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<SEC-DOCUMENT>0001193125-09-205671.txt : 20091214
<SEC-HEADER>0001193125-09-205671.hdr.sgml : 20091214
<ACCEPTANCE-DATETIME>20091008164623
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001193125-09-205671
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20091008

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			KOPIN CORP
		CENTRAL INDEX KEY:			0000771266
		STANDARD INDUSTRIAL CLASSIFICATION:	SEMICONDUCTORS & RELATED DEVICES [3674]
		IRS NUMBER:				042833935
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		695 MYLES STANDISH BLVD
		CITY:			TAUNTON
		STATE:			MA
		ZIP:			02780
		BUSINESS PHONE:		5088246696
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML><HEAD>
<TITLE>SEC Response Letter</TITLE>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">October&nbsp;8, 2009 </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Securities&nbsp;&amp; Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">100 F Street N.E. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Washington, D.C. 20549 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Attn: Mary Beth Breslin
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Re: Kopin Corporation Form 10-K for the year ended December&nbsp;27, 2008 </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Dear Ms.&nbsp;Breslin, </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">This letter is in response to comments received in the
letter dated September&nbsp;25, 2009 (the &#147;Letter&#148;) from you to Mr.&nbsp;Richard&nbsp;A. Sneider, Chief Financial Officer of Kopin Corporation (&#147;Kopin&#148; or the &#147;Company&#148;). The Company has reviewed the comments and the
responses of the Company are set forth below in the numbered paragraphs in the order set forth in the Letter. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Form 10-K for the year ended
December&nbsp;27, 2008 </U></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Index to Exhibits, page 80 </U></FONT></P> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">1.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">We are unable to agree with your analysis provided in response to prior comment 3 regarding the &#147;substantial dependence&#148; standard you cited for the filing of
a material contract exhibit pursuant to Item&nbsp;601(b)(10)(ii)(B). Accordingly, please provide a revised analysis supporting your conclusion that the agreement with Skyworks Solutions is not required to be filed as an exhibit. Further, please
expand your analysis to encompass revenues attributable to Advanced Wireless Semiconductor Company where AWSC resell your products to Skyworks. In this regard, we note your disclosure in the second full paragraph on page 3 of your Form 10-K that
&#147;an investor should view your sales to Skyworks Solutions and AWSC in the aggregate when evaluating the importance of Skyworks Solutions as a customer.&#148; </FONT></TD></TR></TABLE> <P
STYLE="margin-top:12px;margin-bottom:0px; margin-left:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Response</B>: We note your response and again respectfully submit that, as noted in our response letter dated September&nbsp;25, 2009,
the Skyworks contract is not a material contract required to be filed as an exhibit to our Annual Report on Form 10-K. Kopin is not &#147;substantially dependent&#148; upon the Skyworks Solutions contract for purposes of Item&nbsp;601(b)(10)(ii)(B),
and the contract does not govern the sale of the &#147;major part&#148; of our products and therefore does not need to be included as an exhibit to our Annual Report on Form 10-K. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; margin-left:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">We further note that although we indicate in our Form 10-K that it is appropriate to view our sales to Skyworks and AWSC in the aggregate
when evaluating the importance of Skyworks as a <B><I>customer </I></B><I>(</I>because we believe that AWSC&#146;s demand is being driven by orders from Skyworks<B>)</B>, our sales to AWSC are not made under the Skyworks contract and, as such, sales
of our products to AWSC have no bearing on whether the Skyworks <B><I>contract</I></B> is a material contract. The analysis whether Skyworks is a material <B><I>customer</I></B> is under Regulation S-K Item&nbsp;101(c)(vii) and is substantially
different than the analysis under Regulation S-K Item&nbsp;601(b)(10)(ii)(B) with respect to whether a potential contract is material and required to be filed as an exhibit. Regulation S-K Item&nbsp;101(c)(vii) states that a &#147;customer and its
relationship&#148; shall be disclosed if sales to the customer amount to more than 10% of revenue and &#147;loss of such customer would have a material adverse effect on
</FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">
the registrant and its subsidiaries taken as a whole.&#148; Skyworks is identified as a customer because sales to Skyworks exceeded the 10% threshold. This standard, however, is clearly different
than the exhibit inclusion test under Regulation S-K Item&nbsp;601(b)(10)(ii)(B) which states that a registrant shall include any contract as an exhibit if the registrant is &#147;substantially dependent&#148; upon such contract. While loss of
Skyworks as a <B><I>customer</I></B> could potentially have a material adverse effect on our business, our business is not substantially dependent upon the Skyworks <B><I>contract</I></B>. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; margin-left:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">In forming our conclusion we reviewed the relationship with Skyworks from several perspectives. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; margin-left:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">First from the industry perspective: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:8%"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The merchant HBT (heterojunction bipolar transistor) industry is composed of three significant suppliers, Kopin, IQE, a public company in the United Kingdom and Visual Photonic Electronic Corp. (VPEC) a
company located in Taiwan. We believe that only Kopin and VPEC are qualified to sell product to Skyworks. We believe we supply Skyworks 100% of its HBT needs. In the event the contract is terminated or not renewed we do not believe it would be
commercially reasonable for Skyworks to discontinue purchasing product from us. We believe it is more likely that Skyworks would allocate its purchases similar to our other customers. Accordingly we do not believe the loss of the contract with
Skyworks would result in the termination of the relationship and therefore our relationship with Skyworks is not &#147;substantially dependent&#148; on the contract. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:8%"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Second from our operating results perspective: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Kopin had income from operations
for the six month period ended June&nbsp;27, 2009 of $1.7 million and a loss of $1.7 million from continuing operations for the six month period ended June&nbsp;28, 2008 while Kopin&#146;s combined revenues from Skyworks and AWSC for the six month
periods ended June&nbsp;27, 2009 and June&nbsp;28, 2008, were 24% and 31%, respectively, of Kopin&#146;s total revenue. Accordingly, Kopin experienced improved operating performance during the six months ended June&nbsp;27, 2009 while during such
period revenues from Skyworks were declining. We believe that Kopin&#146;s improved operating performance, notwithstanding the lower Skyworks revenue, is further support that Kopin is not &#147;substantially dependent&#148; on the Skyworks contract.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">On the top of page 21 to our Annual Report on From 10-K, as part of our risk factor discussion we state the following:
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:13%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>&#147;We may not be able to realize any profits under a multi-year supply agreement with a significant HBT
customer.</I>&nbsp;We have a supply agreement with a significant HBT customer that expires in July 2010, excluding a last buy option contained in the agreement. Under the terms of this agreement we have agreed to maintain capacity levels for
manufacturing HBT wafers and we committed to a declining pricing schedule. The agreement also requires us to give prior notice if we exit our HBT product line. In consideration for this agreement the customer agreed to source 100% of its HBT wafer
needs from us subject to the customer&#146;s right to source HBT wafers from other sources if we are unable to meet its requirements under certain circumstances. We agreed that failure to meet our supply obligations under the agreement would allow
our customer to obtain court ordered specific performance. If we do not perform we could then be liable for monetary damages up to a maximum of $40 million. The agreement obligates us to provide wafers at preset prices and as a result, our ability
to make a profit under this agreement will be subject to fluctuations in the prices of raw materials, meeting customer wafer demand and to any increase in costs of goods or services required for us to perform under the agreement. If we are unable to
manufacture the HBT wafers below these preset prices we may not be able to achieve or maintain profitability. There can be no assurance that this customer will agree to renew or extend our agreement when it is due to expire in which case we would
potentially lose significant sales of our HBT products.&#148; </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">We include the above disclosure because while we believe that we are not &#147;substantially
dependent&#148; on the Skyworks contract so as to require inclusion of the contract as an exhibit under Regulation S-K Item&nbsp;601, we believe that a $40 million indemnity is material information to an investor and accordingly should be disclosed.
We disclose the concepts of capacity maintenance and exiting the HBT product line to provide situations where the $40 million indemnity may be triggered. It is important to note that although Skyworks has agreed to give us essentially 100% of their
HBT business, they have not guaranteed us any minimum level of orders and, in fact, their orders increase and decrease with normal industry trends. We discuss the 100% agreement clause for investors and, more importantly, for our other HBT
customers, to understand the context under which the $40 million indemnity was negotiated. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">We believe we have conveyed to
investors the important elements of the Skyworks contract. However, while we have chosen to include the above summary of terms, we do not believe that such disclosure obligates us to include the Skyworks contract as an exhibit to our Annual Report
on Form 10-K. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">In our opinion to be &#147;substantially dependent&#148; for purposes of Item&nbsp;601(b)(10)(ii)(B), implies
that Kopin&#146;s ability to remain a &#147;going concern&#148; would be in question if the Skyworks contract were not in place. As previously stated and most recently demonstrated in our operating results, Kopin would be able to continue its
overall business and its HBT operations would continue to support other customers even with a termination of the Skyworks contract. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">If you
have any further questions, please contact the undersigned at 508.824.6696. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Very truly yours,</FONT></TD></TR>
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<TD HEIGHT="16"></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2">/s/ Richard A. Sneider</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Richard A. Sneider</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Chief
Financial Officer</FONT></P></TD></TR>
</TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">cc:</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Ms. Andri Boerman, </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Mr. Joe
McCann </FONT></P>
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