[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: First Amendment of the SUPPLY AGREEMENT which was entered into and
effective October 1, 2000 by and between PPG INDUSTRIES, INC. ("PPG"),
and UNIVERSAL DISPLAY CORPORATION ("UDC") ("Supply Agreement")
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Dear Xx. Xxxxxxxx:
The purpose of this letter is to amend the Supply Agreement, 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.], a new 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 Supply Agreement and the Development and License Agreement entered into by
the parties effective as of October 1, 2000, as amended ("Development & License
Agreement"). The parties desire to amend the Supply 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 First
Amendment of the Supply Agreement, effective on January 1, 2005. Except as
expressly set forth herein, all capitalized terms have the meanings given in the
Supply Agreement. Except as expressly set forth herein, the Supply 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 1.4 of the Supply Agreement is amended and restated as follows:
1.4 "Cost Margin Percentage" means 60%.
2. Article 5 of the Supply Agreement is amended by adding new Article 5.1.1, as
follows:
5.1.1 Notwithstanding anything to the contrary in this Agreement, PPG shall
submit invoices to UDC for:
(a) Costs associated with PPG's development, as requested by UDC, of
processes to produce OLED materials for the supply of Developmental
Chemicals under the Development & License Agreement and/or Products
under this Agreement ("Process Development Charge") as specified in
Schedule 5.1.1 attached hereto and incorporated by reference herein.
Charges for such costs shall be reported to UDC monthly and invoiced
quarterly, within 15 days of the close of the calendar quarter;
(b) The portion, if any, of PPG's 2005 cumulative out-of-pocket
environment, health and safety costs required for the production and
shipment of OLED materials, including without limitation out-of-pocket
costs for product environmental, health and safety testing and TSCA
registration and registration for importation into foreign countries,
that exceeds $20,000. PPG shall notify UDC in advance of the expected
costs of undertaking these activities. Invoices for such costs shall be
submitted to UDC within 15 days following the close of each calendar
month beginning with the calendar month in which such cumulative costs
first exceed $20,000 and;
(c) All analytical costs not otherwise invoiced under Article 3A.3.2(b) of
the Development & License Agreement (excluding Development Team
charges) and not otherwise included in amounts invoiced under the
Development & License Agreement or this Agreement for the supply of
either Development Chemicals or Products, at charges customarily billed
to PPG's Optical Products business unit. Invoices for such costs shall
be submitted to UDC within 15 days following the close of each calendar
month.
(d) PPG shall use reasonable efforts to minimize the costs and charges
described in Articles 5.1.1 (a)-(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.
Xxxxxx X. Xxxxxxxx, President UDC/PPG CONFIDENTIAL
Universal Display Corporation
December 22, 2004
Page 3
3. Article 5 of the Supply Agreement is amended by deleting Article 5.3 and
replacing it with the following new Article 5.3:
5.3 Notwithstanding anything to the contrary in this Agreement, for the
period from January 1, 2005 through December 31, 2005, UDC's form of payment for
invoices under this Agreement shall be as follows:
(a) Payment form for invoices set forth in Article 5.1.1(a) 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 defined in the
Development & License Agreement) 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 Ten Day
Average is less than $6.00, then the form of payment shall be 100% in
cash. Payment shall be due 15 days following the date of the invoice
whether such payment is in cash or a combination of cash and UDC Common
Stock.
(b) Payment terms for invoices set forth in Article 5.1.1(b) - (c) shall be
net 30 days from the date of invoice in cash. Costs set forth in
Article 5.1.1(b)-(c) shall be combined by PPG on the same invoice.
4. In the event that PPG enters into an agreement with Albemarle Corporation for
the supply of crude OLED materials to PPG for conversion into Products supplied
hereunder, PPG shall invoice UDC for PPG's out-of-pocket cost to purchase such
OLED materials multiplied by 1.1. Should PPG & UDC not enter into a new OLED
Services Agreement prior to [The confidential material contained herein has been
omitted and has been separately filed with the Commission.], and effective as of
January 1, 2006, then the multiplier shall be 1.67 instead of 1.1 as stated
above.
5. This Amendment takes effect only on the condition that the parties execute
the Fifth Amendment of the Development & License Agreement of even date
herewith.
6. To the extent of any inconsistency between the terms of the Supply Agreement
and the terms of this Amendment, the terms of this Amendment shall prevail.
Xxxxxx X. Xxxxxxxx, President UDC/PPG CONFIDENTIAL
Universal Display Corporation
December 22, 2004
Page 4
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
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Name: Xxxxxx X. Xxxxxxxx
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Title: President
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Date: Dec. 28, 2004
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SCHEDULE 5.1.1
PROCESS DEVELOPMENT BILLING RATE
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Job Billing Rate
Classification $ per Hour
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Sr. PhD Chemist $108.69
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PhD Chemist $93.67
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MS Chemist $84.26
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BS Chemist $69.71
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