Joint Venture Agreement for Kopin Corporation, Bright LED, and KTC

1.

Kopin, Bright LED, and KTC will form a JV company in an oversea location such as Hong Kong, Bermuda, or British Virgin Island. This JV company will wholly own a LED Die Manufacturing company in China, and Epi Manufacturing company in Taiwan.

2.

The initial investment will be US$13M, of which Kopin and Bright LED will each contribute US$3M, and KTC will contribute $2M. The remaining US$5M will be invested by invited investors from outside. Kopin will hold 3M shares, Bright LED will hold 3M shares, KTC will hold 2M shares and the outside investors will hold 3.5M shares of the JV.

3.

The JV will set up the InGaN LED Die Manufacturing line in China to

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produce blue and green LED dies, starting with a capacity of about 30M dies per month. The JV will set up the InGaN Epi Manufacturing at KTC factory in Taiwan, with the equipments consigned to KTC. The JV will purchase the Epi wafers from KTC as OEM order.

4.

As Bright LED is consuming a large quantity of LED dies each month, Bright LED may purchase a reasonable quantity of LED dies from the JV. This will help to bring up the production capacity and give initial business to the JV. Again, to ensure competitiveness of all parties, this relationship is not compulsory. The JV is also free to sell LED dies to other customers.

5.

In case the cost structure of the JV is not competitive on the market, the three parties shall work closely to find a solution to lower the cost and make JV competitive on the market. The solution may involve technical aspects as well as management aspects.

6.

The JV should use a company name neutral to and mutually accepted by Kopin, Bright LED, and KTC.

7.

A Management Council, consisting at least of Chairman of Bright LED, Chairman of Kopin, Chairman of KTC and the President / General Manager of the JV, shall be formed to resolve the future product transfer pricing issues. The Management Council shall meet quarterly. However, in the first year of operation, the Council shall meet once every two months. The basic principle is that the JV shall sell the LED dies to Bright LED at fair market prices. The buying and sourcing shall also be open to the external customers and suppliers to make all involved parties competitive.

1.

In addition to its cash contribution as described under A.2 above, Kopin will contribute to the JV the InGaN LED Die Process and Epi know-how and technology free of charge. However, the JV will pay for the actual cost incurred during the process of transferring the technology to the JV’s China and Taiwan operation.

2.

Kopin has the responsibility for identifying technical and senior management candidates to be recruited to run the new operation. The final personnel decision will be mutual between Bright LED, KTC and Kopin.

3.

Kopin will transfer the InGaN epitaxial wafer production process and equipments to JV to be located at KTC in Taiwan. KTC will setup a technical team, with Kopin’s assistance, to conduct continuous R&D on LED epitaxial wafers and die products. A mini-size die processing front-end line should be set up at KTC for this purpose.

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4.

Kopin has existing and future Japanese and US customers. Kopin will continue to sell the LED dies to Japan and USA market, and has the marketing rights in Japan and USA for the JV. However, JV can also sell LED dies to Japan by itself, provided that the target customers are not the Kopin existing LED customers.

5.

Kopin will stop LED dies and Epi production after transfer of technologies and equipments to JV.

1.

In addition to its cash contribution as described under A.2 above, Bright LED will be responsible for setting up the factory in China, including the facilities, commercial registrations, and the initial China local operations management team. However, the JV will pay for the actual cost incurred during the setting up the factory. The final decision of these matters will be mutual between Kopin, Bright LED, and KTC.