Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On December 31, 2020, the Compensation Committee of the Board of Directors of
Kopin Corporation (the "Employer") approved the tenth amended and restated
employment agreement (the "Employment Agreement)" with Dr. John C.C. Fan, Chief
Executive Officer of Kopin, which became effective as of January 1, 2021 and
terminates on December 24, 2022. Pursuant to the Employment Agreement, Dr. Fan
will be paid salary at an annual rate of $600,000 per year, subject to the
Board's right to determine his salary and benefits for each subsequent year. If
prior to the expiration of the Employment Term as defined in the Employment
Agreement (i) Dr. Fan is terminated by the Employer without Cause, as defined in
the Employment Agreement, other than by reason of disability, (ii) Dr. Fan dies,
or (iii) Dr. Fan resigns for Good Reason, as defined in the Employment Agreement
within twelve (12) months following a Change in Control, as defined in the
Employment Agreement, of the Employer, Employer shall pay any prorated unpaid
cash bonus earned and accrued but unpaid vacation benefit and immediately vest
all options to purchase Employer's stock, all stock appreciation rights, all
restricted stock awards, and any other compensatory equity awards, granted by
the Employer to the Employee. Provided that Dr. Fan does not resign prior to the
end of the Employment Term and is not terminated by the Employer for Cause, the
Employer shall pay to Dr. Fan (or in the event of his death prior to completion
of all installments to his surviving spouse, or if none to his estate) a cash
retirement benefit of One Million Five Hundred Thousand Dollars ($1,500,000) in
twenty-four (24) equal monthly installments commencing with the next regularly
scheduled pay date for executives following December 24, 2022. Provided that Dr.
Fan does not resign prior to the end of the Employment Term and is not
terminated by the Employer for Cause, each January the Employer shall pay to Dr.
Fan (or in the event of his death prior to completion of all installments to his
spouse) for supplemental health coverage forty thousand dollars ($40,000) per
year commencing with January 2023 and ending with January 2032. Dr. Fan is
entitled to indemnification from claims made against him in connection with his
service to the Company. In addition, the Company will reimburse Dr. Fan for
legal expenses if he prosecutes a successful legal action against the Company to
enforce the Employment Agreement unless he is not the prevailing party. Under
the terms of the Employment Agreement Dr. Fan assigns all inventions and agrees
to a covenant not-to compete for a period of 12 months following termination.
In addition to the above Dr. Fan received two (2) grants of restricted stock of
144,422 and 144,421, respectively (the "Performance Equity Awards") - upon the
achievement of two milestones. The first milestone must be achieved by December
31, 2021 and the second by June 30, 2022. As of the Employee's Termination Date,
all rights to earn any of the Performance Equity Awards to the extent not
previously earned shall terminate. In the event of Employee's death prior to
earning the Performance Equity Awards any earned but unvested portion of the
Performance Equity Awards shall vest and be distributed to the Employee's
surviving spouse or if none to his estate. Dr. Fan was also granted five (5)
tranches of 188,000 shares of restricted stock which are to vest at the end of
the first 20 consecutive trading day period following the grant date (December
31, 2020) during which Kopin Corporation's common stock trades at various price
points of the Company's common stock. The period to achieve the stock price
milestones are from January 1, 2021 through December 31, 2023.
Dr. Fan shall also be entitled to receive an annual cash bonus and an annual
stock incentive award consistent with and subject to substantially similar
conditions as any annual cash bonuses and annual stock incentive awards granted
to other senior executives.
The foregoing description of the material terms of the Employment Agreement does
not purport to be a complete description of the Employment Agreement and is
qualified in its entirety by reference to the Employment Agreement, which will
be filed as an exhibit with the Company's Form 10-K for the 2020 fiscal year
end.
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