust deed or other documents regulating another person, or by any other means whatsoever) that the affairs of such other person are conducted in accordance with its wishes and “Controlled” and “Controlling” shall be construed accordingly;
“Corrupt Act” has the meaning given in Clause 9.1;
“Corruption Law” means: (a) the United Kingdom Bribery Act 2010; (b) the United States Foreign Corrupt Practices Act of 1977; and (c) all other Applicable Laws relating to bribery or corruption of any jurisdiction in which the Company carries on the Business or any Party is incorporated or carries on business;
“Deadlock” has the meaning given in Clause 7.4;
“Deadlock Notice” has the meaning given in Clause 7.2;
“Deed of Adherence” means a deed in the form set out in Schedule 1;
“Default Notice” has the meaning given in Clause 15.3;
“Defaulting Shareholder” has the meaning given in Clause 15.3;
“Director” means a director of the Company;
“Dividend Policy” has the meaning given in Clause 8.16;
“Drag Along Notice” has the meaning given in Clause 14.1;
“Encumbrance” means any lien, pledge, encumbrance, charge (fixed or floating), mortgage, third party claim, debenture, option, right of pre-emption, right to acquire, equity, assignment by way of security, trust arrangement for the purpose of providing security or other security interests of any kind, including retention arrangements or other encumbrances and any agreement to create any of the foregoing;
“Equity Proportions” means the respective proportions in which the Shares are held from time to time by each of the Shareholders save that if the expression “Equity Proportions” is used in the context of some (but not all) of the Shareholders, it shall mean the respective proportions in which Shares are held by each of those particular Shareholders;
“Event of Default” has the meaning given in Clause 15.1;
“Export Control Law” means Applicable Law that imposes restrictions on the export, re export, transfer, disclosure or provision of commodities, hardware, software, technology, brokering, financial assistance or technical assistance including but not limited to:
| (a) | the United States International Traffic in Arms Regulations and Export Administration Regulations; |
| 5 |
| (b) | Council Regulation (EC) 821/2021, the Council Common Position 2008/944/CFSP defining common rules governing control of exports of military technology and equipment, and national implementing legislation thereof; and | |
| (c) | the United Kingdom Customs and Excise Management Act 1979, Export Control Act 2002, and Export Control Order 2008; |
“Governmental Authority” means any supranational, national, state, municipal or local government (including any subdivision, court, administrative agency or commission or other authority thereof) or any other supranational, governmental, intergovernmental, quasi-governmental authority, body, department or organisation, including the European Union, or any regulatory body appointed by any of the foregoing in each case, in any jurisdiction;
“IFRS” means International Financial Reporting Standards, International Accounting Standards and Interpretations of those standards issued by the International Accounting Standards Board and the International Financial Reporting Interpretations Committee and their predecessor bodies;
“Insolvency Event” means the commencement of any proceedings in respect of receivership, bankruptcy, insolvency, dissolution, liquidation or any similar proceedings or events in any applicable jurisdiction;
“Intellectual Property Rights” means patents, utility models, rights to inventions, copyright and neighboring and related rights, moral rights, trademarks and service marks, business names and domain names, rights in get-up and trade dress, goodwill and the right to sue for passing off or unfair competition, rights in designs, rights in technology, rights in computer software, rights in algorithms, database rights, rights to use, and protect the confidentiality of, confidential information (including know-how and trade secrets), and all other intellectual property rights, in each case whether registered or unregistered and including all applications and rights to apply for and be granted, renewals or extensions of, and rights to claim priority from, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist now or in the future in any part of the world;
“Key Terms” means: (i) the number of Shares to be transferred; (ii) the agreed consideration for the proposed transfer, and the consideration per Share; (iii) any conditions to the transfer of the Shares; and (iv) all other material terms and conditions of the proposed transfer;
“Kopin Director” has the meaning given in Clause 4.2;
“Listing” means:
| (a) | the offer and sale of shares or securities representing shares (including depositary receipts) in the Company or a holding company of the Company in an underwritten offering to the public pursuant to which proceeds of sale are generated for Shareholders proportionate to their interests in the Company (or in other agreed proportions); and | |
| (b) | the listing and trading of such shares and securities on a stock exchange of recognised international standing; |
“Lock-up Period” means the period commencing on the date of Completion and ending on the third anniversary of Completion;
“Managing Director” has the meaning given in Clause 3.1.3;
“Negotiation Period” has the meaning given in Clause 7.3;
“New Securities” has the meaning given in Clause 16.1;
| 6 |
“Nominated Representative” means:
| (a) | in respect of Kopin, Michael Murray; and | |
| (b) | in respect of Theon, Christian Hadjiminas, or such other person as a Shareholder may notify to the other Shareholder from time to time; |
“Non-Conflicted Director” means any Director appointed by the Shareholder to whom the Conflict Matter does not apply;
“Other Shareholder” means: (a) if Theon is the Selling Shareholder or the Defaulting Shareholder, Kopin; and (b) if Kopin is the Selling Shareholder or the Defaulting Shareholder, Theon;
“Pro-rata Offer” has the meaning given in Clause 16.2;
“Pro-rata Entitlement” has the meaning given in Clause 16.2.2;
“Process Agent” has the meaning given in Clause 18.1;
“Profitability Determination” has the meaning given in Clause 8.15;
“Public Official” means any person (whether appointed or elected) holding a legislative, administrative or judicial office, including any person employed by or acting on behalf of a public agency, a public enterprise (including any officer or employee of a state-owned or state-operated entity) or a public international organisation;
“Put Option Notice” has the meaning given in Clause 11.12;
“Regulatory Approvals” means in relation to any matter, any necessary approvals required in any jurisdiction by any Governmental Authority in order for the matter to be implemented or completed;
“Related Party Matter” means the entering into of any agreement or arrangement (other than this Agreement and any other Transaction Document) between the Company on the one hand and any of the Shareholders (or any Affiliate of any of the Shareholders) on the other hand and all dealings relating to such agreement (including, without limitation, the termination or variation of any such agreement in accordance with its terms);
“Representatives” has the meaning given in Clause 9.1;
“Restricted Counterpart” means each of ***, *** and ***, together with any of their respective Affiliates;
“Restricted Counterpart Transfer” has the meaning given in Clause 11.11;
“Restricted Counterpart Transfer Notice” has the meaning given in Clause 11.11;
“Restricted Transferee” means:
| (a) | a Sanctioned Person; | |
| (b) | a person who has been found to be in breach of Export Control Laws; or | |
| (c) | a person whose ownership of a company, business, or asset, has previously been rejected and/or challenged by the Committee on Foreign Investment in the United States or analogous Governmental Authority in other applicable jurisdictions; |
“ROFR Acceptance Notice” has the meaning given in Clause 12.2;
“ROFR Period” has the meaning given in Clause 12.2;
“Sanctions” means any Applicable Law relating to economic or financial sanctions or trade embargoes or related restrictive measures imposed, administered or enforced from time to time by a Sanctions Authority, in each instance as it applies to the Company or a Shareholder;
“Sanctions Authority” means:
| (a) | the United Nations Security Council (as a whole, rather than individual members states thereof); |
| 7 |
| (b) | the United States government; | |
| (c) | the European Union (but not individual member states thereof); | |
| (d) | the UK government; | |
| (e) | the respective Governmental Authorities of any of the foregoing, including without limitation, the Office of Foreign Assets Control of the US Department of Treasury, the United States Department of State and Department of Commerce, and HM Treasury; and | |
| (f) | any other Governmental Authority with responsibility for imposing, administering or enforcing Sanctions with jurisdiction over the Company; |
“Sanctioned Person” means any person, organisation or vessel that is:
| (a) | designated on the OFAC list of “Specially Designated Nationals and Blocked Persons” or on any list of targeted persons issued under any Sanctions of any country in which the Company operates or by which it is bound; | |
| (b) | which is, or is part of, a government of any country or other territory subject to a general export, import, financial or investment embargo under any Sanctions applicable to the Company or by which it is bound; | |
| (c) | located in, owned or controlled by, or acting on behalf of the foregoing; or | |
| (d) | otherwise targeted by Sanctions applicable to the Company, a Shareholder, or by which they are bound; |
“Selling Shareholder” has the meaning given in Clause 12.1;
“Shareholder Reserved Matter” means any matter set out in Part A of Schedule 6;
“Shareholders” means the holders of Shares from time to time, and the term “Shareholder” shall be construed as any one of them;
“Shares” means ordinary shares of US$0.001 par value each in the capital of the Company;
“Subscription Agreement” has the meaning given to it the Recitals;
“Subsidiary” means any direct or indirect subsidiary undertaking of the Company from time to time;
“Surviving Provisions” means Clauses 1 (Definitions and Interpretation), 17 (Notices), 18 (Process Agents), 19 (Term), 20 (Announcements and Confidentiality), 21 (Miscellaneous) (except Clause 21.11 (Further Assurance)) and 22 (Governing law and Jurisdiction) and paragraphs 6 and 7 of Schedule 2 (Transfer Terms));
“Tag Along Notice” has the meaning given in Clause 13.1;
“Tax” or “Taxation” means all forms of taxation and statutory and governmental, state, provincial, local governmental or municipal charges, duties, contributions and levies in the nature of taxes, and withholdings and deductions on account of tax, in each case whether of the UK or elsewhere and whenever imposed and all related penalties, charges and interest payable in connection therewith (including, for the avoidance of doubt, in respect of any administrative compliance matters relating to such taxation), regardless of whether or not any such amounts are directly or primarily chargeable against, recoverable from or attributable to the Company (as the case may be) or any other person, or the Company has, or may have, any right of reimbursement against any other person, regardless of whether or not any such amounts are directly or primarily chargeable against, recoverable from or attributable to a Party to this Agreement or any other person, or the relevant Party to this Agreement has, or may have, any right of reimbursement against any other person;
“Theon Director” has the meaning given in Clause 4.2;
| 8 |
“Third Party Purchaser” means a bona fide third party purchaser who is not an Affiliate of any Shareholder or acting in concert with a Shareholder or any of its Affiliates;
“Third Party Purchaser Offer” has the meaning given in Clause 12.1;
“Total Investment Amount” means the aggregate amount of funds contributed or otherwise paid by Theon to the Company and/or any of its Subsidiaries of any kind including, without limitation, any subscription amount for Shares or other securities or any loan or financing amount;
“Transaction Documents” means this Agreement, the Subscription Agreement, the disclosure letter given in connection with the Subscription Agreement, and all other documents entered into in accordance with the terms set out therein;
“Transfer Notice” has the meaning given in Clause 12.1;
“Transfer Terms” means the terms set out in Schedule 2 (Transfer Terms);
“Valuer” means a valuations practitioner in an internationally recognised professional services firm;
“Vendor” means the seller of any Shares in accordance with the terms of this Agreement; and
“Working Hours” means 9.30 am to 5.30 pm in the relevant location on a Business Day.
| 1.2 | In this Agreement: |
| 1.2.1 | any reference to this Agreement includes the Schedules to it each of which forms part of this Agreement for all purposes; | |
| 1.2.2 | references to this Agreement shall be construed as references also to any separate or independent stipulation or agreement contained in it; | |
| 1.2.3 | the contents page and headings in this Agreement are for convenience only and shall not affect its interpretation; | |
| 1.2.4 | references to any document (including this Agreement) or a provision of any document includes such document or provision thereof as amended or supplemented in accordance with its terms, and whether or not such other document or provisions thereof is or becomes ineffective for any reason; | |
| 1.2.5 | a reference to an enactment or statutory provision shall include a reference to any subordinate legislation made under the relevant enactment or statutory provision and is a reference to that enactment, statutory provision or subordinate legislation as from time to time amended, consolidated, modified, re-enacted or replaced, provided that in the case of amendments, consolidations, modifications, re-enactments or replacements made after the date of this Agreement the same shall not have effected a substantial change to that enactment, statutory provision or subordinate legislation; | |
| 1.2.6 | words in the singular shall include the plural and vice versa, and references to one gender include other genders; | |
| 1.2.7 | a reference to a person shall include a reference to any individual, firm, company or other body corporate, an individual’s executors or administrators, Governmental Authority, unincorporated association, trust or partnership (whether or not having separate legal personality); |
| 9 |
| 1.2.8 | a reference to a particular person shall include a reference to the person’s executors, administrators, successors, substitutes (including persons taking by novation) and permitted assigns; | |
| 1.2.9 | a reference to a Clause, paragraph, Schedule (other than to a schedule to a statutory provision) or Recital shall be a reference to a Clause, paragraph, Schedule or Recital (as the case may be) of or to this Agreement; | |
| 1.2.10 | if a period is specified as from a given day, or from the day of an act or event, it shall be calculated exclusive of that day; | |
| 1.2.11 | references to any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall in respect of any jurisdiction other than England be deemed to include what most nearly approximates the English legal term in that jurisdiction and references to any English statute or enactment shall be deemed to include any equivalent or analogous laws or rules in any other jurisdiction; | |
| 1.2.12 | a company or other entity shall be a “subsidiary” for the purposes of this Agreement if it falls within any of the meanings attributed in section 1159 and Schedule 5 Companies Act 2006 or it is a subsidiary undertaking as defined in section 1162 and Schedule 7 Companies Act 2006; | |
| 1.2.13 | a person shall be deemed to be connected with another if that person is connected with another within the meaning of section 1122 of the Corporation Tax Act 2010; | |
| 1.2.14 | words and expressions defined in the Companies Act 2006 shall bear the same meaning as in that Act, unless expressly provided otherwise; | |
| 1.2.15 | references to writing shall include any modes of reproducing words in any legible form and shall include email except where expressly stated otherwise; | |
| 1.2.16 | the term “assets” includes present and future properties, revenues and rights of every description; | |
| 1.2.17 | the term “liabilities” includes liabilities and obligations of whatsoever nature (including in respect of any claims for interest), whether present or future and whether known or unknown and whether arising from or affected by any change in the law or any other change of circumstance of any sort, and “liability” shall be construed accordingly; | |
| 1.2.18 | a reference to “USD”, “US$” “$” or “Dollars” is to the lawful currency of the United States of America; and | |
| 1.2.19 | a reference to a Shareholder is to that Shareholder or to any transferee of its Shares (from that Shareholder or otherwise) pursuant to Clause 11. |
| 1.3 | The ejusdem generis principle of construction shall not apply to this Agreement. Accordingly, general words shall not be given a restrictive meaning by reason of their being preceded or followed by words indicating a particular class of acts, matters or things or by examples falling within the general words. The terms “other”, “or otherwise”, “whatsoever”, “including”, “include”, “for example” and “in particular” or any similar expression shall be construed as illustrative and shall not limit the sense of the words accompanying those terms. |
| 1.4 | The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event that an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favouring or disfavouring any Party by virtue of the authorship of any provisions of this Agreement. |
| 10 |
| 2. | BUSINESS AND OBJECTIVES |
| 2.1 | It is the intention of the Parties that at all times during the continuance of this Agreement the business of the Company shall be confined to the Business. |
| 2.2 | Each Shareholder undertakes to exercise its voting and any other rights attaching to the Shares and its rights pursuant to this Agreement to: |
| 2.2.1 | promote the interests of the Company in connection with the Business and procure that the Business is conducted by the Company: |
| (A) | in accordance with the Business Plan and Budget; | |
| (B) | on sound commercial principles; | |
| (C) | in accordance with Applicable Laws and the Articles; and | |
| (D) | in a way that would be most likely to promote the success of the Company; |
| 2.2.2 | procure that the Board determines the general policy of the Company in the carrying on of the Business in accordance with the express provisions of this Agreement and of the Articles; | |
| 2.2.3 | procure that the Company is operated and managed consistently with this Agreement and complies with the restrictions imposed upon it under its Articles; and | |
| 2.2.4 | to procure, so far as it is able to do so, that any Director appointed by it shall act and vote in relation to the affairs of the Company (subject always to the fiduciary duties of the directors to the Company) to ensure that the Business and all the affairs of the Company are carried on in a proper manner to promote the success of the Company and in compliance with the provisions of this Agreement. |
| 3. | MANAGEMENT OF THE COMPANY |
| 3.1 | The Shareholders agree that the management of the Company shall be performed by: |
| 3.1.1 | the general meeting of Shareholders: | |
| 3.1.2 | the Board; and | |
| 3.1.3 | the managing director of the Company (the “Managing Director”), in each case in accordance with this Agreement and the Articles (provided that the latter are at all times to the fullest extent permitted by Applicable Law in conformity with this Agreement). |
Managing Director
| 3.2 | At Completion, the Managing Director is Andrew McCue. |
| 3.3 | The Managing Director shall have responsibility for the day-to-day operations of the Company save where required by Clause 6. |
| 3.4 | With respect to any future Managing Director in replacement of the person listed in Clause 3.2, the Managing Director shall be appointed in accordance with the following: |
| 3.4.1 | Kopin shall notify Theon of its preferred candidate for the position of Managing Director, and shall present such individual’s qualifications to Theon for consideration, including a summary of such individual’s qualifications and experience; |
| 11 |
| 3.4.2 | Theon shall consider the individual in good faith and shall have a period of ten (10) Business Days to notify Kopin of any concerns with any of such individuals’ appointment; | |
| 3.4.3 | if and to the extent that Theon: |
| (A) | does not express any concerns within such timeframe, Theon shall be deemed to have accepted such candidate as Managing Director and Clause 3.5 shall apply; or | |
| (B) | expresses concerns about the individual notified pursuant to this Clause 3.4, Kopin and Theon shall discuss such concerns in good faith; |
| 3.4.4 | where Clause 3.4.3(B) applies and Theon continues to have concerns, Kopin shall identify one other potential candidate for the role of Managing Director and the process in Clauses 3.4.1 to 3.4.3 (inclusive) shall be repeated; and | |
| 3.4.5 | after complying with Clause 3.4.4, Theon shall be required to notify Kopin of its preference of the two candidates Kopin has presented for appointment pursuant to Clause 3.5. |
| 3.5 | The Shareholders shall procure that the person nominated by Kopin for the position of Managing Director from time to time, having complied with the provisions of Clause 3.4 including any election by Theon pursuant to Clause 3.4.5, is appointed as Managing Director. |
| 3.6 | The Shareholders agree and acknowledge that the Managing Director may only be removed or terminated with the prior consent of Kopin (following prior reasonable consultation with Theon). |
| 3.7 | Prior to the hiring of any chief financial officer or chief operating officer of the Company, Kopin shall notify Theon of its preferred candidate for such position, and shall present such individual’s qualifications to Theon for consideration, including a summary of such individual’s qualifications and experience, following which Kopin shall reasonably consult with Theon ahead of hiring or removing any such person, taking its view into account within the overall decision making process. |
Relationship between this Agreement and the Articles
| 3.8 | Each of the Parties agrees that nothing contained in this Agreement shall be deemed to constitute an amendment to the Articles. |
| 3.9 | If, during the continuance of this Agreement, there is any conflict between the provisions of this Agreement and of the Articles, then as between the Shareholders, during such period, the provisions of this Agreement shall prevail and the Shareholders shall take such action as is necessary to amend the Articles accordingly save as otherwise required by Applicable Law. |
| 3.10 | Each of the Parties agrees that at all times while this Agreement is in force and effect it shall fully and punctually perform and comply with all rights and obligations on its part under the Articles. |
| 3.11 | It is agreed that it is the intention of each of the Parties that the effect of the undertaking contained in Clause 3.10 is that (subject to Clause 3.9) each provision of the Articles shall be enforceable by the Parties between themselves and in whatever capacity. |
| 12 |
Subsidiaries
| 3.12 | If and to the extent that the Company incorporates or otherwise acquires a Subsidiary in accordance with the terms of this Agreement, unless otherwise agreed by the Shareholders: |
| 3.12.1 | each Party undertakes to procure as far as it is able by the exercise of voting rights and other powers of control available to it that the Directors appointed to the Board from time to time shall be appointed as directors of each Subsidiary and that no other persons shall be appointed directors of any Subsidiary (subject to any mandatory requirements of Applicable Law in the Subsidiary’s jurisdiction of incorporation); and | |
| 3.12.2 | the provisions of this Agreement shall apply in respect of such Subsidiary subject only to necessary changes in relation to each Subsidiary as they apply to the Company, so that for this purpose references to the ‘Board’, the ‘Articles’ and the ‘Directors’ shall be deemed to include references to the board, the articles of association (or equivalent document) and the directors of each Subsidiary. |
| 4. | THE BOARD |
Rights of the Shareholders to appoint the Directors
| 4.1 | Unless otherwise agreed by the Shareholders, the Board shall have four Directors, of whom: |
| 4.1.1 | Kopin shall be entitled to nominate two (2) Directors to the Board by notice to the Company for so long as it holds Shares, with one (1) such Director being the Managing Director; and | |
| 4.1.2 | Theon shall be entitled to nominate two (2) Directors to the Board by notice to the Company for so long as it holds Shares, such Directors as of Completion being *** and ***. |
| 4.2 | The Shareholders shall procure that the persons so nominated from time to time are appointed as Directors and each Director appointed following nomination by Kopin shall be a “Kopin Director”, and each Director appointed following nomination by Theon shall be a “Theon Director”. For the purposes of this Agreement, a Director shall be deemed to have been appointed by a Shareholder if he is appointed as a Director following his nomination for appointment to the Board by the relevant Shareholder as contemplated by this Clause 4. |
| 4.3 | Each Shareholder may at any time require any Director appointed by it to be removed or replaced by written notice to the Company. A Shareholder must give such notice to remove its Director(s) within five (5) Business Days of it ceasing to hold Shares. The Shareholders shall procure that any such removal or replacement is made in accordance with this Agreement and the Articles as soon as possible after the relevant notice is delivered to the Company. |
| 4.4 | Any Director appointed by a Shareholder under this Clause 4 may be removed or replaced only in accordance with this Clause 4. The Shareholder nominating a Director to be removed in accordance with Clause 4.3 shall indemnify the Company for any liability arising from any such removal. |
| 4.5 | Any vacancies on the Board due to the removal, death, resignation or incapacity of a Director or other refusal or inability of a Director to serve shall be filled by a person nominated for appointment by the Shareholder responsible for the appointment of the person who is to be replaced. |
Chairperson
| 4.6 | Kopin shall be entitled to nominate one (1) of the Kopin Directors to be Chairperson of the Board. The Shareholders shall procure that the Directors shall elect such person to act as the Chairperson of the Board. |
| 4.7 | The Chairperson shall, in the event of an equality of votes between the Directors, have an additional or casting vote. |
| 13 |
Representation
| 4.8 | Each Director may appoint an alternate director for himself in accordance with the Articles and Applicable Law. |
Remuneration
| 4.9 | The Directors shall not be entitled to receive fees or other emoluments from the Company in connection with the performance of their duties as Directors other than reasonable and properly documented out of pocket expenses incurred in the performance of their duties as Directors. |
Confidentiality
| 4.10 | Subject to Clause 4.11, each Shareholder shall procure that any Director appointed by it shall keep confidential (as contemplated by Clauses 20.2 and 20.3) all Confidential Information. |
| 4.11 | The Shareholders and the Company agree that any Director shall be entitled to pass any information relating to the Company, the Business or affairs of the Company that they receive in their capacity as a Director to any Shareholder that appointed him or her, and neither the other Shareholder nor the Company shall raise any objection to such passing of information nor allege any breach of any duty of confidence to the Company as a result of such action. Each Shareholder shall use the information only in connection with its interest in the Company, and shall not (unless it is under a legal or regulatory obligation to do so and then only to the extent so required) use the information in any way which is detrimental to the Company or to the other Shareholders or to the Business. |
Compliance
| 4.12 | Each Shareholder shall procure that any Director appointed by it shall, while that person is a Director, comply with all terms and conditions set out in this Agreement, the Articles, Applicable Law and all resolutions of the Board. |
Board Meetings
| 4.13 | Board meetings shall be held at least four (4) times each year, and once in each calendar quarter. Any Director shall be entitled to require the Company to convene a meeting of the Board by giving written notice to the Company in which case the Company shall ensure that such meeting is promptly called in accordance with the provisions of this Agreement and the Articles. |
| 4.14 | At least five (5) Business Days written notice shall be given to each of the Directors and the Shareholders of all Board meetings (unless all of the Directors agree in writing to shorter notice in respect of any particular Board meeting). |
| 4.15 | Each notice of a Board meeting shall be sent to each Director and each Shareholder and shall specify: |
| 4.15.1 | a reasonably detailed agenda setting out the matters to be discussed at the meeting; | |
| 4.15.2 | be accompanied by any relevant papers; and | |
| 4.15.3 | be sent by email or courier if sent to an address outside the United Kingdom. |
| 4.16 | Unless otherwise specified in this Agreement, the quorum for a Board meeting shall be satisfied if at least one Kopin Director and one Theon Director are present (or represented) and entitled to vote at the time the relevant business is transacted. Directors shall be regarded as present for quorum purposes if represented by an alternate Director. |
| 4.17 | If a quorum is not present within half an hour of the scheduled time of the meeting (or ceases to be present for half an hour), the Board meeting shall be adjourned, to be held five (5) Business Days later at the same time and place (unless all Directors agree otherwise), provided that the quorum for any adjourned meeting shall be any two (2) Directors. |
| 14 |
| 4.18 | A meeting of the Directors may consist of a telephone or video conference between Directors or such other mechanism some or all of whom are in different places provided that each Director who participates is able to clearly communicate with each of the other participating Directors attending the meeting, and, if he so wishes, to address all of the other participating Directors simultaneously, howsoever effected. A meeting held as described in this Clause 4.18 shall be deemed to take place at the place where the largest group of participating Directors is assembled (or in the event all Directors are in different locations, the location of the Managing Director), and the Parties shall procure so far as they are able that, unless otherwise agreed by the Shareholders, all meetings of Directors are held or deemed pursuant to this Clause 4.18 are held in the United Kingdom. |
| 4.19 | The Shareholders shall use their reasonable endeavours to ensure that Directors appointed or requested to be appointed by them attend Board meetings that they have received notice of in accordance with Clause 4.14. |
Voting at Board meetings
| 4.20 | Each Director shall have one vote save that a Director who is also a proxy shall be entitled, in the absence of his appointor to a separate vote on behalf of each appointor in addition to his or her own vote. |
| 4.21 | All business arising at any Board meeting shall be determined by resolution passed by a majority of the total votes of all Directors present and voting. Decisions of the Board may be taken by written resolution where permitted under Applicable Law. |
| 4.22 | Unless otherwise agreed by all Directors, no business shall be taken at a Board meeting unless it has been included within the agenda provided ahead of such meeting in accordance with Clause 4.15. |
Committees
| 4.23 | The Directors may by unanimous resolution delegate any of their powers to a committee consisting of at least two (2) Directors, at least one of whom must be a Theon Director. Decisions of a committee shall be taken by unanimous resolution. |
| 4.24 | Save as otherwise agreed by the Shareholders or specified in Clause 4.23, the provisions of this Agreement and the Articles with respect to the regulation of meetings of the Board shall apply, mutatis mutandis, to meetings of any committee. |
Conflict Matters
| 4.25 | Each Shareholder shall procure that upon receipt of a Board meeting agenda referred to in Clause 4.15 above, each of its appointed Directors shall consider promptly whether the agenda contains a Conflict Matter, acting in good faith. |
| 4.26 | If any Director considers that the relevant agenda contains a Conflict Matter or a Related Party Matter in respect of which he/she is a Conflicted Director, then he/she shall notify the other Directors no later than the start of the relevant Board meeting and, in the case of a Conflict Matter, withdraw from the Board meeting whilst the matter is considered by the Non-Conflicted Directors. In the case of any Related Party Matter, the relevant Director(s) may proceed to vote on such matter and participate in any corresponding discussions provided he or she has made full disclosure as such in accordance with this Clause 4.26. |
| 4.27 | If any Director considers that any other Directors are Conflicted Directors in relation to a Conflict Matter in respect of which no notification has been given by such other Directors in accordance with Clause 4.26 that they are Conflicted Directors, then he/she shall notify those other Directors of that fact no later than the start of the relevant Board meeting. If those other Directors agree that they are Conflicted Directors in respect of the Conflict Matter, they shall withdraw from the Board meeting whilst the Conflict Matter is considered by the Non-Conflicted Directors in accordance with the remaining provisions of this Clause 4. |
| 15 |
| 4.28 | If any Directors who have received notice in accordance with Clause 4.27 that they are considered by another Director to be Conflicted Directors do not agree that they are Conflicted Directors, they shall notify all Directors in writing (or orally at the relevant Board meeting) of that fact as soon as practicable and in any event no later than the time when consideration of the Conflict Matter at the Board meeting is intended to commence. If agreement as to whether they are Conflicted Directors cannot be reached among the Directors before the time when consideration of the Conflict Matter at the Board meeting is intended to commence: |
| 4.28.1 | the Conflict Matter shall be withdrawn from the agenda; and | |
| 4.28.2 | the Directors shall consider whether any Directors are Conflicted Directors in respect of the Conflict Matter further following the relevant Board meeting. |
| 4.29 | If agreement amount the Directors as to whether any Directors are Conflicted Directors cannot be reached pursuant to Clause 4.28.2 within ten (10) Business Days after the date of the relevant Board meeting, the Shareholders shall refer the matter to a King’s Counsel agreed upon by the Shareholders or, in the absence of agreement within a period of five (5) Business Days after the expiration of the ten (10) Business Day period, a King’s Counsel selected as soon as practicable by the Chairman of the Bar Council of England and Wales for the time being on the application of either Shareholder. The Shareholders shall instruct the King’s Counsel to determine the issue within twenty (20) Business Days, acting as expert, not arbitrator. The decision of the King’s Counsel shall be final and binding (save for manifest error) and the fees and costs shall be apportioned between the Shareholders in such proportions as the King’s Counsel may determine, acting equitably. |
| 4.30 | Within ten (10) Business Days of the decision of the King’s Counsel referred to in Clause 4.29 above, the Conflict Matter shall be considered at a newly convened Board meeting. If the King’s Counsel shall have determined that the Conflict Matter is a Conflict Matter, then the provisions of Clause 4.26 shall apply to such newly convened Board meeting (or to such part of the Board meeting as relates to the Conflict Matter). |
| 4.31 | The Directors shall not be Conflicted Directors in respect of any Related Party Matter to the extent disclosed in accordance with Clause 4.26. |
| 5. | MEETINGS OF SHAREHOLDERS OF THE COMPANY |
| 5.1 | Shareholders’ meetings shall take place in accordance with the Articles and Applicable Law at the Company’s principal place of business or such other place as the Shareholders may agree from time to time. |
| 5.2 | At least ten (10) clear days’ written notice (excluding the day on which the notice is given and the day on which the meeting is held) shall be given to the Shareholders of any Shareholders’ meeting, unless each Shareholder approves a shorter notice period. |
| 5.3 | The quorum at a Shareholders’ meeting shall be one representative of each of Kopin and Theon. If a quorum is not present within half an hour of the time appointed for the Shareholders’ meeting (or ceases to be present for half an hour), the chairperson of the Shareholders’ meeting shall adjourn the meeting to a specified place and time no less than five (5) Business Days and no more than ten (10) Business Days after the original date. Notice of the adjourned Shareholders’ meeting shall be given by the Company and, without prejudice to Clause 6, the quorum at any adjourned Shareholders’ meeting shall be one representative of each of Kopin and Theon. |
| 5.4 | Except where required by Clause 6 or as a matter of Applicable Law, the Shareholders shall decide on matters by a simple majority vote with each Shareholder having one vote for each Share held. |
| 16 |
| 5.5 | Each Shareholder undertakes that it shall not at any time appoint more than one proxy or corporate representative to represent it at any Shareholders’ meeting. |
| 6. | RESERVED MATTERS |
Shareholder Reserved Matters
| 6.1 | The Parties shall procure that the Company shall not do or permit to be done, and the Shareholders shall use their powers to ensure so far as they are legally able that no action or decision is taken (whether by the Board or any of their officers, employees or directors or any person on such persons behalf) in relation to, or anything the effect of which is analogous or similar in substance to any Shareholder Reserved Matter without the prior written consent of the Shareholders. The Shareholder Reserved Matters shall apply equally to any matters undertaken by a Subsidiary as if references to ‘the Company’ included any such Subsidiary. |
Board Reserved Matters
| 6.2 | The Parties shall procure that the Company shall not do or permit to be done, and the Shareholders shall use their powers to ensure so far as they are legally able that no action or decision is taken (whether by the Board or any of their officers, employees or directors or any person on such persons behalf) in relation to, or anything the effect of which is analogous or similar in substance to any Board Reserved Matter without the prior approval of the Board. The Board Reserved Matters shall apply equally to any matters undertaken by a Subsidiary as if references to ‘the Company’ included any such Subsidiary. |
General
| 6.3 | An approval is not required pursuant to Clause 6.1 or 6.2 (as applicable) to the extent that the matter: |
| 6.3.1 | has been expressly agreed and is carried out in accordance with the terms set out in this Agreement; and | |
| 6.3.2 | is expressly provided for in the then current Business Plan or Budget (each as approved in accordance with the terms of this Agreement). |
| 6.4 | For the purpose of Clause 6.1, a Director appointed by a Shareholder shall be deemed authorised to provide such Shareholder’s consent where required provided that any such approval is expressly given in response to a request to approve a Shareholder Reserved Matter and such approval is recorded in written form. |
| 6.5 | To the extent that any Shareholder, acting reasonably and in good faith, is of the view that any of the materiality thresholds set out in Schedule 6 are insufficient and give rise to consents being required on a frequent and repetitive basis which impedes undertaking the Business in the ordinary course, it may notify the other Shareholder and the Shareholders shall, acting reasonably, discuss and agree any required increase to such materiality threshold. |
| 7. | DEADLOCK |
| 7.1 | If: |
| 7.1.1 | a meeting of the Shareholders is unable to adopt a resolution approval required for any Shareholder Reserved Matter or otherwise any matter requiring the prior consent of both Shareholders under the terms of this Agreement or Applicable Law at two consecutive meetings held not less than ten (10) Business Days apart and within forty (40) Business Days of the matter first being considered by the Shareholders; |
| 17 |
| 7.1.2 | a written resolution of the Shareholders required for approval of any Shareholder Reserved Matter or otherwise any matter requiring the prior consent of both Shareholders under the terms of this Agreement or Applicable Law is not approved on two consecutive occasions; | |
| 7.1.3 | any draft business plan or budget is not agreed between the Shareholders in accordance with Clause 8.9 and the provisions of Clause 8.12 applies; or | |
| 7.1.4 | a Default Notice has been issued to a Defaulting Shareholder in accordance with Clause 15, |
an initial deadlock shall be deemed to have occurred.
| 7.2 | Where an initial deadlock has occurred pursuant to Clause 7.1, either Shareholder may give notice to the other Shareholder specifying that in its opinion there is an initial deadlock (“Deadlock Notice”) and identifying the matter over which they are deadlocked and their proposal for resolving the Deadlock. If more than one Deadlock Notice is served in respect of the same initial deadlock, only the first to be served shall be effective. |
| 7.3 | Upon the Deadlock Notice being given, the Shareholders shall forthwith refer the matter in writing to their respective Nominated Representatives for their determination within twenty (20) Business Days of the date of the Deadlock Notice (the “Negotiation Period”). The Shareholders shall, and shall procure that their Nominated Representatives shall, use their reasonable endeavours to negotiate in good faith in an effort to resolve the subject matter of the Deadlock Notice within the Negotiation Period and, without limitation, such reasonable endeavours shall include attending any meetings convened on reasonable notice by either of the Shareholders to seek to discuss the resolution of the subject matter of the Deadlock Notice. |
| 7.4 | If at the end of the Negotiation Period, the Nominated Representatives have not reached a written agreement on the matter identified in the Deadlock Notice, a deadlock shall be deemed to have occurred (a “Deadlock”) in respect of the relevant matter, and: |
| 7.4.1 | where the Deadlock relates to the approval of any Shareholder Reserved Matter or any other matter requiring the agreement of both Shareholders (including, without limitation, in respect of the approval of any draft business plan or budget), the Parties shall not proceed with the relevant action; and | |
| 7.4.2 | where the Deadlock relates to a Default Notice issued pursuant to Clause 15 only, the Other Shareholder may proceed to issue a Call Option Notice in accordance with Clause 15.5. |
| 7.5 | All rights of the Shareholders in respect of the dispute are and shall remain fully reserved and the entire mediation, including all documents produced or to which reference is made, discussions and oral presentations, shall be strictly confidential to the Shareholders and shall be conducted on the same basis as “without prejudice” negotiations, privileged, inadmissible, not subject to disclosure in any other proceedings whatever and shall not constitute any waiver of privilege whether between the Shareholders or between either of them and a third party. Nothing in this Clause 7.5 shall make any document privileged, inadmissible or not subject to disclosure which would have been disclosable in any reference to arbitration commenced pursuant to Clause 22. Nothing in this Clause shall prevent the parties referring to the fact that they have conducted a mediation in any proceedings relating to the dispute. |
| 18 |
Continuation of Business
| 7.6 | The Shareholders shall procure that while a Deadlock continues, the Business shall run in the ordinary course. During such period, no decisions outside the ordinary course of business may be made by the Shareholders or the Board. |
| 7.7 | The dispute settlement provisions in Clause 22 do not apply to any Deadlock except to the extent that the Deadlock relates to the interpretation of this Agreement or the rights and obligations of any Party pursuant to this Agreement. |
| 8. | FINANCIAL MATTERS AND INFORMATION |
Auditors
| 8.1 | The auditors of the Company shall be *** or such other auditors as may be approved by the Board. |
Financial year
| 8.2 | The Company’s financial year shall be 1 January to 31 December. |
Information
| 8.3 | The Company undertakes to each of the Shareholders that it will: |
| 8.3.1 | allow each of the Shareholders to examine the books, records and accounts of the Company; and | |
| 8.3.2 | supply each of the Shareholders with all information, including copies of all published accounts, Directors’ reports, monthly management accounts and operating statistics and other trading and financial information, notices of meetings of the Company and all other circulars and notices issued or given to members of or those dealing with the Company, relating to the Business or otherwise to the affairs and financial or other position of the Company. |
| 8.4 | Without limiting Clause 8.3, the Company shall supply the Shareholders with copies of: |
| 8.4.1 | a Business Plan and Budget for each financial year, approved in accordance with Clauses 8.6 – 8.12 (inclusive); | |
| 8.4.2 | a quarterly report on the business and financial status of the Company, as soon as reasonably practicable after the end of each quarter and in any event within thirty (30) days thereafter; | |
| 8.4.3 | a quarterly report on key performance indicators on operational and technical matters (including capacity, orders, backlog, leads, HR KPIs and legal, dispute and claim related matters); | |
| 8.4.4 | quarterly financial statements of the Company on an individual entity basis, as soon as reasonably practicable after the end of the quarter and in any event within thirty (30) days thereafter, beginning with half-year financial statements; | |
| 8.4.5 | annual financial statements of the Company, prepared in accordance with IFRS, in respect of each financial year of the Company, as soon as reasonably practicable after the end of each financial year and in any event within the period specified by Applicable Law and in any event no later than sixty (60) calendar days after the end of each financial year; | |
| 8.4.6 | a summary of any matters which may have a material adverse effect on the Company’s financial situation promptly after becoming aware of such matters; and | |
| 8.4.7 | such other information as a Shareholder may reasonably request in order to comply with its tax, accounting, or regulatory requirements or as otherwise required to comply with Applicable Law. |
| 19 |
Audits and Review
| 8.5 | The Company undertakes to each of the Shareholders that it will allow each of the Shareholders from time to time (at such Shareholder’s own cost) to carry out an audit or review of the Business and any other affairs of the Company and to designate a person to carry out such audit or review on such Shareholder’s behalf. Such person (which may, but need not be, the Shareholder itself, the auditors or an adviser, consultant or contractor of the Shareholder) shall be entitled (subject to the provisions of Clauses 20.2 and 20.3 (Confidentiality): |
| 8.5.1 | to visit and inspect any premises of the Company and to discuss the affairs, finances and accounts of the Company with its officers and employees; and | |
| 8.5.2 | to inspect and request and retain copies of any books, records or other documents relating to the Business or any other affairs of the Company, |
provided that: (A) the relevant Shareholder provides not less than ten (10) Business Days’ prior notice; (B) any person acting on behalf of the Shareholder enter into a customary non-disclosure agreement with the Company; and (C) any such access may be granted in such a manner as the Company determines reasonably necessary to minimise the interruption to the Company’s operations.
Budget and Business Plan
| 8.6 | No later than thirty (30) Business Days before the commencement of each financial year, unless agreed otherwise, the Company shall produce to each of the Shareholders a draft budget, the form of which shall: (i) where applicable, be prepared in accordance with IFRS accounting standards; (ii) identify the projects and/or products of Theon individually; and (iii) on a basis consistent with the Budget in Schedule 7 save as otherwise agreed between the Shareholders. |
| 8.7 | No later than thirty (30) Business Days before the commencement of each financial year, unless agreed otherwise, the Company shall produce to each of the Shareholders a draft business plan, the form of which shall: (i) where applicable, be prepared in accordance with IFRS accounting standards; (ii) identify the projects and/or products of Theon individually; and (iii) on a basis consistent with the Budget in Schedule 7 save as otherwise agreed between the Shareholders. |
| 8.8 | Within ten (10) Business Days following receipt by the Shareholders of each draft budget or draft business plan pursuant to Clause 8.6 or 8.7 (as applicable), each Shareholder shall be entitled to request such further information as may reasonably be necessary in order for such Shareholder to reach an informed view as to the content, reasonableness and prudence of the draft budget or draft business plan. Any such request shall be made in writing and be copied to each Party. The Company shall, insofar as it is able to do so, comply with any such request within five (5) Business Days of its receipt and shall copy its response to each Shareholder. |
| 8.9 | Following receipt by the Shareholders of each draft budget or draft business plan pursuant to Clause 8.6 or 8.7 (as applicable) and, as appropriate, any further information supplied pursuant to Clause 8.8, the Shareholders shall consult upon the content of such draft budget or draft business plan and shall each use reasonable endeavours to reach agreement as to the contents of such draft budget or draft business plan. |
| 8.10 | If the Shareholders agree on the draft budget or draft business plan (with such amendments as agreed (if any)) then they shall inform the Company and such draft budget or business plan shall be approved and adopted as the Budget or Business Plan. If they fail to agree within one month of the submission of the draft business plan or budget the provisions of Clause 8.12 shall apply. |
| 20 |
Amendments to Budgets and Business Plans
| 8.11 | During the course of any financial year, the Company may from time to time request changes to be made to the Budget or Business Plan. Any such request shall be made in writing to each Shareholder, and, for the purposes of endeavouring to agree any such change, the request shall be treated as if it formed part of a draft budget or draft business plan provided that no such prior approval of the Shareholders shall be required to the extent that any variation to the existing Budget or Business Plan does not meet the threshold set out in paragraph 4 of Part A of Schedule 6. |
Disputed Budgets and Business Plans
| 8.12 | In the event of any dispute between, or failure to agree amongst, the Shareholders as to the form or content of any draft budget or draft business plan (including any proposed revision pursuant to Clause 8.11): |
| 8.12.1 | the existing Budget or Business Plan shall continue in effect; | |
| 8.12.2 | pending resolution of the dispute or failure to agree the Company shall not be entitled to carry out any activities which are the subject of dispute, except in so far as necessary in order to comply with legally binding obligations which it has previously incurred in accordance with this Agreement or insofar as the carrying out of such activities falls within the terms of any previous approved Budget or Business Plan; and | |
| 8.12.3 | the provisions of Clause 7 shall apply. |
First Business Plan and Budget
| 8.13 | The Business Plan and Budget for the first four (4) year(s) following Completion is set out in Schedule 7. |
Allocation of Subscription Proceeds
| 8.14 | The Shareholders shall procure (using their powers to ensure so far as they are legally able, whether by the Board or any of their officers, employees or directors or any person on such persons behalf) that the Company shall allocate the proceeds paid under the terms of the Subscription Agreement to the Company’s capital expenditures and personnel costs, specifically but without limitation to the development, STTEs and manufacture or assembly related to the ***, ***, and ***, each as set out in the Business Plan as set out in Schedule 7 (as may be amended and updated in accordance with this Clause 8) and without prejudice to the future development of additional products or components thereof. |
Dividend Policy
| 8.15 | The Shareholders acknowledge and agree that on an annual basis (until a positive Profitability Determination has been made by the Shareholders and the Dividend Policy has been adopted) and contemporaneously with the determination of the Business Plan and Budget for the next financial year pursuant to Clauses 8.6 – 8.12 (inclusive), the Shareholders shall, each acting reasonably and in good faith, seek to determine whether the Business is profitable for the current financial year (the “Profitability Determination”). For the purpose of this Clause 8.15, the Company shall be considered “profitable” where: (i) it has net profits for the then current financial year after payment of any required costs for such year (including interest, Taxes, depreciation and amortisation); and (ii) its assets exceeding its total liabilities for the relevant period. |
| 8.16 | Upon each of the Shareholders giving a positive Profitability Determination in respect of any financial year, the Shareholders shall procure that the Company agrees and adopts a cash dividend policy as soon as possible thereafter and in any event prior to the end of the then current financial year (with each Party acting reasonably and in good faith in this regard) to govern the Company’s calculation and payment of any cash dividend or other distribution amount to the Shareholders from time to time (the “Dividend Policy”). For the purpose of determining the form and content of the Dividend Policy, each Shareholder agrees that the Dividend Policy will generally align with the terms of ….. dividend policy (details of which can be found at.***) with reference to the dividend payout ratio set out under the heading “***”. |
| 21 |
| 8.17 | Following the adoption of the Dividend Policy pursuant to Clause 8.16, the Parties agree that: |
| 8.17.1 | it is their common intention that cash dividends shall be paid in respect of the Shares in each financial year; | |
| 8.17.2 | nothing in Clauses 8.15 to 8.18 shall operate to oblige the Company to declare or pay a dividend where the Directors consider that the Company’s financial performance does not justify such payment; and | |
| 8.17.3 | the Parties shall, each acting reasonably and in good faith, discuss any proposed amendments to the Dividend Policy from time to time, such amendments to be approved in accordance with Clause 6.1. |
| 8.18 | The Parties agree that whenever the amount of a dividend to be paid falls to be ascertained: |
| 8.18.1 | such determination shall be made in accordance with the Dividend Policy; | |
| 8.18.2 | the Directors shall identify amounts which they consider, having regard to all other sources of funding available to the Company, should be retained in order to meet foreseeable commitments and contingencies, and to develop the Business in accordance with the approved Business Plan and Budget including, without limitation, the Company’s research and development budget; and | |
| 8.18.3 | the Dividend Policy and any dividend amount to be paid to the Shareholders shall always be made in accordance with Applicable Law. |
| 9. | ethics, bribery and corruption |
| 9.1 | With respect to any of the matters which are the subject of this Agreement or in connection with this Agreement or any matter resulting from it, each of the Parties warrants and undertakes that it and its group undertakings and any person acting on its or their behalf, including directors, officers, employees and agents (together, “Representatives”), either in private business dealings or in dealings with the public or government sector, directly or indirectly: |
| 9.1.1 | have not to the best of its knowledge and belief given, made, offered, or received (or agreed to give, make, offer or receive); and | |
| 9.1.2 | will not give, make, offer or receive (nor agree to give, make, offer or receive), |
any payment, gift or other advantage which: (i) would violate any ABC Laws; (ii) was intended to influence any person to act or reward any person for acting in breach of an expectation of good faith, impartiality or trust, or which it would otherwise be improper for the recipient to accept; or (iii) was made to or for a Public Official with the intention of influencing them and obtaining or retaining an advantage in the conduct of business (a “Corrupt Act”).
| 22 |
| 9.2 | With respect to any of the matters which are the subject of this Agreement or in connection with this Agreement or any matter resulting from it, each of the Parties undertakes that it and its Representatives will not: |
| 9.2.1 | request any action, inaction or services that would violate ABC Laws; or | |
| 9.2.2 | receive, agree or attempt to receive the benefits of or profits from a crime or any Corrupt Act or agree to assist any person to retain the benefits of or profits from a crime or any Corrupt Act. |
| 9.3 | The Parties shall, without limiting the foregoing, procure that the Company complies with Export Control Laws. |
| 10. | FINANCING |
| 10.1 | Financing for the Company and the sources of such financing shall be determined in accordance with Clause 6 or, to the extent not a Shareholder Reserved Matter, by the Board from time to time in accordance with the Business Plan and Budget. |
| 10.2 | The Shareholders shall not be required to provide any funding (whether debt, equity or otherwise) to the Company or to provide any guarantee or other security in relation to the obligations of the Company unless they agree to do so. If they agree to do so, they shall (unless otherwise agreed) provide the same funding or credit support at the same time and on the same terms and (in the case of funding) in their Equity Proportions. |
| 11. | TRANSFERS OF SHARES |
General restriction on transfers
| 11.1 | Notwithstanding any other provisions of this Agreement: |
| 11.1.1 | no Shares nor any interest or right therein or in respect thereof shall be transferred to, conferred upon or become vested in any person other than the transfer of the whole legal and equitable title to such Shares carried out in accordance with this Agreement and the Articles; | |
| 11.1.2 | no Shareholder shall, without the prior written consent of the other Shareholder, enter into any derivative arrangement referenced to any of its Shares or the rights attached to, or any benefits (economic or otherwise) or privileges pertaining to, any of its Shares; and | |
| 11.1.3 | no Shareholder shall, without the prior written consent of the other Shareholder, transfer or otherwise dispose of or vest in another person any of its Shares (or any interest or right therein or in respect thereof) or create or allow to subsist any Encumbrance in respect of any of its Shares (or any interest or right therein or in respect thereof), or agree to do the same (other than Encumbrances arising pursuant to this Agreement or the Articles), unless: |
| (A) | it is expressly permitted or required to transfer its Shares pursuant to Clause 11.4 (Transfers to Affiliates); or | |
| (B) | it sells or transfers its Shares in accordance with Clauses 12 (Right of First Refusal) to 14 (Drag Along Rights) (inclusive) following the expiry of the Lock-up Period; or | |
| (C) | it is expressly permitted or required to transfer its Shares pursuant to Clauses 11.11-11.14 (inclusive) and Schedule 5; or |
| 23 |
| (D) | it is expressly permitted or required to transfer its Shares pursuant to Clause 15.5 and Schedule 4. |
| 11.2 | For the purpose of Clause 11.1.3, a Shareholder may not unreasonably withhold its consent to the granting of an Encumbrance over Shares, where such Encumbrance is to be granted as part of a bona fide third party financing of such Shareholder’s corporate group requiring the granting of Encumbrances over the Shareholder’s assets including securities in its Affiliates. |
Lock-up Period
| 11.3 | The Shareholders shall not be permitted to transfer any Shares during the Lock-up Period save in the following circumstances: |
| 11.3.1 | unless otherwise agreed by the Shareholders in writing; or | |
| 11.3.2 | following the delivery of a Put Option Notice pursuant to Clauses 11.11-11.12 (inclusive) and the provisions of Schedule 5; or | |
| 11.3.3 | to an Affiliate pursuant to Clause 11.4; or | |
| 11.3.4 | pursuant to Clause 15.5 and Schedule 4. |
Transfers to Affiliates
| 11.4 | Nothing in this Clause 11 shall prohibit a transfer by a Shareholder of its Shares to one of its Affiliates (including during the Lock-up Period) provided that: |
| 11.4.1 | the proposed transferee: |
| (A) | is not subject to and is not reasonably likely to be subject to any Insolvency Event; | |
| (B) | executes a Deed of Adherence prior to the transfer taking place pursuant to Clause 11.10; | |
| (C) | shall have demonstrated to the reasonable satisfaction of the other Shareholder that: |
| (1) | such transferee is an Affiliate of the transferor and that the ultimate beneficial owner(s) of the transferor will retain control over such transferee; and | |
| (2) | no third party has any rights to exercise any Control over such transferee; |
| 11.4.2 | the transferring Shareholder gives at least ten (10) Business Days’ prior written notice of the transfer to the other Shareholder(s); | |
| 11.4.3 | the transferring Shareholder provides to the other Shareholder(s) evidence that all Regulatory Approvals for the proposed transfer have been received or are not required and in this regard, the other Shareholder and the Company shall provide all reasonable support and information required to obtain any Regulatory Approvals; and | |
| 11.4.4 | in the event that the transfer relates to some (and not all) of a Shareholder’s Shares, it shall be a condition of such transfer that the relevant transferee Affiliate enters into a voting undertaking to exercise any voting rights attached to such Shares in coordination with the original transferring Shareholder. |
| 11.5 | On a transfer of Shares to an Affiliate in accordance with Clause 11.4: |
| 11.5.1 | the original transferring Shareholder (but not a subsequent transferor in a series of such transfers) shall remain a party to this Agreement and shall be jointly and severally liable with the transferee under this Agreement as a Shareholder in respect of the transferred Shares; |
| 24 |
| 11.5.2 | the transferring Shareholder shall procure that the transferee Affiliate complies with its obligations under the Deed of Adherence; and | |
| 11.5.3 | each Shareholder shall procure that prior to any of its transferee Affiliates ceasing to be an Affiliate, or becoming subject to or being reasonably likely to be subject to an Insolvency Event, that Affiliate shall transfer all Shares held by it to such Shareholder (or another Affiliate of such Shareholder fulfilling the requirements of Clause 11.4). |
| 11.6 | Any person executing a Deed of Adherence in accordance with this Agreement shall be entitled to the rights provided for by this Agreement as if it were a party hereto for so long as they are registered as a Shareholder in respect of the Shares transferred to them. |
Transfer Terms
| 11.7 | All transfers or issues of Shares pursuant to this Agreement from one Shareholder to another except a transfer of Shares to an Affiliate in accordance with Clause 11.4 shall be made on the Transfer Terms, save to the extent that this Agreement expressly provides otherwise or the Shareholders otherwise agree in writing. |
Prohibited Transfers
| 11.8 | In no circumstances shall any Shares be transferred to a Restricted Transferee. |
Marketing Notification
| 11.9 | Each Shareholder undertakes that in the event it wishes to seek a Third Party Purchaser of its Shares, it shall, at the same time as commencing such process, notify the other Shareholder of its intention to do so and such other Shareholder may, without prejudice to the provisions of Clause 12, to make an offer to acquire such Shares. |
Deed of Adherence
| 11.10 | The Board shall refuse to register any transfer of Shares and shall not issue any Shares to any person (other than a Shareholder) who has not, prior to such transfer or issue, entered into an agreement in the form of the Deed of Adherence agreeing to be bound by the terms of this Agreement. Any reference to any such transferor in this Agreement shall be deemed to include a reference to the transferee as if named in this Agreement as a Party. |
Put Option
| 11.11 | In the event that Kopin receives an offer from any Restricted Counterpart to acquire securities in Kopin (whether as a result of any delisting, acquisition, subscription or otherwise) such that the Restricted Counterpart will Control Kopin by way of: (a) acquiring the right to exercise more than 50% of the voting rights in Kopin; or (b) comprising a majority of its officers and directors of Kopin (a “Restricted Counterpart Transfer”), Kopin shall give written notice of such offer to Theon as soon as possible thereafter (the “Restricted Counterpart Transfer Notice”). |
| 11.12 | Following receipt of the Restricted Counterpart Transfer Notice, Theon shall have the right at any time within five (5) Business Days after receiving the Restricted Counterpart Transfer Notice to give a notice to Kopin exercising its rights set forth in Schedule 5 (a “Put Option Notice”), following which the provisions of Schedule 5 shall apply. |
| 11.13 | For the avoidance of doubt: |
| 11.13.1 | any transfer of Shares following the delivery of a Put Option Notice pursuant to Clause 11.12 may occur during the Lock-Up Period; |
| 25 |
| 11.13.2 | completion of the Restricted Counterpart Transfer shall not be subject to or otherwise conditional on the transfer of Theon’s Shares to Kopin in accordance with the provisions of Schedule 5; and | |
| 11.13.3 | following the delivery of a Put Option Notice pursuant to Clause 11.12, neither Shareholder shall be required to consummate the transfer of its Shares in accordance with the provisions of Schedule unless and until the closing of the Restricted Counterpart Transfer. |
| 11.14 | Following circulation of any Restricted Counterpart Transfer Notice, to the extent that the Restricted Counterpart Transfer is aborted or otherwise terminated (howsoever caused), Kopin shall immediately notify Theon in writing and, to the extent that Kopin has delivered a Put Option Notice pursuant to Clause 11.12, such Put Option Notice shall be deemed automatically, irrevocably and unconditionally revoked and the provisions of Clauses 11.11-11.14 (inclusive) and Schedule 5 shall apply to any subsequent Restricted Counterpart Transfer. |
| 12. | RIGHT OF FIRST REFUSAL |
| 12.1 | After the Lock-up Period expires, a Shareholder (the “Selling Shareholder”) may only transfer its Shares to a Third Party Purchaser, if it has first received an offer (a “Third Party Purchaser Offer”) from that Third Party Purchaser to purchase the Shares of the Selling Shareholder and makes a written offer (the “Transfer Notice”) to the Other Shareholder. The Transfer Notice shall specify: |
| 12.1.1 | the identity of the Third Party Purchaser; and | |
| 12.1.2 | all of the Key Terms of the proposed transfer, |
and the Selling Shareholder complies with the remaining provisions of this Clause 12 and has not given a Transfer Notice in the previous three (3) months.
| 12.2 | Following receipt of a Transfer Notice, the Other Shareholder shall have the right at any time within ten (10) Business Days after receiving the Transfer Notice (the “ROFR Period”) to give a notice to the Selling Shareholder (the “ROFR Acceptance Notice”) accepting the offer to purchase the Selling Shareholder’s Shares on the Key Terms referred to in Clause 12.1.1. |
| 12.3 | If the Other Shareholder gives a ROFR Acceptance Notice within the ROFR Period, the Other Shareholder shall be bound to buy, and the Selling Shareholder shall be bound to sell to the Other Shareholder, the Selling Shareholder’s Shares on the Key Terms and in accordance with the Transfer Terms. |
| 12.4 | If the Other Shareholder does not give a ROFR Acceptance Notice within the ROFR Period, the Selling Shareholder may at any time within ninety (90) Business Days after the expiry of the ROFR Period transfer all of its Shares to the Third Party Purchaser that made the Third Party Purchaser Offer (and to no other Third Party Purchaser), provided that: |
| 12.4.1 | the transfer is on the Key Terms contained in the Transfer Notice, including but not limited to being for consideration no less than set out in the Transfer Notice (save that any notified conditions have been waived by between the transferor and transferee or are otherwise deemed to be no longer required under Applicable Law); and | |
| 12.4.2 | if the transfer is not completed within the ninety (90) Business Day period referred to above, the Selling Shareholder shall not be entitled to transfer its Shares without serving a further Transfer Notice in accordance with this Clause 12, and subject further to Clause 13 (Tag Along Rights). |
| 26 |
| 12.5 | A Transfer Notice and a ROFR Acceptance Notice shall each be governed by English law and be irrevocable. |
| 12.6 | This Clause shall not apply to a transfer of Shares made pursuant to Clause 13 (Tag Along Rights) or Clause 14 (Drag Along Rights). |
| 13. | TAG ALONG RIGHTS |
| 13.1 | Within twenty (20) Business Days of receipt of a Transfer Notice from the Selling Shareholder, the Other Shareholder shall, provided that it has not given a ROFR Acceptance Notice, be entitled, by written notice to the Selling Shareholder (the “Tag Along Notice”), to require that the Selling Shareholder complies with Clause 13.2. |
| 13.2 | Upon delivery of a Tag Along Notice within the period specified in Clause 13.1: |
| 13.2.1 | subject to Clauses 13.2.2 and 13.2.3, the Other Shareholder shall be bound to participate in the transfer to the Third Party Purchaser in accordance with the terms and conditions set out in the Transfer Notice; | |
| 13.2.2 | the Selling Shareholder shall use all reasonable endeavours to procure that the Third Party Purchaser purchases, or procures the purchase of, all the Shares held by the Other Shareholder at the same time and on (subject to Clause 13.3) the same Key Terms as the Third Party Purchaser purchases the Shares held by the Selling Shareholder and provided the consideration amount payable per Share is equal to the highest price per Share offered, paid or to be paid by the Third Party Purchaser for any Shares; and | |
| 13.2.3 | the Selling Shareholder shall not complete the sale to the Third Party Purchaser unless the Third Party Purchaser acquires all the Shares of the Other Shareholder at the same time and (subject to Clause 13.3) on the same Key Terms as the Third Party Purchaser purchases the Shares held by the Selling Shareholder. |
| 13.3 | In connection with any transfer of Shares pursuant to Clause 13.2, the Other Shareholder shall not be required to make any representation or warranty to the Third Party Purchaser, other than as to: (i) good title to the Shares it transfers; (ii) the absence of any Encumbrance with respect to its Shares; and (iii) customary representations concerning its capacity and authority to undertake the proposed transfer of its Shares. |
| 13.4 | In accordance with the Articles, the Company shall procure that the Directors will not register any purported transfer of Shares in breach of the terms of this Agreement. |
| 13.5 | A Tag Along Notice shall be irrevocable and shall be governed by English law. |
| 14. | DRAG ALONG RIGHTS |
| 14.1 | If Kopin is the Selling Shareholder and after giving a Transfer Notice, it does not receive a ROFR Acceptance Notice within the period specified in Clause 12.2 (Right of First Refusal) or a Tag Along Notice from the Other Shareholder within the period specified in Clause 13.1 (Tag Along Rights), then the Selling Shareholder shall be entitled, by written notice to the Other Shareholder in accordance with Clause 14.2 (the “Drag Along Notice”), to require that the Other Shareholder complies with Clause 14.3. |
| 14.2 | A Drag Along Notice shall specify the date on which each of the Selling Shareholder and the Other Shareholder shall sell its Shares to the Third Party Purchaser (or its nominee) (the “Transfer Date”), such date to be not less than ten (10) and not more than ninety (90) Business Days after the date of the Drag Along Notice. |
| 14.3 | Upon the delivery of a Drag Along Notice within the period specified in Clause 14.1, the Other Shareholder shall, unless the Drag Along Notice lapses in accordance with Clause 14.4, be bound to sell its Shares to the Third Party Purchaser on the Transfer Date and (subject to Clause 14.5) on the same Key Terms as the Third Party Purchaser purchases the Shares held by the Selling Shareholder and provided the consideration amount payable per Share is equal to the highest price per Share offered, paid or to be paid by the Third Party Purchaser for any Shares. |
| 27 |
| 14.4 | If the Other Shareholder and the Selling Shareholder do not each complete the transfer of their Shares to the Third Party Purchaser by the Transfer Date (other than due to default by the Other Shareholder), the Drag Along Notice shall automatically expire. |
| 14.5 | In connection with any transfer of Shares pursuant to Clause 14.3, the Other Shareholder shall not be required to make any representation or warranty to the Third Party Purchaser, other than as to: (i) good title to the Shares it transfers; (ii) the absence of any Encumbrance with respect to its Shares; and (iii) customary representations concerning its capacity and authority to undertake the proposed transfer of its Shares. |
| 14.6 | Completion of the sale and purchase of the Shares of the Other Shareholder following service of a Drag Along Notice shall take place on the same date as, and shall be conditional upon the completion of, the sale and purchase of the Selling Shareholders’ Shares. |
| 14.7 | A Drag Along Notice shall be irrevocable and shall be governed by English law. |
| 15. | DEFAULT |
| 15.1 | A Shareholder commits an event of default (an “Event of Default”) if: |
| 15.1.1 | it does not pay any amount payable by it pursuant to this Agreement in the manner in which it is expressed to be payable in this Agreement and that failure is not remedied within thirty (30) Business Days of the other Shareholder sending it written notice of such failure; | |
| 15.1.2 | it (or the person that transferred Shares to it or one of its predecessors in title pursuant to Clause 11.4 (Transfer to Affiliates)) commits a material breach of this Agreement and the breach is not capable of being remedied or is not remedied within thirty (30) Business Days of the other Shareholder sending it written notice requiring it to remedy the breach; | |
| 15.1.3 | it transfers it Shares in breach of Clause 11.1 (General restriction on transfers) and the breach is not capable of being remedied or is not remedied within thirty (30) Business Days of the other Shareholder sending it written notice requiring it to remedy the breach; | |
| 15.1.4 | it becomes subject to an Insolvency Event; | |
| 15.1.5 | it becomes the subject of Sanctions or a Sanctioned Person; or | |
| 15.1.6 | it, or its Affiliate, is found to be in breach of Export Control Laws and such breach does or is otherwise reasonably expected to materially impact the financial performance or continued operation of the Business when taken as a whole. |
| 15.2 | Each Shareholder undertakes to notify the other Shareholder(s) and the Company in writing if: |
| 15.2.1 | it commits a material breach of this Agreement in circumstances where no immediate Event of Default has occurred by virtue of the breach being capable of remedy; or | |
| 15.2.2 | it does commit an Event of Default (including any Event of Default arising from a failure to remedy a material breach of this Agreement in accordance with Clauses 15.1.1 – 15.1.3 (as applicable)). |
| 28 |
| 15.3 | If an Event of Default is committed by a Shareholder (the “Defaulting Shareholder”), the Other Shareholder may serve notice on the Defaulting Shareholder (a “Default Notice”) stating that it considers an Event of Default to have been committed by the Defaulting Shareholder. Receipt by the Other Shareholder of notice that an Event of Default shall have occurred shall not be a condition precedent to the giving of a Default Notice. |
| 15.4 | The Default Notice shall set out in reasonable detail the basis on which the Other Shareholder has concluded that an Event of Default has arisen in respect of the Defaulting Shareholder and shall notify the Defaulting Shareholder of the Other Shareholder’s intention to exercise its rights under this Clause 15. |
| 15.5 | Following the delivery of any Default Notice, the provisions of Clause 7 shall apply. To the extent that the matter giving rise to the Default Notice is not resolved in accordance with Clause 7 and within the time period set out therein, the Other Shareholder may give a Call Option Notice to the Defaulting Shareholder and the provisions of Schedule 4 shall apply (including, without limitation, to the extent arising during the Lock-up Period). |
| 15.6 | On any issue of a Default Notice, the Shareholders shall use all reasonable endeavours to procure that the Business continues as a going concern during the period commencing on the service of the Default Notice and ending on written resolution of such Event of Default or completion of the sale of the Shares of the Defaulting Shareholder pursuant to Schedule 4. |
| 16. | Issues of New SECURITIES |
| 16.1 | The Company shall not issue, agree to issue, or reserve or set aside for issuance any Shares or securities convertible into Shares (“New Securities”), unless it first complies with Clauses 16.2 to 16.6. |
| 16.2 | If the Company proposes to issue any New Securities, it shall deliver to each Shareholder a written notice in relation to such issuance (a “Pro-rata Offer”), which shall: |
| 16.2.1 | identify and describe the New Securities; | |
| 16.2.2 | offer the New Securities for subscription in cash and on the same terms to each Shareholder pro rata to its Equity Proportion (as close as possible) as at the close of business on the Business Day prior to such offer (a “Pro-rata Entitlement”); and | |
| 16.2.3 | describe the price and other terms upon which they are to be issued, and the number or amount of the New Securities, and a time (being not less than fifteen (15) Business Days from the date of the Pro-rata Offer) (the “Acceptance Period”) within which, if the Pro-rata Offer is not accepted, it will be deemed to be declined. |
| 16.3 | A Shareholder may accept a Pro-rata Offer by irrevocable notice of acceptance to the Company within the Acceptance Period. |
| 16.4 | Within two (2) Business Days of the expiry of the Acceptance Period, the Company shall notify the other Shareholder if a Shareholder does not elect to subscribe for, or is deemed to have declined to subscribe for, its Pro-rata Entitlement, and the other Shareholder shall be entitled to subscribe (on the same terms) for the New Securities not so subscribed for by delivery of an irrevocable notice of acceptance to the Company and the other Shareholder on or prior to the expiry of a further ten (10) Business Days after the expiry of the Acceptance Period. |
| 16.5 | Completion of the subscriptions for the New Securities shall take place on the terms and conditions specified in the Pro-rata Offer within ten (10) Business Days of the expiry of the Acceptance Period (as extended as necessary in accordance with Clause 16.4). |
| 16.6 | After the expiry of the Acceptance Period (as extended as necessary in accordance with Clause 16.4), the Company shall be entitled to issue to any person any New Securities offered to Shareholders and which have not been subscribed for in accordance with Clause 16.5. Any issue or disposal by the Board pursuant to this Clause 16.6 shall be on the same terms as the Pro-rata Offer. |
| 29 |
| 16.7 | It shall be a condition of the issue or disposal of any New Securities to a third party or third parties pursuant to Clause 16.6 that the subscriber enters into a Deed of Adherence in accordance with Clause 11.10. |
| 17. | NOTICES |
| 17.1 | Any notice in connection with this Agreement shall be in writing in English and delivered by hand, registered post or courier using an internationally recognised courier company or email to the address or email address (as the case may be) specified in Clause 17.4 or to such other address or email address as the relevant Party may from time to time specify by notice to the other Parties given in accordance with this Clause. |
| 17.2 | In the absence of evidence of earlier receipt, a notice shall be deemed given and received: |
| 17.2.1 | in the case of personal delivery by hand or courier, at the time of delivery; or | |
| 17.2.2 | in the case of first class post (other than airmail) or recorded delivery, at 10:00 am on the second Business Day after posting; | |
| 17.2.3 | in the case of airmail, at 10:00 am on the fifth Business Day after posting; and | |
| 17.2.4 | in the case of email, at the time the email containing or attaching the notice was sent as recorded on the email account on the sender’s machine, provided that receipt shall not occur if the sender receives an automated message indicating that the message has not been delivered to the recipient. |
| 17.3 | For the purpose of this Clause 17: |
| 17.3.1 | all times are to be read as local time in the place of deemed receipt; and | |
| 17.3.2 | if deemed receipt occurs outside of Working Hours, the notice shall be deemed to have been received at 10:00 am on the next Business Day in the place of receipt. |
| 17.4 | The relevant details of each Party at the date of this Agreement are: |
| In relation to Kopin | In relation to Theon | |
| ***. | ***. | |
| In relation to the Company | ||
| *** |
| 17.5 | Should a Party fail to notify another Party of any change to its address or email in accordance with Clause 17.1, then any notice served under this Clause shall be validly served by that second Party if served to the address or email listed in Clause 17.4. |
| 30 |
| 18. | process agents |
| 18.1 | Each of the Parties hereby irrevocably appoints to be its agent for service of process in England in any legal action of proceedings arising out of this Agreement a process agent (the “Process Agents” and each a “Process Agent”) as set out below: |
| Party | Process Agent | Address | ||
| *** | *** | *** | ||
| *** | *** | *** |
| 18.2 | If there is any change of address of a Party’s Process Agent, that Party shall notify the remaining Parties of such change of address within ten (10) Business Days of the change occurring. |
| 18.3 | If a Party’s Process Agent ceases to be able to act as such or to have an address in England, that Party irrevocably agrees to appoint a new process agent in England and to deliver to each of the other Parties within ten (10) Business Days a copy of a written acceptance of appointment by the new Process Agent. |
| 18.4 | Service upon a Party’s Process Agent of any document in accordance with Clause 18.1 shall be deemed completed whether or not any such document is forwarded to or received by that Party. |
| 19. | TERM |
| 19.1 | This Agreement shall continue until the earliest to occur of the following events: |
| 19.1.1 | all of the Shareholders agree in writing to terminate it; | |
| 19.1.2 | a listing of the shares in the Company becoming effective; or | |
| 19.1.3 | an effective resolution is passed or a binding order is made to wind up the Company. |
| 19.2 | Without limiting Clause 19.1 and without prejudice to the continuation of this Agreement with respect to all other Shareholders who are party to it, this Agreement shall terminate with respect to a Shareholder if that Shareholder ceases to hold Shares. |
| 31 |
| 19.3 | Upon termination of this Agreement, the provisions of this Agreement (other than the Surviving Provisions) shall automatically terminate and cease to have any effect and no Party shall have any claim against any other under it, except in relation to any rights or liabilities that the Parties have accrued under it prior to the date of termination or under the Surviving Provisions. |
| 19.4 | If this Agreement terminates and the Company is not placed into liquidation or if either Shareholder ceases or is about to cease to be a Shareholder (other than in circumstances where its Shares have or will be transferred to an Affiliate), each Shareholder shall on the request of the other exercise its powers in relation to the Company with a view to ensuring that the Company’s name is changed so that it no longer includes the name, initials or trademarks, or any reference to the name, initials or trademarks, of the Shareholder making the request. |
| 20. | Announcements and Confidentiality |
Announcements
| 20.1 | Subject to the remaining provisions of this Clause 20.1, no Party shall release any announcement or despatch any announcement or circular relating to this Agreement or the transactions contemplated by it unless the form and content of such announcement or circular have been submitted to, and agreed by, the other Parties. Nothing in this Clause 20.1 shall prohibit any Party from making any announcement or despatching any circular as required by law or the rules of any stock exchange or Governmental Authority, in which case the announcement shall only be released or the circular despatched after consultation with the other Parties and after taking into account the reasonable requirements of the other Parties as to the content of such announcement or circular. |
Confidentiality
| 20.2 | Save as provided in Clause 20.3, no Party shall disclose to any third party, or use or exploit commercially for its or their own purposes any Confidential Information. The obligations of the parties under this Clause 20.2 shall remain in force until the relevant information enters the public domain otherwise than by the default of a Party. |
| 20.3 | The obligations of confidentiality in Clause 20.2 shall not apply to a Party disclosing of Confidential Information: |
| 20.3.1 | in connection with the performance of its obligations or the enforcement of its rights hereunder including any claim or proceeding arising under Clause 22; | |
| 20.3.2 | to its Affiliates or the directors, officers, employees, agents, and professional advisers of its or their Affiliates to the extent reasonably required for purposes connected with or incidental to this Agreement; | |
| 20.3.3 | pursuant to any listing agreement with or the rules and regulations of any recognised security exchange on which securities of it or any of its Affiliates are listed or traded; | |
| 20.3.4 | as required by Applicable Law; or | |
| 20.3.5 | in the case of Confidential Information belonging to the Company, its use in the ordinary course of the Business, |
provided in each case set out in Clauses 20.3.1 and 20.3.2 above, the Party disclosing the same shall take all reasonable steps to preserve the confidentiality thereof and to ensure that such information shall be used only for the purposes for which it has been disclosed.
| 20.4 | If a Party becomes required, in circumstances contemplated by Clause 20.3.3 or 20.3.4, to disclose any information such Party shall (save to the extent prohibited by such rules and regulations or Applicable Law) give each other Party such notice as is practical in the circumstances of such disclosure and shall co-operate with each other Party, having due regard to each other Party’s views, and take such steps as each other Party may reasonably require in order to enable it to mitigate the effects of, or avoid the requirements for, any such disclosure. |
| 32 |
| 21. | MISCELLANEOUS |
Warranties
| 21.1 | Each Party warrants to each other Party that each of the Party Warranties is true, accurate and not misleading in respect of itself as of the date of this Agreement. |
Assignment
| 21.2 | Subject to Clause 21.3, no Party may assign, transfer or otherwise deal with all or any part of its rights or obligations under this Agreement or any benefit arising under or out of this Agreement without the prior written consent of each other Party, and any purported dealing in contravention of this prohibition shall be ineffective. |
| 21.3 | A Party may transfer all of its rights and obligations to an Affiliate to which it transfers its shares pursuant to Clause 11.4 and which has entered into a Deed of Adherence as contemplated by that Clause. Each Party agrees to do such acts and things (including executing and delivering any deed of novation or other deed or agreement) as the transferring Party reasonably requests to perfect the transfer of such rights and obligations to such transferee. |
Third party rights
| 21.4 | With the exception of the right of persons entering into a Deed of Adherence as contemplated by Clause 11.4 to enforce the terms of Clause 11.6 (each a “Third Party”), no term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement. The right of a Third Party shall be subject to the provisions of Clause 22 (Governing law and Jurisdiction). The Parties may by agreement rescind or vary any term of this Agreement without the consent of any Third Party. |
Entire agreement
| 21.5 | Each of the Parties confirms on behalf of itself and its Affiliates that this Agreement together with the Transaction Documents represents the entire understanding, and constitutes the whole agreement, in relation to its subject matter and supersedes any previous agreement between the Parties with respect thereto and, without prejudice to the generality of the foregoing, excludes any warranty, condition or other undertaking implied at law or by custom, usage or course of dealing. |
| 21.6 | Each Party confirms on behalf of itself and its Affiliates that: |
| 21.6.1 | in entering into this Agreement it has not relied on any representation, warranty, assurance, covenant, indemnity, undertaking or commitment which is not expressly set out in this Agreement or the Transaction Documents; and | |
| 21.6.2 | in any event, without prejudice to any liability for fraudulent misrepresentation or fraudulent misstatement, the only rights or remedies in relation to any representation, warranty, assurance, covenant, indemnity, undertaking or commitment given or action taken in connection with this Agreement or the Transaction Documents are those pursuant to this Agreement or such Transaction Document, and without limitation, no Party has any other right or remedy (whether by way of a claim for contribution or otherwise) in tort (including negligence) or for misrepresentation (whether negligent or otherwise, and whether made prior to, and/or in this Agreement). |
| 33 |
| 21.7 | Nothing contained in this Agreement or in any other document referred to or incorporated in it shall be read or construed as excluding any liability or remedy as a result of fraud. |
Unenforceable provisions
| 21.8 | If any provision or part of this Agreement is or becomes void or unenforceable due to any Applicable Law, it shall be deemed to be deleted and the remaining provisions of this Agreement shall continue in full force and effect. If any invalid, unenforceable or illegal provision of this Agreement would be valid, enforceable and legal if some part of it were deleted, the provision shall apply with the minimum deletion necessary to make it valid, enforceable and legal. |
No fetter
| 21.9 | The Company shall not be bound by any provision of this Agreement to the extent that it constitutes an unlawful restriction or fetter on its statutory powers or is unlawful financial assistance. This shall not affect the validity of the rights and obligations of the other Parties under this Agreement. |
| 21.10 | Without limiting Clause 21.9, in case any of the obligations undertaken by the Company hereunder is not enforceable against the Company under Applicable Law, the Shareholders undertake to take such action in their capacity as shareholders of the Company to ensure that the Company, in fact, acts in accordance with this Agreement. |
Further assurance
| 21.11 | At any time after the date of this Agreement the Parties shall, and shall use all reasonable endeavours to procure that any necessary third party shall, at the cost of the relevant Party, execute and deliver such documents and do such acts and things as that Party may reasonably require for the purpose of giving to that Party the full benefit of all the provisions of this Agreement. |
Waiver
| 21.12 | The rights and remedies of the Parties shall not be affected by any failure to exercise or delay in exercising any right or remedy or by the giving of any indulgence by any other Party or by anything whatsoever except a specific waiver or release in writing and any such waiver or release shall not prejudice or affect any other rights or remedies of the Parties. No single or partial exercise of any right or remedy shall prevent any further or other exercise thereof or the exercise of any other right or remedy. |
Variation
| 21.13 | No variation of this Agreement shall be valid unless it is in writing (which, for this purpose, does not include email) and signed by or on behalf of each of the Parties. The expression “variation” includes any variation, supplement, deletion or replacement however effected. |
Counterparts
| 21.14 | This Agreement may be executed in any number of counterparts and by the Parties to it on separate counterparts, each of which when executed and delivered shall be an original, but all the counterparts together constitute one instrument. Delivery of a counterpart of this Agreement by email attachment shall be an effective mode of delivery. In relation to each counterpart, upon confirmation by or on behalf of a Party that such Party authorises the attachment of its counterpart signature page to the final text of this Agreement, such counterpart signature page shall take effect, together with such final text, as a complete authoritative counterpart. |
| 34 |
No partnership
| 21.15 | Nothing in this Agreement shall constitute any of the Parties a partner of any other, nor shall the execution, completion and implementation of this Agreement confer on any Party any power to bind or impose any obligations to any third parties on any other Party or to pledge the credit of any other Party. |
Costs
| 21.16 | Save as otherwise provided by this Agreement, each Party shall bear its own costs incurred in connection with the preparation, negotiation, entry into and performance of this Agreement and the documents to be entered into pursuant to it, save that this Clause 21.16 shall not prejudice the right of any Party to seek to recover its costs in any litigation or dispute resolution procedure which may arise out of this Agreement. |
Tax
| 21.17 | The Shareholders shall use their reasonable efforts to ensure that the Company remains resident for Tax purposes in its jurisdiction of incorporation and does not become resident for Tax purposes in any jurisdiction other than its jurisdiction of incorporation. Without limiting the preceding sentence, the conduct of the Company’s affairs shall be managed, so as far as reasonably practicable, to achieve the objectives of this Clause 21.17. |
| 21.18 | Each Shareholder shall use its reasonable efforts to ensure that the Company does not become a member of a group with it (or any of its Affiliates) for value added tax purposes. |
| 21.19 | Each Shareholder shall use its reasonable efforts to ensure that all transactions or arrangements between it (or any of its Affiliates) and the Company are made on arm’s length terms. If and to the extent that the Company’s profits or losses for Tax purposes are computed in relation to any such transaction or arrangement on a basis (as finally determined by a Tax Authority) which substitutes arm’s length terms for the actual terms agreed and this adjustment results in a liability or increased liability to Tax, the relevant Shareholder agrees upon written demand to make a payment to the Company equal (on an after-Tax basis) to such liability, or such increase in liability, to Tax. |
| 21.20 | If and to the extent that any Shareholder (or one of its Affiliates) has an increased liability to Tax as a result of an adjustment referred to in Clause 21.19 in respect of which the Company is able to claim a compensating adjustment from a tax authority, then: |
| 21.20.1 | the Company shall, if the relevant Shareholder so requests in writing, claim the compensating adjustment; and | |
| 21.20.2 | if the Company receives or obtains a payment or other relief which comprises or would not have arisen but for such compensating adjustment, then the lesser of the amount received or obtained or the amount of Tax which the Company saves by virtue of the payment or other relief (less in each case any reasonable costs of recovering or obtaining such payment or other relief and any Tax actually suffered thereon) shall be paid by the Company by way of balancing payment to the applicable Shareholder (or one of its Affiliates). |
| 21.21 | A balancing payment to be made under Clause 21.20 shall be made: |
| 21.21.1 | within ten (10) Business Days from the date on which notice setting out the amount due is received by the Company from the applicable Shareholder or, if later; and | |
| 21.21.2 | in the case of a repayment of any Tax, ten (10) Business Days after such repayment is received by the Company or, in the case of the receipt of any other relief, the date which is two Business Days prior to the last day on which the Company would have been due to make an actual payment of Tax had it not been for such relief. |
| 35 |
| 21.22 | Each Party shall be responsible for paying any Tax for which it is liable and which is due in relation to: |
| 21.22.1 | any rights granted under this Agreement and any related ancillary documents; and/or | |
| 21.22.2 | the issuance, acquisition, holding, transfer, sale or any other thing done or deemed to be done in respect of the legal or beneficial title to the Shares by or on behalf of any Party (or such Party’s Affiliates) including any stamp duty, and related interest and penalties, arising on a transfer of Shares to it, |
and each Party shall fully indemnify and hold harmless the Company and each other Party in respect of any liability in connection with such Taxes.
| 21.23 | To the extent (if any) that the Company becomes liable to pay any liability referred to in Clause 21.21 it shall be entitled to pay such liability and will be entitled to set-off such amount against any outstanding payment or amount due to the relevant Party from the Company. Any (excess) amount in relation to such liability that is not withheld or set-off in accordance with the previous sentence will be indemnified by the relevant Party in accordance with Clause 21.21 and shall be payable on demand by the relevant Party to the Company as the Shareholders shall direct. |
Language
| 21.24 | This Agreement was negotiated in English and, to be valid, all certificates, notices, communications and other documents made in connection with it shall be in English. If any part of this Agreement or any such certificate, notice, communication or other document is for any reason translated into any language other than English the English text shall prevail. Each of the Parties understands English and is content for all communications relating to this Agreement to be served on it in English. |
Legal advice
| 21.25 | Each Party confirms it has received independent legal advice relating to all the matters provided for in this Agreement, including the provisions of this Clause, and agrees, having considered the terms of this Agreement as a whole, that the provisions of this Agreement, including this Clause 21.25 are fair and reasonable. |
| 22. | GOVERNING LAW AND Arbitration |
| 22.1 | This Agreement and any claim, dispute or difference (including non-contractual claims, disputes or differences) arising out of or in connection with it or its subject matter shall be governed by, and construed in accordance with, English law. |
| 22.2 | Any dispute or claim arising out of in connection with this Agreement (including any claim dispute or question regarding its existence, validity or termination) shall be referred to and finally resolved by arbitration under the LCIA Rules, which LCIA Rules are deemed to be incorporated by reference into this Clause 22. |
| 22.3 | Any arbitration initiated pursuant to or in accordance with Clause 22.2 of this Agreement shall be conducted as follows: |
| 22.3.1 | the seat, or legal place, of arbitration shall be London; | |
| 22.3.2 | the language to be used in the arbitral proceedings shall be English; and | |
| 22.3.3 | the number of arbitrators shall be three (3). |
| 36 |
| 22.4 | The arbitrators shall be nominated as follows: |
| 22.4.1 | the claimant (or claimant Parties jointly) shall nominate one arbitrator; | |
| 22.4.2 | the respondent (or respondent Parties jointly) shall nominate one arbitrator; and | |
| 22.4.3 | the nominated arbitrators shall jointly nominate the third arbitrator as soon as possible and in any event within 15 days of the appointment of the second arbitrator. The third arbitrator shall act as Chair of the Tribunal. If the nominated arbitrators are unable to agree on the identity of the third arbitrator, they shall request that the LCIA nominates and appoints the third arbitrator. |
| 22.5 | Each Party expressly agrees and consents to the process for nominating and appoint arbitrators pursuant to Clause 22.4. |
| 22.6 | No Party may seek from another Party, nor be required to give, general discovery of documents, nor shall the Tribunal have the authority to order the same. A Party may only seek from another Party, and be required to produce, specific identified documents that are relevant to the Dispute. |
| 22.7 | Each Party shall bear its own costs of arbitration, save where the relevant Tribunal explicitly provides otherwise in any award. |
| 22.8 | Any award rendered by the arbitral tribunal shall be final, conclusive and binding upon the Parties. To the extent permitted by law, the Parties irrevocably waive any right to any form of appeal, review or recourse of any rendered award to any state or other judicial authority. |
| 22.9 | Judgment upon any award rendered may be entered in any court having jurisdiction. |
| 22.10 | Without prejudice to the foregoing provisions of this Clause 22, the Parties agree that: |
| 22.10.1 | the courts of England and Wales shall have jurisdiction (to which the Parties irrevocably submit) to grant interim and ancillary relief in support of any arbitral proceedings (whether or not actually commenced) under this Clause 22; and | |
| 22.10.2 | in the event of a breach or threatened breach of Clause 11.1 or 20 by a Party, any other Party shall be entitled to seek equitable relief (whether interim or final) of any kind, including but not limited to an injunction to restrain the action or behaviour that would constitute a breach of Clause 11.1 or 20 in any court of competent jurisdiction. |
This Agreement has been duly executed by the Parties (or their duly authorised representatives) and delivered as a DEED on the date specified at the beginning of this Agreement.
| 37 |
Schedule 1
DEED OF ADHERENCE
***
| 38 |
Schedule 2
Transfer terms
***
| 39 |
Schedule 3
PARTY WARRANTIES
***
| 40 |
Schedule 4
CALL OPTION
***
| 41 |
Schedule 5
PUT OPTION
***
| 42 |
Schedule 6
RESERVED MATTERS
***
| 43 |
Schedule 7
INitial BUdget AND Business Plan
***
| 44 |
EXECUTION PAGES
IN WITNESS WHEREOF this Agreement is executed and delivered as a DEED on the date and year first above written.
Kopin
EXECUTED and DELIVERED as a DEED |
) |
/s/ Michael Murray | ||
| by KOPIN CORPORATION | ) | Authorised Signatory | ||
| acting by: | ) | |||
| who in accordance with the laws of its jurisdiction of incorporation is acting with the authority of the company | ) |
Theon
EXECUTED and DELIVERED as a DEED |
) |
/s/ Philippe Mennicken | ||
| By THEON INTERNATIONAL PLC | ) | Authorised Signatory | ||
| *** | ) | |||
| ) |
The Company
EXECUTED and DELIVERED as a DEED |
) |
/s/ Michael Murray | ||
| by KOPIN EUROPE LIMITED | ) | Director | ||
| acting by a director | ) | |||
| in the presence of | ) | |||
| Witness Signature | ||||
| Witness Name: | ||||
| Witness Occupation: | ||||
| Witness Address: |
| 45 |
Exhibit 10.24
DATED August 8 2025
SUBSCRIPTION AGREEMENT
RELATING TO KOPIN EUROPE LIMITED
Condor House
5-10 St. Paul’s Churchyard
London EC4M 8AL
Tel. +44 (0)20 3201 5000
Fax: +44 (0)20 3201 5001
www.morganlewis.com
Index
| Clause No. | Page No. | |
| 1. | Definitions | 3 |
| 2. | Interpretation | 8 |
| 3. | Subscription | 9 |
| 4. | Conditions | 9 |
| 5. | New Articles | 12 |
| 6. | Pre-Completion Conduct | 12 |
| 7. | Completion | 13 |
| 8. | Warranties | 14 |
| 9. | Limitations on Liability | 14 |
| 10. | Investor Warranties | 14 |
| 11. | Termination | 15 |
| 12. | Announcements | 15 |
| 13. | Confidentiality | 15 |
| 14. | Costs and expenses | 17 |
| 15. | Variation and Waiver | 17 |
| 16. | No partnership | 17 |
| 17. | Assignment and transfer | 17 |
| 18. | Rights of third parties | 17 |
| 19. | Counterparts; No originals | 18 |
| 20. | Notices | 18 |
| 21. | Rights Cumulative with those at Law | 20 |
| 22. | Securities laws requirements | 20 |
| 23. | Severance | 22 |
| 24. | Whole Agreement | 22 |
| 25. | Further Assurance | 22 |
| 26. | Governing Law and Arbitration | 23 |
| Schedule 1 The Company | *** | |
| Schedule 2 WarrantieS | *** | |
| Schedule 3 PRE-COMPLETION OBLIGATIONS | *** | |
| Schedule 4 LIMITATIONS ON LIABILITY | *** | |
| 2 |
THIS AGREEMENT is dated August 8, 2025
PARTIES
| (1) | THEON INTERNATIONAL PLC, a company incorporated in Cyprus with registered number HE 424549, whose registered office is at 5, Agios Antonios Street, Muskita Building 2, Strovolos, Nicosia, 2002, Cyprus (the “Investor”); |
| (2) | KOPIN EUROPE LIMITED, a company incorporated under the laws of England and Wales with registered number 05220480, whose registered office is at One Eleven, Edmund Street, Birmingham, B3 2HJ (the “Company”), and |
| (3) | KOPIN CORPORATION, a corporation incorporated under the laws of Delaware with company number 2033458 (“Kopin US”), which is a Party (as defined below) to this Agreement solely for the purposes of Schedule 2, Schedule 4 and Clause 8. |
(each a “Party” and together the “Parties”).
INTRODUCTION
| (A) | The Company is a private company limited by shares, brief particulars of which are set out in Schedule 1. |
| (B) | The Investor wishes to subscribe for shares in the capital of the Company on and subject to the terms of this Agreement. |
AGREED TERMS
| 1. | Definitions |
In this Agreement, except where a different interpretation is necessary in the context, the words and expressions set out below shall have the following meanings:
“Accounting Standards” means International Financial Reporting Standards, International Accounting Standards and Interpretations of those standards issued by the International Accounting Standards Board and the International Financial Reporting Interpretations Committee applicable to the Company;
“Accounts” means the audited statement of financial position as at the Accounts Date and the audited statement(s) of profit or loss and other comprehensive income, changes in equity and cash flows for the accounting period ended on the Accounts Date of the Company together with the notes, reports, statements and other documents which are or would be required by Applicable Law and applicable Accounting Standards to be annexed to the financial statements of the Company and to be sent or made available to members, a copy of which has been provided to the Investor and is contained in the Data Room as document 10.64;
“Accounts Date” means 31 December 2023;
“Affiliate” means, in respect of any person, a person that directly, or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the person specified, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a person, whether through the ownership of voting securities, by contract, as trustee or executor, or otherwise, and in respect of any individual, his or her spouse, or civil partner, and his or her grandparents (and those of his spouse or civil partner) and all descendants of those grandparents;
| 3 |
“Agreed Form” means, in relation to any document, the form of that document which has been initialled for the purpose of identification by the Investor (or the Investor’s Solicitors on behalf of the Investor) and the Company (or the Company’s Solicitors on behalf of the Company);
“Applicable Law” means all applicable legislation, statutes or statutory instruments, directives, regulations, judgments, decisions, decrees, orders, instruments, by-laws, and other legislative measures or decisions having the force of law, treaties, conventions and other agreements between states, or between states and the European Union or other supranational bodies, rules of common law, customary law and equity and all civil or other codes and all other laws of, or having effect in, any jurisdiction from time to time;
“Authorisation” means any license, permit, consent, authorisation, permission, clearance, warrant, confirmation, certificate or approval of any Governmental Authority or any other person;
“Board” means the board of directors of the Company as constituted from time to time;
“Business Day” means a day on which banks are open for general commercial business in London, UK, Boston, USA and Nicosia, Cyprus (excluding Saturdays, Sundays and public holidays);
“Change of Control” means, in relation to Kopin US, the occurrence of any event or series of events as a result of which any person or group of persons acting in concert (other than those who, as at the date of this Agreement, directly or indirectly, control Kopin US) acquires, directly or indirectly, control of Kopin US, where “control” means the power to exercise more than 50% of voting rights in Kopin US, or otherwise comprising a majority of its officers and directors, whether through ownership of shares or otherwise;
“Claim” means any claim made by a Party arising out of, or in connection with this Agreement or the Transaction, howsoever arising;
“Company’s Solicitors” means ***;
“Completion” means completion by the Parties of their respective obligations in accordance with Clause 5 (Completion);
“Conditions” has the meaning given to that term in Clause 4.1;
“Confidential Information” has the meaning given to that term in Clause 13.1;
“Consent” includes any licence, permit, consent, approval, authorisation, agreement, permission, waiver, order or exemption;
“Data Room” means the electronic data room as at 2:00 p.m. on 8 August 2025 established by the Company with DataSite for the purposes of the Transaction identified with the project name “Project Katana” (the index of which is attached to the Disclosure Letter);
“Delist” or “Delisted” means, in relation to Kopin US, the removal, whether voluntary or involuntary, of all of the issued and outstanding shares of Kopin US from trading or quotation on NASDAQ, such that the shares of Kopin US are no longer listed or admitted to trading on NASDAQ;
| 4 |
“Disclosure Letter” means a letter of the same date as this Agreement addressed by Kopin US to the Investor for the purpose of Clause 8 which is accepted as such by the Investor, and includes any document which is included or attached to it;
“Encumbrance” means any lien, pledge, encumbrance, charge (fixed or floating), mortgage, third party claim, debenture, option, right of pre-emption, right to acquire, equity, assignment by way of security, trust arrangement for the purpose of providing security or other security interests of any kind, including retention arrangements or other encumbrances and any agreement to create any of the foregoing;
“General Warranties” means the warranties given by the Warrantor as set out in Part 2 of Schedule 2;
“Governmental Authority” means any supranational, national, state, municipal or local government (including any subdivision, court, administrative agency or commission or other authority thereof) or any other supranational, governmental, intergovernmental, quasi-governmental authority, body, department or organisation, including the European Union, or any regulatory body appointed by any of the foregoing in each case, in any jurisdiction;
“Group” means in relation to a company, that company, any subsidiary undertaking or any parent undertaking from time to time of that company and any subsidiary undertaking from time to time of a parent undertaking of that company. Each company in a group is a “member of the Group”;
“Investor’s Board” means the board of directors of the Investor as constituted from time to time
“Investor’s Solicitors” means ***
“Investor Warranties” means the warranties given by the Investor pursuant to Clause 10;
“ISU” means the Investment Security Unit within the UK government’s Cabinet Office;
“Joint Press Release” means any press release agreed between the Parties announcing the signing of this Agreement;
“Kopin US” means the Company’s shareholder at the time of this Agreement, Kopin Corporation of 125 North Drive, Westborough, MA, 01581, United States;
“Leases” means the leases of the Properties (including any documents supplemental to it);
“LCIA Rules” means the LCIA Arbitration Rules in force as at the date of this Agreement;
“License and Collaboration Agreement” means the license and collaboration agreement between Kopin US, the Investor and the Company in the Agreed Form;
“Long Stop Date” means the date falling 90 days after the date of this Agreement, as may be extended pursuant to Clause 4.10 or by written agreement of the Parties;
“Losses” means:
| (a) | any direct or indirect losses, liability, damages, interest, awards, judgments, penalties and out-of-pocket costs and expenses (including reasonable legal advisers’ and consultants’ fees and expenses) suffered or incurred by the relevant person as a result of a breach of this Agreement; and |
| 5 |
| (b) | in relation to any Relief, the loss, non-availability, reduction, nullification, disallowance or clawback of such Relief; |
“NASDAQ” means The NASDAQ Stock Market LLC, a national securities exchange operated by Nasdaq, Inc., or any successor thereto;
“New Articles” means the articles of association of the Company to be adopted by the Company with effect from Completion;
“New Shares” means the shares subscribed by the Investor pursuant to Clause 3;
“Non-Regulatory Conditions” means each Condition other than the NSIA Condition;
“Notice” has the meaning given to that term in Clause 20.1;
“NSIA” means the UK National Security and Investment Act 2021;
“NSIA Condition” has the meaning given to that term in Clause 4.1(a);
“Preferred Stock Purchase Agreement” means the series A convertible preferred stock purchase agreement, dated on or about the date hereof, between Kopin US and the Investor;
“Proceedings” means any proceeding, suit or action arising out of or in connection with this Agreement (including with respect to validity, formation at issue, effect, interpretation, performance or termination) or the transactions contemplated or provided for thereby;
“Properties” means (i) Unit 7 (otherwise known as Unit 2), St David’s Drive, St David’s Business Park, Dalgety Bay, Fife (“Property 1”), and (ii) the 17.82 sqm of office space in Schwarzschildstraße 3, 12489 Berlin (“Property 2”);
“RBS Security Agreement” means the security agreement dated 23 July 2013 between the Company and the Royal Bank of Scotland Plc providing for a deposit amount of £*** with the corresponding registered charge with charge code: ***;
“Relief” means any relief, loss, allowance, credit, deduction or set-off given, claimed, claimable, due or available pursuant to any Tax Legislation, or any set-off or deduction in computing profits for the purposes of any Tax or any right to repayment of Tax, and:
| (a) | any reference to the “use or set-off” of a Relief shall be construed accordingly and shall include use or set-off in part; | |
| (b) | references to the “loss” of a Relief shall include the loss, non-availability, non-existence, reduction, counteraction, disallowance, clawback, cancellation or failure to obtain such Relief, and “lose” and “lost” shall be construed accordingly. |
“Representative” means, in relation to any person, such person’s directors, officers, employees, lawyers, accountants, bankers or other advisers, agents, representatives, sub-contractors or brokers;
“Secretary of State” has the meaning given in the NSIA;
“Settled” means, in respect of a Claim, that such Claim:
| (a) | is agreed in writing between the Parties; or | |
| (b) | is finally settled by arbitration in accordance with Clause 26; |
| 6 |
“SHA” means the shareholders’ agreement among the Company, the Investor and Kopin US related to the Company in the Agreed Form;
“Shareholder Loan” means the revolving credit facility, revolving credit promissory notes, and an amendment letter pursuant to which Kopin US makes a maximum facility amount of $***….. available to the Company;
“Shares” has the meaning given to that term in Part 1 of Schedule 2;
“Tax” means all forms of taxation and statutory and governmental, state, provincial, local governmental or municipal charges, duties, contributions and levies in the nature of taxes, and withholdings and deductions on account of tax, in each case whether of the UK or elsewhere and whenever imposed and all related penalties, charges and interest payable in connection therewith (including, for the avoidance of doubt, in respect of any administrative compliance matters relating to such taxation), regardless of whether or not any such amounts are directly or primarily chargeable against, recoverable from or attributable to the Company (as the case may be) or any other person, or the Company has, or may have, any right of reimbursement against any other person;
“Tax Authority” means any taxing, governmental, local governmental, fiscal or other authority (whether within or outside the United Kingdom) competent to impose, assess, administer or collect any Tax, including HMRC;
“Tax Claim” means a Warranty Claim in respect of any of the Tax Warranties
“Tax Legislation” means any statute, statutory instrument, enactment, law, by-law, directive, decree, ordinance, regulation or other legislative provision imposing or relating to Tax;
“Tax Warranties” means the warranties given by the Warrantor as set out in Part 3 of Schedule 2;
“Transaction” means the subscription by the Investor of the New Shares under and in accordance with the terms of this Agreement and the other transactions contemplated by any of the other Transaction Documents;
“Transaction Documents” means this Agreement, the SHA, the Preferred Stock Purchase Agreement, the License and Collaboration Agreement and the Disclosure Letter;
“Title and Capacity Warranties” means the warranties given by the Warrantor as set out in Part 1 of Schedule 2;
“Title Claim” means a Warranty Claim in respect of any of the Title and Capacity Warranties;
“Warranties” means the Title and Capacity Warranties, the General Warranties and the Tax Warranties;
“Warrantor” means Kopin US; and
“Warranty Claim” means any Claim made by the Investor for breach of any of the Warranties.
| 7 |
| 2. | Interpretation |
| 2.1 | The clause and paragraph headings and the table of contents used in this Agreement are inserted for ease of reference only and shall not affect construction. |
| 2.2 | References to persons shall include bodies corporate, unincorporated associations and partnerships, in each case whether or not having a separate legal personality. |
| 2.3 | Reference to a party or parties is to a party or parties of the agreement. |
| 2.4 | References to any English statute or other legislation or legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of any jurisdiction other than England, be deemed to include a reference to that which most nearly approximates to the English legal term in that jurisdiction. |
| 2.5 | References to those of the parties that are individuals include their respective legal personal representatives. |
| 2.6 | References to “writing” or “written” includes any non-transitory form of visible reproduction of words. |
| 2.7 | References to the word “include” or “including” (or any similar term) are not to be construed as implying any limitation and general words introduced by the word “other” (or any similar term) shall not be given a restrictive meaning by reason of the fact that they are preceded or followed by words indicating a particular class of acts, matters or things. |
| 2.8 | Except where the context specifically requires otherwise, words importing one gender shall be treated as importing any gender, words importing individuals shall be treated as importing corporations and vice versa, words importing the singular shall be treated as importing the plural and vice versa, and words importing the whole shall be treated as including a reference to any part thereof. |
| 2.9 | A reference to “US cents”, “US dollars” or to “$” or “US$” shall be construed as a reference to the lawful currency for the time being of the United States of America; |
| 2.10 | References to any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall in respect of any jurisdiction other than England be deemed to include what most nearly approximates the English legal term in that jurisdiction and references to any English statute or enactment shall be deemed to include any equivalent or analogous laws or rules in any other jurisdiction. |
| 2.11 | Reference to any law or enactment includes references to: |
| (a) | that law or enactment as re-enacted, amended, consolidated, extended or applied by or under any other enactment (before or after the date of this Agreement); | |
| (b) | any law or enactment which that law or enactment re-enacts (with or without modification); and | |
| (c) | any subordinate legislation made (before or after the date of this Agreement) under any law or enactment, as re-enacted, amended, consolidated, extended or applied, as described in paragraph (a) above, or under any law or enactment referred to in paragraph (b) above, |
provided that, as between the Parties, no such re-enactment, amendment, consolidation, extension or application shall apply for the purposes of this Agreement to the extent that it would impose any new or extended obligation, liability or restriction on, or otherwise adversely affect the rights of, any Party, and “law” and “enactment” includes any legislation in any jurisdiction.
| 8 |
| 3. | Subscription |
| 3.1 | Subject to the provisions of Clause 5, the Investor shall apply and agree to subscribe for, and pay to the Company at Completion, the subscription monies set out in the table below in consideration for the allotment and issue to it at Completion of the following shares, and the Company, in consideration of the payment of such subscription monies by the Investor, agrees to allot and issue such shares to the Investor: |
| Investor | No. of New Shares | Total subscription monies (US$) | ||||||
| Theon International Plc | *** | $ | 8,000,000 | |||||
| Total | *** | $ | 8,000,000 | |||||
| 4. | Conditions |
| 4.1 | Completion is conditional upon the following: |
| (a) | either: |
| (i) | the Secretary of State having informed the Investor in writing that it does not consider the Transaction to be a notifiable acquisition for the purposes of section 6 of the NSIA; or | |
| (ii) | notification of the Transaction by the Investor having been accepted by or on behalf of the Secretary of State and either: |
| (1) | the Secretary of State having cleared the Transaction after an initial review under section 14(8)(b)(ii) of the NSIA; or | |
| (2) | if the Secretary of State has issued a call in notice under section 14(8)(b)(i) or section 18(8)(b)(i) of the NSIA to conduct a full national security assessment of the Transaction: |
| a. | the Secretary of State having given a final notification under section 26(1)(b) of the NSIA that no further action will be taken in relation to the Transaction; or | |
| b. | subject to Clause 4.9 below, the Secretary of State having made a final order under section 26(1)(a) of the NSIA that permits the Transaction to complete, and any condition, provision or obligation in that order: (a) expressly directed at the Investor or its group and (b) not imposing any material restriction on, or requiring any material action by, the Company or any of its subsidiaries, having been satisfied, complied with or waived, as applicable, |
| 9 |
(the “NSIA Condition”);
| (b) | the Title and Capacity Warranties being true and accurate as at the date of Completion; | |
| (c) | the Investor Warranties being true and accurate as at the date of Completion; and | |
| (d) | between the period beginning on the date of this Agreement and ending on the date of Completion, Kopin US has not been subject to a Change of Control and has not been Delisted from NASDAQ, |
(the “Conditions”, each a “Condition”).
| 4.2 | Subject to the Company’s compliance with Clause 4.5, the Investor shall use reasonable endeavours to procure the satisfaction of the NSIA Condition as soon as reasonably practicable after the date of this Agreement, and in any event prior to the Long Stop Date, and, subject to the Company providing such information that is reasonably required, the Investor shall notify the Secretary of State in respect of the Transaction in accordance with the NSIA no later than ten (10) Business Days after the date of this Agreement. |
| 4.3 | Notwithstanding the generality of Clause 4.2, the Investor shall inform and consult with the Company and/or the Company’s Solicitors, in relation to all contacts and proposed contacts with the ISU and/or the Secretary of State in relation to the NSIA Condition, including but not limited to: |
| (a) | providing drafts to the Company and/or the Company’s Solicitors of all proposed notifications to, and correspondence to be sent to or material contacts to be made with, the ISU and, if time permits, allowing a reasonable time for the Company and/or the Company’s Solicitors to comment on such draft notifications and correspondence and proposed contacts prior to submission; | |
| (b) | taking into account the reasonable comments of the Company and/or the Company’s Solicitors on, and prior to making such proposed notifications, correspondence and contacts; | |
| (c) | to the extent permitted by the ISU, promptly informing, and consulting with, the Company and/or the Company’s Solicitors in relation to all correspondence and contacts received from the ISU in connection with the NSIA Condition, and where applicable provide the Company with the opportunity to participate in meetings or calls with the ISU or Secretary of State; and | |
| (d) | to the extent permitted by the ISU, promptly providing copies to the Company and/or the Company’s Solicitors of all notifications to, correspondence or contacts with the ISU and any requests for information or notices received from the ISU, |
in each case, provided that the Investor shall not be required by Clauses 4.3(a) to 4.3(d) above to provide copies of any element of such notifications, filings and other communications: (i) where the ISU has prohibited notifications, filings and other communications from being shared or (ii) which contains information of a privileged or commercially sensitive nature without making any redactions or withholding such information it reasonably considers necessary to comply with law (including, but not limited to, the NSIA) or the requirements of the ISU, or providing it only to the Company’s Solicitors on the basis that it will not be shown or otherwise communicated to the Company or its Affiliates.
| 10 |
| 4.4 | The Investor shall further: |
| (a) | respond to all requests for information or notices received from the ISU as soon as reasonably possible; and | |
| (b) | not: |
| (i) | materially alter or vary the contents of any submission made to the Secretary of State; or | |
| (ii) | withdraw the notification to the Secretary of State in respect of the Transaction, |
in each case, without the Company’s prior written consent (in relation to Clause 4.9 or otherwise upon termination of this Agreement in accordance with its terms, such consent not to be unreasonably withheld, conditioned or delayed), save that the Company shall only be deemed to be unreasonably withholding consent in respect of Clause 4.4(b)(ii) where Clause 4.9 applies and the Investor has been required to take an action having a material adverse impact on the Investor in order to satisfy the NSIA Condition).
| 4.5 | The Company shall: |
| (a) | co-operate with and assist the Investor in procuring the satisfaction of the NSIA Condition including by providing the Investor and the Investor’s solicitors upon reasonable request and as soon as reasonably practicable with all information and documents necessary for making any notifications, filings, and other necessary communications in respect of the NSIA Condition; | |
| (b) | to the extent permitted by law or the ISU, as soon as reasonably possible, pass on to the Investor and/or the Investor’s Solicitors any request for further information made by or communications from the ISU. The Company shall only respond to such requests or communications in consultation with the Investor and/or Investor’s Solicitors; taking into account all reasonable comments of the Company and/or the Company’s Solicitors on, and prior to making such proposed notifications, correspondence and contacts; and | |
| (c) | use its reasonable endeavours to: |
| (i) | procure, so far as it is within its powers to do so, that Kopin US provides such information as may be requested in accordance with Clause 4.5(a); | |
| (ii) | ensure that any information or documents supplied by the Company to the Investor in accordance with Clause 4.5(a) is accurate and/or based on reasonable assumptions to the best of the Company’s knowledge, |
in each case, provided that the Company shall not be required by Clause 4.5(a) above to provide the Investor with copies of any element of such information and documents and other communications which contains information of a privileged or commercially sensitive nature without making any redactions it reasonably considers necessary to comply with law (including, but not limited to, the NSIA) or the requirements of the ISU, or providing it only to the Investor’s Solicitors on the basis that it will not be shown or otherwise communicated to the Investor or its Affiliates.
| 4.6 | If and to the extent that the Investor is informed that the NSIA Condition will only be satisfied subject to a condition, term, undertaking, remedy, or similar action or inaction, the Parties shall discuss such requirements in good faith. |
| 11 |
| 4.7 | If, at any time, either Party becomes aware: |
| (a) | of a fact or circumstance that Party reasonably considers might prevent a Condition from being satisfied, it shall inform the other Party in writing as soon as reasonably practicable; or | |
| (b) | that the NSIA Condition has been satisfied, it shall promptly notify the other Party in writing, and in any event within two (2) Business Days of receipt of the relevant decision from the Secretary of State. |
| 4.8 | The Parties agree and acknowledge that each Condition may only be waived by written agreement between the Parties. |
| 4.9 | If and to the extent that the Investor is informed that the NSIA Condition will only be satisfied subject to a condition, term, undertaking, remedy, or similar action or inaction, the Parties shall discuss such requirements in good faith. Nothing in this Agreement in connection with fulfilling the NSIA Condition shall require the Investor to (and the Company nor Kopin US or any of its Affiliates shall not without the Investor’s prior written consent) propose, negotiate, commit to and effect, by consent decree, hold separate order, or otherwise, the sale, divestiture or disposition of any businesses, product lines or assets of the Investor or its Group or the Company, or otherwise take or commit to take actions or to agree to any limitation, commitment, condition, remedy or restriction or requirement, in each case to the extent that the same would have a material effect on the Investor, the Investor’s Group and/or the Company. |
| 4.10 | If and to the extent that: |
| (a) | the NSIA Condition has not been satisfied; or | |
| (b) | a Non-Regulatory Condition ceases to be satisfied, |
and such Condition has not been waived, by 6:00 pm on the Long Stop Date, the Long Stop Date shall automatically extend for a further 30 days, unless either Party gives notice to the other Party that it wishes to terminate this Agreement within five Business Days of the original Long Stop Date, in which case Clause 11 will apply.
| 5. | New Articles |
| 5.1 | The Parties shall use all reasonable endeavours, acting in good faith, to agree the form of the new articles of association of the Company, which align with and give effect to the terms of the SHA (the “New Articles”), as soon as reasonably practicable after the date of this Agreement and before Completion. |
| 5.2 | The Company shall, on or prior to the Completion Date in accordance with clause 7.2(c)(iii) deliver to the Investor the New Articles in the Agreed Form. |
| 5.3 | The Parties agree that the New Articles in the Agreed Form shall be adopted by the Company prior to or with effect from Completion, and the Company shall take all necessary steps to procure the adoption of the New Articles in accordance with the requirements of Applicable Laws and the terms of this Agreement. |
| 6. | Pre-Completion Conduct |
| 6.1 | During the period between signing and Completion, the Company shall: |
| (a) | continue to operate in the ordinary course of business and in accordance with Schedule 3; and | |
| (b) | comply with Applicable Law. |
| 12 |
| 7. | Completion |
| 7.1 | Completion shall take place on the date falling five Business Days after the satisfaction of the NSIA Condition, provided that the Non-Regulatory Conditions remain satisfied, or at such other time as the Parties may agree in writing (the “Completion Date”). |
| 7.2 | On or before the Completion Date the Parties shall procure that the following events shall occur: |
| (a) | the Investor shall: | |
| (i) | execute and deliver to the Company the SHA to take effect on Completion; |
| (ii) | execute and deliver to the Company the License and Collaboration Agreement to take effect on Completion; | |
| (iii) | procure that a meeting of the Investor’s Board is held at which the Investor shall approve the entry by the Investor into the Transaction Documents; and | |
| (iv) | pay the sum set out against the Investor’s name in the table in Clause 3.1 (being the aggregate subscription price for the New Shares) by electronic funds transfer to the bank account of the Company as set out below and payment made in accordance with this Clause 7.2 shall constitute a good discharge for the Investor of its obligations under this Clause 7.2: |
| Account name | : | *** | |
| Bank | : | *** | |
| Account number | : | *** | |
| IBAN | : | *** | |
| Swift Code | : | *** |
| (b) | a meeting of the Board shall be held at which the Company shall approve the following: |
| (i) | the appointment of ***….. and *** as directors of the Company with effect from Completion; | |
| (ii) | subject to receipt of the appropriate subscription amounts: |
| (A) | issue the New Shares credited as fully paid to the Investor and enter the Investor’s name in the register of members in respect thereof; | |
| (B) | subject to receipt of the appropriate subscription amounts, execute and deliver to the Investor certificates for the New Shares; |
| (c) | the Company shall: |
| (i) | execute and deliver to the Investor the SHA to take effect on Completion; | |
| (ii) | execute and deliver to the Investor the License and Collaboration Agreement to take effect on Completion; |
| 13 |
| (iii) | deliver to the Investor: |
| (A) | the New Articles, in the Agreed Form, to take effect on Completion together with a duly executed special resolution, signed by Kopin US approving the entry into the New Articles; and | |
| (B) | a duly executed shareholder resolution, signed by Kopin US, granting the Company’s directors authority to issue the New Shares; and |
| (iv) | so far as it is within its power to do so, procure that the Kopin US executes and delivers to the Investor the SHA and the License and Collaboration Agreement, both in the Agreed Form and to take effect on Completion. |
| 8. | Warranties |
| 8.1 | The Warrantor warrants to the Investor that each Title and Capacity Warranty: |
| (a) | is true and accurate at the date of this Agreement; and | |
| (b) | will be true and accurate at Completion by reference to the facts and circumstances then subsisting. |
| 8.2 | The Warrantor further warrants to the Investor that each General Warranty and each Tax Warranty is true and accurate at the date of this Agreement. |
| 8.3 | Each Warranty is a separate and independent warranty, and, save as otherwise expressly provided, no Warranty shall be limited by reference to any other Warranty or by the other terms of this Agreement. |
| 8.4 | The rights and remedies of the Investor in respect of any breach of any of the Warranties shall not be affected by Completion. |
| 8.5 | Where any Warranty is qualified by words to the effect of “so far as the Warrantor is aware” or other language indicating the Warrantor’s knowledge, such statement shall be deemed qualified by fact, matters, and circumstances in the actual knowledge of the Warrantor having made enquiry of *** and *** |
| 8.6 | Where there is a requirement to convert a figure in one currency into another currency for the purpose of determining the potential liability for a Warranty Claim, the exchange rate used shall be the closing spot rate quoted by the Bank of England in respect of such currency on the date in question (or if such date is not a Business Day, the previous Business Day). |
| 9. | Limitations on Liability |
| 9.1 | The Warranties are subject to the limitations and qualifications set out in this Agreement, in particular the provisions set out in Schedule 4 to the extent provided in that Schedule. |
| 10. | Investor Warranties |
| 10.1 | The Investor warrants to the Company that each of the following statements is true and accurate at the date of this Agreement, and will be true and accurate at Completion by reference to the facts and circumstances then subsisting: |
| (a) | it is validly incorporated, in existence and duly registered under the laws of its jurisdiction of incorporation; | |
| (b) | it has the requisite power and authority to enter into and to perform this Agreement without any additional Authorisations (save as contemplated by this Agreement); |
| 14 |
| (c) | this Agreement constitutes legal, valid and binding obligations of the Investor; | |
| (d) | entry into and compliance with the terms of this Agreement does not and will not conflict with or constitute a default or a breach under any provision of: |
| (i) | the Investor’s memorandum or articles of association or equivalent constitutional documents; | |
| (ii) | any order, judgment, decree or regulation or any other restriction of any kind by which the Investor is bound or to which the Investor submits; or | |
| (iii) | any agreement, instrument or contract to which the Investor is a party or by which it is bound |
| 11. | Termination |
| 11.1 | Other than as expressly set out in Clause 4.10, no Party shall have a right to terminate this Agreement. |
| 11.2 | Termination of this Agreement shall not effect: |
| (a) | any rights or obligations which have accrued or become due prior to the date of termination; and | |
| (b) | the continued existence and validity of the obligations of the Parties under Clauses 1, 2, 9, 12, 13, 14, 15, 17, 18, 19, 20, 21, 23, 24, and 26. |
| 12. | Announcements |
| 12.1 | Save in relation to the Joint Press Release, no announcement concerning the existence or the subject matter of this Agreement or any ancillary matter shall be made by or on behalf of any Party without the prior written approval of the other Party (such approval not to be unreasonably withheld or delayed). This Clause 12.1 does not apply in the circumstances described in Clause 12.2. | |
| 12.2 | A Party may, after consultation with the Company (in the case of an announcement to be made by the Investor) or the Investor (in the case of an announcement to be made by the Company), make an announcement concerning the existence or the subject matter of this Agreement if required by: | |
| (a) | any Applicable Law; or | |
| (b) | any securities exchange or Governmental Authority to which that Party or any of its Affiliates is subject or submits, wherever situated, |
in which case the Party concerned shall take all such steps as may be reasonable and practicable in the circumstances to agree the contents of such announcement with the Investor (in the case of an announcement to be made by the Company) or the Company (in the case of an announcement to be made by the Investor) before making such announcement.
| 13. | Confidentiality |
| 13.1 | Subject to Clause 13.2, each Party shall treat as strictly confidential and shall not disclose to any other person any information received or obtained as a result of entering into or performing this Agreement which relates to the existence of this Agreement, the provisions of this Agreement, the negotiations and subject matter of this Agreement, the other Party (including written information and information transferred or obtained orally, visually, electronically or by any other means) (“Confidential Information”). |
| 15 |
| 13.2 | A Party may disclose information which would otherwise be subject to the provisions of Clause 13.1, if and to the extent: |
| (a) | it is required by Applicable Law; | |
| (b) | it is an announcement made in accordance with the provisions of Clause 12; | |
| (c) | it is required by any securities exchange or Governmental Authority to which that Party or any of its Affiliates is subject or submits; | |
| (d) | it is disclosed on a strictly confidential basis to any of the Representatives of that Party, to its Affiliates or to Representatives of its Affiliates on a need-to-know basis and provided that such Representatives are bound by confidentiality obligations at least as restrictive as those set out herein; | |
| (e) | the information has come into the public domain through no fault of that Party or any of its Affiliates or Representatives; | |
| (f) | that the other Party has given its prior written consent to the disclosure; or | |
| (g) | it is required to enable that Party to perform this Agreement or enforce its rights under this Agreement and/or disclosure is required for the purposes of any Proceedings, |
and provided that to the extent permitted by Applicable Law any information to be disclosed in reliance on Clauses 13.2(a) or (c) shall be disclosed only after consultation with the Company or the Investor (as applicable) and the Party intending to disclose the Confidential Information shall take into account, and to the extent possible, not take any action in contravention of, the reasonable comments or requests of the relevant other Party.
| 13.3 | Each of the Parties hereby agrees that it shall not use Confidential Information for any purpose other than in relation to the proper performance of its obligations and exercise of its rights under this Agreement (and the transactions contemplated hereby) or in connection with the business of the Investor’s Group or Company’s Group, as applicable. |
| 13.4 | Each of the Parties undertakes that it shall, and shall procure that its Affiliates shall, only disclose Confidential Information to any of its or their Representatives if it is reasonably required for purposes connected with this Agreement (or the other Transaction Documents) and only if the Representative is informed of the confidential nature of the Confidential Information and accepts equivalent restrictions to those accepted by the Party who discloses the information. |
| 13.5 | The restrictions contained in this Clause 13 shall continue to apply after termination of this Agreement without limit in time. |
| 13.6 | Without prejudice to any other rights or remedies that the Parties may have, the Parties acknowledge and agree that damages alone would not be an adequate remedy for any breach by them of this Clause 13 and that the remedies of injunction and specific performance as well as any other equitable relief for any threatened or actual breach of this Clause 13 by any Party would be more appropriate remedies. |
| 16 |
| 14. | Costs and expenses |
The parties shall bear their own costs and disbursements incurred in the negotiations leading up to and in the preparation of this Agreement and of matters incidental to this Agreement.
| 15. | Variation and Waiver |
| 15.1 | No variation of this Agreement shall be effective unless it is in writing (which, for this purpose, does not include email) and signed by or on behalf of each of the Parties. The expression “variation” shall, in each case, include any variation, supplement, deletion or replacement however effected. |
| 15.2 | Any waiver or any right or default hereunder shall be effective only in the instance given and will not operate as or imply a waiver of any other or similar right, claim or default on any subsequent occasion. No waiver of this Agreement or of any provision hereof will be effective unless it is in writing and signed by the Party, in each case against whom such waiver is sought to be enforced. |
| 15.3 | Any failure or delay by any person in exercising, or failure to exercise, any right or remedy provided by law under this Agreement shall not impair or constitute a waiver of that right or remedy or of any other right or remedy and no single or partial exercise of any right or remedy provided by law or under this Agreement or otherwise shall prevent any further exercise of the right or remedy or the exercise of any other right or remedy. |
| 16. | No partnership |
Nothing in this Agreement is intended to or shall be construed as establishing or implying any partnership of any kind between the parties.
| 17. | Assignment and transfer |
| 17.1 | This Agreement is personal to the Parties and no Party shall, without the prior written consent of the other Party: |
| (a) | assign any of its rights under this Agreement; | |
| (b) | transfer any of its obligations under this Agreement; | |
| (c) | sub-contract or delegate any of its obligations under this Agreement; or | |
| (d) | charge or deal in any other manner with this Agreement or any of its rights or obligations. |
| 17.2 | Any purported assignment, transfer, sub-contracting, delegation, charging or dealing in contravention of Clause 17.1 shall be ineffective. |
| 18. | Rights of third parties |
Save as otherwise expressly provided in this Agreement, the Parties do not intend that any term of this Agreement should be enforceable, by virtue of the Contracts (Rights of Third Parties) Act 1999 or otherwise, by any person who is not a Party. The Parties may agree to vary, waive, terminate or rescind this Agreement at any time and in any way without any third party’s consent.
| 17 |
| 19. | Counterparts; No originals |
This Agreement may be executed in any number of counterparts, each of which shall constitute an original, and all the counterparts shall together constitute one and the same agreement. The exchange of a fully executed version of this Agreement (in counterparts or otherwise) by electronic transmission in PDF format shall be sufficient to bind the parties to the terms and conditions of this Agreement and no exchange of originals is necessary.
| 20. | Notices |
| 20.1 | Any notice or other communication to be given under or in connection with this Agreement (a “Notice”) shall be: |
| (a) | in writing in the English language; | |
| (b) | (save where the Notice is given by email) signed by or on behalf of the Party giving it; and | |
| (c) | delivered personally by hand or courier (using an internationally recognised courier company) or sent by first class post (or by airmail if overseas) or recorded delivery or by email (either by signed attachment or in the body of the email with an electronic signature), to the Party due to receive the Notice, to the address and for the attention of the relevant Party set out in this Clause 20. |
| 20.2 | In the absence of evidence of earlier receipt, any Notice served in accordance with Clause 20.1 shall be deemed given and received: |
| (a) | in the case of personal delivery by hand or courier, at the time of delivery at the address referred to in Clause 20.4; | |
| (b) | in the case of first class post (other than airmail) or recorded delivery, at 10:00 am on the second Business Day after posting; | |
| (c) | in the case of airmail, at 10:00 am on the fifth Business Day after posting; and | |
| (d) | in the case of email, at the time the email containing or attaching the Notice was sent to the email address referred to in this Clause 20, as recorded on the email account on the sender’s machine, provided that receipt shall not occur if the sender receives an automated message indicating that the message has not been delivered to the recipient. |
| 20.3 | For the purposes of this Clause 20.1: |
| (a) | all times are to be read as local time in the place of deemed receipt; and | |
| (b) | if deemed receipt under Clause 20.1 is not within business hours (meaning 9.00 am to 5.30 pm Monday to Friday on a day that is not a public holiday in the place of receipt), the Notice is deemed to have been received at 10:00 am on the next Business Day in the place of receipt. |
| 18 |
| 20.4 | Notices under this Agreement shall be sent to a Party at its address or email address and for the attention of the individual set out below: |
| Party | Email address | Address | ||
| The Warrantor | ||||
| FAO: ***… | *** | *** | ||
| With a copy (which shall not constitute, or be essential for valid, notice) to: | ||||
| ***… | ***. | *** | ||
| *** | *** | *** | ||
| The Company | ||||
| FAO: *** | *** | *** | ||
| With a copy (which shall not constitute, or be essential for valid, notice) to: | ||||
| *** | *** | *** | ||
| *** | *** | *** |
| 19 |
| The Investor | ||||
FAO: *** |
*** | *** | ||
| With a copy (which shall not constitute, or be essential for valid, notice) to: | ||||
| *** | *** | *** |
provided that a Party may change its notice details to another address in the United Kingdom, United States or Cyprus on giving notice to the other Parties of the change in accordance with this Clause 20. That notice shall only be effective on the day falling five (5) clear Business Days after the notification has been received or on such later date as may be specified in the notice.
| 20.5 | In proving service, it shall be sufficient to prove that the envelope containing the notice or communication was properly addressed and delivered to the address shown thereon, or that the email containing the notice or communication was sent to the email address of the relevant Party. If a Party can reasonably assume that the person for whose attention a Notice is marked in relation to another Party, or a director of such another Party, is aware that such a Notice has been given, such Notice shall be deemed to be validly given from the time at which such person had that awareness. |
| 21. | Rights Cumulative with those at Law |
The powers, rights and remedies of the Parties under this Agreement are in addition to and not exclusive of any other powers, rights or remedies provided by law.
| 22. | Securities laws requirements |
| 22.1 | The Investor acknowledges and warrants to the Company, for the purpose of compliance with the United States Securities Act of 1933, as amended (the “Securities Act”) and state securities laws, as follows: |
| (a) | the Investor acknowledges that the New Shares have not been registered under the Securities Act, or any state securities laws on the basis that the Company is relying on an exemption from registration under such laws that depends in part on the representations made by the Investor pursuant to this clause, and that the transferability of the New Shares is therefore subject to restrictions imposed by those laws; |
| 20 |
| (b) | the Investor agrees not to sell or otherwise transfer the New Shares insofar as the Securities Act restricts such sale or transfer unless they are registered under the Securities Act and United States state securities laws of the applicable jurisdiction or unless an exemption from registration is available; | |
| (c) | the Investor has either a residence or business address at the address listed next to its name; all offers of the New Shares were made to the Investor at that address; no offer or solicitation was made to the Investor in any jurisdiction other than that jurisdiction; and the Investor accepted the offer to purchase New Shares by executing this Agreement within that jurisdiction; and prior to such acceptance, the Investor did not accept the offer in any other jurisdiction, orally, in writing, or otherwise; | |
| (d) | if the Investor is a “U.S. Person” (within the meaning of Rule 902 of Regulation S promulgated under the Securities Act) it is also an “accredited investor” within the definition set forth in Rule 501(a) under the Securities Act; | |
| (e) | if the Investor is a “U.S. Person” it acknowledges that it has experience in making investments such as those in the Company and is able to bear the economic risk of the investment for an indefinite period of time because the New Shares have not been registered under the Securities Act, and therefore, must (to the extent the Securities Act restricts a transfer of New Shares) be held unless they are subsequently registered under the Securities Act or an exemption from such registration is available; | |
| (f) | the Investor acquired the New Shares for its own account for investment and not for the account of another nor with a view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act, the state securities laws of any applicable jurisdiction, or the rules and regulations promulgated thereunder and such Investor was not formed for the specific purpose of acquiring the New Shares; and | |
| (g) | the Investor believes that it has received all the information it considers necessary or appropriate for deciding whether to purchase the New Shares pursuant to this Agreement. The Investor has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the issue of the New Shares and the business, properties and financial condition of the Company. The foregoing, however, does not in any way limit or modify the Warranties. |
| 22.2 | This Agreement and the issue of the New Shares contained herein is only being provided to persons located in the United Kingdom, and is not directed at or made towards persons located in other jurisdictions. This Agreement is not a prospectus, offering document, or any other similar document for the purposes of Regulation (EU) 2017/1129, and is not required to and does not contain all information which would be required in such documents. Neither this Agreement, nor the issue of the New Shares, has been registered with the UK Listing Authority, Financial Conduct Authority, or any other governmental or regulatory bodies both within and outside the United Kingdom. The distribution of this Agreement in jurisdictions outside the United Kingdom may be restricted by the laws and regulations of those jurisdictions and therefore persons into whose possession this Agreement comes should inform themselves about, and observe, such restrictions. Any failure to comply with such restrictions may constitute a violation of the securities laws or regulations of any such jurisdiction. This Agreement does not constitute an offer to sell or issue, nor the solicitation of an offer to buy or subscribe for, shares in any jurisdiction in which such offer or solicitation is unlawful. |
| 21 |
| 23. | Severance |
| 23.1 | If at any time any provision of this Agreement shall be held to be illegal, void, invalid or unenforceable in whole or in part under any enactment or rule of law in any jurisdiction, then: |
| (a) | such provision shall: |
| (i) | to the extent that it is illegal, void, invalid or unenforceable be given no effect and shall be deemed not to be included in this Agreement; and | |
| (ii) | not affect or impair the legality, validity or enforceability in that jurisdiction of any other provision of this Agreement; or the legality, validity or enforceability under the law of any other jurisdiction of such provision or any other provision of this Agreement; and |
| (b) | the Parties shall use all reasonable endeavours to replace such a provision with a valid and enforceable substitute provision which carries out, as closely as possible, the intentions of the Parties under this Agreement. |
| 24. | Whole Agreement |
| 24.1 | This Agreement (together with any documents referred to herein or entered into pursuant to this Agreement) contains the whole agreement and understanding between the Parties relating to the transactions contemplated by this Agreement and supersede all previous agreements, understandings or arrangements (whether express, implied, oral or written (whether or not in draft form)) between the Parties relating to these transactions, which shall cease to have any further force or effect. |
| 24.2 | Each of the Parties acknowledges that in entering into this Agreement it has agreed not to rely on any representation, warranty, collateral contract, undertaking or other assurance (except those Warranties, Investor Warranties and undertakings expressly set out in this Agreement) made by or on behalf of any other Party before the signature of this Agreement including during the course of negotiating this Agreement. Each of the Parties waives all rights and remedies which, but for this Clause 24, might otherwise be available to it in respect of any such representation, warranty, collateral contract, undertaking or other assurance, provided that nothing in this Clause 24 shall limit or exclude any liability for fraud or fraudulent misrepresentation on the part of a Party. |
| 25. | Further Assurance |
| 25.1 | Without prejudice to any other provision of this Agreement, the Company shall, on being requested in writing to do so by the Investor, perform or procure the performance of all such acts and/or execute and/or deliver or procure the execution and/or delivery of all such documents as may be required by law or as the Investor may from time to time reasonably require in order to implement and give full effect to this Agreement. |
| 25.2 | Without prejudice to any other provision of this Agreement, the Investor shall, on being requested in writing to do so by the Company, perform or procure the performance of all such acts and/or execute and/or deliver or procure the execution and/or delivery of all such documents as may be required by law or as the Company may from time to time reasonably require in order to implement and give full effect to this Agreement. |
| 22 |
| 26. | Governing Law and Arbitration |
| 26.1 | This Agreement and any claim, dispute or difference (including non-contractual claims, disputes or differences) arising out of or in connection with it or its subject matter shall be governed by, and construed in accordance with, English law. |
| 26.2 | Any dispute or claim arising out of in connection with this Agreement (including any claim dispute or question regarding its existence, validity or termination) shall be referred to and finally resolved by arbitration under the LCIA Rules, which LCIA Rules are deemed to be incorporated by reference into this Clause 26. |
| 26.3 | Any arbitration initiated pursuant to or in accordance with Clause 26.2 of this Agreement shall be conducted as follows: |
| (a) | the seat, or legal place, of arbitration shall be London; | |
| (b) | the language to be used in the arbitral proceedings shall be English; | |
| (c) | the number of arbitrators shall be three (3); and | |
| (d) | any award rendered by the arbitral tribunal shall be final, conclusive and binding upon the Parties. To the extent permitted by law, the Parties irrevocably waive any right to any form of appeal, review or recourse of any rendered award to any state or other judicial authority. |
| 26.4 | Judgment upon any award rendered may be entered in any court having jurisdiction. |
| 26.5 | Without prejudice to Clauses 26.2, 26.3 and 26.4, the Parties agree that the courts of England and Wales shall have jurisdiction (to which the Parties irrevocably submit) to grant interim and ancillary relief in support of any arbitral proceedings (whether or not actually commenced) under this Clause 26. |
| 26.6 | The Investor irrevocably appoints *** as its agent to accept service of process in England in any Proceeding, service upon whom shall be deemed completed whether or not forwarded to the Investor or received by the Investor. The Investor shall inform the Company in writing of any change of address of the process agent of the Investor within 10 days of such change. |
| 26.7 | If the process agent ceases to be able to act as such or to have an address in England, the relevant Party shall appoint a new process agent in England and deliver to the other Parties within 10 days a copy of a written acceptance of appointment by the process agent. |
| 26.8 | Nothing in this Agreement shall affect the right to serve process in any other manner permitted by law. |
| 23 |
Exhibit 10.25
SERIES A CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT
dated as of August 8, 2025
by and between
Kopin Corporation
and
Theon International PLC
Table of Contents
| Page | |||
| Article I PURCHASE; CLOSING | 1 | ||
| Section 1.1 | Purchase | 1 | |
| Section 1.2 | Closing. | 2 | |
| Section 1.3 | Closing Conditions. | 2 | |
| Article II REPRESENTATIONS AND WARRANTIES OF THE COMPANY | 4 | ||
| Section 2.1 | Organization and Authority. | 4 | |
| Section 2.2 | Capitalization. | 4 | |
| Section 2.3 | Authorization and Enforcement. | 5 | |
| Section 2.4 | Sale and Status of Securities. | 6 | |
| Section 2.5 | SEC Documents; Financial Statements. | 7 | |
| Section 2.6 | Brokers and Finders | 8 | |
| Section 2.7 | Compliance with Laws; Anti-Corruption; Trade Controls. | 8 | |
| Section 2.8 | Employment Matters. | 10 | |
| Section 2.9 | Environmental Matters | 11 | |
| Section 2.10 | Material Permits | 11 | |
| Section 2.11 | Real Property | 11 | |
| Section 2.12 | Intellectual Property | 12 | |
| Section 2.13 | Tax Matters | 12 | |
| Section 2.14 | Insurance | 13 | |
| Section 2.15 | Information Technology | 13 | |
| Section 2.16 | Government Contracts | 13 | |
| Section 2.17 | Solvency | 13 | |
| Section 2.18 | No Integrated Offering | 14 | |
| Section 2.19 | No “Bad Actor” Disqualification | 14 | |
| Section 2.20 | Listing and Maintenance Requirements | 14 | |
| Section 2.21 | No Additional Representations | 14 | |
| Article III REPRESENTATIONS AND WARRANTIES OF THE PURCHASER | 15 | ||
| Section 3.1 | Organization and Authority | 15 | |
| Section 3.2 | Authorization | 15 | |
| Section 3.3 | Purchase for Investment | 16 | |
| Section 3.4 | Brokers and Finders | 17 | |
| Section 3.5 | Ownership | 17 | |
| Section 3.6 | Placement Agent | 17 | |
| Section 3.7 | Acknowledgment of No Other Representations or Warranties | 17 | |
| Section 3.8 | No Additional Representations | 18 | |
| Article IV COVENANTS | 18 | ||
| Section 4.1 | Conduct of Business | 18 | |
| Section 4.2 | Securities Laws | 19 | |
| Section 4.3 | Tax Matters. | 19 | |
| Section 4.4 | Legend. | 20 | |
| i |
Table of Contents
(continued)
| Page | |||
| Section 4.5 | Listing of Shares | 20 | |
| Section 4.6 | Corporate Actions | 21 | |
| Section 4.7 | Use of Proceeds | 21 | |
| Section 4.8 | Standstill. | 22 | |
| Section 4.9 | Indemnification. | 23 | |
| Section 4.10 | Participation Rights. | 24 | |
| Article V MISCELLANEOUS | 25 | ||
| Section 5.1 | Expenses | 25 | |
| Section 5.2 | Amendment; Waiver | 25 | |
| Section 5.3 | Counterparts; Electronic Transmission | 26 | |
| Section 5.4 | Governing Law | 26 | |
| Section 5.5 | WAIVER OF JURY TRIAL | 26 | |
| Section 5.6 | Notices | 26 | |
| Section 5.7 | Entire Agreement | 27 | |
| Section 5.8 | Assignment | 27 | |
| Section 5.9 | Interpretation; Other Definitions | 28 | |
| Section 5.10 | Captions | 33 | |
| Section 5.11 | Severability | 34 | |
| Section 5.12 | No Third-Party Beneficiaries | 34 | |
| Section 5.13 | Public Announcements | 34 | |
| Section 5.14 | Specific Performance | 34 | |
| Section 5.15 | Termination | 34 | |
| Section 5.16 | Effects of Termination | 35 | |
| Section 5.17 | Survival | 35 | |
| Section 5.18 | Non-Recourse | 35 | |
| Exhibit A: | Form of Certificate of Designations |
| Exhibit B: | License and Collaboration Agreement and related side letter |
| Exhibit C: | Form of CFIUS Side Letter |
| Exhibit D: | Form of Solvency Certificate |
| ii |
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT, dated as of August 8, 2025 (this “Agreement”) by and between Kopin Corporation, a corporation organized and existing under the laws of the State of Delaware (the “Company”) and Theon International PLC, a company incorporated and existing under the laws of Cyprus (the “Purchaser”). The Company and the Purchaser are sometimes referred to hereinafter individually as a “Party” and, collectively, as the “Parties.”
RECITALS:
WHEREAS, the Parties are substantially concurrently herewith (i) entering into a Subscription Agreement (the “UK Subscription Agreement”) by and among the Company, Kopin Europe Limited, a private limited company incorporated under the laws of England and Wales, (“Kopin UK”) and the Purchaser, including the form of a Shareholders Agreement relating to Kopin UK by and among the Company, Kopin UK and the Purchaser (such agreements collectively, and together with all ancillary documents executed in connection therewith, the “JV Agreements” and the transactions contemplated by the JV Agreements, the “JV Transaction”) and (ii) agreeing to enter into a License and Collaboration Agreement (as it may be amended or supplemented from time to time, the “License and Collaboration Agreement”) by and among the Company, Kopin UK, and the Purchaser (the transactions contemplated by the License and Collaboration Agreement and the ancillary documents thereto, the “License Transaction” and, together with the JV Transaction and the Preferred Purchase Transaction, the “Transactions”);
WHEREAS, the Company proposes to issue and sell to the Purchaser preferred stock, par value $0.01 per share, designated as “Series A Convertible Preferred Stock” (the “Preferred Stock”) having the terms set forth in the Certificate of Amendment to the Certificate of Incorporation of Kopin Corporation in the form attached hereto as Exhibit A (the “Certificate of Designations”), subject to the terms and conditions set forth in this Agreement;
WHEREAS, the Preferred Stock will be convertible at any time into Common Stock; and
WHEREAS, capitalized terms used in this Agreement have the meanings set forth in Section 5.9.
NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements set forth herein, the parties agree as follows:
Article I
PURCHASE; CLOSING
Section 1.1 Purchase. On the terms and subject to the conditions herein, on the Closing Date, the Company agrees to issue and sell to the Purchaser, and the Purchaser agrees to purchase from the Company, 1,000 shares of Preferred Stock (the “Purchased Shares”) for an aggregate purchase price for all such Purchased Shares of $7,000,000 (the “Purchase Price”), which Purchased Shares shall be convertible into shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) and issued to the Purchaser free and clear of any Liens (other than restrictions arising under applicable securities laws and restrictions set forth in the Certificate of Designations).
| 1 |
Section 1.2 Closing.
(a) The closing of the purchase by the Purchaser of the Purchased Shares pursuant to this Agreement (the “Closing”) shall be held remotely via telephone or video conference on the date of consummation of the JV Transactions, subject to the satisfaction or waiver of the conditions set forth in Section 1.3 as of such date (other than those conditions that by their nature are to be satisfied by actions taken at the Closing, but subject to their satisfaction or waiver at the Closing) or at such other date, time and place as the Company and the Purchaser mutually agree in writing (the “Closing Date”).
(b) Subject to the satisfaction or waiver at or prior to the Closing of the applicable conditions to the Closing set forth in Section 1.3, at the Closing:
(1) the Company shall instruct its Transfer Agent to issue the Purchased Shares in book entry form in such name(s) as the Purchaser may designate in writing; and
(2) the Purchaser shall deliver or cause to be delivered to a bank account designated by the Company in writing on or prior to the Closing Date, the Purchase Price by wire transfer of immediately available funds.
Section 1.3 Closing Conditions.
(a) The obligation of the Purchaser, on the one hand, and the Company, on the other hand, to effect the Closing is subject to the satisfaction or waiver by the Purchaser and the Company at or prior to the Closing of the following conditions:
(1) no temporary restraining order, preliminary or permanent injunction or other judgment or order issued by any Governmental Authority, and no Law shall be in effect restraining, enjoining, making illegal or otherwise prohibiting the consummation of the Preferred Purchase Transaction;
(2) the Required Regulatory Approval shall have been obtained; and
(3) the execution of the License and Collaboration Agreement and side letter related thereto (attached hereto as Exhibit B) and the letter agreement with respect to CFIUS Matters (the “CFIUS Side Letter” attached hereto as Exhibit C) and the consummation of the JV Transaction are occurring substantially concurrently with the Closing, in accordance with the terms and conditions set forth in the License and Collaboration Agreement, the CFIUS Side Letter and the JV Agreements.
(b) The obligation of the Purchaser to effect the Closing is also subject to the satisfaction or waiver by the Purchaser at or prior to the Closing of the following conditions:
(1) the Company shall have performed in all material respects all obligations required to be performed by it pursuant to this Agreement at or prior to the Closing;
| 2 |
(2) all of the representations and warranties made by the Company in Article II of this Agreement and in any letter, certificate or instrument delivered to the Purchaser in connection with this Agreement (including the CFIUS Side Letter) shall be true and correct in all respects as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties expressly speak as of an earlier date, in which case such representations and warranties shall be true and correct as of such date);
(3) (i) the Common Stock shall be listed on Nasdaq and shall not have been suspended by the SEC or Nasdaq from trading on Nasdaq and (ii) the Company shall not have received any notice from Nasdaq of non-compliance with Nasdaq listing standards or intent to delist the Common Stock from Nasdaq;
(4) the Company shall have delivered, or caused to be delivered, to the Purchaser the following:
a. a certificate, dated as of the Closing Date, certifying (i) the By-laws of the Company as in effect on the Closing Date, (ii) the Certificate of Incorporation of the Company as in effect on the Closing Date, and (iii) resolutions of the Board of Directors of the Company approving this Agreement, the License and Collaboration Agreement and the JV Agreements and the Transactions, duly executed by the Secretary of the Company;
b. a certificate, in customary form to be agreed by the parties, dated as of the Closing Date and signed by the Company’s Chief Executive Officer or its Chief Financial Officer, certifying to the fulfillment of the conditions specified in Section 1.3(b)(1), Section 1.3(b)(2) and Section 1.3(b)(3); and
c. a certificate of good standing of the Company from the Secretary of State, or equivalent, in its jurisdiction of incorporation, dated no more than five business days prior to the Closing;
d. evidence that the Certificate of Designations has been filed with the Secretary of State of the State of Delaware;
e. a solvency certificate, dated as of the Closing Date, in substantially the form attached here as Exhibit D, duly executed by the Chief Financial Officer of the Company; and
f. a copy of the irrevocable instructions issued by the Company to its Transfer Agent (any subsequent transfer agent) (the “Irrevocable Transfer Agent Instructions”), directing the Transfer Agent to issue the Purchased Shares to the Company, duly executed by the Company.
| 3 |
Article II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the SEC Documents filed or furnished by the Company with the SEC or in a correspondingly identified schedule attached hereto, the Company represents and warrants to the Purchaser, as of the date hereof and as of the Closing Date (except to the extent made only as of a specified date, in which case as of such date), that:
Section 2.1 Organization and Authority.
(a) The Company has been duly organized and is validly existing under the laws of the State of Delaware, has all requisite corporate power and authority to conduct its business as presently conducted, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified (in the case of good standing, to the extent such jurisdiction recognizes such concept), except where such failure to be so qualified, individually or in the aggregate, would not be reasonably expected to have a Material Adverse Effect. The Company is not in violation or default of any of the provisions of its Articles of Incorporation or By-laws.
(b) All of the issued and outstanding equity interests of each Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity, and none of the outstanding equity interests of any Subsidiary was issued in violation of the preemptive or similar rights of any securityholder of such Subsidiary, except when such violation would not result in a Material Adverse Effect. Each material Subsidiary has been duly organized and is validly existing under the laws of its jurisdiction of organization, has all requisite corporate or other applicable entity power and authority to own its properties and conduct its business as presently conducted, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified (in the case of good standing, to the extent such jurisdiction recognizes such concept), except where such failure to be so qualified, individually or in the aggregate, would not be reasonably expected to have a Material Adverse Effect. As used herein, “Subsidiary” means each subsidiary listed in Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the most recently ended fiscal year.
Section 2.2 Capitalization.
(a) The authorized capital stock of the Company consists of 275,000,000 shares of Common Stock and 3,000 shares of preferred stock, par value $0.01 per share. As of June 28, 2025 (the “Capitalization Date”), there were 163,431,946 shares of Common Stock issued, 163,012,671 shares of Common Stock outstanding, and 419,275 shares of Common Stock held by the Company in its treasury, and no shares of preferred stock of the Company issued and outstanding. As of the close of business on the Capitalization Date, (i) 591,366 shares of Common Stock were subject to issuance upon the exercise of stock options outstanding on such date that were granted pursuant to the Kopin Equity Incentive Plan (“Kopin Stock Options”) of which 554,406 were then unvested; (ii) 6,414,254 unvested shares of restricted stock units from awards granted pursuant to the Kopin Equity Incentive Plan (“Kopin RSUs”) were outstanding; (iii) 7,163,768 shares of Common Stock were available for future awards under the Kopin Equity Incentive Plan and no other equity securities were available for future awards under the Kopin Equity Incentive Plan; and (iv) 10,000,000 pre-funded warrants. All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and non-assessable. From the Capitalization Date through and as of the date of this Agreement, no other shares of Common Stock or preferred stock have been issued other than those shares of Common Stock subject to issuance upon the exercise or settlement of outstanding Kopin Stock Options and granted under the Kopin Equity Incentive Plan.
| 4 |
(b) As of the date of this Agreement, except (i) pursuant to any cashless exercise provisions of any Kopin Stock Options or pursuant to the surrender of shares to the Company or the withholding of shares by the Company to cover tax-withholding obligations under Kopin Stock Options, (ii) as set forth in Section 2.2(a) or (iii) as described in the SEC Documents (as defined below), the Company does not have and is not bound by any outstanding options, preemptive rights, rights of first offer, warrants, calls, commitments or other rights or agreements calling for the purchase or issuance of, or securities or rights convertible into, or exchangeable for, any shares of Common Stock or any other equity securities of the Company or any securities representing the right to purchase or otherwise receive any shares of Common Stock or any other equity securities of the Company (including any rights plan or agreement).
Section 2.3 Authorization and Enforcement.
(a) The Company has the corporate power and authority to enter into and consummate the transactions contemplated by this Agreement and its obligations hereunder. The execution, delivery and performance of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized. This Agreement has been duly and validly executed and delivered by the Company and, assuming due authorization, execution and delivery by the Purchaser, this Agreement is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles). No other corporate proceedings are necessary for the execution and delivery by the Company of this Agreement, and no other corporate proceedings (except to the extent expressly set forth in the other Transaction Documents) are necessary for the performance by the Company of its obligations hereunder or the consummation by it of the transactions contemplated hereby.
(b) Neither the execution, delivery and performance by the Company of this Agreement, nor the consummation of the transactions contemplated hereby, nor compliance by the Company with any of the provisions hereof, will (i) violate, conflict with, or result in a material breach of any provision of, require any payment to or consent by any person under, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any Lien upon any of the material properties or assets of any Company Group Member under any of the terms, conditions or provisions of (x) the Certificate of Incorporation, the Certificate of Designations, the By-laws or the certificate of incorporation, charter, articles of association, bylaws or other governing instrument of any Subsidiary or (y) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which any Company Group Member is a party or by which it may be bound, or to which any Company Group Member or any of the properties or assets of any Company Group Member may be subject, or (ii) violate any law, statute, ordinance, rule, regulation, permit, franchise or any judgment, ruling, order, writ, injunction or decree applicable to any Company Group Member or any of its respective properties or assets, except in the case of clause (i)(y) or (ii), for such violations, conflicts and breaches as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or prevent, prohibit or restrict the issuance of the Purchased Shares in accordance with the terms of this Agreement.
| 5 |
(c) Other than the Required Regulatory Approval, or under applicable federal securities laws or the securities or blue sky laws of the various states, no notice to, registration, declaration or filing with (other than the Certificate of Designations to be filed with Delaware State), exemption or review by, or authorization, order, consent or approval of any Governmental Authority, nor expiration or termination of any statutory waiting period, is necessary for the consummation by the Company of the transactions contemplated by this Agreement, except where the failure to obtain such approval or to provide or obtain such notice, registration, declaration, filing, exemption, review, authorization, order, consent or to have such waiting period expire or terminate would not individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or prevent, prohibit or restrict the issuance of the Purchased Shares in accordance with the terms of this Agreement.
Section 2.4 Sale and Status of Securities.
(a) Subject to the accuracy of the representations made by the Purchaser in Section 3.3, the offer, sale and issuance of the Purchased Shares (i) have been and will be made in compliance with applicable exemptions from the registration and prospectus delivery requirements of the Securities Act and (ii) will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state blue sky laws.
(b) (i) The Purchased Shares and (ii) the Common Stock issuable upon conversion of the Purchased Shares have been duly authorized by all necessary corporate action. When issued and sold against receipt of the consideration therefor as provided in this Agreement, the Purchased Shares will be validly issued, fully paid and nonassessable and issued free and clear of all Liens, other than restrictions on transfer provided for in this Agreement or imposed by applicable securities laws, and will not be subject to preemptive or similar rights of stockholders. Upon any conversion of any Purchased Shares in accordance with the Certificate of Designations, the Common Stock to be issued upon such conversion will be validly issued, fully paid and non-assessable and free and clear of all Liens, other than restrictions on transfer provided for in this Agreement or imposed by applicable securities laws, and will not be subject to preemptive or similar rights of stockholders. The respective rights, preferences, privileges and restrictions of the Common Stock and Preferred Stock are as stated in the Certificate of Incorporation and the Certificate of Designations, as applicable. The Common Stock to be issued upon any conversion of the Purchased Shares are duly reserved for such issuance.
| 6 |
(c) Neither the Company nor, to the knowledge of the Company, any other Person authorized by the Company to act on its behalf, has engaged in a general solicitation or general advertising (within the meaning of Regulation D of the Securities Act) of investors with respect to offers or sales of Common Stock or Preferred Stock, and neither the Company nor, to the knowledge of the Company, any Person acting on its behalf has made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the offering or issuance of Common Stock or Preferred Stock under this Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act that would result in neither Regulation D nor any other applicable exemption from registration under the Securities Act being available, nor will the Company take any action or steps that would cause the offering or issuance of Common Stock or Preferred Stock under this Agreement to be integrated with other offerings by the Company.
Section 2.5 SEC Documents; Financial Statements.
(a) The Company has filed all required reports, proxy statements, forms, schedules and other documents with the U.S. Securities and Exchange Commission (the “SEC”) since December 31, 2022 (collectively, the “SEC Documents”). Each of the SEC Documents, as of its respective date, complied in all material respects with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Documents. Except to the extent that information contained in any SEC Document has been revised or superseded by a later filed SEC Document filed and publicly available prior to the date of this Agreement, as of their respective dates, or if amended, as of the date of the last such amendment, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
(b) The Company (i) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are reasonably designed to ensure that material information relating to the Company Group is made known to the individuals responsible for the preparation of the Company’s filings with the SEC and (ii) has disclosed, based on its most recent evaluation prior to the date of this Agreement, to the Company’s outside auditors and the Company’s audit committee (A) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting. The Company and the Subsidiaries employ disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to the Company’s management, including its principal executive officer or officers and principal financial officer or officers, as appropriate, to allow timely decisions regarding disclosure.
| 7 |
(c) There is no transaction, arrangement or other relationship between the Company and/or any of its Subsidiaries and an unconsolidated or other off-balance sheet entity that is required by applicable Law to be disclosed by the Company in its SEC Documents and is not so disclosed.
(d) The financial statements of the Company and its consolidated Subsidiaries included in the SEC Documents (i) complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, in each case as of the date such SEC Document was filed, and (ii) have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) applied on a consistent basis during the periods involved (except as may be indicated in such financial statements or the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows of the Company and its consolidated Subsidiaries for the periods then ended (subject, in the case of unaudited statements, to the absence of footnote disclosures and normal audit adjustments, which are not reasonably expected to be material individually or in the aggregate).
(e) Since the date of the latest audited financial statements included within the SEC Documents, (i) there has been no change or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) there have been no transactions entered into by the Company or any of its Subsidiaries, other than those in the ordinary course of business or as contemplated by the Transactions, which are material with respect to the Company and its Subsidiaries considered as one enterprise and (iii) there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock.
Section 2.6 Brokers and Finders. Except for the Placement Agent, the fees and expenses of which will be paid by the Company, no Company Group Member and none of their respective officers, directors, employees or agents has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Company in connection with this Agreement or the transactions contemplated hereby.
Section 2.7 Compliance with Laws; Anti-Corruption; Trade Controls.
(a) Except as described in the SEC Documents, there is no Proceeding before or brought by any Governmental Authority now pending, or, to the knowledge of the Company, threatened, against or affecting the Company or any Subsidiary which would reasonably be expected to result in a Material Adverse Effect or materially and adversely affect the properties or assets of the Company or the consummation of the transactions contemplated in this Agreement or the performance by the Company of its obligations hereunder. All Proceedings to which the Company or any Subsidiary is a party or of which any of their respective property or assets is the subject which are not described in the SEC Documents, including ordinary routine litigation incidental to the business, would not reasonably be expected to result in a Material Adverse Effect.
| 8 |
(b) Neither the Company, nor any of its Subsidiaries, nor any of their respective directors, officers, employees, or affiliates, nor to the knowledge of the Company, any agent, or other person acting on behalf of the Company or any of its Subsidiaries, has violated or is in violation of, or has been subject to any actual or threatened investigation, audit, voluntary disclosure, or proceeding under any Anti-Corruption Laws, except as would not reasonably be expected to be material to any Company Group Member. As used herein, “Anti-Corruption Laws” means Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”), the UK Bribery Act of 2010, and any other applicable anti-bribery or anti-corruption laws or regulations, to the extent consistent with U.S. Laws. Without limiting the foregoing, no such person is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of any Anti-Corruption Laws, including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA. The Company and, to the knowledge of the Company, its affiliates have conducted their businesses in compliance with applicable Anti-Corruption Laws and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith, except as would not reasonably be expected to be material to any Company Group Member.
(c) The operations of the Company are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions to which the Company or its Subsidiaries are subject, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”), except as would not reasonably be expected to be material to any Company Group Member, and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.
(d) Neither the Company, its Subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee, affiliate or person acting on behalf of the Company is (i) currently or was at any time since April 24, 2019 subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”), the U.S. Department of State, or the U.S. Department of Commerce), Canada, the United Kingdom, the United Nations Security Council, the European Union, any European Union Member State, or any other relevant Governmental Authority, except to the extent inconsistent with U.S. Laws (“Sanctions Laws”), or (ii) located, organized, or resident in a country or territory that is the subject of comprehensive Sanctions Laws (currently Crimea, the so-called Donetsk People’s Republic (DNR) and Luhansk People’s Republic (LNR) regions of Ukraine, Cuba, Iran, North Korea, and Syria). The Company will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person subject to any Sanctions Laws.
| 9 |
(e) For the past five (5) years, the Company and its Subsidiaries have complied with applicable import and export control laws and regulations in all material respects, including the regulations administered and enforced by (i) OFAC (31 C.F.R. Parts 500-599); (ii) the Export Administration Regulations (15 C.F.R. Parts 730-780); (iii) the International Traffic in Arms Regulations (22 C.F.R. Parts 120-130), (iv) the Foreign Trade Regulations (15 C.F.R. Part 30); (v) the Laws administered by U.S. Customs and Border Protection, including the Uyghur Forced Labor Prevention Act (Pub. L. No. 117-78); (vi) applicable laws promulgated, administered, or enforced by the United States, United Nations Security Council, Canada, the European Union, any European Union Member State, the United Kingdom, and the United Nations; and (vii) any other applicable laws relating to the export and import activities of the Company in the jurisdictions where it operates. The representation and warranty set forth in paragraph 3 of the CFIUS Side Letter is hereby incorporated by reference and is true and correct as of the date hereof.
Section 2.8 Employment Matters.
(a) No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company or any other Company Group Member, which would reasonably be expected to result in a Material Adverse Effect. The Company is not aware of any existing or threatened labor disturbance by the employees of any of its or any Subsidiary’s principal suppliers, manufacturers, customers or contractors which would reasonably be expected to result in a Material Adverse Effect. The Company and its Subsidiaries are in compliance with all applicable U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance would not, individually or in the aggregate, reasonably be result in a Material Adverse Effect.
(b) (i) Each “employee benefit plan” (within the meaning of Section 3(3) of ERISA) for which the Company or any member of its “Controlled Group” (defined as any organization which is a member of a controlled group of corporations within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended (the “Code”)) would have any liability (each a “Plan”) has been maintained in compliance in all material respects with its terms and with the requirements of all applicable Law, including ERISA and the Code; (ii) with respect to each Plan subject to Title IV of ERISA, (A) no “reportable event” (within the meaning of Section 4043(c) of ERISA) has occurred or is reasonably expected to occur, (B) no “accumulated funding deficiency” (within the meaning of Section 302 of ERISA or Section 412 of the Code), whether or not waived, has occurred or is reasonably expected to occur, (C) the fair market value of the assets under each Plan exceeds the present value of all benefits accrued under such Plan (determined based on those assumptions used to fund such Plan), and (D) neither the Company nor any member of its Controlled Group has incurred, or reasonably expects to incur, any liability under Title IV of ERISA (other than contributions to the Plan or premiums to the Pension Benefit Guaranty Corporation in the ordinary course and without default) in respect of a Plan (including a “multiemployer plan,” within the meaning of Section 4001(c)(3) of ERISA); and (iii) each Plan that is intended to be qualified under Section 401(a) of the Code is so qualified and, to the knowledge of the Company, nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification.
| 10 |
Section 2.9 Environmental Matters. (i) neither the Company nor any of its Subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products, asbestos-containing materials or mold (collectively, “Hazardous Materials”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “Environmental Laws”), (ii) the Company and its Subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (iii) there are no pending or, to the knowledge of the Company, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company or any of its Subsidiaries and (iv) there are no events or circumstances that would reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Company or any of its Subsidiaries relating to Hazardous Materials or any Environmental Laws, except, in the case of any of clauses (i), (ii), (iii) or (iv) above, for any violation, failure to have permits, authorization and approvals, liability or circumstances that would not reasonably be expected to have a Material Adverse Effect.
Section 2.10 Material Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Documents, except where the failure to possess such certificates, authorizations or permits would not reasonably be expected to have a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit, except where the revocation or modification of such Material Permit would not reasonably be expected to have a Material Adverse Effect.
Section 2.11 Real Property. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) would not reasonably be expected to have a Material Adverse Effect. Any real property and facilities held under lease by the Company and the Subsidiaries are in full force and effect and neither the Company nor any Subsidiary has any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any Subsidiary under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such Subsidiary to the continued possession of the leased or subleased premises under any such lease or sublease.
| 11 |
Section 2.12 Intellectual Property. The Company and the Subsidiaries solely own all right, title, and interest in, to and under all patents, patent applications, trade and service marks, trade names, copyrights, licenses, inventions, trade secrets, technology, know-how, registrations and applications of any of the foregoing, and other intellectual property and similar proprietary rights (collectively, “Intellectual Property”) owned or purported to be owned by them (the “Owned Intellectual Property”) and have sufficient right in and to all Intellectual Property used in or necessary for the conduct of their business . To the knowledge of the Company, all Owned Intellectual Property is subsisting, in full force and effect, valid and enforceable. Other than as set forth on Section 2.12(a) of the Company Disclosure Schedule, neither the Company nor any Subsidiary has received any written notice, or has been or is subject to any proceeding or written threat thereof, (A) regarding any infringement, misappropriation, or other violation of any Intellectual Property of any Person, or any unauthorized use or disclosure of any trade secret or know-how, or (B) challenging the ownership, use, validity, enforceability, patentability or registrability of any Owned Intellectual Property. Other than as set forth on Section 2.12(b) of the Company Disclosure Schedule, neither the Company nor any Subsidiary has granted to any Person any exclusive license, option, or other right with respect to Owned Intellectual Property other than standard U.S. Government march-in rights, and neither the Company nor any Subsidiary, nor the conduct of their business, is infringing, misappropriating, or otherwise violating, any Intellectual Property of any Person. To the knowledge of the Company, no Person is infringing, misappropriating, or otherwise violating, any Owned Intellectual Property. The Company and the Subsidiaries have taken commercially reasonable steps to protect, maintain and enforce the Owned Intellectual Property. All Persons that have authored, invented, or otherwise developed any Intellectual Property for or on behalf of the Company or any of the Subsidiaries have executed valid and enforceable written agreements pursuant to which such Persons assigns to the Company or applicable Subsidiary exclusive ownership of all Intellectual Property authored, invented, or otherwise developed by such Person in the course of such Person’s employment or other engagement with the Company and the Subsidiaries. The Intellectual Property relevant to any matter disclosed on Section 2.12(a) or 2.12(b) of the Company Disclosure Schedule (including, for clarity, any patent involved in a dispute disclosed on Section 2.12(a) of the Company Disclosure Schedule or any patent exclusively licensed to any Person under a license agreement disclosed on Section 2.12(b) of the Company Disclosure Schedule) does not cover or otherwise relate to any Product (as defined in the License and Collaboration Agreement) under the License and Collaboration Agreement (including the “Kopin Module”).
Section 2.13 Tax Matters. All United States federal income tax returns of the Company and its Subsidiaries required by law to be filed have been filed and all taxes shown by such returns or otherwise assessed, which are due and payable, have been paid, except assessments against which appeals have been or will be promptly taken and as to which adequate reserves have been provided, except where the failure to file or pay would not reasonably be expected to have a Material Adverse Effect. The Company and its Subsidiaries have filed all other tax returns that are required to have been filed by them pursuant to applicable foreign, state, local or other law and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company and its Subsidiaries, except for such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided. The charges, accruals and reserves on the books of the Company in respect of any income and corporation tax liability for any years not finally determined are adequate to meet any assessments or re-assessments for additional income tax for any years not finally determined.
| 12 |
Section 2.14 Insurance. The Company and its Subsidiaries carry or are entitled to the benefits of insurance, with financially sound and reputable insurers, in such amounts and covering such risks as is generally maintained by companies of established repute engaged in the same or similar business, and all such insurance is in full force and effect. The Company has no reason to believe that it or any Subsidiary will not be able (A) to renew its existing insurance coverage as and when such policies expire or (B) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Effect. Neither the Company nor any Subsidiary has been denied any insurance coverage which it has sought or for which it has applied.
Section 2.15 Information Technology. To the Company’s knowledge, there has been no security breach or other compromise of or relating to the Company’s or its Subsidiaries’ information technology and computer systems, networks, hardware, software, data (including the data of their respective customers, employees, suppliers, vendors and any third party data maintained by or on behalf of them), equipment or technology (collectively, “IT Systems and Data”). The Company and its Subsidiaries have not been notified in writing of, and none of them have knowledge of, any event or condition that would reasonably be expected to result in any security breach or other compromise to their IT Systems and Data, except as would not have a Material Adverse Effect. The Company and its Subsidiaries have implemented commercially reasonable backup and disaster recovery and security plans, procedures and facilities for their respective businesses consistent with industry standards and practices, and the Company and its Subsidiaries have taken commercially reasonable steps to protect the IT Systems and Data. The Company and its Subsidiaries have been in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to (i) the privacy and security of IT Systems and Data, (ii) the protection of such IT Systems and Data from unauthorized use, access, misappropriation or modification and (iii) the collection, use, transfer, storage, disposal and disclosure by the Company and its Subsidiaries of personally identifiable information and/or any other information collected from or provided by third parties, except as would not, individually or in the aggregate, have a Material Adverse Effect.
Section 2.16 Government Contracts. The Company and its Subsidiaries have complied with all material terms and conditions of each Government Contract and neither a Governmental Authority nor any prime contractor has provided written notice to the Company or its Subsidiaries, that the Company or its Subsidiaries has materially breached or violated any legal requirement of any Government Contract. To the knowledge of the Company, neither the Company nor any of its Subsidiaries nor any of their respective senior management is, or has been, suspended or debarred from doing business with the United States Government or has been declared non- responsible or ineligible for United States Government contracting. With respect to each Government Contract and Government Bid, all representations and certifications and statements submitted by the Company or any Company Group Member were accurate in all material respects as of their respective effective dates.
Section 2.17 Solvency. Based on the consolidated financial condition of the Company as of the date here and as of the Closing Date: (i) the solvency of the Company will be able to meet its long-term debts and satisfy its financial obligations as they come due, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, consolidated and currently planned capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid.
| 13 |
Section 2.18 No Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Article III, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Purchased Shares to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of the Nasdaq Capital Market.
Section 2.19 No “Bad Actor” Disqualification. With respect to the securities to be offered and sold hereunder in reliance on Rule 506 under the Securities Act, none of the Company, any of its predecessors, or any affiliated issuer, nor any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person” and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3).
Section 2.20 Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to the knowledge of the Company is reasonably likely to, have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from the Nasdaq Capital Market nor has the Company received as of the date of this Agreement any notification that the SEC or the Nasdaq Capital Market is contemplating terminating such registration or listing.
Section 2.21 No Additional Representations. Except for the representations and warranties made by the Company in Article II or in any Transaction Document, neither the Company nor any other person makes any express or implied representation or warranty with respect to any Company Group Member or their respective businesses, operations, assets, liabilities, employees, employee benefit plans, conditions or prospects, and the Company hereby disclaims any such other representations or warranties. In particular, without limiting the foregoing disclaimer, neither the Company nor any other person makes or has made any representation or warranty to the Purchaser, or any of its Affiliates or representatives, with respect to (i) any financial projection, forecast, estimate, budget or prospect information relating to any Company Group Member or their respective business, or (ii) except for the representations and warranties made by the Company in Article II or in any Transaction Document, any oral or written information presented to the Purchaser or any of its Affiliates or representatives in the course of their due diligence investigation of the Company, the negotiation of this Agreement or in the course of the transactions contemplated hereby.
| 14 |
Article III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company, as of the date hereof and as of the Closing Date (except to the extent made only as of a specified date, in which case as of such date), that:
Section 3.1 Organization and Authority. The Purchaser has been duly organized and is validly existing and in good standing under the laws of the jurisdiction of its organization, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified and where failure to be so qualified would reasonably be expected to materially and adversely affect the Purchaser’s ability to perform its obligations under this Agreement or consummate the transactions contemplated hereby on a timely basis, and the Purchaser has the requisite power and authority and governmental authorizations to own its properties and assets and to carry on its business as it is now being conducted.
Section 3.2 Authorization.
(a) The Purchaser has the requisite power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution, delivery and performance of this Agreement by the Purchaser and the consummation of the transactions contemplated hereby have been duly authorized by all requisite action on the part of the Purchaser, and no further approval or authorization by any of its shareholders, partners, members or other equity owners, as the case may be, is required. This Agreement has been duly and validly executed and delivered by the Purchaser and, assuming due authorization, execution and delivery by the Company, is a valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles). No other corporate proceedings are necessary for the execution and delivery by the Purchaser of this Agreement, and no other corporate proceedings (except to the extent expressly set forth in the other Transaction Documents) are necessary for the performance by the Purchaser of its obligations hereunder or the consummation by it of the transactions contemplated hereby.
(b) None of the execution, delivery and performance by the Purchaser of this Agreement, the consummation of the transactions contemplated hereby, or compliance by the Purchaser with any of the provisions hereof, will (i) violate, conflict with, or result in a breach of any provision of, require any payment to or consent by any person under, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any Lien upon any of the properties or assets of the Purchaser under any of the terms, conditions or provisions of (x) its governing instruments or (y) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Purchaser is a party or by which it may be bound, or to which the Purchaser or any of the properties or assets of the Purchaser may be subject, or (ii) violate any law, statute, ordinance, rule, regulation, permit, concession, grant, franchise or any judgment, ruling, order, writ, injunction or decree applicable to the Purchaser or any of its respective properties or assets except in the case of clauses (i)(y) and (ii) for such violations, conflicts and breaches as would not reasonably be expected to materially and adversely affect the Purchaser’s ability to perform its respective obligations under this Agreement or consummate the transactions contemplated hereby on a timely basis.
| 15 |
(c) Other than the Required Regulatory Approval, or under applicable federal securities laws or the securities or blue sky laws of the various states, no notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of, any Governmental Authority, nor expiration or termination of any statutory waiting period, is necessary for the consummation by the Purchaser of the transactions contemplated by this Agreement.
Section 3.3 Purchase for Investment. The Purchaser acknowledges that the Purchased Shares have not been registered under the Securities Act or under any state or other applicable securities laws. The Purchaser (i) acknowledges that it is acquiring the Purchased Shares and the Common Stock issuable upon conversion of the Purchased Shares pursuant to an exemption from registration under the Securities Act solely for investment and for its own account and not as a nominee or agent for any other Person with no present intention to distribute any of the Purchased Shares to any Person in violation of applicable securities laws, (ii) will not sell or otherwise dispose of any of the Purchased Shares or the Common Stock issuable upon conversion of the Purchased Shares, except in compliance with the registration requirements or exemption provisions of the Securities Act and any other applicable securities laws, (iii) has such knowledge and experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of its investment in the Purchased Shares and of making an informed investment decision, (iv) is an “accredited investor” (as that term is defined by Rule 501 of the Securities Act), (v) is a “qualified institutional buyer” (as that term is defined in Rule 144A of the Securities Act), (vi) is an “institutional account” as defined in FINRA Rule 4512(c), and (vii) (A) has been furnished with or has had access to the information that it considers necessary or appropriate to make an informed investment decision with respect to the Purchased Shares and the Common Stock issuable upon conversion of the Purchased Shares, (B) has had an opportunity to discuss with management of the Company the intended business and financial affairs of the Company and to obtain information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to it or to which it had access, and (C) can bear the economic risk of (x) an investment in the Purchased Shares and the Common Stock issuable upon conversion of the Purchased Shares indefinitely and (y) a total loss in respect of such investment. The Purchaser has such knowledge and experience in business and financial matters so as to enable it to understand and evaluate the risks of and form an investment decision with respect to its investment in the Purchased Shares and the Common Stock issuable upon conversion of the Purchased Shares and to protect its own interest in connection with such investment.
| 16 |
Section 3.4 Brokers and Finders. Neither the Purchaser nor its Affiliates or any of their respective officers, directors, employees or agents has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Purchaser, in connection with this Agreement or the transactions contemplated hereby.
Section 3.5 Ownership. As of the date of this Agreement, other than as contemplated by the Transactions and other than 27,930 shares of Common Stock, neither the Purchaser nor any of its controlled subsidiaries are the owners of record or the Beneficial Owners of Common Stock or securities convertible into or exchangeable for, or any swaps or other derivative securities whose value is primarily correlated to, Common Stock.
Section 3.6 Placement Agent. The Purchaser acknowledges and agrees that (a) the Placement Agent is acting solely as the Company’s placement agent in connection with the offering of the Purchased Shares and is not and shall not be construed as a fiduciary for the Purchaser, the Company or any other Person in connection with the offering of the Purchased Shares, (b) the Placement Agent has not made and will not make any representation or warranty, whether express or implied, of any kind or character and has not provided any advice or recommendation with respect to the offering of the Purchased Shares, (c) the Placement Agent will have no responsibility with respect to (i) any representations, warranties or agreements made by any Person or entity under or in connection with the offering of the Purchased Shares or any of the Transaction Documents or any of the other documents furnished pursuant thereto or in connection therewith, or the execution, legality, validity or enforceability (with respect to any Person) thereof, or (ii) the business, affairs, financial condition, operations, properties or prospects of, or any other matter concerning the Company, the Purchaser or the offering of the Purchased Shares, and (d) the Placement Agent shall have no liability or obligation (including without limitation, for or with respect to any losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses or disbursements incurred by the Purchaser, the Company or any other Person), whether in contract, tort or otherwise, to the Purchaser or any Person claiming through you, in respect of the offering of the Purchased Shares.
Section 3.7 Acknowledgment of No Other Representations or Warranties. The Purchaser acknowledges that it has conducted its own independent investigation and analysis of the business, operations, assets, liabilities, results of operations, condition (financial or otherwise) and prospects of the Company. The Purchaser acknowledges and agrees that, except for the representations and warranties contained in Article II, neither the Company nor any of its Subsidiaries, nor any other Person, makes any express or implied representation or warranty with respect to any Company Group Member or their respective businesses, operations, assets, liabilities, employees, employee benefit plans, conditions or prospects, and the Company hereby disclaims any such other representations or warranties and the Purchaser acknowledges that neither it nor any Affiliate thereof has relied on any information or material other than the express representations and warranties set forth in Article II. In particular, without limiting the foregoing disclaimer, neither the Company nor any of its Subsidiaries, nor any other Person, (1) makes or has made any representation or warranty to the Purchaser, or any of its Affiliates or representatives, with respect to any financial projection, forecast, estimate, budget or prospect information relating to any Company Group Member or their respective business, or (2), except for the representations and warranties made by the Company in Article II, any oral or written information presented to the Purchaser or any of its Affiliates or representatives in the course of their due diligence investigation of the Company, the negotiation of this Agreement or in the course of the transactions contemplated hereby. To the fullest extent permitted by applicable Law, except with respect to the representations and warranties contained in Article II, neither the Company nor any of its Affiliates shall have any liability (except in the case of actual, intentional fraud with respect to its representations and warranties contained in Article II) to the Purchaser or its Affiliates or representatives on any basis (including in contract or tort, under federal or state securities laws or otherwise) based upon any other representation or warranty, either express or implied, included in any information or statements (or any omissions therefrom) provided or made available by the Company or its Affiliates to the Purchaser or its Affiliates or representatives in the course of their due diligence investigation of the Company, the negotiation of this Agreement or in the course of the transactions contemplated by this Agreement.
| 17 |
Section 3.8 No Additional Representations. Except for the representations and warranties made by the Purchaser in Article III or in any Transaction Document, neither the Purchaser nor any other person makes any express or implied representation or warranty with respect to the Purchaser or any of its Affiliates, and the Purchaser hereby disclaims any such other representations or warranties. In particular, without limiting the foregoing disclaimer, neither the Purchaser nor any other person makes or has made any representation or warranty to the Company, any member of the Company Group, or any of their respective representatives, with respect to (i) any financial projection, forecast, estimate, budget or prospect information relating to the Purchaser, its Affiliates or their respective business, or (ii) except for the representations and warranties made by the Purchaser in Article III or in any Transaction Document, any oral or written information presented to the Company, any member of the Company Group or any of their respective representatives in the course of their due diligence investigation of the Purchaser, the negotiation of this Agreement or in the course of the Transactions.
Article IV
COVENANTS
Section 4.1 Conduct of Business.
(a) Except as expressly permitted by this Agreement, as required by applicable Law or unless the Purchaser shall otherwise consent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), during the Pre-Closing Period the Company and each member of the Company Group shall conduct its business and operations in the ordinary course of business and in compliance in all material respects with all applicable Laws.
(b) Except (i) as expressly permitted by this Agreement, (ii) as required by applicable Law or (iii) with the prior written consent of the Purchaser (which consent shall not be unreasonably withheld, delayed or conditioned), at all times during the Pre-Closing Period, the Company shall not, nor shall it cause or permit any member of the Company Group, to do any of the following:
(i) (A) during the 90 days after the date hereof, sell, issue, grant, or authorize any capital stock or other security of the Company that are senior to the Preferred Stock or any instrument convertible into or exchangeable for any capital stock or other securities of the Company that are senior to the Preferred Stock; or (B) at any time, sell, issue, grant, or authorize any Covered Securities without first offering the Purchaser the opportunity to acquire a portion thereof on the terms and conditions set forth in Section 4.10;
| 18 |
(ii) except the filing of the Certificate of Designations, amend any of its organizational documents, or effect or be a party to any merger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split, reverse stock split, liquidation, dissolution or similar transaction except, for the avoidance of doubt, the Transactions;
(iii) during the 90 days after the date hereof, enter into a new line of business without reasonably consulting with the Purchaser if it could reasonably be expected to be materially adverse to the interests of the Purchaser (including the Purchaser’s reputation);
(iv) sell, assign, transfer, license, abandon or otherwise dispose of any Intellectual Property that will or could be useful or necessary for the JV Transaction or the License Transaction except that the Company and its Company Group may grant non-exclusive licenses of any intellectual property in the ordinary course of business; or
(v) agree, resolve, offer or commit to do any of the foregoing.
Nothing contained in this Agreement shall give the Purchaser, directly or indirectly, the right to control or direct the operations of the Company prior to the Closing. Prior to the Closing, the Company shall exercise, consistent with the terms and conditions of this Agreement, complete unilateral control and supervision over its business operations.
Section 4.2 Securities Laws. During the period commencing on the date hereof and terminating on the earlier to occur of (a) the Closing and (b) the termination of this Agreement in accordance with the provisions hereof (the “Pre-Closing Period”), the Company shall use its reasonable best efforts to (a) obtain all necessary permits and qualifications, if any, or secure an exemption therefrom, required by any state or country prior to the offer and sale of the Purchased Shares and (b) cause such authorization, approval, permit or qualification to be effective as of the Closing; provided that not the knowledge of the Company, no such permits, qualifications or exemptions are necessary for the consummation of the Preferred Purchase Transaction. Without limiting the foregoing, neither the Company nor, to the knowledge of the Company, any other Person authorized by the Company to act on its behalf, shall take any action or steps that would cause the offering or issuance of Purchased Shares under this Agreement (or the conversion of such Purchased Shares into Common Stock) to be integrated with other offerings by the Company or that would result in neither Regulation D nor any other applicable exemption from registration under the Securities Act to be available.
Section 4.3 Tax Matters.
(a) The Purchaser shall provide to the Company, upon reasonable request of the Company, a properly completed IRS Form W-8 or W-9, as applicable.
(b) The Company shall use commercially reasonable efforts to provide information that Purchaser reasonably requests in connection with the tax affairs of Purchaser and its Affiliates arising out of the Purchased Shares, including, when relevant, the determination of earnings and profits or of whether the Company is a “U.S. real property holding corporation” under Section 897 of the Code.
| 19 |
Section 4.4 Legend.
(a) The Purchaser agrees that any certificates or other instruments, including the Company’s internal records, representing the Purchased Shares or Common Stock subject to this Agreement will bear a legend substantially to the following effect:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND OTHER RESTRICTIONS SET FORTH IN A PREFERRED STOCK PURCHASE AGREEMENT, DATED AS OF AUGUST 8, 2025, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE ISSUER.
(b) Upon request of the Purchaser and upon receipt by the Company of an opinion of counsel reasonably satisfactory to the Company to the effect that such legend is no longer required under the Securities Act and applicable state laws (if such legal opinion is requested by the Company or its transfer agent), the Company shall promptly cause the first paragraph of the legend to be removed from any certificate for any Purchased Shares or Common Stock to be transferred in accordance with the terms of this Agreement. The Company shall promptly cause the second paragraph of the legend to be removed upon the expiration of such transfer and other restrictions set forth in this Agreement (and, for the avoidance of doubt, immediately prior to any termination of this Agreement). The Purchaser acknowledges that the Purchased Shares, and the Common Stock issuable upon conversion of the Purchased Shares, issued pursuant to this Agreement have not been registered under the Securities Act or under any state securities laws and agrees that it will not sell or otherwise dispose of any of the Purchased Shares or Common Stock issuable upon conversion of the Purchased Shares or, if applicable, issued pursuant to this Agreement, except in compliance with the registration requirements or pursuant to an exemption from such requirements of the Securities Act and any other applicable securities laws.
Section 4.5 Listing of Shares. To the extent the Company has not done so prior to the date of this Agreement, the Company shall promptly, and from time to time, apply to cause the maximum number of Common Stock issuable upon conversion of the Purchased Shares to be approved for listing on the Nasdaq Capital Market or another U.S. national stock exchange that the Common Stock is then listed on, subject to official notice of issuance, and shall use reasonable best efforts to maintain such listing.
| 20 |
Section 4.6 Corporate Actions.
(a) At any time that any Purchased Share is outstanding, the Company shall:
(1) take all action necessary to cause the authorized shares of the Company to include a sufficient number of authorized but unissued Common Stock to satisfy the conversion requirements of all Preferred Stock then outstanding (and, in the event of any Change of Control (as defined in the Certificate of Designations), condition such Change of Control transaction on there being sufficient authorized shares to comply with the terms of the Certificate of Designations); and
(2) not effect any voluntary deregistration under the Exchange Act or any voluntary delisting of the Common Stock from the Nasdaq Capital Market (unless moving to another U.S. national stock exchange) other than in connection with a Change of Control (as defined in the Certificate of Designations) pursuant to which the Company agrees to satisfy, or will otherwise cause the satisfaction, in full of its obligations under Section 8 of the Certificate of Designations or is otherwise consistent with the terms set forth in Section 8 of the Certificate of Designations.
(b) If any occurrence since the date of this Agreement until the Closing would have resulted in an adjustment to the Conversion Price (as defined in the Certificate of Designations) pursuant to the Certificate of Designations if the Purchased Shares had been issued and outstanding since the date of this Agreement, the Company shall adjust the Conversion Price (as defined in the Certificate of Designations), effective as of the Closing, in the same manner as would have been required by the Certificate of Designations if the Purchased Shares had been issued and outstanding since the date of this Agreement.
(c) Prior to or upon the Closing, the Company shall file with the Secretary of State of the State of Delaware the Certificate of Designations substantially in the form attached hereto as Exhibit A.
Section 4.7 Use of Proceeds. The Company covenants that it shall use the proceeds derived from the sale of the Purchased Shares only for working capital and general business purposes.
| 21 |
Section 4.8 Standstill.
(a) For a period of 18 months from the date hereof, the Purchaser, acting alone or as part of a group, will not, and the Purchaser will cause its controlled subsidiaries and its and their respective directors and executive management employees (and the Family Members of such directors and executive management employees) (the foregoing persons, collectively, the “Standstill Parties”), not to, directly or indirectly, except with the prior approval of the Company (i) acquire, offer or seek to acquire, agree to acquire or make a proposal to acquire, by purchase or otherwise, any securities, loans or debt of the Company, or direct or indirect rights to acquire any securities, loans or debt of the Company, any securities convertible into or exchangeable for any such securities, loans or debt, any options or other derivative securities or contracts or instruments in any way related to the price of shares of common stock of the Company, a material portion of the assets or property of the Company or any loans or debt of the Company, or rights or options to acquire any interests in any of the foregoing; (ii) make or in any way encourage or participate in any “solicitation” of “proxies” (whether or not relating to the election or removal of directors), as such terms are used in the rules of the SEC, to vote, or seek to advise or influence any person with respect to voting of, any voting securities of the Company, or call or seek to call a meeting of the Company’s stockholders or initiate any stockholder proposal for action by the Company’s stockholders, or seek election to or to place a representative on the Board of Directors or seek the removal of any director from the Board of Directors; (iii) demand a copy of the Company’s stock ledger, list of stockholders or any other books and records of the Company (other than in connection with the exercise of the Purchaser’s participation right pursuant to Section 4.10); (iv) make any public announcement with respect to, or offer, seek, propose or indicate an interest in (in each case with or without conditions), any merger, consolidation, business combination, tender or exchange offer, recapitalization, reorganization or purchase of a material portion of the assets, properties, securities, loans or debt of the Company, or any other extraordinary transaction involving the Company or any of their respective securities, or enter into any discussions, negotiations, arrangements, understandings or agreements (whether written or oral) with any other person regarding any of the foregoing; (v) otherwise act, alone or in concert with others, to seek to control or influence, in any manner, the Board of Directors, any committee of the Board of Directors or the management or policies of the Company; (vi) make any proposal or statement of inquiry or disclose any intention, plan or arrangement inconsistent with any of the foregoing; (vii) advise, assist, encourage or direct any person to do, or to advise, assist, encourage or direct any other person to do, any of the foregoing; (viii) take any action that would, in effect, require the Company to make a public announcement regarding the possibility of a transaction or any of the events described in this Section 4.8; (ix) knowingly enter into any discussions, negotiations, arrangements or understandings with any third party (including, without limitation, security holders of the Company) other than its Representatives with respect to any of the foregoing, including, without limitation, forming, joining or in any way participating in a “group” (as defined in Section 13(d)(3) of the Exchange Act) with respect to any securities of the Company or otherwise in connection with any of the foregoing or (x) contest the validity of this Section 4.8; provided, that the foregoing shall not prevent or restrict (A) the Purchaser from exercising its rights to acquire Covered Securities pursuant to Section 4.10 or from exercising any rights under or engaging in any activities contemplated by the JV Agreements or the License and Collaboration Agreement or (B) the Standstill Parties from acquiring shares of Common Stock in a total amount up to three percent (3%) of the Company’s outstanding shares of Common Stock (on an As-Converted Basis) at the time of such acquisitions, and such three percent (3%) shall be calculated without taking into account the acquisition of the Purchased Shares hereunder, the Purchaser’s acquisition of any Covered Securities pursuant to Section 4.10 or any shares of Common Stock held as of the date of this Agreement by any Standstill Party.
| 22 |
(b) Furthermore, the Purchaser’s obligations under Section 4.8(a) shall terminate immediately (and without further action by any party hereto) if (x) any person or group of persons shall have acquired or entered into a definitive agreement to acquire, or the board has approved an acquisition of, more than 50% of the Company’s outstanding Common Stock or securities that entitle such person or group to appoint at least a majority of the Board of Directors, or (y) any person commences a tender or exchange offer which, if consummated, would result in such person’s acquisition of beneficial ownership of more than 50% of the outstanding voting securities of the Company, and in connection therewith, the Company files with the SEC a Schedule 14D-9 with respect to such offer that does not recommend that the Company’s stockholders reject such offer; provided, however, that with respect to clauses (x) and (y) of this sentence, the Purchaser shall not have solicited, initiated, encouraged or taken any action to facilitate or assist or participate with any such other person or group in violation of this Section 4.8 in connection with any of the transactions contemplated by clauses (x) and (y) of this sentence. The Purchaser’s covenant under the Confidentiality Agreement not to purchase more than 1% of the Company is hereby terminated and replaced in its entirety with the Purchaser’s obligations set forth in this Section 4.8.
Section 4.9 Indemnification.
(a) The Company will indemnify and hold the Purchaser and its directors, officers, shareholders, employees and agents, each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees of such controlling Person (each, a “Purchaser Party”) harmless from any and all out-of-pocket losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur, as a result of or relating to third party claims against such Purchaser Party arising from the legal proceedings set forth in “Item 3. Legal Proceedings” of the Company’s Annual Report on Form 10-K.
(b) Promptly after receipt by any Person (the “Indemnified Person”) of notice of any demand, claim or circumstances which would or might give rise to a claim or the commencement of any action, proceeding or investigation in respect of which indemnity may be sought pursuant to Section 4.9(a), such Indemnified Person shall promptly notify the Company in writing and the Company shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Person and the assumption of the payment of all fees and expenses; provided, however, that the failure of any Indemnified Person to so notify the Company shall not relieve the Company of its obligations hereunder except to the extent that the Company is actually, materially and adversely prejudiced by such failure to notify. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Company and the Indemnified Person shall have mutually agreed to the retention of such counsel; (ii) the Company shall have failed promptly to assume the defense of such proceeding and employ counsel reasonably satisfactory to such Indemnified Person in such proceeding; or (iii) the named parties to any such proceeding (including any impleaded parties) include both such Indemnified Person and the Company, and such Indemnified Person shall have been advised by counsel that a conflict of interest exists if the same counsel were to represent such Indemnified Person and the Company; . The Company shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, delayed or conditioned. Without the prior written consent of the Indemnified Person, which consent shall not be unreasonably withheld, delayed or conditioned, the Company shall not effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is a party, unless such settlement includes an unconditional release of such Indemnified Person from all liability arising out of such Proceeding and such settlement does not require any Indemnified Person to perform any covenant or refrain from engaging in any activity or include any non-monetary limitation on the actions of any Indemnified Person or any of its Affiliates or any admission of fault, violation, culpability, malfeasance or nonfeasance by, or on behalf of, or liability on behalf of, any such Indemnified Person.
| 23 |
Section 4.10 Participation Rights.
(a) If the Company offers to sell Covered Securities (as defined below) in a private offering of Covered Securities for cash (a “Qualified Offering”), then the Purchaser shall be afforded the opportunity to acquire from the Company, for the same price and on the same terms as such Covered Securities are offered, in the aggregate up to the amount of Covered Securities required to enable it to maintain its Qualified Purchaser Percentage Interest (measured immediately prior to the delivery of the Qualified Offering Notice). “Qualified Purchaser Percentage Interest” means, as of any date of determination, the percentage equal to (i) the number of shares of Common Stock (on an As-Converted Basis) then held by the Purchaser as of the date of determination, divided by (ii) the total number of outstanding shares of Common Stock (on an As-Converted Basis) as of such date. “Covered Securities” means Common Stock, the Preferred Stock and any other class or series of preferred stock of the Company and any rights, options or warrants to purchase or securities convertible into or exercisable or exchangeable for Common Stock, Preferred Stock or other preferred stock or securities of the Company, other than securities that are (A) issuable upon the exercise or conversion of any securities of the Company (including derivative securities) issued and outstanding as of the date hereof or pursuant to this Agreement or the Transaction Documents; (B) issued by the Company pursuant to any employment contract, employee incentive or benefit plan, stock purchase plan, stock ownership plan, stock option or equity compensation plan (or a bona fide inducement grant to new employees outside of any such plan) or other similar plan approved by the Board of Directors, including where stock is being issued or offered to a trust, other entity to or for the benefit of any employees, consultants, officers or directors of the Company; (C) issued on an arm’s length basis to an unaffiliated third party in connection with acquisitions, asset purchases, licenses, joint ventures, technology license agreements, collaborations or strategic transactions involving the Company and other entities approved by the Board of Directors; or (D) securities issued to financial institutions or lessors in connection with credit or lending arrangements, equipment financings or lease arrangements. Notwithstanding anything to the contrary herein, (i) the participation rights granted to the Purchaser in this Section 4.10(a) shall automatically terminate and be of no further force or effect upon the earlier to occur of (i) the Purchaser ceases to own and control legally and beneficially, directly or indirectly, at least 1.25% of the Company’s outstanding shares of Common Stock (on an As-Converted Basis) and (ii) 36 months from the signing of the Agreement. This Section 4.10(a) shall not require the Company to take any action that would require shareholder approval under applicable stock exchange rules or result in a violation of Law or stock exchange rule or regulation.
(b) Prior to making any Qualified Offering of Covered Securities, the Company shall give the Purchaser written notice of its intention to make such an offering, describing, to the extent then known, the anticipated amount of securities, and other material terms then known to the Company upon which the Company proposes to offer the same (such notice, a “Qualified Offering Notice”). The Purchaser shall then have 10 days after receipt of the Qualified Offering Notice (the “Offer Period”) to notify the Company in writing (a “Purchaser Notice”) that it intends to exercise such preemptive right and as to the amount of Covered Securities the Purchaser desires to purchase, up to the maximum amount calculated pursuant to Section 4.10(a) (the “Designated Securities”). The failure to respond to a Qualified Offering Notice during the Offer Period constitutes a waiver of the Purchaser’s preemptive right in respect of such offering. A Purchaser Notice constitutes a non-binding indication of interest of the Purchaser to purchase the amount of Designated Securities specified by the Purchaser (or a proportionately lesser amount if the amount of Covered Securities to be offered in such Qualified Offering is subsequently reduced) at the price (or range of prices) established in the Qualified Offering and other terms set forth in the Company’s notice to it. The sale of the Covered Securities in the Qualified Offering, including any Designated Securities, shall be closed not later than 30 days after the end of the Offer Period. The Covered Securities to be sold to other investors in such Qualified Offering shall be sold at a price not less than, and upon terms no more favorable to such other investors than, those specified in the Qualified Offering Notice. If the Company does not consummate the sale of Covered Securities to other investors within such 30-day period, the right provided hereunder shall be revived and such securities shall not be offered unless first reoffered to the Purchaser in accordance herewith. Notwithstanding anything to the contrary set forth herein and unless otherwise agreed by the Purchaser, by not later than 60 days following the end of the Offer Period, the Company shall either confirm in writing to the Purchaser that the Qualified Offering has been abandoned or shall publicly disclose its intention to issue the Covered Securities in the Qualified Offering, in either case in such a manner that the Purchaser will not be in possession of any material, non-public information thereafter.
| 24 |
(c) If the Purchaser exercises its preemptive right provided in this Section 4.10 with respect to a Qualified Offering, the Company shall offer and sell the Purchaser, if any such offering is consummated, the Designated Securities at the same price as the Covered Securities are offered to third persons (not including the underwriters or the initial purchasers in a Rule 144A offering that is being reoffered by the initial purchasers) in such offering and shall provide written notice of such price upon the determination of such price.
(d) In addition to the pricing provision of Section 4.10(c), the Company will offer and sell the Designated Securities to the Purchaser upon terms and conditions not less favorable than the most favorable terms and conditions offered to other persons or entities in a Qualified Offering.
Article V
MISCELLANEOUS
Section 5.1 Expenses.
(a) Except as set forth in Section 4.9, Section 5.15 or this Section 5.1, each party will bear and pay all other costs and expenses incurred by it or on its behalf in connection with the transactions contemplated pursuant to this Agreement.
(b) The Company shall pay any and all documentary, stamp or similar issue or transfer tax payable in connection with the sale and issuance of the Purchased Shares.
Section 5.2 Amendment; Waiver. No amendment or waiver of any provision of this Agreement will be effective with respect to any party unless made in writing and signed by an officer or duly authorized representative of such party. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The conditions to each party’s obligation to consummate the Closing are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable law. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.
| 25 |
Section 5.3 Counterparts; Electronic Transmission. For the convenience of the parties hereto, this Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement. Executed signature pages to this Agreement may be delivered by electronic transmission and such electronic transmission will be deemed as sufficient as if actual manual pages had been delivered.
Section 5.4 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of laws of another jurisdiction. Each party agrees that all Proceedings exclusively concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement and any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, employees or agents) shall be commenced in the Court of Chancery of the State of Delaware and any state appellate court therefrom within the State of Delaware (or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, any other state or federal court within the State of Delaware) (the “Chosen Courts”). The parties hereby irrevocably and unconditionally consent to the jurisdiction of the Chosen Courts in any such Proceeding and irrevocably waive, to the fullest extent permitted by Law, any objection that they may now or hereafter have to the laying of the venue of any such Proceeding in any such court or that any such Proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such Proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of the Chosen Courts. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 5.6 shall be deemed effective service of process on such party. Nothing herein shall be construed so as to conflict with any choice of law, remedy or jurisdiction clauses in the License and Collaboration Agreement or the UK Agreements, which shall remain in full force and effect in accordance with their terms.
Section 5.5 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 5.6 Notices. Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be deemed to have been duly given (i) on the date of delivery if delivered personally or by electronic mail (subject to confirmation of receipt of such electronic mail), (ii) on the first business day following the date of dispatch if delivered by a recognized next-day courier service, or (iii) on the fifth business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below or pursuant to such other instructions as may be designated in writing by the party to receive such notice.
| 26 |
If to the Purchaser:
c/o Theon International PLC
5, Agios Antonios str.
Muskita Building 2,
1st floor, Office/Apart. 102
2002 Nicosia, Cyprus
Attention: Christianos Hadjiminas
Email: ch@theon.com
with a copy to (which copy alone shall not constitute notice):
Reed Smith LLP
599 Lexington Avenue, 22nd Floor
New York, NY 10022
Attention: Jennifer W. Cheng, Esq.
Email: jcheng@reedsmith.com
If to the Company:
125 North Drive
Westborough, MA 01581
Attention: Michael Murray
Email: MMURRAY@KOPIN.COM
with a copy to (which copy alone shall not constitute notice):
Morgan, Lewis & Bockius LLP
1 Federal St.
Boston, MA 02110
Attention: John J. Concannon III
Email: jack.concannon@morganlewis.com
Section 5.7 Entire Agreement. This Agreement (including the Exhibits and Schedules hereto) and the Transaction Documents constitute the entire agreement and supersede all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof.
Section 5.8 Assignment. Neither this Agreement, nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other party; provided that no such assignment will relieve the Purchaser of its obligations hereunder prior to the Closing. This Agreement shall bind and inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns.
| 27 |
Section 5.9 Interpretation; Other Definitions. Wherever required by the context of this Agreement, the singular shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa, and, unless specified otherwise, references to any agreement, document or instrument shall be deemed to refer to such agreement, document or instrument as amended, supplemented or modified from time to time. All article, section, paragraph or clause references not attributed to a particular document shall be references to such parts of this Agreement, and all exhibit, annex and schedule references not attributed to a particular document shall be references to such exhibits, annexes and schedules to this Agreement. In addition, the following terms are ascribed the following meanings:
(1) The term “business day” means any day that is not a Saturday, a Sunday or any other day on which commercial banks are generally required or authorized by law to be closed in New York, New York.
(2) The terms “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision.
(3) The words “including,” “includes,” “included” and “include” are deemed to be followed by the words “without limitation.”
(4) The phrase “to the extent” means the degree to which a matter extends (rather than “if”).
(5) The word “or” is not exclusive.
(6) The term “person” or “Person” has the meaning given to it in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act.
(7) “Affiliate” means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with such other person; provided that (i) portfolio companies in which any Person or any of its Affiliates has an investment shall not be deemed an Affiliate of such Person (other than for purposes of Section 3.5), (ii) no Company Group Member, and none of the Company’s other controlled Affiliates, will be deemed to be Affiliates of the Purchaser for purposes of this Agreement and (iii) each Subsidiary shall be deemed an Affiliate of the Company and of each other Subsidiary. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) when used with respect to any Person, means the possession, directly or indirectly, of the power to cause the direction of management or policies of such person, whether through the ownership of voting securities, by contract or otherwise.
(8) “Agreement” shall have the meaning set forth in the Preamble.
(9) “Anti-Corruption Laws” shall have the meaning set forth in Section 2.7(b).
| 28 |
(10) “As-Converted Basis” means, as of the time of calculation, taking into account all issued and outstanding shares of Common Stock and all issued and outstanding shares of Common Stock into which the Purchased Shares and any other convertible securities owned by the Purchaser would convert if the Purchaser voluntarily elected to convert the Purchased Shares or such securities as of such date without regard to any restrictions on conversion set forth therein or in the Transaction Documents.
(11) “Beneficial Ownership” or “Beneficially Own” shall have the meaning given such term in Rule 13d-3 under the Exchange Act and a Person’s Beneficial Ownership of securities shall be calculated in accordance with the provisions of such Rule; provided, however, that for purposes of determining any Person’s Beneficial Ownership, such person shall be deemed to be the Beneficial Owner of any equity securities that may be acquired by such person, whether within sixty (60) days or thereafter, upon the conversion, exchange, redemption or exercise of any warrants, options, rights or other securities issued by the Company or any Subsidiary.
(12) “By-laws” means the sixth amended and restated by-laws of the Company.
(13) “Capitalization Date” shall have the meaning set forth in Section 2.2(a).
(14) “Certificate of Designations” shall have the meaning set forth in the Recitals.
(15) “Certificate of Incorporation” shall mean the amended and restated certificate of incorporation of the Company.
(16) “CFIUS Side Letter” shall have the meaning set forth in Section 1.3(a)(3).
(17) “Closing” shall have the meaning set forth in Section 1.2(a).
(18) “Closing Date” shall have the meaning set forth in Section 1.2(a).
(19) “Code” shall have the meaning set forth in Section 2.8(b).
(20) “Common Stock” means the shares of common shares, par value $0.01 per share, of the Company.
(21) “Company” shall have the meaning set forth in the Preamble.
(22) “Company Group” means the Company and the Subsidiaries from time to time.
| 29 |
(23) “Company Group Member” means any corporation, partnership, joint venture, limited liability company, unincorporated association, trust or other entity within the Company Group.
(24) “Confidentiality Agreement” means that certain Confidentiality Agreement, dated as of March 13, 2025, by and between the Purchaser and the Company.
(25) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and all rules, regulations, rulings and interpretations adopted by the Internal Revenue Service or the Department of Labor thereunder.
(26) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(27) “Family Member” means the spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law of the relevant Person.
(28) “FCPA” shall have the meaning set forth in Section 2.7(b).
(29) “FINRA” means the Financial Industry Regulatory Authority.
(30) “GAAP” shall have the meaning set forth in Section 2.5(d).
(31) “Governmental Authority” means the government of the United States or any other nation, or any political subdivision thereof, whether state, provincial or local, or any agency (including any self-regulatory agency or organization), authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administration powers or functions of or pertaining to government (including any supranational bodies such as the European Union) over the Company or any of the Subsidiaries, or any of their respective properties, assets or undertakings.
(32) “Government Bid” means any quotation, bid or proposal by the Company or any Company Group Member that, if accepted or awarded, would result in a Government Contract.
(33) “Government Contract” means any contract for the sale of supplies or services currently in performance, or that has been closed for less than three years prior to the Closing Date, that is between the Company or any Company Group Member and a Governmental Authority or entered into by the Company or any Company Group Member as a subcontractor at any tier in connection with a contract between another Person and a Governmental Authority.
| 30 |
(34) “Joint Venture Agreement” shall have the meaning set forth in the Recitals.
(35) “knowledge” means, with respect to any statement made to the knowledge of the Company, that the statement is based upon the actual knowledge of the officers of the Company and the knowledge that each such person would have reasonably obtained upon due inquiry.
(36) “Kopin Equity Incentive Plan” means the Company’s 2020 Equity Incentive Plan.
(37) “Kopin Stock Options” shall have the meaning set forth in Section 2.2(a).
(38) “License and Collaboration Agreement” shall have the meaning set forth in the Recitals.
(39) “Law” or “Laws” means any statute, law, ordinance, treaty, rule, code, regulation or other binding directive issued, promulgated or enforced by any Governmental Authority.
(40) “Lien” means any mortgage, deed of trust, pledge, option, power of sale, retention of title, right of pre-emption, right of first refusal, hypothecation, security interest, encumbrance, claim, lien or charge of any kind, or an agreement, arrangement or obligation to create any of the foregoing.
(41) “Material Adverse Effect” means a change, event, development or circumstance, the effect of which is or would reasonably be expected to be, individually or in the aggregate, materially adverse (A) to the business, assets, results of operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole or (B) to the validity or enforceability of or the Company’s ability to perform in any material respect its obligations under this Agreement; provided, however, that none of the following shall be taken into account, either alone or in combination, in determining whether there has been, or may be, a Material Adverse Effect: (i) the effect of any change in the United States or foreign economies or securities, financial, banking or credit markets (including changes in interest or exchange rates) or geopolitical conditions in general; (ii) the effect of any change that generally affects any industry in which the Company or any of its Subsidiaries operates; (iii) the effect of any change arising in connection with natural disasters or acts of nature, hostilities, acts of war, sabotage, civil unrest, riots, terrorism or military actions or any escalation or worsening of any such hostilities, acts of war, sabotage, civil unrest, riots, or terrorism or military actions; (iv) the effect of any epidemic, pandemic or disease outbreak, curfews or other restrictions that relate to, or arise out of, any epidemic, pandemic or disease outbreak or material worsening of such conditions threatened or existing as of the date of this Agreement; (v) the failure (in and of itself) of the Company or its Subsidiaries to meet any of their internal projections (provided that any change, event, or development underlying such failure may be taken into account if not otherwise excluded under the other subclauses of this definition); (vi) any effect resulting from the negotiation, execution, delivery, performance or announcement of this Agreement or the pendency of the Transactions (including by reason of the identity of Purchaser), including the impact thereof on the relationships, contractual or otherwise, of the Company and its Subsidiaries with customers, suppliers, lenders, lessors, business partners, employees, regulators, Governmental Authorities, vendors or any other Person (except with respect to those certain representations and warranties of the Company regarding such matters); (vii) the consummation of the Transactions; (viii) the effect of any changes or proposed changes in GAAP or applicable laws, or standards, interpretations or enforcement thereof; (ix) any actual or potential sequester, stoppage, shutdown, default or similar event or occurrence by or involving any Governmental Authority affecting a national or federal government as a whole; or (x) any actual or potential break-up of any existing political or economic union of or within any country or countries or any actual or potential exit by any country or countries from, or suspension or termination of its or their membership in, any such political or economic union (but in each case, including the underlying causes of any of the foregoing); except in the case of clauses (i), (ii), (iii), (iv), (viii), (ix) and (x), to the extent the Company Group is materially and disproportionately adversely affected thereby as compared to other companies in the industries in which the Company Group operates (and then only to the extent of such material and disproportionate impact). For the avoidance of doubt, a Material Adverse Effect shall be measured only against past performance of the Company and its Subsidiaries, and not against any forward-looking statements, financial projections or forecasts of the Company and its Subsidiaries.
| 31 |
(42) “Money Laundering Laws” shall have the meaning set forth in Section 2.7(c).
(43) “Non-Recourse Party” shall have the meaning set forth in Section 5.18.
(44) “OFAC” shall have the meaning set forth in Section 2.7(d).
(45) “Person” means an individual, a corporation, a general or limited partnership, a limited liability company, an association, a trust, other legal entity or organization.
(46) “Placement Agent” means Stifel, Nicolaus & Company, Incorporated.
(47) “Plan” shall have the meaning set forth in Section 2.8(b).
(48) “Pre-Closing Period” shall have the meaning set forth in Section 4.2.
(49) “Preferred Purchase Transaction” means the purchase and sale of the Purchased Shares on the terms and conditions set forth in this Agreement.
(50) “Preferred Stock” shall have the meaning set forth in the Recitals.
(51) “Proceeding” means any action, suit, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation before or by any Governmental Authority, stock market, stock exchange or trading facility.
(52) “Purchase Price” shall have the meaning set forth in Section 1.1.
| 32 |
(53) “Purchased Shares” shall have the meaning set forth in Section 1.1.
(54) “Purchaser” shall have the meaning set forth in the Preamble.
(55) “Required Regulatory Approval” means the NSIA Condition (as defined in the UK Subscription Agreement).
(56) “Sanctions Laws” shall have the meaning set forth in Section 2.7(d).
(57) “SEC” shall have the meaning set forth in Section 2.5(a).
(58) “SEC Documents” shall have the meaning set forth in Section 2.5(a).
(59) “Securities Act” means the Securities Act of 1933, as amended.
(60) “Standstill Party” shall have the meaning set forth in Section 4.8(a).
(61) “Subsidiary” shall have the meaning set forth in Section 2.1(b).
(62) “Transactions” shall have the meaning set forth in the Recitals.
(63) “Transaction Documents” means this Agreement, the License and Collaboration Agreement, the UK Agreements and the Certificate of Designations and all other documents and instruments executed or delivered in connection with the Transactions.
(64) “Transfer Agent” means Computershare Trust Company, N.A.
Section 5.10 Captions. The article, section, paragraph and clause captions herein are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof.
| 33 |
Section 5.11 Severability. If any provision of this Agreement or the application thereof to any Person (including the officers and directors of the parties hereto) or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.
Section 5.12 No Third-Party Beneficiaries. Except as set forth in the immediately succeeding sentences or as otherwise expressly provided herein, nothing contained in this Agreement, expressed or implied, is intended to confer upon any Person other than the parties hereto (and their permitted assigns), any benefit, right or remedies.
Section 5.13 Public Announcements. Subject to each party’s disclosure obligations imposed by law or regulation or the rules of any stock exchange upon which its securities are listed, each of the parties hereto will cooperate with each other in the development and distribution of all news releases and other public information disclosures with respect to this Agreement and any of the transactions contemplated by this Agreement, and neither the Company nor the Purchaser will make any such news release or public disclosure without first consulting with the other, and, in each case, also receiving the other’s consent (which consent shall not be unreasonably withheld or delayed), and each party shall coordinate with the party whose consent is required with respect to any such news release or public disclosure.
Section 5.14 Specific Performance. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.
Section 5.15 Termination. This Agreement shall survive the Closing until the Purchaser and its Affiliates do not own any Purchased Shares or Common Stock issued upon the conversion of the Purchased Shares. Prior to the Closing, this Agreement may only be terminated:
(a) by mutual written agreement of the Company and the Purchaser;
(b) by the Company or the Purchaser, upon written notice to the other party given at any time on or after the Long Stop Date (as defined in the UK Subscription Agreement) (the “End Date”); provided, however, that the right to terminate this Agreement pursuant to this Section 5.15(b) shall not be available to any party whose failure to fulfill any obligations under this Agreement shall have been the principal cause of, or resulted in, the failure of the Closing to occur on or prior to such date;
(c) by the Company or the Purchaser, upon written notice to the other party given at any time after the termination of the UK Subscription Agreement in accordance with its terms; provided, however, that the right to terminate this Agreement pursuant to this Section 5.15(c) shall not be available to any party whose failure to fulfill any obligations under this Agreement shall have been the principal cause of, or resulted in, the termination of the Joint Venture Agreement in accordance with its terms;
| 34 |
(d) by the Purchaser upon written notice to the Company, if it is not in material breach of its obligations under this Agreement and there has been a breach of, or inaccuracy in, any representation, warranty, covenant or agreement of the Company such that the conditions set forth in Section 1.3(b)(1) or Section 1.3(b)(2) would not be satisfied as of the time of such breach or inaccuracy and such breach or inaccuracy has not been cured within five (5) business days after written notice thereof to the Purchaser; provided, that no cure period shall be required (x) for a breach or inaccuracy which by its nature cannot be cured or (y) if any of the conditions to the Closing set forth in Section 1.3(b)(1) or Section 1.3(b)(2) are incapable of being satisfied on or before the End Date.
Section 5.16 Effects of Termination. In the event of any termination of this Agreement in accordance with Section 5.15, neither party (nor any of its Affiliates) shall have any liability or obligation to the other (or any of its Affiliates) under or in respect of this Agreement, except to the extent of (A) any liability arising from any intentional and material breach by such party of its obligations under this Agreement arising prior to such termination; (B) actual, intentional fraud with respect to a party’s representations and warranties contained in this Agreement. In the event of any such termination, this Agreement shall become void and have no effect, and if such termination occurs prior to the Closing, the transactions contemplated hereby shall be abandoned without further action by the parties hereto, in each case, except (x) as set forth in the preceding sentence and (y) in accordance with the provisions of Section 5.1 (Expenses), Section 5.2 through Section 5.13 (Amendment Waiver; Counterparts; Electronic Transmission; Governing Law; Waiver of Jury Trial; Notices; Entire Agreement, Assignment; Interpretation; Other Definitions; Captions; Severability; No Third Party Beneficiaries; Public Announcements), this Section 5.16 and Section 5.18 (Non-Recourse). For the avoidance of doubt, an intentional and material breach by either party shall be deemed to include any failure by such party to consummate the Closing if it is obligated to do so hereunder.
Section 5.17 Survival. The representations and warranties, and covenants required to be completed prior to the Closing, of the parties contained in this Agreement shall survive for eighteen (18) months following the Closing. All of the other covenants or agreements of the parties contained in this Agreement shall survive until fully performed or fulfilled, unless and to the extent that non-compliance with such covenants or agreements is waived in writing by the party entitled to such performance.
Section 5.18 Non-Recourse. This Agreement may only be enforced against, and any claims or causes of action that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement may only be made against, the entities that are expressly identified as parties hereto, including entities that become parties hereto after the date hereof, and no former, current or future equityholders, controlling persons, directors, officers, employees, agents or Affiliates of any party hereto or any former, current or future equityholder, controlling person, director, officer, employee, general or limited partner, member, manager, advisor, agent or Affiliate of any of the foregoing (each a “Non-Recourse Party”) shall have any liability for any obligations or liabilities of the parties to this Agreement or for any claim (whether in tort, contract or otherwise) based on, in respect of, or by reason of, the transactions contemplated hereby or in respect of any representations made or alleged to be made in connection herewith. Without limiting the rights of either party against the other party hereto, in no event shall either party or any of its Affiliates seek to enforce this Agreement against, make any claims for breach of this Agreement against, or seek to recover monetary damages from, any Non-Recourse Party.
[Remainder of page intentionally left blank]
| 35 |
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first herein above written.
| Executed by KOPIN CORPORATION, a company incorporated in DELAWARE, acting by MICHAEL MURRAY, who, in accordance with the laws of that territory, is acting under the authority of the company | |
| /s/ Michael Murray | |
| Authorized Signatory | |
| Executed by THEON INTERNATIONAL PLC, a company incorporated in CYPRUS, acting by PHILIPPE MENNICKEN, who, in accordance with the laws of that territory, is acting under the authority of the company | |
| /s/ Philippe Mennicken | |
| Authorized Signatory |
EXHIBIT A
Form of Certificate of Designations
(attached)
EXHIBIT B
License and Collaboration Agreement and related side letter
(attached)
EXHIBIT C
Form of CFIUS Side Letter
(attached)
EXHIBIT D
Form of Solvency Certificate
(attached)
DATED ______________________ 2025
Exhibit 10.26
FIRST AMENDMENT
TO
SERIES A CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT
This first AMENDMENT (this “Amendment”), dated as of September 30, 2025, is made by and between Kopin Corporation, a corporation organized and existing under the laws of the State of Delaware (the “Company”) and Theon International PLC, a company incorporated and existing under the laws of Cyprus (the “Purchaser”) and amends that certain Series A Convertible Preferred Stock Purchase Agreement, by and between the Company and the Purchaser, dated as of August 8, 2025 (the “Purchase Agreement”). Terms used herein and not otherwise defined shall have the meanings specified in the Purchase Agreement.
RECITALS:
WHEREAS, pursuant to Section 5.2 of the Purchase Agreement, no amendment or waiver of any provision of the Purchase Agreement will be effective with respect to any party unless made in writing and signed by an officer or duly authorized representative of such party;
WHEREAS, Company and the Purchaser mutually desire to amend the Purchase Agreement pursuant to the terms of this Amendment; and
NOW, THEREFORE, in consideration of the mutual covenants, promises and agreements contained herein, the parties hereby agree as follows:
| 1. | Amendments. The Purchase Agreement shall be amended as follows: |
| i. | An updated Exhibit A is attached hereto which shall replace and supersede in all respects Exhibit A originally included in the Purchase Agreement. |
| 2. | Reference to and Effect on the Purchase Agreement. On or after the date hereof, each reference in the Purchase Agreement to “this Agreement”, “hereunder”, “herein” or words of like import shall mean and be a reference to the Purchase Agreement as amended by this Amendment. No reference to this Amendment need be made in any instrument or document at any time referring to the Purchase Agreement, and a reference to the Purchase Agreement in any such instrument or document shall be deemed a reference to the Purchase Agreement as amended hereby. Except as specifically amended hereby, the Purchase Agreement shall continue in full force and effect as originally constituted and is ratified and affirmed by the parties thereto. | |
| 3. | Entire Agreement; Governing Law. This Amendment and the Purchase Agreement constitute the full and entire agreement between the parties with regard to the subject matter hereof. This Amendment and all actions arising out of or in connection with this Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law provisions of the State of Delaware or of any other state. | |
| 4. | Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. |
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Series A Convertible Preferred Stock Purchase Agreement as of the date first set forth above.
| Executed by KOPIN CORPORATION, a company incorporated in DELAWARE, acting by MICHAEL MURRAY, who, in accordance with the laws of that territory, is acting under the authority of the company | |
/s/ Michael Murray | |
| Authorized Signatory | |
Executed by THEON INTERNATIONAL PLC, a company incorporated in CYPRUS, acting by STELIOS ANASTASIOU, who, in accordance with the laws of that territory, is acting under the authority of the company | |
| /s/Stelios Anastasiou | |
| Authorized Signatory |
[Signature Page to First Amendment to
Series A Convertible Preferred Stock Purchase Agreement]
EXHIBIT A
Form of Certificate of Designations
(attached)
Exhibit 10.27
LICENSE AND COLLABORATION
AGREEMENT
between
KOPIN CORPORATION
and
THEON INTERNATIONAL PLC
and
KOPIN EUROPE LIMITED
Condor House
5-10 St. Paul’s Churchyard
London EC4M 8AL
Tel. +44 (0)20 3201 5000
Fax: +44 (0)20 3201 5001
www.morganlewis.com
TABLE OF CONTENTS
CLAUSE
| 1. DEFINITIONS AND INTERPRETATION | 3 | |
| 2. CONTRACTing STRUCTURE | 7 | |
| 3. Marketing, advertising and promotion | 7 | |
| 4. Product sUpply & MANUFACTURE | 7 | |
| 5. SELLER Obligations | 7 | |
| 6. LICENSING | 8 | |
| 7. Additional License obligations | 8 | |
| 8. Patent Maintenance | 9 | |
| 10. FEES AND CHARGES | 10 | |
| 11. Invoicing and payment | 11 | |
| 12. Confidentiality | 11 | |
| 13. Customers | 13 | |
| 14. Warranties | 13 | |
| 15. Indemnity | 14 | |
| 16. Insurance | 15 | |
| 17. Limitation and exclusion of liability | 15 | |
| 18. TERM AND Termination | 16 | |
| 19. Consequences of termination | 16 | |
| 20. Conflicts of Interest | 17 | |
| 21. Force majeure | 18 | |
| 22. Existing arrangements | 18 | |
| 23. NOTICES | 18 | |
| 24. GOVERNING LAW AND JURISDICTION | 19 | |
| 25. MISCELLANEOUS | 20 |
SCHEDULE
Schedule 1 (Market and Product Development Activities)
Schedule 2 (DarkWave Product Development Collaboration Principles)
Schedule 3 (MicroLED Product Development Collaboration Principles)
Schedule 4 (OLED Product Development Collaboration Principles)
| 2 |
THIS AGREEMENT (this “Agreement”) is made entered into on October 16 2025 (the “Commencement Date”).
BETWEEN:
| (1) | KOPIN CORPORATION, a Delaware corporation, whose registered office is at 125 North Drive, Westborough, MA, 01581, United States (“Kopin”); |
| (2) | THEON INTERNATIONAL PLC, a company incorporated in Cyprus with registered number [HE 424549], whose registered office is at 5, Agios Antonios Street, Muskita Building 2, Strovolos, Nicosia, 2002, Cyprus (“Theon”); and |
| (3) | KOPIN EUROPE LIMITED, a company registered in England & Wales with company number 05220480 whose registered office is at One Eleven, Edmund Street, Birmingham, B3 2HJ (the “Company”), |
(each a “Party” and together the “Parties”).
RECITALS:
| (A) | The Parties to this Agreement wish to establish a framework to govern their respective rights and obligations in relation to particular Projects in respect of which they wish to co-operate. |
| (B) | This Agreement sets out the terms and conditions upon which the Parties have agreed that such Projects may take place. |
IT IS AGREED as follows:
| 1. | DEFINITIONS AND INTERPRETATION |
| 1.1 | In this Agreement, the following words and expressions shall have the following meanings: |
| Affiliate | means, in respect of any person, a person that directly, or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the person specified, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a person, whether through the ownership of voting securities, by contract, as trustee or executor, or otherwise; | |
| Applicable Law | means all applicable legislation, statutes or statutory instruments, directives, regulations, judgments, decisions, decrees, orders, instruments, by-laws, and other legislative measures or decisions having the force of law, treaties, conventions and other agreements between states, or between states and the European Union or other supranational bodies, rules of common law, customary law and equity and all civil or other codes and all other laws of, or having effect in, any jurisdiction from time to time; | |
| Business Day | means a day on which banks are open for general commercial business in London, UK, Boston, USA and Nicosia, Cyprus (excluding Saturdays, Sundays and public holidays); | |
| Combined Product | means a product which combines a Theon Product with a Company Product and/or a Kopin Product as a single unit for sale to customers; |
| 3 |
| Company Product | means a product or product component, whether manufactured, created, or developed, and regardless of the medium through which they are delivered or consumed, owned by or licensed to the Company and made available to the other Parties pursuant to this Agreement, but excluding Kopin Products; | |
| Control | means the ability of a person to secure, directly or indirectly, (whether by the holding of shares or other equity interests, possession of voting rights or by virtue of any other power conferred by the articles of association, constitution, partnership deed, trust deed or other documents regulating another person, or by any other means whatsoever) that the affairs of such other person are conducted in accordance with its wishes and “Controlled” and “Controlling” shall be construed accordingly; | |
| Fees | means the fees a Party charges another Party for the purchase of any Products and/or Product components or services; | |
| Improvement | any improvement, development, enhancement, modification or derivative of any of the Products, or its design or manufacturing process, which would make the Product cheaper, more effective, more useful or more valuable, or would in any other way render the Product more commercially competitive but excludes any such improvements, development, enhancement, modification or derivative to the extent these are funded by, or custom for, a customer or other third party and which are subject to restrictions; | |
| Input | in relation to a Party, the services, resources, workforce or other tangibles or intangibles that such Party provides in accordance with this Agreement in relation to a Project as set out in a Project Schedule. | |
| Intellectual Property Rights | means patents, utility models, rights to inventions, copyright and neighboring and related rights, moral rights, trademarks and service marks, business names and domain names, rights in get-up and trade dress, goodwill and the right to sue for passing off or unfair competition, rights in designs, rights in technology, rights in computer software, rights in algorithms, database rights, rights to use, and protect the confidentiality of, confidential information (including know-how and trade secrets), and all other intellectual property rights, in each case whether registered or unregistered and including all applications and rights to apply for and be granted, renewals or extensions of, and rights to claim priority from, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist now or in the future in any part of the world; | |
| Joint IPR | has the meaning given in Clause 6.6; | |
| Kopin Facility | means the Kopin premises located at ***; | |
| Kopin Off-the-Shelf Products | means any standardized Kopin Product which is made commercially available for sale to the general public; |
| 4 |
| Kopin Product | means a product or product component, whether manufactured, created, or developed, and regardless of the medium through which they are delivered or consumed, owned by or licensed to Kopin and made available to the other Parties pursuant to this Agreement. For the avoidance of doubt Kopin Products may include Kopin Off-the-Shelf Products, but does not include any custom design defense or industrial products owned by or licensed to Kopin; | |
| Licensed Products | means the Company Products and the Kopin Products; | |
| month | means a calendar month; | |
| Pre-Existing IPR | means any and all Intellectual Property Rights owned by or licensed to a Party as at the Commencement Date; | |
| Product | means a Company Product, a Kopin Product or a Theon Product (as applicable); | |
| Project | means a project agreed by Kopin and Theon (and the Company, where applicable) in accordance with Clause 9, in relation to which the relevant Parties will collaborate in accordance with this Agreement, as further described in a Project Schedule. For the avoidance of doubt, a Project may include specific market or customers opportunities or a wider program for the development of Products; | |
| Project Charges | means the charges payable by a Party to another Party in relation to a Project, as set out in a Project Schedule; | |
| Project Period | means subject to earlier termination in accordance with this Agreement, the period from the start date to the end date for a Project, as set out in a Project Schedule; | |
| Project Schedule | means a document, which may be in short or long-form, specifying particulars in relation to a particular Project, as further described in Clause 9; | |
| Restricted Territories | means any countries listed in the United States Department of State list of embargoed countries from time to time; | |
| Steering Committee | has the meaning given in the applicable Project Schedule; | |
| Territory | means all countries and jurisdictions worldwide, excluding the Restricted Territories; | |
| Theon Product | means a product or product component, whether manufactured, created, or developed, and regardless of the medium through which they are delivered or consumed, owned by or licensed to Theon and made available to the other Parties pursuant to this Agreement; and | |
| Working Hours | means 9.30 am to 5.30 pm in the relevant location on a Business Day. |
| 5 |
| 1.2 | Clause, Schedule and paragraph headings shall not affect the interpretation of this Agreement. |
| 1.3 | The Schedules form part of this Agreement and shall have effect as if set out in full in the body of this Agreement. Any reference to this Agreement includes the Schedules and any Project Schedule agreed in accordance with Clause 9. |
| 1.4 | References to clauses and Schedules are to the clauses and Schedules of this Agreement and references to paragraphs are to paragraphs of the relevant Schedule. |
| 1.5 | A reference to this Agreement or to any other agreement or document referred to in this Agreement is a reference to this Agreement or such other agreement or document as varied or novated (in each case, other than in breach of the provisions of this Agreement) from time to time. |
| 1.6 | A person includes a natural person, corporate or unincorporated body (whether or not having separate legal personality) and that person’s personal representatives, successors and permitted transferees. |
| 1.7 | A reference to a company shall include any company, corporation or other body corporate, wherever and however incorporated or established. |
| 1.8 | Unless the context otherwise requires, words in the singular shall include the plural and in the plural shall include the singular. |
| 1.9 | Unless the context otherwise requires, a reference to one gender shall include a reference to the other genders. |
| 1.10 | This Agreement shall be binding on and enure to the benefit of, the Parties to this Agreement and their respective successors and permitted transferee and references to a Party shall include that Party’s successors and permitted transferees. |
| 1.11 | Unless otherwise provided, a reference to a law is a reference to it as amended, extended or re-enacted from time to time provided that, as between the Parties, no such amendment, extension or re-enactment made after the date of this Agreement shall apply for the purposes of this Agreement to the extent that it would impose any new or extended obligation, liability or restriction on, or otherwise adversely affect the rights of, any Party. |
| 1.12 | A reference to a law shall include all subordinate legislation made from time to time under that law. |
| 1.13 | A reference to writing or written excludes fax and email (unless otherwise expressly provided in this Agreement). |
| 1.14 | Any obligation on a Party not to do something includes an obligation not to allow that thing to be done. |
| 1.15 | Any statement is qualified by the expression so far as a Party is aware or to a Party’s knowledge (or any similar expression) shall be deemed to be given to the best of the knowledge, information and belief of that Party after it has made due and careful enquiry. |
| 1.16 | Any words following the terms including, include, in particular, for example or any similar expression shall be construed as illustrative and shall not limit the sense of the words, description, definition, phrase or term preceding those terms. |
| 1.17 | Where the context permits, other and otherwise are illustrative and shall not limit the sense of the words preceding them. |
| 6 |
| 1.18 | Any reference to this Agreement terminating shall, where the context requires, include a reference to this Agreement terminating by expiry. |
| 2. | CONTRACTing STRUCTURE |
| 2.1 | The Parties may enter into Project Schedules under this Agreement to outline specific product development programs and project-specific work. Each Project Schedule shall detail the scope, deliverables, timelines, and any other relevant terms for the Project as determined by the relevant project managers. |
| 2.2 | Each Project Schedule shall be part of this Agreement and shall not form a separate contract to it. |
| 2.3 | In the event of any conflict between the terms of this Agreement and those of a Project Schedule, the terms and conditions of this Agreement shall take precedence. However, if a Project Schedule explicitly states otherwise, the conflicting terms in the Project Schedule shall prevail (in respect of that specific Project Schedule only) to the extent of the inconsistency. |
| 3. | Marketing, advertising and promotion |
| *** | |
| 4. | Product sUpply & MANUFACTURE |
| *** | |
| 5. | SELLER Obligations |
| 5.1 | Kopin agrees to manufacture or otherwise procure and sell to the Company and/or Theon (as applicable), the Kopin Products, subject to the terms of this Agreement, for distribution by the Company and/or Theon in the Territory, either as standalone Products or as Combined Products. Any such sales shall be subject to: (a) payment of the Fees; and (b) any applicable commercial terms agreed in a Project Schedule. |
| 5.2 | The Company agrees to manufacture or otherwise procure and sell to Theon, the Licensed Products, subject to the terms of this Agreement, for distribution by Theon in the Territory, either as standalone Products or as Combined Products. Any such sales shall be subject to: (a) payment of the Fees; and (b) the any applicable commercial terms agreed in a Project Schedule. |
| 5.3 | To the extent expressly agreed and applicable under a Project Schedule, Theon agrees to manufacture or otherwise procure and sell to Kopin, the Theon Products and Combined Products, subject to the terms of this Agreement, for distribution by Kopin in the United States of America, either as standalone Products or as Combined Products. Any such sales shall be subject to: (a) payment of the Fees; and (b) any applicable commercial terms agreed in a Project Schedule. For clarity, Theon may purchase Products and Product components from third party vendors and suppliers in case of better pricing at arm’s length. |
| 5.4 | Production and manufacture as described in Clauses 5.1 and 5.2 and 5.3 above shall be driven by purchase orders. |
| 5.5 | Upon the completion of the manufacture described in Clauses 5.1 and 5.2 and 5.3 above, ownership shall transfer to the purchasing Party Ex Works, as defined by Incoterms 2020 (International Commercial Term). The purchasing Party shall be responsible for arranging the delivery of the relevant Product, such delivery to occur within ten (10) days following the completion of manufacture. |
| 5.6 | The purchasing Party shall inspect any Product promptly upon receipt and notify the selling Party of any damage, loss or other failure to meet the order quantity or any failure to comply with the specifications for the Products (collectively, a “Defect”). In the event any Products sold to the purchasing Party has (i) any obvious Defect and the selling Party is notified of such Defect within thirty (30) days of the purchasing Party’s receipt of the Products, or (ii) any non-obvious or latent Defect and the selling Party is notified of such Defect within thirty (30) days of the purchasing Party becoming aware of the Defect, the purchasing Party shall have the right to reject the Products that have the Defect, including by returning such Products to the selling Party at the selling Party’s cost. |
| 5.7 | Theon shall obtain at its own expense all third party licenses, permits and consents necessary for its sale of the Licensed Products and Combined Products in the Territory. |
| 5.8 | In respect of a Party which is undertaking sales activity with the ultimate customer pursuant to this Agreement (the “Seller”), the Seller shall not: |
| (a) | represent itself as an agent of the other Parties for any purpose; | |
| (b) | pledge either of the other Parties’ credit; |
| 7 |
| (c) | give any condition or warranty on either of the other Parties’ behalf; | |
| (d) | make any representation on either of the other Parties’ behalf; | |
| (e) | commit either of the other Parties to any contracts; | |
| (f) | otherwise incur any liability for or on behalf of either of the other Parties; | |
| (g) | where Theon is the Seller, without Kopin’s written consent, make any promises or guarantees about the Licensed Products beyond those agreed in writing with Kopin; or | |
| (h) | where the Company or Kopin (if applicable) is the Seller, without Theon’s written consent, make any promises or guarantees about the Theon Products (if applicable) or Combined Products beyond those agreed in writing with Theon. |
| 5.9 | The Seller shall manage and execute all sales activities related to the Product, ensuring compliance with Applicable Laws. |
| 5.10 | The Seller shall provide and honor warranties for the Product as required by law and as specified in any agreements with customers. |
| 5.11 | The Seller is responsible for providing any necessary service or support related to the Product, including but not limited to maintenance, repairs, and customer service. |
| 5.12 | The Seller is responsible for the collection of accounts receivable arising from the sale of the Product. This includes managing invoicing, payment processing, and any necessary follow-up actions to ensure timely payment. |
| 5.13 | The Seller shall bear the cost of all returns from customers relating to the Products it distributes. |
| 6. | LICENSING |
| *** | |
| 7. | Additional License obligations |
| 7.1 | Except as expressly provided under this Agreement, nothing in this Agreement shall be construed as a transfer of ownership of any Intellectual Property Rights. |
| 7.2 | No Party shall sublicense, assign, or otherwise transfer the licenses granted herein without the prior written consent of ***% of the Company’s shareholders. Notwithstanding the foregoing, Theon may sublicense any right or license granted to it hereunder to any of its Affiliates solely to the extent necessary for the design or manufacture of Combined Products under this Agreement. |
| 7.3 | No licensee Party shall directly or indirectly assist any other person to do or omit to do anything to diminish any Intellectual Property Rights licensed to it by the licensor Party hereunder. |
| 7.4 | Each Party acknowledges and agrees that the exercise of the licenses granted to it under this Agreement are subject to all applicable laws, enactments, regulations and other similar instruments in the Territory, and each Party understands and agrees that it shall at all times be solely liable and responsible for such due observance and performance. |
| 7.5 | A licensee Party shall immediately notify the licensor Party in writing giving full particulars if any of the following matters come to its attention: |
| (a) | any actual, suspected or threatened infringement of any of the Intellectual Property Rights licensed to it by the licensor Party hereunder; | |
| (b) | any claim made or threatened that the applicable Product infringes the rights of any third party; or | |
| (c) | any other form of attack, charge or claim to which any of the Intellectual Property Rights licensed to it by the licensor Party hereunder may be subject. |
| 7.6 | In respect of any of the matters listed in Clause 7.5: |
| (a) | the licensor Party shall, at their absolute discretion, decide what action to take, if any; | |
| (b) | the licensor Party shall have exclusive control over and conduct of all claims and proceedings; |
| 8 |
| (c) | the licensee Party shall not make any admissions other than to the licensor Party and shall provide the licensor Party with assistance that the licensor Party may reasonably require in the conduct of any claims or proceedings, at the sole cost of the licensor Party; and | |
| (d) | the licensor Party shall bear the cost of any proceedings and shall be entitled to retain all sums recovered in any action for their own account. |
| 8. | Patent Maintenance |
| 8.1 | Each Party shall be responsible for maintaining its own patents and patent applications, including the payment of all necessary fees and compliance with applicable laws and regulations. |
| 8.2 | If a Party intends to abandon any of its patents or patent applications that are relevant to any Project Schedule, it must provide written notice to the other Party at least thirty days prior to the intended abandonment date. Upon receiving notice of abandonment, the other Party shall have the option to assume responsibility for maintaining the patent. This option must be exercised by providing written notice to the abandoning Party within thirty days of receiving the abandonment notice. |
| 8.3 | If the option in Clause 8.2 is exercised, the abandoning Party shall take all necessary steps to transfer the ownership and other rights and responsibilities of the patent or patent application to the other Party, including executing any required documents. |
| 8.4 | The Party assuming maintenance of the patent or patent application shall bear all costs and expenses associated with its maintenance from the date of transfer. |
| 9. | PROJECTS |
| 9.1 | The Parties agree that the terms of this Agreement shall apply when either Kopin or Theon (proposing party) wishes to propose to either Kopin or Theon (as applicable) (a receiving party) a Project. |
| 9.2 | A proposing party may submit a proposal for a proposed Project at any time. The proposal shall contain high level details of the proposed Project, including an indication of the Parties’ likely respective Inputs and any Charges the proposing party intends to make for its own Inputs (if applicable). |
| 9.3 | On receipt of a proposal, the receiving party shall consider it, provide the proposing party with their comments and Kopin and Theon shall then discuss whether they wish to formalize the proposal so that it becomes a Project. Either Kopin or Theon may, in its absolute discretion, decline to agree to formalize a proposal into a Project. |
| 9.4 | In order to formalize a proposal into a Project: (a) either party may submit to the other a draft Project Schedule; and (b) each relevant Party may sign the Project Schedule or decline to do so. A Project Schedule shall not have operative effect under this Agreement unless it is signed by each relevant Party Parties. Once signed by all relevant Parties, a Project Schedule becomes part of the Agreement. |
| 9.5 | In the event that the Parties are unable to reach an agreement on the Project Schedule, the matter shall be escalated in accordance with Clause 24. The Parties agree to engage in good faith negotiations to resolve any disagreements and to adhere to the procedures outlined in Clause 24 to facilitate a timely and amicable resolution. |
| 9 |
| 9.6 | Unless terminated earlier in accordance with this Agreement, each Project Schedule has contractual effect during the term identified in the Project Schedule. The termination or expiry of this Agreement shall not affect the validity or enforceability of any Project Schedule that is in effect at the time of such termination or expiry, unless otherwise agreed by Kopin and Theon in writing. |
| 9.7 | Each Party shall in relation to the obligations allocated to it in a Project Schedule agreed in accordance with this clause: |
| (a) | perform such obligations, including by providing the Inputs in accordance with timeframes or milestones (if any) specified in the Project Schedule; | |
| (b) | use reasonable care and skill in performing such obligations; | |
| (c) | comply with good industry practice; | |
| (d) | comply with all laws applicable to it; | |
| (e) | obtain and maintain consents, licenses and permissions (statutory, regulatory, contractual or otherwise) that are necessary to enable it to comply with such obligations; | |
| (f) | ensure that the Inputs it provides conform with descriptions and specifications (if any) set out in the applicable Project Schedule; and | |
| (g) | if on another Party’s premises, comply with that Party’s health and safety and site regulations made known to it. |
| 9.8 | Each Party shall ensure that it uses employees in performing its obligations under a Project Schedule who are suitably qualified and experienced. |
| 9.9 | Theon may perform its obligations under this Agreement by Theon Affiliates. |
| 9.10 | If the Parties intend to include language in a Project Schedule which varies or takes priority over any provision of this Agreement, such Project Schedule must be approved by the managing directors of both Kopin and Theon. |
| 10. | FEES AND CHARGES |
| 10.1 | Charges. |
| (a) | Except as provided for in Clause 10.1(b) and except for Fees for any Products (and Product components), each Party shall: |
| (i) | not be entitled to charge the other Parties for the provision of anything (including Inputs) it provides in connection with each Project and this Agreement; and | |
| (ii) | be otherwise responsible for its own costs incurred in connection with each Project and this Agreement, including all Inputs it provides. |
| (b) | If a Project Schedule provides that a Party is responsible for paying another Party any Charges, such Charges shall be invoiced and paid for in the currency specified in the Project Schedule in accordance with Clause 11. |
| 10 |
| 10.2 | Fees. |
| (a) | Fees for any Products (and Product components) purchased by the Parties in accordance with Clauses 5.1 and 4.1 shall be calculated in accordance with the applicable Project Schedule(s), including any Appendix Pricing therein. |
| 11. | Invoicing and payment |
| 11.1 | A Party shall pay the net amount of any invoice issued to it in accordance with this Agreement within 30 (thirty) days of the date of the invoice issuance. |
| 11.2 | If a Party fails to make a payment due to another Party under this Agreement by the due date, then, without limiting that Party’s remedies under this Agreement, the defaulting Party shall pay interest on the overdue sum from the due date until payment of the overdue sum, whether before or after judgment. |
| 11.3 | Interest under this clause will accrue at the lesser of the rate of *** (***%) per month or the highest rate permissible under applicable law, calculated daily and compounded monthly. The interest rate applied shall not exceed the maximum rate permitted by applicable law. In the event that the interest rate specified herein exceeds the maximum rate allowed by law, the interest rate shall be automatically reduced to the maximum rate permitted. |
| 11.4 | In relation to payments disputed in good faith, interest under this clause is payable only after the dispute is resolved on sums found or agreed to be due, from 30 (thirty) days after the dispute is resolved until payment. |
| 12. | Confidentiality |
| 12.1 | Confidential Information means all confidential information (however recorded or preserved) disclosed by a Party or its Representatives (defined below) (the “Discloser”) to another Party or its Representatives (the “Recipient”) in connection with this Agreement, including: |
| (a) | the existence and terms of this Agreement or any agreement entered into in connection with this Agreement; | |
| (b) | all other know-how relating to the manufacture or sale of the Products; and | |
| (c) | any information (whether or not technical) that would be regarded as confidential by a reasonable business person. |
| 12.2 | Representatives means, in relation to a Party, its employees, officers, contractors, subcontractors, representatives and advisers. |
| 12.3 | The provisions of this clause shall not apply to any Confidential Information that: |
| (a) | is or becomes generally available to the public (other than as a result of its disclosure by the Recipient in breach of this clause); | |
| (b) | was available to the Recipient on a non-confidential basis before disclosure by the Discloser; | |
| (c) | was, is or becomes available to the Recipient on a non-confidential basis from a person who, to the Recipient’s knowledge, is not bound by a confidentiality agreement with the Discloser or otherwise prohibited from disclosing the information to the Recipient; | |
| (d) | Kopin and Theon agree in writing is not confidential or may be disclosed; or |
| 11 |
| (e) | is developed by or for the Recipient independently of the information disclosed by the Discloser. |
| 12.4 | The Recipient shall keep the Discloser’s Confidential Information secret and confidential and shall not: |
| (a) | use such Confidential Information except for the purpose of exercising or performing its rights and obligations under or in connection with this Agreement (the “Permitted Purpose”); or | |
| (b) | disclose such Confidential Information in whole or in part to any third party, except as expressly permitted by this Clause 12. |
| 12.5 | The Recipient may disclose the Confidential Information to those of its Representatives who need to know such Confidential Information for the Permitted Purpose, provided that: |
| (a) | it informs such Representatives of the confidential nature of the Confidential Information before disclosure; and | |
| (b) | it procures that its Representatives shall, in relation to any Confidential Information disclosed to them, comply with the obligations set out in this clause as if they were a party to this Agreement, | |
| (c) | and at all times, it is liable for the failure of any Representatives to comply with the obligations set out in this clause. |
| 12.6 | The Recipient may disclose Confidential Information to the extent such Confidential Information is required to be disclosed by law, by any governmental or other regulatory authority or by a court or other authority of competent jurisdiction provided that, to the extent it is legally permitted to do so, it gives the Discloser as much notice of the disclosure as possible and, where notice of disclosure is not prohibited and is given in accordance with this Clause 12.6, it considers in good faith the reasonable requests of the Discloser in relation to the content of the disclosure. |
| 12.7 | On termination of this Agreement, unless such things are needed by a Party to perform its obligations under a Project Schedule (and only until the end of such time), the Recipient shall: |
| (a) | destroy or return to the Discloser all documents and materials (and any copies) containing, reflecting, incorporating or based on the Discloser’s Confidential Information; | |
| (b) | erase all the Discloser’s Confidential Information from computer and communications systems and devices used by it, including such systems and data storage services provided by third parties (to the extent technically and legally practicable); and | |
| (c) | certify in writing to the Discloser that it has complied with the requirements of this clause, |
provided that the Recipient may: (a) retain documents and materials containing, reflecting, incorporating or based on the Discloser’s Confidential Information to the extent required by law or any applicable governmental or regulatory authority; and (b) retain copies of the Discloser’s Confidential Information to comply with the Recipient’s established document retention policies. The provisions of this clause shall continue to apply to any such documents and materials retained by the Recipient, subject to Clause 19.
| 12.8 | The provisions of this Clause 12 shall continue to apply after the expiry or earlier termination of this Agreement. |
| 12 |
| 13. | Customers |
| 13.1 | Each Party agrees that it has no right to bind the other Parties in contract or otherwise in relation to any customers of any Party and it shall not represent that it has such right. |
| 13.2 | Nothing in this Agreement constitutes one Party a partner, employer, employee or agent of another Party in relation to a Party’s customers. |
| 13.3 | No Party may provide to any of its customers any information, or make any representation, relating to another Party’s products or services, unless that information or representation is approved in writing by that Party for use in those circumstances. |
| 14. | Warranties |
| 14.1 | Each Party represents and warrants that: |
| (a) | it has the corporate power and authority to enter into and consummate the transactions contemplated by this Agreement and to carry out its obligations hereunder and thereunder. The execution, delivery and performance of this Agreement by it and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized. This Agreement has been duly and validly executed and delivered by it thereto and, assuming due authorization, execution and delivery by the Parties, this Agreement is a valid and binding obligation of the Party enforceable against it in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles). No other corporate proceedings are necessary for the execution and delivery by the Party of this Agreement, and no other corporate proceedings are necessary for the performance by the Party of its obligations hereunder and thereunder or the consummation by it of the transactions contemplated hereby or thereby. | |
| (b) | neither the execution, delivery and performance by it of this Agreement, nor the consummation of the transactions contemplated hereby and thereby, nor compliance by it with any of the provisions hereof, will (i) violate, conflict with, or result in a material breach of any provision of, require any payment to or consent by any person under, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any lien upon any of the material properties or assets of any of its group companies or (B) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which any of that Party’s group of companies is a party or by which it may be bound, or to which any of that Party’s group of companies or any of the properties or assets of any of that Party’s group of companies may be subject, or (ii) violate any law, statute, ordinance, rule, regulation, permit, franchise or any judgment, ruling, order, writ, injunction or decree applicable to any of that Party’s group of companies or any of its respective properties or assets, except in the case of clause (i)(A) or (B), for such violations, conflicts and breaches as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect or prevent, prohibit or restrict the issuance of the Series A Convertible Preferred Stock in accordance with the terms of the Series A Convertible Preferred Stock Purchase Agreement entered into between Kopin and Theon on 11 August 2025; |
| 13 |
| (c) | its entry into and performance under the terms of this Agreement will not infringe, misappropriate, or otherwise violate the Intellectual Property Rights of any third party or cause it to be in breach of any obligations to a third party; and | |
| (d) | so far as it is aware, all information, data and materials provided by it under this Agreement are accurate and complete in all material respects at the date on which they are given, and it is entitled to provide such information, data and materials to the other Parties without recourse to any third party. |
| 14.2 | Except as expressly provided in this Agreement, there are no conditions, warranties or other terms binding on the Parties with respect to the actions contemplated by this Agreement. Any condition, warranty or other term in this regard that might otherwise be implied or incorporated into this Agreement, whether by law or otherwise, is, to the extent that it is lawful to do so, excluded by this Agreement. |
| 15. | Indemnity |
| 15.1 | In this clause, a reference to an indemnified party shall include that Party’s subsidiaries, and the provisions of this clause shall be for the benefit of that Party and each such subsidiary, and shall be enforceable by each such subsidiary, in addition to the Party. |
| 15.2 | Each Party (indemnifying party) shall indemnify the other Parties (each an indemnified party) against all liabilities, costs, expenses, damages and losses (including but not limited to any direct, indirect or consequential losses, loss of profit, loss of reputation and all interest, penalties and legal costs (calculated on a full indemnity basis) and all other reasonable professional costs and expenses) suffered or incurred by the indemnified party (collectively, “Losses”) arising out of or in connection with: (a) any thirty party claim made against the indemnified party relating to any Products or Product components purchased from the indemnifying party; (b) the indemnifying Party’s gross negligence, willful misconduct or fraud with respect to this Agreement; (c) any thirty party claim made against the indemnified party for actual or alleged infringement, misappropriation, or other violation of a third party’s Intellectual Property Rights arising out of or in connection with the indemnified party’s use in accordance with this Agreement of Intellectual Property Rights licensed to it by the indemnifying party under this Agreement; and (d) the indemnifying Party’s breach of this Agreement (including any representations, warranties or covenants hereunder); in each case, except to the extent such Losses arise out of the gross negligence, willful misconduct, fraud, or breach of this Agreement by the indemnified party or any of its Representatives. |
| 15.3 | If any third party makes a claim, or notifies an intention to make a claim, against the indemnified party which may reasonably be considered likely to give rise to a liability under this indemnity (“Claim”): |
| (a) | the indemnified party will give the indemnifying party written notice of such Claim setting forth in reasonable detail the facts and circumstances surrounding the Claim, provided that any failure or delay to give the indemnifying party written notice shall not relieve the indemnifying party of its indemnification obligations, except and only to the extent the indemnifying party is actually prejudiced thereby; | |
| (b) | the indemnified party shall have the right to participate in the defense of any relevant proceeding at its expense with counsel it selects; | |
| (c) | the indemnifying party shall immediately assume the full control of the defense or settlement of such proceeding, including the selection and employment of counsel, and shall pay all authorized and documented costs of such defense; and | |
| (d) | the indemnifying party may not, without the prior written consent of the indemnified party (such consent not to be unreasonably withheld, conditioned, or delayed), (i) settle or compromise any such Claim or enter into a consent judgment other than monetary damages that are paid in full by the indemnifying party or (ii) make any admission or agree to any finding of wrongdoing, violation of Applicable Law or violation of the rights of any third party with respect to the indemnified party. |
| 14 |
| 15.4 | If a payment due from the indemnifying party under this clause is subject to Tax, the indemnified party shall be entitled to receive from the indemnifying party such amounts as shall ensure that the net receipt, after Tax, to the indemnified party in respect of the payment is the same as it would have been were the payment not subject to Tax. |
| 15.5 | Nothing in this clause shall restrict or limit the indemnified party’s general obligation at law to mitigate a loss it may suffer or incur as a result of an event that may give rise to a claim under this indemnity. The indemnified party shall use commercially reasonable efforts to mitigate relevant Losses. |
| 16. | Insurance |
| 16.1 | During the Term and for a period of five (5) years thereafter, each Party to this Agreement shall maintain, at its own expense, insurance coverage that is reasonably appropriate and sufficient to cover its obligations and liabilities under this Agreement and shall, on another Party’s request produce both the insurance certificate giving details of cover and the receipt for the current year’s premium. In the event of any cancellation or material change in coverage, the affected Party shall notify the other Parties promptly and take all necessary steps to maintain continuous coverage. |
| 16.2 | Failure to maintain the required insurance coverage or to provide proof of such coverage upon request shall constitute a material breach of this Agreement. |
| 17. | Limitation and exclusion of liability |
| 17.1 | Nothing in this Agreement shall limit or exclude a Party’s liability: |
| (a) | for death or personal injury caused by its negligence, or that of its employees, agents or sub-contractors; | |
| (b) | for fraud or fraudulent misrepresentation; | |
| (c) | for breach of any obligation as to title or quiet possession implied by law with respect to any Product sold by it; | |
| (d) | for any other act, omission, or liability which may not be limited or excluded by law; | |
| (e) | for breach of any of the confidentiality obligations in Clause 12; or | |
| (f) | under the indemnities in Clause 15. |
| 17.2 | Subject to Clause 17.1, IN NO EVENT SHALL ANY PARTY BE LIABLE FOR ANY SPECIAL, PUNITIVE, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR EXEMPLARY DAMAGES, OR DAMAGES FOR LOSS OF DATA, PROFITS, INTEREST, OR REVENUE OR ANY INTERRUPTION OF BUSINESS, IN CONNECTION WITH, ARISING FROM OR IN RELATION TO THIS AGREEMENT, WHETHER BASED ON WARRANTY, CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY), BREACH OF STATUTORY DUTY, OR ANY OTHER LEGAL OR EQUITABLE GROUNDS, AND REGARDLESS OF WHETHER SUCH DAMAGES ARE FORESEEABLE OR WHETHER SUCH PARTY IS ADVISED OF THE POSSIBILITY OR LIKELIHOOD OF SUCH DAMAGES. |
| 15 |
| 17.3 | Subject to Clause 17.1, and except as provided in Clause 17.4, a Party’s total liability to each other Party, whether in contract, tort (including negligence), breach of statutory duty, or otherwise, arising under or in connection with this Agreement shall be limited to ten million US dollars ($10,000,000). |
| 17.4 | Subject to Clause 17.1, a Party’s total liability to each other Party, whether in contract, tort (including negligence), breach of statutory duty, or otherwise, arising under or in connection with this Agreement, in respect of issues arising from a Product or Product component of the first Party shall be limited to the total revenues generated from the sale of the specific Product or Product component to the second Party during the twelve (12) months immediately preceding the event giving rise to the claim. |
| 17.5 | The Parties expressly agree that if any limitation or provision contained or expressly referred to in this Clause 17 is held to be invalid, illegal or unenforceable under any applicable law, it shall, to that extent, be deemed omitted in accordance with Clause 25.6. |
| 18. | TERM AND Termination |
| 18.1 | The initial term of this Agreement shall be ten (10) years, commencing on the Commencement Date (the “Term”). |
| 18.2 | The Parties may terminate this Agreement by mutual written agreement. |
| 18.3 | Without affecting any other right or remedy available to it, either Kopin or Theon may terminate this Agreement with immediate effect by giving written notice to the other Parties: |
| (a) | if a Party sells all of its interest in the Company (other than a sale to an Affiliate of that Party); | |
| (b) | if one of the other Parties commits a material breach of any term of this Agreement which breach is irremediable or (if such breach is remediable) fails to remedy that breach within a period of sixty (60) days after being notified in writing to do so; and | |
| (c) | if one of the other Parties repeatedly breaches any of the terms of this Agreement in such a manner as to reasonably justify the opinion that its conduct is inconsistent with it having the intention or ability to give effect to the terms of this Agreement. |
| 19. | Consequences of termination |
| 19.1 | On termination of this Agreement, the following clauses shall continue in force: |
| (a) | Clause 1 (Definitions and Interpretation); | |
| (b) | Clause 6.6 (Jointly Developed Intellectual Property Rights); | |
| (c) | Clause 11 (Invoicing and payment); | |
| (d) | Clause 12 (Confidentiality); | |
| (e) | Clause 14.1(b) and Clause 14.2 (Warranties); | |
| (f) | Clause 15 (Indemnity); | |
| (g) | Clause 16 (Insurance); | |
| (h) | Clause 17 (Limitation and exclusion of liability); | |
| (i) | Clause 19 (Consequences of termination); |
| 16 |
| (j) | Clause 20 (Force majeure); | |
| (k) | Clause 23 (Notices); | |
| (l) | Clause 25.6 (Unenforceable provisions); | |
| (m) | Clause 25.13 (No partnership); | |
| (n) | Clause 25.9 (Waiver); | |
| (o) | Clause 25.9 (Rights and remedies); | |
| (p) | Clause 25.10 (Third party rights); | |
| (q) | Clause 25.4 (Entire agreement); | |
| (r) | Clause 24 (Governing law and jurisdiction); and | |
| (s) | any other Clause, covenant, term or condition set forth herein that are intended or by their terms have effect after the termination of this Agreement. |
| 19.2 | Termination of this Agreement shall not affect any rights, remedies, obligations or liabilities of the Parties that have accrued up to the date of termination, including the right to claim damages in respect of any breach of the Agreement which existed at or before the date of termination. |
| 19.3 | Any notice to terminate the Agreement in accordance with Clause 18 shall have effect from the termination or expiry of the last Project Schedule. |
| 19.4 | In the event of termination of this Agreement, the Parties agree to enter into a run-off period, during which the Parties shall: (a) ensure that all existing sales, warranty and service obligations to customers, as of the date of termination, are fully met and (b) ensure that Theon is entitled to finalize manufacture of any ordinary course in-process Combined Products and sell any Combined Products in Theon inventory as of the date of termination. This includes fulfilling any outstanding orders, services, or commitments that were agreed upon prior to the termination date. The run-off period shall commence on the date of termination and shall continue until the later of: (i) all existing customer obligations at the time of the notice to terminate have been satisfactorily fulfilled, or (ii) six (6) months from the time of the notice to terminate. The terms of this Agreement (including any relevant licenses to Intellectual Property Rights) shall continue in force until the completion of any such run-off period. The Parties agree to cooperate in good faith to ensure a smooth transition and fulfilment of all existing obligations during the run-off period. |
| 20. | Conflicts of Interest |
| 20.1 | The Steering Committee shall identify potential or actual conflicts of interest between the Parties. Each Party is obligated to promptly notify the Steering Committee of any such conflicts. |
| 20.2 | The Steering Committee shall develop and implement procedures to resolve conflicts of interest in a manner that is fair and equitable to all Parties. The Steering Committee shall strive to reach a consensus on all decisions. Where a consensus cannot be reached the matter shall be escalated to the Company’s board for determination. |
| 20.3 | The Steering Committee shall maintain records of all conflicts identified and the resolutions reached. The Steering Committee shall provide periodic reports to the Parties, detailing the conflicts addressed and the outcomes. |
| 17 |
| 21. | Force majeure |
| 21.1 | No Party shall be in breach of this Agreement or a Project Schedule nor liable for delay in performing, or failure to perform, any of its obligations under this Agreement or a Project Schedule if such delay or failure result from events, circumstances or causes beyond its reasonable control. In such circumstances the time for performance shall be extended by a period equivalent to the period during which performance of the obligation has been delayed or failed to be performed. The Parties shall, in good faith, endeavor to find a workaround to achieve the closest possible outcome to the original obligations under this Agreement during the period of delay or non-performance. |
| 22. | Existing arrangements |
| 22.1 | Subject to Clause 14, nothing in this Agreement shall restrict any Party’s right to continue to conduct its business activities or arrangements that existed on the Commencement Date or that otherwise come into being outside the scope of this Agreement. |
| 23. | NOTICES |
| 23.1 | Any notice in connection with this Agreement shall be in writing in English and delivered by hand, registered post or courier using an internationally recognized courier company or email to the address or email address (as the case may be) specified in Clause 23.4 or to such other address or email address as the relevant Party may from time to time specify by notice to the other Parties given in accordance with this Clause. |
| 23.2 | In the absence of evidence of earlier receipt, a notice shall be deemed given and received: |
| (a) | in the case of personal delivery by hand or courier, at the time of delivery; or | |
| (b) | in the case of first class post (other than airmail) or recorded delivery, at 10:00 am on the second Business Day after posting; | |
| (c) | in the case of airmail, at 10:00 am on the fifth Business Day after posting; and | |
| (d) | in the case of email, at the time the email containing or attaching the notice was sent as recorded on the email account on the sender’s machine, provided that receipt shall not occur if the sender receives an automated message indicating that the message has not been delivered to the recipient. |
| 23.3 | For the purpose of this Clause 23: |
| (a) | all times are to be read as local time in the place of deemed receipt; and | |
| (b) | if deemed receipt occurs outside of Working Hours, the notice shall be deemed to have been received at 10:00 am on the next Business Day in the place of receipt. |
| 23.4 | The relevant details of each Party at the date of this Agreement are: |
| In relation to Kopin | In relation to Theon | |
| Address: [●] | Address: [●] | |
| Attention: [●] | Attention: [●] | |
| [Email: [●]] | [Email: [●]] | |
| [With a copy to: [●]] | [With a copy to: [●]] | |
| In relation to the Company | ||
| Address: [●] | ||
| Attention: [●] | ||
| [Email: [●]] | ||
| [With a copy to: [●]] |
| 18 |
| 23.5 | Should a Party fail to notify another Party of any change to its address or email in accordance with Clause 23.1, then any notice served under this Clause shall be validly served by that second Party if served to the address or email listed in Clause 23.4. |
| 24. | GOVERNING LAW AND JURISDICTION |
| 24.1 | This Agreement and any claim, dispute or difference (including non-contractual claims, disputes or differences) arising out of or in connection with it or its subject matter shall be governed by, and construed in accordance with, the laws of Delaware. |
| 24.2 | If a dispute arises out of or in connection with this Agreement or the performance, validity or enforceability of it (“Dispute”) then except as expressly provided in this Agreement, the Parties shall follow the procedure set out in this clause: |
| (a) | A Party shall give to the other Parties written notice of the Dispute, setting out its nature and full particulars (“Dispute Notice”), together with relevant supporting documents. On service of the Dispute Notice, the representatives of the Parties that have authority and experience regarding this Agreement (for Theon said representative shall be George Hadjiminas, for Kopin, Paul Baker) shall attempt in good faith to resolve the Dispute; | |
| (b) | if such representatives of the Parties are for any reason unable to resolve the Dispute within [30] days of service of the Dispute Notice, then the Dispute shall be referred to and finally resolved by arbitration under the JAMS Comprehensive Arbitration Rules, which rules are deemed to be incorporated by reference into this Clause 24. |
| 24.3 | Any arbitration initiated pursuant to or in accordance with Clause 24.2 of this Agreement shall be conducted as follows: |
| (a) | the seat, or legal place, of arbitration shall be Delaware; | |
| (b) | the language to be used in the arbitral proceedings shall be English; | |
| (c) | the number of arbitrators shall be three (3); and | |
| (d) | any award rendered by the arbitral tribunal shall be final, conclusive and binding upon the Parties. To the extent permitted by law, the Parties irrevocably waive any right to any form of appeal, review or recourse of any rendered award to any state or other judicial authority. |
| 24.4 | Judgment upon any award rendered may be entered in any court having jurisdiction. |
| 24.5 | Without prejudice to Clauses 24.2, 24.3 and 24.4, the Parties agree that the Delaware courts shall have jurisdiction (to which the Parties irrevocably submit) to grant interim and ancillary relief in support of any arbitral proceedings (whether or not actually commenced) under this Clause 24. |
| 19 |
| 25. | MISCELLANEOUS |
| 25.1 | Assignment. No Party may assign, transfer or otherwise deal with all or any part of its rights or obligations under this Agreement or any benefit arising under or out of this Agreement without the prior written consent of both Kopin and Theon (such consent not to be unreasonably withheld, conditioned, or delayed), and any purported dealing in contravention of this prohibition shall be ineffective. |
| 25.2 | Steering Committee. Within one (1) month from the Commencement Date, the Parties shall agree on the form, structure and scope of responsibility of the Steering Committee. |
| 25.3 | Third party rights. No term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement. The right of a Third Party shall be subject to the provisions of Clause 24 (Governing law and Jurisdiction). The Parties may by agreement rescind or vary any term of this Agreement without the consent of any Third Party. |
| 25.4 | Entire agreement. |
| (a) | Each of the Parties confirms that this Agreement represents the entire understanding, and constitutes the whole agreement, in relation to its subject matter and supersedes any previous agreement between the Parties with respect thereto and, without prejudice to the generality of the foregoing, excludes any warranty, condition or other undertaking implied at law or by custom, usage or course of dealing. | |
| (b) | Each Party confirms that in entering into this Agreement it has not relied on any representation, warranty, assurance, covenant, indemnity, undertaking or commitment which is not expressly set out in this Agreement. |
| 25.5 | Announcements. |
| (a) | Subject to Clause 25.5(b), no Party shall make, or permit any person to make, any public announcement, communication or circular (announcement) concerning the existence, subject matter or terms of this Agreement, the wider transactions contemplated by it (including each Project Schedule), or the relationship between the Parties, without the prior written consent of the other Parties (such consent not to be unreasonably withheld or delayed). The Parties shall consult together on the timing, contents and manner of release of any announcement. | |
| (b) | Where an announcement is required by law or any governmental or regulatory authority (including, without limitation, any relevant securities exchange), or by any court or other authority of competent jurisdiction, the Party required to make the announcement shall promptly notify the other Parties. The Party concerned shall make all reasonable attempts to agree the contents of the announcement before making it. |
| 25.6 | Unenforceable provisions. If any provision of this Agreement or the application of any such provision to any Person or circumstance shall be declared by any court of competent jurisdiction to be invalid, illegal, void or unenforceable in any respect, all other provisions of this Agreement, or the application of such provision to Persons or circumstances other than those as to which it has been held invalid, illegal, void or unenforceable, shall nevertheless remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination that any provision, or the application of any such provision, is invalid, illegal, void or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible to the fullest extent permitted by Applicable Law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the greatest extent possible. |
| 20 |
| 25.7 | No set off, deduction or counterclaim. Every payment payable by a Party under this Agreement shall be made in full without any set off or counterclaim howsoever arising and shall be free and clear of, and without deduction of, or withholding for or on account of, any amount which is due and payable to a Party under this Agreement. |
| 25.8 | Further assurance. At any time after the date of this Agreement the Parties shall, and shall use all reasonable endeavors to procure that any necessary third party shall, at the cost of the relevant Party, execute and deliver such documents and do such acts and things as that Party may reasonably require for the purpose of giving to that Party the full benefit of all the provisions of this Agreement. |
| 25.9 | Waiver. The rights and remedies of the Parties shall not be affected by any failure to exercise or delay in exercising any right or remedy or by the giving of any indulgence by any other Party or by anything whatsoever except a specific waiver or release in writing and any such waiver or release shall not prejudice or affect any other rights or remedies of the Parties. No single or partial exercise of any right or remedy shall prevent any further or other exercise thereof or the exercise of any other right or remedy. |
| 25.10 | Rights and remedies. The rights and remedies provided under this Agreement are in addition to, and not exclusive of, any rights or remedies provided by law. |
| 25.11 | Variation. No variation of this Agreement shall be valid unless it is in writing (which, for this purpose, does not include email) and signed by or on behalf of each of Kopin and Theon. The expression “variation” includes any variation, supplement, deletion or replacement however effected. Any variation of this Agreement agreed in accordance with this Clause shall be deemed to apply to all future Project Schedules entered into after the date of such variation, but shall not apply to Project Schedules already in force at that date unless such variation specifically so provides. |
| 25.12 | Counterparts. This Agreement may be executed in any number of counterparts and by the Parties to it on separate counterparts, each of which when executed and delivered shall be an original, but all the counterparts together constitute one instrument. Delivery of a counterpart of this Agreement by email attachment shall be an effective mode of delivery. In relation to each counterpart, upon confirmation by or on behalf of a Party that such Party authorizes the attachment of its counterpart signature page to the final text of this Agreement, such counterpart signature page shall take effect, together with such final text, as a complete authoritative counterpart. |
| 25.13 | No partnership. Nothing in this Agreement shall constitute any of the Parties a partner of any other, including for tax purposes, nor shall the execution, completion and implementation of this Agreement confer on any Party any power to bind or impose any obligations to any third parties on any other Party or to pledge the credit of any other Party. |
| 25.14 | Costs. Save as otherwise provided by this Agreement, each Party shall bear its own costs incurred in connection with the preparation, negotiation, entry into and performance of this Agreement and the documents to be entered into pursuant to it. |
| 25.15 | IRS Form W-8. In connection with the execution of this Agreement, and at such other time as may be reasonably request by Kopin, Theon shall provide Kopin with a properly executed IRS Form W-8BEN-E establishing for the applicable Theon Affiliates an exemption from withholding under Article 14 of the U.S. Cyprus Income Tax Treaty. |
| 25.16 | Section 365(n). The license rights granted to each Party pursuant to this Agreement (including any Project Schedule) are, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined in Section 101 of the U.S. Bankruptcy Code. If a Party granting such license rights files or has filed against it a petition for relief under the United States Bankruptcy Code, any Party receiving such license rights, as licensee of the intellectual property rights hereunder, may fully exercise all of its rights and elections under the Section 365(n) of U.S. Bankruptcy Code. |
| 21 |
EXECUTION PAGES
IN WITNESS WHEREOF this Agreement is executed on the date and year first above written.
| Kopin | ||
| EXECUTED and DELIVERED | ) | |
| /s/Michael Murray | ||
| by KOPIN CORPORATION | ) | Authorised Signatory |
| Theon | ||
| EXECUTED and DELIVERED | ) | |
| /s/ Stelios Anastasiou | ||
| By THEON INTERNATIONAL PLC | ) | Authorised Signatory |
| The Company | ||
| EXECUTED and DELIVERED | ) | |
| /s/Michael Murray | ||
| by KOPIN EUROPE LIMITED | ) | Director |
| 22 |
APPENDIX 1
***
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Prospectus constituting a part of this Registration Statement of our report dated April 16, 2025, relating to the consolidated financial statements of Kopin Corporation (the Company) appearing in the Company’s Annual Report on Form 10-K for the year ended December 28, 2024. Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.
We also consent to the reference to us under the caption “Experts” in the Prospectus.
/s/ BDO USA, P.C.
Boston, Massachusetts
November 6, 2025
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in this Registration Statement on Form S-1 of Kopin Corporation of our report dated March 14, 2024, relating to the consolidated financial statements of Kopin Corporation and its subsidiaries as of December 30, 2023 and for each of the years in the two-year period ended December 30, 2023, appearing in the Annual Report on Form 10-K of Kopin Corporation for the year ended December 28, 2024.
We also consent to the reference to our firm under the heading “Experts” in such Prospectus.
/s/ RSM US LLP
Boston, Massachusetts
November 6, 2025