OLED MATERIALS SUPPLY AND SERVICE AGREEMENT
THIS AGREEMENT (the "Agreement") between PPG INDUSTRIES, INC. ("PPG"),
a Pennsylvania corporation having its principal place of business at Xxx XXX
Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, and UNIVERSAL DISPLAY CORPORATION
("UDC"), a Pennsylvania corporation having its principal place of business at
000 Xxxxxxxx Xxxxxxxxx, Xxxxx, Xxx Xxxxxx 00000, each a "Party" and collectively
the "Parties," is effective as of January 1, 2006 (the "Effective Date").
WHEREAS, PPG and UDC are Parties to a Supply Agreement (the "Supply
Agreement") and a Development and License Agreement (the "Development
Agreement"), each dated as of October 1, 2000, as amended; and
WHEREAS, PPG and UDC desire to terminate the Supply Agreement and
Development Agreement and continue the relationship of the Parties under the
terms of this Agreement as of the Effective Date.
NOW, THEREFORE, intending to be legally bound, PPG and UDC agree as
follows:
ARTICLE 1 - DEFINITIONS
Whenever used in this Agreement, unless otherwise clearly indicated in
the context, the following terms shall have the meanings as defined in this
Article. As used herein, the singular includes the plural and vice versa, and
the words "shall" and "will" are each understood to be imperative or mandatory
in nature and are interchangeable with one another.
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Ancillary Development Chemical" means a Development OLED Chemical that
UDC does not currently, and does not intend during the Term, to resell to third
parties for their manufacture of OLEDs for commercial sale.
"Analytical Services" means analytical services provided or to be
provided by PPG with respect to the development, production or supply of OLED
Chemicals hereunder.
"Batch Sheet" means PPG's standard written operator instructions for
the manufacture of Products or purification or conversion of Third-Party OLED
Materials, and/or one or more Intermediates in the Synthetic Pathway for such
Products, which instructions are intended to embody the equipment-specific
information for manufacturing the Products or purification or conversion of
UDC and PPG Confidential Page 1 of 66
Third-Party OLED Materials and/or Intermediates at PPG's Monroeville,
Pennsylvania manufacturing facility.
"Calendar Quarter" means the three-month period beginning on each of
January 1, April 1, July 1 and October 1 of a year.
"Commercial OLED Chemical" means an OLED Chemical supplied or to be
supplied by PPG to UDC pursuant to a Purchase Order hereunder and following the
establishment of a Validated Process for such OLED Chemical, which OLED Chemical
is being supplied to UDC with the understanding that UDC will be reselling it to
third parties for their manufacture of OLEDs for commercial sale, or which OLED
Chemical is in fact resold to a third party for such purpose.
"Commission" means the Securities and Exchange Commission.
"Competitive OLED Chemical" means an OLED Chemical or Intermediate that
is neither a Product nor an Evaluation OLED Chemical.
"Confidential Information" of a Party shall include all trade secret,
confidential and/or proprietary information of such Party, whether of a
technical, engineering, operational, financial or marketing nature (including,
without limitation, their respective proprietary materials), that is (i) in
writing and marked as "Trade Secret," "Confidential," "Proprietary" or with
words of a similar nature; or (ii) orally or visually disclosed and clearly
identified as "Trade Secret," "Confidential" or "Proprietary" at the time of
such disclosure and confirmed in writing as such within thirty (30) days
following such oral or visual disclosure. Notwithstanding the foregoing, the
information in each Batch Sheet, Materials Research Technical Report and Process
Development Technical Report shall be deemed Confidential Information of UDC.
"Contract Year" means any calendar year beginning January 1st and
ending on December 31st during the Term.
"Development OLED Chemical" means an OLED Chemical and/or Intermediate
supplied or to be supplied by the Process Development Team to UDC hereunder,
pursuant to a Purchase Order or Statement of Work and prior to the establishment
of a Validated Process for such OLED Chemical, which OLED Chemical is being
supplied to UDC with the understanding that UDC will not be reselling it to
third parties for their manufacture of OLEDs for commercial sale.
"Developed Technology" means all inventions, discoveries, Know-How and
materials, patentable or unpatentable, that are conceived, created, made or
reduced to practice by the Materials Development Team and/or the Process
Development Team (alone or with UDC personnel) in their performance of work
under agreed-upon Statements of Work. This includes all OLED Chemicals and
Intermediates, their compositions of matter, their Synthetic Pathways and
relevant detailed process descriptions, their Material Specifications and any
specifications for raw materials used to produce them, their uses in all fields
UDC and PPG Confidential Page 2 of 66
of application, and their associated analytical characterization techniques.
"Developed Technology" shall also encompass all "Developed Technology,"
"Development Discoveries" and "UDC Improvements" as such terms are defined in
the Development Agreement or the Supply Agreement. Furthermore, for purposes of
clarification, the Know-How embodied in any Batch Sheet, Process Development
Technical Report or a Materials Research Technical Report for an OLED Chemical
or Intermediate is encompassed within Developed Technology.
"Development Program" means the joint research and development program
undertaken or to be undertaken by PPG and UDC pursuant to this Agreement, as
such program is detailed in one or more Statements of Work for the Material
Development Team and/or Process Development Team, which Program is or shall be
directed to (i) Materials Development, (ii) Process Development; and (iii) such
other items as are agreed upon by the Parties in a Statement of Work.
"Developmental Quantities" means those quantities of an OLED Chemical
that can be reasonably produced by the Materials Development Team in
laboratory-scale equipment, which quantities are typically not in excess of one
(1) gram of material.
"Disclosing Party" has the meaning given in Section 4.1.
"EH&S Services" means the environmental, health and safety services
provided or to be provided by PPG with respect to the development, production or
supply of OLED Chemicals hereunder, including, without limitation, toxicity
testing and chemicals inventory registration.
"Evaluation OLED Chemical" means an OLED Chemical supplied or to be
supplied to UDC by the Materials Development Team pursuant to a Statement of
Work.
"Intermediate" means a material that occurs somewhere in a Synthetic
Pathway between the introduction of the basic precursor raw materials and the
creation of one or more unrefined OLED Chemicals.
"Know-How" means trade secrets and other unpatented proprietary
technical and/or scientific information, data, specifications, plans, drawings,
designs, copyrights, blueprints, formulae, processes and other similar items and
materials.
"Materials Development" means the exploration, identification and
development, pursuant to a Statement of Work, of (i) new or improved OLED
Chemicals, including variants of existing OLED Chemicals; (ii) Synthetic
Pathways for making such OLED Chemicals; and (iii) analytical methodologies,
data and data analyses for characterizing such OLED Chemicals.
"Materials Development Team" means a team of one or more qualified
research and development chemists, technicians, engineers and/or supervisors as
assembled by PPG and having as its members those individuals in place as of
UDC and PPG Confidential Page 3 of 66
January 1, 2006, unless reduced in number during the Term as otherwise provided
in this Agreement, and such other individuals assigned by PPG to work on
Materials Development hereunder.
"Materials Research Technical Report" means a document prepared by the
Materials Development Team, which document details for a particular OLED
Chemical, in a reasonably comprehensive manner consistent with past reports of a
similar nature, one or more of the following, as applicable in view of the
relevant Statement(s) of Work: (i) the viable Synthetic Pathway(s) and relevant
detailed process descriptions for making such OLED Chemical in Developmental
Quantities; (ii) the Materials Specifications for such OLED Chemical and any
associated Intermediates, (iii) raw materials required for the manufacture of
such OLED Chemical and its associated Intermediates by such Synthetic
Pathway(s), including the specifications for such raw materials and any existing
and potential suppliers of such raw materials; (iv) EH&S information pertaining
to such OLED Chemical and its associated Intermediates and their raw materials;
and (v) the analytical methodologies, data and data analyses for characterizing
such OLED Chemical and its associated Intermediates and their raw materials.
"Material Specifications" means, with respect to each OLED Chemical
and/or Intermediate produced or supplied, or to be produced or supplied
hereunder, the written analytical and visual specifications for such OLED
Chemical and/or Intermediate, and for its packaging, storage and shipment, as
such specifications may be changed by written agreement of the Parties from time
to time.
"OLED Chemicals" means organic or organometallic molecules or compounds
positioned between the two electrodes in a device that radiates light by
applying electrical current or voltage to the electrodes.
"Patents" means United States and foreign patents and patent
applications, together with all divisions, continuations, continuations-in-part,
reissues, re-examinations, renewals and extensions of the same.
"Person" or "person" means any natural person, corporation,
partnership, limited liability company, proprietorship, association, trust or
other legal entity.
"PPG's Material Development Costs" means all of PPG's actual costs of
conducting Materials Development work under an agreed-upon Statement of Work and
budget for such work, the applicable categories of which shall be specified on
Exhibit A-1 attached hereto, as the same may be amended by mutual written
agreement of the Parties from time to time.
"PPG's OLED Material Conversion Costs" means all of PPG's actual costs
of producing and supplying Development OLED Chemicals or Pre-Commercial OLED
Chemicals to UDC under an agreed-upon Statement of Work or Purchase Order
(excluding the costs of raw materials and Third-Party OLED Materials purchased
UDC and PPG Confidential Page 4 of 66
under subsection 6.2.1 below and Intermediates produced under subsection 6.2.2
below, all of which shall be invoiced separately to UDC under Section 9.1
below), the applicable categories of which shall be specified on Exhibit A-2
attached hereto, as the same may be amended by mutual written agreement of the
Parties from time to time.
"PPG's Commercial OLED Material Costs" means all of PPG's actual costs
of producing and supplying Commercial OLED Chemicals to UDC under an agreed-upon
Purchase Order (including the costs of raw materials and Third-Party OLED
Materials purchased under subsection 6.2.1 below and Intermediates produced
under subsection 6.2.2 below), the applicable categories of which shall be
specified on Exhibit A-3 attached hereto, as the same may be amended by mutual
written agreement of the Parties from time to time.
"PPG's Process Development Costs" means all of PPG's actual,
fully-loaded man-hour costs of conducting Process Development work under an
agreed-upon Statement of Work and budget for such work, the applicable
categories of which shall be specified on Exhibit A-4 attached hereto, as the
same may be amended by mutual written agreement of the Parties from time to
time.
"Pre-Commercial OLED Chemical" means an OLED Chemical supplied or to be
supplied by PPG to UDC pursuant to a Purchase Order hereunder and following the
establishment of a Validated Process for such OLED Chemical, which OLED chemical
is being supplied to UDC with the understanding that UDC does not intend to
resell it to third parties for their manufacture of OLEDs for commercial sale;
provided, however, that if an ordered or supplied quantity of any Pre-Commercial
OLED Chemical is in fact resold to a third party for such purpose, it shall be
reclassified as a Commercial OLED Chemical, whereupon there shall be a
corresponding additional charge or credit to UDC to reflect any cost differences
as set forth below.
"Primary Development Chemical" means a Development OLED Chemical that
UDC does not currently, but that UDC intends during the Term to, resell to third
parties for their manufacture of OLEDs for commercial sale.
"Princeton License Agreement" means that Amended License Agreement by
and among UDC, The Trustees of Princeton University ("Princeton University") and
the University of Southern California ("USC"), dated as of October 9, 1997, as
amended.
"Process Development" means the exploration, identification,
development and scale-up, pursuant to a Statement of Work, of (i) one or more
new or improved Synthetic Pathways for manufacturing OLED Chemicals in
quantities sufficient for supply on a commercial scale and on a cost-effective
basis, including any processes intended to qualify as Validated Processes; (ii)
new or improved Materials Specifications for such OLED Chemicals; and (iii) new
or improved analytical methodologies, data and data analyses for characterizing
such OLED Chemicals.
UDC and PPG Confidential Page 5 of 66
"Process Development Team" means a team of one or more qualified
research and process development chemists, technicians, engineers and/or
supervisors employed or utilized by PPG in the Specialty Synthesis Group of its
Optical Products business, or any successor to such group or business, which
individuals PPG, in its sole discretion, shall select and assign from time to
time during the Term to perform Process Development work hereunder.
"Process Development Technical Report" means a document prepared by the
Process Development Team, which document details for a particular OLED Chemical,
in a manner sufficiently comprehensive so as to facilitate and assist a
reasonably competent specialty chemicals manufacturer to manufacture such OLED
Chemical in commercial-scale quantities and according to its corresponding
Material Specifications, one or more of the following, as applicable in view of
the relevant Statement(s) of Work and subject to Section 11.5: (i) the viable
Synthetic Pathway(s) and relevant detailed process descriptions for
manufacturing such OLED Chemical in quantities appropriate for commercial-scale
sales by UDC, including any processes intended to qualify as Validated
Processes; (ii) the Materials Specifications for such OLED Chemical and any
associated Intermediates; (iii) raw materials required for the manufacture of
such OLED Chemical and its associated Intermediates by such Synthetic
Pathway(s), including the specifications for such raw materials and any existing
and potential suppliers of such raw materials and current Certificates of
Analysis for such raw materials; (iv) PPG's current procedures for the handling
of such OLED Chemical and its associated Intermediates and their raw materials,
together with EH&S information pertaining thereto; (v) the analytical
methodologies, data and data analyses for characterizing such OLED Chemical and
its associated Intermediates and their raw materials; and (vi) a reasonably
detailed description of problems encountered by PPG during Process Development
work on such OLED Chemical that in PPG's opinion are significant, including any
material failed approaches and solutions or proposed solutions thereto. The
Parties acknowledge that they will promptly and in good faith agree upon a
representative Process Development Technical Report in a mutually acceptable
format.
"Product" means any Development OLED Chemical, Pre-Commercial OLED
Chemical or Commercial OLED Chemical.
"Purchase Order" means a written order from UDC to PPG, or an
instruction under a blanket written order from UDC to PPG, including email
correspondence confirmed by an authorized representative of each Party, for the
purchase of a Product, or for the performance of any Analytical Services or EH&S
Services not encompassed within Materials Development work, but excluding any
preprinted terms and conditions therein.
"Receiving Party" has the meaning given in Section 4.1.
"Records" has the meaning given in Section 2.8.1.
UDC and PPG Confidential Page 6 of 66
"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
1933 Act.
"Securities" means the shares of UDC Common Stock issuable to PPG
pursuant to this Agreement.
"Statement of Work" means one or more agreed-upon written protocols,
plans or other documents, including email correspondence confirmed by an
authorized representative of each Party, describing the work to be performed by
the Materials Development Team and/or the Process Development Team, as the same
may be amended from time to time in writing by mutual agreement of the Parties.
Separate Statements of Work will be mutually agreed upon in writing for each of
the Materials Development Team and the Process Development Team.
"Sublimation" or "Sublimate" means the conversion of an unrefined OLED
Chemical from solid to vapor, and its subsequent de-sublimation from vapor to
solid under appropriate temperature and pressure conditions to recover the
desired sublimated OLED Chemical, with the purpose of such conversion being to
enhance the purity of such OLED Chemical.
"Synthetic Pathway" means generalized process step(s) for the
conversion of precursor materials and/or Intermediates to other Intermediates
and/or OLED Chemicals, including, without limitation, the structural formulas
for such precursor materials and/or Intermediates, and the general processing
conditions for synthesis and purification of such Intermediates and/or OLED
Chemicals (e.g., solvent usage, temperature conditions, etc.).
"Third-Party OLED Material" means an Intermediate or unrefined OLED
Chemical, produced by a party other than PPG, to be subjected to Sublimation
and/or other additional processing hereunder.
"UDC Common Stock" means the common stock of UDC, $0.01 par value per
share.
"UDC Chemical Know-How" means any and all Know-How relating to OLED
Chemicals or methods of producing OLED Chemicals, or that might reasonably be
useful in connection with producing OLED Chemicals, that UDC owns or otherwise
is authorized to disclose and license or sublicense to PPG hereunder, including,
without limitation, any such Know-How constituting Developed Technology and any
such Know-How acquired or licensed by UDC from Princeton University or USC under
the Princeton License Agreement, or under other agreements, whether prior to or
after the Effective Date.
"UDC Chemical Patents" means any and all Patents, whether or not
currently existing, that claim or cover any OLED Chemicals or methods of
producing OLED Chemicals, or any methods or processes that might reasonably be
UDC and PPG Confidential Page 7 of 66
useful in connection with producing OLED Chemicals, and that UDC is authorized
to license or sublicense to PPG hereunder, including, without limitation, any
such Patents claiming Developed Technology and any such Patents acquired or
licensed by UDC from Princeton University or USC under the Princeton License
Agreement, or under other agreements, whether prior to or after the Effective
Date.
"UDC Proprietary Materials for Chemicals" means all UDC Chemical
Patents, UDC Chemical Know-How and Developed Technology.
"Validated Process" means a process, including a Synthetic Pathway, for
manufacturing an OLED Chemical, in quantities appropriate for commercial-scale
sales by UDC, so as to meet its corresponding Material Specifications and UDC's
criteria for qualifying the material for use in OLED devices, which process has
been successfully proven reproducible in three consecutive pilot batch
manufacturing runs at PPG's Monroeville, Pennsylvania facility.
"Waste" means any "hazardous substance," "hazardous material" and/or
"hazardous waste" as provided under any environmental law, rule or regulation,
as well as any other waste material, pollutant and/or contaminant of any kind,
including, without limitation, any routine process waste or any by-product
arising from the manufacture of any OLED Chemical hereunder.
ARTICLE 2 - DEVELOPMENT TEAMS
2.1. Development Teams. PPG shall maintain the Materials Development
Team and Process Development Team to work on the tasks set forth in Statements
of Work.
2.1.1 Materials Development Team. For the Materials
Development Team, PPG shall provide, as requested by UDC, a maximum of [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.], full-time advanced-degree chemists and [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.] full-time technicians plus part-time senior
supervision. PPG shall make available the part-time services of [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.] and [The confidential material contained herein has
been omitted and has been separately filed with the Commission.], provided such
individuals continue to be employed by PPG and their responsibilities are such
that they are available to provide such services, PPG employees who are not
members of the Materials Development Team but whose work will be deemed
Materials Development hereunder, to provide analytical and computational
services, respectively. Subject to the following provision regarding staff
reductions, PPG shall maintain the Materials Development Team until December 31,
2006, unless UDC requests that the Materials Development Team be disbanded at an
earlier date.
UDC and PPG Confidential Page 8 of 66
2.1.2 Process Development Team. PPG shall maintain the Process
Development Team to work on the tasks set forth in Statements of Work. PPG shall
sufficiently staff the Process Development Team so as to reasonably ensure the
timely and proper completion of such tasks.
2.2 Team Management.
2.2.1 Materials Development Team. The Materials Development
Team shall report to [The confidential material contained herein has been
omitted and has been separately filed with the Commission.], who in turn shall
report to the PPG Director, Optical Products R&D. For so long as the Materials
Development Team is maintained at PPG, PPG's Director, Manufacturing & Applied
Technology, and Director, Optical Products R&D will meet periodically with UDC
management to review and discuss the direction and performance of the Materials
Development work. Such meetings will take place at least twice each year at
mutually agreed times, or more frequently as requested by PPG or UDC.
2.2.2 Process Development Team. The Process Development Team
shall report to PPG's Operations Manager Specialty Synthesis Group, who shall
communicate periodically with UDC's Vice President Technology Commercialization
to discuss the direction and performance of the Process Development work.
2.3 Materials Development Team Staffing.
2.3.1 Timing. Upon ninety (90) days' written notice from UDC
with an effective date of not earlier than January 2006, PPG shall reduce the
Materials Development Team staffing level. PPG and UDC shall cooperate in good
faith to minimize turnover of members of the Materials Development Team.
However, PPG shall not hire any new employees for the Materials Development
Team, regardless of any unplanned vacancies.
2.3.2 Severance Costs. All out-of-pocket severance costs of
PPG related to any reduction in the Materials Development Team staffing level
incurred at UDC's request and in accordance with PPG's customary severance
policies and procedures shall be for UDC's account, it being UDC's understanding
that PPG currently estimates such costs to be approximately [The confidential
material contained herein has been omitted and has been separately filed with
the Commission.]. Upon UDC's request, PPG shall assist UDC in hiring such
individuals as its own employees or consultants, and PPG shall reasonably
facilitate the transition of such individuals to UDC. With respect to any such
individuals not hired by UDC, PPG shall use reasonable efforts to redeploy such
individuals within PPG so as to minimize severance costs. Within thirty (30)
days after the date of a staff reduction, PPG shall provide UDC with an invoice
for the out-of-pocket severance costs that were incurred by PPG related to such
reduction, and UDC shall reimburse PPG, within thirty (30) days of the date of
the invoice, in cash for all such costs.
UDC and PPG Confidential Page 9 of 66
2.4 Statements of Work and Budgets.
2.4.1 Materials Development Work. The Statement of Work and
budget for Materials Development work in 2006 shall be mutually agreed to by the
Parties in good faith on or before January 1, 2006.
2.4.2 Process Development Work. The Parties shall in good
faith mutually agree upon Statements of Work and budgets for Process Development
work on an as-needed basis prior to the commencement of such work. PPG shall in
good faith agree to perform all Process Development work reasonably requested by
UDC hereunder, provided, however, PPG in its reasonable discretion may refuse to
perform certain Process Development Work if (i) PPG does not have and cannot
reasonably reassign sufficient staffing to perform the work, (ii) PPG does not
have appropriate capital equipment and facilities reasonably available to
perform the work, or (iii) the chemical nature of the materials involved is such
that PPG is not reasonably equipped to manage their associated chemical hazards.
If there is a problem that can be circumvented through outsourcing any of the
Process Development Work, then the Parties shall use commercially reasonable
efforts to pursue and facilitate such outsourcing.
2.4.3 Changes. Upon either Party's request, the Parties will
in good faith discuss and endeavor to agree upon revisions to any Statement of
Work and/or budget for the Development Program. However, such Statements of Work
and budgets may be amended only by mutual written agreement of the Parties,
which may include email correspondence confirmed by an authorized representative
of each Party.
2.5 Materials Development Team Compensation.
2.5.1 For all Materials Development work performed by the
Materials Development Team under the Materials Development Statement of Work and
budget, UDC shall pay PPG at the rate of (i) [The confidential material
contained herein has been omitted and has been separately filed with the
Commission.] PPG's Materials Development Costs for so long as the aggregate
cumulative annual amount of such costs remains less than or equal to [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.]; and (ii) [The confidential material contained
herein has been omitted and has been separately filed with the Commission.]
PPG's Materials Development Costs once the aggregate cumulative annual amount of
such costs exceeds [The confidential material contained herein has been omitted
and has been separately filed with the Commission.] (such collective amounts
referred to herein as "PPG's Materials Development Charges").
2.5.2 Within fifteen (15) days following the end of each of
the first and third Calendar Quarters of 2006, PPG shall calculate and provide
UDC with written notice of: (i) the actual dollar amount of PPG's Materials
UDC and PPG Confidential Page 10 of 66
Development Charges for such Calendar Quarter; and (ii) the expected dollar
amount of PPG's Materials Development Charges for the then-current Calendar
Quarter, based on the agreed-upon Statement of Work and budget for such work,
both such amounts being broken down by cost categories per the applicable
budget. Accompanying such written notice shall be an invoice to UDC for the
total of the amounts specified in clauses (i) and (ii) above, less (a) any
credit to be applied against such total pursuant to subsection 2.5.4 below and,
(b) for the first Calendar Quarter of 2006, any credit that has been carried
over from the Development Agreement based on actual Materials Development work
performed in the fourth Calendar Quarter of 2005. Upon UDC's request, PPG shall
provide a reasonably detailed breakdown of all of PPG's Materials Development
Charges, which shall be subject to reasonable confirmation by UDC.
2.5.3 Within fifteen (15) days following the end of each of
the second and fourth Calendar Quarters of 2006, PPG shall calculate and provide
UDC with written notice of: (i) the actual dollar amount of PPG's Materials
Development Charges for such Calendar Quarter, and (ii) the difference, in
dollars, between such amount and previously provided estimate of PPG's Materials
Development Charges for such Calendar Quarter. If the difference calculated
under clause (ii) above is a positive number (i.e., actual costs exceed
estimated costs), then accompanying such written notice shall be an invoice to
UDC for the amount of the difference. If the difference calculated under clause
(ii) above is a negative number (i.e., estimated costs exceed actual costs),
then accompanying such written notice shall be a credit statement to UDC for the
amount of the difference.
2.5.4 Any credit available to UDC under subsection 2.5.3 above
shall first be applied against the actual dollar amount of PPG's Materials
Development Charges for the then-current Calendar Quarter, as specified in
subsection 2.5.2 above. If any portion of the credit still remains following
such application, it shall then be applied against the actual dollar amount of
PPG's Processing Charges for the then-current Calendar Quarter, as specified in
subsection 9.2.1 below. If any portion of the credit still remains thereafter,
it shall be repaid to UDC in cash within thirty (30) days following the end of
the then-current Calendar Quarter.
2.5.5 UDC shall pay all amounts invoiced under subsections
2.5.2 and 2.5.3 above in shares of UDC Common Stock as specified in Article 15
below.
2.6 Compensation for Other Development Work.
2.6.1 UDC shall separately pay PPG, in UDC Common Stock, for
any UDC-approved services of [The confidential material contained herein has
been omitted and has been separately filed with the Commission.] and [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.] performed during each Calendar Quarter of 2006. PPG
shall invoice UDC for such services at the 2005 billing rates for these
individuals with any increase in these rates subject to UDC's approval, which
shall not be unreasonably withheld. Invoiced amounts for such services are to be
included in PPG's Materials Development Charges (as defined in Section 2.5) and
shall be invoiced at [The confidential material contained herein has been
UDC and PPG Confidential Page 11 of 66
omitted and has been separately filed with the Commission.] PPG's Materials
Development Costs.
2.6.2 UDC shall pay PPG for Process Development as specified
in Articles 6 and 9 below.
2.6.3 Except as set forth in Article 17 below, PPG shall be
solely responsible for all salary and other compensation of its employees and/or
researchers in connection with the performance of any Materials Development
work, including, without limitation, all tax withholding with respect thereto
and payment, if any, of employment-related taxes and workers' compensation
insurance premiums.
2.7 Party Responsibilities.
2.7.1 PPG's responsibilities under the Development Program
shall include, without limitation, using commercially reasonable efforts to do
the following:
(i) PPG shall direct the Materials Development Team to
perform Materials Development work.
(ii) PPG shall direct the Materials Development Team to
supply UDC with Developmental Quantities of Evaluation
OLED Chemicals under a Statement of Work. PPG shall not
be obligated to direct the Materials Development Team
to supply UDC with Evaluation OLED Chemicals in greater
than Developmental Quantities.
(iii) PPG shall direct the Materials Development Team to
provide UDC with Materials Research Technical Reports
for Evaluation OLED Chemicals upon UDC's request.
(iv) PPG shall direct the Process Development Team to
perform Process Development work.
(v) PPG shall direct the Process Development Team to supply
UDC with Development OLED Chemicals under a Statement
of Work.
(vi) PPG shall direct the Process Development Team to
provide UDC with Process Development Technical Reports
for Development OLED Chemicals upon UDC's request.
(vii) PPG shall direct the Materials Development Team and
Process Development Team to disclose to UDC all
Developed Technology, by periodically providing copies
of laboratory notebooks at a reasonable frequency
requested by UDC, or by such other means as the Parties
may agree upon in writing.
UDC and PPG Confidential Page 12 of 66
2.7.2 UDC's responsibilities under the Development Program
shall include, without limitation, using commercially reasonable efforts to
do the following:
(i) UDC shall direct its personnel to perform their
obligations as specified in a Statement of Work.
(ii) UDC shall maintain a qualified team to reasonably
evaluate in OLED applications any Evaluation OLED
Chemicals supplied by the Materials Development Team
and any Development OLED Chemicals supplied by the
Process Development Team. UDC shall report the results
of such evaluations to the Materials Development Team
or the Process Development Team, as applicable.
(iii) UDC shall direct its personnel to cooperate with the
Material Development Team and the Process Development
Team in performance of their responsibilities under the
Development Program.
(iv) For OLED Chemicals, including Third-Party OLED
Materials, transferred by UDC to PPG's Process
Development Team for Process Development work pursuant
to a Statement of Work, UDC shall direct its personnel
to provide the Process Development Team with such of
the reasonably available UDC Chemical Know-How as is
necessary in connection with PPG's performance
hereunder.
(v) UDC shall be responsible, in its sole discretion, for
protecting and maintaining the intellectual property
rights to Developed Technology as set forth in Section
3.4 below.
2.7.3 Each Party agrees to the following responsibilities
under this Agreement:
(i) The Parties' researchers will work together in a team
environment using their respective expertise and
Know-How to facilitate performance of the Development
Program.
(ii) While working at the other Party's facilities, each
Party's chemists and other personnel shall: (a) at all
times comply with all of the other Party's safety,
security and mutually agreed confidentiality policies
and procedures; and (b) limit their activities solely
to assisting the other Party in the conduct of the
Development Program.
(iii) The Parties shall work together in a jointly
cooperative manner in support of Product sales by UDC
and the timely availability of Products meeting current
or future requirements of the OLED industry.
UDC and PPG Confidential Page 13 of 66
2.8 Recordkeeping and Reporting.
2.8.1 During the Term, PPG shall direct the Material
Development Team and the Process Development Team to diligently maintain
tangible records of work conducted under the Development Program ("Records").
These Records shall be kept in bound laboratory notebooks, each page of which
shall be timely dated, signed and witnessed. PPG will retain the Records for two
(2) years beyond the Term.
2.8.2 PPG shall provide UDC with such reports and other
supporting documentation as UDC may reasonably request in connection with
monitoring PPG's charges for the Development Program.
2.8.3 During the Term and for at least two (2) years
thereafter, UDC shall have the right to examine Records kept by PPG hereunder.
Each such examination shall take place during normal business hours of PPG and
on at least ten (10) business days' advance written notice to PPG. Each such
examination shall be at a location selected by PPG and in accordance with
procedures reasonably acceptable to PPG, including, without limitation,
procedures designed to protect any Confidential Information of PPG. PPG shall
not be required to permit examination of its Records more often than once during
any Calendar Quarter.
2.9 Other Research Work.
2.9.1 PPG acknowledges that UDC intends to continue working
with Princeton University, USC and others to explore and develop new and
improved OLED Chemicals, and that PPG's work under the Development Program may
involve work on such chemicals, to the extent set forth in a Statement of Work.
2.9.2 Except in connection with conducting the Development
Program hereunder, during the Term and for [The confidential material contained
herein has been omitted and has been separately filed with the Commission.]
thereafter, PPG shall not conduct or fund any research program specifically
directed to developing OLED Chemicals for use in OLEDs, whether on its own or in
collaboration with any other person; provided, however, that nothing in this
Agreement shall prohibit PPG from continuing to perform work on its photochromic
and electrochromic development programs.
ARTICLE 3 - INTELLECTUAL PROPERTY
3.1 Developed Technology. All Developed Technology shall be owned
solely by UDC, and PPG hereby assigns and transfers any and all right, title and
interest it may have in and to such Developed Technology to UDC. Upon UDC's
request, PPG shall execute and deliver to UDC all instruments and other
documents, and shall take such other actions as may be reasonably necessary so
that UDC may protect and defend its rights in and to the Developed Technology.
UDC and PPG Confidential Page 14 of 66
Subject to the express terms of this Agreement, UDC shall have no obligation of
accounting to PPG with respect to any Developed Technology. UDC shall bear all
costs associated with patenting and protecting the Developed Technology.
3.2 Other Technology.
3.2.1 All inventions, discoveries, Know-How and materials,
that are not Developed Technology, patentable or unpatentable, that are
conceived, created, made or reduced to practice under this Agreement ("Other
Technology"), if conceived, created, made or reduced to practice solely by the
personnel of one Party, shall be owned solely by that Party. Each Party shall
bear all costs associated with patenting and protecting its solely-owned Other
Technology.
3.2.2 All Other Technology conceived, created, made or reduced
to practice jointly by the personnel of both Parties shall be owned jointly by
both Parties. Subject to the express terms of this Agreement, neither Party
shall have any obligation of accounting to the other Party with respect to any
jointly-owned Other Technology. The Parties shall in good faith agree upon and
implement procedures for the preparation, filing, prosecution and maintenance of
patent applications and patents claiming any jointly-owned Other Technology, and
shall allocate responsibility for the costs and expenses associated with such
patent activities. Should either Party elect not to pay its fair share of such
costs and expenses for patents in any country of the world, that Party shall,
upon request, assign to the other Party all of such Party's rights to such
patents in said country.
3.2.3 Upon either Party's request, the other Party shall
execute and deliver to such Party all instruments and other documents, and shall
take such other actions as may be reasonably necessary so that such Party may
protect and defend its rights in and to any Other Technology.
3.3 License Grants to PPG.
3.3.1 UDC hereby grants to PPG, during the Term and subject to
the terms and conditions set forth herein, a worldwide, royalty-free,
non-exclusive, non-transferable (except as permitted under Section 21.2 below)
license, with the right to sublicense under subsection 3.3.4 below, to practice
under any and all UDC Chemical Patents, and to use, improve, enhance and modify
any and all unpatented UDC Proprietary Materials for Chemicals, for the sole
purposes of (i) performing PPG's obligations under the Development Program as
contemplated hereunder; (ii) producing and selling OLED Chemicals to UDC as
contemplated hereunder; and (iii) providing Analytical Services and EH&S
Services as requested by UDC hereunder.
3.3.2 UDC hereby further grants to PPG a worldwide, perpetual,
royalty-free, non-exclusive, non-transferable (except as permitted under Section
21.2 below) license, with the right to sublicense as permitted under subsection
3.3.4 below, to practice under any and all Patents claiming Developed Technology
UDC and PPG Confidential Page 15 of 66
and all Know-How encompassed by Developed Technology, solely for PPG's own use
in its current and future business, but not otherwise in competition with UDC
with respect to OLEDs or OLED Chemicals.
3.3.3 UDC shall not grant rights to others that will adversely
affect PPG's license contemplated under this Section 3.3.
3.3.4 The licenses granted to PPG under this Agreement shall
extend to any division of or subsidiary controlled by PPG. Any sublicenses, in
whole or in part, to other Persons shall be subject to UDC's prior written
approval, such approval not to be withheld unreasonably; provided, however, that
UDC, in its sole discretion, may withhold approval of sublicenses other than
those for purposes of permitting such third Parties to practice under the
applicable Patents and/or Know-How on PPG's behalf and/or for PPG's benefit or
account (e.g., for purposes of exercising the equivalent of "have made" or "have
sold" rights as such rights are generally understood, or performing
manufacturing activities on PPG's behalf with respect to Products to be supplied
to UDC hereunder). PPG shall provide UDC with written notice of the names and
addresses of each such sublicensee, as well as a full, unredacted copy of the
sublicense agreement and all subsequent amendments and modifications thereof,
before or within a reasonable period of time after PPG enters into such
sublicense. Each sublicense granted by PPG hereunder shall (i) expressly provide
that such sublicense is nontransferable and nonassignable, (ii) prohibit the
initial sublicensee from granting any further licenses or sublicenses
thereunder, (iii) expressly provide that UDC is a third-party beneficiary of the
sublicense agreement with rights to enforce its terms directly against the
sublicensee, and (iv) obligate the sublicensee to abide by the terms and
conditions of this Agreement applicable to sublicensees.
3.3.5 Except for the license and other rights expressly
granted or promised to PPG under this Agreement, the Parties retain their
respective rights to their respective Patents and Know-How.
3.4 Acknowledgment of Derivative Rights. Notwithstanding anything to
the contrary in this Agreement, PPG acknowledges that some of its rights to
certain UDC Chemical Patents derive from the Princeton License Agreement. Each
Party agrees that PPG's rights to said UDC Chemical Patents under this Agreement
shall be a sublicense under and subject to the provisions of the Princeton
License Agreement.
3.5 Patent Procurement, Maintenance and Enforcement.
3.5.1 The desirability of applying for, prosecuting and
maintaining Patents claiming the Developed Technology (and the countries in
which Patents should be applied for, prosecuted and maintained) shall be
determined by UDC in its sole and absolute discretion. If UDC decides to obtain
Patent protection for any Developed Technology, PPG shall reasonably cooperate
with UDC in preparing, filing and prosecuting applications for such Patents and
in maintaining any Patents issuing thereon. UDC shall bear all expenses incurred
UDC and PPG Confidential Page 16 of 66
in preparing, filing and prosecuting such Patent applications and in maintaining
any resulting Patents.
3.5.2 UDC shall provide PPG with copies of all Patent
applications claiming any Developed Technology before they are filed, in order
for PPG to promptly review said applications to be certain that no PPG
Confidential Information is being disclosed without PPG's prior approval. If PPG
claims that its Confidential Information is disclosed in an application
submitted for review, UDC shall not file such application until the claim has
been resolved to the reasonable satisfaction of PPG. The Parties shall in good
faith attempt to resolve any such claim as expeditiously as possible.
3.5.3 Each Party shall promptly notify the other Party of any
known or reasonably suspected infringement or misappropriation of UDC
Proprietary Materials for Chemicals.
3.5.4 UDC shall protect and enforce all Patents and Patent
applications claiming any Developed Technology, at its sole expense and in its
sole and absolute discretion. PPG shall reasonably assist UDC in its efforts to
protect and/or enforce such Patents and Patent applications at UDC's sole cost
and expense.
ARTICLE 4 - CONFIDENTIALITY
4.1 General Obligations. Each Party (in such capacity, the "Receiving
Party") shall review and maintain Confidential Information of the other Party
(in such capacity, the "Disclosing Party") in accordance with the following
terms and conditions:
4.1.1 The Receiving Party agrees to treat all Confidential
Information of the Disclosing Party as confidential and not to disclose such
Confidential Information to any other person, or use such Confidential
Information for any purpose other than to perform its obligations or exercise
its rights hereunder, except as expressly permitted by the Disclosing Party in
writing.
4.1.2 The Receiving Party shall make only such copies of the
Confidential Information of the Disclosing Party as are reasonable for the
Receiving Party's performance of its obligations or exercise of its rights
hereunder.
4.1.3 At all times, the Receiving Party shall keep and
maintain all Confidential Information of the Disclosing Party in a safe and
secure place with reasonable safeguards to insure that unauthorized persons do
not have access to such Confidential Information. Upon discovery of any
unauthorized disclosure or use of Confidential Information of the Disclosing
Party, the Receiving Party shall immediately notify the Disclosing Party and
take all reasonable steps to prevent its further unauthorized disclosure or use.
UDC and PPG Confidential Page 17 of 66
4.1.4 The Receiving Party is prohibited from disclosing
Confidential Information of the Disclosing Party to third parties unless such
other person has a need-to-know such Confidential Information in connection with
the Receiving Party's performance of its obligations or exercise of its rights
under this Agreement. In addition, disclosure of such Confidential Information
to any third party shall be permitted only after such third party has agreed in
writing to abide by provisions of confidentiality and restrictive use no less
stringent than those set forth herein. The Receiving Party shall be responsible
for enforcing such provisions against such third party.
4.1.5 With respect to all Confidential Information of the
Disclosing Party in the Receiving Party's possession or control (including,
without limitation, all copies and summaries thereof and regardless of the
format in which such Confidential Information is stored), the Receiving Party,
promptly upon the Disclosing Party's request, shall either: (i) return all such
Confidential Information to the Disclosing Party, or (ii) destroy all such
Confidential Information and certify the same to the Disclosing Party in
writing. Notwithstanding the foregoing sentence, the Receiving Party may retain
one copy of each tangible item of Confidential Information of the Disclosing
Party in a secure location solely for purposes of enforcement of this Agreement;
provided, however, that all such Confidential Information shall continue to be
governed in all respects by the other provisions of this Article. The provisions
of this Section 4.1.5 shall not apply to any Developed Technology.
4.2 Exceptions. Notwithstanding anything to the contrary herein, the
provisions of this Article shall not apply with respect to any Confidential
Information of the Disclosing Party that:
4.2.1 is already in or subsequently enters the public domain
through no fault of the Receiving Party;
4.2.2 is supplied by the Disclosing Party to another person
without a duty of confidentiality;
4.2.3 is known to the Receiving Party or is in its
possession (as shown by tangible evidence) prior to receipt from the Disclosing
Party;
4.2.4 is developed independently by the Receiving Party (as
shown by competent written records) without reliance on any Confidential
Information of the Disclosing Party;
4.2.5 is lawfully received by the Receiving Party from another
person without a duty of confidentiality to the Disclosing Party; or
4.2.6 is disclosed by the Receiving Party pursuant to judicial
order or governmental regulation or administrative process so long as the
Receiving Party notifies the Disclosing Party promptly before the disclosure and
UDC and PPG Confidential Page 18 of 66
cooperates with the Disclosing Party in the event that the Disclosing Party
decides to contest or limit the disclosure.
4.3 Other Persons. To the extent any person that is subject to the
restrictions set forth in this Article is not a Party to this Agreement, the
terms of this Article 4 shall apply to such person to the same extent as if he,
she or it were a Party hereto.
4.4 Injunctive Relief. In the event of any breach or threatened breach
by any person of any provision of this Article 4, the Party harmed or likely to
be harmed by such breach or threatened breach shall be entitled to seek
injunctive or other equitable relief restraining such person from engaging in
conduct that would constitute a breach of the obligations of such person under
this Article 4. Such relief, if granted, shall be in addition to and not in lieu
of any other remedies that may be available, at law or equity, including an
action for the recovery of damages.
4.5 Survival. The obligations of confidentiality pursuant to this
Article 4 will survive termination or expiration of this Agreement for a period
of ten (10) years after the date of expiration or termination.
ARTICLE 5 - APPOINTMENT AND EXCLUSIVE OLED MATERIAL SUPPLY
5.1 Exclusive Appointment. Subject to the terms and conditions of this
Agreement, UDC hereby appoints PPG as its exclusive supplier of, and PPG hereby
agrees to manufacture and sell to UDC, all of UDC requirements for OLED
Chemicals that (i) are developed solely by UDC and are materials that UDC
intends during the Term to resell to third parties for their manufacture of
OLEDs for commercial sale; or (ii) are or were developed jointly by UDC and PPG
through Process Development work conducted hereunder or under the Development
Agreement (collectively, "Covered OLED Chemicals"). UDC shall not sell or
otherwise supply Covered OLED Chemicals for use in OLEDs, except those provided
by PPG to UDC hereunder.
5.2 Exceptions. The obligations and restrictions under Section 5.1
above shall not apply under the following circumstances:
5.2.1 UDC's requirements for the Covered OLED Chemical are in
excess of such quantities as PPG is able to reasonably manufacture, alone or in
the aggregate with other Covered OLED Chemicals, using its current or
anticipated capital equipment and facilities. For each current Covered OLED
Chemical, such maximum quantity has been separately agreed to in writing by the
Parties and each of UDC and PPG agrees that such maximum quantity is sufficient
for UDC's reasonably foreseeable needs. For other Covered OLED Chemicals, or if
UDC's expected requirements for a current Covered OLED Chemical increase
substantially, the Parties shall discuss and in good faith endeavor to agree
upon a new or revised maximum quantity for the Covered OLED Chemical. If PPG is
to perform Process Development work on the Covered OLED Chemical, PPG shall
provide UDC with PPG's proposed maximum quantity for the Covered OLED Chemical
UDC and PPG Confidential Page 19 of 66
and the Parties shall endeavor to reach such agreement prior to or promptly
following UDC's request for PPG to commence such Process Development work. If
there is a problem that can be circumvented through PPG's outsourcing of any of
the manufacturing process steps, or through the purchase of a Third-Party OLED
Material, then the Parties shall use commercially reasonable efforts to pursue
such an alternative approach and the foregoing obligations and restrictions
shall continue to apply unless the Parties, despite their good faith efforts,
are unable to agree on a viable alternative.
5.2.2 PPG's pricing or projected pricing for commercial-scale
quantities of the Covered OLED Chemical is in excess of that which allows UDC to
resell the Covered OLED Chemical for a reasonable profit and UDC has good reason
to believe that it can obtain the Covered OLED Chemical from another source at
pricing that would enable UDC to resell the Covered OLED Chemical for such a
profit. For each current Covered OLED Chemical, PPG pricing or projected pricing
for commercial-scale quantities has been separately agreed to in writing by the
Parties and each of UDC and PPG agrees that such pricing or projected pricing is
currently sufficient for UDC to resell the Covered OLED Chemical for a
reasonable profit. For other Covered OLED Chemicals, or if the pricing at which
UDC is able to resell a current Covered OLED Chemical decreases substantially,
the Parties shall discuss and in good faith endeavor to agree upon new or
revised pricing or projected pricing for commercial-scale quantities of the
Covered OLED Chemical. If PPG is to perform Process Development work on the
Covered OLED Chemical, PPG shall provide UDC with PPG's projected pricing for
commercial-scale quantities of the Covered OLED Chemical and the Parties shall
endeavor to reach such agreement prior to or promptly following UDC's request
for PPG to commence such Process Development work. If there is a problem that
can be circumvented through PPG's outsourcing of any of the manufacturing
process steps, or through the purchase of a Third-Party OLED Material, then the
Parties shall use commercially reasonable efforts to pursue such an alternative
approach and the foregoing obligations and restrictions shall continue to apply
unless the Parties, despite their good faith efforts, are unable to agree on a
viable alternative.
5.2.3 PPG is regularly unable to provide commercial-scale
quantities of the Covered OLED Chemical that meet its corresponding Material
Specifications and pass UDC's OLED device qualification testing and the Parties,
despite their good faith efforts, are unable to timely agree upon and implement
a plan for the situation to be remedied. If there is a problem that can be
circumvented through PPG's outsourcing of any of the manufacturing process
steps, or through the purchase of a Third-Party OLED Material, then the Parties
shall use commercially reasonable efforts to pursue such an alternative approach
and the foregoing obligations and restrictions shall continue to apply unless
the Parties, despite their good faith efforts, are unable to agree on a viable
alternative.
5.2.4 The Covered OLED Chemical cannot be manufactured by PPG
and supplied to UDC for resale to third parties for use in OLEDs without
infringing or otherwise violating the Patent or other proprietary rights of a
third party.
UDC and PPG Confidential Page 20 of 66
5.2.5 The Covered OLED Chemical is only being obtained by UDC
in limited quantities for demonstration, testing, evaluation and/or research and
development purposes.
5.2.6 The Covered OLED Chemical is designed or intended to be
used [The confidential material contained herein has been omitted and has been
separately filed with the Commission.].
5.2.7 UDC and PPG otherwise mutually agree that the Covered
OLED Chemical will not be subject to the foregoing obligations and restrictions.
For clarification, UDC shall be entitled to [The confidential material contained
herein has been omitted and has been separately filed with the Commission.] as
and to the extent deemed appropriate by UDC, such that PPG shall not claim any
information contained therein is Confidential Information of PPG.
5.3 Other OLED Chemical Sales by PPG.
5.3.1 During the Term and for [The confidential material
contained herein has been omitted and has been separately filed with the
Commission.] thereafter, PPG shall not sell or supply Products or Evaluation
OLED Chemicals to persons other than UDC, or assist or authorize any other
person to sell or supply Products or Evaluation OLED Chemicals to persons other
than UDC.
5.3.2 During the Term and for [The confidential material
contained herein has been omitted and has been separately filed with the
Commission.] thereafter, PPG shall not sell or supply Competitive OLED Chemicals
for any OLED-related uses to persons other than UDC, or assist or authorize any
other person to sell or supply Competitive OLED Chemicals for any OLED uses to
persons other than UDC.
5.3.3 Should PPG, during the Term or within [The confidential
material contained herein has been omitted and has been separately filed with
the Commission.] thereafter, learn that any person to whom PPG is selling any
Competitive OLED Chemical for non-OLED uses is using such OLED Chemical for OLED
uses, PPG agrees to immediately cease supplying such person with such OLED
Chemical unless otherwise agreed in writing by UDC. Nothing in this Agreement,
by implication or otherwise, authorizes PPG to use any UDC Proprietary Materials
for Chemicals and/or any Confidential Information of UDC in manufacturing,
purifying, analyzing or distributing Products, Evaluation OLED Chemicals or
Competitive OLED Chemicals to persons other than UDC, either during or following
the Term.
UDC and PPG Confidential Page 21 of 66
ARTICLE 6 - PRODUCTS AND SERVICES
6.1 General.
6.1.1 The OLED Chemicals to be supplied pursuant to this
Agreement are Evaluation OLED Chemicals and Products. PPG shall use commercially
reasonable efforts to allocate sufficient resources and adopt sufficient
planning procedures to fulfill its obligations to supply Products to UDC
hereunder in a timely manner.
6.1.2 The maximum quantity of each current Product that PPG
may be required to supply to UDC during any Calendar Quarter has been separately
agreed to in writing by the Parties. The Parties will cooperate in good faith to
agree in writing upon such maximum quantity for other Products, or if either
Party proposes any changes to an existing maximum quantity.
6.1.3 All Products supplied by PPG hereunder shall be
manufactured, packaged, stored and shipped according to and in compliance with
their corresponding Material Specifications, and in accordance with
manufacturing practices as implemented by PPG with respect to other, similar
products manufactured by PPG.
6.1.4 The Parties will cooperate in good faith to control
PPG's costs and expenses for each Product supplied to UDC hereunder, and shall
use their reasonable best efforts to reduce such costs to the fullest extent
reasonably practicable in light of the Product's corresponding Material
Specifications and UDC's required volumes and lead times. PPG shall provide UDC
with such reports and other supporting documentation as UDC may reasonably
request in connection with monitoring such costs and expenses and PPG's efforts
to control the same.
6.1.5 The Parties recognize that detailed and continuing
exchanges of information shall be necessary in order to optimize the
administration of this Agreement and PPG's supply of Products to UDC, consistent
with the respective rights and obligations of the Parties hereunder. To that
end, each Party shall designate a representative (and notify the other Party of
the individual so designated) responsible for exchanging information and for
resolving issues relating to the forecasting, ordering, production, shipment and
sales of Products which may arise under this Agreement. The designated
representatives of each Party shall conduct planning meetings (which may be by
teleconference if practicable) periodically and as may be necessary to address
any issues that may arise.
6.2 Raw Materials, Intermediates and Third-Party OLED Materials.
6.2.1 PPG's Purchase of Raw Materials and Third-Party OLED
Materials. PPG will recommend to UDC in writing all purchases of raw materials
and Third-Party OLED Materials based upon written Product forecasts to be
provided by UDC. Unless otherwise specifically agreed, PPG shall be responsible
administratively for ordering and arranging for the delivery of all raw
UDC and PPG Confidential Page 22 of 66
materials and Third-Party OLED Materials required for Process Development and
the manufacture of said Products to PPG's Monroeville Chemicals Center, and PPG
shall arrange for the conversion of such raw materials and Third-Party OLED
Materials into said Products which PPG shall supply to UDC as set forth herein.
Unless otherwise agreed, PPG shall also serve as the technical interface with
the supplier of such raw materials and Third-Party OLED Materials for quality
control and related purposes.
(i) Raw Materials for Products Other Than Commercial
OLED Chemicals. Upon written approval by UDC to the Operations Manager,
Specialty Synthesis Group of PPG, PPG will purchase all raw materials for
Products other than Commercial OLED Chemicals for UDC's account.
(ii) Raw Materials for Commercial OLED Chemicals. As
a general matter, PPG shall be responsible for obtaining raw materials
sufficiently in advance to as to reasonably ensure the timely manufacture and
supply of Commercial OLED Chemicals for which UDC has issued a Purchase Order to
PPG. However, should UDC specifically request that PPG purchase and maintain an
inventory of one or more critical raw materials above and beyond that which is
usual and customary for the production of a particular Commercial OLED Chemical,
PPG shall maintain said additional inventory at such levels as UDC and PPG, from
time to time, shall agree in good faith and in writing. Such additional
inventory shall be for PPG's account, subject to subsection 6.2.4 below.
(iii) Third-Party OLED Materials - Intermediates.
Where the Third-Party OLED Material is an Intermediate, unless otherwise agreed
by the Parties such Third-Party OLED Material shall be treated as if it were a
raw material covered under clause (i) or clause (ii) above, as applicable.
(iv) Third-Party OLED Materials - Unrefined OLED
Chemicals. Where the Third-Party OLED Material is an unrefined OLED Chemical,
unless otherwise agreed by the Parties such Third-Party OLED Material shall be
purchased by UDC and UDC shall retain title thereto at all times during the
conversion of such Third-Party OLED Material into the associated Product.
However, as indicated above, PPG shall be responsible, subject to UDC's
approval, for administratively ordering and arranging for the delivery of such
material from the supplier on UDC's behalf in connection with filling UDC's
Purchase Orders for the associated Product.
6.2.2 PPG's Production of Intermediates. PPG will recommend to
UDC in writing the production and maintenance of inventories of Intermediates
based upon written Product forecasts to be provided by UDC.
(i) Intermediates for Products Other Than Commercial
OLED Chemicals. Upon written approval by UDC to the Operations Manager,
Specialty Synthesis Group of PPG, PPG will produce and maintain a reasonable
inventory of Intermediates for Products other than Commercial OLED Chemicals for
UDC's account.
UDC and PPG Confidential Page 23 of 66
(ii) Intermediates for Commercial OLED Chemicals. As
a general matter, PPG shall be responsible for producing Intermediates
sufficiently in advance so as to reasonably ensure the timely manufacture and
supply of Commercial OLED Chemicals hereunder. However, should UDC specifically
request that PPG produce and maintain an inventory of one or more Intermediates
above and beyond that which is usual and customary for the production of a
particular Commercial OLED Chemical, PPG shall maintain said additional
inventory at such levels as UDC and PPG, from time to time, shall agree in good
faith and in writing. Such additional inventory shall be for PPG's account,
subject to subsection 6.2.4 below.
6.2.3 Maintenance and Records. All raw materials and
Third-Party OLED Materials purchased by PPG for UDC's account will be maintained
separate from other PPG materials and shall be used solely for the production of
Products for UDC hereunder. PPG will maintain records as to disposition of such
raw materials and Third-Party OLED Materials for a period of six (6) months
following the close of each Contract Year. Upon at least thirty (30) days' prior
written notice to PPG, UDC may engage an independent third party to audit such
records, subject to PPG's reasonable confidentiality limitations.
6.2.4 Disposal of Unused Inventory. If any inventory of raw
materials obtained or Intermediates produced for PPG's account is not converted
to a Commercial OLED Chemical within six (6) months of receipt or production by
PPG, then PPG shall xxxx UDC for the inventory. If such inventory is no longer
required, then UDC, at its option, shall either (i) pay for disposal of the
inventory; (ii) have the inventory shipped to UDC at UDC's sole cost and
expense; or (iii) in the case of raw materials, return such inventory for credit
from supplier of such inventory.
6.3 Material Specifications. As a general matter, all Material
Specifications shall be proposed by PPG but are subject to final comment and
revision and written approval by UDC. Once approved, the Material Specifications
for a given OLED Chemical or Intermediate may be changed only by written
agreement of the Parties, which agreement in the case of PPG shall not be
unreasonably withheld. The Parties shall endeavor to establish and agree upon
changes to the Material Specifications in a manner designed to ensure that all
Products are of high quality and purity, are fit for use in connection with
OLEDs, and can be manufactured at a commercially reasonable price; provided
however that the Parties are only agreeing to use their good faith efforts to
achieve the foregoing goals and, subject thereto, neither Party makes any
representation or warranty with respect to the Material Specifications. With
respect to Development OLED Chemicals that are the subject of Process
Development, the Parties shall in good faith attempt to agree upon the Material
Specifications for such Development OLED Chemicals as part of the Process
Development work. The Parties acknowledge that they will promptly and in good
faith agree upon a representative Material Specification in a mutually
acceptable format.
UDC and PPG Confidential Page 24 of 66
6.4 Services and Charges. Except as otherwise set forth herein, upon
UDC's request by a written Statement of Work and/or Purchase Order, PPG shall
supply the following OLED Chemicals and services to UDC, for the charges set
forth herein:
6.4.1 Evaluation OLED Chemicals. PPG shall supply Evaluation
OLED Chemicals as requested by UDC. Charges for the supply of Evaluation OLED
Chemicals, including all raw materials and conversion costs, are [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.].
6.4.2 Process Development Work. UDC shall pay PPG at the rate
of [The confidential material contained herein has been omitted and has been
separately filed with the Commission.] PPG's Process Development Costs for all
Process Development work performed by chemists on the Process Development Team.
If supplied to UDC, Development OLED Chemicals produced by chemists on the
Process Development Team shall be [The confidential material contained herein
has been omitted and has been separately filed with the Commission.].
6.4.3 Development OLED Chemicals.
(i) For the supply of each Primary Development
Chemical produced by PPG personnel other than chemists on the Process
Development Team and in cumulative quantities of [The confidential material
contained herein has been omitted and has been separately filed with the
Commission.] or less, UDC shall pay PPG at the rate of [The confidential
material contained herein has been omitted and has been separately filed with
the Commission.] PPG's OLED Material Conversion Costs. For the supply of any
such Primary Development Chemical in cumulative quantities of more than [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.], UDC shall pay PPG at the rate of [The confidential
material contained herein has been omitted and has been separately filed with
the Commission.] PPG's OLED Material Conversion Costs for the excess quantity.
(ii) For the supply of each Ancillary Development
Chemical produced by PPG personnel other than chemists on the Process
Development Team, UDC shall pay PPG at the rate of [The confidential material
contained herein has been omitted and has been separately filed with the
Commission.] PPG's OLED Material Conversion Costs.
(iii) Notwithstanding clauses (i) and (ii) above, if
the Development OLED Chemical is a Third-Party OLED Material that [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.] PPG's OLED Material Conversion Costs shall be [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.] in lieu of the rates specified above.
UDC and PPG Confidential Page 25 of 66
(iv) For clarification, the amounts specified above
do not include the cost of raw materials and Third-Party OLED Materials
purchased for UDC's account in accordance with subsection 6.2.1 above, or
Intermediates produced for UDC's account in accordance with subsection 6.2.2
above, for which UDC shall pay PPG at PPG's cost according to Section 9.1 below.
6.4.4 Pre-Commercial OLED Chemicals. For the supply of each
Pre-Commercial OLED Chemical, UDC shall pay PPG at the rate of [The confidential
material contained herein has been omitted and has been separately filed with
the Commission.] PPG's OLED Material Conversion Costs. Notwithstanding the
foregoing sentence, if the Pre-Commercial OLED Chemical is a Third-Party OLED
Material that [The confidential material contained herein has been omitted and
has been separately filed with the Commission.] PPG's OLED Material Conversion
Costs shall be [The confidential material contained herein has been omitted and
has been separately filed with the Commission.] in lieu of [The confidential
material contained herein has been omitted and has been separately filed with
the Commission.]. For clarification, these amounts do not include any costs for
raw materials and Third-Party OLED Materials purchased for UDC's account in
accordance with subsection 6.2.1 above, or for Intermediates produced for UDC's
account in accordance with subsection 6.2.2 above, for which UDC shall pay PPG
at PPG's cost according to Section 9.1 below.
6.4.5 Commercial OLED Chemicals. For the supply of each
Commercial OLED Chemical, UDC shall pay PPG at the rate of [The confidential
material contained herein has been omitted and has been separately filed with
the Commission.] PPG's Commercial OLED Material Cost, subject to adjustment
based on the Credit Pool described in Section 6.5 below. For clarification,
these amounts include all costs for raw materials and Third-Party OLED Materials
purchased for UDC's account in accordance with subsection 6.2.1 above, and for
Intermediates produced for UDC's account in accordance with subsection 6.2.2
above.
6.4.6 Analytical Services. PPG shall recommend and provide
Analytical Services that are reasonably within the scope of PPG's capabilities
on a Purchase Order basis. UDC shall pay PPG for such Analytical Services at the
rate of [The confidential material contained herein has been omitted and has
been separately filed with the Commission.] PPG's actual costs to provide such
services. For clarification, UDC shall not be required to pay separately for
Analytical Services in connection with (i) Materials Development work, or (ii)
the supply of Commercial OLED Chemicals, all such amounts being included in the
charges under Article 2, Section 6.4.2 and Section 6.4.5, respectively.
6.4.7 Environmental, Health & Safety Services. PPG shall
recommend and provide EH&S Services that are reasonably within the scope of
PPG's capabilities on a Purchase Order basis. UDC shall pay PPG for such EH&S
Services at the rate of [The confidential material contained herein has been
omitted and has been separately filed with the Commission.] PPG's actual
out-of-pocket costs to provide such services.
UDC and PPG Confidential Page 26 of 66
6.5 Credit Pool. For each OLED Chemical for which Process Development
work is performed on or after the Effective Date, PPG will maintain a credit
pool based on the sum of (i) [The confidential material contained herein has
been omitted and has been separately filed with the Commission.] of the amounts
paid by UDC to PPG for Process Development work on such OLED Chemical; (ii) [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.] of the amounts paid by UDC to PPG for the supply of
such OLED Chemical as either a Development OLED Chemical or a Pre-Commercial
OLED Chemical; and (iii) [The confidential material contained herein has been
omitted and has been separately filed with the Commission.] of the amounts paid
by PPG for EH&S Services pertaining to such OLED Chemical. [The confidential
material contained herein has been omitted and has been separately filed with
the Commission.] Until the cumulative credit pool for a particular OLED Chemical
is exhausted, PPG will use [The confidential material contained herein has been
omitted and has been separately filed with the Commission.] instead [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.] to establish the price for the supply of that OLED
Chemical as a Commercial OLED Chemical. For clarification, the amount credited
will be the difference between what the charge was or would have been using the
[The confidential material contained herein has been omitted and has been
separately filed with the Commission.] versus the [The confidential material
contained herein has been omitted and has been separately filed with the
Commission.].
6.6 Cost Components.
6.6.1 PPG shall determine the particular amounts to be
included in the various costs identified in Exhibits A-1 through A-4 in a manner
consistent with past practice under the Development Agreement and the Supply
Agreement, and so as to conform with generally accepted practices in the
specialty chemicals industry. Should PPG, in performing any services or
providing any Products hereunder, incur any substantial costs in connection with
an equipment malfunction, processing error or other similar occurrence that are
beyond those which is foreseeable and customary, the amounts associated
therewith shall not be included in such costs.
6.6.2 The various costs identified in Exhibits A-1 through A-4
shall be reset as of the beginning of each Contract Year and, unless otherwise
agreed by the Parties in writing, shall remain in effect for the remainder of
such Contract Year. PPG shall notify UDC of all such cost adjustments at least
thirty (30) days prior to the date on which the adjustment is to take effect
and, upon UDC's request, PPG shall provide UDC with a reasonably detailed
written justification for the adjustment.
ARTICLE 7 - FORECASTS, ORDERS, PLANNING & DELIVERY
7.1 Forecasts. For planning purposes only, UDC shall provide to the
Operations Manager, Specialty Synthesis Group of PPG a non-binding twelve (12)
UDC and PPG Confidential Page 27 of 66
month rolling forecast of its requirements for known Products at least fifteen
(15) days prior to the start of each Calendar Quarter.
7.2 Lead Times. PPG shall provide a report in writing to UDC at least
thirty (30) days prior to the start of each Calendar Quarter specifying PPG's
lead times required to supply each Product based on the information available to
PPG at the time. Such report shall at a minimum include lead time information
for the following: (i) raw material sourcing, (ii) conversion and purification,
(iii) initial product qualification, including time for device testing, and (iv)
final QC prior to shipment. The Parties will use their reasonable best efforts
to reduce the lead times for each Product to be supplied to UDC hereunder to the
fullest extent reasonably practicable in light of cost considerations and UDC's
forecasted needs. Any increase in lead times over those indicated a prior report
shall be justified by PPG in writing. Notwithstanding the above, should PPG
become aware of any material change in lead times for any Product, PPG shall
notify UDC within five (5) business days of becoming aware of such change.
7.3 Purchase Orders.
7.3.1 UDC shall issue Purchase Orders for all Products, except
that Development OLED Chemicals to be supplied pursuant to a Statement of Work
shall be supplied according thereto. Each Purchase Order shall identify the
requested quantity and shipping date for the Product, along with any other
information reasonably requested by PPG. The requested shipping date shall take
into account the current lead time for the Product.
7.3.2 UDC shall issue separate Purchase Orders for all Process
Development to be performed under a Statement of Work, Analytical Services, EH&S
Services and UDC-approved raw material and Third-Party OLED Material purchases.
7.4 Acceptance of Orders. PPG shall promptly accept each Purchase Order
issued by UDC, provided such Purchase Order is consistent in all material
respects with the terms of this Agreement and any applicable Statement of Work.
7.5 Delivery, Title and Risk of Loss. PPG shall deliver OLED Chemicals
to UDC F.O.B., PPG's Monroeville Chemical Center, freight absorbed and paid by
PPG. Title and risk of loss for all OLED Chemicals shall transfer from PPG to
UDC upon delivery to the carrier at the Monroeville Chemical Center.
7.6 Inconsistencies; Preprinted Terms. To the extent of any conflict or
inconsistency between this Agreement and any Purchase Order, confirmation,
acceptance or other similar document exchanged hereunder, the provisions of this
Agreement shall govern. No preprinted terms of any Purchase Order, confirmation,
acceptance or other similar document exchanged hereunder shall have any effect
unless separately agreed to in writing by the Parties.
UDC and PPG Confidential Page 28 of 66
ARTICLE 8 - INSPECTION, ACCEPTANCE, REJECTION AND REPLACEMENT
8.1 Shipment Documentation; Certificate of Analysis. Each shipment of a
Product hereunder shall be accompanied by (i) a packing slip describing the
shipment and referencing any UDC Purchase Order or other identifying number; and
(ii) an accurate certificate of analysis, or other mutually agreed-upon quality
control data, demonstrating that the Product complies with its corresponding
Material Specifications.
8.2 Batch Samples. Unless and until the Parties otherwise agree in
writing, upon completing production of any batch of Product ordered hereunder,
PPG shall promptly make a batch sample available to UDC for inspection and
acceptance testing. For each batch of any Product produced by PPG hereunder, PPG
shall maintain quality control samples and records for a period of two (2) years
following the date of production. Such samples and records shall be available
for review and testing by UDC or its designees on reasonable advance notice and
during PPG's normal business hours.
8.3 UDC Testing of Samples.
8.3.1 Unless UDC elects by written notice to PPG otherwise,
UDC shall conduct OLED device tests on each batch sample provided by PPG
hereunder in order to verify that the Product contributes the properties
required for the OLED device to function effectively. Regardless of real or
apparent compliance of the batch sample with its corresponding Material
Specifications, UDC reserves the right to reject any batch of Product that does
not contribute said properties; provided, however, that UDC shall not reject any
batch of Product due to an alteration of its intended use. UDC shall promptly
provide PPG with written notice of the results of its testing of each batch
sample.
8.3.2 Should UDC reject any batch of Product based on its
testing of a batch sample as set forth above, the Parties shall promptly discuss
the matter and attempt to determine the source of the problem. In any event, PPG
shall promptly rework or replace the batch of Product as and to the extent
instructed by UDC, and PPG shall ship to UDC a new batch sample for testing as
set forth above. All non-conforming Product that cannot be reworked shall be
disposed of by PPG in accordance with all applicable laws, rules, regulations
and other requirements.
8.3.3 This process of testing batch samples and reworking or
replacing any rejected batches of Product shall be repeated until UDC instructs
PPG otherwise. Any rejection by UDC shall apply only to the batch of Product
affected.
8.4 Quantity Tolerances. Unless otherwise mutually agreed to in writing
by the Parties, the amount of any Product delivered hereunder may not vary by
more than [The confidential material contained herein has been omitted and has
been separately filed with the Commission.] from the amount specified in the
Purchase Order.
UDC and PPG Confidential Page 29 of 66
8.5 Container Labels. All Product containers will be labeled with the
identity and net weight of the Product contained therein and shall indicate the
production date and lot number for such Product. The actual weight of the
Product in the container shall not deviate from the weight shown on the
container's label by more than one-half (0.5) gram. PPG shall apply to all
containers containing Products supplied hereunder such notices of the UDC
Chemical Patents as may be reasonably requested by UDC in writing, in order to
protect UDC's rights and interests therein.
8.6 Trademarks. All trademarks, trade names and designs utilized on the
packaging for Products supplied under this Agreement shall be chosen by UDC;
provided, however, that UDC must obtain prior written approval to use any PPG
trademarks, trade names and designs. All rights to the respective trademarks,
trade names and designs of each Party shall remain with that Party. Except as
otherwise agreed to by the Parties in writing, each Party assumes all
responsibility for use of its trademarks, trade names or designs, or any
portions thereof, appearing on the packaging for or on other written materials
distributed with the Products supplied hereunder.
8.7 Shipments, Inspection and Acceptance.
8.7.1 PPG shall use commercially reasonable efforts to ship
the entire requested quantity of each Product to UDC by the requested shipping
date. However, no shipment shall be sent prior to UDC's confirmation that
testing of the batch sample was successful unless UDC has elected by written
notice to PPG not to test a batch sample for the Product shipment.
8.7.2 Upon receipt of each Product shipment, UDC shall inspect
the shipment for any shortage or other visible defects. Should UDC detect a
problem, UDC shall promptly provide PPG with written notice thereof, which
notice shall specify the nature of the problem. Such written notice shall be
provided to PPG within ninety (90) days following the date of receipt of the
shipment by UDC; otherwise, UDC shall be deemed to have accepted the shipment
subject to its right of revocation under Section 8.8 below.
8.7.3 Promptly following such notice, the Parties shall
discuss the matter and attempt to determine the source of the problem. In any
event, PPG shall promptly (i) make up any shortage, or (ii) rework or replace
any non-conforming portion of the shipment, in each case as and to the extent
instructed by UDC. If a portion of the shipment is to be reworked or replaced,
PPG first shall ship to UDC a new batch sample for testing as set forth in
Section 8.3 above. All non-conforming Product shall be returned to PPG unless
otherwise agreed by the Parties. Any non-conforming Product that cannot be
reworked shall be disposed of by PPG or UDC, as applicable, in accordance with
all applicable laws, rules, regulations and other requirements.
UDC and PPG Confidential Page 30 of 66
8.8 Revocation of Acceptance.
8.8.1 The Parties acknowledge that UDC may elect not to test
each Product shipment prior to using the shipment or selling all or any portion
of it to a third party. Consequently, should UDC subsequently learn that any
portion of the Product shipment does not meet its corresponding Material
Specifications as indicated in the Certificate of Analysis, or that its
properties in an OLED are not consistent with those of the batch sample
originally tested by UDC, UDC shall have the right to provide written notice to
PPG revoking UDC's acceptance of the shipment. Such notice shall be provided
within ten (10) business days of UDC's learning of the problem, and in any event
within one (1) year of the date of receipt of the shipment by UDC; otherwise UDC
shall be deemed to have waived its right to revoke acceptance of the shipment.
8.8.2 Promptly following such notice, the Parties shall
discuss the matter and attempt to determine the source of the problem. In any
event, PPG shall promptly replace any non-conforming portion of the shipment as
and to the extent instructed by UDC. Prior to sending any replacement shipment
of Product, PPG first shall ship to UDC a new batch sample for testing as set
forth in Section 8.3 above unless UDC elects by written notice to PPG not to
test a batch sample. UDC shall be responsible for ensuring that any
non-conforming Product is disposed of in accordance with all applicable laws,
rules, regulations and other requirements.
8.9 Responsibility for Costs. Any reworking or replacement of Product
batches or shipments, or portions thereof, under this Article 8 shall be
performed by PPG and charged to UDC on a cost-plus basis, except where the
problem is due to negligence on the part of PPG. In the latter case, at UDC's
option the Product batch or shipment shall be reworked or replaced by PPG at no
added cost to UDC, or UDC shall be credited the full cost for the original work
and, if separately invoiced, the cost of any raw materials or Third-Party OLED
Materials. Notwithstanding the foregoing sentence, if UDC has elected by written
notice to PPG not to test a batch sample then such reworking or replacement
shall be at UDC's cost and UDC shall receive no credit even if the problem is
due to negligence on the part of PPG.
8.10 Entire Remedy. This Article 8 states UDC's sole remedy and PPG's
sole responsibility with respect to any short, defective or non-conforming
shipment of Product provided to UDC hereunder. However, the foregoing sentence
shall not apply with respect to claims of bodily injury or damage to tangible
property resulting from the negligence or willful misconduct of PPG.
ARTICLE 9 - INVOICES AND PAYMENT TERMS
9.1 Raw Materials, Intermediates and Third-Party OLED Materials. PPG
shall invoice UDC for all raw materials and Third-Party OLED Materials purchased
for UDC's account in accordance with subsection 6.2.1 above, and for all
Intermediates produced for UDC's account in accordance with subsection 6.2.2
UDC and PPG Confidential Page 31 of 66
above, in each case within fifteen (15) days following the end of each month.
All such invoices are subject to reasonable confirmation by UDC and shall be due
and payable, within thirty (30) days from date of receipt by UDC, in 100% cash.
9.2 Process Development, Development OLED Chemicals and Pre-Commercial
OLED Chemicals. PPG shall invoice UDC for all amounts payable for Process
Development work in accordance with subsection 6.4.2 above, for the supply of
all Development OLED Chemicals in accordance with subsection 6.4.3 above, and
for the supply of all Pre-Commercial OLED Chemicals in accordance with
subsection 6.4.4 above (such collective amounts referred to herein as "PPG's
Processing Charges"), as follows:
9.2.1 Within fifteen (15) days following the end of each of
the first and third Calendar Quarters of each Contract Year, PPG shall calculate
and provide UDC with written notice of: (i) the actual dollar amount of PPG's
Processing Charges for such Calendar Quarter; and (ii) the expected dollar
amount of PPG's Processing Charges for the then-current Calendar Quarter, based
on the agreed-upon Purchase Orders and/or Statements of Work and budgets and
forecasted amounts for such work. Accompanying such written notice shall be an
invoice to UDC for the total of the amounts specified in clauses (i) and (ii)
above, less (a) any credit to be applied against such total pursuant to
subsection 9.2.3 below or subsection 2.5.4 above and, (b) for the first Calendar
Quarter of 2006, any credit that has been carried over from the Development
Agreement or the Supply Agreement based on actual Process Development work
performed or OLED Chemicals provided in the fourth Calendar Quarter of 2005.
Upon UDC's request, PPG shall provide a reasonably detailed breakdown of all of
PPG's Processing Charges, which shall be subject to reasonable confirmation by
UDC.
9.2.2 Within fifteen (15) days following the end of each of
the second and fourth Calendar Quarters of each Contract Year, PPG shall
calculate and provide UDC with written notice of: (i) the actual dollar amount
of PPG's Processing Charges for such Calendar Quarter, and (ii) the difference,
in dollars, between such amount and previously provided estimate of PPG's
Processing Charges for such Calendar Quarter. If the difference calculated under
clause (ii) above is a positive number (i.e., actual costs exceed estimated
costs), then accompanying such written notice shall be an invoice to UDC for the
amount of the difference. If the difference calculated under clause (ii) above
is a negative number (i.e., estimated costs exceed actual costs), then
accompanying such written notice shall be a credit statement to UDC for the
amount of the difference.
9.2.3 Any credit available to UDC under subsection 9.2.2 above
shall first be applied against the actual dollar amount of PPG's Processing
Charges for the then-current Calendar Quarter, as specified in subsection 9.2.1
above. If any portion of the credit still remains thereafter, it shall be repaid
to UDC in cash within thirty (30) days following the end of the then-current
Calendar Quarter.
UDC and PPG Confidential Page 32 of 66
9.2.4 UDC shall pay all amounts properly invoiced under
subsections 9.2.1 and 9.2.2 above in (i) 100% cash or, (ii) at UDC's option, up
to 50% in shares of UDC Common Stock, as specified in Article 15 below, and the
remainder in cash. The cash portion of all such amounts shall be due and payable
within fifteen (15) days from the date of receipt by UDC.
9.3 Commercial OLED Chemicals. PPG shall invoice UDC for the supply of
all Commercial OLED Chemicals in accordance with subsection 6.4.5 above upon the
earlier of (i) the time of shipment under subsection 8.7.1 above; or (ii) thirty
(30) days following shipment of a batch sample for OLED device testing under
Section 8.2 above, which batch sample has not been rejected by UDC during such
30-day period based on UDC's testing under Section 8.3 above. All such invoices
are subject to reasonable confirmation by UDC and shall be due and payable,
within thirty (30) days from date of receipt by UDC, in 100% cash.
9.4 Analytical Services and EH&S Services. PPG shall invoice UDC for
Analytical Services in accordance with subsection 6.4.6 above, and for EH&S
Services in accordance with subsection 6.4.7 above, in each case within fifteen
(15) days following the end of each month. All such invoices are subject to
reasonable confirmation by UDC and shall be due and payable, within thirty (30)
days from date of receipt by UDC, in 100% cash.
9.5 Late Payments. At its discretion, PPG may charge UDC interest at
the Prime Rate plus [The confidential material contained herein has been omitted
and has been separately filed with the Commission.], or the maximum rate
permitted by law, whichever is lower, on all properly invoiced amounts not paid
when due. As used herein, the "Prime Rate" shall be the prime rate of interest
as reported in The Wall Street Journal on the first business day immediately
preceding the date on which the payment is made.
9.6 Books of Account; Examinations. PPG shall keep books of account and
supporting data and records consistent with its accounting policies and
practices, which shall contain all particulars that may be reasonably necessary
for the purpose of showing the amounts payable by UDC under this Article 9
("PPG's Books of Account"). During the Term and for at least two (2) years
thereafter, UDC shall have the right to examine PPG's Books of Account. Each
such examination shall take place during normal business hours of PPG and on at
least ten (10) business days' advance written notice to PPG. Each such
examination shall be at a location selected by PPG and in accordance with
procedures reasonably acceptable to PPG, including, without limitation,
procedures designed to protect any Confidential Information of PPG. PPG shall
not be required to permit examination of its Books of Account more often than
once during any Calendar Quarter.
UDC and PPG Confidential Page 33 of 66
ARTICLE 10 - QUALITY CONTROL; PRODUCTION FACILITIES
10.1 Production Process Control. PPG shall use statistical methods to
analyze and control its production processes to achieve and maintain a state of
predictable stability of the Products. UDC may request PPG to furnish reasonable
proof that appropriate statistical methods are being properly used and applied
to produce the Products. Such proof includes, without limitation, the following:
(i) the existing quality assurance control or similar plan of PPG as attached
hereto as Exhibit B; (ii) periodic quality assurance surveys by UDC of PPG's
production facility; and/or (iii) a report to UDC of statistically analyzed data
which demonstrates the state of predictable stability of the processes involved.
10.2 Production Changes. PPG shall inform UDC in writing of the
occurrence or expected occurrence of material events that might reasonably be
expected to affect the quality, quantity, cost or any other material aspect of
any Product manufactured or processed hereunder, including, without limitation,
any changes in manufacturing conditions or quality control procedures relating
to the manufacture or processing of the Product. PPG shall, upon UDC's request,
supply test data and/or samples of Products produced hereunder to UDC and
otherwise reasonably cooperate with UDC, in order to permit UDC to evaluate the
possible effects of such events and verify that PPG will continue to be able to
supply Products as required hereunder. PPG shall not change raw material
suppliers, the composition, manufacturing location, or process used to produce
any Pre-Commercial OLED Chemical or Commercial OLED Chemical from that utilized
when the OLED Chemical was originally approved by UDC, without UDC's prior
written consent.
10.3 Testing and Inspection. UDC shall have the right, upon reasonable
advance notice and during regular business hours, to test OLED Chemicals being
produced by PPG hereunder, and, upon reasonable advance notice, to visit,
inspect and audit the facilities at which such OLED Chemicals are produced, as
well as all relevant records being maintained by PPG in connection therewith.
Upon prior approval by PPG, such approval not to be unreasonably withheld,
purchasers or prospective purchasers of Products from UDC may visit these
facilities with UDC for substantially similar purposes. All persons visiting,
inspecting or auditing any PPG facilities shall be required to comply with PPG's
generally applicable policies and procedures with respect thereto, including,
without limitation, executing PPG's standard form confidentiality agreement
prior to the visit, inspection or audit.
ARTICLE 11 - WARRANTIES AND LIMITATIONS OF LIABILITY
11.1 Mutual Representations and Warranties. Each Party represents
and warrants to the other as follows:
11.1.1 It has the requisite corporate right, power and
authority to enter into and perform this Agreement.
UDC and PPG Confidential Page 34 of 66
11.1.2 The execution, delivery and performance of this
Agreement by it will not (i) result in the breach of, constitute a default under
or interfere with any contract or other instrument or obligation, whether
written or oral, to which it is currently bound; or (ii) violate any writ,
order, injunction, decree, or any law, statute, rule or regulation applicable to
it.
11.1.3 It shall, to its knowledge following reasonable
inquiry, comply in all material respects with all applicable laws, rules,
regulations and other governmental requirements relating to or affecting its
performance under this Agreement, and shall obtain and maintain all governmental
permits, licenses and consents required in connection therewith.
11.2 Additional UDC Representations and Warranties. UDC further
represents and warrants to PPG that:
11.2.1 It owns or has, and shall retain, sufficient rights in
the UDC Proprietary Materials for Chemicals to grant the licenses, sublicenses
and other rights granted to PPG pursuant to Section 3.3 above;
11.2.2 It is unaware of any alleged invalidity of the UDC
Chemical Patents licensed to PPG hereunder, and it will immediately notify PPG
in writing of its receipt of any written notices to the contrary.
11.2.3 It will not, without PPG's prior written consent which
shall not be unreasonably withheld, resell any Development OLED Chemical to
other persons for their manufacture of OLEDs for commercial sale; and
11.3 Additional PPG Representations and Warranties. PPG further
represents and warrants to UDC that:
11.3.1 It has or will have sufficient rights to assign to UDC
the Developed Technology pursuant to Section 3.1 above; and
11.3.2 It will not, knowingly, manufacture any Product for
supply to UDC hereunder utilizing any process known or suspected by PPG to be
covered by a Patent of PPG or any third party.
11.4 Intellectual Property Warranty; Indemnity. Notwithstanding any
other provision of this Agreement, UDC warrants to PPG that each Third-Party
OLED Material supplied to PPG by UDC hereunder shall be supplied in such a
manner so as not to infringe any valid and enforceable U.S. or non-U.S. patent,
trademark, copyright, trade secret or other intellectual property or proprietary
rights of any third party. UDC shall indemnify and hold harmless PPG from and
against any and all claims, damages, judgments, costs and expenses, and
out-of-pocket losses, including without limitation reasonable attorney's fees,
arising from or related to any such infringement or alleged infringement. UDC
shall further defend or settle, at its own option and expense, any claim, suit
UDC and PPG Confidential Page 35 of 66
or proceeding brought against PPG alleging such infringement. PPG shall notify
UDC promptly in writing of the commencement of such claim, suit or proceeding
and shall give UDC authority, information, and a reasonable amount of assistance
for the defense or settlement thereof, and UDC shall pay all of PPG's
out-of-pocket expenses in connection therewith. In its sole discretion, PPG may
participate in any such suit or proceeding with counsel of its own choice, at
its own expense. PPG shall not settle or compromise any such claim, suit or
proceeding without the prior written consent of UDC, which shall not be
unreasonably withheld. At no cost or obligation to PPG, UDC shall keep PPG
informed of the progress of any suit including any settlement negotiations.
11.5 Additional PPG Disclaimer; Indemnity. In situations where PPG
provides to UDC, or to any third party on UDC's behalf, any Process Development
information or information pertaining to the manufacture of Products as
contemplated under subsections 2.4.2, 5.2.1, 5.2.2, 5.2.3, or 6.2.1 (last
sentence of opening paragraph only) above, or under Section 18.6 (Transition
Assistance), or through any Process Development Technical Report or Batch Sheet
prepared by PPG hereunder, PPG agrees to use commercially reasonable efforts to
ensure that such information is substantially accurate and complete. Subject
thereto, PPG disclaims all representations and warranties as to such
information, and UDC shall indemnify and hold harmless PPG from and against any
and all claims, damages, judgments, costs and expenses, and out-of-pocket
losses, including without limitation reasonable attorney's fees, arising from
property damage, physical injury or death caused by UDC's or any third party's
reliance on such information. UDC shall further defend or settle, at its own
option and expense, any claim, suit or proceeding brought against PPG alleging
such property damage, physical injury or death. PPG shall notify UDC promptly in
writing of the commencement of such claim, suit or proceeding and shall give UDC
authority, information, and a reasonable amount of assistance for the defense or
settlement thereof, and UDC shall pay all of PPG's out-of-pocket expenses in
connection therewith. In its sole discretion, PPG may participate in any such
suit or proceeding with counsel of its own choice, at its own expense. PPG shall
not settle or compromise any such claim, suit or proceeding without the prior
written consent of UDC, which shall not be unreasonably withheld. At no cost or
obligation to PPG, UDC shall keep PPG informed of the progress of any suit
including any settlement negotiations.
11.6 Disclaimer of Additional Warranties. EXCEPT FOR THE EXPRESS
WARRANTIES CONTAINED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS
OR WARRANTIES TO THE OTHER, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION,
THE IMPLIED WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE. ALL SUCH OTHER REPRESENTATIONS AND WARRANTIES ARE
HEREBY DISCLAIMED.
11.7 Limitation on Certain Damages. EXCEPT FOR OUT-OF-POCKET AMOUNTS
PAYABLE TO THIRD PARTIES AS SET FORTH IN SECTIONS 11.4 (INTELLECTUALY PROPERTY
UDC and PPG Confidential Page 36 of 66
WARRANTY; INDEMNITY) AND 11.5 (ADDITIONAL PPG DISCLAIMER; INDEMNITY), IN NO
EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, INDIRECT,
PUNITIVE OR CONSEQUENTIAL DAMAGES OF ANY KIND (INCLUDING LOST PROFITS, BUSINESS
OR GOODWILL) IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER COVERED BY THIS
AGREEMENT, REGARDLESS OF WHETHER SUCH LIABILITY IS BASED ON BREACH OF CONTRACT,
TORT, STRICT LIABILITY, BREACH OF WARRANTY OR ANY OTHER THEORY, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
11.8 Special Disclaimer. PRINCETON UNIVERSITY AND USC MAKE NO
REPRESENTATIONS AND WARRANTIES AS TO THE PATENTABILITY AND/OR DISCOVERIES
INVOLVED IN ANY OF THE UDC CHEMICAL PATENTS. PRINCETON UNIVERSITY AND USC MAKE
NO REPRESENTATION AS TO PATENTS NOW HELD OR WHICH WILL BE HELD BY OTHERS IN ANY
FIELD AND/OR FOR ANY PARTICULAR PURPOSE. PRINCETON UNIVERSITY AND USC MAKE NO
EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
ARTICLE 12 - REGULATORY COMPLIANCE; HEALTH AND SAFETY
12.1 General.
12.1.1 PPG shall comply in all material respects with all
applicable domestic governmental requirements for, and where required obtain or
provide, all registrations, permits, notices, reports, licenses, and supplier
notifications with respect to its production, sale, packaging and delivery of
Products hereunder. PPG shall promptly provide UDC with copies of any such
documents of a material nature.
12.1.2 PPG shall recommend and provide, as EH&S Services
hereunder, assistance in preparing and filing the forms required for compliance
with non-U.S. laws, such as registrations, permits, notice reports, licenses and
supplier notifications with respect to PPG's production, sale, packaging and
delivery of Products by UDC outside the U.S. Such services will be performed, in
part, by an outside consultant selected by PPG in such a manner as PPG would use
to select a consultant for its own similar purposes, subject to UDC's consent,
and PPG makes no representation or warranty, regarding the quality of any such
services provided by said consultant. UDC will indemnify and defend PPG from and
against any liability arising from any such services provided by said
consultant.
12.2 Material Safety Data Sheets. PPG shall be responsible for
preparing and delivering to UDC Material Safety Data Sheets for all Products
supplied hereunder, as may be required under the Occupational Safety and Health
Act, regulations promulgated thereunder and any similar state "right-to-know"
laws that are currently in force or that may be enacted in the future. UDC shall
UDC and PPG Confidential Page 37 of 66
be responsible for delivering such Material Safety Data Sheets to those persons
to whom UDC sells or otherwise supplies the Product. PPG shall update such
Material Safety Data Sheets as necessary to comply with all material legal
requirements, and shall promptly provide UDC with such updated Material Safety
Data Sheets, which UDC shall deliver to those persons to whom UDC sells or
otherwise supplies the Products. PPG shall be listed as the emergency contact on
all container labels and Material Safety Data Sheets for Products supplied
hereunder. In addition, during the term of this Agreement and for twenty-four
(24) months thereafter, PPG shall be responsible for emergency response in the
case of any emergencies or other incidents involving the Products supplied
hereunder. The Parties shall cooperate in good faith to transition
responsibility for such activities to UDC or its designee prior to the end of
such period.
12.3 Employees and Training. Each Party shall become reasonably
familiar with the OLED Chemicals supplied hereunder and with any raw materials
used and/or Wastes generated by such Party during the course of producing,
packaging, handling and/or using such OLED Chemicals. Each Party shall be
responsible for informing its employees of any known or reasonably ascertainable
chemical hazards associated with the OLED Chemicals supplied hereunder, and with
any such raw materials or Wastes that its employees may handle, and each Party
shall provide its employees with reasonable training in the proper methods of
handling such items.
12.4 Notice of Government Action. Each Party shall promptly notify the
other of any information or notice it has or becomes aware of, including,
without limitation, any threatened or pending action by any governmental
authority, concerning the health and/or environmental risks posed by any OLED
Chemical supplied hereunder, or any raw material used or Waste generated during
the course of producing or packaging such OLED Chemical, including, but not
limited to, information concerning any known or suspected side effects,
injuries, toxicity, sensitivity reactions, complaints, alleged defects or other
adverse experiences (including the severity thereof) associated with exposure to
or use of such items.
ARTICLE 13 - WASTE DISPOSAL
Except as otherwise provided in this Agreement, PPG shall be solely
responsible for the lawful management (including, without limitation, the
emission, release and disposal) of all Wastes generated in connection with the
manufacture and supply of OLED Chemicals under this Agreement. PPG shall handle,
accumulate, label, package and ship such Wastes in material compliance with all
applicable federal, state and local laws, rules, regulations and orders.
ARTICLE 14 - INDEMNIFICATION AND INSURANCE
14.1 Environmental Indemnification. Subject to Section 14.2 below, PPG
shall indemnify, defend and hold harmless UDC, its affiliates and their
UDC and PPG Confidential Page 38 of 66
respective officers, directors, members, employees, agents and representatives
(each, an "Indemnified Party"), from and against any and all claims, demands,
liabilities, damages, judgments, penalties, fines, costs, and expenses
(including, but not limited to, reasonable attorneys' fees; collectively
"Claims") incurred by, or rendered against, each such Indemnified Party arising
out of any alleged or actual bodily injury to persons, or damage to property,
the environment or natural resources, at a facility of PPG or any of its
sublicensees, or at a facility or location chosen by PPG or any of its
sublicensees for their disposal of Wastes generated in connection with the
manufacture of OLED Chemicals supplied under this Agreement, or any other
facility or location at which such Wastes are ultimately disposed or come to be
located.
14.2 Indemnification Procedures. UDC shall promptly notify PPG in
writing, specifying the nature of any Claim, the total monetary amount sought,
and any other relief sought. Each Indemnified Party shall cooperate with PPG in
all reasonable respects in connection with the defense and/or settlement of the
Claim. Any compromise or settlement of a Claim must be approved in writing by
both Parties, which approval shall not be unreasonably withheld. Any Indemnified
Party's failure to give timely notice or to provide copies of documents or to
furnish relevant data in connection with any Claim shall not constitute a
defense (in part or in whole) to any claim for indemnification for such Party,
except and only to the extent that such failure results in material prejudice to
PPG. Each Indemnified Party, upon written notice to PPG, shall have the right to
employ separate counsel at its own expense and participate in the defense of the
Claim.
14.3 Insurance Requirements. Each Party shall maintain its standard
general liability insurance or its self-insurance practices to protect against
covered damages, costs or fees (including reasonable attorney's fees) arising
out of or relating to any property damage, bodily injury, sickness, disease or
death, caused directly by any negligent act or omission of either Party's
personnel while on premises at the other Party's facility, and will name the
other Party as an additional insured under such insurance. The insured will
provide the other Party with a certificate of such insurance, showing the other
as an additional insured, and notify the other of any material changes to the
relevant insurance policies.
ARTICLE 15 - UDC COMMON STOCK
15.1 Timing of Share Issuance. Shares in payment for invoices provided
following the end of each of the first and third Calendar Quarters of each
Contract Year, under subsections 2.5.2 and 9.2.1 above, shall be delivered
within fifteen (15) days following UDC's receipt of such invoices. Any shares in
payment for invoices provided following the end of each of the second and fourth
Calendar Quarters of each Contract Year, under subsections 2.5.3 and 9.2.2
above, shall be delivered by the date that the shares in payment for the
then-current Calendar Quarter are due as per the preceding sentence. In other
words, any shares in payment of a second Calendar Quarter invoice for the
difference between actual and estimated costs are to be delivered when shares in
UDC and PPG Confidential Page 39 of 66
payment for the third Calendar Quarter invoice are due, and any shares in
payment of a fourth Calendar Quarter invoice for the difference between actual
and estimated costs are to be delivered when shares in payment for the following
first Calendar Quarter invoice are due.
15.2 Issuance of Shares. The number of shares of UDC Common Stock to be
issued in full or partial payment of any invoiced amount shall equal the
quotient of (i) the invoiced amount to be paid in shares, divided by (ii) the
Ten-Day Average. As used herein, the "Ten-Day Average" shall equal the average
closing price for UDC Common Stock, as set forth in the NASDAQ National market
listing of The Wall Street Journal, for the ten (10) trading days prior to the
close of the Calendar Quarter immediately preceding the date of issuance.
Notwithstanding the foregoing, if the Ten-Day Average is less than [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.], then the invoiced amount shall be paid in 100% cash
rather than shares of UDC Common Stock. For clarification, the Ten Day Average
used to determine the number of shares to be issued in payment of a second or
fourth Calendar Quarter invoice shall be calculated based on the average closing
price for UDC Common Stock for the ten (10) trading days prior to the close of
the third and following first Calendar Quarters, respectively.
15.3 Representations of PPG.
15.3.1 Purchase Entirely for Own Account. The Securities to be
received by PPG pursuant to this Agreement will be acquired for investment for
PPG's own account, not as a nominee or agent, and not with a view to the resale
or distribution of any part thereof that would violate any applicable federal
securities laws, and PPG has no immediate intention of selling, granting any
participation in, or otherwise distributing the same except to the extent the
same are included in a Registration Statement (as hereinafter defined). By
executing this Agreement, PPG further represents that PPG does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Securities, other than as provided herein. PPG represents
that it has full power and authority to enter into this Agreement.
15.3.2 Accredited Status. PPG is an "accredited investor"
within the meaning of Commission Rule 501 of Regulation D, as presently in
effect.
15.3.3 Restricted Securities. PPG understands that the
Securities it is receiving are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from UDC in a
transaction not involving a public offering, and that under such laws and
applicable regulations such Securities may be resold without registration under
the 1933 Act only in certain limited circumstances. In this connection, PPG
represents that it is familiar with Commission Rule 144, as presently in effect,
and understands the resale limitations imposed thereby and by the 1933 Act.
UDC and PPG Confidential Page 40 of 66
15.3.4 Legends. It is understood that the certificates
evidencing the Securities that may be issued pursuant to this Agreement shall,
unless otherwise expressly agreed by the Parties, bear the following legend:
"These securities have not been registered under the Securities Act of
1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with
respect to the securities under such Act or an opinion of counsel
satisfactory to the Corporation that such registration is not required
or unless sold pursuant to Rule 144 of such Act."
and any other legend required by any applicable state securities laws. To the
extent that such legends are no longer applicable, UDC shall instruct its
transfer agent to remove the legends upon request by PPG.
15.4 Certain Covenants of UDC.
15.4.1 Authorized Shares. All shares of UDC Common Stock
issued to PPG in accordance with Section 2.5 or Section 9.2 above shall be duly
authorized, validly issued fully-paid and non-assessable.
15.4.2 Listing. UDC shall promptly secure the listing of the
Securities upon The Nasdaq SmallCap Market, The Nasdaq National Market or such
other national securities exchange or automated quotation system, if any, upon
which shares of UDC Common Stock are then listed (subject to official notice of
issuance). So long as PPG owns any of the Securities, UDC shall maintain, so
long as any other shares of UDC Common Stock shall be so listed, such listing of
all UDC Common Stock, and shall comply in all respects with UDC's reporting,
filing and other obligations under the bylaws or rules of the National
Association of Securities Dealers and such exchanges, as applicable.
15.4.3 Reports Under 1934 Act. With a view to making available
to PPG the benefits of Rule 144 and any successor or other rule or regulation of
the Commission that may at any time permit PPG to sell the Securities to the
public without registration, UDC agrees to: (i) make and keep public information
available, as those terms are understood and defined in Rule 144, at all times;
(ii) file with the Commission in a timely manner all reports required of UDC
under the 1934 Act; and (iii) furnish to PPG, so long as PPG owns any
Securities, forthwith upon request (a) a written statement by UDC that it has
filed with the Commission in a timely manner all reports required of UDC under
the 1934 Act, (b) a copy of the most recent annual or quarterly report of UDC
and such other reports and documents so filed by UDC, and (c) such other
information as may be reasonably requested in availing PPG of any rule or
regulation of the Commission which permits the selling of any Securities without
registration.
UDC and PPG Confidential Page 41 of 66
15.5 Certain Sales.
15.5.1 Short Sales. During the Term, PPG shall not, and shall
cause its affiliates to not, engage in or encourage any third party to engage in
any "short sales" (as such term is defined in Rule 3b-3 of the 0000 Xxx) of UDC
Common Stock or any other UDC securities.
15.5.2 Prohibited Sales During Certain Periods. During the
thirty (30) day period following the end of each Calendar Quarter during the
Term (each a "PPG Restricted Period"), PPG shall not offer, sell or contract to
sell shares of UDC Common Stock received hereunder or previously under the
Development Agreement, or any securities convertible into or exchangeable or
exercisable for any share of UDC Common Stock, to the extent that the number of
shares of UDC Common Stock subject to such offer, sale or contract to sell would
exceed, on any one (1) day during such PPG Restricted Period, twenty-five
percent (25%) of the average daily trading volume of shares of UDC Common Stock
for the ninety (90) day period immediately preceding the PPG Restricted Period
(the "PPG Volume Limit"); provided however that the PPG Volume Limit shall not
apply to any private placement of shares of UDC Common Stock by PPG. During each
PPG Restricted Period, PPG shall not enter into any swap or hedge arrangement
that transfers, in whole or in part, any of the economic consequences of
ownership of shares of UDC Common Stock in excess of the PPG Volume Limit, or
publicly disclose the intention to make any offer, sale or contract to sell or
to enter into any swap or hedge in excess of the PPG Volume Limit.
15.6 Preemptive Rights.
15.6.1 Definition. For the purposes of this Section, "Eligible
Offering" means any offering of (i) UDC Common Stock or (ii) other equity
securities of UDC or any security convertible into or exchangeable for or
carrying rights or options to purchase any UDC Common Stock (collectively, "UDC
Equity Securities"), during the Term. Notwithstanding the foregoing, an Eligible
Offering shall not include sales or issuances of:
(a) shares of UDC Common Stock (and/or options,
warrants or other UDC Common Stock purchase rights issued pursuant to such
options, warrants or other rights) issued or to be issued to employees, officers
or directors of, or consultants or advisors to UDC or any subsidiary, pursuant
to compensation plans, agreements, or other arrangements that are approved by
UDC's Board of Directors, to the extent that such plans, agreements or other
arrangements do not exceed, in the aggregate, twenty-five percent (25%) of the
number of shares of UDC Common Stock outstanding, not including any currently
outstanding warrants described in the Proxy Statement for UDC's 2005 Annual
Meeting of Shareholders;
(b) stock, options and warrants issued, or to be
issued, pursuant to any rights or agreements outstanding as of, and as the same
UDC and PPG Confidential Page 42 of 66
exist on, the date of execution of this Agreement, to the extent such rights or
agreements are described in UDC's 2004 Annual Report on Form 10-K;
(c) shares of UDC Common Stock issued in connection
with any stock split, stock dividend or recapitalization by UDC;
(d) shares of UDC Common Stock issued upon exercise
of any warrants issued to PPG under the Development Agreement;
(e) shares issued by UDC pursuant to a bona fide,
registered underwritten public offering; and
(f) up to 100,000 of UDC equity securities issued by
UDC in each Contract Year.
15.6.2 Eligible Offering. Pursuant to the terms of this
Section, UDC hereby grants to PPG the options to purchase any UDC Common Stock
in an amount that bears the same ratio to the aggregate amount of securities
covered by such Eligible Offering as the number of shares of UDC Common Stock
issued to PPG hereunder and owned by PPG at such time bears to the total number
of shares owned by all holders of UDC Common Stock at the time.
15.6.3 Notice of Eligible Offering. Before issuing any
securities pursuant to an Eligible Offering, UDC shall give written notice
thereof to PPG. Such notice must specify the securities UDC proposes to issue,
the price to be paid for such securities (or if such price is to be determined
at or prior to the closing of such issuance, the method in which such price is
calculated) and any other consideration that UDC intends to receive for the
securities being issued. In the event such securities are comprised of warrants
to purchase UDC Common Stock, such warrants shall be valued using the
Black-Scholes method of valuation. For a period of five (5) business days
following the delivery of such notice, PPG will be entitled to elect, by written
notice to UDC, to purchase up to the portion of the securities being sold in the
Eligible Offering calculated in accordance with subsection 15.6.2 above;
provided, however, that if two (2) or more securities are proposed to be sold as
a "unit" in an Eligible Offering, any such PPG election must relate to such unit
of securities. If any such offer is accepted by PPG, UDC shall sell to PPG and
PPG shall purchase from UDC, for the price and on the terms set forth in UDC's
notice of such Eligible Offering, the number of securities that PPG has elected
to purchase. UDC then may sell the remainder of the securities to be sold in the
Eligible Offering, if any, pursuant to the provisions set forth in subsection
15.6.4 below.
15.6.4 Sale to Third Parties. If PPG does not make an election
to exercise its rights pursuant to this Section with respect to any securities
included in an Eligible Offering within the five (5) business day period
described in subsection 15.6.3 above, or if there remain securities to be sold
after the sale of securities to PPG as set forth in subsection 15.6.3 above,
then UDC may issue such securities to third parties, but only for the price and
UDC and PPG Confidential Page 43 of 66
consideration of the type and not less than the amount set forth in UDC's notice
to PPG, and otherwise on the terms set forth in such notice, and only within a
period of ninety (90) days thereafter.
ARTICLE 16 - REGISTRATION RIGHTS
16.1 Registration of the Securities.
16.1.1 Within thirty (30) days following the date any
Securities are delivered to PPG as set forth in Section 15.1 above, UDC shall
prepare and file with the Commission one or more registration statements (on
Form S-3, or other appropriate form of registration statement) under the 1933
Act (each a "Registration Statement"), together with such state law
qualifications and other compliances with applicable law, at the sole expense of
UDC, in respect of PPG, so as to permit public offering and resale of such
Securities (hereinafter, the "Registrable Securities") under the 1933 Act by
PPG.
16.1.2 UDC shall use commercially reasonable efforts to cause
each Registration Statement to be declared effective by the Commission as
promptly as is practicable, but in any event within one hundred twenty (120)
days following the filing date thereof and within five (5) days after Commission
clearance.
16.1.3 UDC will cause each Registration Statement or any
post-effective amendment filed under this Article 16 to remain continuously
effective under the 1933 Act until the earliest of (i) the date that none of the
Registrable Securities covered by such Registration Statement are outstanding;
(ii) the date that all of the Registrable Securities covered by such
Registration Statement have been sold by PPG pursuant to such Registration
Statement; (iii) the date that PPG receives an opinion of counsel to UDC, which
counsel shall be reasonably acceptable to PPG, that the Registrable Securities
may be sold under the provisions of Rule 144 without limitation as to volume or
a requirement of "brokers transactions"; (iv) the date that all of the
Registrable Securities covered by such Registration Statement have been
otherwise transferred to persons who may trade such shares without restriction
under the 1933 Act, and UDC has delivered a new certificate or other evidence of
ownership for such Registrable Securities not bearing a restrictive legend; or
(v) the date that all of the Registrable Securities covered by such Registration
Statement may be sold without any time, volume or manner limitations pursuant to
Rule 144(k) or any similar provision then in effect under the 1933 Act in the
opinion of counsel to UDC, provided such counsel is reasonably acceptable to
PPG. If, under Commission rules or policies of the Commission staff, any of the
Registrable Securities for any reason cannot be included in a Registration
Statement initially filed by UDC and must be included in a separate registration
statement, UDC shall file all such additional registration statements as may be
needed to permit PPG to offer and resell to the public all of the Registrable
Securities, and the term "Registration Statement" shall for purposes of this
Agreement be deemed to include all such additional registration statements.
UDC and PPG Confidential Page 44 of 66
16.1.4 All fees, disbursements and out-of-pocket expenses and
costs incurred by UDC in connection with the preparation and filing of each
Registration Statement under this Article 16, and in complying with applicable
federal and state securities laws (including, without limitation, all attorneys'
and accountants' fees of UDC), shall be borne by UDC. PPG shall bear the cost of
underwriting and/or brokerage discounts, fees and commissions, if any,
applicable to its sale of the Registrable Securities and the fees and expenses
of its counsel. PPG and its counsel shall have a reasonable period, of not less
than two (2) business days for each Registration Statement filed hereunder and
for each amendment or subsequently filed Registration Statement, to review the
proposed Registration Statement or any amendment thereto, prior to filing with
the Commission, and UDC shall provide PPG with copies of any comment letters
received from the Commission and each written response thereto with respect
thereto within two (2) business days of receipt or sending thereof. UDC shall
make reasonably available for inspection by PPG, any underwriter participating
in any disposition pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by PPG or any such underwriter all financial
and other records, pertinent corporate documents and properties of UDC and its
subsidiaries, and cause UDC's officers, directors and employees to be reasonably
available for discussions with and to supply all information reasonably
requested by such PPG or any such underwriter, attorney, accountant or agent in
connection with each Registration Statement, in each case, as is customary for
similar due diligence examinations; provided, however, that all records,
information and documents that are designated in writing by UDC, in good faith,
as confidential, proprietary or containing any material non-public information
shall be kept confidential by PPG and any such underwriter, attorney, accountant
or agent (pursuant to an appropriate confidentiality agreement in the case of
any such underwriter or agent), unless such disclosure is made pursuant to
judicial process in a court proceeding (after first giving UDC an opportunity
promptly to seek a protective order or otherwise limit the scope of the
information sought to be disclosed) or is required by law, or such records,
information or documents become available to the public generally or through a
third party not in violation of an accompanying obligation of confidentiality;
and provided further that, if the foregoing inspection and information gathering
would otherwise unreasonably disrupt UDC's conduct of its business, such
inspection and information gathering shall, to the maximum extent reasonably
practicable, be coordinated on behalf of PPG and the other persons entitled
thereto by one firm of counsel reasonably acceptable to PPG and such other
persons. To the extent necessary, UDC shall qualify any of the Registrable
Securities for sale in such states as such PPG reasonably designates, except
that UDC shall not be required to qualify in any state which will require an
escrow relating to UDC and/or the sellers of Registrable Securities, or which
will require UDC to qualify to do business in such state or require UDC to file
therein any general consent to service of process. UDC, at its expense, will
supply PPG with copies of each Registration Statement and the prospectus
included therein and other related documents in such quantities as may be
reasonably requested by PPG.
UDC and PPG Confidential Page 45 of 66
16.1.5 If UDC delivers to PPG a certificate signed by UDC's
President and Chief Operating Officer and Chief Financial Officer to the effect
that (i) UDC is aware of nonpublic information concerning UDC that has not been
disclosed in a Registration Statement either by incorporation of 1934 Act
filings by UDC or by information included directly in such Registration
Statement, and (ii) in the good faith judgment of UDC, the disclosure of such
information in such Registration Statement may have a material adverse effect on
the business, operations, properties, assets, prospects or condition (financial
or otherwise) of UDC, then, PPG agrees not to effect any sales of Registrable
Securities pursuant to such Registration Statement until such time as PPG (a) is
advised in writing by UDC that the use of the applicable prospectus contained in
such Registration Statement may be resumed, (b) has received copies of a
supplemental or amended prospectus, if applicable, containing such information
and (c) has received copies of one or more additional or supplemental filings,
if any, which are incorporated or deemed to be incorporated by reference in such
prospectus and which contain such information. UDC agrees to, as promptly as
practicable, prepare any supplement or amendment to the applicable prospectus or
to make any additional or supplemental filings so that, as thereafter delivered
to the purchasers of such Registrable Securities, such prospectus will not
contain any untrue statement of material fact or omit to state any fact
necessary to make the statements therein not misleading.
16.2 PPG's Obligations.
16.2.1 Cooperation with UDC. PPG will cooperate with UDC in
all respects in connection with this Article 16, including, without limitation,
by timely supplying all information reasonably requested by UDC (which shall
include all information regarding PPG and proposed manner of sale of the
Registrable Securities required to be disclosed in a Registration Statement),
and by executing and returning to UDC or its counsel all documents reasonably
requested in connection with the registration and sale of the Registrable
Securities.
16.2.2 "Market Stand-Off" Agreement. Unless otherwise
consented to in writing by the managing underwriter, PPG shall not effect any
public sale or distribution of equity securities of UDC, or any securities
convertible into or exchangeable or exercisable for such securities, during the
seven (7) days prior to and the ninety (90) days after any underwritten
registered public offering of UDC Common Stock or other UDC securities (except
as part of such underwritten registered public offering) if PPG is a selling
stockholder in such underwritten registered public offering. UDC may impose
stop-transfer instructions with respect to the shares of UDC Common Stock or
other UDC securities subject to the foregoing restriction until the end of any
such period.
16.3 Registration Procedures. In addition to the requirements of
Section 16.1 above, UDC shall (except as otherwise expressly provided in this
Agreement), as expeditiously as possible, subject to PPG's compliance with
subsection 16.2.1 above:
16.3.1 prepare and file with the Commission such amendments
and supplements to each Registration Statement and the prospectus used in
UDC and PPG Confidential Page 46 of 66
connection therewith as may be necessary to keep such Registration Statement
effective and to comply with the provisions of the 1933 Act with respect to the
sale or other disposition of all Securities covered by such Registration
Statement (including prospectus supplements with respect to the sales of
securities on a delayed or continuous basis in connection with a registration
statement pursuant to Rule 415 promulgated under the 0000 Xxx);
16.3.2 take all lawful action such that (i) each Registration
Statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, not
misleading; and (ii) the prospectus forming part of each Registration Statement,
and any amendment or supplement thereto, does not, at any time during the period
set forth in subsection 16.1.3 above, include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading;
16.3.3 prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and the distribution
or delivery of any prospectus (including any supplements thereto), (i) provide
draft copies thereof to PPG and reflect in such documents all such comments as
PPG (and its counsel) reasonably may propose; and (ii) furnish to PPG such
numbers of copies of a prospectus including a preliminary prospectus or any
amendment or supplement to any prospectus, as applicable, in conformity with the
requirements of the 1933 Act, and such other documents, as PPG may reasonably
request in order to facilitate the public sale or other disposition of the
Registrable Securities;
16.3.4 to the extent necessary, register and qualify the
Securities covered by a Registration Statement under applicable state securities
laws, do any and all other acts and things which may be reasonably necessary or
advisable to enable PPG to consummate the public sale or other disposition in
such jurisdictions within the United States of America of the Registrable
Securities, except that UDC shall not be required to qualify in any state which
will require an escrow relating to UDC and/or the sellers of Registrable
Securities, or which will require UDC to qualify to do business in such state or
require UDC to file therein any general consent to service of process;
16.3.5 subject to the provisions of subsection 16.1.5 above,
(i) notify PPG, at any time when a prospectus included in a Registration
Statement is required to be delivered under the 1933 Act, upon becoming aware of
the happening of any event as a result of which the prospectus included in such
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing; and (ii) prepare and file a curative amendment or
1934 Act filing deemed incorporated by reference in such Registration Statement
under applicable provisions of this Article 16 as promptly as is reasonably
practicable;
UDC and PPG Confidential Page 47 of 66
16.3.6 notify PPG (and, in the event of an underwritten
offering, the managing underwriters) of: (i) the issuance by the Commission or
any state authority of any stop order or other suspension of the effectiveness
of a Registration Statement, or the initiation of any proceeding for such
purpose, or threat (to the extent known by UDC) at the earliest practicable time
and take all lawful and reasonable action to effect the withdrawal, rescission
or removal of such stop order or other suspension and (ii) the receipt of any
notification with respect to the suspension of the qualification of UDC Common
Stock for sale in any jurisdiction, or the initiation or treat (to the extent
known by UDC) for such purpose;
16.3.7 cooperate with PPG to facilitate the timely preparation
and delivery of certificates for the Securities to be offered pursuant to a
Registration Statement and enable such certificates for the Securities to be in
such denominations or amounts, as the case may be, as PPG reasonably may request
and to be registered in such names as PPG may request, and, within three (3)
business days after a Registration Statement that includes Securities is
declared effective by the Commission, deliver and/or cause legal counsel
selected by UDC to deliver to the transfer agent for the Securities (with copies
to PPG) an appropriate instruction and, to the extent necessary, an opinion of
such counsel;
16.3.8 take all such other lawful actions as are reasonably
necessary to expedite and facilitate the disposition by PPG of the Securities in
accordance with the intended methods therefor provided in the prospectus and as
is otherwise customary for issuers to perform under the circumstances;
16.3.9 in the event of an underwritten offering pursuant to
this Section 16, (i) promptly include or incorporate in a prospectus supplement
or post-effective amendment to a Registration Statement such information as the
managing underwriters reasonably agree should be included therein to the extent
UDC does not reasonably object thereto, (ii) make all required filings of such
prospectus supplement or post-effective amendment as soon as is reasonably
practicable after being notified of the matters to be included or incorporated
in such prospectus supplement or post-effective amendment, and (iii) enter into
an underwriting agreement, in usual and customary form and subject to reasonable
negotiation by its counsel, with the managing underwriters of such offering and
perform its obligations under such underwriting agreement;
16.3.10 cause all Securities registered pursuant to this
Section 16 to be listed timely on each securities exchange or quotation system
on which similar securities issued by UDC are then listed;
16.3.11 if Securities are being sold in an underwritten
offering, enter into such agreements (including an underwriting agreement) and
take all such other actions in connection therewith as are reasonably requested
in order to expedite or facilitate the disposition of the Securities, and in
such connection (i)(A) make such representations and warranties to PPG and to
UDC and PPG Confidential Page 48 of 66
the underwriters, in form, substance and scope as are customarily made by
issuers in such agreements and (B) notify PPG and the underwriters if such
representations and warranties cease to be true and correct in any material
respect prior to the completion of all transactions contemplated by such
agreements; (ii) obtain opinions of counsel to UDC and updates thereof (which
counsel and opinions (in form, substance and scope) shall be reasonably
satisfactory to PPG and the managing underwriters) addressed to such parties and
covering such matters as are customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
PPG or the managing underwriters; and (iii) obtain "comfort" letters and updates
thereof from the independent registered public accounting firm of UDC (and, if
necessary, any other independent certified public accountants of any subsidiary
of UDC or of any business acquired by UDC for which financial statements and
financial data are, or are required to be, included in a Registered Statement),
addressed to PPG and the underwriters, in form, substance and scope which shall
be reasonably satisfactory to PPG and the underwriters and covering matters of
the type customarily covered in "comfort" letters in connection with such
underwritten offerings;
16.3.12 maintain a transfer agent and CUSIP number for the UDC
Common Stock; and
16.3.13 reasonably cooperate with PPG to carry out the intent
of this Section 16.
16.4 Rank. UDC shall not be precluded from granting registration rights
to other persons, provided that no such grant shall interfere with or purport to
delay or subordinate any of PPG's rights under this Agreement.
16.5 Indemnification.
16.5.1 UDC shall indemnify, defend and hold harmless PPG, and
any underwriter (as defined in the 0000 Xxx) for PPG, and each person, if any,
who controls PPG or underwriter within the meaning of the 1933 Act or 1934 Act
("Selling Person") against any losses, claims, damages or liabilities, joint or
several (which shall, for all purposes of this Agreement, include, but not be
limited to, all reasonable costs of defense and investigation and all reasonable
attorneys' fees), to which the Selling Person may become subject, under the 1933
Act, the 1934 Act, any state securities law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in a Registration Statement, or any related preliminary
prospectus, final prospectus or amendment or supplement thereto; or (ii) the
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (iii) any violation
or alleged violation by UDC of the 1933 Act, 1934 Act, or any state securities
law, or any rules or regulations of governmental agencies promulgated
thereunder; provided, however, that UDC will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
UDC and PPG Confidential Page 49 of 66
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement, preliminary prospectus,
final prospectus or amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to UDC by the Selling Person,
specifically for use in the preparation thereof. This Section shall not inure to
the benefit of any Selling Person with respect to any person asserting such
loss, claim, damage or liability who purchased the Securities which are the
subject thereof if, and to the extent such loss or other claim arises from the
fact or alleged fact that, the Selling Person failed to send or give (in
violation of the 1933 Act or the rules and regulations promulgated thereunder) a
copy of the prospectus contained in such Registration Statement to such person
at or prior to time required under the 1933 Act, where the Selling Person was
obligated to do so under the 1933 Act or the rules and regulations promulgated
thereunder. This indemnity agreement will be in addition to any liability which
UDC may otherwise have.
16.5.2 PPG shall cause each Selling Person, severally and not
jointly, to agree in writing to indemnify and hold harmless UDC, and each
officer, director of UDC or person, if any, who controls UDC within the meaning
of the 1933 Act, against any losses, claims, damages or liabilities (which
shall, for all purposes of this Agreement, include, but not be limited to, all
reasonable costs of defense and investigation and all reasonable attorneys'
fees) to which UDC or any such officer, director or controlling person may
become subject under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material fact
contained in a Registration Statement, or any related preliminary prospectus,
final prospectus or amendment or supplement thereto; or (ii) the omission or the
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but in each case only to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in such Registration Statement, preliminary
prospectus, final prospectus or amendment or supplement thereto in reliance
upon, and in conformity with, written information furnished to UDC by such
Selling Person, specifically for use in the preparation thereof. This indemnity
agreement will be in addition to any liability which the Selling Person may
otherwise have. Notwithstanding anything to the contrary herein, the Selling
Person shall not be liable under this Section for any amount in excess of the
net proceeds to such Selling Person as a result of the sale of Securities
pursuant to such Registration Statement.
16.5.3 Promptly after receipt by an indemnified party under
this Section 16.5 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 16.5, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
the indemnifying party from any liability which it may have to any indemnified
party except to the extent of actual prejudice demonstrated by the indemnifying
party. In case any such action is brought against any indemnified party, and
where it notifies the indemnifying party of the commencement thereof, the
UDC and PPG Confidential Page 50 of 66
indemnifying party will be entitled to participate in and, to the extent that it
may wish, jointly with any other indemnifying party similarly notified, assume
the defense thereof. Subject to the provisions herein stated and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section 16.5 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation, unless the indemnifying
party shall not pursue the action to its final conclusion. The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that if the indemnified party is the Selling
Person, the fees and expenses of such counsel shall be at the expense of the
indemnifying party if (i) the employment of such counsel has been specifically
authorized in writing by the indemnifying party, or (ii) the named parties to
any such action (including any impleaded parties) include both the Selling
Person and the indemnifying party and the Selling Person shall have been advised
by such counsel that there may be one or more legal defenses available to the
indemnifying party different from or in conflict with any legal defenses which
may be available to the Selling Person (in which case the indemnifying party
shall not have the right to assume the defense of such action on behalf of the
Selling Person, it being understood, however, that the indemnifying party shall,
in connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable only for the reasonable fees and
expenses of one separate firm of attorneys for the Selling Person, which firm
shall be designated in writing by the Selling Person). No settlement of any
action against an indemnified party shall be made without the prior written
consent of the indemnified party, which consent shall not be unreasonably
withheld. All fees and expenses of the indemnified party (including reasonable
costs of defense and investigation in a manner not inconsistent with this
subsection and all reasonable attorneys' fees and expenses) shall be paid to the
indemnified party, as incurred, within ten (10) business days of written notice
thereof to the indemnifying party (regardless of whether it is ultimately
determined that an indemnified party is not entitled to indemnification
hereunder; provided, that the indemnifying party may require such indemnified
party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such indemnified party is not entitled to
indemnification hereunder).
16.5.4 In order to provide for just and equitable contribution
under the 1933 Act in any case in which (i) the indemnified party makes a claim
for indemnification pursuant to this Section 16.5 but is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the
fact that the express provisions of this Section 16.5 provide for
indemnification in such case; or (ii) contribution under the 1933 Act may be
required on the part of any indemnified party, then UDC and the applicable
UDC and PPG Confidential Page 51 of 66
Selling Person shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (which shall, for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees), in either such case (after
contribution from others) on the basis of relative fault as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by UDC on the one hand or the applicable Selling
Person on the other hand, and the Parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
UDC and the Selling Person agree that it would not be just and equitable if
contribution pursuant to this Section 16.5 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this subsection. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this Section
16.5 shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection, in no case
shall any Selling Person be liable or responsible for any amount in excess of
the net proceeds received by such Selling Person from the offering of
Registrable Securities and UDC shall be liable and responsible for any amount in
excess of such proceeds. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
16.5.5 Notwithstanding any other provision of this Section
16.5, in no event shall (i) PPG be required to undertake liability to any person
under this Section 16.5 for any amounts in excess of the dollar amount of the
net proceeds to be received by PPG from the sale of such person's Securities
(after deducting any fees, discounts and commissions applicable thereto)
pursuant to any Registration Statement under which such Securities are to be
registered under the 1933 Act; and (ii) any underwriter be required to undertake
liability to any person hereunder for any amounts in excess of the aggregate
discount, commission or other compensation payable to such underwriter with
respect to the Securities underwritten by it and distributed pursuant to such
Registration Statement.
16.6 Liquidated Damages. The Parties hereto agree that PPG
will suffer damages if UDC fails to fulfill its obligations under subsection
16.1.1 or subsection 16.1.2 above, and that it would not be feasible to
ascertain the extent of such damages. Accordingly:
16.6.1 if a Registration Statement is not filed within thirty
(30) days after the date on which such Registration Statement is to be filed
pursuant to subsection 16.1.1 above, UDC will be obligated to pay liquidated
damages to PPG in the form of shares of UDC Common Stock in an amount equal to
the quotient of [The confidential material contained herein has been omitted and
has been separately filed with the Commission.] divided by the Average Price for
UDC and PPG Confidential Page 52 of 66
each month or portion thereof during which such Registration Statement has not
been filed after such thirty (30) day period; and
16.6.2 if a Registration Statement has not been declared
effective within one hundred twenty (120) days after the date of its filing,
then UDC will be obligated to pay liquidated damages to PPG in the form of
shares of UDC Common Stock in an amount equal to the quotient of [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.] divided by the Average Price for each month or
portion thereof during which such Registration Statement has not been declared
effective after such one hundred twenty (120) day period.
16.6.3 For purposes of this Section 16.6, the "Average Price"
shall equal, for any month, the average closing price for UDC Common Stock, as
set forth in the NASDAQ National Market listing of The Wall Street Journal, for
the ten (10) trading days prior to the close of the Calendar Quarter immediately
preceding such month.
16.6.4 Notwithstanding anything to the contrary in this
Section16.6, UDC shall not be required to pay liquidated damages to PPG if PPG
failed to comply with its obligations under Section 16.2.
ARTICLE 17 - STOCK OPTIONS
17.1 Option Grants. At the beginning of each Contract Year, upon the
approval of PPG, UDC shall issue to employees of PPG ("PPG Employees") who are
assigned full-time to the Materials Development program, such number of
non-qualified stock options to purchase shares of UDC Common Stock ("Options")
as is, in the good faith estimation of UDC, consistent with the option grants
made by UDC to UDC employees at similar levels and performing similar functions.
PPG Employees who are assigned full-time to the Materials Development program
after the beginning of a Contract Year shall be issued such prorated number of
Options as is determined in accordance with the preceding sentence.
17.2 Option Terms. Options shall vest one-year from the date of grant
and, with respect to any individual PPG Employee, such vesting shall be
contingent upon such employee continuing to be assigned full-time to the
Materials Development program on the vesting date, provided that if the
Materials Development program is terminated all such Options shall become
immediately vested and exercisable for a period of ninety (90) days. In the
event any employee does not continue to be assigned full-time to the Materials
Development program by reason of an involuntary termination without cause, such
employee will receive the benefit of any additional exercise period with respect
to the Options that UDC provides to other similarly situated UDC employees who
are terminated. If at any time during the Contract Year with respect to a grant
of Options was made to a PPG Employee, such PPG Employee ceases to be assigned
UDC and PPG Confidential Page 53 of 66
full-time to the Materials Development program, such nonvested Options shall be
forfeited. If at any time after the Contract Year with respect to a grant of
Options was made to a PPG Employee, such PPG Employee ceases to be assigned full
time to the Materials Development program, such Option (to the extent vested)
shall be exercisable in accordance with the terms set forth in the UDC's Equity
Compensation Plan, provided that the PPG Employee shall have ninety (90) days
following termination of assignment to exercise any vested Options. Any PPG
Employee who is involuntarily reassigned out of the Materials Development
program to PPG's Specialty Synthesis Group ("SSG") will, for the purposes of
this Section 17.2 only, deemed to continue to be assigned to the Materials
Development program. If such involuntarily reassigned PPG Employee ceases to be
a full-time SSG employee at any time following the involuntary reassignment, the
employee will no longer be considered for purposes of this Section 17.2 to be
assigned to the Materials Development program unless such PPG Employee is
actually reassigned to the Materials Development program. If at any time after
the Contract Year with respect to a grant of Options was made to a PPG Employee,
such PPG Employee ceases to be assigned full time to the Materials Development
program or SSG, such Option (to the extent vested) shall be exercisable in
accordance with the terms set forth in the UDC's Equity Compensation Plan,
provided that the PPG Employee shall have ninety (90) days following termination
of assignment to exercise any vested Options.
17.3 Bonus Options. If at any time UDC grants to employees of UDC
"bonus" options (that is, options granted to UDC employees other than at the
beginning of their service to UDC), UDC shall make available to PPG a pool of
"bonus" Options for distribution to PPG employees on the Materials Development
program, as is, in the good faith estimation of UDC, consistent with the
criteria used to issue "bonus" options to employees of UDC. Upon approval by
PPG, the bonus Options shall be issued to PPG employees on the Materials
Development program by UDC in equal or unequal amounts as determined in the
discretion of PPG after consultation with UDC. The terms of such Options shall
be consistent with the options granted to UDC employees.
17.4 Transition Adjustments. UDC will, in its discretion, make fair and
equitable adjustments to the vesting and exercise period provisions of the
Options issued to PPG Employees who have worked to UDC's reasonable satisfaction
on the Materials Development program through the date on which such PPG
Employees are removed from the Materials Development Team through a staffing
level reduction under subsection 2.3.1 above.
ARTICLE 18 - TERM AND TERMINATION
18.1 Effect on Prior Agreements. The Supply Agreement and the
Development Agreement are hereby terminated effective as of the Effective Date;
provided, however, that the provisions of the Supply Agreement and the
Development Agreement pertaining to a reconciliation for actual work performed
or OLED Chemicals provided during the fourth Calendar Quarter of 2005 shall
continue in effect except as expressly modified by the terms of this Agreement.
UDC and PPG Confidential Page 54 of 66
18.2 Term. The initial term of this Agreement (the "Initial Term")
shall be from the Effective Date through December 31, 2008. Thereafter, the term
of this Agreement shall be extended automatically for additional twelve (12)
month periods (each, a "Renewal Term"; and collectively with the Initial Term,
the "Term") unless and until (i) PPG provides UDC with at least [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.] prior written notice, or (ii) UDC provides PPG with
at least [The confidential material contained herein has been omitted and has
been separately filed with the Commission.] prior written notice, that this
Agreement shall expire at the end of the Initial Term or the upcoming Renewal
Term, as applicable.
18.3 Termination for Material Breach. Either Party may terminate this
Agreement if the other Party breaches any material term, condition or provision
of this Agreement and such breach continues uncured for a period of forty-five
(45) days (thirty (30) days for nonpayment of amounts due and owing hereunder)
after the breaching Party's receipt of written notice specifying the nature of
the breach from the terminating Party; provided, however that if such breach is
not reasonably capable of cure within the applicable cure period, the breaching
Party shall have an additional forty-five (45) days to cure such breach so long
as the cure is commenced within the applicable cure period and is diligently
pursued to completion thereafter.
18.4 Termination for Bankruptcy Events. Either Party may terminate this
Agreement in the event of the filing by or against the other Party of a
proceeding under any bankruptcy or similar law, unless such proceeding is
dismissed, within forty-five (45) days from the date of filing; the making by
the other Party of a proceeding for dissolution or liquidation, unless such
proceeding is dismissed within forty-five (45) days from the date of filing; the
appointment of a receiver, trustee or custodian for all or part of the assets of
the other Party, unless such appointment or application is revoked or dismissed
within forty-five (45) days from the date thereof; the attempt by the other
Party to make any adjustment, settlement or extension of its debts with its
creditors generally; or the declared insolvency of the other Party.
18.5 Survival. The rights and obligations of the Parties under Articles
3 (except subsection 3.3.1), 4, 11, 13, 16, 19 and 20, and Sections 2.8, 2.9,
5.3, 9.6, 12.2 (last sentence only), 12.4, 14.1, 14.2, 15.3, 15.4, 18.7 and 21.8
of this Agreement, together with any other provisions that by their nature would
be expected to survive the expiration or termination of this Agreement, shall
survive such expiration or termination.
18.6 Transition Assistance. Should either Party provide a notice of
non-renewal under Section 18.2 above, upon UDC's request and at UDC's expense,
in order to facilitate an orderly transition of the activities being conducted
by PPG hereunder at such time, PPG shall reasonably assist UDC in transitioning
such activities to UDC and/or to one or more third parties designated by UDC.
The Parties shall in good faith agree upon a written plan for such a transition
and implement said plan sufficiently in advance of the date by which this
UDC and PPG Confidential Page 55 of 66
Agreement is then-scheduled to expire so as to reasonably ensure that the
transition will be completed by such date.
18.7 Reconciliation. Within thirty (30) days after expiration or
termination of this Agreement, PPG shall prepare and send to UDC a written
statement reconciling to actual amounts any outstanding amounts that have been
invoiced on an estimated basis under this Agreement. Subject to reasonable
confirmation of such statement by UDC, within thirty (30) days thereafter, any
amounts set forth in the statement that are due and payable in all cash shall be
paid by the party owing such amounts. Reconciliation of amounts payable in UDC
Common Stock shall be as follows: (i) if additional UDC Common Stock is due to
PPG, then UDC shall deliver to PPG such additional UDC Common Stock within
thirty (30) days after the beginning of the next Calendar Quarter; (ii) if
shares of UDC Common Stock previously delivered to PPG exceed the actual amount
due as set forth in the statement, then PPG shall pay UDC within thirty (30)
days thereafter in cash the value of the excess shares at a per share price
equal to the Ten Day Average used to calculate the shares of UDC Common Stock
last delivered to PPG; and (iii) UDC shall file a Registration Statement for all
unregistered UDC Common Stock within thirty (30) days after the earlier of the
next April 1 or October 1.
ARTICLE 19 - NON-SOLICITATION
During the Term and for a period of two (2) years thereafter, neither
Party shall, directly or indirectly, hire, retain or attempt to hire or retain
any person who is known to be employed by the other Party at such time. The
foregoing shall not prohibit UDC from hiring or otherwise retaining any members
of the Materials Development Team in accordance with Section 2.3 above.
ARTICLE 20 - NOTICES
All notices and requests in connection with this Agreement shall be in
writing and shall be transmitted via facsimile, with a copy thereof promptly
mailed, to the address(es) of the recipient as set forth below, or to such other
address(es) as the recipient shall specify in a notice given hereunder. Notices
shall be deemed given on the date of confirmation of facsimile transmission, if
such confirmation occurs on a business day of the recipient, or, if not, on the
next succeeding business day of the recipient.
To PPG: PPG Industries, Inc.
Xxx XXX Xxxxx
Xxxxxxxxxx, XX 00000
Attn.: General Counsel
Fax: 000-000-0000
UDC and PPG Confidential Page 56 of 66
With a copy to: PPG Industries, Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attn: Vice-President, Optical Products
Fax: 000-000-0000
To UDC: Universal Display Corporation
000 Xxxxxxxx Xxxxxxxxx
Xxxxx, XX 00000
Attn.: President and Chief Operating Officer
Fax: 000-000-0000
With a copy to: Xxxxxx, Xxxxx & Bockius LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxxxx Chairman, Esquire
Fax: 000-000-0000
ARTICLE 21 - MISCELLANEOUS
21.1 Force Majeure. If the performance of this Agreement by either
Party should be prevented, delayed, restricted, or interfered with by any
man-made or natural catastrophe, or any other circumstances outside the control
of such Party and not due to its negligence that is recognized under
international commercial practice as constituting a force majeure event, then
the Party so affected shall, upon giving prompt notice of such event to the
other Party, be excused from such performance to the extent of such prevention,
delay, restriction, or interference, provided that the Party so affected shall
use its best efforts to avoid or remove such causes of nonperformance and
promptly resume performance hereunder when such causes have been removed. Upon
such circumstances arising, the Parties shall promptly consult as to what, if
any, modification to the terms of the Agreement shall be required to arrive at
an equitable solution; and, if such nonperformance appears likely to continue
for a period of time in excess of thirty (30) days and the affected Party's
nonperformance appears likely to cause serious hardship to the other Party, such
other Party may terminate this Agreement upon thirty (30) days' prior written
notice to the affected Party.
21.2 Assignment; Binding Effect. Neither Party may assign or transfer
to any person, firm, or corporation, any of its rights or obligations under this
Agreement without the prior written consent of the other Party, except that
either Party may assign this Agreement to an entity which acquires all or
substantially all of its assets or merges with it. Any prohibited assignment of
this Agreement or the obligations hereunder shall be null and void. No permitted
assignment shall relieve PPG or UDC of responsibility for the performance of any
accrued obligations which it has prior to such assignment. Any permitted
assignment shall obligate the assignee or successor in interest of PPG or UDC to
be bound by the terms and obligations of this Agreement. Subject to the
UDC and PPG Confidential Page 57 of 66
foregoing, all of the terms, conditions and provisions of this Agreement shall
be binding upon and shall inure to the benefit of each Party's permitted
successors and assigns.
21.3 Third-Party Beneficiaries. Except as expressly stated herein,
nothing in this Agreement shall confer any rights upon any person other than the
Parties hereto and their respective permitted successors and assigns.
21.4 Non-Use of Names. PPG shall not use the names of Princeton
University or USC in connection with any products, promotion or advertising
without the prior consent of Princeton University or USC, except to the extent
reasonably required by law. Notwithstanding the foregoing sentence, PPG may
state that certain of its rights hereunder are sublicense rights under the
Princeton License Agreement.
21.5 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, irrespective of
its provisions regarding conflicts of laws.
21.6 Entire Agreement. This Agreement, together will its Exhibits,
constitutes the entire agreement between the Parties regarding the subject
matter hereof. Neither Party has made any representation, promises or warranties
not herein expressly stated. This Agreement may not be modified except by a
written instrument signed by both Parties to this Agreement.
21.7 Waivers. No waiver by any Party of any condition, or the breach of
any term, covenant, agreement, representation, or warranty contained in this
Agreement, in any one or more instances, shall be deemed to be a further or
continuing waiver of any such condition or breach of any other term, covenant,
agreement, representation, or warranty contained in this Agreement.
21.8 Dispute Resolution.
21.8.1 Except to the extent of a claim to enforce intellectual
property rights or confidentiality obligations, and as a precondition to
instituting any legal action permitted by the provisions below, any controversy,
claim or dispute between the Parties arising out of or relating to the provision
of this Agreement or the breach, termination or a validity thereof shall, upon
written request of either Party, immediately be referred jointly for resolution
to senior executives of each of the Parties who have authority to settle the
controversy and who are at a higher level of management than the person(s) with
direct responsibility for day-to-day administration of this Agreement. Within
fifteen (15) days after delivery of the written request of a Party, the
receiving Party shall submit to the other a written response. The request notice
and the response shall each include: (i) a statement of the respective Party's
position and a summary of arguments supporting that position; and (ii) the name
and title of any other person who will accompany the senior executive. Within
thirty (30) days after delivery of the disputing Party's request notice, the
senior executives of both Parties shall meet at a mutually acceptable time and
UDC and PPG Confidential Page 58 of 66
place, and thereafter as often as they reasonably deem necessary, to attempt in
good faith to resolve the controversy. The Parties agree to honor all reasonable
requests for information. All negotiations pursuant to this provision are
confidential and shall be treated as compromise and settlement negotiations for
purposes of applicable rules of evidence.
21.8.2 If the controversy has not been resolved by negotiation
within forty-five (45) days of the disputing Party's request notice, or if the
Parties failed to meet within thirty (30) days of such request notice, the
Parties agree to attempt to settle the dispute by mediation under the mediation
procedure rules then in effect of the CPR Institute or any rules mutually agreed
upon by the Parties. Unless otherwise agreed, the Parties shall select a neutral
mediator from the CPR Panels of Distinguished Neutrals. All mediation
proceedings are non-binding.
21.8.3 This mediation must be concluded within any period
mutually agreed upon by the Parties or if there is no such agreement, then
within forty-five (45) days of the selection of the mediator. Unless the Parties
expressly agree otherwise, each Party shall bear its own costs, legal and expert
fees incurred in mediation, and evenly share the costs of the mediator. If after
proceeding in good faith (i) the Parties are unable to agree on a neutral
mediator within thirty (30) days of the failure of the senior executives to meet
or to resolve the dispute in accordance with subsection 21.8.2 above, whichever
is earlier; or (ii) with the assistance of a neutral mediator, the Parties do
not resolve the dispute within the period prescribed in this subsection, the
Parties may proceed in accordance with subsection 21.8.4 below.
21.8.4 After exhausting the procedures set forth above, either
Party may initiate litigation to resolve the dispute. The litigation shall be
commenced only in a state court or federal court located in Philadelphia or
Pittsburgh, Pennsylvania and each Party hereto submits to the jurisdiction of
the court in which such litigation is commenced.
21.8.5 In the event of any dispute involving termination of
this Agreement by a Party, such termination shall be suspended for so long as
the other Party is acting in good faith to resolve the dispute in accordance
with the provisions of this Section 21.8; provided, however, that if the basis
for termination concerns UDC's non-payment of PPG's charges for a particular
service provided by PPG hereunder, PPG may suspend its continued provision of
said service, without impacting the other obligations of either Party hereunder,
until the matter is resolved to the reasonable satisfaction of both Parties.
21.8.6 Nothing in this Section 21.8 shall prohibit either
Party from seeking equitable relief to restrain or prevent a breach of this
Agreement at any time.
21.9 Severability. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Agreement is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability will have the power to reduce the scope, duration
UDC and PPG Confidential Page 59 of 66
or area of the term or provision, to delete specific words or phrases, or to
replace any invalid or unenforceable term or provision with a term or provision
that is valid and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision, and this Agreement will be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
21.10 Independent Contractors. In making and performing this Agreement,
the Parties are acting and shall act as independent contractors. Neither Party
is, nor will be deemed to be, an agent, legal representative, joint venturer,
partner or employee of the other Party for any purpose.
21.11 Press Releases. The Parties shall agree on the language of any
press releases or public disclosures regarding the existence of this Agreement
and/or its terms and conditions prior to the issuance or release thereof.
Language that has been approved by either Party need not be reapproved for
subsequent release by the other Party in the absence of notice to the contrary.
Nothing in this Section shall prevent either Party from complying with any
applicable securities or other laws.
21.12 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be binding as of the date executed by both
Parties, and all of which shall constitute one and the same instrument. Each
such copy shall be deemed an original, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart. This Agreement shall be deemed executed by the Parties when any one
or more counterparts hereof, individually or taken together, bears the
signatures of each of the Parties hereto. This Agreement, once executed by a
Party, may be delivered to the other Party by facsimile transmission of a copy
thereof that bears the signature of the Party so delivering it.
UDC and PPG Confidential Page 60 of 66
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement by their
duly authorized representatives as of the Effective Date.
UNIVERSAL DISPLAY CORPORATION PPG INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxx
----------------------------------- ------------------------------------
NAME: Xxxxxx X. Xxxxxxxx NAME: Xxxxxxx X. Xxxxx
TITLE: President TITLE: Vice President - Optical Products
DATE: July 29, 2005 DATE: July 18, 2005
UDC and PPG Confidential Page 61 of 66
EXHIBIT A-1
PPG'S MATERIAL DEVELOPMENT COSTS
o employee salaries and benefits for members of the Materials
Development Team;
o expenses directly associated with such employees (such as travel
costs and OLED field training);
o analytical costs;
o material and lab supply costs;
o research overhead and depreciation costs; and
o patent expenses incurred by PPG at UDC's request.
UDC and PPG Confidential Page 62 of 66
EXHIBIT A-2
PPG'S OLED MATERIAL CONVERSION COSTS
Basis for Calculating Lab Reactor, Plant Reactor and Sublimator Unit Cost:
o Labor (Benefits, Employee Expenses, Training, Meeting Expenses,
Payroll admin)
o Operating Supplies (solvents used during conversion of intermediates
and products as well as purification, some filtration media, misc.
lab supplies, office supplies, safety equipment)
o Manufacturing Unit Depreciation
o Maintenance
o Facilities Charges (Utilities and other service charges from group,
storeroom, etc.)
o Software purchases and maintenance (DP services, computer center
etc.)
o Professional Services (Safety, Process etc.)
UDC and PPG Confidential Page 63 of 66
EXHIBIT A-3
PPG'S COMMERCIAL OLED MATERIAL COSTS
CATEGORIES
o Raw Materials
o Conversion Cost as listed in Exhibit A-2
o Analytical Charges
o Packaging Cost
o Containers
o Shipping boxes
o Labor
UDC and PPG Confidential Page 64 of 66
EXHIBIT A-4
PPG'S PROCESS DEVELOPMENT COSTS
Basis for Calculating Chemist Hourly Rate Charge:
o Labor (Benefits, Employee Expenses, Training, Meeting Expense,
Payroll admin)
o Facilities charges (Utilities and other service charges for group,
storeroom etc.)
o Monroeville Chemical Center service charge including office & lab
space charges
UDC and PPG Confidential Page 65 of 66
EXHIBIT B
PPG QUALITY ASSURANCE CONTROL PLAN
Customer needs and expectations are determined through the use of the Gatekeeper
process (Staged Gate Process). This process monitors compliance of purchased and
manufactured materials with applicable regulatory environmental, health, and
safety requirements. This process is also a guide to determining the
specifications for purchased and manufactured materials along with writing
standard procedures for safer and consistent manufacture/
handling/storage/shipment of materials. A lot number to provide traceability
identifies critical raw materials, intermediates, and products. Critical raw
materials, critical isolated intermediates, and products are tested to monitor
for compliance with applicable specifications. Changes to written standard
procedures are done through a documented Management of Change (MOC) process. The
MOC process identifies potential impacts on environmental, health, & safety and
product quality along with standard procedures. Customer notification is part of
the MOC process.
UDC and PPG Confidential Page 66 of 66
