PPG Graphic
PPG INDUSTRIES PPG Industries, Inc.
440 College Park Drive
Monroeville, Pennsylvania 15146 USA
Telephone (724) 325-5903
Fax (724) 325-5940
elias@ppg.com
RICHARD C. ELIAS
Vice President, Optical Products
December 22, 2004 UDC/PPG CONFIDENTIAL
Mr. Steven V. Abramson
President
Universal Display Corporation
375 Phillips Boulevard
Ewing, NJ 08618
RE: First Amendment of the SUPPLY AGREEMENT which was entered into and
effective October 1, 2000 by and between PPG INDUSTRIES, INC. ("PPG"),
and UNIVERSAL DISPLAY CORPORATION ("UDC") ("Supply Agreement")
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Dear Mr. Abramson:
The purpose of this letter is to amend the Supply Agreement, as set forth
herein. It is the intention of the parties to negotiate and execute, on or
before [The confidential material contained herein has been omitted and has been
separately filed with the Commission.], a new OLED Services Agreement for the
period 2006 through The confidential material contained herein has been omitted
and has been separately filed with the Commission.], which will supercede both
the Supply Agreement and the Development and License Agreement entered into by
the parties effective as of October 1, 2000, as amended ("Development & License
Agreement"). The parties desire to amend the Supply Agreement in order to
provide additional time in which to negotiate the new OLED Services Agreement.
Therefore, intending to be legally bound, PPG and UDC hereby agree to this First
Amendment of the Supply Agreement, effective on January 1, 2005. Except as
expressly set forth herein, all capitalized terms have the meanings given in the
Supply Agreement. Except as expressly set forth herein, the Supply Agreement
shall remain unchanged and shall continue in full force and effect.
Steven V. Abramson, President UDC/PPG CONFIDENTIAL
Universal Display Corporation
December 22, 2004
Page 2
1. Article 1.4 of the Supply Agreement is amended and restated as follows:
1.4 "Cost Margin Percentage" means 60%.
2. Article 5 of the Supply Agreement is amended by adding new Article 5.1.1,
as follows:
5.1.1 Notwithstanding anything to the contrary in this Agreement, PPG shall
submit invoices to UDC for:
(a) Costs associated with PPG's development, as requested by UDC, of
processes to produce OLED materials for the supply of Developmental
Chemicals under the Development & License Agreement and/or Products
under this Agreement ("Process Development Charge") as specified in
Schedule 5.1.1 attached hereto and incorporated by reference herein.
Charges for such costs shall be reported to UDC monthly and invoiced
quarterly, within [The confidential material contained herein has been
omitted and has been separately filed with the Commission.] days of
the close of the calendar quarter;
(b) The portion, if any, of PPG's 2005 cumulative out-of-pocket
environment, health and safety costs required for the production and
shipment of OLED materials, including without limitation out-of-pocket
costs for product environmental, health and safety testing and TSCA
registration and registration for importation into foreign countries,
that exceeds [The confidential material contained herein has been
omitted and has been separately filed with the Commission.]. PPG shall
notify UDC in advance of the expected costs of undertaking these
activities. Invoices for such costs shall be submitted to UDC within
[The confidential material contained herein has been omitted and has
been separately filed with the Commission.] days following the close
of each calendar month beginning with the calendar month in which such
cumulative costs first exceed [The confidential material contained
herein has been omitted and has been separately filed with the
Commission.] and;
(c) All analytical costs not otherwise invoiced under Article 3A.3.2(b) of
the Development & License Agreement (excluding Development Team
charges) and not otherwise included in amounts invoiced under the
Development & License Agreement or this Agreement for the supply of
either Development Chemicals or Products, at charges customarily
billed to PPG's Optical Products business unit. Invoices for such
costs shall be submitted to UDC within [The confidential material
contained herein has been omitted and has been separately filed with
the Commission.] days following the close of each calendar month.
(d) PPG shall use reasonable efforts to minimize the costs and charges
described in Articles 5.1.1 (a)-(c) above without reducing the quality
of services and materials provided to UDC. In addition, PPG shall
provide UDC with such reports and other supporting documentation as
UDC may reasonably request in connection with monitoring such costs
and charges and PPG's efforts to reduce the same.
Steven V. Abramson, President
Universal Display Corporation
December 22, 2004
Page 3
3. Article 5 of the Supply Agreement is amended by deleting Article 5.3 and
replacing it with the following new Article 5.3:
5.3 Notwithstanding anything to the contrary in this Agreement, for the
period from January 1, 2005 through December 31, 2005, UDC's form of payment for
invoices under this Agreement shall be as follows:
(a) Payment form for invoices set forth in Article 5.1.1(a) shall be 100%
in cash, or at UDC's option, a combination of cash and stock
calculated as follows: (A) the number of duly authorized, validly
issued fully paid and non-assessable shares of UDC Common Stock (as
defined in the Development & License Agreement) as is the quotient of
(i) an amount representing up to 50% of the invoice price divided by
(ii) the average closing price for UDC Common Stock, as set forth in
the NASDAQ National market listing of The Wall Street Journal, for the
[The confidential material contained herein has been omitted and has
been separately filed with the Commission.] trading days prior to the
close of that calendar quarter (the "[The confidential material
contained herein has been omitted and has been separately filed with
the Commission.] Day Average"); plus (ii) the difference between the
invoice price and the amount set forth in (A)(i) above.
Notwithstanding the foregoing, if [The confidential material contained
herein has been omitted and has been separately filed with the
Commission.] Day Average is less than [The confidential material
contained herein has been omitted and has been separately filed with
the Commission.], then the form of payment shall be 100% in cash.
Payment shall be due [The confidential material contained herein has
been omitted and has been separately filed with the Commission.] days
following the date of the invoice whether such payment is in cash or a
combination of cash and UDC Common Stock.
(b) Payment terms for invoices set forth in Article 5.1.1(b) - (c) shall
be net [The confidential material contained herein has been omitted
and has been separately filed with the Commission.] days from the date
of invoice in cash. Costs set forth in Article 5.1.1(b)-(c) shall be
combined by PPG on the same invoice.
4. In the event that PPG enters into an agreement with Albemarle
Corporation for the supply of crude OLED materials to PPG for
conversion into Products supplied hereunder, PPG shall invoice UDC for
PPG's out-of-pocket cost to purchase such OLED materials [The
confidential material contained herein has been omitted and has been
separately filed with the Commission.]. Should PPG & UDC not enter
into a new OLED Services Agreement prior to [The confidential material
contained herein has been omitted and has been separately filed with
the Commission.], and effective as of January 1, 2006, then the
multiplier shall be [The confidential material contained herein has
been omitted and has been separately filed with the Commission.] as
stated above.
Steven V. Abramson, President UDC/PPG CONFIDENTIAL
Universal Display Corporation
December 22, 2004
Page 4
5. This Amendment takes effect only on the condition that the parties
execute the Fifth Amendment of the Development & License Agreement of even date
herewith.
6. To the extent of any inconsistency between the terms of the Supply
Agreement and the terms of this Amendment, the terms of this Amendment shall
prevail.
Steven V. Abramson, President UDC/PPG CONFIDENTIAL
Universal Display Corporation
December 22, 2004
Page 5
If UDC agrees to the foregoing, please have its authorized representative
execute the two enclosed originals of this Amendment and return one to me.
Very truly yours,
/s/ Richard C. Elias
- --------------------
Richard C. Elias
On behalf of PPG Industries, Inc.
ACKNOWLEDGED AND AGREED TO:
On behalf of Universal Display Corporation
By: /s/ Steven V. Abramson
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Name: Steven V. Abramson
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Title: President
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Date: Dec. 28, 2004
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SCHEDULE 5.1.1
The confidential material contained herein has been omitted and has been
separately filed with the Commission.