-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CD+e3GQXWN+d7SgqoHbu28jnyXmsDxsopJaY7l8jq5kmtahZwR39X/Bh+o4UKBFe AAL6jzr/jgHg9P6Tw57AdA== 0000950116-01-000387.txt : 20010308 0000950116-01-000387.hdr.sgml : 20010308 ACCESSION NUMBER: 0000950116-01-000387 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20010307 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIVERSAL DISPLAY CORP \PA\ CENTRAL INDEX KEY: 0001005284 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER TERMINALS [3575] IRS NUMBER: 232372688 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-50990 FILM NUMBER: 1563087 BUSINESS ADDRESS: STREET 1: THREE BALA PLAZA, SUITE 104E CITY: BALA CYNWYD STATE: PA ZIP: 19004 BUSINESS PHONE: 6106174010 MAIL ADDRESS: STREET 1: THREE BALA PLAZA EAST STREET 2: SUITE 104 CITY: BALA CYNWYD STATE: PA ZIP: 19004 S-3/A 1 0001.txt S-3/A As filed with the Securities and Exchange Commission on March 7, 2001 Registration No.333-50990 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ---------- PRE-EFFECTIVE AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 ---------- UNIVERSAL DISPLAY CORPORATION (Exact name of registrant as specified in its charter)
Pennsylvania 3575 23-2372688 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.) incorporation or organization) Classification No.)
375 Phillips Boulevard Ewing, New Jersey 08618 (609) 671-0980 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ---------- SHERWIN I. SELIGSOHN Chief Executive Officer and Chairman of the Board Universal Display Corporation 375 Phillips Boulevard Ewing, New Jersey 08618 (609) 671-0980 (Name, address, including zip code, and telephone number, including area code, of agent for service) ----------------------- Copies of all communications to: RICHARD A. SILFEN, ESQ. Morgan, Lewis & Bockius LLP 1701 Market Street Philadelphia, PA 19103 (215) 963-5000 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. |_| If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. |_|
- ------------------------------------------------------------------------------------------------------------------------------------ Title of Each Class Amount Proposed Maximum Proposed Maximum Amount of of Securities to be Registered to be Registered Offering Price Per Share Aggregate Offering Price Registration Fee(1)(2) - ------------------------------------------------------------------------------------------------------------------------------------ Common Stock to be offered by 597,985 13.6875 8,184,920 * selling shareholders - ------------------------------------------------------------------------------------------------------------------------------------
* Previously paid. (1) Fee calculated in accordance with Rule 457(c) of the Securities Act of 1933, as amended. Estimated solely for the purpose of calculating the registration fee based on the average of the high and low prices per share of the Registrant's common stock on November 28, 2000, as reported on the Nasdaq National Market. (2) The Registrant paid a filing fee of $4,889 upon the original filing of this Registration Statement. Based on the reduced number of shares of common stock being registered on this Amendment, the requisite filing fee would be $2,047. The Registrant believes that the difference of $2,842 should be deemed to a filing fee relating to securities as to which a registration statement has been withdrawn, and that such amount therefore be available to be applied to filing fees due with respect to future registration statements filed by the Registrant. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. SUBJECT TO COMPLETION, DATED MARCH 7, 2001 PROSPECTUS 597,985 Shares UNIVERSAL DISPLAY CORPORATION Common Stock The shareholders of Universal Display Corporation identified in this prospectus under "Selling Shareholders," or their donees or pledgees, are offering up to 597,985 shares of our common stock for resale to the public. The selling shareholders will be selling shares of common stock (a) that they own or will acquire from us in the future and (b) that they can acquire by exercising warrants that they own or will acquire from us in the future. We will not receive any proceeds from the resale of shares of our common stock by the selling shareholders. We are paying the expenses of this offering. The primary market for our common stock is the Nasdaq National Market System, where it trades under the symbol "PANL." Our common stock is also traded on the Philadelphia Stock Exchange under the symbol "PNL." On March 6, 2001, the last reported sale price of our common stock on the Nasdaq National Market System was $9.25 per share. An investment in our common stock involves significant risks. You should carefully consider the risk factors described on pages 5 to 9 before investing in our common stock. The Securities have not been approved by the Securities and Exchange Commission or any state securities commission, nor have they determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. The information in this prospectus is not complete and may change. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. _____________________________ The date of this Prospectus is ________, 2001 TABLE OF CONTENTS Page ---- Cautionary Statement Concerning Forward-Looking Statements.....................1 Universal Display Corporation............................................... 2 Risk Factors................................................................ 5 The Offering .................................................................10 Use of Proceeds.............................................................. 10 Selling Shareholders........................................................ 10 Plan of Distribution........................................................ 11 About this Prospectus...................................................... 12 Where You Can Find More Information........................................ 12 Legal Opinion............................................................... 13 Experts..................................................................... 13 i CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements that involve a number of risks and uncertainties. For such statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. A number of factors could cause our actual results, performance or achievements or those of the display technology industry to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to: o competition in the display technology industry in general and in our specific target markets; o changes in prevailing interest rates and the availability of and terms of financing to fund the growth of our business; o inflation; o changes in costs of goods and services; o economic conditions in general and in our specific target markets; o changes in consumer preferences and tastes; o demographic changes; o changes in, or failure to comply with, federal, state, local or foreign government regulation; o liability and other claims asserted against us; o changes in our commercialization strategy; o the ability to attract and retain qualified personnel; o changes in our capital expenditure plans; and o other factors referred to in this prospectus In addition, the forward-looking statements included in this prospectus are not meant to predict future events or circumstances and may not be realized. Forward-looking statements can be identified by, among other things, the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," "seek," "pro forma," "anticipates," "intends," or "potential" or the negative of, or any other variations on, those terms or comparable terminology, or by discussion of strategy or intentions. Given these uncertainties, prospective investors are cautioned not to place undue reliance on these forward-looking statements. We disclaim any obligation to update these factors or to announce the results of any revisions to any of the forward-looking statements contained in this prospectus publicly to reflect future events or developments. 1 UNIVERSAL DISPLAY CORPORATION This is a summary of information appearing elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. This summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements, including the notes to the financial statements, appearing elsewhere in this prospectus or in our annual and quarterly reports and other filings with the Securities and Exchange Commission. References in this prospectus to "we," "us," "Company" and "our" refer to Universal Display Corporation, together with its wholly-owned subsidiary, UDC, Inc. Our Company Universal Display Corporation is engaged in the research, development and commercialization of organic light emitting diode, or OLED, technology for use in flat panel displays, lasers and light generating devices. We expect the initial market for our technology to be in the electronic flat panel display industry. This industry includes such products as: o cellular phone displays; o portable personal digital assistants and Internet access-type devices; o laptop computers; and o television and computer monitors. Stanford Resources, Inc. estimated the size of the electronic display market to be approximately $41 billion in 2000. The flat panel part of this market is approximately $17 billion in 2000. We have the exclusive, perpetual, worldwide license to commercialize all OLED technology, intellectual property and know-how developed by Princeton University and the University of Southern California, subject to the terms of our Sponsored Research Agreement and License Agreement with those universities. To date, 34 patents have been issued in the United States. Approximately 40 patent applications (with corresponding foreign protection) have been filed, and additional patents are being filed monthly. We have also obtained a license, with rights to sublicense, to 70 US patents, approximately 4 US patent applications, and additional foreign patents related to OLED technology owned by Motorola, Inc. Our OLED Technology Organic light emitting diodes are made of material containing a carbon-based substance that has the capability to emit light when electric current is passed through it. We, in collaboration with our research and development partners, are working towards commercializing innovative OLED technology, including the following six proprietary OLED technology platforms o TOLED Technology: Our transparent OLED can be used to create transparent displays for information displays on windshields, cockpit displays on aircraft and head mounted displays. TOLEDs can also be used in numerous portable electronic applications because of their bright colors, high contrast, low power requirements and top emission characteristics. o SOLED Technology: Unlike traditional side-by-side display architecture, which places the red, green and blue picture elements, or pixels, horizontally next to each other, our stacked OLED stacks the red, green and blue pixels vertically on top of each other. Thus, to display green in the conventional architecture, you turn off the red and blue pixels, leaving spaces between each of the illuminated green pixels. In SOLED, to display green, you turn off the red and blue sections of the stacked pixel component. The stacked architecture of the SOLED may increase the resolution of the display by a factor of three. 2 o FOLED Technology: Unlike conventional displays, our flexible OLEDs can be built on flexible materials such as plastic. We believe that such displays will be lighter in weight and will have lower power requirements. The FOLED also may provide the opportunity to apply low cost roll to roll (web processing) technologies to display fabrication, which can reduce the cost, and therefore expand the market, of electronic flat panel displays. o Organic Laser Technology: We and our research partners are attempting to develop a fourth technology platform based upon the ability to fabricate an organic laser utilizing OLED technology. In the September 25, 1997 issue of Nature, our research partners announced what they believed to be the first evidence of lasing from vacuum deposited thin films of organic molecules. We believe this is a significant first step towards the realization of electrically pumped, solid-state lasers based on organic thin films. o High Efficiency Materials: A fifth technology platform respects the use of molecules that emit light through the process of phosphorescence. This class of molecules has the potential for higher efficiency, lower power and longer lifetimes than conventional OLED technology which involves the emission of light through the process of fluorescence. We and our research partners first announced this discovery in the September 10,1999 issue of the scientific journal, Nature. o Organic Vapor Phase Deposition: A sixth technology platform involves the use of a carrier gas stream in a hot walled reactor at low vacuum to precisely deposit the thin layers of organic materials used in OLED displays. Conventional OLED fabrication equipment evaporates the organic molecules at high vacuum. We have entered into a Development and License Agreement with Aixtron AG, a German company that manufactures precision semiconductor production equipment for LED's, to further develop, commercialize and produce manufacturing equipment for OLEDs based on this technology. Our Research Partners Princeton and USC have been performing research on OLED technology for many years, and have continued that research for us since 1994. The sponsored research agreement between us and our research partners, which was originally executed in 1994, was extended in 1997 for five additional years and is subject to further extension by mutual agreement. Key members of our research team include Dr. Stephen Forrest at Princeton and Dr. Mark R. Thomson at USC. There are approximately 20 researchers at Princeton and USC who are engaged in OLED research. Our Commercialization Strategy Our approach to developing technology and penetrating the electronic display market has four major components: o We are continuing to fund our research partners under the current sponsored research agreement and to obtain the worldwide exclusive rights to all intellectual property invented in the project. o We are working on the development of reliable commercial prototypes and the optimization of the fabrication processes. In 1999, we moved into an 11,000 square foot space near Princeton, New Jersey to serve as a pilot line facility and technology transfer center. o We have entered into Agreements with an Equipment manufacturer, Aixtron AG; and an organic materials developer and supplier, PPG Industries, Inc., to further develop and commercialize our technology, and potentially obtain royalties from the sales of certain equipment and revenues from the sales of certain materials to OLED manufacturers. 3 o We intend to license our proprietary OLED technology and enter into joint ventures and other strategic alliances with experienced manufacturers and users of display products for the volume manufacture, distribution and sale of products based upon this technology. We do not presently intend to become a volume manufacturer. Our Development Partners We have entered into agreements with three companies: Effective October 1, 2000, the Company entered into a Development and License Agreement with PPG Industries, Inc. (PPG) to leverage our OLED flat panel display technology with PPG's expertise in organic materials development and manufacturing. A team of PPG scientists and engineers will assist us in developing and commercializing our proprietary OLED system. Present staffing levels will provide the full time services of 7 PPG employees, plus managerial services. Based upon current staffing levels, we anticipate issuing to PPG approximately 114,000 shares of common stock annually for the period from January 1, 2001 through December 31, 2005, of which 227,766 shares are being offered hereunder. In addition, we anticipate issuing to PPG annually warrants to purchase up to an additional 114,000 shares of our common stock over the period from January 1, 2001 through December 31, 2005, of which warrants to purchase 113,883 shares of our common stock are being offered hereunder. The amount of equity to be obtained by PPG under the agreement is subject to adjustment under certain circumstances. PPG's services have an estimated value of approximately $11 million. PPG also has the right to request that we grant royalty bearing licenses to PPG for use of our OLED technology in certain applications. We also entered into a Supply Agreement with PPG whereby PPG will be the exclusive supplier of our proprietary materials through December 31, 2007. PPG will sell the materials to us, and we will resell them to OLED manufacturers. Effective September 29, 2000, we entered into a License Agreement with Motorola, Inc., whereby we obtained the rights, with the right to sublicense, to 70 US patents, 4 pending US patents, and certain foreign patents of Motorola, Inc., related to OLEDs. Our agreement with Motorola also includes the opportunity to meet with their product development group, although there are no assurances that Motorola will purchase any products from the Company or its licensees, or use any of the Company's technology in their products. In connection with the rights granted to the Company under the agreement, we issued to Motorola 200,000 shares of common stock, 300,000 shares of Convertible Preferred Stock (each share convertible into one share of common stock, subject to adjustment under certain circumstances, and vesting 75,000 shares per year), and Warrants to purchase an additional 150,000 shares. Effective July 19, 2000, we entered into a Development and License Agreement with Aixtron AG of Germany to further develop and commercialize manufacturing equipment for OLEDs based on a proprietary UDC technology called Organic Vapor Phase Deposition (OVPD). Aixtron AG is a world leader in the production of manufacturing equipment for LED's using MOCVD (Metal-organic chemical vapor deposition) technology. Under the agreement, UDC and Aixtron will engage in a joint development program to commercialize OVPD equipment. Aixtron has the exclusive license to produce equipment based on this technology, and UDC will receive a royalty from the sale of the equipment. Executive Offices Our executive offices are located at 375 Phillips Boulevard, Ewing, New Jersey 08618. Our phone number is (609) 671-0980. Our web site can be found at www.universaldisplay.com. 4 RISK FACTORS An investment in our common stock involves a high degree of risk. In addition to the other information contained in this prospectus, you should carefully consider the following risk factors before making an investment decision concerning our common stock. You should not purchase our common stock if you cannot afford the loss of your entire investment. We do not expect to be profitable in the foreseeable future, and may never be profitable. Since inception, we have not generated any product revenues, and have incurred significant losses, resulting in an accumulated deficit of approximately $24.5 million, as of September 30, 2000. We expect to incur losses for the foreseeable future and until such time, if ever, as we are able to achieve sufficient levels of revenue from the commercial exploitation of the OLED technology to support our operations. You should note, however, that: o OLED technology may never become commercially viable; o markets for flat panel displays utilizing the OLED technology may be limited; and o we may never generate sufficient revenues from the commercial exploitation of the OLED technology to become profitable. Additionally, even if we find commercially viable applications for our OLED technology, we may never recover our research and development costs. If we do not receive additional financing in the future, we will not be able continue the research, development and commercialization of our OLED technology. Our capital requirements have been and will continue to be significant. The completion of the research, development and commercialization of the OLED technology for potential applications will require significant additional effort and resources. Our cash on hand is not sufficient to meet all of our future obligations. When we need additional funds, such funds may not be available on commercially reasonable terms or at all. If we cannot obtain more money when we need it, our business might fail. Additionally, if we attempt to raise money in an offering of our common stock, the issuance of additional stock will dilute our then existing shareholders. If our OLED technology is not feasible for product applications, we may never generate significant revenues. At this time, we are unable to determine the feasibility of our OLED technology for the commercial viability of any potential applications. We must make substantial advances in our research and development efforts in a number of areas including: o reliability; o the development of more fully saturated colors for full color displays; o integration with drive electronics; and o issues related to scalability and cost effective fabrication technologies for product applications before products utilizing the OLED technology are manufactured and sold. The development of an electrically pumped laser is also necessary before products based on the organic laser research are manufactured and sold. Our efforts may never demonstrate the feasibility of our OLED technology, particularly for use in full color, large area, high resolution, high information content flat panel display applications. Our research and development efforts remain subject to all of the risks associated with the development of new products based on emerging and innovative technologies, including, without limitation, unanticipated technical or other problems and the possible insufficiency of the funds allocated to complete its development. Technical problems may result in delays and cause us to incur additional expenses that would increase our losses. If we cannot complete our research and development of the OLED technology successfully, or if we experience delays in 5 completing our research and development of the OLED technology for use in potential applications, particularly after the occurrence of significant expenditures, our business may fail. Even if our technology is technically feasible, it may not be accepted by the market. The potential size, timing and viability of market opportunities targeted by us are uncertain at this time. Market acceptance of the OLED technology will depend, in part, upon such technology providing benefits comparable to CRT and LCD technology (the current standard for display quality) at an appropriate cost, and its adoption by consumers, neither of which have been achieved. Many potential licensees of the OLED technology manufacture flat panel displays utilizing competing technologies and may, therefore, be reluctant to redesign their products or manufacturing processes to incorporate the OLED technology. Potential licensees may never utilize the commercially viable OLED technology. If our research partners fail to make advances in their research, or if they terminate their relationship with us, we might not succeed in commercializing our OLED technology. Research and development of commercially viable applications for OLED technology is dependent on the success of the research efforts of our research partners conducted under our sponsored research agreement with them. We cannot assure you that our research partners will make additional advances in the research and development of the OLED technology. Although we fund the OLED technology research, the scope of and technical aspects of the research as well as the resources and efforts directed to such research is subject to the control of our research partners. Our sponsored research agreement provides that if Dr. Forrest is unavailable to continue to serve as a principal investigator, either because he is no longer associated with Princeton or otherwise, and a successor acceptable to both us and Princeton is not available, Princeton has the right to terminate the sponsored research agreement. The 1997 sponsored research agreement, which expires in July 2002, may not be extended. The termination or expiration of the sponsored research agreement or the 1997 license agreement would materially and adversely affect our ability to research, develop and commercialize our OLED technology. If we cannot form strategic relationships with companies that manufacture and use products that incorporate our OLED technology, our commercialization strategy will fail. Our strategic plan depends upon the development of strategic relationships with companies that will manufacture and use products incorporating its OLED technology. We have not yet entered into any such strategic relationships, although we have entered into a Development and Licensing Agreement with Aixtron AG to develop and commercialize a new type of production equipment for OLEDs based upon our proprietary technology. Our agreement with Motorola also includes the opportunity to meet with their product development group, although there are no assurances that Motorola will purchase any products from UDC or its licensees. Our agreements with PPG provide us with the capability to sell chemicals to our licensees. In December, 1999, we moved into a new facility which includes a prototype pilot line and technology transfer facility to accelerate the development and commercialization of our technology, We cannot assure you that such a facility will allow us to enter into such strategic relationships. Our prospects will be significantly affected by our ability to sublicense the OLED technology and successfully develop strategic alliances with third parties for incorporation of the OLED technology into flat panel displays manufactured by others. Strategic alliances may require financial or other commitments by us. We might not be able, for financial or other reasons, to enter into strategic alliances on commercially acceptable terms, or at all. Failure to do so would have a material adverse effect on us. If we cannot protect our intellectual property rights, or if our technology infringes the rights of others, our business will suffer. Our rights to the OLED technology are dependent on patents and other intellectual property rights relating 6 to the OLED technology that are licensed to us by Princeton and USC. Thirty-four U.S. patents have already been issued, approximately 40 additional patent applications are pending in the United States and corresponding international patent applications have been filed to cover the major industrial countries. However, there can be no assurance that additional patents applied for will be obtained or that any such patents will afford us commercially significant protection of our OLED technology, or will be found valid if challenged. In connection with our license agreement with Motorola, Inc., we have obtained a license to 70 additional OLED-related U.S. patents, 4 patent applications, related foreign patents and applications, and the right to sublicense this technology. The patent laws of other countries may differ from those of the United States as to the patentability of the OLED technology and the degree of protection afforded. Older companies and institutions may independently develop equivalent or superior technologies and may obtain patent or similar rights with respect thereto. There are a number of other companies and organizations that have been issued patents and are filing additional patent applications relating to OLED technology, including Eastman Kodak Corporation, which holds a number of patents related to OLED technology. There can be no assurance that the exercise of some aspects of our licensing rights respecting its OLED technology being developed by Princeton and USC or those licensed from Motorola, Inc. will not infringe on the patents of others, in which event we or our research partners may be required to obtain a license, pay damages, modify their products or method of operation or be prohibited from making, using, selling or offering to sell some or all products incorporating our OLED technology. We also might not have the financial or other resources necessary to enforce or defend a patent infringement action, and the licensors of our licensed technology might not enforce an action in a timely manner. If products incorporating our OLED technology are found to infringe upon the patent or other intellectual property rights of others, it could have a material adverse effect on us. The federal government has rights to our OLED technology that might prevent us from realizing its benefits. The United States government, through the Defense Advanced Research Projects Agency, has provided funding to Princeton and us for research activities related to certain aspects of its OLED technology. The federal government could obtain rights to this technology, which would affect our rights as follows: o If all or certain aspects of the OLED technology develop from our funding to Princeton, and those aspects are deemed to fall within the planned and committed activities of DARPA's funding, the federal government, pursuant to federal law, could have certain rights relating to the OLED technology. o If the federal government determines that we have not taken effective steps to achieve practical application of such technology in a field of use in a reasonable time, it may require us to grant licenses to other parties in any such field of use. o The federal government could restrict our ability to market the OLED technology to the federal government for military and other applications. o The federal government's continued funding of ours and Princeton's research activities may also give it rights to aspects of the OLED technology developed in the future. If so, we might not realize the benefits of that technology. Because many of our competitors have better name-recognition, and greater financial, technical, marketing and research capabilities than us, we may never be able to compete successfully in the flat panel display industry. The flat panel display industry is characterized by intense competition. The market is currently, and will likely continue to be, dominated by products utilizing LCD technology. Numerous companies are making substantial investments in, and conducting research to improve characteristics of, LCD technology. Several other flat panel display technologies have been, or are being, developed, including field emission, inorganic electroluminescence, polymeric light emitting diode, gas plasma and vacuum fluorescent displays. In addition, other 7 companies are engaged in research and development activities with respect to technology using OLEDs. Advances in LCD technology or any of these developing technologies may overcome their limitations or become the leading technology for flat panel displays, either of which could limit the potential market for flat panel displays utilizing the Company's OLED technology. Substantially all of these competitors have better name recognition and greater financial, technical, marketing, personnel and research capabilities than us. Our competitors may succeed in developing technologies and applications that are more cost-effective or have fewer display limitations than our OLED technology. We may never be able to compete successfully or develop commercial applications for our OLED technology. If we cannot keep our key employees or hire other talented persons as we grow, our business might not succeed. Our performance is substantially dependent on the continued services of senior management and other key personnel, and its ability to offer competitive salaries and benefits to its employees. We do not have employment agreements with any of our management or key personnel. Additionally, competition for highly skilled technical, managerial and other personnel is intense. We might not be able to attract, hire, train, retain and motivate the highly skilled managers and employees we need to be successful. If we fail to attract and retain the necessary technical and managerial personnel, we will suffer and might fail. We can issue shares of preferred stock that can adversely affect your rights as a shareholder. Our articles of incorporation authorize us to issue up to 5,000,000 shares of preferred stock with designations, rights and preferences determined from time-to-time by our board of directors. Accordingly, our board is empowered, without shareholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights superior to those of our common shareholders. For example, an issuance of shares of preferred stock could: o adversely affect the voting power of the common shareholders; o make it more difficult for a third party to gain control of us; o discourage bids for our common stock at a premium; or o otherwise adversely affect the market price of the common stock. Our board has designated and issued (a) 200,000 shares of Series A Preferred Stock, all of which are held by an entity controlled by Sherwin Seligsohn and (b) 300,000 shares of Series B Convertible Preferred Stock, which shares are convertible into shares of our common stock in accordance with our articles of incorporation. We may issue additional shares of our authorized preferred stock at any time in the future. The market price of our common stock might be highly volatile. The market price of our common stock might be highly volatile, as has been the case with the securities of other emerging growth companies. Factors such as: o our operating results; o announcements by us or our competitors of technological developments, new product applications or license arrangements; and o other factors affecting the flat panel display industry generally may have a significant impact on the market price of our common stock. In recent years, the stock market has experienced a high level of price and volume volatility and market prices for the stock of many companies, particularly small and emerging-growth companies. If our shares are delisted, you might not be able to sell your investment in our company. 8 Our common stock is listed on the Nasdaq National Market System. To continue to be listed on that market, however, we must maintain, with certain exceptions, maintenance criteria, including: o specified levels for total assets; o market value of the public float; o total capital and surplus; and o a minimum bid price per share. The failure to meet such maintenance criteria in the future may result in the delisting of our common stock from the Nasdaq National Market System. Thereafter, trading, if any, in our common stock would be conducted in the non-Nasdaq over-the-counter market. As a result of such delisting, you could find it more difficult to dispose of, or to obtain accurate quotations as to the market value of, our common stock. If we are delisted, trading in our common stock may become subject to additional regulation that could further limit the liquidity of your investment. In addition, if our common stock were to become delisted from trading on Nasdaq and the trading price of the common stock were to remain below $5.00 per share, trading in the common stock would also be subject to the requirements of additional rules under the Exchange Act. These rules require additional disclosure by broker-dealers in connection with any trades involving any non-Nasdaq equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Such rules require the delivery, prior to any so-called penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it, and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors. For these types of transactions, the broker-dealer must make a special suitability determination for the purchaser and have received the purchaser's written consent to the transaction prior to sale. The broker-dealer also must disclose the commissions payable to the broker-dealer, current bid and offer quotations for the penny stock and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Such information must be provided to the customer orally or in writing prior to effecting the transaction and in writing before or with the customer confirmation. Monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our common stock, which could severely limit the market liquidity of your investment. This offering, as well as the issuance of other publicly traded shares, could drive our stock price down. Following the effectiveness of our registration statement, the shares of common stock offered by the selling shareholders will become freely salable in the public market. Although the sale of these additional shares to the public might increase the liquidity of our shareholders' investments, the increase in the number of shares available for public sale could drive the price of our common stock down, thus reducing the value of your investment and perhaps hindering our ability to raise additional funds in the future. To the extent other restricted shares become freely salable, whether through an effective registration statement or under Rule 144 of the Securities Act, or we issue additional shares that might be or become freely salable, you could expect our stock price to decrease. Pursuant to the terms of our agreement with PPG, we may have to issue PPG more shares than we anticipate if our stock price goes down. Pursuant to the development and license agreement we entered into with PPG, we are required to issue to PPG, for the services they expect to render to us during a particular calendar year during the term of the agreement, shares of common stock based on the value of such services at the beginning of the year. If, at the time of issuance, the price of our common stock has declined materially since the date we executed the agreement with PPG, we may be required to issue to PPG more shares of common stock than we initially anticipated. This increase in the number of shares available for public sale could cause people to sell our shares, including short sales, which could drive the price of our common stock down, thus reducing the value of your investment and perhaps hindering our ability to raise additional funds in the future. In addition, this increase in the number of shares outstanding would further dilute our existing stockholders. THE OFFERING Of the 597,985 shares of our common stock being offered by the selling shareholders, 397,985 are being offered by PPG. These shares consist of the following shares: o 28,168 shares of common stock which were issued as nonrefundable initial consideration for the services furnished to us by PPG pursuant to the development and license agreement for the period from October 1, 2000 through December 31, 2000. 9 o 28,168 shares of common stock which are issuable upon exercise of a warrant we issued to PPG on February 15, 2001, as compensation for services for the period from October 1, 2000 through December 31, 2000, which warrant is exercisable and will remain exercisable for a 7-year period from date of issuance at an exercise price of $24.28 per share. o 113,883 shares of common stock which were issued on January 3, 2001 as nonrefundable initial consideration for the services furnished to us by PPG pursuant to the development and license agreement for the period from January 1, 2001 through December 31, 2001. o 113,883 shares of common stock which we expect to issue to PPG in January 2002 as nonrefundable initial consideration for the services furnished to us by PPG pursuant to the development and license agreement for the period from January 1, 2002 through December 31, 2002. o 113,883 shares of common stock which will be issuable upon exercise of a warrant we expect to issue to PPG in February 2002, as compensation for services for the period from January 1, 2001 through December 31, 2001, which warrant is exercisable and will remain exercisable for a 7-year period from date of issuance at an exercise price of $24.28 per share. Of the remaining shares being offered, 50,000 shares are being offered by PDLD, Inc. and 150,000 shares are being offered by Paradigm Group. We issued PDLD 50,000 shares of our common stock in connection with the license by us of a patent to Aixtron. Also, in connection with the Motorola license agreement, we issued Paradigm warrants to purchase up to 150,000 shares of our common stock at an exercise price of $21.60 which warrants are exercisable until September 29, 2007. The selling shareholders pursuant to this prospectus may sell the shares of common stock offered for resale in a secondary offering. Under the terms of the transactions described above, we are contractually required to register all of the shares of common stock that are described above. USE OF PROCEEDS The selling shareholders will receive the proceeds from the resale of the shares of common stock. We will not receive any proceeds from the resale of the shares of common stock by the selling shareholders. SELLING SHAREHOLDERS The following table sets forth information regarding the beneficial ownership of shares of common stock by the selling shareholders as of February 7, 2001, and the number of shares of common stock covered by this prospectus. We have entered into a development and license agreement with PPG described under "Universal Display Corporation - Our Development Partners" in this prospectus, pursuant to which certain of the securities listed below were initially issued to such selling shareholder in a private placement. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. The shares of common stock subject to options or warrants currently exercisable or exercisable within 60 days of February 7, 2001 are deemed outstanding and to be beneficially owned by the selling shareholders holding such options or warrants. 10
Beneficial Ownership After Resale of Shares --------------------------- Number of Maximum Shares Number of Name of Beneficially Shares Being Number of Selling Shareholders Owned Offered Shares Percent (1) -------------------- ----- ------- ------ ----------- PPG Industries, Inc. (2)(3) 397,985 397,985 0 0 PDLD, Inc. (3)(4) 46,662 46,662 0 0 Trustee of Princeton University (4) 1,669 1,669 0 0 Paul E. Burrows (4) 75,695 695 75,000 * Stephen Forrest (5) 160,695 695 160,000 * Jeffrey Schwartz (4) 279 279 0 0 Paradigm Group, LLC (3)(6) 150,000 150,000 0 0 ------- ------- Totals 832,985 597,985 235,000 0
- ------------- *Less than 1%. (1) Based on 16,791,249 shares outstanding as of February 7, 2001. (2) Includes: o 142,051 shares of common stock currently owned by PPG, o 28,168 shares of common stock that may be acquired upon exercise of a warrant that is currently exercisable, o 113,883 shares of common stock that will be issued by us to PPG in January 2002, and o 113,883 shares of common stock that will be issued by us from time to time upon PPG's exercise of warrants to purchase shares of common stock which will be issued to PPG in the future. (3) Voting and dispositive power over these shares of common stock is held by the following persons: as to Paradigm, Sheldon Drobny; as to PDLD, Vladimir Ban; and as to PPG, David W. Kiener (as directed by PPG's Board of Directors) as to dispositive power, and Thomas Ben Lehman, as to voting power. (4) Allocated portion of 50,000 shares of common stock issued to PDLD, Inc. (5) Allocated portion of 50,000 shares of common stock issued to PDLD, Inc. Dr. Forrest is a member of our Scientific Advisory Board and one of our principal researchers. (6) Consists of 150,000 shares of common stock that may be issued by us from time to time upon Paradigm Group's exercise of warrants to purchase shares of common stock. PLAN OF DISTRIBUTION FOR THE RESALE OF THE SHARES The selling shareholders, including any donees or pledgees who receive shares from the selling shareholders, may, from time to time, sell all or a portion of the shares of common stock on any market upon which the common stock my be quoted, in privately negotiated transactions or otherwise, at fixed prices that may be changed, at market prices prevailing at the time of sale, at prices related to such market prices or at negotiated prices. The selling shareholders may sell the shares of common stock by one or more of the following methods, without limitation: o block trades in which the broker or dealer so engaged will attempt to sell the shares of common stock as agent, but may partition and resell a portion of the block as principal to facilitate the transaction; o purchases by the broker or dealer as principal and resale by the broker or dealer for its account pursuant to this prospectus; o an exchange distribution in accordance with the rules of the exchange; o ordinary brokerage transactions and transactions in which the broker solicits purchasers; 11 o negotiated transactions or otherwise, including an underwritten offering; o market sales (both long and short to the extent permitted under the federal securities laws); o in connection with short sales of the shares of Common Stock; o in connection with the writing of non-traded and exchange-traded call options, in hedge transactions and in settlement of other transactions in standardized or over-the-counter options, if permitted under the securities laws, and o a combination of any of these methods of sale. In effecting sales, brokers and dealers engaged by the selling shareholders may arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions or discounts from the selling shareholders or, if any such broker-dealer acts as agent for the purchaser of such shares, from such purchaser, in amounts to be negotiated. These commissions or discounts may exceed those customary in the types of transactions involved. Broker-dealers may agree with the selling shareholders to sell a specified number of shares of common stock at a stipulated price per share, and, to the extent such broker-dealer is unable to do so acting as agent for the selling shareholders, to purchase as principal any unsold shares of common stock at the price required to fulfill the broker dealer commitment to the selling shareholders. Broker-dealers who acquire shares of common stock as principal may thereafter resell such shares of common stock form time to time in transactions (which may involve block transactions and sales to and through other broker-dealers, including transactions of the nature described above) at prices and on terms then prevailing at the time of sale, at prices then related to then-current market price or in negotiated transactions. In connection with such resales, broker-dealers may pay to or receive from the purchasers of shares of common stock commissions as described above. The selling shareholders may also sell the shares of common stock in accordance with Rule 144 under the Securities Act of 1933 (the "Securities Act") rather than pursuant to this prospectus. The selling shareholders and any broker-dealers or agents that participate with the selling shareholders in sales of the shares of common stock may be deemed to be "underwriters" within the meaning of the Securities Act in connection with those sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. From time to time, the selling shareholders may pledge their shares of common stock pursuant to the margin provisions of their customer agreements with their brokers. Upon default by a selling shareholders, the broker may offer and sell such pledged shares of common stock from time to time. Upon a sale of the shares of common stock, the selling shareholders intend to comply with the prospectus delivery requirements under the Securities Act by delivering a prospectus to each purchaser in the transaction. We intend to file any amendments or other necessary documents in compliance with the Securities Act that may be required in the event the selling shareholders defaults under any customer agreement with brokers. We are required to pay all fees and expenses incident to the registration of the shares of common stock. We have agreed to indemnify the selling shareholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. Brokerage commissions and similar selling expenses, if any, attributable to the sale of shares by the selling shareholders will be borne by the selling shareholders. The selling shareholders may agree to indemnify brokers, dealers or agents that participate in sales by the selling shareholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. 12 ABOUT THIS PROSPECTUS You should only rely on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of common stock. WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any reports, statements or other information we file at the SEC's public reference rooms located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661 and 7 World Trade Center, Suite 1300, New York, NY 10048. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public from commercial document retrieval services and at the web site maintained by the SEC at "http://www.sec.gov." We have filed a Registration Statement on Form S-3, of which this prospectus forms a part, to register the resale of the shares with the SEC. As allowed by SEC rules, this prospectus does not contain all the information you can find in the Registration Statement or the exhibits to the Registration Statement. The SEC allows us to "incorporate by reference" information into this prospectus, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus, except for any information superseded by information in this prospectus. This prospectus incorporates by reference the documents set forth below that we have previously filed with the SEC. These documents contain important information about us, our business and our finances. The documents that we are incorporating by reference are: o Our Annual Report on Form 10-K for the year ended December 31, 1999, as amended; o Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2000; o Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2000; o Our Quarterly Report on Form 10-Q for the quarter ended September 30, 2000; and o The description of our common stock that is contained in our Registration Statement on Form SB-2 filed with the SEC on June 30, 1999, as amended August 25, 1999. Any documents which we file pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus but before the end of any offering of securities made under this prospectus will also be considered to be incorporated by reference. If you request, either orally or in writing, we will provide you with a copy of any or all documents which are incorporated by reference. We will provide such documents to you free of charge, but will not include any exhibits, unless those exhibits are incorporated by reference into the document. You should address written requests for documents to Sidney D. Rosenblatt, Executive Vice President, Chief Financial Officer, Treasurer and Secretary, Universal Display Corporation, 375 Phillips Boulevard, Ewing, New Jersey 08618. 13 LEGAL OPINION Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania, will pass on the validity of the shares. EXPERTS The audited financial statements incorporated by reference in this prospectus and elsewhere in this registration statement, to the extent and for the periods indicated in their reports, have been audited by Arthur Andersen LLP, independent public accountants, and are included herein in reliance upon the authority of said firm as experts in giving said reports. 14 ================================================================================ 597,985 Shares UNIVERSAL DISPLAY CORPORATION Common Stock --------------- PROSPECTUS --------------- __________, 2001 ================================================================================ PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution The estimated expenses payable by the Registrant in connection with the issuance and distribution of the securities being registered are as follows: SEC Registration fee $ 4,889 Transfer agent and registrar fees $ 1,500 Printing and engraving fees $ 5,000 Legal fees $15,000 Blue Sky fees and expenses $ 5,000 Accounting fees $ 5,000 Miscellaneous $ 5,000 ------- Total $41,389 The selling shareholders described in the prospectus included herewith will not pay any of the expenses of this offering. Item 15. Indemnification of Directors and Officers Chapter 17, Subchapter D of the Pennsylvania Business Corporation Law of 1988, as amended (the "PBCL") contains provisions permitting indemnification of officers and directors of a business corporation in Pennsylvania. Sections 1741 and 1742 of the PBCL provide that a business corporation may indemnify directors and officers against liabilities and expenses they may incur as such in connection with any threatened, pending or completed civil, administrative or investigative proceeding, provided that the particular person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. In general, the power to indemnify under these sections does not exist in the case of actions against a director or officer by or in the right of the corporation if the person otherwise entitled to indemnification shall have been adjudged to be liable to the corporation unless it is judicially determined that, despite the adjudication of liability but in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnification for specified expenses. Section 1743 of the PBCL provides that the corporation is required to indemnify directors and officers against expenses they may incur in defending actions against them in such capacities if they are successful on the merits or otherwise in the defense of such actions. Section 1746 of the PBCL grants a corporation broad authority to indemnify its directors and officers for liabilities and expenses incurred in such capacity, except in circumstances where the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness. Section 1747 of the PBCL permits a corporation to purchase and maintain insurance on behalf of any person who is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a representative of another corporation or other enterprise, against any liability asserted against such person and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify the person against such liability under Chapter 17 Subchapter D of the PBCL. The Registrant's Bylaws provide a right to indemnification to the full extent permitted by law, for expenses (including attorney's fees), damages, punitive damages, judgments, penalties, fines and amounts paid in settlement, actually and reasonably incurred by any director or officer whether or not the indemnified liability arises II-1 or arose from any threatened, pending or completed proceeding by or in the right of the Registrant (a derivative action) by reason of the fact that such director or officer is or was serving as a director, officer, employee or agent of the Registrant or, at the request of the Registrant, as a director, officer, partner, fiduciary or trustee of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, unless the act or failure to act giving rise to the claim for indemnification is financially determined by a court to have constituted willful misconduct or recklessness. The Bylaws provide for the advancement of expenses to an indemnified party upon receipt of an undertaking by the party to repay those amounts if it is finally determined that the indemnified party is not entitled to indemnification. The Registrant's Bylaws authorize the Registrant to take steps to ensure that all persons entitled to indemnification are properly indemnified, including, if the Board of Directors so determines, purchasing and maintaining insurance. Item 16. List of Exhibits The exhibits filed as part of this registration statement are as follows: Exhibit Number Description 4.1 Form of Warrant issuable by the registrant to PPG Industries, Inc. from time to time pursuant to the Development and License Agreement, as amended. 5.1 Opinion of Morgan, Lewis & Bockius LLP regarding legality of securities being registered.* 10.1 Development and License Agreement between the registrant and PPG Industries, Inc.** 10.2 Amendment Number 1 to the Development and License Agreement between the registrant and PPG Industries, Inc. ** 23.1 Consent of Morgan, Lewis & Bockius LLP (included in its opinion filed as Exhibit 5.1 hereto).* 23.2 Consent of Arthur Andersen LLP. 24.1 Powers of Attorney (included as part of the signature page hereof). - ---------------------- * Previously filed. ** Confidential treatment is being sought for certain portions of this exhibit pursuant to Rule 406 under the Securities Act of 1933, as amended. Item 17. Undertakings (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933 (the "Securities Act"); (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the II-2 form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) That, insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (d) That, (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective; and (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Pre-Effective Amendment to Registration Statement on Form S-3 to be signed on its behalf by the undersigned thereunto duly authorized, in Ewing, New Jersey, on March 7, 2001. UNIVERSAL DISPLAY CORPORATION By: /s/ Steven V. Abramson ----------------------------------------- Steven V. Abramson President and Chief Operating Officer In accordance with the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Each person in so signing also makes, constitutes and appoints Steven V. Abramson and Sidney D. Rosenblatt, and each of them acting alone, his or her true and lawful attorney-in-fact, with full power of substitution, to execute and cause to be filed with the securities and exchange commission pursuant to the requirements of the securities act of 1933, as amended, any and all amendments and post-effective amendments to this registration statement, and including any registration statement for the same offering that is to be effective upon filing pursuant to rule 462(b) under the securities act, with exhibits thereto and other documents in connection therewith, and hereby ratifies and confirms all that said attorney-in-fact or his or her substitute or substitutes may do or cause to be done by virtue hereof.
Signature Title Date --------- ----- ---- Chief Executive Officer and Chairman of March 7, 2001 * the Board (principal executive officer) - ------------------------------------------------- Sherwin I. Seligsohn President, Chief Operating Officer and March 7, 2001 /s/ Steven V. Abramson Director - ------------------------------------------------- Steven V. Abramson Executive Vice President, Chief Financial March 7, 2001 Officer, Treasurer, Secretary and Director * (principal financial and accounting officer) - ------------------------------------------------- Sidney D. Rosenblatt Executive Vice President and Director March 7, 2001 * - ------------------------------------------------- Dean L. Ledger Director March 7, 2001 * - ------------------------------------------------- C. Keith Hartley Director March 7, 2001 * - ------------------------------------------------- Elizabeth H. Gemmill * Director March 7, 2001 - ------------------------------------------------- Lawrence Lacerte * By: /s/ Steven V. Abramson --------------------------------------------- Steven V. Abramson as Attorney-in-Fact
II-4 EXHIBIT INDEX Exhibit Number Description 4.1 Form of Warrant issuable by the registrant to PPG Industries, Inc. from time to time pursuant to the Development and License Agreement, as amended. 5.1 Opinion of Morgan, Lewis & Bockius LLP regarding legality of securities being registered.* 10.1 Development and License Agreement between the registrant and PPG Industries, Inc.** 10.2 Amendment Number 1 to the Development and License Agreement between the registrant and PPG Industries, Inc. ** 23.1 Consent of Morgan, Lewis & Bockius LLP (included in its opinion filed as Exhibit 5.1 hereto).* 23.2 Consent of Arthur Andersen LLP. 24.1 Powers of Attorney (included as part of the signature page hereof). - ---------------------- * Previously filed. ** Confidential treatment is being sought for certain portions of this exhibit pursuant to Rule 406 under the Securities Act of 1933, as amended. EX-4.1 2 0002.txt EXHIBIT 4.1 THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT. STOCK PURCHASE WARRANT THIS CERTIFIES THAT, for value received, PPG Industries, Inc. is entitled to purchase from UNIVERSAL DISPLAY CORPORATION, a Pennsylvania corporation (the "Company"), at any time or from time to time during the period specified in Paragraph 2 hereof, _________ (________) fully paid and nonassessable shares of the Company's Common Stock, par value $.01 per share (the "Common Stock"), at an exercise price of $24.28 per share, representing 120% of the Average Price as such term is defined in that certain Development and License Agreement (the "Development Agreement") between the parties entered into and effective as of October 1, 2000 (the "Exercise Price"). The term "Warrant Shares," as used herein, refers to the shares of Common Stock purchasable hereunder. The Warrant Shares and the Exercise Price are subject to adjustment as provided in Paragraph 4 hereof. This Warrant is subject to the following terms, provisions, and conditions: 1. Manner of Exercise; Issuance of Certificates; Payment for Shares. Subject to the provisions hereof, this Warrant may be exercised by the holder hereof, in whole or in part, from time to time, by the surrender of this Warrant, together with a completed exercise agreement in the form attached hereto (the "Exercise Agreement"), to the Company during normal business hours on any business day at the Company's principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder hereof), and upon payment to the Company in cash, by certified or official bank check or by wire transfer for the account of the Company of the Exercise Price for the Warrant Shares specified in the Exercise Agreement. The Warrant Shares so purchased shall be deemed to be issued to the holder hereof or such holder's designee, as the record owner of such shares, as of the close of business on the date on which this Warrant shall have been surrendered, the completed Exercise Agreement shall have been delivered, and payment shall have been made for such shares as set forth above. Certificates for the Warrant Shares so purchased, representing the aggregate number of shares specified in the Exercise Agreement, shall be delivered to the holder hereof within a reasonable time, not exceeding three (3) business days, after this Warrant shall have been so exercised. The certificates so delivered shall be in such denominations as may be requested by the holder hereof and shall be registered in the name of such holder or such other name as shall be designated by such holder. Notwithstanding the foregoing, any partial exercise, other than an exercise of the total remaining shares, shall be for at least forty thousand (40,000) shares. If under this Section 1 this Warrant is exercised for less than all Warrant Shares for which this Warrant is then exercisable, a new Warrant of like tenor and provisions for the unexercised Warrant Shares shall then also be delivered to the holder. 2. Period of Exercise. This Warrant is exercisable at any time or from time to time on or after the date hereof and through 5:00 p.m., Philadelphia time, on the date which is the seventh-year anniversary of the date hereof (the "Exercise Period"). 3. Certain Agreements of the Company. The Company hereby covenants and agrees as follows: (a) Shares to be Fully Paid. All Warrant Shares will, upon issuance in accordance with the terms of this Warrant, be validly issued, fully paid, and nonassessable and free from all taxes, liens, and charges with respect to the issue thereof. (b) Reservation of Shares. The Company agrees that all times prior to the expiration of the Exercise Period, it shall have authorized, and reserved for the purpose of issuance upon exercise of this Warrant, a sufficient number of shares of Common Stock to provide for the exercise of this Warrant in whole. (c) Listing. The Company shall promptly secure the listing of the shares of Common Stock issuable upon exercise of this Warrant upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance upon exercise of this Warrant) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all shares of Common Stock from time to time issuable upon the exercise of this Warrant; and the Company shall so list on each national securities exchange or automated quotation system, as the case may be, and shall maintain such listing of, any other shares of capital stock of the Company issuable upon the exercise of this Warrant if and so long as any shares of the same class shall be listed on such national securities exchange or automated quotation system. (d) Certain Actions Prohibited. The Company will not, by amendment of its charter or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the holder of this Warrant in order to protect the exercise privilege of the holder of this Warrant against dilution or other impairment, consistent with the tenor and purpose of this Warrant. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, and (ii) will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant. (e) Successors and Assigns. This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation, or acquisition of all or substantially all the Company's assets. 4. Antidilution Provisions. During the Exercise Period, the Exercise Price and the number of Warrant Shares shall be subject to adjustment from time to time as provided in this Paragraph 4. (a) Subdivision or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock acquirable hereunder into a greater number of shares, then, after the date of record for effecting such subdivision, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by reverse stock split, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock acquirable hereunder into a smaller number of shares, then, after the date of record for effecting such combination, the Exercise Price in effect immediately prior to such combination will be proportionately increased. Upon each adjustment of the Exercise Price pursuant to the provisions of this paragraph , the number of shares of Common Stock issuable upon exercise of this Warrant shall be adjusted by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price. (b) Consolidation, Merger or Sale. In case of any consolidation of the Company with, or merger of the Company with or into any other corporation, or in case of any sale or conveyance of all or substantially all of the assets of the Company other than in connection with a plan of complete liquidation of the Company, then as a condition of such consolidation, merger or sale or conveyance, adequate provision will be made whereby the holder of this Warrant will have the right to acquire and receive upon exercise of this Warrant in lieu of the shares of Common Stock immediately theretofore acquirable upon the exercise of this Warrant, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for the number of shares of Common Stock immediately theretofore acquirable and receivable upon exercise of this Warrant had such consolidation, merger or sale or conveyance not taken place. The Company will not effect any consolidation, merger or sale or conveyance unless prior to the consummation thereof, the successor corporation (if other than the Company) assumes by written instrument the obligations under this Paragraph 4 and the obligations to deliver to the holder of this Warrant such shares of stock, securities or assets as, in accordance with the foregoing provisions, the holder may be entitled to acquire. (c) Notice of Adjustment. Upon the occurrence of any event which requires any adjustment of the Exercise Price, then, and in each such case, the Company shall give notice thereof to the holder of this Warrant, which notice shall state the Exercise Price resulting from such adjustment and the increase or decrease in the number of Warrant Shares purchasable at such price upon exercise, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Such calculation shall be certified by the chief financial officer of the Company. (d) Minimum Adjustment of Exercise Price. In the event that any adjustment of the Exercise Price as required herein results in a fraction of a cent, such Exercise Price shall be rounded up to the nearest cent. No adjustment of the Exercise Price shall be made in an amount of less than 1% of the Exercise Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than 1% of such Exercise Price. (e) No Fractional Shares. No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but the Company shall pay a cash adjustment in respect of any fractional share which would otherwise be issuable in an amount equal to the same fraction of the Market Price of a share of Common Stock on the date of such exercise. (f) Other Notices. In case at any time: (i) the Company shall declare any dividend upon the Common Stock payable in shares of stock of any class or make any other distribution (including dividends or distributions payable in cash out of retained earnings) to the holders of the Common Stock; (ii) the Company shall offer for subscription pro rata to the holders of the Common Stock any additional shares of stock of any class or other rights; (iii) there shall be any capital reorganization of the Company, or reclassification of the Common Stock, or consolidation or merger of the Company with or into, or sale of all or substantially all its assets to, another corporation or entity; or (iv) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company; then, in each such case, the Company shall give to the holder of this Warrant (a) notice of the date on which the books of the Company shall close or a record shall be taken for determining the holders of Common Stock entitled to receive any such dividend, distribution, or subscription rights or for determining the holders of Common Stock entitled to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up and (b) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, notice of the date (or, if not then known, a reasonable approximation thereof by the Company) when the same shall take place. Such notice shall also specify the date on which the holders of Common Stock shall be entitled to receive such dividend, distribution, or subscription rights or to exchange their Common Stock for stock or other securities or property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, or winding-up, as the case may be. Such notice shall be given at least 30 days prior to the record date or the date on which the Company's books are closed in respect thereto. Failure to give any such notice or any defect therein shall not affect the validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv) above. 5. Issue Tax. The issuance of certificates for Warrant Shares upon the exercise of this Warrant shall be made without charge to the holder of this Warrant or such shares for any issuance tax or other costs in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than the holder of this Warrant. 6. No Rights or Liabilities as a Shareholder. This Warrant shall not entitle the holder hereof to any voting rights or other rights as a shareholder of the Company. No provision of this Warrant, in the absence of affirmative action by the holder hereof to purchase Warrant Shares, and no mere enumeration herein of the rights or privileges of the holder hereof, shall give rise to any liability of such holder for the Exercise Price or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. 7. Transfer and Replacement of Warrant. (a) Restrictions on Transfer. The Warrant and the rights granted to the holder hereof are non-transferable. Notwithstanding the foregoing, the holder hereof may at any time assign this Warrant in whole or in part to any affiliate of the holder. (b) Replacement of Warrant. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such loss, theft, or destruction, upon delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company, or, in the case of any such mutilation, upon surrender and cancellation of this Warrant, the Company, at its expense, will execute and deliver, in lieu thereof, a new Warrant of like tenor. (c) Cancellation; Payment of Expenses. Upon the surrender of this Warrant in connection with any transfer or replacement as provided in this Paragraph 7, this Warrant shall be promptly canceled by the Company. The Company shall pay all taxes (other than securities transfer taxes) and all other expenses (other than legal expenses, if any, incurred by the Holder) and charges payable in connection with the preparation, execution, and delivery of Warrants pursuant to this Paragraph 7. (d) Register. The Company shall maintain, at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder hereof), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each assignee and each prior owner of this Warrant. (e) Exercise Without Registration. If, at the time of the surrender of this Warrant in connection with any exercise of this Warrant, this Warrant (or, in the case of any exercise, the Warrant Shares issuable hereunder), shall not be registered under the Securities Act of 1933, as amended (the "Securities Act"), and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such exercise, (i) that the holder of this Warrant, as the case may be, furnish to the Company a written opinion of counsel, which opinion and counsel are acceptable to the Company, to the effect that such exercise may be made without registration under said Act and under applicable state securities or blue sky laws and (ii) that the holder execute and deliver to the Company an investment letter in form and substance acceptable to the Company. The first holder of this Warrant, by taking and holding the same, represents to the Company that such holder is acquiring this Warrant for investment and not with a view to the distribution thereof. Notwithstanding the foregoing, if this Warrant is presented for exercise by the initial Holder hereof, the foregoing provisions of this Section 7 shall not apply to the exercise of this Warrant by the initial Holder hereof. 8. Registration Rights. The initial holder of this Warrant is entitled to the benefit of such registration rights in respect of the Warrant Shares as are set forth in Article 11 of the Development Agreement. 9. Notices. All notices, requests, and other communications required or permitted to be given or delivered hereunder to the holder of this Warrant shall be in writing, and shall be personally delivered, or shall be sent by certified or registered mail or by recognized overnight mail courier, postage prepaid and addressed, to such holder at the address shown for such holder on the books of the Company, or at such other address as shall have been furnished to the Company by notice from such holder. All notices, requests, and other communications required or permitted to be given or delivered hereunder to the Company shall be in writing, and shall be personally delivered, or shall be sent by certified or registered mail or by recognized overnight mail courier, postage prepaid and addressed, to the office of the Company at 375 Phillips Boulevard, Ewing, New Jersey 08618, Attention: Chief Executive Officer, or at such other address as shall have been furnished to the holder of this Warrant by notice from the Company. Any such notice, request, or other communication may be sent by facsimile, but shall in such case be subsequently confirmed by a writing personally delivered or sent by certified or registered mail or by recognized overnight mail courier as provided above. All notices, requests, and other communications shall be deemed to have been given either at the time of the receipt thereof by the person entitled to receive such notice at the address of such person for purposes of this Paragraph 9, or, if mailed by registered or certified mail or with a recognized overnight mail courier upon deposit with the United States Post Office or such overnight mail courier, if postage is prepaid and the mailing is properly addressed, as the case may be. 10. Governing Law. This warrant shall be governed by and construed and enforced in accordance with the internal laws of the Commonwealth of Pennsylvania without regard to the body of law controlling conflicts of law. 11. Miscellaneous. (a) Amendments. This Warrant and any provision hereof may only be amended by an instrument in writing signed by the Company and the holder hereof. (b) Descriptive Headings. The descriptive headings of the several paragraphs of this Warrant are inserted for purposes of reference only, and shall not affect the meaning or construction of any of the provisions hereof. IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer. UNIVERSAL DISPLAY CORPORATION By: ___________________________________ Name: ___________________________________ Title: ___________________________________ Issued and dated as of _____________, 2000 FORM OF EXERCISE AGREEMENT Dated: ____________, 200__ To: Universal Display Corporation The undersigned, pursuant to the provisions set forth in the within Warrant, hereby agrees to purchase ________ shares of Common Stock covered by such Warrant, and makes payment herewith in full therefor at the price per share provided by such Warrant in cash or by certified or official bank check in the amount of $_________. Please issue a certificate or certificates for such shares of Common Stock in the name of and pay any cash for any fractional share to: Name:_____________________________________ Signature: _______________________________ Address: _______________________________ _______________________________ Note: The above signature should correspond exactly with the name on the face of the within Warrant. EX-10.1 3 0003.txt EXHIBIT 10.1 DEVELOPMENT AND LICENSE AGREEMENT THIS DEVELOPMENT AND LICENSE AGREEMENT (this "Agreement") is entered into and effective as of this 1st day of October, 2000 (the "Effective Date") by and between PPG INDUSTRIES, INC., a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, U.S.A., having its principal place of business at One PPG Place, Pittsburgh, Pennsylvania 15272 ("PPG"), and UNIVERSAL DISPLAY CORPORATION, a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, U.S.A., having a principal place of business at 375 Phillips Boulevard, Ewing, New Jersey 08618 ("UDC"). WHEREAS: 1. PPG possesses technical, manufacturing, and business know-how, as well as development resources and capabilities, relating to various chemical products; 2. UDC is the owner and/or licensee of technology related to, and has expertise in the development and use of, organic light-emitting devices ("OLEDs"); 3. PPG and UDC mutually desire to utilize certain PPG research and development capabilities, facilities and equipment, and the parties' respective personnel and Know-How, to develop new and/or improved OLED Chemicals under the terms and conditions of this Agreement; 4. UDC desires to establish an assured supply of certain OLED Chemicals to UDC and UDC Licensees, and PPG possesses technical, manufacturing and business know-how relating to the commercial production of OLED Chemicals, and the parties have agreed to concurrently enter into a long-term business relationship whereby PPG manufactures and is the exclusive supplier of certain OLED Chemicals, and non-exclusive supplier of other OLED Chemicals, to UDC for its own use and for resale to UDC Licensees pursuant to the Supply Agreement by and between the parties as of the date hereof; 5. The parties desire to identify and pursue opportunities to accelerate and enhance the commercial success of UDC's OLED business, and to pursue other opportunities beyond OLED Chemicals, as may be mutually agreed by the parties. NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, the parties hereto, intending to be legally bound hereby, covenant and agree as follows: ARTICLE 1 - DEFINITIONS Whenever used in this Agreement, unless otherwise clearly indicated in the context, the following terms shall have the meanings as defined in this Article. As used herein, the singular includes the plural and vice versa. 1.1 "1933 Act" means the Securities Act of 1933, as amended. 1.2 "1934 Act" means the Securities Exchange Act of 1934, as amended. 1.3 "Authorized OLED Applications" means the OLED applications identified in Exhibit F attached hereto, together with any other OLED applications that the parties mutually agree in writing shall be added to Exhibit F. 1.4 "Average Price" means the lesser of (a) the average closing price per share of UDC Common Stock for the ninety (90) calendar days ending on the business day prior to the execution of this Agreement or (b) if, on any date that UDC is required to issue shares of UDC Common Stock to PPG pursuant to this Agreement (the "Issuance Date") the average closing price per share of UDC Common Stock for the ninety (90) calendar days prior to such date, as listed in the NASDAQ National Market listing of The Wall Street Journal, is less than [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the price set forth in (a), such average closing price, provided that in the event that such average closing price is less than [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the amount set forth in the preceding clause (a), then the average closing price for purposes of this clause (b) shall be deemed to be [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the amount set forth in the preceding clause (a); provided further that such prices shall be appropriately adjusted in the event of any dividend, stock split, combination of other similar recapitalization affecting UDC Common Stock since the date of execution of this Agreement or Issuance Date, as the case may be. 1.5 "Commission" means the Securities and Exchange Commission. 1.6 "Confidential Information" of a party shall include all trade secret, confidential and/or proprietary information of such party, whether of a technical, engineering, operational, financial or marketing nature (including, without limitation, their respective proprietary materials), that is (i) in writing and marked as "Trade Secret," "Confidential," "Proprietary" or with words of a similar nature; or (ii) orally disclosed and clearly identified as "Trade Secret," "Confidential" or "Proprietary" at the time of such disclosure and confirmed in writing as such within thirty (30) days following such oral disclosure. 1.7 "Developed Technology" means all inventions, discoveries, information and materials, patentable or unpatentable, that (i) are conceived, created, made or reduced to practice by the Development Team (alone or with UDC personnel) (ii) pursuant to an agreed-upon Statement of Work or Work Plan. This includes OLED Chemicals, their composition of matter, their synthetic pathways (including purification) for developmental quantities, their uses in all fields of application, and their associated analytical characterization techniques. "Developed Technology" shall also encompass the technology developed pursuant to the December 29, 1999 and February 21, 2000 agreements between the parties. 1.8 "Development Program" means the joint research and development program undertaken by PPG and UDC pursuant to this Agreement, which program shall be directed to (i) developing new and/or improved OLED Chemicals and methods and practices for producing developmental quantities of such chemicals; and (ii) such other items as are agreed upon by the parties in a Statement of Work or Work Plan. 1.9 "Development Team" means the team of qualified research and process development chemists, technicians, engineers and supervision assembled by PPG to work on the Development Program under this Agreement, to the extent the salaries of such persons are funded pursuant to subsection (a) of Exhibit A hereto. 1.10 "Know-How" means trade secrets, know-how and other unpatented technical and/or proprietary information, data, specifications, plans, drawings, designs, copyrights, blueprints, formulae, processes and other similar items and materials. 1.11 "OLED Chemicals" means organic or organometallic molecules or compounds positioned between the two electrodes in a device that radiates light by applying electrical current or voltage to the electrodes. 1.12 "Patents" means United States and foreign patents and patent applications, together with all divisions, continuations, continuations-in-part, reissues, re-examinations, renewals and extensions of the same. 1.13 "Person" or "person" means any natural person, corporation, partnership, limited liability company, proprietorship, association, trust or other legal entity. 1.14 "PPG Actual Expenses" means, for the period of calculation, PPG's calculation of the actual PPG Expenses incurred. 1.15 "PPG Estimated Expenses" means, as of the date of calculation, PPG's good faith estimate of PPG Expenses. 1.16 "PPG Expenses" means, for the period of calculation, the amount calculated pursuant to Exhibit A attached hereto. 1.17 "Princeton License Agreement" means that Amended License Agreement by and among UDC, The Trustees of Princeton University ("Princeton University") and the University of Southern California ("USC"), dated as of October 9, 1997, as the same has been and may be amended from time to time provided that any amendment does not materially alter the rights or obligations of the parties under this Agreement. 1.18 "Rule 144" means Rule 144 promulgated by the Commission pursuant to the 1933 Act. 1.19 "Securities" means the shares of UDC Common Stock issuable to PPG pursuant to this Agreement, the Warrants issuable to PPG pursuant to this Agreement and the shares of UDC Common Stock issuable upon exercise of the Warrants. 1.20 "Statement of Work" means an agreed-upon statement of work describing the work to be performed by the Development Team, as amended from time to time in writing by mutual agreement. The initial Statement of Work for the period 2000-2001 is attached hereto as Exhibit B. 1.21 "Supply Agreement" means the related Supply Agreement entered into by and between the parties as of the date hereof. 1.22 "UDC Common Stock" means the common stock of UDC, $0.01 par value per share. 1.23 "UDC Chemical Know-How" means any and all Know-How relating to OLED Chemicals or methods of producing OLED Chemicals, or that might reasonably be useful in connection with producing OLED Chemicals, that UDC owns or otherwise is authorized to disclose and license or sublicense to PPG hereunder, including, without limitation, any such Know-How constituting Developed Technology and any such Know-How acquired or licensed by UDC from Princeton University or USC under the Princeton License Agreement or such other agreements, whether prior to or after the Effective Date. 1.24 "UDC Chemical Patents" means the Patents listed in Exhibit D attached hereto and any and all other Patents, whether or not currently existing, that claim or cover any OLED Chemicals or methods of producing OLED Chemicals, or any methods or processes that might reasonably be useful in connection with producing OLED Chemicals, and that UDC is authorized to license or sublicense to PPG hereunder, including, without limitation, any such Patents claiming Developed Technology and any such Patents acquired or licensed by UDC from Princeton University or USC under the Princeton License Agreement or such other agreements, whether prior to or after the Effective Date. 1.25 "UDC Proprietary Materials for Chemicals" means all UDC Chemical Patents, UDC Chemical Know-How, and Developed Technology, as well as the Product Specifications as such term is defined under the Supply Agreement. 1.26 "Warrant Shares" means the shares of UDC Common Stock issuable pursuant to the Warrants. 1.27 "Work Plan" means a written work plan provided by UDC that may be updated monthly, or more frequently if mutually agreed to by the parties, which work plan shall describe in greater detail the work to be performed as set forth in the Statement of Work. The initial Work Plan is attached hereto as Exhibit C. ARTICLE 2 - MANAGEMENT AND REPRESENTATION 2.1 The parties shall form a Management Committee (the "Committee") consisting of equal numbers of representatives appointed by PPG and UDC reporting to the President of UDC. The number of representatives appointed by each party shall be not less than one and not more than three. Each party shall designate one representative to be its spokesperson; UDC's spokesperson shall chair the Committee (the "Chair"). The parties agree to cause their respective representatives to comply with all terms and conditions set forth in this Agreement and all applicable laws. 2.2 The Committee shall be a forum for discussing the strategic direction of the Development Program. The Committee shall establish the Statement of Work for the upcoming budget year as specified in Section 10.2 below. 2.3 Meetings of the Committee shall be convened on a regular basis and whenever necessary but at least quarterly, and presided over by the Chair. Any Committee member may, whenever it is deemed necessary, request the Chair to convene a meeting of the Committee. Meetings of the Committee may be conducted in person or by telephone or video conference. 2.4 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] ARTICLE 3 - PARTY RESPONSIBILITIES 3.1 PPG shall assemble the Development Team to work on the tasks set forth in the Statement of Work. [The confidential material contained herein has been omitted and has been separately filed with the Commission.] By July 1 of the year preceding the year to which the Statement of Work applies, UDC may request that PPG add or reduce qualified individuals to or from the Development Team to support the agreed-upon Statement of Work, provided that the distribution of stock and warrants pursuant to Article 10 is adjusted appropriately [The confidential material contained herein has been omitted and has been separately filed with the Commission.] PPG's responsibilities under the Development Program shall include, without limitation, using commercially reasonable efforts to do the following: 3.1.1 PPG shall direct the Development Team to develop and improve OLED Chemicals as described in the agreed-upon Statement of Work, and to perform its obligations as specified in the Statement of Work and in the Work Plan. 3.1.2 PPG shall direct the Development Team to [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 3.1.3 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 3.1.4 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 3.2 UDC's responsibilities under the Development Program shall include, without limitation, using commercially reasonable efforts to do the following: 3.2.1 UDC shall prepare and provide PPG with written Work Plans, consistent with the agreed-upon Statement of Work, and perform its obligations as specified in the Statement of Work and the Work Plan. 3.2.2 UDC shall assemble a qualified team [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 3.2.3 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 3.2.4 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 3.3 Each party agrees to the following responsibilities under this Agreement: 3.3.1 The parties' researchers will work together in a team environment using their respective expertise and know-how to [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 3.3.2 While working at the other party's facilities, each party's chemists and other personnel shall: (i) at all times comply with all of the other party's safety, security and mutually agreed confidentiality policies and procedures; and (ii) limit their activities solely to assisting the other party in the development of the OLED Chemicals. 3.3.3 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 3.4 The parties agree to undertake the following marketing and/or business collaboration activities: 3.4.1 The parties shall make every commercially reasonable effort to identify and pursue opportunities to accelerate and enhance the commercial success of UDC's OLED business. 3.4.2 The parties shall work together to identify and explore opportunities to introduce UDC's OLED technology to PPG's businesses. UDC will use commercially reasonable efforts to provide PPG with early product development opportunities respecting OLED applications. 3.4.3 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 3.5 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 3.6 PPG acknowledges that UDC intends to continue working with Princeton University and USC to explore and develop new and improved OLED Chemicals, and that PPG's work under the Development Program may involve work on such chemicals, to the extent set forth in an agreed-upon Statement of Work. ARTICLE 4 - TECHNOLOGY LICENSES 4.1 UDC hereby grants to PPG, during the term of this Agreement and subject to the terms and conditions set forth herein, a worldwide, royalty-free, non-exclusive, non-transferable (except as permitted under Section 15.2 below) license, with the right to sublicense under Section 4.4, to practice under any and all UDC Chemical Patents, and to use, improve, enhance and modify any and all unpatented UDC Proprietary Materials for Chemicals, for the sole and limited purpose of performing PPG's obligations under Article 3 above, and as required by the Development Program as contemplated hereunder. UDC shall disclose UDC Chemical Know-How to PPG as is necessary in connection with PPG's performance under the Development Program. 4.2 UDC hereby grants to PPG a worldwide, perpetual, royalty-free, non-exclusive, non-transferable (except as permitted under Section 15.2 below) license, with the right to sublicense as permitted under Section 4.4 below, to practice under any and all Patents claiming Developed Technology, solely for PPG's own use in its current and future business (including Authorized OLED Applications), but not otherwise in competition with UDC with respect to OLEDs or OLED Chemicals. 4.3 Upon PPG's written request, UDC shall grant to PPG a worldwide, perpetual, non-exclusive license to all applicable UDC Patents and UDC Know-How for the sole and limited purposes of [The confidential material contained herein has been omitted and has been separately filed with the Commission.] The terms of such license shall be as the parties may mutually agree in writing, subject to the following: 4.3.1 For Authorized OLED Applications sold or otherwise distributed by PPG or its permitted sublicensees, PPG shall pay to UDC [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 4.3.2 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 4.3.3 UDC shall not grant rights to others that will adversely affect PPG's license contemplated under this Section 4.3. 4.4 The licenses granted to PPG under this Agreement shall extend to any division of or subsidiary controlled by PPG. Any sublicenses, in whole or in part, to other persons shall be subject to UDC's prior written approval, such approval not to be withheld unreasonably; provided, however, that UDC, in its sole discretion, may withhold approval of sublicenses other than those for purposes of permitting such third parties to practice under the applicable Patents and/or Know-How on PPG's behalf and/or for PPG's benefit or account (e.g., for purposes of exercising the equivalent of "have made" or "have sold" rights as such rights are generally understood). 4.5 Notwithstanding anything to the contrary in this Agreement, PPG acknowledges that some of its rights to certain UDC Chemical Patents derive from the Princeton License Agreement. UDC agrees that PPG's rights to said UDC Chemical Patents under this Agreement shall be a sublicense under the provisions of the Princeton License Agreement. 4.6 Except as set forth in the Supply Agreement, nothing herein shall restrict PPG, by implication or otherwise, from producing, using, offering to sell and/or selling any OLED Chemicals that (i) are not claimed in or covered by any UDC Chemical Patents respecting their compositions of matter, methods of production or uses in OLEDs, and (ii) can be produced without the use of any UDC Chemical Know-How or any Developed Technology. 4.7 Except for the license and other rights expressly granted or promised to PPG under this Agreement, or as otherwise expressly stated in the Supply Agreement, the parties retain their respective rights to their respective Patents and Know-How. ARTICLE 5 - DEVELOPED TECHNOLOGY 5.1 All Developed Technology shall be owned solely by UDC, and PPG hereby assigns and transfers any and all right, title and interest it may have in and to such Developed Technology to UDC. Upon UDC's request, PPG shall execute and deliver to UDC all instruments and other documents, and shall take such other actions as may be reasonably necessary so that UDC may protect and defend its rights in and to the Developed Technology. Except as expressly stated herein or in the Supply Agreement, UDC shall have no obligation of accounting to PPG with respect to any Developed Technology. Except as stated elsewhere in this Agreement, UDC shall bear all costs associated with patenting and protecting the Developed Technology. 5.2 PPG shall direct the Development Team to disclose to UDC all Developed Technology, by periodically providing copies of laboratory notebooks at a reasonable frequency requested by UDC, or by such other means as the parties may agree upon in writing. ARTICLE 6 - PATENT PROCUREMENT, MAINTENANCE AND ENFORCEMENT 6.1 During the term of this Agreement, PPG shall direct the Development Team to diligently maintain tangible records of work conducted under the Development Program ("Records"). These Records shall be kept in bound laboratory notebooks, each page of which shall be timely dated, signed and witnessed. PPG will retain the Records for two (2) years beyond the term of this Agreement. 6.2 During the term of this Agreement and for at least two (2) years thereafter, either party shall have the right to examine Records kept by the other party hereunder. Each such examination shall take place during normal business hours of the party whose Records are being examined and on at least ten (10) business days' advance written notice to such party. Each such examination shall be at a location selected by the party whose Records are being examined and in accordance with procedures reasonably acceptable to such party, including, without limitation, procedures designed to protect any Confidential Information of the party whose Records are being examined. No party shall be required to permit examination of its Records more often than once during any calendar quarter. 6.3 The desirability of applying for, prosecuting and maintaining Patents claiming the Developed Technology (and the countries in which Patents should be applied for, prosecuted and maintained) shall be determined by UDC. If UDC decides to obtain Patent protection for any Developed Technology, PPG shall reasonably cooperate with UDC in preparing, filing and prosecuting applications for such Patents and in maintaining any Patents issuing thereon. Except as stated in Section 6.4 below, UDC shall bear all expenses incurred in preparing, filing and prosecuting such Patent applications and in maintaining any resulting Patents. 6.4 UDC shall file, prosecute and maintain all Patents and Patent applications claiming any Developed Technology, at its sole expense, consistent with UDC's reasonably established procedures governing the filing, prosecution and maintenance of all of its Patents and Patent applications, as such procedures may be modified from time to time but not so as to adversely impact PPG or its rights under this Agreement. In the event that (i) UDC (or its trustee or receiver) decides not to prepare, file, or prosecute a Patent application claiming any Developed Technology in any country (i.e., a non-elected country) or (ii) UDC (or its trustee or receiver) decides to discontinue pursuit of or maintenance of any Patents claiming any Developed Technology, UDC (or its trustee or receiver) shall promptly inform PPG of its decision in writing, with reasonable effort being made to provide at least sixty (60) days notice before the date on which any action is due, provided further that in the case of a decision not to file a Patent application, UDC (or its trustee or receiver) shall use all reasonable efforts to provide PPG with sufficient advance notice to enable PPG to file an appropriate Patent application prior to any public use, disclosure or offer for sale. In such circumstances, or should UDC fail to provide such notice, PPG shall have the right, but not the obligation, in its sole discretion and at its sole expense, to prepare, file, and/or prosecute such Patent application, and/or to maintain such Patent. [The confidential material contained herein has been omitted and has been separately filed with the Commission.] In addition, UDC shall promptly execute all necessary documents and give all reasonable assistance, including providing PPG with all relevant files and documents, that may be necessary for PPG to prepare, file, and prosecute such Patent application(s), and/or to maintain such Patent(s). 6.4.1 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 6.5 UDC shall provide PPG with copies of all Patent applications claiming any Developed Technology before they are filed, in order for PPG to promptly review said applications to be certain that no PPG Confidential Information is being disclosed without PPG's prior approval. If PPG claims that its Confidential Information is disclosed in an application submitted for review, UDC shall not file such application until the claim has been resolved to the reasonable satisfaction of PPG. The parties shall in good faith attempt to resolve any such claim as expeditiously as possible. 6.6 Each party shall promptly notify the other party of any known or reasonably suspected infringement or misappropriation of UDC Proprietary Materials for Chemicals. 6.7 UDC shall protect and enforce all Patents and Patent applications claiming any Developed Technology, at its sole expense, consistent with the manner in which it protects and enforces all of its Patents. [The confidential material contained herein has been omitted and has been separately filed with the Commission.] ARTICLE 7 - WARRANTIES AND LIMITATIONS OF LIABILITY 7.1 Each party represents and warrants to the other as follows: 7.1.1 It has the requisite corporate right, power and authority to enter into and perform this Agreement. 7.1.2 The execution, delivery and performance of this Agreement by it will not (i) result in the breach of, constitute a default under or interfere with any contract or other instrument or obligation, whether written or oral, to which it is currently bound, or (ii) violate any writ, order, injunction, decree, or any law, statute, rule or regulation applicable to it. 7.1.3 It shall, to its knowledge following reasonable inquiry, comply in all material respects with all applicable laws, rules, regulations and other governmental requirements relating to or affecting its performance under this Agreement, and shall obtain and maintain all governmental permits, licenses and consents required in connection therewith. 7.2 UDC represents and warrants as follows: 7.2.1 It owns or has, and shall retain, sufficient rights in the UDC Proprietary Materials for Chemicals to grant the licenses, sublicenses, and rights granted to PPG hereunder. 7.2.2 It is unaware of any alleged invalidity of the UDC Chemical Patents licensed to PPG hereunder and it will immediately notify PPG in writing of its receipt of any written notices to the contrary. 7.2.3 PPG represents and warrants that it has or will have sufficient rights to assign to UDC the Developed Technology conceived, created, made or reduced to practice by the Development Team, pursuant to Section 5.1 of this Agreement. 7.3 EXCEPT FOR THE EXPRESS WARRANTIES CONTAINED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES TO THE OTHER, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. ALL SUCH OTHER REPRESENTATIONS AND WARRANTIES ARE HEREBY DISCLAIMED. 7.4 IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, INDIRECT, PUNITIVE OR CONSEQUENTIAL DAMAGES OF ANY KIND (INCLUDING LOST PROFITS, BUSINESS OR GOODWILL) IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER COVERED BY THIS AGREEMENT, REGARDLESS OF WHETHER SUCH LIABILITY IS BASED ON BREACH OF CONTRACT, TORT, STRICT LIABILITY, BREACH OF WARRANTY OR ANY OTHER THEORY, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 7.5 PRINCETON UNIVERSITY AND USC MAKE NO REPRESENTATIONS AND WARRANTIES AS TO THE PATENTABILITY AND/OR DISCOVERIES INVOLVED IN ANY OF THE UDC CHEMICAL PATENTS. PRINCETON UNIVERSITY AND USC MAKE NO REPRESENTATION AS TO PATENTS NOW HELD OR WHICH WILL BE HELD BY OTHERS IN ANY FIELD AND/OR FOR ANY PARTICULAR PURPOSE. PRINCETON UNIVERSITY AND USC MAKE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. ARTICLE 8 - INSURANCE 8.1 Each party shall maintain its standard general liability insurance or its self-insurance practices to protect against covered damages, costs or fees (including reasonable attorney's fees) arising out of or relating to any property damage, bodily injury, sickness, disease or death, caused directly by any negligent act or omission of either party's personnel while on premises at the other party's facility, and will name the other party as an additional insured under such insurance. The insured will provide the other party with a certificate of such insurance, showing the other as an additional insured, and notify the other of any material changes to the relevant insurance policies. ARTICLE 9 - CONFIDENTIAL INFORMATION 9.1 Each party (in such capacity, the "Receiving Party") shall review and maintain Confidential Information of the other party (in such capacity, the "Disclosing Party") in accordance with the following terms and conditions: 9.1.1 The Receiving Party agrees to treat all Confidential Information of the Disclosing Party as confidential and not to disclose such Confidential Information to any other person, or use such Confidential Information for any purpose, other than to perform its obligations or exercise its rights hereunder, except as expressly permitted by the Disclosing Party in writing. 9.1.2 The Receiving Party shall make only such copies of the Confidential Information of the Disclosing Party as are reasonable for the Receiving Party's performance of its obligations or exercise of its rights hereunder. 9.1.3 At all times, the Receiving Party shall keep and maintain all Confidential Information of the Disclosing Party in a safe and secure place with reasonable safeguards to insure that unauthorized persons do not have access to such Confidential Information. Upon discovery of any unauthorized disclosure or use of Confidential Information of the Disclosing Party, the Receiving Party shall immediately notify the Disclosing Party and take all reasonable steps to prevent its further unauthorized disclosure or use. 9.1.4 The Receiving Party is prohibited from disclosing Confidential Information of the Disclosing Party to third parties unless such other person has a need-to-know such Confidential Information in connection with the Receiving Party's performance of its obligations or exercise of its rights under this Agreement. In addition, disclosure of such Confidential Information to any third party shall be permitted only after such third party has agreed in writing to abide by provisions of confidentiality and restrictive use no less stringent than those set forth herein. The Receiving Party shall be responsible for enforcing such provisions against such third party. 9.1.5 With respect to all Confidential Information of the Disclosing Party in the Receiving Party's possession or control (including, without limitation, all copies and summaries thereof and regardless of the format in which such Confidential Information is stored), the Receiving Party, promptly upon the Disclosing Party's request, shall either: (i) return all such Confidential Information to the Disclosing Party, or (ii) destroy all such Confidential Information and certify the same to the Disclosing Party in writing. Notwithstanding the foregoing sentence, the Receiving Party may retain one copy of each tangible item of Confidential Information of the Disclosing Party in a secure location solely for purposes of enforcement of this Agreement; provided, however, that all such Confidential Information shall continue to be governed in all respects by the other provisions of this Article. The provisions of this Section 9.1.5 shall not apply to any Developed Technology. 9.2 Notwithstanding anything to the contrary herein, the provisions of this Article shall not apply with respect to any Confidential Information of the Disclosing Party that: 9.2.1 is already in or subsequently enters the public domain through no fault of the Receiving Party; 9.2.2 is supplied by the Disclosing Party to another person without a duty of confidentiality; 9.2.3 is known to the Receiving Party or is in its possession (as shown by tangible evidence) prior to receipt from the Disclosing Party; 9.2.4 is developed independently by the Receiving Party (as shown by competent written records) without reliance on any Confidential Information of the Disclosing Party; 9.2.5 is lawfully received by the Receiving Party from another person without a duty of confidentiality to the Disclosing Party; or 9.2.6 is disclosed by the Receiving Party pursuant to judicial order or governmental regulation or administrative process so long as the Receiving Party notifies the Disclosing Party promptly before the disclosure and cooperates with the Disclosing Party in the event that the Disclosing Party decides to contest or limit the disclosure. 9.3 To the extent any person that is subject to the restrictions set forth in this Article is not a party to this Agreement, the terms of this Article shall apply to such person to the same extent as if he, she or it were a party hereto. 9.4 Regarding Confidential Information concerning any Developed Technology, UDC agrees to comply with the provisions of this Article 9 as a Receiving Party with respect thereto. 9.5 In the event of any breach or threatened breach by any person of any provision of this Article, the party harmed or likely to be harmed by such breach or threatened breach shall be entitled to seek injunctive or other equitable relief restraining such person from engaging in conduct that would constitute a breach of the obligations of such person under this Article. Such relief, if granted, shall be in addition to and not in lieu of any other remedies that may be available, at law or equity, including an action for the recovery of damages. ARTICLE 10 - UDC COMMON STOCK AND WARRANTS 10.1 Initial Period Payments. 10.1.1 Attached hereto as Schedule 10.1 is the parties' agreed-upon written calculation of PPG Estimated Expenses for the period from [The confidential material contained herein has been omitted and has been separately filed with the Commission.] (the "Initial Period") based on expenditures to be made by PPG during that period. On the date of execution of this Agreement, UDC will deliver to PPG (i) such number of duly authorized, validly issued, fully paid and non-assessable shares of UDC Common Stock as is equal to the quotient of (a) the PPG Estimated Expenses for the Initial Period divided by (b) the Average Price (the "Initial Period Shares"), and (ii) a [The confidential material contained herein has been omitted and has been separately filed with the Commission.] term promissory note for the amount of the Initial Period PPG Estimated Expenses, secured by an interest in all Developed Technology, which promissory note shall (a) if upon its maturity, the Registration Statement has not been declared and maintained effective, be automatically payable in cash for the principal amount thereof plus interest calculated at [The confidential material contained herein has been omitted and has been separately filed with the Commission.] per annum (based on a year of 365 days), compounded daily, and, upon receipt of such cash payment, the Initial Period Shares shall be returned to UDC and cancelled, or (b) if upon or before its maturity, the Registration Statement has been declared and maintained effective, be automatically deemed to have been paid through the issuance of the Initial Period Shares to PPG, on the date the Registration Statement has become so effective and the promissory note shall thereupon be cancelled. 10.1.2 During the Initial Period, PPG will notify UDC of any anticipated increase in the amounts set forth in the Initial Period PPG Estimated Expenses. UDC will either approve or deny in writing such anticipated increase and UDC will be deemed to accept any changes in the Statement of Work and/or a Work Plan resulting from such approval or denial. PPG will not exceed the amounts set forth in the Initial Period PPG Estimated Expenses without the prior written consent of UDC. 10.1.3 On or before [The confidential material contained herein has been omitted and has been separately filed with the Commission.], PPG will provide to UDC PPG's written calculation of PPG Actual Expenses for the Initial Period. If PPG Actual Expenses are greater than PPG Estimated Expenses for the Initial Period, then, on or before [The confidential material contained herein has been omitted and has been separately filed with the Commission.], UDC will (i) execute an amendment to the secured promissory note described in Section 10.1 to increase the principal amount thereof for the difference between PPG Actual Expenses and PPG Estimated Expenses for such Initial Period, and (ii) deliver to PPG the number of shares of UDC Common Stock as is equal to (a) the difference between PPG Actual Expenses and PPG Estimated Expenses for such Initial Period divided by (b) the Average Price, which shares shall be deemed to be added to the Initial Period Shares. If PPG Actual Expenses are less than PPG Estimated Expenses for the Initial Period, then, on or before [The confidential material contained herein has been omitted and has been separately filed with the Commission.], PPG will deliver to UDC, at its election, either (i) cash equal to the difference between PPG Actual Expenses and PPG Estimated Expenses for such Initial Period or (ii) the number of shares of UDC Common Stock as is equal to (A) the difference between PPG Actual Expenses and PPG Estimated Expenses for such Initial Period divided by (B) the Average Price. 10.1.4 On [The confidential material contained herein has been omitted and has been separately filed with the Commission.], UDC will deliver to PPG a warrant substantially in the form of Exhibit D hereto (a "Warrant") evidencing PPG's right to purchase, for a [The confidential material contained herein has been omitted and has been separately filed with the Commission.] year period and on the terms and conditions set forth in the Warrant, the number of shares of UDC Stock as is equal to, for the Initial Period, PPG Actual Expenses divided by the Average Price. 10.2 Subsequent Annual Payments. On [The confidential material contained herein has been omitted and has been separately filed with the Commission.] and each [The confidential material contained herein has been omitted and has been separately filed with the Commission.] thereafter during the Initial Term, UDC will provide to PPG a proposed Statement of Work setting forth its anticipated requirements for the period from [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the subsequent calendar year through [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of such calendar year (each a "Subsequent Period"). For the purposes of this Agreement, the Initial Period and each Subsequent Period are sometimes referred to as "Period." 10.2.1 Following receipt of each proposed Statement of Work, on [The confidential material contained herein has been omitted and has been separately filed with the Commission.] and each [The confidential material contained herein has been omitted and has been separately filed with the Commission.] thereafter during the Initial Term, PPG will provide to UDC PPG's written calculation of PPG Estimated Expense for the Subsequent Period covered by the proposed Statement of Work. Within [The confidential material contained herein has been omitted and has been separately filed with the Commission.] days of UDC's receipt from PPG of the calculation of PPG Estimated Expenses, UDC shall either approve or reject such calculation of PPG Estimated Expenses by written notice to PPG. If UDC rejects PPG's calculation of PPG Estimated Expenses and provides its written reasons therefor, UDC and PPG, through their President and Vice-President, Specialty Chemicals, respectively, shall work together to establish a mutually acceptable estimate before [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the year prior to which such shares may be earned. Upon the parties' agreement of a mutually acceptable Statement of Work and PPG Estimated Expenses therefor, the Statement of Work shall constitute an agreed-upon Statement of Work for such Subsequent Period. On the first business day immediately following [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the calendar year to which an agreed-upon Statement of Work relates, UDC will deliver to PPG such number of duly authorized, validly issued fully paid and non-assessable shares of UDC Common Stock as is equal to the quotient of (a) the PPG Estimated Expenses for the period covered by an agreed-upon Statement of Work divided by (b) the Average Price. Notwithstanding the foregoing sentence, for the first annual period beginning on [The confidential material contained herein has been omitted and has been separately filed with the Commission.] following the execution of this Agreement, in addition to delivering the shares of UDC Common Stock provided in the foregoing sentence, which shares shall be deemed to be added to the Initial Period Shares, UDC will execute an amendment to the secured promissory note described in Section 10.1, to increase the principal amount thereof for [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of such period PPG Estimated Expenses. In the event that on such date as UDC will deliver to PPG shares of UDC Common Stock, the average closing price per share of UDC Common Stock for the ninety (90) calendar days prior to such date, as listed in the NASDAQ National Market listing of The Wall Street Journal, is less than [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the price set forth in clause (a) of the first sentence of Section 1.4, then, in addition to UDC delivering to PPG shares of UDC Common Stock as set forth above, UDC shall deliver to PPG cash in an amount equal to the difference between (i) the aggregate value of UDC Common Stock deliverable to PPG if the Average Price had been adjusted to the actual average closing price for the ninety (90) calendar days prior to such date as listed in the NASDAQ National Market listing of The Wall Street Journal and (ii) the aggregate value of UDC Common Stock actually delivered to PPG pursuant to the terms of this Agreement. 10.2.2 During each Subsequent Period, PPG will notify UDC of any anticipated increase in the amounts set forth in the relevant Subsequent Period Estimated Expenses. UDC will either approve or deny such anticipated increase and UDC will be deemed to accept any changes in the Statement of Work resulting from such approval or denial. PPG will not exceed the amounts set forth in the applicable Annual Estimate without the prior written consent of UDC. PPG shall deliver to UDC, within thirty (30) days following the end of each calendar quarter, a summary of actual expenses incurred for such quarter. 10.3 Reconciliation, Warrant. 10.3.1 On or before [The confidential material contained herein has been omitted and has been separately filed with the Commission.] and each [The confidential material contained herein has been omitted and has been separately filed with the Commission.] thereafter during the Initial Term, PPG will provide to UDC PPG's written calculation of PPG Actual Expenses for the immediately preceding Period. (a) If PPG Actual Expenses are greater than PPG Estimated Expenses for such Period, then, on or before [The confidential material contained herein has been omitted and has been separately filed with the Commission.], UDC will deliver to PPG the number of shares of UDC Common Stock as is equal to (i) the difference between, for such Period, PPG Actual Expenses and PPG Estimated Expenses divided by (ii) the Average Price. (b) If PPG Actual Expenses are less than PPG Estimated Expenses, then on or before [The confidential material contained herein has been omitted and has been separately filed with the Commission.], PPG will deliver to UDC, at its election (i) cash equal to the difference between, for such Period, PPG Estimated Expenses and PPG Actual Expenses or (ii) such number of shares of UDC Common Stock as is equal to (A) the difference between PPG Estimated Expenses and PPG Actual Expenses for such period divided by (ii) the Average Price. 10.3.2 On [The confidential material contained herein has been omitted and has been separately filed with the Commission.], and each [The confidential material contained herein has been omitted and has been separately filed with the Commission.] thereafter during the Initial Term, UDC will also deliver to PPG a Warrant in the form of Exhibit D evidencing PPG's right to purchase, on the terms and conditions set forth in the warrant, such number of shares as is equal to, for the immediately preceding Period, PPG Actual Expenses divided by the Average Price. 10.4 Representations of PPG. 10.4.1 Purchase Entirely for Own Account. The Securities to be received by PPG pursuant to this Agreement will be acquired for investment for PPG's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof that would violate any applicable federal securities laws, and PPG has no immediate intention of selling, granting any participation in, or otherwise distributing the same except to the extent the same are included in the Registration Statement (as hereinafter defined). By executing this Agreement, PPG further represents that PPG does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Securities. PPG represents that it has full power and authority to enter into this Agreement. 10.4.2 Accredited Status. PPG is an "accredited investor" within the meaning of Commission Rule 501 of Regulation D, as presently in effect. 10.4.3 Restricted Securities. PPG understands that the Securities it is receiving are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from UDC in a transaction not involving a public offering and that under such laws and applicable regulations such Securities may be resold without registration under the 1933 Act, only in certain limited circumstances. In this connection, PPG represents that it is familiar with Commission Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the 1933 Act. 10.4.4 Legends. It is understood that the certificates evidencing the Securities of UDC which may be issued pursuant to this Agreement may bear one or all of the following legends: "These securities have not been registered under the Securities Act of 1933, as amended. They may not be sold, offered for sale, pledged or hypothecated in the absence of a registration statement in effect with respect to the securities under such Act or an opinion of counsel satisfactory to the Corporation that such registration is not required or unless sold pursuant to Rule 144 of such Act." and any legend required by any applicable state securities laws. To the extent that such legends are no longer applicable, UDC shall cause its transfer agent to remove the legends upon request by PPG. 10.5 Certain Covenants of UDC. 10.5.1 Reservation of Shares. UDC shall at all times have authorized, and reserved for the purpose of issuance, a sufficient number of shares of UDC Common Stock to provide for the Warrant Shares. UDC shall not reduce the number of shares of UDC Common Stock reserved for issuance of the Warrant Shares without the consent of PPG. If at any time the number of shares of Common Stock authorized and reserved for issuance is below the number of Warrant Shares, UDC will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of shareholders to authorize additional shares to meet UDC's obligations under this Section 10.5.1, in the case of an insufficient number of authorized shares, and using its commercially reasonable efforts to obtain shareholder approval of an increase in such authorized number of shares. 10.5.2 Listing. UDC shall promptly secure the listing of the UDC Common Shares upon The Nasdaq SmallCap Market, The Nasdaq National Market or such other national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance). So long as PPG owns any of the Securities, UDC shall maintain, so long as any other shares of UDC Common Stock shall be so listed, such listing of all Common Shares, and shall comply in all respects with UDC's reporting, filing and other obligations under the bylaws or rules of the National Association of Securities Dealers and such exchanges, as applicable. 10.5.3 Reports Under 1934 Act. With a view to making available to PPG the benefits of Rule 144 and any successor or other rule or regulation of the Commission that may at any time permit PPG to sell the shares of UDC Common Stock issuable pursuant to this Agreement to the public without registration, UDC agrees to: (a) make and keep public information available, as those terms are understood and defined in Rule 144, at all times; (a) file with the Commission in a timely manner all reports and other documents required of UDC under the 1933 Act and the 1934 Act; and (c) furnish to PPG, so long as PPG owns any Shares, forthwith upon request (i) a written statement by UDC that it has complied with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of UDC and such other reports and documents so filed by UDC, and (iii) such other information as may be reasonably requested in availing PPG of any rule or regulation of the Commission which permits the selling of any Shares without registration. 10.6 Certain Sales. 10.6.1 Short Sales. During the term of this Agreement, PPG and its affiliates agree not to engage in, or encourage any third party from engaging in, "short sales" (as such term is defined in Rule 3b-3 of the 1934 Act) of UDC's securities. 10.6.2 Prohibited Sales During Certain Periods. During the ninety (90) calendar day period prior to and including [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of each calendar year during the Initial Term (each a "PPG Restricted Period"), PPG shall not offer, sell or contract to sell shares of UDC Common Stock received hereunder or any securities convertible into or exchangeable or exercisable for any share of UDC Common Stock, to the extent that such sale would exceed, on any one (1) day during such PPG Restricted Period, [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the average daily trading volume of shares of UDC Common Stock for the ninety (90) calendar day period immediately preceding the PPG Restricted Period (the "PPG Volume Limit"); provided however that the PPG Volume Limit shall not apply to any private placement of shares of UDC Common Stock by PPG. During each PPG Restricted Period, PPG shall not enter into any swap or hedge arrangement that transfers, in whole or in part, any of the economic consequences of ownership of shares of UDC Common Stock in excess of the PPG Volume Limit, or publicly disclose the intention to make any offer, sale or contract to sell or to enter into any swap or hedge in excess of the PPG Volume Limit. 10.7 PPG Representation on UDC Board. If, at any time during the term of this Agreement, PPG's ownership of UDC Common Stock equals or exceeds [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the total number of issued and outstanding shares of UDC Common Stock, then PPG shall be entitled to designate one (1) individual for election to UDC's Board of Directors and UDC shall use all commercially reasonable efforts to cause such designee to be elected to UDC's Board of Directors within thirty (30) days of PPG's designation, including but not limited to recommending such designee for election, causing any shares for which UDC has or can control voting rights with respect thereto to be voted in favor of such designee, causing broker votes to be cast in favor of such designee and amending its articles of incorporation and/or by-laws and/or adopting any resolutions for increasing the number of directors on the UDC Board, if necessary to accommodate the designee. If, at any time during the term of this Agreement, PPG's ownership of UDC Common Stock equals or exceeds [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the total number of issued and outstanding shared of UDC Common Stock, then PPG shall be entitled to designate one quarter of the total members of UDC's Board of Directors, with any fraction rounded up to the nearest whole number and UDC shall use all commercially reasonable efforts to cause such designees to be elected to UDC's Board of Directors within thirty (30) days of PPG's designation, all as set forth in the preceding sentence. UDC will support PPG's acquisition of up to [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of UDC's Common Stock, either through open market purchases or UDC treasury shares, at UDC's discretion. 10.8 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 10.8.1 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 10.8.2 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 10.8.3 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 10.8.4 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 10.9 Acquisition Transactions. If all or substantially all of the assets of UDC, or any material portion of the OLED assets of UDC are acquired by a third party during the Initial Term or any extension thereof, or if the shareholders of UDC approve a merger, consolidation, share exchange, division or other disposition as a result of which the shareholders of UDC immediately prior to the transaction will not own a majority of the voting power of the surviving or resulting corporation or any corporation which acquires the stock of UDC, or if UDC assigns or transfers this Agreement to a third party, then either PPG or UDC shall, within ninety (90) days following such event, have the right to terminate this Agreement, in which case UDC will distribute to PPG the Acquisition Amount of UDC Common Stock and a warrant evidencing PPG's right to purchase the Acquisition Amount of UDC Common Stock on the terms and conditions set forth in the Warrant attached hereto as Exhibit E. The "Acquisition Amount" shall be calculated by multiplying the most recent PPG Estimated Expenses (as calculated pursuant to Section 10.2.2), or the PPG Estimated Expenses for the Initial Period (as calculated pursuant to Section 10.2.1) if it is the most recent estimate provided pursuant to this Agreement, by the number of years (and any fraction thereof) remaining in the Initial Term. ARTICLE 11 - REGISTRATION RIGHTS 11.1 Definitions. For the purposes of this Article 11, "Registrable Securities" means the parties good faith estimate of the number of shares of UDC Common Stock issuable to PPG (including shares issuable upon exercise of the Warrants) during the Initial Term. 11.2 Registration Rights With Respect to the Securities. 11.2.1 UDC agrees that it will prepare and file with the Commission, within thirty (30) days after the execution of this Agreement, a registration statement (on Form S-3, or other appropriate form of registration statement) under the 1933 Act (the "Registration Statement"), together with such state law qualifications and other compliances with applicable law, at the sole expense of UDC, in respect of PPG, so as to permit a public offering and resale of the Registrable Securities under the 1933 Act by PPG. UDC shall use its commercially reasonable efforts to cause the Registration Statement to become effective as promptly as possible after the filing thereof and within five (5) days after Commission clearance. UDC will within such five (5) days request acceleration of effectiveness. 11.2.2 UDC will maintain the Registration Statement or any post-effective amendment filed under this Article 11 hereof effective under the 1933 Act until the earlier of (i) the date that none of the Registrable Securities are or may become issued and outstanding, (ii) the date that all of the Registrable Securities have been sold pursuant to the Registration Statement, (iii) the date the holders thereof receive an opinion of counsel to UDC, which counsel shall be reasonably acceptable to PPG, that the Registrable Securities may be sold under the provisions of Rule 144 without limitation as to volume or a requirement of "brokers transactions," (iv) all Registrable Securities have been otherwise transferred to persons who may trade such shares without restriction under the 1933 Act, and UDC has delivered a new certificate or other evidence of ownership for such Registrable Securities not bearing a restrictive legend, or (v) all Registrable Securities may be sold without any time, volume or manner limitations pursuant to Rule 144(k) or any similar provision then in effect under the 1933 Act in the opinion of counsel to UDC, provided such counsel is reasonably acceptable to PPG. If, under Commission rules or policies of the Commission staff, any of the Registrable Securities for any reason cannot be included in the Registration Statement initially filed by UDC and must be included in a separate registration statement, UDC shall file all such additional registration statements as may be needed to permit PPG to offer and resell to the public all of the Registrable Securities, and the term "Registration Statement" shall for purposes of this Agreement be deemed to include all such additional registration statements. 11.2.3 All fees, disbursements and out-of-pocket expenses and costs incurred by UDC in connection with the preparation and filing of the Registration Statement under this Article 11 and in complying with applicable federal and state securities laws (including, without limitation, all attorneys' and accountants' fees of UDC), shall be borne by UDC. PPG shall bear the cost of underwriting and/or brokerage discounts, fees and commissions, if any, applicable to its sale of the Securities being registered and the fees and expenses of its counsel. PPG and its counsel shall have a reasonable period, of not less than five (5) business days for the Registration Statement initially to be filed hereunder and for each amendment or subsequently filed Registration Statement, to review the proposed Registration Statement or any amendment thereto, prior to filing with the Commission, and UDC shall provide PPG with copies of any comment letters received from the Commission and each written response thereto with respect thereto within two (2) business days of receipt or sending thereof. UDC shall make reasonably available for inspection by PPG, any underwriter participating in any disposition pursuant to the Registration Statement, and any attorney, accountant or other agent retained by PPG or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of UDC and its subsidiaries, and cause UDC's officers, directors and employees to supply all information reasonably requested by such PPG or any such underwriter, attorney, accountant or agent in connection with the Registration Statement, in each case, as is customary for similar due diligence examinations; provided, however, that all records, information and documents that are designated in writing by UDC, in good faith, as confidential, proprietary or containing any material non-public information shall be kept confidential by PPG and any such underwriter, attorney, accountant or agent (pursuant to an appropriate confidentiality agreement in the case of any such PPG or agent), unless such disclosure is made pursuant to judicial process in a court proceeding (after first giving UDC an opportunity promptly to seek a protective order or otherwise limit the scope of the information sought to be disclosed) or is required by law, or such records, information or documents become available to the public generally or through a third party not in violation of an accompanying obligation of confidentiality; and provided further that, if the foregoing inspection and information gathering would otherwise disrupt UDC's conduct of its business, such inspection and information gathering shall, to the maximum extent possible, be coordinated on behalf of PPG and the other parties entitled thereto by one firm of counsel designated by and on behalf of the majority in interest of PPG and other parties. To the extent necessary, UDC shall qualify any of the Registrable Securities for sale in such states as such PPG reasonably designates except that UDC shall not be required to qualify in any state which will require an escrow relating to UDC and/or the sellers of Registrable Securities, or which will require UDC to qualify to do business in such state or require UDC to file therein any general consent to service of process. UDC at its expense will supply PPG with copies of the Registration Statement and the prospectus included therein and other related documents in such quantities as may be reasonably requested by PPG. 11.2.4 If UDC delivers to PPG a certificate signed by UDC's President and Chief Operating Officer and Chief Financial Officer to the effect that (i) UDC is aware of nonpublic information concerning UDC that has not been disclosed in the Registration Statement either by incorporation of 1934 Act filings by UDC or by information included directly in the Registration Statement, and (ii) in the good faith judgment of UDC, the disclosure of such information in the Registration Statement may have a material adverse effect on the business, operations, properties, assets, prospects or condition (financial or otherwise) of UDC, then, PPG agrees not to effect any sales of Registrable Securities pursuant to the Registration Statement until such time as PPG (a) is advised in writing by UDC that the use of the applicable prospectus contained in such Registration Statement may be resumed, (b) has received copies of a supplemental or amended prospectus, if applicable, and (c) has received copies of any additional or supplemental filings, if any, which are incorporated or deemed to be incorporated by reference in such prospectus. UDC agrees to, at the request of PPG, prepare any supplement or amendment to the applicable prospectus or to make any additional or supplemental filings so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain any untrue statement of material fact or omit to state any fact necessary to make the statements therein not misleading. 11.3 PPG's Obligations. 11.3.1 Cooperation with Company. PPG will cooperate with UDC in all respects in connection with this Article 11, including timely supplying all information reasonably requested by UDC (which shall include all information regarding PPG and proposed manner of sale of the Registrable Securities required to be disclosed in the Registration Statement) and executing and returning all documents reasonably requested in connection with the registration and sale of the Registrable Securities. 11.3.2 "Market Stand-Off" Agreement. Unless otherwise consented to in writing by the managing underwriter, PPG shall not effect any public sale or distribution of equity securities of UDC or any securities convertible into or exchangeable or exercisable for such securities during the seven days prior to and the 90 days after any underwritten registration (except as part of such underwritten registration) if PPG participates in such registration. UDC may impose stop-transfer instructions with respect to the shares of Common Stock subject to the foregoing restriction until the end of any such period. 11.4 Registration Procedures. In addition to the requirements of Section 11.2, UDC shall (except as otherwise expressly provided in this Agreement), as expeditiously as possible, subject to PPG's compliance with Section 11.3.1: (a) prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the 1933 Act with respect to the sale or other disposition of all securities covered by such registration statement (including prospectus supplements with respect to the sales of securities from time to time in connection with a registration statement pursuant to Rule 415 promulgated under the 1933 Act) and (ii) take all lawful action such that each of (A) the Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, not misleading and (B) the Prospectus forming part of the Registration Statement, and any amendment or supplement thereto, does not at any time during the Registration Period include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) prior to the filing with the Commission of any Registration Statement (including any amendments thereto) and the distribution or delivery of any prospectus (including any supplements thereto), provide draft copies thereof to PPG and reflect in such documents all such comments as PPG (and its counsel) reasonably may propose and (ii) furnish to PPG such numbers of copies of a prospectus including a preliminary prospectus or any amendment or supplement to any prospectus, as applicable, in conformity with the requirements of the 1933 Act, and such other documents, as PPG may reasonably request in order to facilitate the public sale or other disposition of the securities owned by PPG. (c) to the extent necessary, register and qualify the Securities covered by the Registration Statement under applicable state securities laws, and do any and all other acts and things which may be reasonably necessary or advisable to enable PPG to consummate the public sale or other disposition in such jurisdictions within the United States of America of the securities owned by such PPG, except that UDC shall not be required to qualify in any state which will require an escrow relating to UDC and/or the sellers of Registrable Securities, or which will require UDC to qualify to do business in such state or require UDC to file therein any general consent to service of process. (d) subject to the provisions of Section 11.2.4 hereof, notify PPG at any time when a prospectus relating thereto covered by the Registration Statement is required to be delivered under the 1933 Act, of the happening of any event of which it has knowledge as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and UDC shall prepare and file a curative amendment or 1934 Act filing deemed incorporated in the Registration Statement under applicable provisions of this Article 11 as quickly as commercially possible. (e) as promptly as practicable after becoming aware of such event, notify PPG who holds Securities being sold (or, in the event of an underwritten offering, the managing underwriters) of the issuance by the Commission or any state authority of any stop order or other suspension of the effectiveness of the Registration Statement at the earliest possible time and take all lawful action to effect the withdrawal, recission or removal of such stop order or other suspension. (f) cooperate with PPG to facilitate the timely preparation and delivery of certificates for the Securities to be offered pursuant to the Registration Statement and enable such certificates for the Securities to be in such denominations or amounts, as the case may be, as PPG reasonably may request and registered in such names as PPG may request; and, within three (3) business days after a Registration Statement which includes Securities is declared effective by the Commission, deliver and cause legal counsel selected by UDC to deliver to the transfer agent for the Securities (with copies to PPG whose Securities are included in such Registration Statement) an appropriate instruction and, to the extent necessary, an opinion of such counsel. (g) take all such other lawful actions reasonably necessary to expedite and facilitate the disposition by PPG of the Securities in accordance with the intended methods therefor provided in the prospectus which are customary for issuers to perform under the circumstances. (h) in the event of an underwritten offering elected by PPG, promptly include or incorporate in a Prospectus supplement or post-effective amendment to the Registration Statement such information as the managers reasonably agree should be included therein and to which UDC does not reasonably object and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after it is notified of the matters to be included or incorporated in such Prospectus supplement or post-effective amendment; and enter into and perform its obligations as UDC under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. (i) cause all Securities registered pursuant hereunder to be listed timely on each securities exchange or quotation system on which similar securities issued by UDC are then listed. (j) use its best efforts to furnish, at the request of PPG, on the date that such Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Article 11, if such securities are being sold through underwriters (i) an opinion, dated such date, of the counsel representing UDC for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to PPG and (ii) a letter dated such date, from the independent certified public accountants of UDC, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to PPG. (k) maintain a transfer agent and CUSIP number for its Common Stock. 11.5 Rank. UDC shall not be precluded from granting registration rights to other persons, provided that no such grant shall interfere with or purport to delay or subordinate any of PPG's rights under this Agreement. 11.6 Indemnification. 11.6.1 UDC agrees to indemnify, defend and hold harmless PPG, and any underwriter (as defined in the 1933 Act) for PPG, and each person, if any, who controls PPG or underwriter within the meaning of the 1933 Act or 1934 Act ("Selling Person") against any losses, claims, damages or liabilities, joint or several (which shall, for all purposes of this Agreement, include, but not be limited to, all reasonable costs of defense and investigation and all reasonable attorneys' fees), to which the Selling Person may become subject, under the 1933 Act, the 1934 Act, any state securities law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, or any related preliminary prospectus, final prospectus or amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein of a material fact required to be stated therein or necessary to make the statements therein not misleading, or arise out of or are based upon any violation or alleged violation by UDC of the 1933 Act, 1934 Act, or any state securities law, or any rules or regulations of governmental agencies promulgated thereunder; provided, however, that UDC will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, preliminary prospectus, final prospectus or amendment or supplement thereto in reliance upon, and in conformity with, written information furnished to UDC by the Selling Person, specifically for use in the preparation thereof. This Section shall not inure to the benefit of any Selling Person with respect to any person asserting such loss, claim, damage or liability who purchased the Securities which are the subject thereof if, and to the extent such loss or other claim arises from the fact or alleged fact that, the Selling Person failed to send or give (in violation of the 1933 Act or the rules and regulations promulgated thereunder) a copy of the prospectus contained in such Registration Statement to such person at or prior to time required under the 1933 Act, where the Selling Person was obligated to do so under the 1933 Act or the rules and regulations promulgated thereunder. This indemnity agreement will be in addition to any liability which UDC may otherwise have. 11.6.2 Each Selling Person, severally and not jointly, agrees that it will indemnify and hold harmless UDC, and each officer, director of UDC or person, if any, who controls UDC within the meaning of the 1933 Act, against any losses, claims, damages or liabilities (which shall, for all purposes of this Agreement, include, but not be limited to, all reasonable costs of defense and investigation and all reasonable attorneys' fees) to which UDC or any such officer, director or controlling person may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, or any related preliminary prospectus, final prospectus or amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, preliminary prospectus, final prospectus or amendment or supplement thereto in reliance upon, and in conformity with, written information furnished to UDC by such Selling Person, specifically for use in the preparation thereof. This indemnity agreement will be in addition to any liability which the Selling Person may otherwise have. Notwithstanding anything to the contrary herein, the Selling Person shall not be liable under this Section for any amount in excess of the net proceeds to such Selling Person as a result of the sale of Securities pursuant to the Registration Statement. 11.6.3 Promptly after receipt by an indemnified party under this Article 11 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Article 11, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve the indemnifying party from any liability which it may have to any indemnified party except to the extent of actual prejudice demonstrated by the indemnifying party. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, assume the defense thereof, subject to the provisions herein stated and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Article 11 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation, unless the indemnifying party shall not pursue the action to its final conclusion. The indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be at the expense of the indemnifying party if the indemnifying party has assumed the defense of the action with counsel reasonably satisfactory to the indemnified party; provided that if the indemnified party is the Selling Person, the fees and expenses of such counsel shall be at the expense of the indemnifying party if (i) the employment of such counsel has been specifically authorized in writing by the indemnifying party, or (ii) the named parties to any such action (including any impleaded parties) include both the Selling Person and the indemnifying party and the Selling Person shall have been advised by such counsel that there may be one or more legal defenses available to the indemnifying party different from or in conflict with any legal defenses which may be available to the Selling Person (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of the Selling Person, it being understood, however, that the indemnifying party shall, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable only for the reasonable fees and expenses of one separate firm of attorneys for the Selling Person, which firm shall be designated in writing by the Selling Person). No settlement of any action against an indemnified party shall be made without the prior written consent of the indemnified party, which consent shall not be unreasonably withheld. All fees and expenses of the indemnified party (including reasonable costs of defense and investigation in a manner not inconsistent with this Section and all reasonable attorneys' fees and expenses) shall be paid to the indemnified party, as incurred, within ten (10) business days of written notice thereof to the indemnifying party (regardless of whether it is ultimately determined that an indemnified party is not entitled to indemnification hereunder; provided, that the indemnifying party may require such indemnified party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such indemnified party is not entitled to indemnification hereunder). 11.6.4 In order to provide for just and equitable contribution under the 1933 Act in any case in which (i) the indemnified party makes a claim for indemnification pursuant to Section 11.6 hereof but is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that the express provisions of Section 11.6 hereof provide for indemnification in such case, or (ii) contribution under the 1933 Act may be required on the part of any indemnified party, then UDC and the applicable Selling Person shall contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (which shall, for all purposes of this Agreement, include, but not be limited to, all reasonable costs of defense and investigation and all reasonable attorneys' fees), in either such case (after contribution from others) on the basis of relative fault as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by UDC on the one hand or the applicable Selling Person on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. UDC and the Selling Person agree that it would not be just and equitable if contribution pursuant to this Section were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this Article 11. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this Article 11 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 11.6.4, in no case shall any Selling Person be liable or responsible for any amount in excess of the net proceeds received by such Selling Person from the offering of Registrable Securities and UDC shall be liable and responsible for any amount in excess of such proceeds. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 11.6.5 Notwithstanding any other provision of this Article 11, in no event shall (i) PPG be required to undertake liability to any person under this Article 11 for any amounts in excess of the dollar amount of the net proceeds to be received by such PPG from the sale of such PPG's Securities (after deducting any fees, discounts and commissions applicable thereto) pursuant to any Registration Statement under which such Securities are to be registered under the 1933 Act and (ii) any underwriter be required to undertake liability to any person hereunder for any amounts in excess of the aggregate discount, commission or other compensation payable to such underwriter with respect to the Securities underwritten by it and distributed pursuant to the Registration Statement. 11.7 Liquidated Damages. The parties hereto agree that PPG will suffer damages if UDC fails to fulfill its obligations under Article 11, and that it would not be feasible to ascertain the extent of such damages. Accordingly: 11.7.1 if the Registration Statement is not filed within [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the date of execution of this Agreement, UDC will be obligated to pay liquidated damages to PPG [The confidential material contained herein has been omitted and has been separately filed with the Commission.] for each month or portion thereof during which the Registration Statement has not been filed after such [The confidential material contained herein has been omitted and has been separately filed with the Commission.] day period; 11.7.2 if the Registration Statement has not been declared effective within the earlier of (a) [The confidential material contained herein has been omitted and has been separately filed with the Commission.] days of the date of its filing or (b) [The confidential material contained herein has been omitted and has been separately filed with the Commission.] days of the execution of this Agreement, then UDC will be obligated to pay liquidated damages to PPG [The confidential material contained herein has been omitted and has been separately filed with the Commission.] for each month or portion thereof during which the Registration Statement has not been declared effective after such [The confidential material contained herein has been omitted and has been separately filed with the Commission.] day period; and 11.7.3 if the Registration Statement has not been declared effective within the earlier of (a) [The confidential material contained herein has been omitted and has been separately filed with the Commission.] days of the date of its filing or (ii) [The confidential material contained herein has been omitted and has been separately filed with the Commission.] days of the execution of this Agreement, provided such delay is not due solely to the fault of PPG to comply with its obligations under Section 11.3, [The confidential material contained herein has been omitted and has been separately filed with the Commission.] Notwithstanding anything to the contrary in this Section 11.7, UDC shall not be required to pay liquidated damages to PPG if PPG failed to comply with its obligations under Section 11.3. ARTICLE 12 - STOCK OPTIONS 12.1 Option Grants. At the beginning of each Period beginning on January 1, 2001, upon the approval of PPG, UDC shall issue to employees of PPG ("PPG Employees") who are assigned full-time to the Development Program, such number of non-qualified stock options to purchase shares of UDC Common Stock ("Options") as is, in the good faith estimation of UDC, consistent with the option grants made by UDC to UDC employees at similar levels and performing similar functions. PPG Employees who are assigned full-time to the Development Program after the beginning of a Period shall be issued such prorated number of Options as is determined in accordance with the preceding sentence. 12.2 Option Terms. [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 12.3 Bonus Options. If at any time UDC grants to employees of UDC "bonus" options (that is, options granted to UDC employees other than at the beginning of their service to UDC), UDC shall make available to PPG a pool of "bonus" Options for distribution to PPG employees on the Development Team, as is, in the good faith estimation of UDC, consistent with the criteria used to issue "bonus" options to employees of UDC. Upon approval by PPG, the bonus Options shall be issued to PPG employees on the Development Team by UDC in equal or unequal amounts as determined in the discretion of PPG after consultation with UDC. The terms of such Options shall be consistent with the options granted to UDC employees. ARTICLE 13 - TERM AND TERMINATION 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 twelve (12) month periods (each, a "Renewal Term") unless and until either party provides the other with at least twelve (12) months' prior written notice that this Agreement shall expire at the end of the Initial Term or the upcoming Renewal Term, as applicable. 13.2 Either party may terminate this Agreement if the other party breaches any material term, condition or provision of this Agreement and such breach continues uncured for a period of forty-five (45) days (thirty (30) days for nonpayment of amounts due and owing hereunder) after the breaching party's receipt of written notice specifying the nature of the breach from the terminating party; provided, however that if such breach is not reasonably capable of cure within the applicable cure period, the breaching party shall have an additional forty-five (45) days to cure such breach so long as the cure is commenced within the applicable cure period and is diligently pursued to completion thereafter. 13.3 Either party may terminate this Agreement in the event of the filing by or against the other party of a proceeding under any bankruptcy or similar law, unless such proceeding is dismissed, within forty-five (45) days from the date of filing; the making by the other party of a proceeding for dissolution or liquidation, unless such proceeding is dismissed within forty-five (45) days from the date of filing; the appointment of a receiver, trustee or custodian for all or part of the assets of the other party, unless such appointment or application is revoked or dismissed within forty-five (45) days from the date thereof; the attempt by the other party to make any adjustment, settlement or extension of its debts with its creditors generally; or the insolvency of the other party. 13.4 Subject to Section 13.5, this Agreement shall terminate upon termination of the Supply Agreement. 13.5 The provisions of Sections 4.2, 4.3 (for a period of [The confidential material contained herein has been omitted and has been separately filed with the Commission.]), 4.4 through 4.7, and 13.5 and of Articles 5, 6, 7, 9, 10, 11, 12, 14 and 15 of this Agreement shall survive its expiration or termination. ARTICLE 14 - NOTICES All notices and requests in connection with this Agreement shall be in writing and shall be transmitted via facsimile, with a copy thereof promptly mailed, to the address(es) of the recipient as set forth below, or to such other address(es) as the recipient shall specify in a notice given hereunder. Notices shall be deemed given on the date of confirmation of facsimile transmission, if such confirmation occurs on a business day of the recipient, or, if not, on the next succeeding business day of the recipient. To PPG: PPG Industries, Inc. PPG Industries, Inc. One PPG Place One PPG Place Pittsburgh, PA 15272 Pittsburgh, PA 15272 Attn.: General Counsel Attn: Vice-President, Specialty Chemicals Fax: 412-434-2490 Fax: 412-434-2137 With a copy to: Reed Smith LLP 435 Sixth Avenue Pittsburgh, PA 15219 Attn: Jeffrey G. Aromatorio, Esquire Fax: 412-288-3063 To UDC: Universal Display Corporation 375 Phillips Boulevard Ewing, NJ 08618 Attn.: President and Chief Operating Officer Fax: 609-671-0995 With a copy to: Morgan, Lewis & Bockius LLP 1701 Market Street Philadelphia, PA 19103-2921 Attn: Stephen M. Goodman, Esquire Fax: 215-963-5299 ARTICLE 15 - MISCELLANEOUS 15.1 If the performance of this Agreement by either party should be prevented, delayed, restricted, or interfered with by any man-made or natural catastrophe, or any other circumstances outside the control of such party and not due to its negligence that is recognized under international commercial practice as constituting a force majeure event, then the party so affected shall, upon giving prompt notice of such event to the other party, be excused from such performance to the extent of such prevention, delay, restriction, or interference, provided that the party so affected shall use its best efforts to avoid or remove such causes of nonperformance and promptly resume performance hereunder when such causes have been removed. Upon such circumstances arising, the parties shall promptly consult as to what, if any, modification to the terms of the Agreement shall be required to arrive at an equitable solution; and, if such nonperformance appears likely to continue for a period of time in excess of thirty (30) days and the affected party's nonperformance appears likely to cause serious hardship to the other party, such other party may terminate this Agreement upon thirty (30) days' prior written notice to the affected party. 15.2 Neither party may assign or transfer to any person, firm, or corporation, any of its rights or obligations under this Agreement without the prior written consent of the other party, except that either party may assign this Agreement to an entity which acquires all or substantially all of its assets or merges with it. Any prohibited assignment of this Agreement or the obligations hereunder shall be null and void. No permitted assignment shall relieve PPG or UDC of responsibility for the performance of any accrued obligations which it has prior to such assignment. Any permitted assignment shall obligate the assignee or successor in interest of PPG or UDC to be bound by the terms and obligations of this Agreement. Subject to the foregoing, all of the terms, conditions and provisions of this Agreement shall be binding upon and shall inure to the benefit of each party's permitted successors and assigns. 15.3 Except as expressly stated herein, nothing in this Agreement shall confer any rights upon any person other than the parties hereto and their respective permitted successors and assigns. 15.4 PPG shall not use the names of Princeton University or USC in connection with any products, promotion or advertising without the prior consent of Princeton University or USC, except to the extent reasonably required by law. Notwithstanding the foregoing sentence, PPG may state that certain of its rights hereunder are sublicense rights under the Princeton License Agreement. 15.5 This Agreement will be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, irrespective of its provisions regarding conflicts of laws. 15.6 This Agreement and the Supply Agreement constitute the entire agreement between the parties regarding the subject matter hereof. Information deemed confidential under any prior agreements between the parties shall hereafter be handled in accordance with and governed by the provisions of this Agreement. Neither party has made any representation, promises or warranties not herein expressly stated. This Agreement may not be modified except by a written instrument signed by both parties to this Agreement. 15.7 No waiver by any party of any condition, or the breach of any term, covenant, agreement, representation, or warranty contained in this Agreement, in any one or more instances, shall be deemed to be a further or continuing waiver of any such condition or breach of any other term, covenant, agreement, representation, or warranty contained in this Agreement. 15.8 In the event a dispute, claim or controversy arises between the parties relating to the validity, interpretation, performance, termination or breach of this Agreement (collectively the "Dispute"), the parties agree to hold a meeting, attended by the President of UDC and the Vice-President, Specialty Chemicals of PPG, to attempt in good faith to negotiate a resolution of the Dispute prior to pursuing other available remedies. If, within thirty (30) days after such meeting (or such extended period of time as the parties may mutually agree), the parties have not succeeded in negotiating a resolution of the Dispute, the parties agree to submit the Dispute to mediation following procedures of the American Arbitration Association ("AAA"), at which mediation an individual of each party having decision-making authority respecting the Dispute shall attend. The parties shall mutually agree on the selection process for the mediator, the time and place for mediation, any exchange of information and the conduct of the mediation. The fees of the mediator and the costs of mediation shall be shared equally by the parties. If such mediation does not result in an agreed upon resolution of the Dispute within sixty (60) days after commencement of the mediation process (or such extended period of time as the parties may mutually agree), either party shall be free to pursue any and all remedies available to it, subject to the express limitations of Article 7 above. In the event of any Dispute involving termination of this Agreement by a party, such termination shall be suspended for so long as the other party is acting in good faith to resolve the Dispute in accordance with the provisions of this Section. Nothing in this Section shall prohibit either party from seeking equitable relief to restrain or prevent a breach of this Agreement at any time. 15.9 In consideration of the transactions contemplated hereby, during the term of this Agreement and for a [The confidential material contained herein has been omitted and has been separately filed with the Commission.] period after termination of this Agreement (the "Non-Solicitation Period"), neither party, or its respective affiliates, will directly or indirectly contact, approach or solicit for the purpose of offering employment to or hiring (whether as an employee, consultant, agent, independent contractor or otherwise) or actually hire any person who is known to be employed by the other party at such time, or to have been employed by the other party within the preceding [The confidential material contained herein has been omitted and has been separately filed with the Commission.]. 15.10 If the final judgment of a court of competent jurisdiction declares that any term or provision of this Agreement is invalid or unenforceable, the parties agree that the court making the determination of invalidity or unenforceability will have the power to reduce the scope, duration or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement will be enforceable as so modified after the expiration of the time within which the judgment may be appealed. 15.11 In making and performing this Agreement, the parties are acting and shall act as independent contractors. Neither party is, nor will be deemed to be, an agent, legal representative, joint venturer, partner or employee of the other party for any purpose. 15.12 The parties shall agree on the language of any press releases or public disclosures regarding the existence of this Agreement and/or its terms and conditions. Language that has been approved by either party need not be reapproved for subsequent release by the other party. Nothing in this Section 15.12 shall prevent either party from complying with any applicable securities or other laws. 15.13 This Agreement may be executed in two or more counterparts, each of which shall be binding as of the Effective Date, and all of which shall constitute one and the same instrument. Each such copy shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. This Agreement shall be deemed executed by the parties when any one or more counterparts hereof, individually or taken together, bears the signatures of each of the parties hereto. This Agreement, once executed by a party, may be delivered to the other party by facsimile transmission of a copy thereof that bears the signature of the party so delivering it. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. UNIVERSAL DISPLAY CORPORATION PPG INDUSTRIES, INC. By: /s/ Steven V. Abramson By: /s/ Howard I. Roe --------------------------------- ------------------------------------ NAME: Steven V. Abramson NAME: Howard I. Roe --------------------------------- ------------------------------------ TITLE: President TITLE: Director, Commercial Development --------------------------------- ------------------------------------ DATE: October 31, 2000 DATE: October 31, 2000 --------------------------------- ------------------------------------ EX-10.2 4 0004.txt EXHIBIT 10.2 AMENDMENT NUMBER 1 TO THE ------------------------- DEVELOPMENT AND LICENSE AGREEMENT --------------------------------- THIS AMENDMENT NUMBER 1 TO THE DEVELOPMENT AND LICENSE AGREEMENT (this "Amendment") is entered into and effective as of this 7th day of March, 2001 (the "Effective Date") by and between PPG INDUSTRIES, INC., a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, U.S.A., having its principal place of business at One PPG Place, Pittsburgh, Pennsylvania 15272 ("PPG"), and UNIVERSAL DISPLAY CORPORATION, a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, U.S.A., having a principal place of business at 375 Phillips Boulevard, Ewing, New Jersey 08618 ("UDC"). WHEREAS: 1. PPG and UDC entered into that certain Development and License Agreement as of October 1, 2000 (the "Agreement"); 2. PPG and UDC now believe it is in their respective best interests to amend the Original Agreement. NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, the parties hereto, intending to be legally bound hereby, covenant and agree as follows: ARTICLE 1 - DEFINITIONS ----------------------- Whenever used in this Agreement, unless otherwise defined herein, capitalized terms shall have the meanings as defined in this Article 1 of the Agreement. As used herein, the singular includes the plural and vice versa. ARTICLE 2 - AMENDMENT AND RESTATEMENT OF ---------------------------------------- SECTION 1.4, ARTICLES 10 AND 11 ------------------------------- Section 1.4 , and Articles 10 and 11 of the Agreement are amended and restated in their entirety to read as follows: 1.4 "Average Price" means the lesser of: the following ninety (90) calendar day average prices (each an "Average Closing Price") (a) Twenty Dollars and Twenty-Four Cents ($20.24), which is the Average Closing Price per share of UDC Common Stock for the ninety (90) calendar days ending on the business day prior to the execution of this Agreement; or (b) with respect to any shares of UDC Common Stock required to be issued to PPG on any date pursuant to this Agreement (in each case, an "Issuance Date"), (1) if the Average Closing Price for the ninety (90) calendar days prior to such Issuance Date (or, if later, the effective date of the Registration Statement, as defined in Section 11.2.1, relating to any such shares, as listed in the Nasdaq National Market listing of The Wall Street Journal, is less than [The confidential material contained herein has been omitted and has been separately filed with the Commission.] then, such Average Closing Price ending on the Issuance Date or the effective date of the Registration Statement, as applicable; or (2) if such Average Closing Price as calculated in clause (b)(1), above, is less than [The confidential material contained herein has been omitted and has been separately filed with the Commission.], then, the Average Closing Price shall be deemed to be [The confidential material contained herein has been omitted and has been separately filed with the Commission.]; provided further that such prices shall be appropriately adjusted in the event of any dividend, stock split, combination of other similar recapitalization affecting UDC Common Stock since the date of execution of this Agreement, the Issuance Date or the effective date of the Registration Statement, as the case may be. ARTICLE 10 - UDC COMMON STOCK AND WARRANTS ------------------------------------------ 10.1 Initial Period Payments. ------------------------ 10.1.1 Attached hereto as Schedule 10.1 is the parties' agreed-upon written calculation of PPG Estimated Expenses for the period from the [The confidential material contained herein has been omitted and has been separately filed with the Commission.] (the "Initial Period") based on expenditures to be made by PPG during that period. On the date of execution of this Agreement, UDC will deliver to PPG (i) such number of duly authorized, validly issued, fully paid and non-assessable shares of UDC Common Stock as is equal to the quotient of (a) the PPG Estimated Expenses for the Initial Period divided by (b) the Average Price (the "Initial Period Shares"), and (ii) a [The confidential material contained herein has been omitted and has been separately filed with the Commission.] term promissory note for the amount of the Initial Period PPG Estimated Expenses, secured by an interest in all Developed Technology, which promissory note shall (a) if upon its maturity, the Registration Statement has not been declared and maintained effective, be automatically payable in cash for the principal amount thereof plus interest calculated at [The confidential material contained herein has been omitted and has been separately filed with the Commission.] per annum (based on a year of 365 days), compounded daily, and, upon receipt of such cash payment, the Initial Period Shares shall be returned to UDC and cancelled, or (b) if upon or before its maturity, the Registration Statement has been declared and maintained effective, be automatically deemed to have been paid through the issuance of the Initial Period Shares to PPG, on the date the Registration Statement has become so effective and the promissory note shall thereupon be cancelled. 10.1.2 During the Initial Period, PPG will notify UDC of any anticipated increase in the amounts set forth in the Initial Period PPG Estimated Expenses. UDC will either approve or deny in writing such anticipated increase and UDC will be deemed to accept any changes in the Statement of Work and/or a Work Plan resulting from such approval or denial. PPG will not exceed the amounts set forth in the Initial Period PPG Estimated Expenses without the prior written consent of UDC. 2 10.1.3 On or before [The confidential material contained herein has been omitted and has been separately filed with the Commission.], PPG will provide to UDC PPG's written calculation of PPG Actual Expenses for the Initial Period. If PPG Actual Expenses are greater than PPG Estimated Expenses for the Initial Period, then, on or before [The confidential material contained herein has been omitted and has been separately filed with the Commission.], UDC will (i) execute an amendment to the secured promissory note described in Section 10.1 to increase the principal amount thereof for the difference between PPG Actual Expenses and PPG Estimated Expenses for such Initial Period, and (ii) deliver to PPG the number of shares of UDC Common Stock as is equal to (a) the difference between PPG Actual Expenses and PPG Estimated Expenses for such Initial Period divided by (b) the Average Price, which shares shall be deemed to be added to the Initial Period Shares. If PPG Actual Expenses are less than PPG Estimated Expenses for the Initial Period, then, on or before [The confidential material contained herein has been omitted and has been separately filed with the Commission.], PPG will deliver to UDC, at its election, either (i) cash equal to the difference between PPG Actual Expenses and PPG Estimated Expenses for such Initial Period or (ii) the number of shares of UDC Common Stock as is equal to (A) the difference between PPG Actual Expenses and PPG Estimated Expenses for such Initial Period divided by (B) the Average Price. 10.1.4 On [The confidential material contained herein has been omitted and has been separately filed with the Commission.] UDC will deliver to PPG a warrant substantially in the form of Exhibit D hereto (a "Warrant") evidencing PPG's right to purchase, for [The confidential material contained herein has been omitted and has been separately filed with the Commission.] period and on the terms and conditions set forth in the Warrant, the number of shares of UDC Stock as is equal to the aggregate number of shares of UDC Stock issued to PPG for the Initial Period under Sections 10.1.1 and 10.1.3. 10.2 Subsequent Annual Payments. -------------------------- On [The confidential material contained herein has been omitted and has been separately filed with the Commission.] and each [The confidential material contained herein has been omitted and has been separately filed with the Commission.] thereafter during the Initial Term, UDC will provide to PPG a proposed Statement of Work setting forth its anticipated requirements for the period from [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the subsequent calendar year through [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of such calendar year (each a "Subsequent Period"). For the purposes of this Agreement, the Initial Period and each Subsequent Period are sometimes referred to as "Period." 10.2.1 Following receipt of each proposed Statement of Work, on [The confidential material contained herein has been omitted and has been separately filed with the Commission.] and each [The confidential material contained herein has been omitted and has been separately filed with the Commission.] thereafter during the Initial Term, PPG will provide to UDC PPG's written calculation of PPG Estimated Expense for the Subsequent Period covered by the proposed Statement of Work. Within [The confidential material contained herein has been omitted and has been separately filed with the Commission.] days of UDC's receipt from PPG of the calculation of PPG Estimated Expenses, UDC shall either approve or reject such calculation of PPG Estimated Expenses by 3 written notice to PPG. If UDC rejects PPG's calculation of PPG Estimated Expenses and provides its written reasons therefor, UDC and PPG, through their President and Vice-President, Specialty Chemicals, respectively, shall work together to establish a mutually acceptable estimate before [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the year prior to which such shares may be earned. Upon the parties' agreement of a mutually acceptable Statement of Work and PPG Estimated Expenses therefor, the Statement of Work shall constitute an agreed-upon Statement of Work for such Subsequent Period. On the first business day immediately following [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the calendar year to which an agreed-upon Statement of Work relates, UDC will deliver to PPG such number of duly authorized, validly issued fully paid and non-assessable shares of UDC Common Stock as is equal to the quotient of (a) the PPG Estimated Expenses for the period covered by an agreed-upon Statement of Work divided by (b) the Average Price; provided further that if the Registration Statement with respect to such shares, in the case of the shares required to be delivered to PPG pursuant to this Section 10.2.1 or Section 10.3.1, is not effective on the date the shares are required to be delivered, then UDC will deliver to PPG such additional number of shares upon the effective dates of such Registration Statements (each a "Registration Date") as may be necessary to reflect the re-calculation of the Average Price on the Registration Dates as set forth in clause (b) of Section 1.4. Notwithstanding the foregoing sentence, for the first annual period beginning on [The confidential material contained herein has been omitted and has been separately filed with the Commission.] following the execution of this Agreement, in addition to delivering the shares of UDC Common Stock provided in the foregoing sentence, which shares shall be deemed to be added to the Initial Period Shares, UDC will execute an amendment to the secured promissory note described in Section 10.1, to increase the principal amount thereof for [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of such period PPG Estimated Expenses. In the event that on such date as UDC will deliver to PPG shares of UDC Common Stock or on the Registration Date, the average closing price per share of UDC Common Stock for the ninety (90) calendar days prior to such date, as listed in the NASDAQ National Market listing of The Wall Street Journal, is less than [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the price set forth in clause (a) of Section 1.4, then, in addition to UDC delivering to PPG shares of UDC Common Stock as set forth above, UDC shall deliver to PPG cash in an amount equal to the difference between (i) the aggregate value of UDC Common Stock deliverable to PPG if the Average Price had been adjusted to the actual average closing price for the ninety (90) calendar days prior to such date as listed in the NASDAQ National Market listing of The Wall Street Journal and (ii) the aggregate value of UDC Common Stock actually delivered to PPG pursuant to the terms of this Agreement. 10.2.2 During each Subsequent Period, PPG will notify UDC of any anticipated increase in the amounts set forth in the relevant Subsequent Period Estimated Expenses. UDC will either approve or deny such anticipated increase and UDC will be deemed to accept any changes in the Statement of Work resulting from such approval or denial. PPG will not exceed the amounts set forth in the applicable Annual Estimate without the prior written consent of UDC. PPG shall deliver to UDC, within thirty (30) days following the end of each calendar quarter, a summary of actual expenses incurred for such quarter. 4 10.3 Reconciliation, Warrant. ----------------------- 10.3.1 On or before [The confidential material contained herein has been omitted and has been separately filed with the Commission.] and each [The confidential material contained herein has been omitted and has been separately filed with the Commission.] thereafter during the Initial Term, PPG will provide to UDC PPG's written calculation of PPG Actual Expenses for the immediately preceding Period. (a) If PPG Actual Expenses are greater than PPG Estimated Expenses for such Period, then, on or before [The confidential material contained herein has been omitted and has been separately filed with the Commission.], UDC will deliver to PPG the number of shares of UDC Common Stock as is equal to (i) the difference between, for such Period, PPG Actual Expenses and PPG Estimated Expenses divided by (ii) the Average Price; provided that if the Registration Statement with respect to such shares required to be delivered to PPG pursuant to Section 10.2.1 or this Section 10.3.1, is not effective on the date the shares are required to be delivered, then UDC will deliver to PPG such additional number of shares upon the Registration Dates as may be necessary to reflect the re-calculation of the Average Price on the Registration Dates as set forth in clause (b) of Section 1.4. (b) If PPG Actual Expenses are less than PPG Estimated Expenses, then on or before [The confidential material contained herein has been omitted and has been separately filed with the Commission.], PPG will deliver to UDC, at its election (i) cash equal to the difference between, for such Period, PPG Estimated Expenses and PPG Actual Expenses or (ii) such number of shares of UDC Common Stock as is equal to (A) the difference between PPG Estimated Expenses and PPG Actual Expenses for such period divided by (B) the Average Price. 10.3.2 On [The confidential material contained herein has been omitted and has been separately filed with the Commission.], and on each [The confidential material contained herein has been omitted and has been separately filed with the Commission.] thereafter during the Initial Term, UDC will also deliver to PPG a Warrant, in the form of Exhibit D, evidencing PPG's right to purchase, on the terms and conditions set forth in the warrant, such number of shares of UDC Stock as is equal to the aggregate number of shares of UDC Stock issued to PPG for the immediately preceding Period under Sections 10.2.1 and 10.3.1(a); provided that, if (i) the Registration Statement with respect to any shares issued to PPG for the immediately preceding period is not effective upon such [The confidential material contained herein has been omitted and has been separately filed with the Commission.], and (ii) upon the effective date of the Registration Statement UDC is required to deliver additional shares to PPG pursuant to the terms of Section 10.3.1(a), then UDC will deliver an additional Warrant, in the form of Exhibit D, evidencing PPG's right to purchase such additional number of shares of UDC Stock as is equal to the number of additional shares required to be delivered to PPG pursuant to the terms of Section 10.3.1(a). 5 10.4 Representations of PPG. ---------------------- 10.4.1 Purchase Entirely for Own Account. The Securities to be received by PPG pursuant to this Agreement will be acquired for investment for PPG's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof that would violate any applicable federal securities laws, and PPG has no immediate intention of selling, granting any participation in, or otherwise distributing the same except to the extent the same are included in the Registration Statement (as hereinafter defined). By executing this Agreement, PPG further represents that PPG does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Securities. PPG represents that it has full power and authority to enter into this Agreement. 10.4.2 Accredited Status. PPG is an "accredited investor" within the meaning of Commission Rule 501 of Regulation D, as presently in effect. 10.4.3 Restricted Securities. PPG understands that the Securities it is receiving are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from UDC in a transaction not involving a public offering and that under such laws and applicable regulations such Securities may be resold without registration under the 1933 Act, only in certain limited circumstances. In this connection, PPG represents that it is familiar with Commission Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the 1933 Act. 10.4.4 Legends. It is understood that the certificates evidencing the Securities of UDC which may be issued pursuant to this Agreement may bear one or all of the following legends: "These securities have not been registered under the Securities Act of 1933, as amended. They may not be sold, offered for sale, pledged or hypothecated in the absence of a registration statement in effect with respect to the securities under such Act or an opinion of counsel satisfactory to the Corporation that such registration is not required or unless sold pursuant to Rule 144 of such Act." and any legend required by any applicable state securities laws. To the extent that such legends are no longer applicable, UDC shall cause its transfer agent to remove the legends upon request by PPG. 10.5 Certain Covenants of UDC. ------------------------ 10.5.1 Reservation of Shares. UDC shall at all times have authorized, and reserved for the purpose of issuance, a sufficient number of shares of UDC Common Stock to provide for the Warrant Shares. UDC shall not reduce the number of shares of UDC Common Stock reserved for issuance of the Warrant Shares without the consent of PPG. If at any time the number of shares of Common Stock authorized and reserved for issuance is below the number of Warrant Shares, UDC will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without 6 limitation, calling a special meeting of shareholders to authorize additional shares to meet UDC's obligations under this Section 10.5.1, in the case of an insufficient number of authorized shares, and using its commercially reasonable efforts to obtain shareholder approval of an increase in such authorized number of shares. 10.5.2 Listing. UDC shall promptly secure the listing of the UDC Common Shares upon The Nasdaq SmallCap Market, The Nasdaq National Market or such other national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance). So long as PPG owns any of the Securities, UDC shall maintain, so long as any other shares of UDC Common Stock shall be so listed, such listing of all Common Shares, and shall comply in all respects with UDC's reporting, filing and other obligations under the bylaws or rules of the National Association of Securities Dealers and such exchanges, as applicable. 10.5.3 Reports Under 1934 Act. With a view to making available to PPG the benefits of Rule 144 and any successor or other rule or regulation of the Commission that may at any time permit PPG to sell the shares of UDC Common Stock issuable pursuant to this Agreement to the public without registration, UDC agrees to: (a) make and keep public information available, as those terms are understood and defined in Rule 144, at all times; (b) file with the Commission in a timely manner all reports and other documents required of UDC under the 1933 Act and the 1934 Act; and (c) furnish to PPG, so long as PPG owns any Shares, forthwith upon request (i) a written statement by UDC that it has complied with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of UDC and such other reports and documents so filed by UDC, and (iii) such other information as may be reasonably requested in availing PPG of any rule or regulation of the Commission which permits the selling of any Shares without registration. 10.6 Certain Sales. -------------- 10.6.1 Short Sales. During the term of this Agreement, PPG and its affiliates agree not to engage in, or encourage any third party from engaging in, "short sales" (as such term is defined in Rule 3b-3 of the 1934 Act) of UDC's securities. 10.6.2 Prohibited Sales During Certain Periods. During the ninety (90) calendar day period prior to and including [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of each calendar year during the Initial Term (each a "PPG Restricted Period"), PPG shall not offer, sell or contract to sell shares of UDC Common Stock received hereunder or any securities convertible into or exchangeable or exercisable for any share of UDC Common Stock, to the extent that such sale would exceed, on any one (1) day during such PPG Restricted Period, [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the average daily trading volume of shares of UDC Common Stock for the ninety (90) calendar day period immediately preceding the PPG Restricted Period (the "PPG Volume Limit"); provided however that the PPG Volume Limit shall not apply to any private placement of shares of UDC Common Stock by PPG. During each PPG Restricted Period, PPG shall not enter into any swap or hedge arrangement that transfers, 7 in whole or in part, any of the economic consequences of ownership of shares of UDC Common Stock in excess of the PPG Volume Limit, or publicly disclose the intention to make any offer, sale or contract to sell or to enter into any swap or hedge in excess of the PPG Volume Limit. 10.7 PPG Representation on UDC Board. If, at any time during the term of this Agreement, PPG's ownership of UDC Common Stock equals or exceeds [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the total number of issued and outstanding shares of UDC Common Stock, then PPG shall be entitled to designate one (1) individual for election to UDC's Board of Directors and UDC shall use all commercially reasonable efforts to cause such designee to be elected to UDC's Board of Directors within thirty (30) days of PPG's designation, including but not limited to recommending such designee for election, causing any shares for which UDC has or can control voting rights with respect thereto to be voted in favor of such designee, causing broker votes to be cast in favor of such designee and amending its articles of incorporation and/or by-laws and/or adopting any resolutions for increasing the number of directors on the UDC Board, if necessary to accommodate the designee. If, at any time during the term of this Agreement, PPG's ownership of UDC Common Stock equals or exceeds [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the total number of issued and outstanding shared of UDC Common Stock, then PPG shall be entitled to designate one quarter of the total members of UDC's Board of Directors, with any fraction rounded up to the nearest whole number and UDC shall use all commercially reasonable efforts to cause such designees to be elected to UDC's Board of Directors within thirty (30) days of PPG's designation, all as set forth in the preceding sentence. UDC will support PPG's acquisition of up to twenty-five percent (25%) of UDC's Common Stock, either through open market purchases or UDC treasury shares, at UDC's discretion. 10.8 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 10.8.2 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 10.8.3 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 10.8.4 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] 10.9 Acquisition Transactions. If all or substantially all of the assets of UDC, or any material portion of the OLED assets of UDC are acquired by a third party during the Initial Term or any extension thereof, or if the shareholders of UDC approve a merger, consolidation, share exchange, division or other disposition as a result of which the shareholders of UDC immediately prior to the transaction will not own a majority of the voting power of the surviving or resulting corporation or any corporation which acquires the stock of UDC, or if UDC assigns or transfers this Agreement to a third party, then either PPG or UDC shall, within [The confidential material contained herein has been omitted 8 and has been separately filed with the Commission.] days following such event, have the right to terminate this Agreement, in which case UDC will distribute to PPG the Acquisition Amount of UDC Common Stock and a warrant evidencing PPG's right to purchase the Acquisition Amount of UDC Common Stock on the terms and conditions set forth in the Warrant attached hereto as Exhibit E. The "Acquisition Amount" shall be calculated by multiplying the most recent PPG Estimated Expenses (as calculated pursuant to Section 10.2.2), or the PPG Estimated Expenses for the Initial Period (as calculated pursuant to Section 10.2.1) if it is the most recent estimate provided pursuant to this Agreement, by the number of years (and any fraction thereof) remaining in the Initial Term. ARTICLE 11 - REGISTRATION RIGHTS 11.1 Definitions. For the purposes of this Article 11: ----------- "Group A Registrable Securities" means the parties good faith estimate of the number of shares of UDC Common Stock issuable to PPG (including shares issuable upon exercise of the Warrants) between the Effective Date and December 31, 2002. "Group B Registrable Securities" means the parties good faith estimate of the number of shares of UDC Common Stock issuable to PPG (including shares issuable upon exercise of the Warrants) between January 1, 2003 and December 31, 2004. "Group C Registrable Securities" means the parties good faith estimate of the number of shares of UDC Common Stock issuable to PPG (including shares issuable upon exercise of the Warrants) between January 1, 2005 and December 31, 2005. "Registrable Securities" means, collectively, Group A Registrable Securities, Group B Registrable Securities and Group C Registrable Securities. 11.2 Registration Rights With Respect to the Securities. -------------------------------------------------- 11.2.1 UDC agrees that it will prepare and file with the Commission one or more registration statements (on Form S-3, or other appropriate form of registration statement) under the 1933 Act (each a "Registration Statement"), together with such state law qualifications and other compliances with applicable law, at the sole expense of UDC, in respect of PPG, so as to permit a public offering and resale of the Registrable Securities under the 1933 Act by PPG. UDC shall use its commercially reasonable efforts to cause each Registration Statement to become effective as promptly as possible after the filing thereof and within five (5) days after Commission clearance. UDC will within such five (5) days request acceleration of effectiveness. 11.2.2 The parties acknowledge that UDC has filed with the Commission a Registration Statement with respect to Group A Registrable Securities. UDC shall file with the Commission a Registration Statement with respect to Group B Registrable Securities on or before October 1, 2002. UDC shall file with the Commission a Registration Statement with respect to Group C Registrable Securities on or before October 1, 2004. 9 11.2.3 UDC will maintain each Registration Statement or any post-effective amendment filed under this Article 11 hereof effective under the 1933 Act until the earlier of (i) the date that none of the Registrable Securities covered by such Registration Statement are or may become issued and outstanding, (ii) the date that all of the Registrable Securities covered by such Registration Statement have been sold pursuant to such Registration Statement, (iii) the date the holders thereof receive an opinion of counsel to UDC, which counsel shall be reasonably acceptable to PPG, that the Registrable Securities covered by such Registration Statement may be sold under the provisions of Rule 144 without limitation as to volume or a requirement of "brokers transactions," (iv) all Registrable Securities covered by such Registration Statement have been otherwise transferred to persons who may trade such shares without restriction under the 1933 Act, and UDC has delivered a new certificate or other evidence of ownership for such Registrable Securities not bearing a restrictive legend, or (v) all Registrable Securities covered by such Registration Statement may be sold without any time, volume or manner limitations pursuant to Rule 144(k) or any similar provision then in effect under the 1933 Act in the opinion of counsel to UDC, provided such counsel is reasonably acceptable to PPG. If, under Commission rules or policies of the Commission staff, any of the Registrable Securities for any reason cannot be included in a Registration Statement initially filed by UDC and must be included in a separate registration statement, UDC shall file all such additional registration statements as may be needed to permit PPG to offer and resell to the public all of the Registrable Securities, and the term "Registration Statement" shall for purposes of this Agreement be deemed to include all such additional registration statements. 11.2.4 All fees, disbursements and out-of-pocket expenses and costs incurred by UDC in connection with the preparation and filing of each Registration Statement under this Article 11 and in complying with applicable federal and state securities laws (including, without limitation, all attorneys' and accountants' fees of UDC), shall be borne by UDC. PPG shall bear the cost of underwriting and/or brokerage discounts, fees and commissions, if any, applicable to its sale of the Securities being registered and the fees and expenses of its counsel. PPG and its counsel shall have a reasonable period, of not less than five (5) business days for each Registration Statement filed hereunder and for each amendment or subsequently filed Registration Statement, to review the proposed Registration Statement or any amendment thereto, prior to filing with the Commission, and UDC shall provide PPG with copies of any comment letters received from the Commission and each written response thereto with respect thereto within two (2) business days of receipt or sending thereof. UDC shall make reasonably available for inspection by PPG, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other agent retained by PPG or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of UDC and its subsidiaries, and cause UDC's officers, directors and employees to supply all information reasonably requested by such PPG or any such underwriter, attorney, accountant or agent in connection with each Registration Statement, in each case, as is customary for similar due diligence examinations; provided, however, that all records, information and documents that are designated in writing by UDC, in good faith, as confidential, proprietary or containing any material non-public information shall be kept confidential by PPG and any such underwriter, attorney, accountant or agent (pursuant to an appropriate confidentiality agreement in the case of any such PPG or agent), unless such disclosure is made pursuant to judicial process in a court proceeding (after first giving UDC an opportunity promptly to seek a protective 10 order or otherwise limit the scope of the information sought to be disclosed) or is required by law, or such records, information or documents become available to the public generally or through a third party not in violation of an accompanying obligation of confidentiality; and provided further that, if the foregoing inspection and information gathering would otherwise disrupt UDC's conduct of its business, such inspection and information gathering shall, to the maximum extent possible, be coordinated on behalf of PPG and the other parties entitled thereto by one firm of counsel designated by and on behalf of the majority in interest of PPG and other parties. To the extent necessary, UDC shall qualify any of the Registrable Securities for sale in such states as such PPG reasonably designates except that UDC shall not be required to qualify in any state which will require an escrow relating to UDC and/or the sellers of Registrable Securities, or which will require UDC to qualify to do business in such state or require UDC to file therein any general consent to service of process. UDC at its expense will supply PPG with copies of each Registration Statement and the prospectus included therein and other related documents in such quantities as may be reasonably requested by PPG. 11.2.5 If UDC delivers to PPG a certificate signed by UDC's President and Chief Operating Officer and Chief Financial Officer to the effect that (i) UDC is aware of nonpublic information concerning UDC that has not been disclosed in a Registration Statement either by incorporation of 1934 Act filings by UDC or by information included directly in such Registration Statement, and (ii) in the good faith judgment of UDC, the disclosure of such information in such Registration Statement may have a material adverse effect on the business, operations, properties, assets, prospects or condition (financial or otherwise) of UDC, then, PPG agrees not to effect any sales of Registrable Securities pursuant to such Registration Statement until such time as PPG (a) is advised in writing by UDC that the use of the applicable prospectus contained in such Registration Statement may be resumed, (b) has received copies of a supplemental or amended prospectus, if applicable, and (c) has received copies of any additional or supplemental filings, if any, which are incorporated or deemed to be incorporated by reference in such prospectus. UDC agrees to, at the request of PPG, prepare any supplement or amendment to the applicable prospectus or to make any additional or supplemental filings so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain any untrue statement of material fact or omit to state any fact necessary to make the statements therein not misleading. 11.3 PPG's Obligations. ----------------- 11.3.1 Cooperation with Company. PPG will cooperate with UDC in all respects in connection with this Article 11, including timely supplying all information reasonably requested by UDC (which shall include all information regarding PPG and proposed manner of sale of the Registrable Securities required to be disclosed in a Registration Statement) and executing and returning all documents reasonably requested in connection with the registration and sale of the Registrable Securities. 11.3.2 "Market Stand-Off" Agreement. Unless otherwise consented to in writing by the managing underwriter, PPG shall not effect any public sale or distribution of equity securities of UDC or any securities convertible into or exchangeable or exercisable for such securities during the seven days prior to and the 90 days after any underwritten registration (except 11 as part of such underwritten registration) if PPG participates in such registration. UDC may impose stop-transfer instructions with respect to the shares of Common Stock subject to the foregoing restriction until the end of any such period. 11.4 Registration Procedures. In addition to the requirements of Section 11.2, UDC shall (except as otherwise expressly provided in this Agreement), as expeditiously as possible, subject to PPG's compliance with Section 11.3.1: (a) prepare and file with the Commission such amendments and supplements to each Registration Statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the 1933 Act with respect to the sale or other disposition of all securities covered by such Registration Statement (including prospectus supplements with respect to the sales of securities from time to time in connection with a registration statement pursuant to Rule 415 promulgated under the 1933 Act) and (ii) take all lawful action such that each of (A) each Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, not misleading and (B) the Prospectus forming part of each Registration Statement, and any amendment or supplement thereto, does not at any time during the period set forth in Section 11.2.3 include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) prior to the filing with the Commission of any Registration Statement (including any amendments thereto) and the distribution or delivery of any prospectus (including any supplements thereto), (i) provide draft copies thereof to PPG and reflect in such documents all such comments as PPG (and its counsel) reasonably may propose and (ii) furnish to PPG such numbers of copies of a prospectus including a preliminary prospectus or any amendment or supplement to any prospectus, as applicable, in conformity with the requirements of the 1933 Act, and such other documents, as PPG may reasonably request in order to facilitate the public sale or other disposition of the securities owned by PPG. (c) to the extent necessary, register and qualify the Securities covered by a Registration Statement under applicable state securities laws, and do any and all other acts and things which may be reasonably necessary or advisable to enable PPG to consummate the public sale or other disposition in such jurisdictions within the United States of America of the securities owned by such PPG, except that UDC shall not be required to qualify in any state which will require an escrow relating to UDC and/or the sellers of Registrable Securities, or which will require UDC to qualify to do business in such state or require UDC to file therein any general consent to service of process. 12 (d) subject to the provisions of Section 11.2.5 hereof, notify PPG at any time when a prospectus relating thereto covered by a Registration Statement is required to be delivered under the 1933 Act, of the happening of any event of which it has knowledge as a result of which the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and UDC shall prepare and file a curative amendment or 1934 Act filing deemed incorporated in such Registration Statement under applicable provisions of this Article 11 as quickly as commercially possible. (e) as promptly as practicable after becoming aware of such event, notify PPG who holds Securities being sold (or, in the event of an underwritten offering, the managing underwriters) of the issuance by the Commission or any state authority of any stop order or other suspension of the effectiveness of a Registration Statement at the earliest possible time and take all lawful action to effect the withdrawal, recission or removal of such stop order or other suspension. (f) cooperate with PPG to facilitate the timely preparation and delivery of certificates for the Securities to be offered pursuant to a Registration Statement and enable such certificates for the Securities to be in such denominations or amounts, as the case may be, as PPG reasonably may request and registered in such names as PPG may request; and, within three (3) business days after a Registration Statement which includes Securities is declared effective by the Commission, deliver and cause legal counsel selected by UDC to deliver to the transfer agent for the Securities (with copies to PPG whose Securities are included in such Registration Statement) an appropriate instruction and, to the extent necessary, an opinion of such counsel. (g) take all such other lawful actions reasonably necessary to expedite and facilitate the disposition by PPG of the Securities in accordance with the intended methods therefor provided in the prospectus which are customary for issuers to perform under the circumstances. (h) in the event of an underwritten offering elected by PPG, promptly include or incorporate in a Prospectus supplement or post-effective amendment to a Registration Statement such information as the managers reasonably agree should be included therein and to which UDC does not reasonably object and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after it is notified of the matters to be included or incorporated in such Prospectus supplement or post-effective amendment; and enter into and perform its obligations as UDC under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. 13 (i) cause all Securities registered pursuant hereunder to be listed timely on each securities exchange or quotation system on which similar securities issued by UDC are then listed. (j) use its best efforts to furnish, at the request of PPG, on the date that such Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Article 11, if such securities are being sold through underwriters (i) an opinion, dated such date, of the counsel representing UDC for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to PPG and (ii) a letter dated such date, from the independent certified public accountants of UDC, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to PPG. (k) maintain a transfer agent and CUSIP number for its Common Stock. 11.5 Rank. UDC shall not be precluded from granting registration rights to other persons, provided that no such grant shall interfere with or purport to delay or subordinate any of PPG's rights under this Agreement. 11.6 Indemnification. --------------- 11.6.1 UDC agrees to indemnify, defend and hold harmless PPG, and any underwriter (as defined in the 1933 Act) for PPG, and each person, if any, who controls PPG or underwriter within the meaning of the 1933 Act or 1934 Act ("Selling Person") against any losses, claims, damages or liabilities, joint or several (which shall, for all purposes of this Agreement, include, but not be limited to, all reasonable costs of defense and investigation and all reasonable attorneys' fees), to which the Selling Person may become subject, under the 1933 Act, the 1934 Act, any state securities law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in a Registration Statement, or any related preliminary prospectus, final prospectus or amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein of a material fact required to be stated therein or necessary to make the statements therein not misleading, or arise out of or are based upon any violation or alleged violation by UDC of the 1933 Act, 1934 Act, or any state securities law, or any rules or regulations of governmental agencies promulgated thereunder; provided, however, that UDC will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement, preliminary prospectus, final prospectus or amendment or supplement thereto in reliance upon, and in conformity with, written information furnished to UDC by the Selling Person, specifically for use in the preparation thereof. This Section shall not inure to the benefit of any Selling Person with respect to any person asserting such loss, claim, damage or liability who purchased the Securities which are the subject thereof if, and to the extent such loss or other claim arises from the fact or alleged fact that, 14 the Selling Person failed to send or give (in violation of the 1933 Act or the rules and regulations promulgated thereunder) a copy of the prospectus contained in such Registration Statement to such person at or prior to time required under the 1933 Act, where the Selling Person was obligated to do so under the 1933 Act or the rules and regulations promulgated thereunder. This indemnity agreement will be in addition to any liability which UDC may otherwise have. 11.6.2 Each Selling Person, severally and not jointly, agrees that it will indemnify and hold harmless UDC, and each officer, director of UDC or person, if any, who controls UDC within the meaning of the 1933 Act, against any losses, claims, damages or liabilities (which shall, for all purposes of this Agreement, include, but not be limited to, all reasonable costs of defense and investigation and all reasonable attorneys' fees) to which UDC or any such officer, director or controlling person may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in a Registration Statement, or any related preliminary prospectus, final prospectus or amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in such Registration Statement, preliminary prospectus, final prospectus or amendment or supplement thereto in reliance upon, and in conformity with, written information furnished to UDC by such Selling Person, specifically for use in the preparation thereof. This indemnity agreement will be in addition to any liability which the Selling Person may otherwise have. Notwithstanding anything to the contrary herein, the Selling Person shall not be liable under this Section for any amount in excess of the net proceeds to such Selling Person as a result of the sale of Securities pursuant to such Registration Statement. 11.6.3 Promptly after receipt by an indemnified party under this Article 11 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Article 11, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve the indemnifying party from any liability which it may have to any indemnified party except to the extent of actual prejudice demonstrated by the indemnifying party. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, assume the defense thereof, subject to the provisions herein stated and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Article 11 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation, unless the indemnifying party shall not pursue the action to its final conclusion. The indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be at the expense of the indemnifying party if the indemnifying party has assumed the 15 defense of the action with counsel reasonably satisfactory to the indemnified party; provided that if the indemnified party is the Selling Person, the fees and expenses of such counsel shall be at the expense of the indemnifying party if (i) the employment of such counsel has been specifically authorized in writing by the indemnifying party, or (ii) the named parties to any such action (including any impleaded parties) include both the Selling Person and the indemnifying party and the Selling Person shall have been advised by such counsel that there may be one or more legal defenses available to the indemnifying party different from or in conflict with any legal defenses which may be available to the Selling Person (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of the Selling Person, it being understood, however, that the indemnifying party shall, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable only for the reasonable fees and expenses of one separate firm of attorneys for the Selling Person, which firm shall be designated in writing by the Selling Person). No settlement of any action against an indemnified party shall be made without the prior written consent of the indemnified party, which consent shall not be unreasonably withheld. All fees and expenses of the indemnified party (including reasonable costs of defense and investigation in a manner not inconsistent with this Section and all reasonable attorneys' fees and expenses) shall be paid to the indemnified party, as incurred, within ten (10) business days of written notice thereof to the indemnifying party (regardless of whether it is ultimately determined that an indemnified party is not entitled to indemnification hereunder; provided, that the indemnifying party may require such indemnified party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such indemnified party is not entitled to indemnification hereunder). 11.6.4 In order to provide for just and equitable contribution under the 1933 Act in any case in which (i) the indemnified party makes a claim for indemnification pursuant to Section 11.6 hereof but is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that the express provisions of Section 11.6 hereof provide for indemnification in such case, or (ii) contribution under the 1933 Act may be required on the part of any indemnified party, then UDC and the applicable Selling Person shall contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (which shall, for all purposes of this Agreement, include, but not be limited to, all reasonable costs of defense and investigation and all reasonable attorneys' fees), in either such case (after contribution from others) on the basis of relative fault as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by UDC on the one hand or the applicable Selling Person on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. UDC and the Selling Person agree that it would not be just and equitable if contribution pursuant to this Section were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this Article 11. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this Article 11 shall be deemed 16 to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 11.6.4, in no case shall any Selling Person be liable or responsible for any amount in excess of the net proceeds received by such Selling Person from the offering of Registrable Securities and UDC shall be liable and responsible for any amount in excess of such proceeds. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 11.6.5 Notwithstanding any other provision of this Article 11, in no event shall (i) PPG be required to undertake liability to any person under this Article 11 for any amounts in excess of the dollar amount of the net proceeds to be received by such PPG from the sale of such PPG's Securities (after deducting any fees, discounts and commissions applicable thereto) pursuant to any Registration Statement under which such Securities are to be registered under the 1933 Act and (ii) any underwriter be required to undertake liability to any person hereunder for any amounts in excess of the aggregate discount, commission or other compensation payable to such underwriter with respect to the Securities underwritten by it and distributed pursuant to such Registration Statement. 11.7 Liquidated Damages. The parties hereto agree that PPG will suffer damages if UDC fails to fulfill its obligations under Article 11, and that it would not be feasible to ascertain the extent of such damages. Accordingly: 11.7.1 if a Registration Statement is not filed within [The confidential material contained herein has been omitted and has been separately filed with the Commission.] days of the date on which a Registration Statement shall be filed pursuant to Section 11.2.2, UDC will be obligated to pay liquidated damages to PPG [The confidential material contained herein has been omitted and has been separately filed with the Commission.] for each month or portion thereof during which such Registration Statement has not been filed after such [The confidential material contained herein has been omitted and has been separately filed with the Commission.] day period; 11.7.2 if the Registration Statement with respect to the Group A Registrable Securities has not been declared effective within the earlier of (a) [The confidential material contained herein has been omitted and has been separately filed with the Commission.] days of the date of its filing or (b) [The confidential material contained herein has been omitted and has been separately filed with the Commission.] days of the execution of this Agreement, then UDC will be obligated to pay liquidated damages to PPG [The confidential material contained herein has been omitted and has been separately filed with the Commission.] for each month or portion thereof during which such Registration Statement has not been declared effective after such [The confidential material contained herein has been omitted and has been separately filed with the Commission.] day period; 11.7.3 if a Registration Statement with respect to the Group B Registrable Securities or Group C Registration Securities has not been declared effective within [The confidential material contained herein has been omitted and has been separately filed with the Commission.] days of the date of its filing, then UDC will be obligated to pay liquidated damages to PPG [The confidential material contained herein has been omitted and has been separately filed with the Commission.] for each month or portion thereof during which such Registration Statement has not been declared effective after such [The confidential material contained herein has been omitted and has been separately filed with the Commission.] day period; and 11.7.4 if the Registration Statement with respect to the Group A Registrable Securities has not been declared effective within the earlier of (a) [The confidential material contained herein has been omitted and has been separately filed with the Commission.] days of the date of its filing or (ii) [The confidential material contained herein has been omitted and has been separately filed with the Commission.] days of the execution of this Agreement, provided such delay is not 17 due solely to the fault of PPG to comply with its obligations under Section 11.3, then [The confidential material contained herein has been omitted and has been separately filed with the Commission.] Notwithstanding anything to the contrary in this Section 11.7, UDC shall not be required to pay liquidated damages to PPG if PPG failed to comply with its obligations under Section 11.3. ARTICLE 3 - MISCELLANEOUS ------------------------- 3.1 Except as provided above, the Agreement shall continue in full force and effect without modification. 3.2 This Amendment may be executed in two or more counterparts all of which shall constitute one and the same instrument. Each such copy shall be deemed an original, and it shall not be necessary in making proof of this Amendment to produce or account for more than one such counterpart. This Amendment shall be deemed executed by the parties when any one or more counterparts hereof, individually or taken together, bears the signatures of each of the parties hereto. This Amendment , once executed by a party, may be delivered to the other party by facsimile transmission of a copy thereof that bears the signature of the party so delivering it. [Signature Page Follows] 18 IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above. UNIVERSAL DISPLAY CORPORATION PPG INDUSTRIES, INC. By: /s/ Steven V. Abramson By: /s/ Howard I. Roe ----------------------- -------------------------- NAME: Steven V. Abramson NAME: Howard I. Roe -------------------- -------------------------- TITLE: President TITLE: Director, Commercial Development ------------------- -------------------------------- DATE: March 7, 2001 DATE: March 7, 2001 -------------------- -------------------------- 19 EX-23.2 5 0005.txt EXHIBIT 23.2 EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our report dated March 17, 2000 included in Universal Display Corporation's Form 10-K for the year ended December 31, 1999 and to all references to our Firm included in this registration statement. /s/ Arthur Andersen LLP Philadelphia, PA March 5, 2001 -----END PRIVACY-ENHANCED MESSAGE-----