[GRAPHIC OMITTED]
PPG INDUSTRIES PPG Industries, Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx
00000 XXX
Telephone (000) 000-0000
Fax (000) 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").
--------------------------------------------------------------------
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.
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 $235,000. 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.
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
1.0. 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 $6.00,
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.
(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 $80.00 and $116.00 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 1.93 up to $1.65 million and 2) for any
Development Team cost exceeding $1.65 million and approved by UDC, PPG Actual
Expenses multiplied by 1.00. 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 $6.00, 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.
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
Xxxxxxx X. Xxxxx
On behalf of PPG Industries, Inc.
ACKNOWLEDGED AND AGREED TO:
On behalf of Universal Display Corporation
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxxx
-------------------------
Title: President
------------------------
Date: Dec. 28, 2004
-------------------------
SCHEDULE 10.10.1
DEVELOPMENT TEAM BUDGET
2005
BUDGET
--------
SALARY & BENEFITS $976,000
EMPLOYEE EXPENSES $20,000
ANALYTICAL COST $234,000
MATERIAL & LAB SUPPLY COST $270,000
RESEARCH OVERHEAD & DEPRECIATION $378,000
PATENT EXPENSES @ UDC REQUEST $0
TOTAL $1,878,000
Budget Basis:
o Six PhD or BS Chemists
o Three Technicians (BS Chemists)
o One UDC PhD - One month (analytical and material & lab cost only)
o Salary & Benefits - Based on projected 2005 salaries and benefit charge.
o Analytical Cost - Based on 2004 recent history
o Material & Lab Supply Cost - Based on 2004 history
o Travel Cost - Based on 2004 history
o No UDC Requested Patent Help
Xxxxx Xxxxxxxxx
November 16, 2004
