SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A-1
AMENDMENT NO. 1 TO QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Pennsylvania 23-2372688
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
375 Phillips Blvd.
Ewing, NJ 08618
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(Address of principal executive offices)
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Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
Title Outstanding as of November 12, 2001 ------------------------------------- ----------------------------------- Common Stock par value $.01 per share 17,047,080 |
This Amendment No. 1 is filed to amend and restate in its entirety Item 6(a) of
Part II and to file certain exhibits.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Articles of Amendment to the Registrant's Articles of Incorporation filed with the Department of State of the Commonwealth of Pennsylvania on July 31, 2000.*
3.2 Articles of Amendment to the Registrant's Articles of Incorporation filed with the Department of State of the Commonwealth of Pennsylvania on September 29, 2000.*
10.1 License Agreement between the Registrant and Motorola, Inc. dated as of September 27, 2000 (Portions of this Exhibit were omitted and filed separately with the Secretary of the Commission pursuant to an application for confidential treatment filed with the Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended) *
10.2 Termination, Amendment and License Agreement by and among the Registrant, PD-LD, Inc., Dr. Vladimir S. Ban, and The Trustees of Princeton University dated as of July 19, 2000 (Portions of this Exhibit were omitted and filed separately with the Secretary of the Commission pursuant to an application for confidential treatment filed with the Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended) *
27 Financial Data Schedule #
* Filed herewith. # Previously filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
UNIVERSAL DISPLAY CORPORATION
November 19, 2001 By: /s/ Sidney D. Rosenblatt
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Sidney D. Rosenblatt
Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary
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ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 91)
In compliance with the requirements of 15 Pa.C.S. ss. 1915 (relating to articles of amendment), the undersigned business corporation, desiring to amend its Articles, hereby states that:
2. The (a) address of this corporation's current registered office in this Commonwealth or (b) name of its commercial registered office provider and the county of venue is (the Department is hereby authorized to correct the following information to conform to the records of the Department):
(a)
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Number and Street City State Zip County
(b) CT Corporation System Philadelphia
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Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office provider, the county in (b) shall be deemed the county in which the corporation is located for venue and official publication purposes.
5. (Check, and if appropriate complete, one of the following):
X The amendment shall be effective upon filing these Articles of --- Amendment in the Department of State.
The amendment shall be effective on: _____________at _____________
--- Date Hour
6. (Check one of the following):
X The amendment was adopted by the shareholders (or members) pursuant to
--- 15 Pa.C.S.ss.1914 (a) and 1914 (b).
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The amendment was adopted by the board of directors pursuant to 15 --- Pa.C.S. ss.1914(c).
7. (Check, and if appropriate complete, one of the following):
X The amendment adopted by the corporation, set forth in full, is as --- follows:
The aggregate number of shares which the corporation shall have authority to issue shall be 55,000,000 shares: (a) 50,000,000 shares of Common Stock, $.01 par value per share ("Common Stock"), (b) 4,800,000 shares of Preferred Stock, $.01 par value per share ("Preferred Stock") (exclusive of the shares of Series A Preferred Stock); and (c) 200,000 shares of Series A Nonconvertible Preferred Stock, $.01 par value per share.
The amendment adopted by the corporation as set forth in full in --- Exhibit A attached hereto and made a part hereof.
8. (Check if the amendment restates the Articles):
The restated Articles of Incorporation supersede the original Articles --- and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these Articles of Amendment to be signed by a duly authorized officer thereof this 21st day of July, 2000.
BY: /s/ Steven V. Abramson
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Name: Steven V. Abramson
Title: President
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UNIVERSAL DISPLAY CORPORATION
CERTIFICATE OF DESIGNATIONS
Series B Convertible Preferred Stock
Pursuant to Section 1522 of the Business Corporation Law of the Commonwealth of Pennsylvania
UNIVERSAL DISPLAY CORPORATION, a corporation organized and existing under the laws of the Commonwealth of Pennsylvania (the "Corporation"), does hereby certify that, pursuant to authority conferred upon the Board of Directors by the Articles of Incorporation of the Corporation, as amended and restated through the date hereof (as amended and restated, the "Articles of Incorporation") and pursuant to the provisions of ss.1727(b) of the Pennsylvania Business Corporation Law, the Board of Directors, at a duly constituted meeting of such Board on September 29, 2000, adopted the following resolution providing for the voting powers (if any), designations, preferences and relative, participating, optional and other rights, and the qualifications, limitations and restrictions of the Series B Convertible Preferred Stock (as hereinafter defined).
WHEREAS, the Articles of Incorporation of the Corporation provide for two classes of shares known as common stock, $0.01 par value per share (the "Common Stock"), and preferred stock, $0.01 par value per share ("Preferred Stock"); and
WHEREAS, the Board of Directors of the Corporation is authorized by the Articles of Incorporation to provide for the issuance of the shares of Preferred Stock in series, and by filing a certificate pursuant to the applicable law of the Commonwealth of Pennsylvania, to establish from time to time the number of shares to be included in such series and to fix the designations, preferences and rights of the shares of each such series and the qualifications, limitations and restrictions thereof.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors deems it advisable to, and hereby does, designate a series of Preferred Stock designated "Series B Convertible Preferred Stock" and fixes and determines the rights, preferences, qualifications, limitations and restrictions relating to the Series B Convertible Preferred Stock as follows:
1. Designation of Series B Convertible Preferred Stock. The shares of such series of Preferred Stock shall be designated as "Series B Convertible Preferred Stock" (the "Series B Preferred Stock") and the number of shares constituting such series shall be 300,000. The par value of the Series B Preferred Stock shall be $0.01 per share and the issuance price of the Series B Preferred Stock shall be $21.48 per share (the "Original Issuance Price"). The Series B Preferred Stock shall have the relative rights, designations, preferences, qualifications, privileges, limitations and restrictions applicable thereto as follows:
2. Rank.
The Series B Preferred Stock shall rank senior to the Common Stock and any other capital stock of the Corporation ranking junior to the Series B Preferred Stock as to dividends and upon liquidation, dissolution or winding up. Nothing herein shall prevent the Corporation from creating any other class of stock ranking pari passu or senior to the Series B Preferred Stock.
3. Dividends.
If the Corporation's Board of Directors declares or the Corporation pays any dividends with respect to the Common Stock (whether payable in cash, securities or other property except for dividends payable solely in shares of Common Stock), the Corporation shall be deemed to have declared with respect to all shares of outstanding Series B Preferred Stock, and the Corporation shall pay to each holder of shares of Series B Preferred, dividends in an amount equal to the product of (i) the amount of dividends so declared or paid with respect to each share of Common Stock and (ii) the number of shares of Common Stock (including fractions thereof) issuable upon conversion of the shares of Series B Preferred held by such holder on the record date for such dividend with respect to the Common Stock.
Nothing contained in the foregoing shall prevent the Corporation from:
(i) effecting a stock split or declaring or paying any dividend consisting of
shares of any class of capital stock paid to the holders of shares of such class
of capital stock; (ii) complying with any specific provision of the terms of any
subsequently designated series of Preferred Stock in accordance with its terms;
(iii) declaring and paying all accrued dividends on the Series B Preferred
Stock; (iv) redeeming or repurchasing any stock of a deceased shareholder out of
proceeds of insurance held by the Corporation on that shareholder's life; or (v)
redeeming or repurchasing any stock of any director, officer, employee,
consultant or other person or entity, pursuant to a stock repurchase agreement
or stock restriction agreement under which the Corporation has the right or
obligation to repurchase such shares in the event of death, termination of
employment or of the consulting arrangement, or other similar discontinuation of
a business relationship.
4. Liquidation, Dissolution or Winding Up.
4.1 Treatment at Liquidation, Dissolution or Winding Up.
4.1.1 In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or in the event of its insolvency, before any distribution or payment is made to any holders of Common Stock or any other class or series of capital stock of the Corporation designated to be junior to the Series B Preferred Stock in liquidation preference, and subject to the liquidation rights and preferences of any class or series of Preferred Stock designated in the future to be senior to, or on a parity with, the Series B Preferred Stock with respect to liquidation preference, the holders of each share of Series B Preferred Stock shall be entitled to be paid first out of the assets of the Corporation available for distribution to holders of the Corporation's capital stock of all classes, whether such assets are capital, surplus or earnings ("Available Assets"), an amount equal to the Original Issuance Price per share of Series B Preferred Stock (subject to equitable adjustment for any stock dividend, stock split, combination, reorganization, recapitalization, reclassification or other similar event involving a change in the capital structure of the Preferred Stock) plus any accrued but unpaid dividends.
If, upon liquidation, dissolution or winding up of the Corporation, the Available Assets shall be insufficient to pay the holders of Series B Preferred Stock, the holders of Series B Preferred Stock shall share ratably in any distribution of Available Assets pro rata in proportion to the respective liquidation preference amounts which would otherwise be payable upon liquidation with respect to the outstanding shares of the Series B Preferred Stock and such other series of Preferred Stock if all liquidation preference dollar amounts with respect to such shares were paid in full. Upon the occurrence of a liquidation, dissolution or winding up of the Corporation, the Series B Preferred Stock shall rank pari passu with any other series of preferred stock hereinafter created which ranks pari passu with the Series B Preferred Stock.
4.2 Treatment of Reorganization, Consolidation, Merger, or Sale of Assets. Any merger, consolidation or other corporate reorganization or combination to which the Corporation is a non-surviving party or in which there is a recapitalization, reorganization, reclassification or other similar change in the capital structure of the Corporation, and any sale of all or substantially all of the assets of the Corporation, shall be regarded as a liquidation, dissolution or winding up of the affairs of the Corporation for purposes of this Section 4 upon the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series B Preferred Stock. The provisions of this Section 4.2 shall not apply to (i) any reorganization, merger or consolidation involving only a change in the state of incorporation of the Corporation, (ii) a merger of the Corporation with or into a wholly-owned Subsidiary of the Corporation that is incorporated in the United States of America, or (iii) a merger, reorganization, consolidation or other combination, of which the Corporation is substantively the surviving corporation and operates as a going concern, with another corporation incorporated in the United States of America and which does not involve a recapitalization, reorganization, reclassification or other similar change in the capital structure of the Corporation.
4.3 Distributions Other than Cash. Whenever the distribution provided for in this Section 4 shall be payable in whole or in part in property other than cash, the value of any property distributed shall be the fair market value of such property as reasonably determined in good faith by the Board of Directors of the Corporation. All distributions of property other than cash made hereunder shall be made, to the maximum extent possible, pro rata with respect to each series and class of Preferred Stock and Common Stock in accordance with the liquidation amounts payable with respect to each such series and class.
5. Voting Power. Except as otherwise expressly provided in this Section
5 or Sections 4.2 or 7, or in any Statement of Designations, Preferences and
Rights hereafter filed with respect to any other series of Preferred Stock, or
as otherwise required by law, (i) each holder of Series B Preferred Stock shall
be entitled to vote on all matters submitted to a vote of the shareholders of
the Corporation and shall be entitled to that number of votes equal to the
largest number of whole shares of Common Stock into which such holder's shares
of Series B Preferred Stock could be converted, pursuant to the provisions of
Section 6 herein, at the record date for the determination of shareholders
entitled to vote on such matters or, if no such record date is established, at
the date such vote is taken or any written consent of shareholders is solicited,
and (ii) the holders of shares of Series B Preferred Stock and Common Stock
shall vote together (or render written consents in lieu of a vote) as a single
class on all matters submitted to the shareholders of the Corporation.
6. Conversion Rights. The holders of the Series B Preferred Stock shall have conversion rights as follows:
6.1 Conversion.
6.1.1 Voluntary Conversion. Each share of Series B Preferred Stock shall be convertible, at the option of the holder thereof, at the times specified in this Section 6.1.1, at the office of the Corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Original Issuance Price by the Conversion Price applicable to such share, determined as hereinafter provided, in effect on the date the certificate is surrendered for conversion. The Conversion Price shall initially be the Original Issuance Price per share of Common Stock. Such initial Conversion Price shall be adjusted as hereinafter provided in Section 6. On and after each of September 29, 2001, September 29, 2002, September 29, 2003 and September 29, 2004 (each a "Conversion Date"), 75,000 shares of Series B Preferred Stock shall become convertible into Common Stock on a cumulative basis, such that a total of 75,000 shares of Series B Preferred Stock shall first become convertible on and after the first Conversion Date, a total 150,000 shares of Series B Preferred Stock (less any previously converted shares) shall be convertible on and after the second Conversion Date, a total of 225,000 shares of Series B Preferred Stock (less any previously converted shares) shall be convertible on and after the third Conversion Date, and all 300,000 shares of Series B Preferred Stock (less any previously converted shares) shall be convertible on and after the fourth Conversion Date.
6.1.2 Conversion Price Adjustment On Conversion Dates. In the event that at the applicable Conversion Date, the average closing price per share of the Common Stock for the thirty (30) trading days ending two business days prior to such Conversion Date (the "Average Price") is less than $12.00 (subject to equitable adjustment for any stock dividend, stock split, combination, reorganization, recapitalization, reclassification or other similar event involving a change in the capital structure of the Common Stock), then the Conversion Price with respect to the 75,000 shares of Series B Preferred Stock first becoming convertible on that Conversion Date shall be reduced as of that Conversion Date to a price (calculated to the nearest cent) determined by multiplying the Conversion Price in effect immediately before the Conversion Date, but without regard to any prior adjustments under this Section 6.1.2, by a fraction, the numerator of which is the Average Price and the denominator of which is $12.00. In the event that, at any time the Common Stock shall cease to be listed or eligible for trading on at least one of the Nasdaq Small Cap Market, Nasdaq National Market, a national securities exchange, or a successor trading market in the United States of America having listing standards similar to any of the foregoing, then, in lieu of the Average Price, the corporation shall use the fair market value per share established by a valuation set by appraisal from an investment banking firm appointed by the holders of more than 50% of the outstanding Series B Preferred Stock and the Corporation. The Corporation shall have the option, in lieu of effecting an adjustment in the Conversion Price pursuant to this Section 6.1.2, to pay the holders of Series B Preferred Stock, within ten (10) days after each Conversion Date for which an adjustment would otherwise apply under this Section 6.1.2, an amount of cash equal to (i) the difference between $12.00 (subject to equitable adjustment for any stock dividend, stock split, combination, reorganization, recapitalization, reclassification or other similar event involving a change in the capital structure of the Common Stock) and the Average Price, multiplied by (ii) the number of shares of Common Stock into which the shares of Series B Preferred Stock would then become convertible if the adjustment provided by this Section 6.1.2 were effected minus the number of shares of Common Stock into which the shares of Series B Preferred Stock would then become convertible without regard to this Section 6.1.2. If the Corporation makes the cash payment as provided above with respect to a given Conversion Date, the shares of Series B Preferred Stock which first become convertible on such Conversion Date shall remain convertible in accordance with the other provisions of this Section 6 without regard to the adjustment provided in this Section 6.1.2.
6.1.3 Mandatory Conversion. All outstanding shares of Series B Preferred Stock shall be converted automatically into the number of fully paid, non-assessable shares of Common Stock into which such shares of Series B Preferred Stock are then convertible pursuant to this Section 6 on the date which is five (5) business days after the fourth Conversion Date, without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent.
6.1.4 Optional Conversion in the Event of Reorganization,
Consolidation, Merger, or Sale of Assets. Notwithstanding the provisions of
Section 6.1.1 hereof, any shares of the Series B Preferred Stock may, at the
option of the holder thereof, be converted immediately prior to the
effectiveness of any of the following events into fully-paid and non-assessable
shares of Common Stock as calculated pursuant to this Section 6: any merger,
consolidation or other corporate reorganization or combination to which the
Corporation is a non-surviving party or in which there is a recapitalization,
reorganization, reclassification or other similar change in the capital
structure of the Corporation, or any sale of all or substantially all of the
assets of the Corporation to which Section 4.2 hereof applies. The Corporation
shall mail or cause to be mailed to each holder of Series B Preferred Stock a
notice specifying the date on which any such merger, consolidation or other
corporate reorganization or combination to which the Corporation is a
non-surviving party or in which there is a recapitalization, reorganization,
reclassification or other similar change in the capital structure of the
Corporation, or sale of all or substantially all of the assets of the
Corporation is expected to become effective (such notice shall be mailed by
first class mail, postage prepaid, at least fifteen (15) days prior to the date
specified in such notice on which action is being taken). In the event that at
the date of effectiveness of any such transaction, the price per share of the
Common Stock paid or exchanged in such transaction (the "Acquisition Price") is
less than $12.00 (subject to equitable adjustment for any stock dividend, stock
split, combination, reorganization, recapitalization, reclassification or other
similar event involving a change in the capital structure of the Common Stock),
then the Conversion Price with respect to the shares of Series B Preferred Stock
becoming convertible under this Section 6.1.4 shall be reduced for purposes of
such transaction to a price (calculated to the nearest cent) determined by
multiplying the Conversion Price in effect immediately before such date of
effectiveness by a fraction, the numerator of which is the Acquisition Price and
the denominator of which is $12.00. The Corporation shall have the option, in
lieu of effecting an adjustment in the Conversion Price pursuant to this Section
6.1.4, to pay the holders of Series B Preferred Stock, no later than the closing
of the transaction to which this Section 6.1.4 is otherwise applicable, an
amount of cash equal to (i) the difference between $12.00 (subject to equitable
adjustment for any stock dividend, stock split, combination, reorganization,
recapitalization, reclassification or other similar event involving a change in
the capital structure of the Common Stock) and the Acquisition Price, multiplied
by (ii) the number of shares of Common Stock into which the shares of Series B
Preferred Stock would then become convertible if the adjustment provided by this
Section 6.1.4 were effected minus the number of shares of Common Stock into
which the shares of Series B Preferred Stock would then become convertible
without regard to this Section 6.1.4. If the Corporation makes the cash payment
as provided above, the shares of Series B Preferred Stock which become
convertible under this Section 6.1.4 shall remain convertible in accordance with
the other provisions of this Section 6 without regard to the Conversion Price
reduction provided in this Section 6.1.4.
6.2 Surrender of Certificates Upon Conversion. Before any holder of Series B Preferred Stock shall be entitled to convert the same into shares of Common Stock, the holder shall surrender the certificates representing such shares at the office of the Corporation or its transfer agent for the Common Stock. Thereupon, there shall be issued and delivered to such holder a certificate or certificates for the number of shares of Common Stock into which the shares of Series B Preferred Stock so surrendered were convertible on the date on which the conversion occurred. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of surrender of the shares of Series B Preferred Stock to be converted, and the person(s) entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. The Corporation shall not be obligated to issue such certificates unless certificates evidencing such shares of Series B Preferred Stock being converted are either delivered to the Corporation or any such transfer agent, or the holder notifies the Corporation that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection therewith.
6.3 Adjustment Upon Extraordinary Common Stock Event. Upon the happening of an Extraordinary Common Stock Event (as hereinafter defined), then the Conversion Price for the Series B Preferred Stock in effect immediately prior to such event shall, as appropriate and concurrently with the effectiveness of such event, be decreased in the cases of clauses (i) or (ii) of the next sentence proportionate to the increase in the number of outstanding shares of Common Stock, and increased in the case of clause (iii) of the next sentence proportionate to the decrease in the number of outstanding shares of Common Stock. An "Extraordinary Common Stock Event" shall mean (i) the issuance of additional shares of Common Stock as a dividend or other distribution on outstanding shares of Common Stock, (ii) a subdivision of outstanding shares of Common Stock into a greater number of shares of Common Stock, or (iii) a combination or reverse stock split of outstanding shares of Common Stock into a smaller number of shares of the Common Stock.
6.4 Adjustment Upon Capital Reorganization or Reclassification. If the
Common Stock shall be changed into the same or different number of shares of any
other class or classes of capital stock, whether by capital reorganization,
recapitalization, reclassification or otherwise (other than an Extraordinary
Common Stock Event), then and in each such event the holder of each share of
Series B Preferred Stock shall have the right thereafter to convert such share
into, in lieu of the number of shares of Common Stock which the holder would
otherwise have been entitled to receive, the kind and amount of shares of
capital stock and other securities and property receivable upon such
reorganization, recapitalization, reclassification or other change by the
holders of the number of shares of Common Stock into which such shares of Series
B Preferred Stock could have been converted immediately prior to such
reorganization, recapitalization, reclassification or change, all subject to
further adjustment as provided herein. The provision for such conversion right
shall be a condition precedent to the consummation by the Corporation of any
such transaction unless the election described below is made. In the case of a
transaction to which both this Section 6.4 and Section 4.2 herein apply, the
holders of at least two-thirds of the outstanding shares of Series B Preferred
Stock shall have the option of electing treatment for the Series B Preferred
Stock under either this Section 6.4 or Section 4.2 herein, notice of which
election shall be submitted in writing to the Corporation at its principal
office no later than fifteen (15) business days after the Corporation gives
written notice to such holders setting forth a description of the transaction,
the election that may be made under this Section 6.4, and the estimated closing
date of the transaction. If no such election shall be made, the provisions of
Section 4.2 herein, and not this Section 6.4, shall apply.
6.5 Certificate as to Adjustments; Notice by Corporation. In each case of an adjustment or readjustment of the number of shares of Common Stock into which the shares of Series B Preferred Stock are convertible, the Corporation at its expense will furnish each holder of Series B Preferred Stock so affected with a certificate prepared by the Treasurer or Chief Financial Officer of the Corporation, showing such adjustment or readjustment, and stating in detail the facts upon which such adjustment or readjustment is based.
6.7 Cash in Lieu of Fractional Shares. No fractional shares of Common Stock or scrip representing fractional shares shall be issued upon the conversion of shares of Series B Preferred Stock. Instead of any fractional shares of Common Stock which would otherwise be issuable upon conversion of Series B Preferred Stock, the Corporation shall pay to the holder of the shares of Series B Preferred Stock which were converted a cash adjustment in respect of such fractional shares in an amount equal to the same fraction of the market price per share of the Common Stock (as determined in a reasonable manner prescribed by the Board of Directors) at the close of business on the Conversion Date. The determination as to whether or not any fractional shares are issuable shall be based upon the aggregate number of shares of Series B Preferred Stock being converted at any one time by any holder thereof, not upon each share of Series B Preferred Stock being converted.
6.8 Reservation of Common Stock. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series B Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series B Preferred Stock (including any shares of Series B Preferred Stock represented by any warrants, options, subscription or purchase rights for Series B Preferred Stock), and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series B Preferred Stock (including any shares of Series B Preferred Stock represented by any warrants, options, subscriptions or purchase rights for such Series B Preferred Stock), the Corporation shall take such action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.
7. Restrictions and Limitations on Corporate Action. The Corporation will not take any corporate action without the approval by the holders of at least two-thirds of the then outstanding shares of Series B Preferred Stock, if such amendment or corporate action would alter or change the rights, preferences or privileges of the Series B Preferred Stock.
8. No Dilution or Impairment. The Corporation will not, by amendment of
its Articles of Incorporation or through any reorganization, transfer of capital
stock or assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of the Series B Preferred Stock set forth
herein, but will at all times in good faith assist in the carrying out of all
such terms. Without limiting the generality of the foregoing, the Corporation
(a) will not increase the par value of any shares of stock receivable on the
conversion of the Series B Preferred Stock above the amount payable therefor on
such conversion, and (b) will take such action as may be necessary or
appropriate in order that the Corporation may validly and legally issue fully
paid and nonassessable shares of stock on the conversion of all Series B
Preferred Stock from time to time outstanding.
9. Notices of Record Date. In the event of
(a) any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividends or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of capital stock of any class or any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Corporation, any reclassification or recapitalization of the capital stock of the Corporation, any merger or consolidation of the Corporation, or any transfer of all or substantially all of the assets of the Corporation to any other corporation, or any other entity or person, or
(c) any voluntary or involuntary dissolution, liquidation or winding up of the Corporation,
then and in each such event the Corporation shall mail or cause to be mailed to
each holder of Series B Preferred Stock a notice specifying (i) the date on
which any such record is to be taken for the purpose of such dividend,
distribution or right and a description of such dividend, distribution or right,
(ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding up is expected to become effective, and (iii) the time, if any, that is
to be fixed, as to when the holders of record of Common Stock (or other
securities) shall be entitled to exchange their shares of Common Stock (or other
securities) for securities or other property deliverable upon such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding up. Such notice shall be mailed by
first class mail, postage prepaid, at least fifteen (15) days prior to the date
specified in such notice on which action is being taken..
10. Status of Converted Series B Preferred Stock. Any share or shares of Series B Preferred Stock acquired by the Corporation by reason of conversion or otherwise shall be returned to the status of authorized but unissued shares of undesignated Preferred Stock. Upon the cancellation of all outstanding shares of Series B Preferred Stock, the provisions of this Certificate of Designation of Series B Preferred Stock shall terminate and have no further force and effect.
CONFIDENTIAL
LICENSE AGREEMENT
THIS AGREEMENT is made effective this ___ day of September, 2000, by and between MOTOROLA, INC., a corporation organized and existing under the laws of Delaware, having a place of business at 1303 E. Algonquin Road, Schaumburg, Illinois 60196, United States of America (hereinafter referred to as "MOTOROLA") and UNIVERSAL DISPLAY CORPORATION, a Pennsylvania corporation, having a place of business at 375 Phillips Boulevard, Ewing, New Jersey 08618, (hereinafter referred to as "UDC"), who agree as follows:
Section 1.0 Recitals
1.1 MOTOROLA has the right to grant licenses under certain patents and know-how relating to organic electroeluminescence display technology.
1.2 MOTOROLA is prepared to grant licenses under such patents and know-how on reasonable terms and conditions to financially sound and commercially responsible applicants.
1.3 UDC intends to manufacture products which utilize such patents or know-how and/or to license others to do so.
1.4 UDC is desirous of acquiring and MOTOROLA is willing to grant, subject to certain terms and conditions, a license to make, use or sell products utilizing the claims of such patents or such know-how.
Section 2.0 Definitions In addition to other defined terms herein, the following definitions shall apply to this Agreement:
"Affiliate" shall mean any corporation, company or other entity more than fifty percent (50%) of which is owned by or controlled by or under common control with either party hereto, but such corporation, company or other entity shall be deemed to be an Affiliate only as long as such affiliation exists.
"Certificate of Designations" shall mean the Certificate of Designations in the form attached as Exhibit A to the Securities Purchase Agreement which amends the Certificate of Incorporation of UDC to set forth the rights, preferences and privileges, and other applicable terms, of the Preferred Shares.
"Common Shares" shall mean two hundred thousand (200,000) shares of UDC's Common Stock, together with such additional shares of Common Stock as may be issued pursuant to Section 4.5 of this Agreement.
"Effective Date" shall mean the date of this Agreement, which shall be the Closing Date as defined in the Securities Purchase Agreement.
"Field of Use" shall mean the use, production, sale and/or distribution of any organic light emitting device or component (or their associated compositions, structures, encapsulation and/or drive electronics and schemes) and/or products incorporating these devices or components.
CONFIDENTIAL
"Know-how" shall mean all confidential and proprietary information including trade secrets, skills, experience, knowledge, techniques, processes, procedures, designs, technical data and information such as software codes, recorded or unrecorded, which (i) are owned, or controlled with the royalty-free right to sublicense, by MOTOROLA as of the date of this Agreement, and (ii) relate primarily to organic light emitting devices or components, or their associated compositions, structures, encapsulation and/or drive electronics and schemes; including, but not limited to, the designs, drawings, reports, notebooks, memoranda, blueprints, specifications and the like, prepared by or for MOTOROLA, which relate to the foregoing. Nothing in the foregoing definition shall obligate MOTOROLA (i) to disclose to UDC any MOTOROLA trade secrets or other proprietary or confidential information concerning products in which organic light emitting devices or components may be utilized or concerning inventions or other matters outside the express scope of the preceding sentence, or (ii) to license any Know-how to UDC that would require MOTOROLA to pay royalties to any non-Affiliate of MOTOROLA.
"Licensed Patents" shall mean those patents and patent applications specified in Exhibit A to this Agreement, any patents issued with respect to said patent applications, and any reissues, renewals, restorations, substitutions, registrations, divisionals, re-examinations, continuations and continuation-in-part applications or claims in continuation-in-part applications where the claimed invention arises from the subject matter specifically described in the specification of the aforesaid patents and patent applications, together with all foreign counterparts thereof.
"Licensed Products" shall mean any organic light emitting device which employs a patent claim of the Licensed Patents or which, but for the license rights granted to UDC hereunder, would constitute a misappropriation of the Know-how.
"Preferred Shares" shall mean three hundred thousand (300,000) shares of UDC's Series B Convertible Preferred Stock which have the rights, preferences, privileges and other terms set forth, in the Certificate of Designations.
"Related Agreements" shall mean this Agreement, the Securities Purchase Agreement and the exhibits to the Securities Purchase Agreement.
"Securities Purchase Agreement" shall mean the form of Securities Purchase Agreement attached as Exhibit C to this Agreement.
"Sublicensees" shall mean third parties to which UDC or Affiliates of UDC have granted, licensed or sublicensed any exclusive, nonexclusive or other rights to sell, or utilize any patents or know-how relating to, any organic light emitting devices or components and/or products incorporating these devices or components.
CONFIDENTIAL
"Total Revenues" shall mean total gross revenues accrued by UDC and/or
its Affiliates [The confidential material contained herein has been omitted and
has been separately filed with the Commission.], plus total gross revenues
accrued by UDC and/or its Affiliates from [The confidential material contained
herein has been omitted and has been separately filed with the Commission.].
Total gross revenues shall not be reduced for this purpose [The confidential
material contained herein has been omitted and has been separately filed with
the Commission.]. Notwithstanding the foregoing general definition, Total
Revenues accrued by UDC and/or its Affiliates from Sublicensees shall exclude
[The confidential material contained herein has been omitted and has been
separately filed with the Commission.].
"Warrant" shall mean the Stock Purchase Warrant attached as Exhibit B to the Securities Purchase Agreement, pursuant to which MOTOROLA or its assigns shall have the right from time to time, in whole or in part, for a warrant term of seven (7) years to purchase up to one hundred and fifty thousand (150,000) shares of UDC's Common Stock, which Warrant (i) shall not be exercisable prior to the first anniversary date of the Closing Date, and (ii) has an exercise price equal to one hundred and five percent (105%) of the average closing price per share of UDC's Common Stock for the ten (10) trading days ending three (3) trading days before the earlier of the Effective Date or the trading day before any public announcement or news of the transactions contemplated by this Agreement.
Section 3.0 License Grant
3.1 Subject to the terms and conditions of this Agreement, MOTOROLA grants to UDC a worldwide license under the Licensed Patents and Know-how, to make, have made, develop, use, sell, have sold, offer for sale, lease, rent, transfer, import or otherwise dispose of the Licensed Products in or outside the Field of Use. The license granted in this Section 3.1 is nontransferable and nonassignable except as expressly permitted in this Agreement. Except for the rights specifically reserved for the benefit of Motorola in Section 3.2 and except for the previously granted non-exclusive license to [The confidential material contained herein has been omitted and has been separately filed with the Commission.], MOTOROLA shall not license to any other persons or entities any rights under the Licensed Patents in the Field of Use. Except as set forth in Section 3.2, MOTOROLA shall not exercise rights under the Licensed Patents and shall not utilize Know-how in the Field of Use.
(a) MOTOROLA will sign and deliver to UDC promptly upon request of UDC the USPTO Form 1619 attached to this Agreement as Exhibit B to enable UDC to file the same with the U.S. Patent and Trademark Office and foreign counterparts thereof for the purpose of accurately indicating UDC's interest under this Agreement. Unless the parties otherwise agree in writing, the redacted version of this Agreement attached hereto as Exhibit E shall be attached to Form 1619.
(b) MOTOROLA shall, as soon as is reasonably practicable but in any event within sixty (60) days after the Effective Date, make available to UDC the Know-how. During the first twelve months after the Effective Date, UDC may request, and MOTOROLA shall perform, additional independent contractor consulting services for UDC for the purpose of assisting UDC in utilizing the Know-how, for which UDC shall compensate MOTOROLA at the rate of [The confidential material contained herein has been omitted and has been separately filed with the Commission.], provided that UDC first enters into a written independent contractor agreement reasonably satisfactory to MOTOROLA for those services, the terms of which shall not be inconsistent with the provisions of this Agreement. Notwithstanding the scope of the license and definition of Know-how, MOTOROLA shall not be obligated to transfer, teach or otherwise physically deliver Know-how except as provided in this Section 3.1(b).
CONFIDENTIAL
(c) UDC and its Affiliates (in their capacity as sublicensees of UDC) shall have the right to sublicense, in part or in whole, UDC's license rights hereunder to the Licensed Patents and Know-how, provided that UDC and its Affiliates (in their capacity as sublicensees of UDC) shall give written notice to MOTOROLA describing in reasonable detail the names and addresses of each sublicensee and a full, unredacted copy of the sublicense agreement and all subsequent amendments and modifications thereof, before or within a reasonable period of time after UDC or any Affiliate of UDC (in its capacity as a sublicensee of UDC) enters into such agreements. Notwithstanding the foregoing, each sublicense granted by UDC or any Affiliate of UDC shall (i) expressly provide that such sublicense is nontransferable and nonassignable (except to an Affiliate of the sublicensee or in connection with a merger or acquisition of the sublicensee or a sale of all or substantially all of the sublicensee's assets to which the sublicense relates), and (ii) except with respect to sublicenses granted by UDC to its Affiliates, prohibit the initial sublicensee from granting any further licenses or sublicenses thereunder to any non-Affiliate of the initial sublicensee (except as necessary to exercise its "have made", "have sold" and other similar rights under the Licensed Patents and Know-how), and (iii) expressly provide that such sublicensee's rights under the sublicense are subject to MOTOROLA's reserved rights under Section 3.2 of this Agreement.
3.2 Notwithstanding Section 3.1, MOTOROLA reserves for MOTOROLA itself, and shall have, the right under the Licensed Patents and Know-how to make, develop, use, sell, offer for sale, have sold, lease, rent, transfer, import or otherwise dispose of any products throughout the world in or outside the Field of Use, and without payment of any royalty or other sum to UDC or any duty to account therefor.
(a) For clarification, these reserved rights shall not include the right to sublicense to other persons or entities any of the rights reserved unto MOTOROLA in the Field of Use, or the right to exercise any "have made" rights in the Field of Use by authorizing third parties to make products utilizing the Licensed Patents or Know-how for MOTOROLA. However, these reserved rights shall include the right to exercise "have sold" rights in the Field of Use by authorizing third parties on MOTOROLA's behalf to sell or otherwise distribute products manufactured by MOTOROLA.
(b) UDC agrees for itself and its successors and assignees that at all times the license granted to UDC under Section 3.1 remains in effect, UDC or its successors and assignees shall make licenses to produce Licensed Products under the Licensed Patents and Know-how available to existing and future third party suppliers or manufacturers of MOTOROLA products which may be designated by MOTOROLA in written notices to UDC from time to time. These licenses to MOTOROLA suppliers or manufacturers shall, with respect to Licensed Products sold to MOTOROLA, offer both (1) the most favorable terms taken as a whole then or previously granted by UDC to other sublicensees (other than Affiliates of UDC) under the Licensed Patents or Know-how, and (2) reasonable terms and conditions that are demonstrably free of any unfair discrimination. If MOTOROLA suppliers or manufacturers accept such licenses, and thereafter more favorable terms are granted by UDC to subsequent licensees, the MOTOROLA suppliers and manufacturers shall be given the right, retroactively to the date(s) that the more favorable terms were granted to others, to elect the more favorable terms with respect to Licensed Products sold to MOTOROLA, with reasonable adjustments and credits under the circumstances. This Section 3.2(b) is for the benefit of MOTOROLA and shall not be separately enforceable against UDC by MOTOROLA's suppliers or manufacturers. UDC shall comply with this Section 3.2(b) in a reasonably prompt manner assuming reasonably prompt notice and/or responses from MOTOROLA and/or MOTOROLA's suppliers or manufacturers, and shall, if requested by MOTOROLA, provide information or certification in writing to MOTOROLA reasonably appropriate to indicate compliance with this Section 3.2(b). UDC and its successors and assignees promise not to sue any MOTOROLA supplier or manufacturer for injunctive relief or other remedies or damages to the extent of and based upon acts or omissions of such supplier or manufacturer that would be within the scope of the licenses which UDC or UDC's successors or assignees is required to make available to such persons under this Section 3.2(b), provided that this sentence is not intended to (a) relieve such persons of their obligations under written license agreements executed by them with UDC or its successors or assignees, or (b) delay or impair any rights or remedies UDC or its successors or assignees may otherwise have against any such supplier or manufacturer who refuses to negotiate in good faith and agree upon license terms which comply with this Section 3.2(b).
CONFIDENTIAL
(c) MOTOROLA shall have the right to grant licenses under the Licensed Patents and Know-how to any third party (including, without limitation, MOTOROLA Affiliates) for any purpose or use outside the Field of Use. If this Agreement is terminated by MOTOROLA pursuant to Section 13, MOTOROLA shall, in addition to other rights and remedies as may be available, thereafter have the right under this Agreement to grant licenses under the Licensed Patents and Know-how to any third party (including, without limitation MOTOROLA Affiliates) for any purpose or use in or outside the Field of Use.
3.3 Nothing in this Agreement shall be construed as granting to UDC any right under any patents, patent applications, or Know-how owned or licensed by MOTOROLA or its Affiliates, except as specifically set forth herein. Without limiting the foregoing, if MOTOROLA should after the Effective Date develop or acquire inventions, know-how, patents or patent applications which relate to organic light emitting devices or components, MOTOROLA is not obligated to license or otherwise make available to UDC any rights or disclosures concerning such future intellectual property. Except as expressly required under Section 8.0 below, in no event shall UDC be entitled to any license or other rights whatsoever under trademarks, service marks, or trademark or service mark applications of MOTOROLA. MOTOROLA shall not be obligated to co-brand, purchase or otherwise promote any Licensed Products that may be produced by or for UDC. Nothing in this Agreement shall preclude either party from developing, marketing or otherwise commercializing alone, or in efforts with other parties, any inventions or products which are similar to or competitive with the Licensed Products that may be developed or marketed by UDC, subject only to such party's compliance with its obligations under Sections 3.1 and 3.2 above and the other express provisions of this Agreement.
3.4 UDC and MOTOROLA believe it would be beneficial for both parties to consider collaboration on product development activities. Until the earlier of the fourth (4th) anniversary of the Effective Date of this Agreement or the termination of this Agreement in accordance with Section 13, MOTOROLA's Strategic Intellectual Asset Management Group or any successor to that group shall use commercially reasonable efforts to facilitate good faith discussions between UDC and the relevant business groups within MOTOROLA concerning the potential use of UDC organic light emitting devices or components in MOTOROLA products, consistent with the following principles:
CONFIDENTIAL
(a) MOTOROLA through its Strategic Intellectual Asset Management Group will use these efforts to introduce appropriate UDC personnel to the appropriate personnel within the relevant MOTOROLA business groups in response to reasonable requests for such meetings initiated by UDC. The parties will reasonably cooperate in scheduling at least one meeting in each calendar quarter commencing in the fourth quarter of 2000 through September 30, 2001.
(b) The parties anticipate that the discussions could involve future design goals for MOTOROLA products that may utilize UDC organic light emitting devices or components, including such matters as cost, design, human factors, power requirements, other relevant performance requirements, information concerning preferred manufacturers/suppliers, and trade-off considerations that would facilitate the development of prototypes for MOTOROLA by UDC. Such information as may be disclosed by MOTOROLA under this Section 3.4 shall be treated as confidential information under Sections 5.1 and 5.2 of this Agreement.
(c) These discussions could lead to reviewing and testing of UDC prototype designs by MOTOROLA, and joint development efforts for specific product applications.
(d) MOTOROLA is under no obligation to (i) utilize any UDC organic light emitting devices or components in any MOTOROLA product; (ii) conduct joint activities described above in this Section 3.4, (iii) disclose any information to, or otherwise deal with, any sublicensees or other third parties in connection with these discussions under Section 3.4 unless MOTOROLA, in its sole discretion, elects to discuss these matters with third parties identified by UDC; (iv) disclose any information or otherwise become engaged in any matter hereunder that would violate any existing or future confidentiality or other agreement between MOTOROLA and a third party; or (v) commit any specific number of person hours or dollars hereunder or initiate product development activities or meetings. Beyond the efforts to cooperate in arranging quarterly meetings as and for the period specifically stated above, MOTOROLA cannot assure UDC that relevant MOTOROLA business groups will in fact meet with or disclose information to UDC.
(e) MOTOROLA's obligations under this Section 3.4 shall end automatically upon UDC entering into or completing any agreement by which UDC is acquired by way of merger, stock purchase, sale of assets or other form of business acquisition in which there is a change in control of UDC.
(f) UDC's sole remedy for any breach by MOTOROLA of this
Section 3.4 shall be to offset UDC's actual and direct damages arising from the
breach against UDC's obligation to pay up to [The confidential material
contained herein has been omitted and has been separately filed with the
Commission.] in prospective royalties and minimum royalties under Sections 4.2
and 4.3 below. UDC waives any and all claims, losses and liabilities, known or
unknown and however arising, for any breach by MOTOROLA of this Section 3.4 in
excess of the amount stated in the immediately preceding sentence.
CONFIDENTIAL
Section 4.0 Royalties and Other Payments
4.1 As initial consideration for the license granted by MOTOROLA to UDC under Section 3.0, UDC shall, in accordance with and subject to the terms and conditions of this Agreement and the Securities Purchase Agreement, issue and deliver to MOTOROLA the Common Shares, the Preferred Shares, and the Warrant and perform timely UDC's other obligations under the Securities Purchase Agreement, Warrant and Certificate of Designations. The issuance and delivery of these securities and rights to MOTOROLA, and the additional shares, if any, issued under any of the provisions of Section 4.0, shall not be refundable or terminable for any reason, and shall not be credited toward the additional royalties payable under this Section 4.0. UDC shall not setoff against, or delay performance of its obligations in respect of, these securities based upon any claim by UDC that MOTOROLA shall have breached its obligations under the Related Agreements or otherwise. In addition, the parties acknowledge and agree that (1) the Warrant is part of the consideration for such license and, since MOTOROLA is not providing and has not provided any services to UDC, the Warrant is not being issued to MOTOROLA as compensation in connection with any services rendered or to be rendered, and (2) any shares which may be issued upon the exercise of the Warrants do not constitute additional consideration for the license. The parties agree to treat the issuance of the Warrant and any subsequent issuance of shares pursuant to an exercise of some or all of the Warrants for all applicable income tax purposes in a manner consistent with the immediately preceding sentence.
4.2 As additional consideration for the license granted by MOTOROLA to
UDC under Section 3.0, UDC shall pay MOTOROLA a royalty of [The confidential
material contained herein has been omitted and has been separately filed with
the Commission.] during each calendar year or partial calendar year during the
term of this Agreement. The parties acknowledge that this royalty is based on
[The confidential material contained herein has been omitted and has been
separately filed with the Commission.] for purposes of accounting convenience to
both UDC and MOTOROLA, and that both parties have voluntarily accepted this
measurement of royalty as fair and reasonable.
(a) UDC shall make such royalty payments to MOTOROLA within
[The confidential material contained herein has been omitted and has been
separately filed with the Commission.] days after the end of each calendar year
or partial calendar year. Such royalty payments may be made, in UDC's
discretion, in [The confidential material contained herein has been omitted and
has been separately filed with the Commission.] shares of UDC's Common Stock.
CONFIDENTIAL
(b) Notwithstanding the foregoing, UDC shall not have the
right to pay any royalty in shares of Common Stock unless (i) UDC shall first
have registered pursuant to the Securities Purchase Agreement (at the expense of
UDC) such stock for resale by MOTOROLA under any available form or procedure
under the Securities Act of 1933, as amended (the "1933 Act"), and applicable
state laws, such that such shares are immediately resalable by MOTOROLA without
any holding period, volume limitation or other restriction under federal or
state securities law (other than any applicable prospectus delivery requirements
pertaining to a valid prospectus made available by UDC at UDC's expense), and
(ii) such Common Stock is then eligible and listed for trading on the Nasdaq
Small Cap Market, Nasdaq National Market, a national securities exchange, or a
successor quotation system or exchange having similar listing standards and
commercial market standing to the foregoing, UDC at the time of issuance has
timely filed all reports required to be filed by UDC under the Securities
Exchange of 1934, and UDC is not then subject to the "penny stock" rules of the
Securities and Exchange Commission or similar successor rules. Further, if this
Agreement is assigned to a successor of UDC in accordance with Section 11.0,
MOTOROLA shall have the additional right in MOTOROLA's discretion to require
that royalties [The confidential material contained herein has been omitted and
has been separately filed with the Commission.]. The number of shares of UDC's
Common Stock used to pay such portion of the royalty shall be equal to [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.].
4.3 During the term of this Agreement, UDC agrees to make minimum
royalty payments to MOTOROLA under Section 4.2 as set forth below in this
Section 4.3. To the extent the royalties payable under Section 4.2 based on [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.] are not sufficient to meet these minimums, [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.], within ninety (90) days after the end of each
two-year period specified below in which such a shortfall occurs, except that
stock may not be used for this purpose unless UDC satisfies the requirements of
Section 4.2(b) in respect of such stock. In the event UDC fails to pay to
MOTOROLA these minimum royalties for any period stated below, the license
granted under Section 3.0 to UDC shall thereafter become non-exclusive and
MOTOROLA shall have the unrestricted right to license the Licensed Patents and
Know-how to others. The minimum royalties payable during the term of this
Agreement are as follows: For the period commencing on the Effective Date and
ending on last day of the second complete calendar year following the Effective
Date, UDC shall pay to MOTOROLA a minimum royalty under Section 4.2 of [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.]. For the period ending two years after the previous
two-year period, UDC shall pay to MOTOROLA a minimum royalty under Section 4.2
of [The confidential material contained herein has been omitted and has been
separately filed with the Commission.]. For the two-year period following the
second two-year period, UDC shall pay to MOTOROLA a minimum royalty under
Section 4.2 of [The confidential material contained herein has been omitted and
has been separately filed with the Commission.]. The parties understand that
minimum royalty requirements under this Section 4.3 cease upon full payment of
the foregoing sums specified in this Section 4.3, but without reduction of or
prejudice to amounts otherwise owed under Section 4.2 or other applicable
provisions of this Agreement. Should this Agreement be terminated during any
such period, the minimum royalties due for such period shall be calculated on a
prorated basis.
4.4 Except to the extent any delay is due to the failure of MOTOROLA to
(a) review the Registration Statement (as defined below) pursuant to Section
6(b)(iii) of the Securities Purchase Agreement or in providing to the Company
any such information as shall be requested pursuant to Section 6(c)(i) of the
Securities Purchase Agreement, for each calendar month or portion thereof
commencing on or after November 1, 2000, that the Registration Statement (the
"Registration Statement") defined in Section 6 of the Securities Purchase
Agreement shall not have been filed in compliance with applicable rules and
regulations of the Securities and Exchange Commission ("SEC"), UDC shall pay to
MOTOROLA in cash the sum of [The confidential material contained herein has been
omitted and has been separately filed with the Commission.], representing
additional consideration for the rights of UDC under this Agreement.
CONFIDENTIAL
4.5 If on the date (the "Measurement Date") which is three (3) trading days before the date (the "SEC Effective Date") the Registration Statement is initially declared effective by the SEC, the average daily closing price per share of UDC's Common Stock on the Nasdaq Small Cap Market (or successor market for such stock) for the ten (10) trading days ending on the Measurement Date (the "Section 4.5 Average Price") shall be less [The confidential material contained herein has been omitted and has been separately filed with the Commission.], then (a) UDC shall prior to the SEC Effective Date issue and deliver to Motorola an additional number of Common Shares equal to (i) the [The confidential material contained herein has been omitted and has been separately filed with the Commission.] (ii) [The confidential material contained herein has been omitted and has been separately filed with the Commission.]; and (b) UDC shall, to the extent permitted pursuant to the 1933 Act and the rules and regulations thereunder, amend the Registration Statement prior to the SEC Effective Date to include therein for resale such additional shares together with the initial [The confidential material contained herein has been omitted and has been separately filed with the Commission.] Common Shares or, only if the same is not so permitted, promptly file an additional registration statement pursuant to the last sentence of Section 6(b)(ii) of the Securities Purchase Agreement and take other actions thereunder as may be needed to permit Motorola to offer and resell to the public such additional Common Shares. [The confidential material contained herein has been omitted and has been separately filed with the Commission.].
4.6 If laws, rules or regulations require withholding of income taxes
or other taxes imposed upon royalties payable by UDC to MOTOROLA under this
Section 4.0, UDC shall make such withholding payments as required and subtract
such withholding payments from the royalties payable under this Section 4.0. UDC
shall submit reasonable proof of payment of the withholding taxes to MOTOROLA
within a reasonable period of time. The parties agree to cooperate with each
other, including, without limitation, in the filing of appropriate certificates
of tax exemption, (i) to ensure that any withholding payments required to be
made by UDC are reduced to the fullest extent permitted by law, and (ii) to seek
credit for withholding payments previously made by UDC. In the event UDC is
subsequently credited for withholding payments which have been subtracted from
royalties payable to MOTOROLA under this Section 4.0, the amount previously
withheld shall be immediately paid by UDC to MOTOROLA regardless of whether or
not UDC is able to utilize any such credit in filing its tax return.
Notwithstanding the foregoing, (a) UDC shall be deemed to be the sole payor of
payments owed to MOTOROLA under this Agreement and shall not have the right to
substitute any domestic or foreign Affiliate for that purpose, and (b) if UDC
reincorporates or otherwise reorganizes as a foreign person that would thereupon
cause payments hereunder to MOTOROLA to become subject to withholding, then UDC
shall comply with applicable laws to the extent required and shall gross up the
payments otherwise owed to MOTOROLA so that MOTOROLA receives net of withholding
taxes the amount MOTOROLA would have received if UDC had remained a domestic
person.
CONFIDENTIAL
Section 5.0 Confidentiality; Improvements and Joint Improvements.
5.1 UDC acknowledges that all Know-how accumulated by MOTOROLA is extremely valuable to MOTOROLA and that the disclosure of such Know-how by UDC to any unauthorized third party may cause MOTOROLA irreparable harm. UDC represents, warrants and agrees that each of its present employees has executed, and each of their replacements and all additional employees or contractors who work on or are involved in work performed under this Agreement, or who have access to any Know-how supplied by MOTOROLA to UDC, will execute a written confidentiality agreement (to be kept in force by UDC) which obligates the employee to maintain the Know-how as confidential and to use the Know-how only as permitted under this Agreement.
5.2 As of the Effective Date, MOTOROLA and UDC shall execute and deliver that certain Nondisclosure Agreement in the form attached hereto as Exhibit D.
5.3 All modifications or enhancements of, or improvements to the Licensed Patents or Know-how ("Improvements") created, developed or made solely by MOTOROLA or its employees shall be owned solely by MOTOROLA. All Improvements created, developed or made solely by UDC or its employees shall be owned solely by UDC. The parties do not anticipate that they will engage in joint development efforts relating to Licensed Products. However, if Improvements are created, developed or made jointly by MOTOROLA or its employees, and by UDC or its employees ("Joint Improvements"), the Joint Improvements shall be owned jointly by MOTOROLA and UDC, with no obligations of accounting by either party to the other.
5.4 MOTOROLA and UDC shall jointly have responsibility for the preparation, filing, prosecution and maintenance of all patents on Joint Improvements. Each party shall consult with the other party on all aspects relating to the preparation, filing, prosecution and maintenance of all such patents reasonably prior to material filing dates, or to taking significant other action with the United States Patent and Trademark Office or any foreign counterpart thereof. In addition, each party shall execute such documents and perform such other acts as may be necessary or reasonably requested to permit the other party to prepare and make such filings and to prosecute and maintain such patents in a timely and complete manner. Each party shall have the right to consult with its own patent attorneys on all aspects relating to the preparation, filing, prosecution and maintenance of all patents on Joint Improvements reasonably prior to material filing dates, or to taking significant other action with the United States Patent and Trademark Office or any foreign counterpart thereof. Subject to Section 5.5 below, the parties shall share equally in all reasonable and necessary expenses incurred by either party in connection with the preparation, filing, prosecution and maintenance of each patent on a Joint Improvement.
CONFIDENTIAL
5.5 In the event that either party (the "abandoning party") desires to abandon the preparation, filing, prosecution or maintenance of any patent on a Joint Improvement, the abandoning party shall notify the other party thereof in writing not less than 30 days prior to the date of such intended abandonment, and the other party shall have the right, at its sole expense, to prepare, file, prosecute and maintain the patent subject to such abandonment. In the event that the other party successfully issues such patent, then the abandoning party shall be and hereby is granted a non-exclusive, nontransferable and nonassignable (except as expressly permitted hereunder), royalty-free license to practice under the issued patent; provided, however, that the abandoning party shall be prohibited from sublicensing or otherwise permitting other persons to exercise said license rights. For greater clarity, patents on Joint Inventions include separate patents within individual jurisdictions, notwithstanding that such separate patents may be related to patents filed within other jurisdictions that the abandoning party does not wish to abandon.
Section 6.0 Records and Reports
6.1 UDC shall pay royalties and other sums of money due hereunder in United States dollars. All royalties for an accounting period computed on invoiced amounts in currencies other than United States dollars shall be converted directly into United States dollars without intermediate conversions to another currency at the Telegraphic Transfer Selling (TTS) rate quoted by The Wall Street Journal at the close of banking on the last business day of such accounting period. UDC shall provide written confirmation of the quoted TTS rate directly to MOTOROLA with the royalty report.
6.2 An accounting period shall end on the last day of each calendar year during the term of this Agreement. The first accounting period under this Agreement shall be for a period commencing as of the Effective Date and ending December 31, 2000. Within ninety (90) days after the end of each accounting period, UDC shall furnish to MOTOROLA a written report containing the certification specified in Section 6.3, and setting forth Total Revenues for that year and the amount of royalties currently due under this Agreement and the calculation of such royalties due, including relevant details of any Common Stock UDC intends to use for payment under applicable sections of this Agreement. The report shall also separately break out and reconcile total revenues or sales of UDC reported on a consolidated basis for all operations compared to Total Revenues as defined under Section 1.0 of this Agreement, and shall include separately stated Total Revenues from sublicensees and amounts UDC has received for services to sublicensees which UDC elects to exclude in conformance with the provisions of the definition of Total Revenues, and such other related details as MOTOROLA may from time to time reasonably request.
6.3 UDC's reports shall be certified by an officer of UDC or by a designee of such officer to be correct to the best of UDC's knowledge and information.
6.4 UDC shall keep reports, books and records in sufficient detail to permit the determination of royalties payable under this Agreement, including without limitation separate books and records sufficient to permit a determination and audit of Total Revenues as defined in Section 1.0 of this Agreement. UDC shall retain said reports, books and records for a minimum period of two (2) years following the end of the accounting period to which they apply. At the request of MOTOROLA, UDC will permit an independent certified public accountant, hired by MOTOROLA on other than a contingent fee basis, to inspect said books and records to verify that the amount of royalties paid to MOTOROLA has been correctly reported. Such inspection and examination shall be made during normal business hours of UDC's principal office upon reasonable prior notice and not more often than once per calendar year.
CONFIDENTIAL
6.5 The fees and expenses of an inspection under Section 6.4 shall be borne by MOTOROLA. However, if an error in royalties of more than [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the total royalties due is discovered for any year examined, then the reasonable fees and expenses of MOTOROLA's independent certified public accountant shall be borne by UDC.
6.6 UDC shall be liable for interest at a rate [The confidential material contained herein has been omitted and has been separately filed with the Commission.] on any overdue royalty payment, commencing on the date such royalty or other payment becomes due. If such interest rate exceeds the maximum legal rate in the jurisdiction where a claim for such is being affected, the interest rate shall be reduced to such maximum legal rate.
Section 7.0 Representations and Warranties, Disclaimers and Indemnification.
7.1 Each party hereby represents and warrants to the other that: (i) such party has all requisite corporate power and authority to execute, deliver and perform its obligations under the Related Agreements; (ii) each of the Related Agreements constitutes a valid and legally binding obligation of such party, enforceable against it in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies; and (iii) the execution, delivery and performance of each of the Related Agreements by such party will not result in any violation of or constitute, with or without the passage of time and the giving of notice, either a default under any provision of any agreement or instrument to which it is a party, or any judgment, order, decree, law, ordinance, regulation or other governmental restriction.
7.2 MOTOROLA hereby additionally represents and warrants to UDC, based solely upon a reasonable internal inquiry within the scope of this Section 7.2, that: (i) MOTOROLA owns all of the Licensed Patents and Know-how listed in Exhibits A and B; (ii) MOTOROLA has not received any written notice to the specific effect that the Licensed Patents or Know-how infringe or conflict with asserted rights of others; and (iii) none of the issued Licensed Patents have been declared invalid or unenforceable by a court or government agency pursuant to any form of judgment, order or other notice received by MOTOROLA. No representation is made or implied that MOTOROLA or any person acting on its behalf has conducted any company-wide inquiry or external litigation or patent search for purposes of the foregoing limited representations, or otherwise attempted to verify independently any of the foregoing. Nothing contained in this Agreement shall be construed as any form of representation, warranty or assurance (A) that any patent will issue from any patent application set forth in Exhibit A; (B) as to the validity, scope or usefulness of any Licensed Patent or Know-how, except for the limited statement above concerning invalidity or unenforceability in this Section 7.2; or (C) that the use, manufacture, sale or other disposition of Licensed Products will not infringe or violate patent or other rights of third parties, except for the limited statement above concerning infringement or conflict in this Section 7.2. Nothing contained in this Agreement shall be construed as authority for or consent to any act which would constitute inducement of infringement or contributory infringement under the patent law of the United States of America or analogous laws of foreign jurisdictions; provided, however, that this sentence shall not limit the scope of the express representations and warranties of MOTOROLA in this Section 7.2.
CONFIDENTIAL
7.3 EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN THE RELATED AGREEMENTS, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, IN FACT OR IN LAW, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. EACH PARTY HEREBY DISCLAIMS ALL SUCH ADDITIONAL WARRANTIES.
7.4 UDC hereby agrees to indemnify, defend and hold harmless MOTOROLA, MOTOROLA's Affiliates, and their respective successors and assigns from and against any and all claims, actions, losses, liabilities, damages, settlement amounts, costs and expenses (including without limitation reasonable attorneys' fees) (collectively, "Losses") payable by such persons to third parties or governmental authorities, to the extent such Losses arise out of or relate to the use, sale or other disposition of Licensed Products by UDC or UDC's agents or sublicensees or their respective customers provided that UDC's indemnity obligation shall not apply to the extent Losses arise from a breach of the Related Agreements by MOTOROLA or from the [The confidential material contained herein has been omitted and has been separately filed with the Commission.].
7.5 If any action shall be brought against an indemnitee described in
Section 7.4 (the "Claimant") in respect to which indemnity may be sought from
the another party (the "Indemnifying Party") pursuant to the provisions of
Section 7.4, the Claimant shall promptly notify the Indemnifying Party in
writing, specifying the nature of the action and the total monetary amount
sought or other such relief as is sought therein. The Claimant shall cooperate
with the Indemnifying Party at the Indemnifying Party's expense in all
reasonable respects in connection with the defense and/or settlement of any such
action. The Indemnifying Party shall have the right to undertake to control and
conduct all proceedings or negotiations in connection therewith, assume and
control the defense thereof, and if it so undertakes, it shall also undertake
all other required steps or proceedings to settle or defend any such action,
including the employment of counsel which shall be reasonably satisfactory to
Claimant, and payment of all reasonably incurred expenses. Claimant shall have
the right to employ separate counsel to provide input into the defense, at
Claimant's own cost. The Indemnifying Party shall pay directly or, if requested,
reimburse Claimant upon demand for any payments made or damages suffered by
Claimant, based upon the judgment of any court of competent jurisdiction or
pursuant to a bona fide compromise or settlement of claims, demands, or actions
for which Claimant is entitled to indemnification hereunder. The Indemnifying
Party shall not settle any claim or action under this Section 7.0 on Claimant's
behalf without first obtaining Claimant's written permission, which permission
shall not be unreasonably withheld or delayed; provided, however, that if
Claimant withholds or unreasonably delays approval of Indemnifying Party's
settlement offer, Claimant shall defend that claim or action and Claimant hereby
waives any right to indemnity hereunder from the Indemnifying Party in excess of
the settlement offer amount. Claimant may settle any claim or action hereunder,
but the Indemnifying Party will not be responsible for any such settlement
unless it shall have approved the settlement, in writing and in advance, which
approval will not be unreasonably withheld or delayed. Each party agrees not to
publicize any settlement without first obtaining the other party's written
permission, which permission will not be unreasonably withheld.
CONFIDENTIAL
7.6 EXCEPT FOR WILLFUL AND KNOWING MATERIAL BREACHES OF THE SCOPE OF ANY LICENSE RIGHTS GRANTED UNDER SECTIONS 3.1, 3.2 OR 3.3, BREACHES OF THE OBLIGATIONS OF CONFIDENTIALITY UNDER SECTION 5.0, AND AS EXPRESSLY STATED OTHERWISE HEREIN, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER OR ITS AFFILIATES FOR ANY CONSEQUENTIAL, SPECIAL OR INCIDENTAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGE OR LOST PROFITS, REGARDLESS OF WHETHER SUCH PARTY SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.
7.7 The parties acknowledge and agree that the foregoing disclaimers, limitation of liability and indemnification obligations represent bargained for allocations of risk, and that the economics, terms and conditions of this Agreement reflect such allocations.
Section 8.0 Marking
On all Licensed Products, UDC and its sublicensees shall acknowledge that the Licensed Products are manufactured under a license from MOTOROLA. Unless otherwise agreed between the parties, one of the following notices shall be used by UDC and its sublicensees on an exposed surface of all Licensed Products: "Manufactured under license from Motorola, Inc.", or "Under license from Motorola, Inc." When, from the character of the article this cannot be done, such notice shall be applied to all data sheets that accompany the Licensed Product. One of such notices shall also be used in all instruction and servicing manuals unless such acknowledgment is clearly and unambiguously given in the course of any textual descriptions or explanations.
Section 9.0 Patent Filing, Prosecution and Maintenance
9.1 [The confidential material contained herein has been omitted and has been separately filed with the Commission.] shall be responsible for all costs (including attorneys' fees and expenses) incurred by it in maintaining the domestic and foreign patents, and prosecuting the domestic and foreign patent applications, specified in Exhibit A.
9.2 MOTOROLA shall provide UDC with documentation which is sufficient to allow UDC to monitor the domestic and foreign patents listed in Exhibit A for the due date for maintenance fee payments. This Section 9.2 sets forth the parties' other responsibilities for maintenance fees as follows:
(a) If UDC desires maintenance fees to be paid for Licensed Patents, UDC shall give MOTOROLA written notice identifying patents for which maintenance fees will become due and requesting payment of the applicable fees (the "Maintenance Notice") at least ninety (90) days and not more than one hundred eighty (180) days before each date a maintenance fee is due for any such patent. If UDC fails give a Maintenance Notice to MOTOROLA on a timely basis as provided above after MOTOROLA has provided documentation required under this Section 9.2, MOTOROLA may in its discretion elect not to pay the maintenance fees for any patents which would have been properly included in a timely given Maintenance Notice, and shall not be responsible to UDC or any other person if any such patents are abandoned for failure to pay the maintenance fees or otherwise.
CONFIDENTIAL
(b) To the extent UDC timely gives a Maintenance Notice to MOTOROLA as set forth above, MOTOROLA then has the sole discretion to determine whether or not to pay maintenance fees for the patent(s) included in that Maintenance Notice. If MOTOROLA chooses not to pay the maintenance fees for the patents included in a Maintenance Notice, MOTOROLA shall so advise UDC in writing (the "Rejection Notice") within sixty (60) days after UDC timely delivers that Maintenance Notice to MOTOROLA.
(c) As to any patents included in a Rejection Notice from MOTOROLA, UDC shall have the right, upon giving written notice thereof to MOTOROLA within thirty (30) days after MOTOROLA delivers a Rejection Notice, to (a) pay the maintenance fees for patents included in the Rejection Notice and, upon UDC's election, (b) require MOTOROLA to deliver promptly to UDC a written assignment of MOTOROLA's right, title and interest in the patents listed in the Rejection Notice. Whether or not included as a reservation in such assignment, UDC hereby grants MOTOROLA and MOTOROLA's Affiliates, under all patents included in each such assignment of patents, an irrevocable, fully paid-up, and perpetual worldwide license to make, develop, use, sell, offer for sale, have sold, lease, rent, transfer, import or otherwise dispose of any products throughout the world in or outside the Field of Use, and without payment of any royalty or other sum to UDC or any duty to account therefor, and UDC agrees to comply with Section 3.2 respecting MOTOROLA's suppliers and manufacturers under such assigned patents, but the foregoing shall be subject during the period this Agreement remains in effect to the same limitations on MOTOROLA's reserved rights set forth in Section 3.0.
(d) UDC shall be entitled to deduct from future royalties owing under
Section 4.3 or 4.4 all maintenance fees UDC actually pays to domestic and/or
foreign governmental patent offices for Licensed Patents assigned to UDC
pursuant to this Section 9.2. UDC shall be entitled to the deduction after
furnishing certification to MOTOROLA reasonably detailing the amounts and dates
of payments and to which agencies the payments were made.
9.3 As to patent applications listed in Exhibit A, MOTOROLA will use its reasonable patent prosecution judgment in determining the timing, form and substance of remaining steps required for the prosecution of such applications, and may elect to cease prosecution thereof based upon factors MOTOROLA would ordinarily consider in the prosecution of its other patent applications.
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Section 10.0 Patent Infringements
10.1 In the Field of Use, MOTOROLA shall have the primary right, but not the obligation, to prosecute and control at its own expense all lawful actions in response to infringements or misappropriations of the Licensed Patents or the Know-how (each, an "Unauthorized Use"). Neither party shall have a duty to report to the other party instances where a third party is or may be engaging in Unauthorized Use. Within a reasonable time (not to [The confidential material contained herein has been omitted and has been separately filed with the Commission.]) after UDC gives written notice to MOTOROLA describing circumstances involving Unauthorized Use and requesting MOTOROLA to take action against such infringement, MOTOROLA shall provide UDC with written notice indicating whether or not MOTOROLA intends to take responsibility for ending the Unauthorized Use. If MOTOROLA (i) gives written notice to UDC that MOTOROLA does not intend to take responsibility for ending the Unauthorized Use, or (ii) gives written notice to UDC that MOTOROLA intends to take responsibility for ending the Unauthorized Use, but MOTOROLA, within [The confidential material contained herein has been omitted and has been separately filed with the Commission.] days after providing such notice, has not persuaded the third party engaged in or believed to be engaged in the Unauthorized Use (the "Unauthorized User") to cease such Unauthorized Use and has not brought and is not then diligently prosecuting an infringement action against the Unauthorized User (or at any time thereafter MOTOROLA ceases to diligently prosecute such an infringement action against the Unauthorized User), then UDC shall have the right, but shall not be obligated, to take responsibility for ending the Unauthorized Use at UDC's own expense. In furtherance of such right, MOTOROLA hereby agrees that UDC, at its expense, may name MOTOROLA as a party plaintiff in any lawsuit or other action against the Unauthorized User; provided, however, that the counsel retained by UDC to prosecute or settle the lawsuit shall be subject to MOTOROLA's prior written approval, such approval not to be unreasonably withheld. The parties shall share any damages and other recoveries derived from the Unauthorized Use such that the recoveries shall first reimburse all legal and other expenses incurred by each of the parties in respect thereof (pro rata in proportion to the expenses incurred by each if the recoveries are insufficient to pay all of the expenses); any portions of such damages or other recoveries intended primarily to compensate UDC for Total Revenues that UDC would have received but for the Unauthorized Use or otherwise intended as actual or primary damages of UDC shall be treated as Total Revenues for purposes of this Agreement and UDC shall retain such Total Revenues after paying MOTOROLA royalties on said portions as specified in Section 4.0 above; and any recoveries in excess of the foregoing (including without limitation "treble damage" awards in excess of the foregoing) shall be apportioned 50% to UDC and 50% to MOTOROLA. No settlement, consent judgment or other voluntary final disposition of the suit may be entered into without the consent of MOTOROLA, which consent shall not be unreasonably withheld or delayed. With respect to any action against an Unauthorized User initiated by UDC, UDC shall indemnify MOTOROLA against any order for costs that may be made against MOTOROLA in such proceedings.
10.2 In the event that either party learns of the institution of a declaratory judgment action or response alleging invalidity of any of the Licensed Patents, that party shall provide the other party with prompt written notice thereof. MOTOROLA shall have the sole right (but no obligation), at its expense, to defend or settle such action; provided, however, that UDC may participate in the defense or settlement thereof with counsel of its own choosing at its own expense. In the event MOTOROLA notifies UDC that MOTOROLA does not intend to defend such action, or should MOTOROLA at any time cease to diligently defend such action, UDC shall have the right (but no obligation) to take over the sole defense of the action at its own expense; provided, however, that the counsel retained by UDC to defend the action shall be subject to MOTOROLA's prior written approval, such approval not to be unreasonably withheld.
CONFIDENTIAL
10.3 In any suit as either party may institute against an Unauthorized User, or to enforce or defend the Licensed Patents pursuant to this Agreement, the other party hereto shall, at the request and expense of the party initiating such suit, cooperate to the extent reasonably needed to establish standing as a party in the suit and to establish validity of the Licensed Patents. Neither party shall have a duty to volunteer to testify against the opposing parties in such suit, violate any nondisclosure or confidentiality agreement that may be in effect, or reveal any nonpublic information that a party to this agreement may have obtained in the course of commercial relationships, if any, with such opposing parties, provided that this sentence shall not be deemed to waive or impair a party's right to compel testimony or discovery under applicable law. The other party to this Agreement shall also be entitled to retain its own legal counsel for purposes of the suit, the cost of which shall be subject to reimbursement as provided in Section 10.1.
Section 11.0 Assignability
Neither party shall assign this Agreement, or any of its rights or obligations hereunder, whether directly or in conjunction with a change in control or ownership, merger, acquisition, the sale or transfer of all, or substantially all or any part, of such party's business or assets or otherwise, either voluntarily, by operation of law, or otherwise, without the prior written consent of the other party, which consent may be withheld in the sole discretion of the other party. Notwithstanding the foregoing sentence, (i) MOTOROLA without UDC's consent may assign this Agreement to an Affiliate of MOTOROLA, (ii) UDC may assign this Agreement to an Affiliate of UDC which assumes in writing (without a release of UDC) all of UDC's obligations hereunder, is incorporated under the laws of a state of the United States of America and is domiciled in the United States of America or otherwise situated so that such assignment shall not cause tax withholding or other adverse income tax consequences on payments and deliveries by UDC to MOTOROLA under this Agreement, provided that UDC first obtains MOTOROLA's consent to such assignment, which consent shall not be unreasonably withheld or delayed, and (iii) either party, without the other party's consent, may assign this Agreement, in its entirety, to any person with whom such party merges or consolidates, or to any person who purchases all or substantially all of the business or assets of such party to which this Agreement relates, provided that the successor, assignee or surviving entity agrees in writing to be bound by the acquired party's obligations under this Agreement, and (iii) MOTOROLA shall have the right without UDC's consent to transfer any securities received by MOTOROLA under the Related Agreements subject only to the specific transfer restrictions (other than this Section 11.0) set forth in the Related Agreements, and any rights to receive payments from UDC, in any manner and to any person MOTOROLA chooses. Any purported assignment or transfer in violation of this Section 11.0 shall be null and void, and the rights and privileges granted hereunder shall not extend to the purported assignee. Except as provided above, this Agreement shall be binding upon and inure to the benefit of the parties and their permitted successors and assigns.
Section 12.0 Duration of the Royalty Obligation
12.1 Unless this Agreement is sooner terminated, UDC's obligation to pay royalties under Sections 4.2 and 4.3 of this Agreement shall continue in force and effect until the expiration or invalidation of the last to expire or be invalidated of the Licensed Patents.
CONFIDENTIAL
Section 13.0 Termination
13.1 MOTOROLA shall have the right to terminate this Agreement on written notice to UDC in the event that:
13.1.1 UDC fails to issue and deliver any securities or make any payment of money when due under the Related Agreements and such issuance and delivery or payment, as the case may be, is not made within fifteen (15) days (in the case of issuance or delivery of securities) or thirty (30) days (in the case of payment of money) after written notice from MOTOROLA reasonably specifying such failure; or
13.1.2 UDC commits a material breach of any material
representation, warranty, covenant or other obligation of UDC under the Related
Agreements, other than the matters specifically listed in other portions of this
Section 13.1, which breach is not cured within sixty (60) days after written
notice is given to UDC by MOTOROLA reasonably specifying such breach, provided
that, if such breach cannot reasonably be cured with diligent efforts within
such sixty (60) day period, UDC shall have up to an additional sixty (60) days
in which to cure such breach provided UDC has pursued and continues to pursue
such cure with all reasonable diligence after MOTOROLA gives such written notice
to UDC; or
13.1.3 UDC shall purport to make or effect an assignment prohibited by Section 11.0; or
13.1.4 UDC becomes insolvent or admits in writing its inability to pay its debts as they mature or makes an assignment for the benefit of its creditors or files a petition under any foreign or U.S. bankruptcy law; or
13.1.5 If, at any time prior to November 15, 2004, UDC's Common Stock (or, if applicable, the shares of common stock theretofore issued by any corporation to MOTOROLA in exchange for UDC's securities held by Motorola pursuant to an acquisition of UDC by such corporation) shall cease to be listed or eligible for trading on at least one of the Nasdaq Small Cap Market, Nasdaq National Market, a national securities exchange, or a successor trading market in the United States of America having listing standards similar to any of the foregoing, which cessation is not cured within sixty (60) days. Notwithstanding the foregoing, UDC shall have the right to avoid termination under this Section 13.1.5 if, within thirty (30) days after such de-listing, UDC tenders payment for all UDC securities then held by MOTOROLA and/or MOTOROLA's Affiliates in immediately available funds equal to the greater of the following amounts per share of UDC Common Stock then held by MOTOROLA assuming for this purpose conversion and/or exercise of the Preferred Shares and Warrant (but after subtracting any then applicable exercise price under the Warrant): (i) $12.00, or (ii) the average daily closing price per share of UDC's Common Stock for the sixty (60) consecutive trading days ending ninety (90) trading days before the effective date of such de-listing. Upon such tender MOTOROLA shall deliver and transfer to UDC all such securities then held by MOTOROLA and paid for by UDC, provided that MOTOROLA need not accept such payment or tender such securities unless UDC shall have furnished to MOTOROLA an opinion of an investment banking or valuation firm or legal counsel reasonably satisfactory to MOTOROLA to the effect that such repurchase is not in contravention of any applicable state or federal laws concerning distributions to stockholders or creditors' rights, and will not constitute a fraudulent transfer or conveyance under applicable state laws or under federal bankruptcy law. MOTOROLA shall deliver to UDC the certificates representing the securities so repurchased by UDC together with signed securities transfer powers in favor of UDC, concurrently with such payment at a closing therefor to be reasonably arranged by the parties.
CONFIDENTIAL
13.2 In the event this Agreement is terminated pursuant to
this Section 13.0, each sublicense by UDC or any Affiliate of UDC of UDC's
license rights hereunder previously granted by UDC or an Affiliate of UDC (in
its capacity as sublicensee of UDC) to a sublicensee which is not an Affiliate
of UDC shall not terminate provided that, and conditioned upon the following:
(i) the sublicensee is not then in material default under its sublicense
agreement with UDC, (ii) the sublicensee agrees in writing with MOTOROLA to pay,
and continues to pay, MOTOROLA directly the royalty payments under Section 4.2
that MOTOROLA would have received through UDC in respect of the sublicense had
UDC performed its obligations hereunder and otherwise to pay and perform the
sublicensee's duties under the sublicense, and (iii) the sublicensee agrees in
writing with MOTOROLA that MOTOROLA assumes no duty or liability to the
sublicensee with respect to the Licensed Patents or any other matter covered by
the sublicense agreement between UDC and the sublicensee. MOTOROLA shall have
the right to terminate (or require UDC to terminate) any such sublicense when
and if termination thereof is permitted by the express terms of the sublicense
agreement.
13.3 UDC shall have the right to terminate this Agreement in the event MOTOROLA defaults under any material term of this Agreement, which default is not cured within sixty (60) days after written notice from UDC reasonably specifying the default, provided that, if such breach cannot reasonably be cured with diligent efforts within such sixty (60) day period, MOTOROLA shall have up to an additional sixty (60) days in which to cure such breach provided MOTOROLA has pursued and continues to pursue such cure with all reasonable diligence after UDC gives such written notice to MOTOROLA.
13.4 If this Agreement is terminated for any reason, the license granted under Section 3.0 to UDC and all sublicenses of such rights granted by UDC shall automatically terminate (except to the extent and for so long as any sublicenses granted by UDC are permitted to continue in accordance with the provisions of Section 13.2 above), and the Securities Purchase Agreement, Warrant, rights and other terms governing the Preferred Shares, and the provisions of Sections 4.4, 4.5, 4.6, 5.1, 5.2, 5.3, 5.4, 5.5, 6.0, 7.0, 8.0, 10.0 as to matters thereunder then pending at the time of termination, 11.0, 13.2, 13.4, 15.0, 16.0, and 17.0 of this Agreement shall survive such termination, as shall all payment obligations of UDC in cash or securities accruing prior to the effective date of termination. In the event of any termination of this Agreement, each party may pursue any legal or equitable remedies that may be available to it based on a breach of this Agreement by the other party, subject to any express limitations of liability contained herein.
Section 14.0 [The confidential material contained herein has been omitted and has been separately filed with the Commission.]
CONFIDENTIAL
Section 15.0 Payments, Notices and Other Communications
15.1 Any notice or other communication pursuant to this Agreement shall be made by Federal Express or a like express carrier and shall be effective upon receipt by the addressee or three (3) business days, whichever is shorter. Such notice or communication shall be mailed to:
15.1.1 In the case of MOTOROLA:
Vice President for Patents, Trademarks & Licensing
Motorola, Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196
15.1.2 In the case of UDC:
15.2 UDC's royalty reports as described in Section 6.0 of this Agreement, shall be mailed via Federal Express or a like express carrier to:
15.3 All payments set forth in Section 4.0 of this Agreement shall be paid via bank wire transfer to:
Account Name:________________
or by check to MOTOROLA and mailed via Federal Express or a like express carrier directly to:
CONFIDENTIAL
Section 16.0 Applicable Law
16.1 This Agreement shall be construed, and the legal relations between the parties with respect to the subject matter of this Agreement shall be determined, in accordance with the internal laws of the State of Illinois, without regard to its provisions governing conflicts of law.
Section 17.0 Miscellaneous
17.1 The waiver by either party of a breach or default of any provision of this Agreement by the other party shall not be construed as a waiver of any succeeding breach of the same or any other provision, nor shall any delay or omission on the part of either party to exercise or avail itself of any right, power or privilege that it has or may have hereunder operate as a waiver of any right, power or privilege of such party.
17.2 The headings of all sections are inserted for convenience of reference only and are not intended to affect the meaning or interpretation of this Agreement.
17.3 If any sentence, paragraph, clause or combination of the same is in violation of any applicable law, that portion which is in violation shall be severed from this Agreement and the remainder of this Agreement shall remain binding upon the parties hereto, except that no license is granted, expressly or by implication, unless royalties are paid pursuant to Section 4.0.
17.4 Each party represents and warrants that it has the full right and power to enter into this Agreement and that there are no outstanding agreements, assignments, or encumbrances to which the representing party is bound which may restrict, or prohibit entry into, or performance under, this Agreement.
17.5 The parties hereto shall keep the terms of this Agreement
confidential and shall not now or hereafter divulge any part thereof to any
third party except: (i) with the prior written consent of the other party; (ii)
to any governmental body having jurisdiction to request and to read the same;
(iii) as otherwise may be required by law or legal process; or (iv) to legal
counsel representing either party. Notwithstanding the foregoing, no disclosure
of this Agreement shall be made pursuant to clauses (ii) or (iii) of the
foregoing sentence without the disclosing party first giving the other party
reasonable notice prior to the intended disclosure so as to allow the other
party sufficient time to seek a protective order or otherwise assure the
confidentiality of this Agreement as that other party shall deem appropriate.
UDC agrees not to file this Agreement as an exhibit to its Commission Filings as
defined in the Securities Purchase Agreement without first redacting and
requesting confidential treatment for any information reasonably considered by
MOTOROLA or UDC to be confidential. MOTOROLA shall inform UDC of any such
information it wishes to redact and request confidential treatment for within
five (5) business days following the date MOTOROLA is requested to do so by UDC.
Nothing herein shall prohibit UDC from (i) informing its sublicensees or
prospective sublicensees that UDC is an authorized licensee of the Licensed
Patents and Know-how, or of any obligations of UDC or reserved rights of
MOTOROLA hereunder that are also applicable to its sublicensees and prospective
sublicensees, (ii) providing its sublicensees and prospective sublicensees with
copies of the redacted version of this Agreement attached to this Agreement as
Exhibit E; provided that each sublicensee or prospective sublicensee must first
have agreed in writing to maintain the contents of said redacted version of this
Agreement as confidential information of UDC and its licensors, (iii) issuing
the press release in form and substance attached to this Agreement as Exhibit F;
or (iv) accurately describing the Related Agreements in its Commission Filings.
Nothing herein shall prohibit MOTOROLA from discussing this Agreement with
MOTOROLA's third party suppliers and manufacturers prior to issuance of the
press release attached hereto as an exhibit or providing such suppliers and
manufacturers with copies of the redacted version of this Agreement attached
hereto as an exhibit, provided that (i) each such supplier or manufacturer
agrees in writing to maintain such information in confidence until the same
becomes public information through no action of such supplier or manufacturer,
and (ii) MOTOROLA advises such supplier or manufacturer that, under federal
securities laws, a person who learns of such nonpublic information may be
legally precluded from trading in UDC securities until such time as UDC publicly
disseminates the information.
CONFIDENTIAL
17.6 The parties hereto acknowledge that this instrument sets forth the entire agreement and understanding of the parties hereto and shall supersede all previous communications, representations and understandings, either oral or written, between the parties relating to the subject matter hereof, except prior written agreements signed by both parties, and shall not be subject to any changes or modifications except by the signing of a written instrument by or on behalf of both parties.
17.7 This Agreement is the result of negotiations between the parties and the parties acknowledge that they have been represented by counsel during such negotiations. Accordingly, this Agreement shall not be construed for or against either party regardless of which party drafted this Agreement or any portion thereof.
[balance of this page is intentionally left blank]
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17.8 This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly signed, in the presence of a witness, in duplicate.
MOTOROLA, INC.
By: /s/ Jon Meyer
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Name: Jon Meyer Date:
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Title: Senior Vice President and
Assistant General Counsel
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UNIVERSAL DISPLAY CORPORATION
By: /s/ Steven V. Abramson
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Name: Steven V. Abramson Date:
----------------------------- ------------------------
Title: President
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TERMINATION, AMENDMENT AND LICENSE AGREEMENT
THIS TERMINATION, AMENDMENT AND LICENSE AGREEMENT (this "Agreement") is made as of this 19th day of July 2000, by and among Universal Display Corporation ("UDC"), a Pennsylvania corporation, PD-LD, Inc. ("PD-LD"), a New Jersey Corporation, Dr. Vladimir S. Ban ("Dr. Ban"), an individual residing in the State of New Jersey, and The Trustees of Princeton University ("Princeton"), a not for profit educational institution duly organized and existing under the laws of the State of New Jersey.
BACKGROUND
A. On April 10, 1996, PD-LD entered into an option agreement with Princeton (the "Option Agreement'), pursuant to which Princeton granted PD-LD options to obtain certain license rights with respect to the patents and patent applications described in Exhibit A attached hereto and any patents issued with respect thereto (the "Option Patent Rights").
B. On October 9, 1997, UDC entered into a license agreement with the University of Southern California ("USC") and Princeton (the "Princeton License Agreement"), pursuant to which Princeton and USC granted UDC certain license rights with respect to the patents and patent applications described therein (the "UDC Patent Rights").
NOW THEREFORE, in consideration of the mutual covenants and promises set forth herein and in the Princeton License Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound hereby, agree as follows:
1. Princeton and PD-LD hereby terminate the Option Agreement, effective immediately. Princeton and PD-LD acknowledge and agree that this termination will void any right or claim that PD-LD has or may have to obtain any license rights from Princeton with respect to the Option Patent Rights. To the extent either of them may have any remaining rights in or to the Option Patent Rights, PD-LD and Dr. Ban hereby assign, transfer and convey to Princeton all of their worldwide right, title and interest in and to the Option Patent Rights.
2. Princeton, on its own behalf and on behalf of USC as permitted under the Interinstitutional Agreement between Princeton and USC dates as of October 9, 1997, and UDC hereby amend the Princeton License Agreement to include the Option Patent Rights within the UDC Patent Rights. Except as specifically modified by this Agreement, all of the provisions of the Princeton License Agreement are hereby ratified and confirmed to be and shall remain in full force and effect.
3. In partial consideration of its termination of the Option Agreement, UDC hereby grants to PD-LD a worldwide, royalty-free, non-exclusive, non-transferable and non-sublicensable license under the Option Patent Rights, to make and use (but not to sell, lease or otherwise distribute to others) equipment for the production of products and devices through an organic vapor phase deposition process, and to make, use, sell, offer for sale and otherwise distribute products and devices produced using such equipment, but in each case excluding opto-electronic products and devices (collectively, "Opto-Electronic Products"). For purposes of this Agreement, "Opto-Electronic Products" shall include, but not limited to, organic light emitting devices, organic solar cells, organic thin film transistors, organic lasers and organic photodetectors, but shall exclude fiber optic communications products and devices that are not competitive with products or devices licensed, sold or otherwise distributed presently or in the future by UDC, its affiliates (including, but not limited to, Global Photonic Energy Corporation) and their respective licensees and sublicensees. PD-LD acknowledges that its license rights to the Option Patent Rights are derivative of UDC's license rights to the Option Patent Rights under the Princeton License Agreement, and, therefore, that PD-LD's license rights to the Option Patent Rights are subject to the provisions of the Princeton License Agreement applicable thereto. UDC DISCLAIMS ANY AND ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE OPTION PATENT RIGHTS, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
4. In further consideration of its termination of the Option Agreement, UDC hereby agrees to pay PD-LD the consideration specified in Exhibit B attached hereto, said consideration to be paid on the terms and conditions set forth therein.
5. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs, administrators, executors, personal representatives, spouse, family members, affiliates, successors and permitted assigns.
6. The validity, construction and performance of this Agreement shall be governed by and interpreted in accordance with the laws of the State of New Jersey, without regard to choice of law provisions.
7. A waiver by any party of a breach or violation of any provision of this Agreement will not constitute or be construed as a waiver of any subsequent breach or violation of that provision or as a waiver of any breach or violation of any other provision in this Agreement.
8. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become a binding agreement when one or more counterparts have been signed by each party and delivered to the other parties.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Agreement to become effective as of the date first set forth above.
UNIVERSAL DISPLAY CORPORATION PD-LD, Inc.
By: /s/ Steven V. Abramson By: /s/ Dr. Vladimir S. Ban
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Name: Steven V. Abramson Name: Dr. Vladimir S. Ban
Title: President & Chief Executive Officer Title: President
THE TRUSTEES OF PRINCETON UNIVERSITY /s/ Vladimir S. Ban
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Dr. Vladimir S. Ban
By: /s/ Alan J. Sinisgalli
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Name: Alan J. Sinisgalli
Title: Associate Provost
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Exhibit A
Option Patent Rights
[The confidential material contained herein has been omitted and has been separately filed with the Commission.]
Exhibit B
Additional Consideration
UDC shall pay to PD-LD all royalties received by UDC from Aixtron AG (less any royalties payable by UDC to Princeton and any taxes or other governmental charges imposed on UDC) on account the sale or lease of equipment by Aixtron AG for the production of products and devices through an organic vapor phase deposition process, but excluding any such royalties or other amounts attributable, in whole or in part, to sales or leasing of equipment for the production of Opto-Electronic Products.
UDC shall issue 50,000 shares (the "Shares") of its unregistered common stock, par value $.01 per share, to PD-LD in the manner described and subject to the conditions and restrictions set forth in this Exhibit B.
PD-LD hereby represents and warrants to UDC, and agrees, as follows:
1. Accredited Investor. It is an "accredited investor" within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation D, as presently in effect.
2. Investment Experience. It believes that it has received all the information it considers necessary or appropriate to enable it to decide whether to purchase the Shares. It has had an opportunity to become aware of UDC's business properties and prospects and its affairs and financial condition, has had an opportunity to ask questions and receive answers, review documents and gather information about UDC and has acquired sufficient information about UDC to reach an informed and knowledgeable decision to acquire the Shares. It has such business and financial experience as is required to give it the capacity to protect its own interests in connection with the purchase of the Shares and can bear the economic risk of its investment. It also represents that it has not been organized for the purpose of acquiring the Shares being purchased hereunder.
3. Investment Intent. It is purchasing the Shares for investment for its own account only, not as a nominee or agent, and not with a view to, or for resale in connection with, any "distribution" of any part thereof within the meaning of the Securities Act of 1933, as amended (the "Act"). It has no present intention of selling, granting any participation in, or otherwise distributing the Shares, except in compliance with the Act or pursuant to an available exemption thereunder. By executing this Agreement, it further represents that it does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or any third person, with respect to any of the Shares.
4. Restricted Shares. It understands that the Shares it is purchasing are characterized as "restricted securities" under the federal securities laws inasmuch as they are being purchased 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 Act only in limited circumstances. In the absence of an effective registration statement covering the Shares or an available exemption from registration under the Act, the Shares must be held indefinitely. It is familiar with Rule 144 under the Act, as presently in effect, and understands the resale limitations imposed thereby and by the Act.
Each of the parties to this Agreement further agrees as follows:
1. Restrictions on Transfer. It is hereby agreed that PD-LD shall not make any disposition of all or any portion of the securities purchased hereunder unless and until the transferee has agreed in writing for the benefit of UDC to be bound by this Exhibit B, or (a) there is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with such registration statement, or (b) PD-LD shall have notified UDC of the proposed disposition and that there is an available exemption from registration, and, if requested by UDC, shall have furnished UDC with an opinion of counsel, reasonably satisfactory to UDC, that such disposition will not require registration of any Shares under the Act. It is agreed that UDC will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances. Notwithstanding the provisions of clauses (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer to an Affiliate of the transferor. "Affiliate" means any entity directly or indirectly controlling, controlled by or under common control with such entity.
2. Restrictive Legend. Each certificate representing Shares shall bear substantially the following legends (in addition to any legends required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SHARES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
THE SHARES REPRESENTED BY THIS CERTIFICATE AND THE RIGHTS OF HOLDERS THEREOF ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OTHER RESTRICTIONS SET FORTH IN A TERMINATION, AMENDMENT AND LICENSE AGREEMENT DATED JULY 19, 2000 (A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY).
Notwithstanding the above, PD-LD (or any authorized subsequent holder of the Shares) may request that UDC remove any such legend from the certificate(s) evidencing the Shares or issue to PD-LD (or to such holder) new certificate(s) therefor that are free of such legend if, with such request, UDC shall have received an opinion of counsel, which opinion is reasonably satisfactory to UDC, to the effect that any transfer by PD-LD (or said holder) of the Shares will not violate the securities laws of the United States or any applicable state laws.
3. Piggyback Registration.
3.1 If UDC at any time proposes to register any of its equity or debt securities in connection with an offering under the Act (other than a registration on Form S-4 or S-8 or any successor or similar forms thereto), whether or not for sale for its own account, it will give 30 days prior written notice to PD-LD (or any authorized subsequent holder of Shares) of its intention to do so, describing such securities and specifying the form and manner and the other relevant facts involved in such proposed registration (including, without limitation, (x) the identity of the managing underwriter, if any, and whether such offering will be pursuant to a "best efforts" or "firm commitment" underwriting and (y) the price (net of any underwriting commissions, discounts and the like) at which the securities are reasonably expected to be sold). Upon the written request of PD-LD (or any authorized subsequent holder of Shares) delivered to UDC within 30 calendar days after the receipt of any such notice (which request shall specify the Shares intended to be included in the registration), UDC will use its best efforts to effect the registration under the Act of all of the Shares that UDC has been so requested to register; provided, however, that:
(i) If, at any time after giving such written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, UDC shall determine for any reason not to register such securities, UDC may, at its election, give written notice of such determination to PD-LD (or any authorized subsequent holder of Shares) and thereupon UDC shall be relieved of its obligation to register any Shares in connection with such registration (but not from its obligation to pay the Registration Expenses (as defined below) in connection therewith).
(ii) If PD-LD (or any authorized subsequent holder of Shares) requests some or all of its Shares to be included in UDC's registration, then PD-LD (or any authorized subsequent holder of Shares) must sell that portion of its Shares on the same terms and conditions as apply to UDC or other securities holders whose securities are being registered.
3.2 In the event the registration relates to an underwritten offering, if the managing underwriter advises UDC that, in its opinion, the number of securities proposed to be included in such registration should be limited due to market conditions, or not to include any selling shareholders, then UDC will include in such registration (i) first, the securities UDC proposes to sell, and (ii) second, the number of securities requested to be included in such registration pursuant to piggyback registration rights that, in the opinion of such managing underwriter, can be sold, such amount to be allocated pro rata among all such requesting holders on the basis of the relative number of securities each such holder has requested to be included in such registration.
3.3 In connection with any underwritten offering with respect to which PD-LD (or any authorized subsequent holder of Shares) shall have requested registration pursuant to this Section 3, UDC shall have the right to select the managing underwriter, if any, with respect to the offering.
3.4 In the event UDC is obligated to file a Registration Statement on Form S-3 or any other form pursuant to a contract or agreement, which contract or agreement provides that no other selling shareholders shall be included in such Registration Statement, then PD-LD shall have no rights to have any of the Shares registered through such Registration Statement.
4. About Registration.
4.1 UDC shall pay all Registration Expenses (as defined below) in connection with any registration, qualification or compliance hereunder, and PD-LD shall pay all Selling Expenses (as defined below) relating to the Shares resold by PD-LD. "Registration Expenses" shall mean all expenses, except for Selling Expenses, incurred by UDC in complying with the registration provisions of this Agreement, including, without limitation, all registration, qualification and filing fees, printing expenses, transfer agent fees, escrow fees, fees and disbursements of counsel for UDC, blue sky fees and expenses and the expense of any audits incident to or required by any such registration. "Selling Expenses" shall mean all selling commissions, underwriting fees and stock transfer taxes applicable specifically to the Shares and all fees and disbursements of counsel for PD-LD.
4.2 In the case of any registration filed by UDC pursuant to these
registration provisions, UDC will use its best efforts to: (i) prepare and file
with the SEC such amendments and supplements to the registration statement and
the prospectus used in connection with the registration statement as may be
necessary to comply with the provisions of the Act with respect to the
disposition of the Shares; (ii) cause such registration statement to become
effective and keep such registration statement effective until PD-LD has
completed the distribution of all of its Shares; (iii) furnish such number of
prospectuses and other documents incident thereto, including any amendment of or
supplement to the prospectus, as PD-LD from time to time may reasonably request;
(iv) cause all such Shares registered as described herein to be listed on each
securities exchange and quoted on each quotation service on which similar
securities issued by UDC are then, or contemporaneous with the effectiveness of
the registration statement will be, listed or quoted; (v) provide a transfer
agent and registrar for all Shares registered pursuant to the registration
statement and a CUSIP number for all such Shares; (vi) comply with all
applicable rules and regulations of the SEC; and (vii) file the documents
required of UDC and otherwise use its best efforts to maintain requisite blue
sky clearance in (A) all jurisdictions in which any of the Shares are originally
sold and (B) all other states specified in writing by PD-LD, provided as to
clause (B), however, that UDC shall not be required to qualify to do business or
consent to service of process in any state in which it is not now so qualified
or has not so consented.
4.3 PD-LD shall furnish to UDC such information regarding PD-LD and the distribution proposed by PD-LD as UDC may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance described herein. PD-LD shall represent that such information is true and complete.
4.4 UDC shall submit to the SEC, within five business days after UDC learns that no review of a particular registration statement will be made by the staff of the SEC or that the staff of the SEC has no further comments on such registration statement, as the case may be, a request for acceleration of effectiveness of such registration statement to a time and date not later than 48 hours after the submission of such request. UDC shall notify PD-LD of the effectiveness of the registration statement on the date that it is declared effective by the SEC. UDC represents and warrants to PD-LD that (a) any registration statement (including any amendments or supplements thereto and prospectuses contained therein), at the time it is first filed with the SEC, at the time it is ordered effective by the SEC and at all times during which it is required to be effective hereunder (and each such amendment and supplement at the time it is filed with the SEC and at all times during which it is available for use in connection with the offer and sale of the Shares) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (b) each prospectus, at the time the related registration statement is declared effective by the SEC and at all times that such prospectus is required by this Agreement be available for use by PD-LD, shall not contain any 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 in which they were made, not misleading.
4.5 UDC will furnish to PD-LD one copy of each letter written by or on behalf of UDC to the SEC or the staff of the SEC and each item of correspondence from the SEC or the staff of the SEC relating to any registration statement pertaining to the Shares (other than any portion of any such letter or item which contains information for which UDC has sought confidential treatment), each of which UDC hereby determines to be confidential information and which PD-LD hereby agrees to keep confidential.
4.6 As promptly as practicable after becoming aware of such event or circumstance, UDC will notify PD-LD of the occurrence of any event or circumstance of which UDC has knowledge as a result of which the prospectus relating to any registration statement pertaining to the Shares, 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, in light of the circumstances under which they were made, not misleading, and use reasonable efforts promptly to prepare a supplement or amendment to such registration statement and the related prospectus to correct such untrue statement or omission.
4.7 As promptly as practicable after becoming aware of such event, UDC will notify PD-LD of the issuance by the SEC of any stop order or other suspension of effectiveness of any registration statement pertaining to the Shares at the earliest practicable time.
4.8 UDC will permit PD-LD and counsel designated by PD-LD, at PD-LD's sole expense, to review and have a reasonable opportunity to comment on such registration statement and all amendments and supplements thereto at least two business days (or such shorter period as may reasonably be specified by UDC) prior to their filing with the SEC.
4.9 To the extent not prohibited by applicable law, UDC will indemnify and hold harmless PD-LD against any claims to which it may become subject under the Act or otherwise, insofar as such claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any of the transactions contemplated by the registration rights portion of this Agreement. Subject to those limitations on legal counsel set forth in Section 4.11, UDC shall reimburse PD-LD promptly as such expenses are incurred and are due and payable, for any documented reasonable legal fees or other documented and reasonable expenses incurred by it in connection with investigating or defending any such claim. Notwithstanding anything to the contrary contained herein, the indemnification contained in this Section 4.9 shall not apply to (i) a claim arising out of or based upon information relating to PD-LD furnished in writing to UDC by PD-LD expressly for use in connection with the preparation of any registration statement or any amendment thereof or supplement thereto; (ii) any claim arising out of or based on any statement or omission in any prospectus, which statement or omission was corrected in any subsequent prospectus that was delivered to PD-LD prior to the pertinent sale or sales of Shares by PD-LD; and (iii) amounts paid in settlement of any claim if such settlement is effected without the prior written consent of UDC.
4.10 To the extent not prohibited by applicable law, PD-LD will indemnify and hold harmless UDC against any claims to which it may become subject under the Act or otherwise, insofar as such claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement under which Shares were registered under the Act pursuant to this Agreement, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading. Subject to those limitations on legal counsel set forth in Section 4.11, PD-LD shall reimburse UDC promptly as such expenses are incurred and are due and payable, for any documented reasonable legal fees or other documented and reasonable expenses incurred by it in connection with investigating or defending any such claim. Notwithstanding anything contrary contained herein, the indemnification contained in this Section 4.10 shall only apply if and to the extent that the claim arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with information pertaining to PD-LD furnished in writing to UDC by PD-LD specifically for use in such registration statement or prospectus (and not corrected prior to the event giving rise to such claim for indemnification), and shall not apply to any amounts paid in settlement of any claim if such settlement is effected without the prior consent of PD-LD.
4.11 Promptly after receipt by either party (the "Indemnified Party") of notice of the commencement of any action (including any governmental action) that may fall within the scope of indemnification available to such party hereunder, such party shall deliver to other party (the "Indemnifying Party") a notice of the commencement thereof and the Indemnifying Party shall have the right to participate in and, to the extent the Indemnifying Party so desires, to assume control of the defense thereof with counsel reasonably satisfactory to the Indemnified Party; provided, however, that the Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the Indemnifying Party if, in the reasonable opinion of counsel retained by the Indemnifying Party, the representation by such counsel of both parties would be inappropriate due to actual or potential differing interests between the parties, in which case the Indemnifying Party shall not be responsible for more than one such separate counsel, and one local counsel in each jurisdiction in which an action is pending, for the Indemnified Party. The failure to deliver notice to the Indemnifying Party within a reasonable time of the commencement of any such action shall not relieve the Indemnifying Party of any liability to the Indemnified Party under Section 4.9 or Section 4.10, as applicable, except to the extent that the Indemnifying Party is prejudiced in its ability to defend such action. The indemnification required by Section 4.9 or Section 4.10, as applicable, shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable.
4.12 To the extent any indemnification by the Indemnifying Party
as set forth in Section 4.9 or Section 4.10, as applicable, is applicable by its
terms but is prohibited or limited by law, the Indemnifying Party agrees to make
the maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 4.9 or Section 4.10, as applicable, to the
fullest extent permitted by law. In determining the amount of contribution to
which the Indemnified Party is entitled, there shall be considered the relative
fault of each party, the parties' relative knowledge of and access to
information concerning the matter with respect to which the claim was asserted,
the opportunity to correct and prevent any statement or omission and any other
equitable considerations appropriate under the circumstances; provided, however,
that (a) no contribution shall be made under circumstances where the maker would
not have been liable for indemnification under the fault standards set forth in
Section 4.9 or Section 4.10, as applicable, and (b) no person or entity guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any other person or entity who was not
guilty of such fraudulent misrepresentation.
4.13 The indemnification and contribution provided in Sections 4.9 through 4.12 shall be in addition to any other rights and remedies available at law or in equity.