NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THEY ARE EXERCISABLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
UNIVERSAL DISPLAY CORPORATION
WARRANT
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Warrant No. C-2 Dated: August 22, 2001
Universal Display Corporation, a Pennsylvania corporation (the
"Company"), hereby certifies that, for value received, Pine Ridge Financial,
Inc. or its registered assigns (the "Holder"), is entitled to purchase from the
Company up to a total of 214,746 shares of common stock, $.01 par value per
share (the "Common Stock"), of the Company (each such share, a "Warrant Share"
and all such shares, the "Warrant Shares") at an exercise price equal to $15.24
per share (as adjusted from time to time as provided in Section 9, the "Exercise
Price"), at any time and from time to time from and after the date hereof and
through and including August 22, 2006 (the "Expiration Date"), and subject to
the following terms and conditions.
1. Definitions. In addition to the terms defined elsewhere in this
Warrant, capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Securities Purchase Agreement, dated as of
August 22, 2001, among the Company and the Purchasers identified therein (the
"Purchase Agreement").
2. Registration of Warrant. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.
3. Registration of Transfers. Subject to Section 12 hereof, the Company
shall register the transfer of any portion of this Warrant in the Warrant
Register, upon surrender of this Warrant, with the Form of Assignment attached
hereto duly completed and signed, to the Transfer Agent or to the Company at its
address specified herein. Upon any such registration or transfer, a new warrant
to purchase Common Stock, in substantially the form of this Warrant (any such
new warrant, a "New Warrant"), evidencing the portion of this Warrant so
transferred shall be issued to the transferee and a New Warrant evidencing the
remaining portion of this Warrant not so transferred, if any, shall be issued to
the transferring Holder. The acceptance of the New Warrant by the transferee
thereof shall be deemed the acceptance by such transferee of all of the rights
and obligations of a holder of a Warrant.
4. Exercise and Duration of Warrants.
(a) This Warrant shall be exercisable by the registered Holder
at any time and from time to time on or after the date hereof to and including
the Expiration Date. At 6:30 P.M., New York City time on the Expiration Date,
the portion of this Warrant not exercised prior thereto shall be and become void
and of no value; provided that, if the Closing Price on the Expiration Date is
greater than 102% of the Exercise Price on the Expiration Date, then this
Warrant shall be deemed to have been exercised in full (to the extent not
previously exercised) on a "cashless exercise" basis at 6:30 P.M. New York City
time on the Expiration Date.
(b) Subject to Section 12 hereof, a Holder may exercise this
Warrant by delivering to the Company (i) an Exercise Notice, in the form
attached hereto, appropriately completed and duly signed; (ii) payment of the
Exercise Price for the number of Warrant Shares as to which this Warrant is
being exercised (which may take the form of a "cashless exercise" if so
indicated in the Exercise Notice); and (iii) this Warrant (or a New Warrant, as
described in Section 5(b)), unless the Holder is awaiting receipt of a New
Warrant from the Company pursuant to another provision hereof. The date such
items are delivered to the Company (as determined in accordance with the notice
provisions hereof) is an "Exercise Date".
5. Delivery of Warrant Shares.
(a) Upon exercise of this Warrant, the Company shall promptly
(but in no event later than four Trading Days after the Exercise Date (the
"Delivery Date")) issue or cause to be issued and cause to be delivered to or
upon the written order of the Holder and in such name or names as the Holder may
designate, a certificate for the Warrant Shares issuable upon such exercise,
free of restrictive legends unless a registration statement covering the resale
of the Warrant Shares and naming the Holder as a selling stockholder thereunder
is not then effective and the Warrant Shares are not freely transferable without
volume restrictions pursuant to Rule 144 under the Securities Act. The Holder,
or any Person so designated by the Holder to receive Warrant Shares, shall be
deemed to have become holder of record of such Warrant Shares as of the Exercise
Date. The Company shall, upon request of the Holder, use its best efforts to
deliver Warrant Shares hereunder electronically through the Depository Trust
Corporation or another established clearing corporation performing similar
functions.
(b) This Warrant is exercisable, either in its entirety or,
from time to time, for a portion of the number of Warrant Shares. If less than
all of the Warrant Shares which may be purchased under this Warrant are
exercised at any time, the Company shall issue or cause to be issued, at its
expense, a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares.
(c) The Company's obligations to issue and deliver Warrant
Shares in accordance with the terms hereof are absolute and unconditional,
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irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of
Warrant Shares.
(d) If the Company fails to deliver to the Holder such
certificate or certificates pursuant to this Section 5 by the Delivery Date, the
Company shall pay to the Holder, in cash, as liquidated damages and not as a
penalty, $5,000 for each Trading Day after the Delivery Date until such
certificates are delivered. Nothing herein shall limit the Holder's right to
pursue actual damages for the Company's failure to deliver certificates
representing shares of Common Stock upon exercise within the period specified
herein and the Holder shall have the right to pursue all remedies available to
it at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief. The exercise of any such rights shall not
prohibit the Holder from seeking to enforce damages pursuant to any other
provision hereof or under applicable law.
(e) In addition to any other rights available to the Holder,
if the Company fails to deliver to the Holder such certificate or certificates
pursuant to this Section 5 by the Delivery Date, and if after such Delivery Date
the Holder purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Holder of the
Underlying Shares which the Holder anticipated receiving upon such conversion (a
"Buy-In"), then the Company shall pay in cash to the Holder (in addition to any
remedies available to or elected by the Holder) the amount by which (x) the
Holder's total purchase price (including brokerage commissions, if any) for the
Common Stock so purchased exceeds (y) the product of (1) the lesser of (A) the
aggregate number of shares of Common Stock that such Holder anticipated
receiving from the conversion at issue or (B) the number of shares of Common
Stock so purchased, multiplied by (2) the Exercise Price of the Common Stock on
the applicable Exercise Date, in which event the number of shares of Common
Stock that would have been issued had the Company timely complied with its
delivery requirements shall not be so issued. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In in connection with an attempted exercise of this Warrant with respect to
which the Exercise Price of the Underlying Shares on the applicable Exercise
Date multiplied by the number of Underlying Shares was equal to $2,000 under
clause (A) of the immediately preceding sentence, the Company shall be required
to pay the Holder $9,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In.
(f) The provisions of Sections 5(d) and 5(e) shall not apply to an
exercise under Section 4(a).
6. Charges, Taxes and Expenses. Except as otherwise provided in this
Section 6, issuance of certificates for shares of Common Stock upon exercise of
this Warrant shall be made without charge to the Holder for any issue or
transfer tax, withholding tax, transfer agent fee or other incidental tax or
expense in respect of the issuance of such certificates, all of which taxes and
3
expenses shall be paid by the Company; provided, however, that the Company shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the registration of any certificates for Warrant Shares or Warrants
in a name other than that of the Holder. The Holder shall be responsible for all
other tax liability that may arise as a result of holding or transferring this
Warrant or receiving Warrant Shares upon exercise hereof.
7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity, if requested. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Company may
prescribe.
8. Reservation of Warrant Shares. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of Warrant Shares which are then issuable and deliverable
upon the exercise of this entire Warrant, free from preemptive rights or any
other contingent purchase rights of persons other than the Holder (taking into
account the adjustments and restrictions of Section 9). The Company covenants
that all Warrant Shares so issuable and deliverable shall, upon issuance and the
payment of the applicable Exercise Price in accordance with the terms hereof, be
duly and validly authorized, issued and fully paid and nonassessable.
9. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 9.
(a) Stock Dividends and Splits. If the Company, at any time while
this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into
a larger number of shares, or (iii) combines outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination.
(b) Pro Rata Distributions. If the Company, at any time while this
Warrant is outstanding, distributes to all holders of Common Stock (i) evidences
of its indebtedness, (ii) any security (other than a distribution of Common
Stock covered by the preceding paragraph), (iii) rights or warrants to subscribe
for or purchase any security, or (iv) any other asset (in each case,
4
"Distributed Property"), then in each such case the Exercise Price in effect
immediately prior to the record date fixed for determination of stockholders
entitled to receive such distribution shall be adjusted (effective on such
record date) to equal the product of such Exercise Price times a fraction of
which the denominator shall be such Exercise Price and of which the numerator
shall be such Exercise Price less the then fair market value of the Distributed
Property distributed in respect of one outstanding share of Common Stock, as
determined by the Company's independent certified public accountants that
regularly examine the financial statements of the Company (an "Appraiser"). In
such event, the Holder, after receipt of the determination by the Appraiser,
shall have the right to select an additional appraiser (which shall be a
nationally recognized accounting firm), in which case such fair market value
shall be deemed to equal the average of the values determined by each of the
Appraiser and such appraiser.
(c) Fundamental Transactions. If, at any time while this
Warrant is outstanding, (i) the Company effects any merger or consolidation of
the Company with or into another Person, (ii) the Company effects any sale of
all or substantially all of its assets in one or a series of related
transactions, (iii) any tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Common Stock are
permitted to tender or exchange their shares for other securities, cash or
property, or (iv) the Company effects any reclassification of the Common Stock
or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(in any such case, a "Fundamental Transaction"), then the Holder shall have the
right thereafter to receive, upon exercise of this Warrant, the same amount and
kind of securities, cash or property as it would have been entitled to receive
upon the occurrence of such Fundamental Transaction if it had been, immediately
prior to such Fundamental Transaction, the holder of the number of Warrant
Shares then issuable upon exercise in full of this Warrant (the "Alternate
Consideration"). The aggregate Exercise Price for this Warrant will not be
affected by any such Fundamental Transaction, but the Company shall apportion
such aggregate Exercise Price among the Alternate Consideration in a reasonable
manner reflecting the relative value of any different components of the
Alternate Consideration. If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction. At the Holder's request, any successor to the Company or surviving
entity in such Fundamental Transaction shall issue to the Holder a new warrant
consistent with the foregoing provisions and evidencing the Holder's right to
purchase the Alternate Consideration for the aggregate Exercise Price upon
exercise thereof. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this paragraph (c) and
insuring that the Warrant (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
If any Fundamental Transaction constitutes or results in a Change of Control and
if upon the happening of such Change of Control (A) the Company or its
successors is not traded on the New York Stock Exchange, the American Stock
Exchange or the NASDAQ National Market, or (B) the Company or its successor, as
the case may be, for the 90 day period prior thereto (1) had an average daily
trading volume of its common stock of less than 100,000 shares or (2) had an
average daily Closing Price of its common stock of less than $10 per share, then
at the request of the Holder delivered before the 90th day after such
5
Fundamental Transaction, the Company (or any such successor or surviving entity)
will purchase the Warrant from the Holder for a purchase price, payable in cash
within five Trading Days after such request (or, if later, on the effective date
of the Fundamental Transaction), equal to the Black Scholes value of the
remaining unexercised portion of this Warrant on the date of such request.
(d) Subsequent Equity Sales.
(i) If, at any time while this Warrant is
outstanding, the Company issues additional shares of Common Stock or
rights, warrants, options or other securities or debt convertible,
exercisable or exchangeable for shares of Common Stock or otherwise
entitling any Person to acquire shares of Common Stock (collectively,
"Common Stock Equivalents" and together with Common Stock hereinafter
called the "CS Securities") at an effective price per share of Common
Stock (the "Effective Price") less than the Exercise Price, then the
Exercise Price shall be reduced to equal the product of (A) the
Exercise Price in effect immediately prior to such issuance of Common
Stock or Common Stock Equivalents times (B) a fraction, the numerator
of which is the sum of (1) the number of shares of Common Stock
outstanding immediately prior to such issuance, plus (2) the number of
shares of Common Stock which the aggregate Effective Price of the
Common Stock issued (or deemed to be issued) would purchase at the
Exercise Price, and the denominator of which is the aggregate number of
shares of Common Stock outstanding or deemed to be outstanding
immediately after such issuance. For purposes of the foregoing
adjustment, in connection with any issuance of any Common Stock
Equivalents, (x) the maximum number of shares of Common Stock
potentially issuable at any time upon conversion, exercise or exchange
of such Common Stock Equivalents (the "Deemed Number") shall be deemed
to be outstanding upon issuance of such Common Stock Equivalents, (y)
the Effective Price applicable to such Common Stock shall equal the
minimum dollar value of consideration payable to the Company to
purchase such Common Stock Equivalents and to convert, exercise or
exchange them into Common Stock, divided by the Deemed Number, and (z)
no further adjustment shall be made to the Exercise Price upon the
actual issuance of Common Stock upon conversion, exercise or exchange
of such Common Stock Equivalents. However, upon termination or
expiration of any Common Stock Equivalents the issuance of which
resulted in an adjustment to the Exercise Price pursuant to this
paragraph, the Exercise Price shall be recomputed to equal the price it
would have been had the adjustments in this paragraph been made, at the
time of issuance of such Common Stock Equivalents, only with respect to
that number of shares of the Common Stock actually issued upon
conversion, exercise or exchange of such Common Stock Equivalents and
at the Effective Prices actually paid in connection therewith.
(ii) If, at any time while this Warrant is
outstanding, the Company or any Subsidiary has outstanding any Common
Stock Equivalents with an Effective Price that floats or resets or
otherwise varies or is subject to adjustment based on market prices of
the Common Stock (a "Floating Price Security"), then for purposes of
applying the preceding paragraph in connection with any subsequent
exercise, the Effective Price will be determined separately on each
6
Exercise Date and will be deemed to equal the lowest Effective Price at
which any holder of such Floating Price Security is entitled to acquire
shares of Common Stock on such Exercise Date (regardless of whether any
such holder actually acquires any shares on such date).
(iii) Notwithstanding the foregoing, no adjustment
will be made under this Section 9(d) in respect of (a) any grant of
options to employees, officers, directors or consultants of the Company
pursuant to any stock option plan duly adopted by the Company's board
of directors (provided, that the number of shares of Common Stock which
are the subject of any such plan may not exceed 2,800,000, subject to
annual increases of up to 40% of the number of shares authorized under
such plans during the immediately preceding year), (b) in respect of
the issuance of CS Securities upon exercise of any such options, (c)
the issuance of CS Securities under the PPG Agreement or the Motorola
Agreement, (d) up to 1,000,000 CS Securities issued in connection with
any contractual strategic alliances approved by the Company's Board of
Directors, (e) the issuance of any CS Securities representing or
convertible into up to 50,000 shares of Common Stock in any single
transaction; provided that this subsection (e) shall only apply to the
first 50,000 shares in the aggregate issued in any consecutive 12 month
period and 150,000 in the aggregate, (f) CS Securities issued or
issuable pursuant to the Notes, Preferred Stock, Warrants or any other
Transaction Document or pursuant to the anti-dilution provisions
thereof, (g) any CS Securities issuable upon the exercise of, or
pursuant to the anti-dilution provisions contained within, any options,
restricted stock awards, preferred stock or warrants outstanding on the
date hereof (but not to the extent amended hereafter) all of which are
set forth on Schedule 1 hereto, or (h) any Common Stock issued upon the
conversion of exercise of any Common Stock Equivalents outstanding as
of the date hereof (but not to the extent amended hereafter) all of
which are set forth on Schedule 2 hereto.
(e) Special Adjustment. Notwithstanding anything to the
contrary that may be contained herein, if at any time on or after the date
hereof, the Holder has pursuant to the Notes converted in excess of $1,500,000
of principal amount of such Notes on account of the Company having delivered a
"Company Conversion Notice" pursuant to such Note, then upon each such
conversion in excess of $1,500,000 (a "Subsequent Conversion") the Exercise
Price shall be reduced (but not increased) to 110% of the Conversion Price in
effect for each such Subsequent Conversion.
(f) Number of Warrant Shares. Simultaneously with any
adjustment to the Exercise Price pursuant to paragraphs (a) or (b) of this
Section, the number of Warrant Shares that may be purchased upon exercise of
this Warrant shall be increased or decreased, as the case may be,
proportionately, so that after such adjustment the aggregate Exercise Price
payable hereunder for the increased number of Warrant Shares shall be the same
as the aggregate Exercise Price in effect immediately prior to such adjustment.
(g) Calculations. All calculations under this Section 9 shall
be made to the nearest cent or the nearest 1/100th of a share, as applicable.
The number of shares of Common Stock outstanding at any given time shall not
7
include shares owned or held by or for the account of the Company; provided,
however, the provisions of this Section 9 shall apply to any sale, issuance,
distribution or disposition of any such shares by the Company.
(h) Notice of Adjustments. Upon the occurrence of each adjustment
pursuant to this Section 9, the Company at its expense will promptly compute
such adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment, including a statement of the adjusted
Exercise Price and adjusted number or type of Warrant Shares or other securities
issuable upon exercise of this Warrant (as applicable), describing the
transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the
Company's Transfer Agent.
(i) Notice of Corporate Events. If the Company (i) declares a
dividend or any other distribution of cash, securities or other property in
respect of its Common Stock, including without limitation any granting of rights
or warrants to subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating
or solicits stockholder approval for any Fundamental Transaction or (iii)
authorizes the voluntary dissolution, liquidation or winding up of the affairs
of the Company; then in each case, the Company shall on the earlier of the day
on which the Company (A) publicly announces such proposed action, or (B)
notifies its shareholders of such proposed action deliver to the Holder a notice
describing the material terms and conditions of such transaction, and the
Company will take all steps reasonably necessary in order to insure that the
Holder is given the practical opportunity to exercise this Warrant prior to such
time so as to participate in or vote with respect to such transaction; provided,
however, that the failure to deliver such notice or any defect therein shall not
affect the validity of the corporate action required to be described in such
notice.
(j) Exception. Notwithstanding anything contained to the contrary
in Section 9(d), in the event, and only in the event, an Event of Default under
Section 4(a)(viii) of the Notes has occurred, and no other Event of Default (as
defined in the Notes) has occurred, then Section 9(d) hereof shall only apply to
the extent sales of CS Securities by the Company exceed $15 million in the
aggregate.
10. Payment of Exercise Price. The Holder shall pay the Exercise Price
in one of the following manners:
(a) Cash Exercise. The Holder may deliver immediately available
funds; or
(b) Cashless Exercise. The Holder may satisfy its obligation to pay
the Exercise Price through a "cashless exercise," in which event the Company
shall issue to the Holder the number of Warrant Shares determined as follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be issued to the
Holder.
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Y = the number of Warrant Shares with respect to
which this Warrant is being exercised.
A = the average of the Closing Prices for the five
Trading Days immediately prior to (but not
including) the Exercise Date.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued pursuant to the Purchase Agreement.
11. Limitation on Exercise. (a) Notwithstanding anything to the
contrary contained herein, the number of shares of Common Stock that may be
acquired by the Holder upon any exercise of this Warrant (or otherwise in
respect hereof) shall be limited to the extent necessary to insure that,
following such exercise (or other issuance), the total number of shares of
Common Stock then beneficially owned by such Holder and its Affiliates and any
other Persons whose beneficial ownership of Common Stock would be aggregated
with the Holder's for purposes of Section 13(d) of the Exchange Act, does not
exceed 4.999% (the "Maximum Percentage") of the total number of issued and
outstanding shares of Common Stock (including for such purpose the shares of
Common Stock issuable upon such exercise). For such purposes, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. Each delivery of an
Exercise Notice hereunder will constitute a representation by the Holder that it
has evaluated the limitation set forth in this paragraph and determined that
issuance of the full number of Warrant Shares requested in such Exercise Notice
is permitted under this paragraph. The Company's obligation to issue shares of
Common Stock in excess of the limitation referred to in this Section shall be
suspended (and shall not terminate or expire notwithstanding any contrary
provisions hereof) until such time, if any, as such shares of Common Stock may
be issued in compliance with such limitation. By written notice to the Company,
the Holder may waive the provisions of this Section or increase or decrease the
Maximum Percentage to any other percentage specified in such notice, but (i) any
such waiver or increase will not be effective until the 61st day after such
notice is delivered to the Company, and (ii) any such waiver or increase or
decrease will apply only to the Holder and not to any other holder of Warrants.
(b) Notwithstanding anything to the contrary contained herein,
this Warrant may not be exercised to the extent such exercise would result in
the Holder, together with any affiliate thereof, beneficially owning (as
determined in accordance with Section 13(d) of the Exchange Act and the rules
promulgated thereunder) in excess of 9.999% of the then issued and outstanding
shares of Common Stock, including shares issuable upon exercise of this Warrant
after application of this Section. Since the Holder will not be obligated to
report to the Company the number of shares of Common Stock it may hold at the
time of an exercise hereunder, unless the conversion at issue would result in
the issuance of shares of Common Stock in excess of 9.999% of the then
9
outstanding shares of Common Stock without regard to any other shares which may
be beneficially owned by the Holder or an affiliate thereof, the Holder shall
have the authority and obligation to determine whether the restriction contained
in this Section 11(b) will limit any particular conversion hereunder and to the
extent that the Holder determines that the limitation contained in this Section
11(b) applies, the determination of the extent to which this Warrant is
convertible shall be the responsibility and obligation of the Holder. If the
Holder has delivered an Exercise Notice for a number of Warrant Shares that,
without regard to any other shares that the Holder or its affiliates may
beneficially own, would result in the issuance in excess of the permitted amount
hereunder, the Company shall notify the Holder of this fact and shall honor the
Exercise Notice to the extent of the maximum number of Warrant Shares permitted
to be purchased at such Exercise Date pursuant to the provisions of this Section
11(b).
12. Exercise or Transfer Without Registration. If, at the time of the
surrender of this Warrant in connection with any exercise, transfer, or exchange
of this Warrant, this Warrant (or, in the case of any exercise, the shares of
Common Stock issuable hereunder), shall not be registered under the Securities
Act and under applicable state securities or blue sky laws, the Company may
require, as a condition of allowing such exercise, transfer, or exchange, (i)
that the Holder or transferee of this Warrant, as the case may be, furnish to
the Company a written opinion of counsel that is reasonably acceptable to the
Company to the effect that such exercise, transfer or exchange may be made
without registration under the Securities Act and under applicable state
securities or blue sky laws, (ii) that the Holder or transferee execute and
deliver to the Company an investment letter in form and substance acceptable to
the Company and (iii) that the transferee is an "accredited investor" as defined
in Rule 501(a) promulgated under the Securities Act; provided that no such
opinion, letter or status as an "accredited investor" shall be required in
connection with a transfer pursuant to Rule 144 under the Securities Act.
13. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant. If
any fraction of a Warrant Share would, except for the provisions of this
Section, be issuable upon exercise of this Warrant, the Company shall pay an
amount in cash equal to the average of the Closing Prices of the Common Stock
for the five Trading Days immediately prior to (but not including) the Exercise
Date multiplied by such fraction; provided that, unless the Holder requests
otherwise, no payment shall be required pursuant to this sentence until the
aggregate amount payable exceeds $1,000, at which time all previously deferred
payments shall be made.
14. Notices. Any and all notices or other communications or deliveries
hereunder (including without limitation any Exercise Notice) shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section prior to 6:30 p.m. (New York City
time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading Day or
later than 6:30 p.m. (New York City time) on any Trading Day or (iii) the
Trading Day following the date of mailing, if sent by nationally recognized
overnight courier service. The addresses for such communications shall be: (i)
if to the Company, to 375 Phillips Boulevard, Ewing, New Jersey 08618;
10
facsimile: (609) 671-0995; attention Sidney Rosenblatt, Chief Financial Officer,
or (ii) if to the Holder, to the address or facsimile number appearing on the
Warrant Register or such other address or facsimile number as the Holder may
provide to the Company in accordance with this Section.
15. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon 30 days' notice to the Holder, the Company may appoint a new
warrant agent. Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.
16. Miscellaneous.
(a) This Warrant shall be binding on and inure to the benefit
of the parties hereto and their respective successors and assigns. Subject to
the preceding sentence, nothing in this Warrant shall be construed to give to
any Person other than the Company and the Holder any legal or equitable right,
remedy or cause of action under this Warrant. This Warrant may be amended only
in writing signed by the Company and the Holder.
(b) The corporate laws of the Commonwealth of Pennsylvania
shall govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Warrant 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. The Company
and the Holder hereby irrevocably submit 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, 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, or that
such suit, action or proceeding is improper. Each of the Company and the Holder
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by receiving a copy thereof
sent to the Company at the address in effect for notices to it under this
instrument 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.
(c) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
(d) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
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(e) This Warrant shall not entitle the Holder to any voting or
other rights as a stockholder of the Company, except to the extent the Holder
has purchased any Warrant Shares.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
UNIVERSAL DISPLAY CORPORATION
By: /s/ Sidney D. Rosenblatt
---------------------------
Name: Sidney D. Rosenblatt
Title: Chief Financial Officer
13
FORM OF EXERCISE NOTICE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To: Universal Display Corporation
The undersigned holder hereby exercises the right to purchase _________________
of the shares of Common Stock ("Warrant Shares") of Universal Display
Corporation, a Pennsylvania corporation (the "Company"), evidenced by Warrant
No. C-2 issued by the Company to the undersigned (the "Warrant"). Capitalized
terms used herein and not otherwise defined have the respective meanings set
forth in the Warrant.
1. Form of Exercise Price. The Holder intends that payment of the
Exercise Price shall be made as (check one):
____________ "Cash Exercise" under Section 10(a)
____________ "Cashless Exercise" under Section 10(b)
2. Payment of Exercise Price. If the holder has elected a Cash
Exercise, the holder shall pay the sum of $___________________
to the Company in accordance with the terms of the Warrant.
3. Delivery of Warrant Shares. The Company shall deliver to the
holder __________ Warrant Shares in accordance with the terms
of the Warrant.
If the number of shares of Common Stock issuable upon this exercise shall not be
all of the shares of Common Stock which the undersigned is entitled to purchase
in accordance with the enclosed Warrant, the undersigned requests that a New
Warrant (as defined in the Warrant) evidencing the right to purchase the
remaining shares of Common Stock be issued in the name of and delivered to
(please print name and address):
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Dated: _______________, ____ Name of Holder:
(Print)___________________________________
By:_______________________________________
Name:_____________________________________
Title:____________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of Universal Display
Corporation to which the within Warrant relates and appoints ________________
attorney to transfer said right on the books of Universal Display Corporation
with full power of substitution in the premises.
Dated: _______________, ____
_______________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant)
_______________________________________
Address of Transferee
_______________________________________
_______________________________________
In the presence of:
___________________________