REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of August 22, 2001, among Universal Display Corporation, a
Pennsylvania corporation (the "Company"), and the investors signatory hereto
(each such investor is a "Purchaser" and all such investors are, collectively,
the "Purchasers").
WHEREAS, the parties have agreed to enter into this Agreement in
connection with, and as a condition to the Closing under, the Securities
Purchase Agreement, dated as of the date hereof, among the Company and the
Purchasers (the "Purchase Agreement");
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:
1. Definitions. In addition to the terms defined elsewhere in this
Agreement, (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Purchase Agreement, and (b) the following
terms have the meanings indicated:
"Conversion Shares Registration Statement" means the initial
registration statement required to be filed hereunder with respect to
the Common Stock issuable upon conversion of the Preferred Stock and
upon exercise of the Warrants and any additional registration
statements related thereto that are contemplated by Section 3(c),
including (in each case) the Prospectus, amendments and supplements to
such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference in
such registration statement.
"CS Required Minimum" means, as of any date, two times the
maximum aggregate number of shares of Common Stock then issued or
potentially issuable in the future upon exercise or conversion in full
of all First Shares and Warrants, assuming that (1) any previously
unconverted First Shares and unexercised Warrants are held until the
fifth anniversary of the Closing Date or, if earlier, until maturity
and (2) the Closing Price at all times on and after the date of
determination equals 50% of the actual Closing Price on the Trading Day
immediately prior to the date of determination.
"Filing Date" means (i) with respect to the Conversion Shares
Registration Statement required to be filed hereunder, the 30th day
following the Closing Date; (ii) with respect to the Note Shares
Registration Statement, the 30th day following the date on which the
Conversion Shares Registration Statement is declared effective; and
(iii) with respect to any additional Registration Statements that may
be required pursuant to Section 3(c), the 30th day following the date
on which the Company first knows, or reasonably should have known that
such additional Registration Statement is required under such Section.
"Holder" means any holder, from time to time, of Registrable
Securities.
"Note Required Minimum" means, as of any date, the maximum
aggregate number of shares of Common Stock then issued or potentially
issuable in the future upon conversion in full of all Notes, assuming
that (a) any previously unconverted Notes are held until the fifth
anniversary of the Closing Date or, if earlier, until maturity and (b)
the Closing Price at all times on and after the date of determination
equals 50% of the actual Closing Price on the Trading Day immediately
prior to the date of determination.
"Note Shares Registration Statement" means the initial
registration statement required to be filed hereunder with respect to
the Common Stock issuable upon conversion of the Notes and any
additional registration statements related thereto that are
contemplated by Section 3(c), including (in each case) the Prospectus,
amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes
any information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of
any portion of the Registrable Securities covered by the Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such Prospectus.
"Registrable Securities" means any Common Stock (including
Underlying Shares) issued or issuable pursuant to the Transaction
Documents.
"Registration Statement" means the Conversion Shares
Registration Statement and/or the Note Shares Registration Statement as
the context requires.
"Required Effectiveness Date" means, with respect to the
Conversion Shares Registration Statement required to be filed
hereunder, the 90th day following the Closing Date, and, with respect
to any additional Registration Statements that may be required pursuant
to Section 3(c), the 60th day following the date on which the Company
first knows, or reasonably should have known, that such additional
Registration Statement is required under such Section.
"Rule 415," "Rule 424" and "Rule 461" means Rule 415, Rule 424
and Rule 461, respectively, promulgated by the Commission pursuant to
the Securities Act, as such Rules may be amended from time to time, or
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any similar rule or regulation hereafter adopted by the Commission
having substantially the same effect as such Rule.
"Special Counsel" means one special counsel to the Holders.
Unless the Holders notify the Company otherwise, the Special Counsel
will be the Purchaser Counsel identified in the Purchase Agreement.
2. Shelf Registration
(a) On or prior to each Filing Date, the Company shall prepare and
file with the Commission a "Shelf" Registration Statement covering the resale of
all Registrable Securities required to be included therein as set forth below
for an offering to be made on a continuous basis pursuant to Rule 415. The
Registration Statement shall be on Form S-3 or any successor form (except if the
Company is not then eligible to register for resale the Registrable Securities
on Form S-3, in which case such registration shall be on Form S-1 or another
appropriate form in accordance herewith as the Holders may consent) and shall
contain (except if otherwise directed by the Holders) the "Plan of Distribution"
substantially in the form attached hereto as Annex A. The Company shall use its
reasonable best efforts to cause the Conversion Shares Registration Statement
and the Note Shares Registration Statement to be declared effective under the
Securities Act as promptly as possible after the filing thereof, but in any
event, with respect to the Conversion Shares Registration Statement only, prior
to the Required Effectiveness Date, and shall use its reasonable best efforts to
keep such Registration Statement continuously effective under the Securities Act
(subject to Section 3(m) until the date which is two years after the date that
such Registration Statement is declared effective by the Commission or such
earlier date when all Registrable Securities covered by such Registration
Statement have been sold or may be sold in any calendar quarter pursuant to Rule
144(k) (the "Effectiveness Period").
(b) (i) The initial Conversion Shares Registration Statement to be
filed hereunder shall cover the sale by the Holders of at least the CS Required
Minimum number of shares of Common Stock.
(ii) The initial Note Shares Registration Statement to be filed
hereunder shall cover the sale by the Holders of at least the Note Required
Minimum number of shares of Common Stock.
(c) Each of the following shall constitute a "CS Event" with respect
to the Conversion Shares Registration Statement:
(i) a Conversion Shares Registration Statement is not filed on
or prior to its Filing Date or is filed without the Company affording
the Holders the opportunity to review and comment on the same as
required by Section 3(a) hereof;
(ii) an amendment to a Conversion Shares Registration
Statement is not filed by the Company with the Commission within ten
Trading Days after the Commission notifies the Company that such
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amendment is required in order for such Conversion Shares Registration
Statement to be declared effective, or the Company fails to respond as
promptly as reasonably possible and in any event within ten Trading
Days to any comments received from the Commission with respect to a
Conversion Shares Registration Statement or any amendment thereto;
(iii) the Company fails to file with the Commission a request
for acceleration in accordance with Rule 461 within five days after the
date the Company is notified (orally or in writing, whichever is
earlier) by the Commission that a Conversion Shares Registration
Statement will not be "reviewed" or is not subject to further review;
(iv) after the Effective Date of a Conversion Shares
Registration Statement, a Holder is not permitted to sell Registrable
Securities registered under such Conversion Shares Registration
Statement (or a subsequent Conversion Shares Registration Statement
filed in replacement thereof) for any reason, except as otherwise
provided in Section 3(m);
(v) the Common Stock is not listed or quoted, or is suspended
from trading, on an Eligible Market for a period of three Trading Days
(which need not be consecutive Trading Days);
(vi) the exercise or conversion rights of the Holders pursuant
to the Transaction Documents are suspended for any reason, without the
consent of the Holders or as otherwise permitted by the Transaction
Documents; or
(vii) the Conversion Shares Registration Statement filed
hereunder is not declared effective by the Commission on or prior to
its Required Effectiveness Date.
Upon the occurrence of any CS Event and on every monthly anniversary thereof
until the applicable CS Event is cured, as partial relief for the damages
suffered therefrom by the Holders (which remedy shall not be exclusive of any
other remedies available at law or in equity), the Company shall pay to each
Holder an amount in cash, as liquidated damages and not as a penalty, equal to
1.0% of the aggregate purchase price actually paid by such Holder pursuant to
the Purchase Agreement for the Preferred Stock for the first month following the
date on which such CS Event occurs (the "CS Event Date") and 2% for each month
thereafter until such CS Event has been cured. If such CS Event has not been
cured either (A) if the CS Event is on account of the provisions of Section
2(c)(i) through 2(c)(vi), within 15 days of the CS Event Date, or (B) if the CS
Event is on account of the provisions of Section 2(c)(vii), within 90 days of
the CS Event Date then, at any time within thirty days after the later of (1)
the expiration of such 15- or 90-day cure period, as the case may be, or (2) the
date on which the Holder became aware that it has the right to send a Repurchase
Notice (as defined below) the Holder may send a written notice to the Company
requiring the Company to repurchase the Preferred Stock held by the Holder for a
price equal to the Stated Value of such Preferred Stock (a "Repurchase Notice")
as of the date of repurchase, in which event the Company shall repurchase such
Preferred Stock on the 5th Trading Day after the giving of such Repurchase
Notice. There shall be excluded from the periods set forth in the previous
sentences any delays that are attributable solely the failure of the Holders to
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timely complete their review of the Conversion Shares Registration Statement
under Section 3(a). The liquidated damages payable pursuant to the terms hereof
shall apply on a pro-rata basis for any portion of a month prior to the cure of
a CS Event.
(d) Each of the following shall constitute a "Note Event" with
respect to the Note Shares Registration Statement:
(i) a Note Shares Registration Statement is not filed on or
prior to its Filing Date or is filed without the Company affording the
Holders the opportunity to review and comment on the same as required
by Section 3(a) hereof;
(ii) an amendment to a Note Shares Registration Statement is
not filed by the Company with the Commission within ten Trading Days
after the Commission notifies the Company that such amendment is
required in order for such Note Shares Registration Statement to be
declared effective, or the Company fails to respond as promptly as
reasonably possible and in any event within ten Trading Days to any
comments received from the Commission with respect to a Note Shares
Registration Statement or any amendment thereto;
(iii) the Company fails to file with the Commission a request
for acceleration in accordance with Rule 461 within five days after the
date the Company is notified (orally or in writing, whichever is
earlier) by the Commission that a Note Shares Registration Statement
will not be "reviewed" or is not subject to further review;
(iv) after the Effective Date of a Note Shares Registration
Statement, a Holder is not permitted to sell Registrable Securities
registered under such Note Shares Registration Statement (or a
subsequent Note Shares Registration Statement filed in replacement
thereof) for any reason, except as otherwise provided in Section 3(m) ;
(v) the Common Stock is not listed or quoted, or is suspended
from trading, on an Eligible Market for a period of three Trading Days
(which need not be consecutive Trading Days); or
(vi) the exercise or conversion rights of the Holders pursuant
to the Transaction Documents are suspended for any reason, without the
consent of the Holders or as otherwise permitted by the Transaction
Documents.
Upon the occurrence of any Note Event and on every monthly anniversary thereof
until the applicable Note Event is cured, as partial relief for the damages
suffered therefrom by the Holders (which remedy shall not be exclusive of any
other remedies available at law or in equity), the Company shall pay to each
Holder an amount in cash, as liquidated damages and not as a penalty, equal to
1.0% of the aggregate purchase price actually paid by such Holder pursuant to
the Purchase Agreement for the Notes for the first month following the date on
which such Note Event occurs and 2% for each month thereafter until such Note
Event has been cured. There shall be excluded from the periods set forth in the
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previous sentences any delays that are attributable solely the failure of the
Holders to timely complete their review of the Note Shares Registration
Statement under Section 3(a). The liquidated damages payable pursuant to the
terms hereof shall apply on a pro-rata basis for any portion of a month prior to
the cure of a Note Event.
3. Registration Procedures. In connection with the Company's
registration obligations hereunder, the Company shall:
(a) Not less than three Trading Days prior to the filing of each
Registration Statement or any related Prospectus or any amendment or supplement
thereto (including any document that would be incorporated or deemed to be
incorporated therein by reference), the Company shall (i) furnish to the Holders
and their Special Counsel copies of all such documents proposed to be filed,
which documents (other than those incorporated or deemed to be incorporated by
reference) will be subject to the review of such Holders and their Special
Counsel, and (ii) cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries as shall be necessary,
in the reasonable opinion of respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not be
restricted in any manner from including in a Registration Statement the
distribution or resale of (i) any securities by PPG or Motorola, provided that
such securities are issued and outstanding on the date hereof, are issued upon
exercise or conversion of any securities held by PPG or Motorola on the date
hereof, or are issued pursuant to preemptive rights of PPG outstanding on the
date hereof and (ii) the distribution or resale of up to 200,000 shares of
Common Stock issuable upon exercise of warrants granted to Gerard, Klauer
Mattison & Co. Inc. on the Closing Date (and any shares issuable pursuant to the
antidilution provisions thereof). The Company shall not file the Registration
Statement or any such Prospectus or any amendments or supplements thereto to
which the Holders of a majority of the Registrable Securities and their Special
Counsel shall reasonably object.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424; (iii)
respond as promptly as reasonably possible, and in any event within ten Trading
Days, to any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and as promptly as reasonably
possible provide the Holders true and complete copies of all correspondence from
and to the Commission relating to the Registration Statement; and (iv) comply in
all material respects with the provisions of the Securities Act and the Exchange
Act with respect to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance with the
intended methods of disposition by the Holders thereof set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.
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(c) If, on any date, the number of shares of Common Stock previously
registered under all existing Registration Statements is less than 125% of the
Actual Minimum on such date, then the Company shall file an additional
Registration Statement covering a number of shares of Common Stock at least
equal to (i) the Required Minimum on such date, less (ii) the number of shares
of Common Stock previously registered under all existing Registration
Statements; provided that the Company will not be required at any time to
register a number of shares of Common Stock greater than the maximum number of
shares of Common Stock that could possibly be issued pursuant to the Transaction
Documents.
(d) Notify the Holders of Registrable Securities to be sold and
their Special Counsel as promptly as reasonably possible, and ^ confirm such
notice in writing no later than one Trading Day thereafter, of any of the
following events: (i) the Commission notifies the Company whether there will be
a "review" of any Registration Statement; (ii) the Commission comments in
writing on any Registration Statement (in which case the Company shall deliver
to each Holder a copy of such comments and of all written responses thereto);
(iii) any Registration Statement or any post-effective amendment is declared
effective; (iv) the Commission or any other Federal or state governmental
authority requests any amendment or supplement to a Registration Statement or
Prospectus or requests additional information related thereto; (v) the
Commission issues any stop order suspending the effectiveness of any
Registration Statement or initiates any Proceedings for that purpose; (vi) the
Company receives notice of any suspension of the qualification or exemption from
qualification of any Registrable Securities for sale in any jurisdiction, or the
initiation or threat of any Proceeding for such purpose; or (vii) the financial
statements included in any Registration Statement become ineligible for
inclusion therein or any statement made in any Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference is untrue in any material respect or any revision to a Registration
Statement, Prospectus or other document is required so that it will not contain
any untrue statement of a material fact or omit to state any 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.
(e) Use its reasonable best efforts to avoid the issuance of or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
any Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(f) Furnish to each Holder and their Special Counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.
(g) Promptly deliver to each Holder and their Special Counsel,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Persons may
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reasonably request. The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, use its
reasonable best efforts to register or qualify or cooperate with the selling
Holders and their Special Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Holder requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
provided, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take any
action that would subject it to general service of process in any jurisdiction
where it is not then so subject or subject the Company to any material tax in
any such jurisdiction where it is not then so subject.
(i) Cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be delivered
to a transferee pursuant to a Registration Statement, which certificates shall
be free, to the extent permitted by the Purchase Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such denominations
and registered in such names as any such Holders may request.
(j) Upon the occurrence of any event described in Section 3(d)(vii),
as promptly as reasonably possible, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will 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,
in light of the circumstances under which they were made, not misleading.
(k) Comply with all applicable rules and regulations of the
Commission.
(l) The Company may require each selling Holder to furnish to the
Company information regarding such Holder and the distribution of such
Registrable Securities as is required by law to be disclosed in the Registration
Statement; and each Holder shall furnish any such information to the Company.
(m) Subject to the last sentence of this Section 3(m), the Company
may by written notice require that the Holders immediately cease sales of
Registrable Securities (for a period not to exceed five consecutive Trading Days
in any one instance and for a period not to exceed twenty Trading Days in any
twelve-month period) pursuant to a Registration Statement at any time that (i)
the Company becomes engaged in a business activity or negotiation which is not
8
disclosed in a Registration Statement (or the prospectus included therein) which
the Company reasonably believes must be disclosed therein under applicable law
and which the Company desires to keep confidential for business purposes, (ii)
the Company determines that a particular disclosure so determined to be required
to be disclosed therein would be premature or would adversely affect the Company
or its business or prospects or (iii) the Registration Statement can no longer
be used under the existing rules and regulations promulgated under the
Securities Act (each of (i), (ii) or (iii), a "Material Condition"). The Company
shall not be required to disclose to the Holders which of the reasons specified
in (i), (ii) or (iii) above is the basis for requiring a suspension of sales due
to the occurrence of a Material Condition. The Company will use its reasonable
best efforts to ensure that the use of the Registration Statement (and the
prospectus included therein) may be resumed as soon as it is practicable. The
Company may not suspend sales of Registrable Securities under a Registration
Statement pursuant to this Section 3(m) more than four (4) times during any
twelve-month period.
4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (a) all registration and filing fees
(including, without limitation, fees and expenses (i) with respect to filings
required to be made with any Trading Market, and (ii) in compliance with
applicable state securities or Blue Sky laws (including, without limitation,
fees and disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities and determination of
the eligibility of the Registrable Securities for investment under the laws of
such jurisdictions as requested by the Holders of a majority of the Registrable
securities included in such Registration Statement)), (b) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses requested by the Holders),
(c) messenger, telephone and delivery expenses, (d) fees and disbursements of
counsel for the Company and up to an aggregate of $25,000 (the "Fee Cap") for
the Special Counsel for the Holders and (e) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement. The Holders shall pay the fees and
expenses of the Special Counsel retained by them in excess of the Fee Cap.
5. Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees of each of them, each Person who controls any such Holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, costs of preparation and reasonable attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or relating to any untrue
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or alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that (i) such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto
or (ii) in the case of an occurrence of an event of the type specified in
Section 3(d)(v)-(vii), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such Holder of
the Advice contemplated in Section 6(f). The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding of which the
Company is aware in connection with the transactions contemplated by this
Agreement.
(b) Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents and employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising solely out of or based solely upon any untrue statement of a
material fact contained in any Registration Statement, any Prospectus, or any
form of prospectus, or in any amendment or supplement thereto, or arising solely
out of or based solely upon any omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Holder to the
Company specifically for inclusion in such Registration Statement or such
Prospectus or to the extent that (i) such untrue statements or omissions are
based solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto
or (ii) in the case of an occurrence of an event of the type specified in
Section 3(d)(v)-(vii), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such Holder of
the Advice contemplated in Section 6(f). In no event shall the liability of any
selling Holder hereunder be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall
be brought or asserted against any Person entitled to indemnity hereunder (an
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"Indemnified Party"), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
reasonable fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the reasonable
expense of the Indemnifying Party). The Indemnifying Party shall not be liable
for any settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.
All reasonable fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten Trading Days of written notice thereof to the Indemnifying
Party, which notice shall be delivered no more frequently than on a monthly
basis (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).
(d) Contribution. If a claim for indemnification under Section 5(a)
or 5(b) is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
11
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6. Miscellaneous
(a) Remedies. In the event of a breach by the Company or by a Holder
of any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of at least two-thirds of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
12
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders and that does not directly or indirectly affect the rights of
other Holders may be given by Holders of at least a majority of the Registrable
Securities to which such waiver or consent relates; provided, however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence.
(c) No Inconsistent Agreements. Neither the Company nor any of its
subsidiaries has entered, as of the date hereof, nor shall the Company or any of
its subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities that would have the effect of impairing
the rights granted to the Holders in this Agreement or otherwise conflicts with
the provisions hereof. Except as and to the extent specified in the applicable
schedule to the Purchase Agreement, neither the Company nor any Subsidiary has
previously entered into any agreement granting any registration rights with
respect to any of its securities to any Person that have not been satisfied in
full.
(d) No Piggyback on Registrations. Except as and to the extent
specified in the applicable schedule to the Purchase Agreement, neither the
Company nor any of its security holders (other than the Holders in such capacity
pursuant hereto) may include securities of the Company in the Registration
Statement other than the Registrable Securities, and the Company shall not after
the date hereof enter into any agreement providing any such right to any of its
security holders. The Company shall not be restricted in any manner from
including in a Registration Statement (i) the distribution or resale of any
securities by PPG or Motorola, provided that such securities are issued and
outstanding on the date hereof, are issued upon exercise or conversion of any
securities held by PPG or Motorola on the date hereof, or are issued pursuant to
preemptive rights of PPG outstanding on the date hereof and (ii) the
distribution or resale of up to 200,000 shares of Common Stock issuable upon
exercise of warrants granted Gerard, Klauer Mattison & Co. Inc. on the Closing
Date (and any shares issuable pursuant to the antidilution provisions thereof).
(e) Compliance. Each Holder covenants and agrees that it will: (i)
comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the Registration Statement; (ii) sell the Registrable Securities pursuant to the
Registration Statement only in transactions that are contemplated by the Plan of
Distribution contained in such Registration Statement; and (iii) in connection
with sales made pursuant to the Registration Statement, deliver only
certificates that represent shares covered by the Registration Statement. The
Holder represents and warrants that the requirements set forth in subsections
(i), (ii) and (iii) of this paragraph (e) shall be true and correct with respect
to every sale of Registrable Securities made pursuant to the Registration
Statement at the time of each such sale.
(f) Discontinued Disposition. Each Holder agrees by its acquisition
of such Registrable Securities that, upon receipt of a notice from the Company
of the occurrence of any event of the kind described in Sections 3(d)(v),
3(d)(vi), 3(d)(vii) or 3(m), such Holder will forthwith discontinue disposition
of such Registrable Securities under the Registration Statement until such
Holder's receipt of the copies of the supplemented Prospectus and/or amended
13
Registration Statement contemplated by Section 3(j), or until it is advised in
writing (the "Advice") by the Company that the use of the applicable Prospectus
may be resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement. The Company may provide
appropriate stop orders to enforce the provisions of this paragraph.
(g) Piggy-Back Registrations. If at any time during the
Effectiveness Period there is not an effective Registration Statement covering
all of the Registrable Securities and the Company shall determine to prepare and
file with the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or their then equivalents relating to equity securities to
be issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of such
determination and, if within fifteen days after receipt of such notice, any such
Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered.
(h) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 6:30 p.m. (New
York City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Agreement on a day that is not a
Trading Day or later than 6:30 p.m. (New York City time) and earlier than 11:59
p.m. (New York City time) on any Trading Day or (c) the Trading Day following
the date of mailing, if sent by U.S. nationally recognized overnight courier
service. The address for such notices and communications shall be as follows:
If to the Company: Universal Display Corporation
375 Phillips Boulevard
Ewing, New Jersey 08618
Fax No.: (609) 671-0995
Attn: Sidney Rosenblatt
With a copy to: Morgan, Lewis & Bockius, LLP
1701 Market Street
Philadelphia, Pennsylvania 19103
Fax No.: (877) 432-9652
Attn: Stephen Goodman, Esq.
If to a Purchaser: To the address set forth under such Purchaser's
name on the signature pages hereof;
14
With a copy to: Morse, Zelnick, Rose & Lander, LLP
450 Park Avenue
New York, N.Y. 10022
Fax No: (212) 838-9190
Attn: George Lander, Esq.
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
(i) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. The Company may not
assign its rights or obligations hereunder without the prior written consent of
each Holder. Each Holder may assign its rights and obligations hereunder in the
manner and to the extent permitted under the Purchase Agreement.
(j) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.
(k) Governing Law. The corporate laws of the Commonwealth of
Pennsylvania shall govern all issues concerning the relative rights of the
Company and its shareholders. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.
(l) Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
15
(m) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(n) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(o) Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser hereunder is several and not joint with the
obligations of any other Purchaser hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.
(p) Entire Agreement. This Agreement, together with the Transaction
Documents, contains the entire understanding of the parties with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral or written, with respect to such matters.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES TO FOLLOW]
16
IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.
UNIVERSAL DISPLAY CORP.
By: /s/ Sidney D. Rosenblatt
---------------------------------
Name: Sidney D. Rosenblatt
Title: Chief Financial Officer
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES OF PURCHASER TO FOLLOW]
17
STRONG RIVER INVESTMENTS, INC.
By: /s/ Kenneth L. Henderson
------------------------
Name: Kenneth L. Henderson
Title: Attorney-in-fact
Address for Notice:
Strong River Investments, Inc.
c/o Icaza, Gonzalez-Ruiz & Aleman (BVI) Ltd.
Vanterpool Plaza, 2nd Floor, Wickhams Cay I
Road Town, Tortola, British Virgin Islands
Facsimile No.: 212-651-9010
Telephone No.: 212-651-9002
Attn: Danny Golan
With copies to:
Morse, Zelnick, Rose & Lander LLP
450 Park Avenue, Suite 902
New York, New York 10022
Fax No.: 212-838-9190
Attn: George Lander, Esq.
PINE RIDGE FINANCIAL INC.
By: /s/ Kenneth L. Henderson
--------------------------------
Name: Kenneth L. Henderson
Title: Attorney-in-fact
Address for Notice:
Strong River Investments, Inc.
c/o Icaza, Gonzalez-Ruiz & Aleman (BVI) Ltd.
Vanterpool Plaza, 2nd Floor, Wickhams Cay I
Road Town, Tortola, British Virgin Islands
Facsimile No.: 212-651-9010
Telephone No.: 212-651-9002
Attn: Danny Golan
With copies to:
Morse, Zelnick, Rose & Lander LLP
450 Park Avenue, Suite 902
New York, New York 10022
Fax No.: 212-838-9190
Attn: George Lander, Esq.
Annex A
Plan of Distribution
--------------------
The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately negotiated transactions;
o to cover short sales effected after the date hereof;
o broker-dealers may agree with the Selling Stockholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any combination of any of the above methods.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The Selling Stockholders may also engage in short sales against the
box, puts and calls and other transactions in securities of the Company or
derivatives of Company securities and may sell or deliver shares in connection
with these trades. The Selling Stockholders may pledge their shares to their
brokers under the margin provisions of customer agreements. If a Selling
Stockholder defaults on a margin loan, the broker may, from time to time, offer
and sell the pledged shares.
Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
The Selling Stockholders will be subject to prospectus delivery
requirements of the Securities Act. We have informed the Selling Stockholders
that the anti-manipulative provisions of Regulation M promulgated under the
Exchange Act may apply to their sales in the market.
The Company is required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to the
Selling Stockholders, up to $25,000. The Company has agreed to indemnify the
Selling Stockholders against certain losses, claims, damages and liabilities,
including liabilities under the Securities Act.