[GRAPHIC OMITTED]
PPG INDUSTRIES PPG Industries, Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000 XXX
Telephone (000) 000-0000
Fax (724) 000- 0000
xxxxx@xxx.xxx
XXXXXXX X. XXXXX
Vice President, Optical Products
December 22,2004 UDC/PPG CONFIDENTIAL
Xx. Xxxxxx X. Xxxxxxxx
President
Universal Display Corporation
000 Xxxxxxxx Xxxxxxxxx
Xxxxx, XX 00000
RE: Fifth Amendment of the DEVELOPMENT AND LICENSE AGREEMENT which was
entered into and effective October 1, 2000 by and between PPG
INDUSTRIES, INC. ("PPG"), and UNIVERSAL DISPLAY CORPORATION ("UDC"),
and previously amended March 2001, December 2002, January 2003 and
April 2003 (as amended, the "Development & License Agreement").
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Dear Xx. Xxxxxxxx:
The purpose of this letter is to amend the Development & License Agreement with
regard to the notice period for non-renewal of the Initial Term or a Renewal
Term and various matters regarding the Development Team and compensation, as set
forth herein. It is the intention of the parties to negotiate and execute, on or
before [The confidential material contained herein has been omitted and has been
separately filed with the Commission.], an OLED Services Agreement for the
period 2006 through [The confidential material contained herein has been omitted
and has been separately filed with the Commission.], which will supercede both
the Development & License Agreement and the Supply Agreement entered into by the
parties effective as of October 1, 2000, as amended ("Supply Agreement"). The
parties desire to amend the Development Agreement in order to provide additional
time in which to negotiate the new OLED Services Agreement.
Therefore, intending to be legally bound, PPG and UDC hereby agree to this Fifth
Amendment of the Development & License Agreement, effective on January 1, 2005.
Except as expressly set forth herein, all capitalized terms have the meanings
given in the Development & License Agreement. Except as expressly set forth
herein, the Development & License Agreement shall remain unchanged and shall
continue in full force and effect.
Xxxxxx X. Xxxxxxxx, President UDC/PPG CONFIDENTIAL
Universal Display Corporation
December 22, 2004
Page 2
1. Article 3 of the Development & License Agreement is amended by adding a
new Article 3.7, as follows:
3.7 Notwithstanding anything to the contrary in this Agreement, for the
period from January 1, 2005 through December 31, 2005:
3.7.1 The Development Team shall report to [The confidential
material contained herein has been omitted and has been separately filed with
the Commission.], who in turn shall report to the PPG Director, Optical Products
R&D. PPG shall provide at least [The confidential material contained herein has
been omitted and has been separately filed with the Commission.], but not more
than [The confidential material contained herein has been omitted and has been
separately filed with the Commission.], full-time chemists. PPG shall make
available the part-time services of [The confidential material contained herein
has been omitted and has been separately filed with the Commission.] and [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.], subject to UDC's approval.
3.7.2 Upon 90 days' prior written notice from UDC, PPG shall
reduce the Development Team staffing level from [The confidential material
contained herein has been omitted and has been separately filed with the
Commission.] to [The confidential material contained herein has been omitted and
has been separately filed with the Commission.] full-time chemists, and all
out-of-pocket severance costs of PPG related to such reduction and incurred in
accordance with PPG's customary severance policies and procedures shall be for
UDC's account. If this Agreement terminates on December 31, 2005 and is not
renewed, all out-of-pocket severance costs of PPG related to such elimination of
the Development Team and incurred in accordance with PPG's customary severance
policies and procedures shall be for UDC's account, it being UDC's understanding
that PPG currently estimates such costs to be approximately [The confidential
material contained herein has been omitted and has been separately filed with
the Commission.]. In all such cases, PPG shall use reasonable efforts [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.] to minimize severance costs and, upon UDC's request,
assist UDC in hiring such individuals as its own employees or consultants, and
PPG hereby waives the application of Article 15.9 of the Development and License
Agreement (Non-Solicitation) in relation to any such individuals so hired by
UDC. Within 30 days after the date of a staff reduction, PPG shall provide UDC
with an invoice for the out-of-pocket severance costs that were incurred by PPG
related to such reduction, and UDC shall reimburse PPG, within 30 days of the
date of the invoice, in cash, for all such costs.
Xxxxxx X. Xxxxxxxx, President UDC/PPG CONFIDENTIAL
Universal Display Corporation
December 22, 2004
Page 3
2. Article 3A.3.2 of the Development Agreement is amended and restated as
follows:
3A.3.2 Notwithstanding anything to the contrary in this Agreement, for
the period from January 1, 2005 through December 31, 2005, PPG shall invoice UDC
for: (a) PPG's conversion costs to supply Primary Development Chemicals and
Ancillary Development Chemicals to UDC for reactor and/or purification unit time
as per Exhibit A of the Supply Agreement; (b) all analytical charges as
customarily billed by the analytical department (excluding Development Team
charges) to PPG's Optical Products business unit; and (c) in the event that PPG
enters into an agreement with [The confidential material contained herein has
been omitted and has been separately filed with the Commission.] for the supply
of OLED materials to PPG which PPG converts into Development Chemicals supplied
to UDC hereunder, and in lieu of invoicing UDC for such costs under Article
3A.3.1, PPG's out-of-pocket cost to purchase such OLED materials multiplied by
[The confidential material contained herein has been omitted and has been
separately filed with the Commission.]. PPG shall use reasonable efforts to
minimize all of the costs and charges under (a) through (c) above without
reducing the quality of services and materials provided to UDC. In addition, PPG
shall provide UDC with such reports and other supporting documentation as UDC
may reasonably request in connection with monitoring such costs and charges and
PPG's efforts to reduce the same.
3. Article 3A.3.3 of the Development Agreement is amended and restated as
follows:
3A.3.3 (a) Costs set forth Article 3A.3.2(a) shall be reported to UDC
monthly and invoiced quarterly within 15 days following the close of each
calendar quarter, with payment due 15 days from the date of the invoice. The
form of payment shall be 100% in cash, or at UDC's option, a combination of cash
and stock calculated as follows: (a) the number of duly authorized, validly
issued fully paid and non-assessable shares of UDC Common Stock as is the
quotient of (i) an amount representing up to 50% of the invoice price divided by
(ii) the average closing price for UDC Common Stock, as set forth in the NASDAQ
National market listing of The Wall Street Journal, for the 10 trading days
prior to the close of that calendar quarter (the "Ten Day Average"); plus (ii)
the difference between the invoice price and the amount set forth in (a)(i)
above. Notwithstanding the foregoing, if the Ten Day Average is less than [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.], then the form of payment shall be 100% in cash.
(b) Costs set forth in Article 3A3.2(b) shall be invoiced quarterly
within 15 days following the end of each calendar quarter with payment in cash
due 30 days from the date of invoice.
Xxxxxx X. Xxxxxxxx, President UDC/PPG CONFIDENTIAL
Universal Display Corporation
December 22, 2004
Page 4
(c) Costs set forth in Article 3A.3.2(c) shall be invoiced quarterly
within 15 days following the end of each calendar quarter with payment in cash
due 30 days from the date of invoice.
(d) Costs set forth in Articles 3A3.2(b) and (c) shall be combined by
PPG on the same invoice.
4. Article 10 of the Development Agreement is amended by adding a new
Article 10.10, as follows:
10.10 Notwithstanding anything to the contrary in this Agreement, for
the period from January 1, 2005 through December 31, 2005:
10.10.1 The approved 2005 Development Team budget as agreed to
by the parties is attached as Schedule 10.10.1. All work to be performed by [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.]and [The confidential material contained herein has
been omitted and has been separately filed with the Commission.] shall be
approved in writing by UDC. The billing rates for services provided by these
individuals shall be [The confidential material contained herein has been
omitted and has been separately filed with the Commission.] and [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.] per hour, respectively.
10.10.2 UDC shall pay for services performed under the
approved Development Team budget for each calendar quarter at the following
rate: 1) PPG Actual Expenses multiplied by[The confidential material contained
herein has been omitted and has been separately filed with the Commission.] up
to [The confidential material contained herein has been omitted and has been
separately filed with the Commission.] and 2) for any Development Team cost
exceeding [The confidential material contained herein has been omitted and has
been separately filed with the Commission.] and approved by UDC, PPG Actual
Expenses multiplied by [The confidential material contained herein has been
omitted and has been separately filed with the Commission.]. Except as otherwise
expressly set forth herein, PPG Actual Expenses for each calendar quarter shall
be determined in a manner consistent with past practices under this Agreement.
In addition, PPG shall provide UDC with such reports and other supporting
documentation as UDC may reasonably request in connection with monitoring the
PPG Actual Expenses for each calendar quarter.
10.10.3 Within 15 days following the close of each calendar
quarter, PPG shall invoice UDC for the combined amounts set forth in Articles
10.10.1 and 10.10.2 above for that calendar quarter. Within 15 days following
the date of the invoice, UDC shall deliver to PPG the number of duly authorized,
validly issued fully paid and non-assessable shares of UDC Common Stock as is
the quotient of (a) such combined amounts divided by (b) the Ten Day Average. In
the event that the Ten Day Average is less than [The confidential material
contained herein has been omitted and has been separately filed with the
Commission.], then UDC shall deliver to PPG cash in an amount equal to the
aggregate value of UDC Common Stock deliverable to PPG under the first sentence
of this Article 10.10.3.
Xxxxxx X. Xxxxxxxx, President UDC/PPG CONFIDENTIAL
Universal Display Corporation
December 22, 2004
Page 5
10.10.4 Notwithstanding anything in the Agreement to the
contrary, no Warrants shall be issued for the services rendered by PPG during
the period of January 1, 2005 through December 31, 2005.
5. Article 13.1 of the Development Agreement is amended and restated as
follows:
13.1 The initial term (the "Initial Term") of this Agreement
shall be from the Effective Date through December 31, 2005. Thereafter, the term
of this Agreement shall be extended automatically for additional 12 month
periods (each, a "Renewal Term") unless and until either party provides the
other with at least 9 months' prior written notice that this Agreement shall
expire at the end of the Initial Term or the upcoming Renewal Term, as
applicable.
6. This Amendment takes effect only on the condition that the parties
execute the First Amendment of the Supply Agreement of even date
herewith.
7. To the extent of any inconsistency between the terms of the Development
Agreement and the terms of this Amendment, the terms of this Amendment
shall prevail.
If UDC agrees to the foregoing, please have its authorized representative
execute the two enclosed originals of this Amendment and return one to me.
Very truly yours,
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
On behalf of PPG Industries, Inc.
Xxxxxx X. Xxxxxxxx, President UDC/PPG CONFIDENTIAL
Universal Display Corporation
December 22, 2004
Page 6
ACKNOWLEDGED AND AGREED TO:
On behalf of Universal Display Corporation
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
Title: President
Date: Dec. 28, 2004
