--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

OLED TECHNOLOGY LICENSE AGREEMENT
 

THIS OLED TECHNOLOGY LICENSE AGREEMENT (this “Agreement”) is entered into
effective as of November 30, 2009 (the “Effective Date”), by and between
Universal Display Corporation, a Pennsylvania corporation with a place of
business at 375 Phillips Blvd, Ewing, New Jersey 08618, U.S.A. (“Universal
Display”); and Showa Denko K.K. (“Showa Denko”), a Japanese corporation with a
place of business at 13-9, Shiba Daimon 1-chome, Minato-ku, Tokyo, 105-8518
Japan.
 
BACKGROUND
 
WHEREAS, Universal Display has rights in certain patents and possesses certain
know-how concerning Organic Light Emitting Devices; and
 
WHEREAS, Showa Denko desires to obtain license rights to practice under these
patents and to use this know-how on the terms and conditions set forth herein.
 
NOW, THEREFORE, intending to be legally bound, each of Showa Denko and Universal
Display hereby agrees as follows:
 
 
AGREEMENT
 
Article 1                      Definitions
 
In addition to other terms defined elsewhere herein, the following terms shall
have their corresponding meanings when used in this Agreement.
 
1.1           “Affiliate” means all entities under the control of a party,
whether directly or through one or more intermediaries.  For such purposes,
“control” shall mean the ability to make, or participate meaningfully in the
making of, business decisions on behalf of the relevant entity.  [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.]
 
1.2           “Know-How” means unpatented technical information, data,
specifications, plans, drawings, designs, blueprints, formulae, processes and
other similar items of a trade secret or confidential nature.
 
1.3           “Licensed Product” means an OLED Light Source, or any product or
part thereof that incorporates one or more OLED Light Sources, which OLED Light
Source(s) (a) are covered, in whole or in part, by any Valid Claim(s) of a
Universal Display Patent; (b) are manufactured using a process that is covered,
in whole or in part, by any Valid Claim of a Universal Display Patent; and/or
(c) are manufactured using any of the Universal Display Know-How.
 
1.4           “Lighting” means a source of direct or indirect illumination,
including, but not limited to, a room, area or architectural lighting source, a
backlight for an LCD display or other
 

Universal Display Corporation
 
Page 1 of 19

--------------------------------------------------------------------------------

 

1.5           consumer electronics product, or a source of illumination for
signage; provided, however, that the source of illumination shall not itself
utilize addressable pixel elements.
 
1.6           “Net Sales Revenue”
 
1.6.1           For Licensed Products that are sold by Showa Denko or Permitted
Sublicensees to non-Affiliated third parties solely for cash, “Net Sales
Revenue” means the gross amount invoiced or received, whichever occurs sooner,
on account thereof, less the following items where separately itemized on the
customer invoice for the Licensed Products: (a) discounts and allowances not
otherwise credited to the customer or its Affiliates; (b) taxes and duties
actually remitted to the appropriate taxing authorities and not refunded; (c)
transportation charges actually paid to third-party carriers; (d) insurance
costs actually paid or accrued for such purpose; and (e) refunds or credits
actually given for returned or defective items.
 
1.6.2           For all other Licensed Products sold or otherwise transferred by
Showa Denko or Permitted Sublicensees, “Net Sales Revenue” means the greater of
(a) or (b), where (a) is the transfer price recorded by Showa Denko or the
Permitted Sublicensee for such sale or transfer; and (b) is the average amount
of Net Sales Revenue according to Section 1.5.1 above at which Licensed Products
of similar kind and quantity have been sold by Showa Denko or the Permitted
Sublicensee to non-Affiliated third parties during the same calendar quarter, or
if no such amount is available, the fair market value of such Licensed Products.
 
1.6.3           If either party presents reasonable evidence that the amount
calculated as set forth above does not fairly reflect the fair market value of
any Licensed Product (such as evidence that the industry-wide average sales
price of substantially similar products differs significantly from the price
calculated herein, or evidence that additional consideration is being received
by Showa Denko or the Permitted Sublicensee based on the downstream sale of a
Licensed Product), the parties shall in good faith negotiate a more equitable
method of calculating Net Sales Revenue with respect to such Licensed Products.
 
1.7           “OLED” or “Organic Light Emitting Device” means a device
consisting of two electrodes, together with one or more chemical substances
deposited between these two electrodes, at least one of which is an organic or
organometallic material, which device emits light when a voltage is applied
across the electrodes, and the like device.
 
1.8           “OLED Light Source” means an OLED device fabricated by a Solution
Processing Method, or a series of such devices, which OLED device(s) are
intended for use in Lighting applications, including [The confidential material
contained herein has been omitted and has been separately filed with the
Commission.]  Two potential configurations of an OLED Light Source, by example
only, are set forth in Exhibit A attached hereto.
 
1.9           “Permitted Sublicensee” means any corporation or other legal
entity more than [The confidential material contained herein has been omitted
and has been separately filed with the Commission.] of whose outstanding shares
(representing the right to vote for the election of the majority of directors or
other managing authority) are now, or hereinafter owned and controlled directly
or indirectly by Showa Denko, but such corporation, company or other legal
 

Universal Display Corporation
 
Page 2 of 19

--------------------------------------------------------------------------------

 

1.10           entity (a) shall be deemed a Permitted Sublicensee only so long
as such ownership and control exists; and (b) shall not include any joint
venture or other similar entity formed with a third party having its own OLED
development program or OLED business.
 
1.11           “Solution Processing Method” means a fabrication method wherein
[The confidential material contained herein has been omitted and has been
separately filed with the Commission.]
 
1.12           “Universal Display Know-How” means Know-How of Universal Display
relating to the design or manufacture of an OLED Light Source.
 
1.13           “Universal Display Patents” means all patents and patent
applications pertaining to OLED Light Sources that are issued, registered,
granted, allowed or published in the world as of the Effective Date and which
Universal Display owns or has the right to license to Showa Denko hereunder,
including, but not limited to, the issued, registered, granted or published
patents and patent applications listed in Exhibit C, together with such future
patents and patent applications as are specified in Section 2.3 below.
 
1.14           “Universal Display Technology” means the Universal Display
Patents and the Universal Display Know-How.
 
1.15           “Valid Claim” means a claim of an issued, registered, granted,
allowed or published patent or patent application, which claim has neither
expired nor been finally held unpatentable, invalid or unenforceable by a court
or other government agency of competent jurisdiction.
 
Article 2                      License Rights
 
2.1           Grant of License to Showa Denko.  Subject to the remaining
provisions of this Article 2, Universal Display hereby grants to Showa Denko a
worldwide, royalty-bearing, non-exclusive and non-transferable (except in
connection with a permitted transfer of this Agreement as a whole) license
right, without rights to sublicense except as permitted in Section 2.2 below,
under the Universal Display Patents, and to use the Universal Display Know-How,
to manufacture, have manufactured (but only in accordance with the following
sentence), sell, offer for sale and use Licensed Products.  [The confidential
material contained herein has been omitted and has been separately filed with
the Commission.]
 
2.2           Permitted Sublicensees.  Showa Denko shall be permitted to grant
sublicenses of the foregoing license rights solely to its Permitted
Sublicensees, provided that (a) each such sublicense shall be pursuant to a
written agreement between Showa Denko and the Permitted Sublicensee, which
written agreement shall obligate the Permitted Sublicensee to abide by the scope
of license and other applicable provisions of this Agreement; (b) in addition to
its other rights or remedies hereunder, Universal Display shall be expressly
identified in the written sublicense agreement as a third-party beneficiary
thereof, entitled to enforce the scope of license and other applicable
provisions of this Agreement directly against the Permitted Sublicensee; (c)
Showa Denko shall identify the name and business address of each such Permitted
Sublicensee to
 

Universal Display Corporation
 
Page 3 of 19

--------------------------------------------------------------------------------

 

2.3           Universal Display in writing promptly following its entry into a
written sublicense agreement with the Permitted Sublicensee; and (d) Showa Denko
shall use its best efforts to cause each Permitted Sublicensee abide by the
scope of license and other applicable provisions of this Agreement.
 
2.4           License Rights to Future Patents and Know-How.  To the extent it
has the right to do so, Universal Display shall expand Showa Denko’s license
rights under Section 2.1 above to include any additional patents, patent
applications and Know-How of Universal Display pertaining to OLED Light Sources
that are owned by or licensed to Universal Display and which are issued,
registered, granted, allowed published or generated during the first five (5)
years of the Term (defined below) [The confidential material contained herein
has been omitted and has been separately filed with the Commission.]  Universal
Display shall periodically (at least two times per year) update Exhibit C to
include any such additional patents and patent applications that are issued,
registered, granted, allowed or published, and promptly notify the updated
Exhibit C to Showa Denko.
 
2.5           No Rights Respecting Certain OLED Chemicals.  [The confidential
material contained herein has been omitted and has been separately filed with
the Commission.] As used herein, “Universal Display Proprietary OLED Chemical”
means [The confidential material contained herein has been omitted and has been
separately filed with the Commission.]
 
2.6           No Rights Respecting Certain OLED Manufacturing
Equipment.  Nothing in this Agreement shall be construed as authorizing or
otherwise permitting Showa Denko, any Permitted Sublicensee or Authorized
Contract Manufacturer, or any third party claiming through them, to practice
under any Universal Display Patents, or to use any Universal Display Know-How,
for purposes of manufacturing equipment or machinery used to produce an OLED
[The confidential material contained herein has been omitted and has been
separately filed with the Commission.] (“Universal Display Proprietary OLED
Manufacturing Equipment”).  Showa Denko and its Permitted Sublicensees and
Authorized Contract Manufacturers shall not manufacture Licensed Products
hereunder using any Universal Display Proprietary OLED Manufacturing Equipment
that they know, or have reason to know, is being made for or sold to them
without appropriate license rights having been obtained from Universal Display.
 
2.7           Acknowledgement of Derivative Rights.  Showa Denko acknowledges
that certain of the Universal Display Technology is licensed by Universal
Display from the Trustees of Princeton University (“Princeton”), the University
of Southern California (“USC”), the University of Michigan (“Michigan”) and
Motorola, Inc. (“Motorola”), and, therefore, that Showa Denko’s license rights
under this Agreement with respect to such Universal Display Technology are
subject to the reserved rights of and obligations to such third parties under
their license agreements with Universal Display.  Showa Denko further
acknowledges that the U.S. Government has certain reserved rights with respect
to those Universal Display Patents claiming inventions that were first conceived
or reduced to practice under contracts between the U.S. Government and Universal
Display or its licensors.  Universal Display hereby covenants to Showa Denko
that: (a) Universal Display shall comply in all material respects with the terms
of its license agreements with such third-party licensors and its contracts with
or awards from the U.S. Government as in either case are relevant to Showa
Denko’s exercise of the license rights
 

Universal Display Corporation
 
Page 4 of 19

--------------------------------------------------------------------------------

 

2.8           granted by Universal Display hereunder; and (b) no additional
consideration shall be owed by Showa Denko to such third-party licensors or the
U.S. Government on account of Showa Denko’s exercise of such license
rights.  Nothing herein shall be construed as limiting or restricting the
reserved rights of or obligations to Universal Display’s third-party licensors
or the U.S. Government with respect to the Universal Display Technology.  Upon
Showa Denko’s request, Universal Display shall provide Showa Denko with copies
(which may be reasonably redacted by Universal Display to avoid disclosing
confidential information not relevant to this Agreement) of such of Universal
Display’s agreements with such third-party licensors and of the applicable
portions its relevant contracts with or awards from the U.S. Government.
 
2.9           Business Consolidations.  Should Showa Denko acquire the existing
OLED business of any third party, or should a third party acquire the OLED
business of Showa Denko, the license rights granted to Showa Denko under this
Agreement shall not extend to any current products of such third party’s OLED
business unless expressly agreed to by Universal Display in writing.  [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.]  Should Universal Display have already entered into
a similar license agreement with the third party at the time of such
acquisition, there shall be no reduction of the payment or other obligations of
Showa Denko under this Agreement as they pertain to products of Showa Denko’s
OLED business, or of such third party under its similar license agreement as
they pertain to products of the third party’s OLED business, unless expressly
agreed to by Universal Display in writing.
 
2.10           Reservation of Rights.  Except for the license rights expressly
granted to Showa Denko under this Article 2, all rights to practice under the
Universal Display Patents and to use the Universal Display Know-How are reserved
unto Universal Display and its licensors.  No implied rights or licenses to
practice under any patents or to use any unpatented inventions, Know-How or
technical information of either party are granted to the other party hereunder.
 
2.11           [The confidential material contained herein has been omitted and
has been separately filed with the Commission.]
 
Article 3                      Technical Assistance
 
3.1           Technical Assistance Agreement.  Universal Display and Showa Denko
shall conduct a program for Showa Denko to receive certain technical assistance
relating to the Universal Display Technology under a separate Technical
Assistance Agreement being entered into by the parties as of the same date
hereof.
 
3.2           Export Control.  Each party shall comply with all obligations
imposed on it under applicable law to control access to technical data and
materials under the U.S. Export Laws and Regulations, or any foreign
counterparts thereof, and shall adhere to such laws and regulations in handling
and disclosing any technical data and materials received by it under this
Agreement.
 
3.3           Patent Matters, Attribution and Samples
 
Universal Display Corporation
 
Page 5 of 19

--------------------------------------------------------------------------------

 
 
3.4           Patent Validity.  Showa Denko shall not, and shall ensure that its
Affiliates do not, challenge or oppose, or assist others in challenging or
opposing (or initiating other proceedings of a similar nature), the issuance,
validity or enforceability of any of the Universal Display Patents during the
term of this Agreement, except that the foregoing shall not apply to patents in
jurisdictions where such a prohibition is contrary to law or regulation.
 
3.5           Patent Marking.  Upon Universal Display’s request, Showa Denko and
its Permitted Sublicensees shall apply or cause to be applied to all Licensed
Products, or their packaging, such reasonable markings or notices of the
Universal Display Patents as may be requested in writing by Universal Display in
order to reasonably protect Universal Display’s rights and interests therein
under the laws of the countries in which such Licensed Products are or are
likely to be marketed, sold or used.
 
3.6           Attribution.  With respect to any Licensed Product that would, but
for the license rights granted hereunder, infringe the [The confidential
material contained herein has been omitted and has been separately filed with
the Commission.] patents being sublicensed to Showa Denko, Showa Denko shall
ensure, and require its Permitted Sublicensees to ensure, that such Licensed
Products are marked on an exposed surface with one of the following notices:
[The confidential material contained herein has been omitted and has been
separately filed with the Commission.]  When such a notice would not reasonably
and customarily be applied to such a Licensed Product, it shall instead appear
prominently in data sheets or other literature accompanying the Licensed
Product.
 
3.7           Non-Use of Certain Names.  Showa Denko and its Permitted
Sublicensees shall not use the names of Princeton, USC or Michigan in connection
with any products, promotion or advertising without the prior consent of
Princeton, USC or Michigan, as applicable, except to the extent reasonably
required by law.  Notwithstanding the foregoing sentence, Showa Denko and its
Permitted Sublicensees may state that their license rights hereunder are
derivative of rights granted by Princeton, USC and Michigan to Universal Display
under the license agreement among them.
 
3.8           [The confidential material contained herein has been omitted and
has been separately filed with the Commission.]
 
3.9           Amendments to the Universal Display Patents.  To the extent
applicable law requires Universal Display to obtain Showa Denko’s approval for
amendments to a specification of any Universal Display Patent licensed
hereunder, Showa Denko agrees that it shall promptly approve all such reasonable
amendments proposed by Universal Display.
 
Article 4                      Consideration
 
4.1           License Fees.  In partial consideration of the license rights
granted by Universal Display hereunder, Showa Denko shall pay to Universal
Display the license fees specified in Exhibit B hereto.  Said license fees are
due and payable on the date(s) specified in Exhibit B
 

Universal Display Corporation
 
Page 6 of 19

--------------------------------------------------------------------------------

 

4.2           hereto.  All such fees are non-refundable and shall be in addition
to, and not applied to reduce, any royalties payable hereunder.
 
4.3           Royalties.  In further consideration of the license rights granted
by Universal Display hereunder, Showa Denko shall pay to Universal Display
running royalties at the rates specified in Exhibit B hereto on account of Net
Sales Revenue from Showa Denko’s or its Permitted Sublicensees’ worldwide sales
or other disposition of Licensed Products.  No multiple royalties shall be due
because any Licensed Product, or its manufacture, sale, other disposition or
usage, is or may be covered by more than one Universal Display Patent licensed
to Showa Denko hereunder.  For clarification, royalties shall not be calculated
or payable on account of any item that is supplied to Showa Denko by a Permitted
Sublicensee or Authorized Contract Manufacturer, or to a Permitted Sublicensee
by Showa Denko or an Authorized Contract Manufacturer, if such item does not
include each and every element of an OLED Light Source, but rather royalties
shall be calculated and payable on account of Showa Denko’s or the Permitted
Sublicensee’s subsequent sale or other disposition of a Licensed Product that
constitutes or incorporates the supplied item.  [The confidential material
contained herein has been omitted and has been separately filed with the
Commission.]
 
4.4           Royalty Reports.  Within forty-five (45) days following the end of
each [The confidential material contained herein has been omitted and has been
separately filed with the Commission.] during the Term (and if the Term ends in
the middle of a [The confidential material contained herein has been omitted and
has been separately filed with the Commission.], within forty-five (45) days
following the end of the Term), Showa Denko shall submit to Universal Display a
written report, in English, that includes the following information (each, a
“Royalty Report”): (a) a description of all Licensed Products sold or otherwise
disposed of by Showa Denko or Permitted Sublicensees during such [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.], including the number of each type of Licensed
Product sold; (b) gross amounts invoiced or received on account of such sales or
other disposition of Licensed Products; and (c) Showa Denko’s reasonably
detailed calculation of the royalties due and owing to Universal Display on
account of such sales or other disposition of Licensed Products [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.]
 
4.5           Payment of Royalties.  Within forty-five (45) days following the
end of each [The confidential material contained herein has been omitted and has
been separately filed with the Commission.] during the Term (and if the Term
ends in the middle of a [The confidential material contained herein has been
omitted and has been separately filed with the Commission.], within forty-five
(45) days following the end of the Term), Showa Denko shall pay directly to
Universal Display the royalties due and payable with respect to Licensed
Products sold or otherwise disposed of during such [The confidential material
contained herein has been omitted and has been separately filed with the
Commission.].
 
4.6           [The confidential material contained herein has been omitted and
has been separately filed with the Commission.]
 
Universal Display Corporation
 
Page 7 of 19

--------------------------------------------------------------------------------

 
 
4.7           [The confidential material contained herein has been omitted and
has been separately filed with the Commission.]
 
Article 5                      Payment Terms; Audit Rights
 
5.1           Payments.  All amounts due to Universal Display hereunder shall be
paid in U.S. Dollars by wire transfer to a bank designated by Universal Display
in writing, or by such other means as the parties may agree in
writing.  Universal Display’s current wire instructions are as follows:
 
[The confidential material contained herein has been omitted and has been
separately filed with the Commission.]

Each payment shall be fully earned when due and nonrefundable once made.  All
payments due hereunder shall be made without set-off, deduction or credit for
any amount owed (or alleged to be owed) by Universal Display to Showa Denko or
any of its Affiliates.  Without limiting its other rights or remedies on account
of any late payment, Universal Display may require Showa Denko to pay interest
on any late payments at a per annum rate equal to [The confidential material
contained herein has been omitted and has been separately filed with the
Commission.].
 
5.2           Payment Authorization and Associated Charges.  Showa Denko shall
secure all authorizations required for payment of all amounts due to Universal
Display hereunder and shall bear all transfer fees, taxes and other charges
associated therewith.  If Showa Denko believes that any income taxes imposed by
any national, provincial or local government of relevant countries on amount
payable to Universal Display hereunder will need to be withheld, Showa Denko
shall provide Universal Display with prompt written notice thereof.  Thereupon,
the parties will cooperate in good faith and use their best efforts to promptly
file for and obtain appropriate governmental exemptions that would eliminate the
requirement for Showa Denko to withhold such taxes.  If, notwithstanding these
efforts, tax withholding is nonetheless required, Showa Denko may make the
appropriate withholding from amounts payable to Universal Display hereunder, and
Showa Denko shall then promptly pay the withheld amounts to the appropriate tax
authorities.  Promptly upon making each such tax payment, Showa Denko shall
obtain and forward to Universal Display the official tax receipt(s) issued by
the relevant government to support Universal Display’s claim to applicable tax
credits or refunds.
 
5.3           Currency Conversion and Restriction.  All royalties due hereunder
based on Licensed Products sold or otherwise disposed of by Showa Denko or
Permitted Sublicensees outside of the United States shall be payable in U.S.
Dollars at the rate of exchange for the currency of the country in which such
sales or usage occurs, which rate of exchange shall equal the exchange rate as
published in The Wall Street Journal on the last business day of the [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.] for which payment is being made.  All royalties
shall be paid to Universal Display without deduction of currency exchange fees
or other similar amounts.  If at any time the legal restrictions of a country
outside of the United States prevent Showa Denko from paying Universal Display
any amounts due hereunder, Universal Display may direct Showa Denko to make such
payment to Universal Display’s account in a bank or other depository of such
country.
 

Universal Display Corporation
 
Page 8 of 19

--------------------------------------------------------------------------------

 

5.4           Records; Audit and Inspection.  Showa Denko and its Permitted
Sublicensees and Authorized Contract Manufacturers shall keep accurate and
complete financial and technical records with respect to their manufacture and
sale or other disposition of Licensed Products, and with respect to the
royalties payable to Universal Display hereunder on account thereof, for a
minimum of three (3) years from the date of payment of said royalties.  An
independent certified public accountant selected by Universal Display and
approved by Showa Denko (such approval not to be unreasonably withheld),
together with such technical support staff as such accountant reasonably deems
necessary, shall have the right to audit such records and inspect such of Showa
Denko’s or its Permitted Sublicensees’ or Authorized Contract Manufacturers’
materials, equipment and manufacturing processes as are reasonably necessary in
order to verify Showa Denko’s payment of all royalties due hereunder.  Universal
Display shall give reasonable advance notice of any such audit or inspection to
Showa Denko, and such audit or inspection shall be conducted during Showa
Denko’s or the Permitted Sublicensee’s or Authorized Contract Manufacturer’s
normal business hours and in a manner that does not cause unreasonable
disruption to Showa Denko’s or the Permitted Sublicensee’s or Authorized
Contract Manufacturer’s conduct of its business.  The results of any such audit
or inspection shall be deemed a Confidential Item (defined below) of Showa Denko
and shall not be disclosed by Universal Display except as may be necessary for
Universal Display to enforce its rights hereunder.  If the audit or inspection
reveals that Showa Denko has underpaid any royalties due to Universal Display,
Showa Denko shall immediately pay to Universal Display all unpaid royalties,
plus interest on the unpaid amounts from the date payment was initially due at
the rate specified in Section 6.1 above.  Universal Display shall be responsible
for paying the fees and expenses charged by the accountant for conducting any
audit or inspection hereunder; provided, however, that if the unpaid royalties
exceed [The confidential material contained herein has been omitted and has been
separately filed with the Commission.] of the total royalties that should have
been paid by Showa Denko during the audited period, Showa Denko shall promptly
reimburse Universal Display for the reasonable fees and expenses charged by such
accountant.
 
Article 6                      Confidentiality and Publicity
 
6.1           Obligations of Confidentiality and Non-Use.  Each party (the
“Recipient”) shall handle and maintain all Confidential Items (defined below) of
the other party in accordance with the following terms and conditions:
 
6.1.1           Recipient shall not publish, disclose or otherwise disseminate
any Confidential Items of the other party, except to such of Recipient’s (and,
in the case of Showa Denko, its Permitted Sublicensees’ and Authorized Contract
Manufacturers’) employees, officers and agents who have a “need to know” it to
accomplish the purposes of this Agreement, and then only if such persons
previously have agreed in writing to handle and maintain such Confidential Items
in accordance with the provisions of this Agreement or provisions substantially
similar thereto.  Disclosure or dissemination of Confidential Items of the other
party to additional persons or entities requires the prior written approval of
such other party, which consent shall not be unreasonably withheld.
 
6.1.2           Recipient shall maintain all Confidential Items of the other
party in a safe and secure place with reasonable safeguards to prevent any
unauthorized access to or disclosure
 

Universal Display Corporation
 
Page 9 of 19

--------------------------------------------------------------------------------

 

6.1.3           of such Confidential Items.  As used herein, “reasonable
safeguards” means all safeguards that a reasonable person would take to protect
the Confidential Item in question, which safeguards shall be no less than the
safeguards Recipient takes to protect its own confidential or proprietary items
of a similar nature.
 
6.1.4           Recipient may copy Confidential Items of the other party only as
is reasonably necessary for Recipient to accomplish the purposes of this
Agreement.  [The confidential material contained herein has been omitted and has
been separately filed with the Commission.] copying or reproduction of
Confidential Items that are chemical substances is strictly prohibited.
 
6.1.5           Recipient shall not utilize or exploit any Confidential Items of
the other party, or permit or assist others to utilize or exploit such
Confidential Items, except as is reasonably necessary to accomplish the purposes
of this Agreement.  Reverse engineering, disassembly or other methods designed
to derive the composition, structure, method of manufacture or purity of any
Confidential Items that are chemical substances is strictly prohibited [The
confidential material contained herein has been omitted and has been separately
filed with the Commission.]
 
6.1.6           Recipient shall not publish or otherwise disclose to third
parties any test results or other information or data regarding Recipient’s
evaluation of any Confidential Items of the other party without the other
party’s prior written consent.
 
6.1.7           Promptly upon learning of any unauthorized use or disclosure of
any Confidential Item of the other party, Recipient shall provide the other
party with written notice thereof and take such other steps as are reasonably
requested by the other party in order to limit the effects of such use or
disclosure and/or prevent any further unauthorized use or disclosure of such
Confidential Item.
 
6.1.8           Promptly upon the expiration or sooner termination of this
Agreement, Recipient shall return to the other party, destroy and/or delete from
Recipient’s records and computer systems all Confidential Items of the other
party, including any copies or portions thereof, in Recipient’s possession or
control; provided, however, that Recipient may retain one copy of documents
incorporating Confidential Items for archival purposes only.  Within thirty (30)
days following the other party’s written request, Recipient shall provide the
other party with a certificate of Recipient’s compliance with the foregoing
requirements.
 
6.2           Definition of Confidential Items.  As used herein, “Confidential
Items” of a party are all trade secret, proprietary and confidential information
and materials, in written, oral, visual or electronic form, relating to such
party’s or its licensors’, suppliers’ or business partners’ technologies,
compounds, research programs, operations and/or financial or business condition
(including, without limitation, know-how, data, drawings, designs,
specifications, formulations, processes, methods, equipment, software and
pricing information) that is (i) disclosed in writing and marked as
“Confidential”, “Proprietary” or with similar words at the time of disclosure,
or (ii) orally or otherwise visually disclosed and identified as confidential or
proprietary at the time of
 

Universal Display Corporation
 
Page 10 of 19

--------------------------------------------------------------------------------

 

6.3           disclosure and confirmed as such in writing within thirty (30)
days thereafter.  Notwithstanding the foregoing, “Confidential Items” of a party
shall not include any information or materials that:
 
6.3.1           are approved by such party in writing for release by Recipient
without restriction;
 
6.3.2           Recipient can demonstrate by written records were previously
known to Recipient other than through a prior disclosure by such party or any
third party with an obligation of confidentiality to such party;
 
6.3.3           are publicly known as of the date of this Agreement, or become
public knowledge subsequent thereto, through no act or omission of Recipient or
any third party receiving such items from or through Recipient;
 
6.3.4           are obtained by Recipient in good faith from a third party
without the violation of any obligation of confidentiality to such party by
either Recipient or the third party; or
 
6.3.5           are independently developed by or on behalf of Recipient without
the benefit of such party’s Confidential Items, as shown by competent written
records.
 
6.4           [The confidential material contained herein has been omitted and
has been separately filed with the Commission.]
 
6.5           Disclosure Required by Law.  This Agreement shall not restrict
Recipient from disclosing any Confidential Items of the other party to the
extent required by applicable law, or by the order of any court or government
agency; provided, however, that Recipient shall afford the other party prompt
notice of such law or order, so that the other party may interpose an objection
to such disclosure or take whatever other actions the other party deems
appropriate to protect such Confidential Items, and provided further that
Recipient shall use all reasonable efforts to limit such disclosure to only
those Confidential Items that are required to be disclosed and to ensure that
the person or entity to whom such Confidential Items are disclosed agrees to
keep them confidential.
 
6.6           Responsibility for Personnel.  Recipient shall be responsible for
the acts or omissions of any persons or entities receiving Confidential Items of
the other party from or through Recipient to the extent such acts or omissions,
if performed or not performed by Recipient, would constitute violations of this
Agreement by Recipient.
 
6.7           Universal Display’s Licensors.  Notwithstanding the foregoing,
Universal Display shall have the right to provide an unredacted copy of this
Agreement, along with copies of all Royalty Reports, to each of Princeton, USC,
Michigan and Motorola; provided that in such case Universal Display shall cause
such third-party licensors to have first agreed in writing to handle and
maintain such items in accordance with the provisions of this Article 7, or
provisions substantially similar thereto.
 
Universal Display Corporation
 
Page 11 of 19

--------------------------------------------------------------------------------

 
 
6.8           Confidentiality of this Agreement.  The terms of this Agreement
shall be deemed Confidential Items of each party and treated as such by both
parties.  Notwithstanding the foregoing sentence, either party may disclose in
its public filings such of the terms of this Agreement as are reasonably
required for such party to comply with applicable securities laws and
regulations, including, without limitation, by filing an appropriately redacted
copy of this Agreement in connection therewith.
 
6.9           Press Releases and Other Public Disclosure.  Within four (4)
business days following the date on which this Agreement is executed, Universal
Display will be required to file with the U.S. Securities and Exchange
Commission a Current Report on Form 8-K that describes the material terms of
this Agreement.  Concurrent with Universal Display’s filing of such Current
Report, the parties will issue a joint press release describing the general
nature of their business relationship.  Each party shall provide a suitable
quote from one of its high-level officials for this press release.  Any
subsequent press release regarding this Agreement or the relationship between
the parties must be consented to by both parties; provided, however, that this
shall not prohibit either party from making any disclosure of this Agreement or
the terms hereof to the extent required by law or regulation.
 
6.10           [The confidential material contained herein has been omitted and
has been separately filed with the Commission.]
 
Article 7                      Representations and Warranties; Disclaimers and
Limitations of Liability
 
7.1           Warranties by Both Parties.  Each party represents and warrants to
the other that such party has the right, power and authority to enter into this
Agreement and to perform its obligations hereunder, and that such performance
will not violate any other agreement or understanding by which such party is
bound.
 
7.2           Further Warranty by Universal Display.  Universal Display
additionally represents and warrants to Showa Denko that Universal Display owns
or has sufficient rights in the Universal Display Technology to grant the
license rights granted to Showa Denko hereunder.
 
7.3           Further Warranty by Showa Denko.  Showa Denko additionally
represents and warrants to Universal Display that it shall not, and that it
shall ensure its Permitted Sublicensees do not, bind or purport to bind
Universal Display to any affirmation, representation or warranty provided to any
other person with respect to any Licensed Products it may manufacture, sell,
offer for sale or use, or any processes it may employ in connection therewith.
 
7.4           Disclaimer of Additional Warranties.  ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF
NON-INFRINGEMENT, VALIDITY, QUALITY, PERFORMANCE, MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE, ARE HEREBY DISCLAIMED.  In particular, Universal Display
makes no representation or warranty that Showa Denko or any Permitted
Sublicensee will be able to manufacture, sell or use any Licensed Products
without obtaining additional license rights from third parties, and Showa Denko
and its Permitted Sublicensees
 
Universal Display Corporation
 
Page 12 of 19

--------------------------------------------------------------------------------

 
 
7.5           shall be solely responsible for determining the rights they are
required to obtain and for obtaining all such rights.
 
7.6           Required Disclaimer of Princeton, USC and Michigan.  PRINCETON,
USC AND MICHIGAN MAKE NO REPRESENTATIONS AND WARRANTIES AS TO THE PATENTABILITY
AND/OR DISCOVERIES INVOLVED IN ANY OF THE UNIVERSAL DISPLAY PATENTS LICENSED
HEREUNDER.  PRINCETON, USC AND MICHIGAN MAKE NO REPRESENTATION AS TO PATENTS NOW
HELD OR WHICH WILL BE HELD BY OTHERS IN ANY FIELD AND/OR FOR ANY PARTICULAR
PURPOSE.  PRINCETON, USC AND MICHIGAN MAKE NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
 
7.7           Limitation on Certain Damages.  IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER, OR TO ANY THIRD PARTY CLAIMING THROUGH THE OTHER, WHETHER
AS A RESULT OF BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, FOR
ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING
UNDER OR IN CONNECTION WITH A BREACH OR ALLEGED BREACH OF THIS AGREEMENT.  The
foregoing limitation shall not limit either party’s liability for: (a) any
claims of bodily injury or damage to tangible property resulting from gross
negligence or willful misconduct of such party or its Affiliates; (b) any
knowing or willful unauthorized use of materials or technology of the other
party or its Affiliates; (c) any knowing or willful infringement of patents of
the other party or its Affiliates; or (d) any breach of the provisions of
Article 7 respecting Confidential Items of the other party.
 
7.8           Essential Part of the Bargain.  The parties acknowledge that the
disclaimers and limitations of liability set forth in this Article 8 reflect a
deliberate and bargained for allocation of risks between them and are intended
to be independent of any exclusive remedies available under this Agreement,
including any failure of such a remedy to achieve its essential purpose.
 
Article 8                      Term and Termination
 
8.1           Term.  The term of this Agreement (the “Term”) shall commence on
the Effective Date and shall continue, unless terminated sooner as permitted
hereunder, until the latter of the date of expiration of the last to expire of
the Universal Display Patents.  Unless otherwise expressly agreed in writing by
the parties, all licenses granted under this Agreement shall expire immediately
upon any termination of this Agreement.
 
8.2           Termination for Breach.  Either party may terminate this Agreement
on written notice to the other party if the other party materially breaches any
of its obligations under this Agreement and fails to cure such breach within
sixty (60) days following written notice thereof by the terminating party.
 
8.3           Termination for Challenge of Patents.  Universal Display may
terminate this Agreement on written notice to Showa Denko if Showa Denko or any
of its Affiliates asserts or assists another in asserting (including through the
use of a “dummy” person or entity), before any
 

Universal Display Corporation
 
Page 13 of 19

--------------------------------------------------------------------------------

 

8.4           court, patent office or other governmental agency, that any of the
Universal Display Patents are invalid or unenforceable, should be cancelled or
invalidated (in whole or in part), or should otherwise not be granted, allowed
or issued.
 
8.5           Other Termination.  Either party may terminate this Agreement on
written notice to the other party if the other party permanently ceases
conducting business in the normal course, becomes insolvent or is adjudicated
bankrupt, makes a general assignment for the benefit of its creditors, admits in
writing its inability to pay its debts as they become due, permits the
appointment of a receiver for its business or assets, or initiates or becomes
the subject of any bankruptcy or insolvency proceedings which proceedings, if
initiated involuntarily, are not dismissed with sixty (60) days thereafter.
 
8.6           Survival.  The following provisions of this Agreement shall
survive the expiration or earlier termination of this Agreement:  (a) Articles 4
and 6 through 10; provided, however, that the obligations of each party with
respect to Confidential Items of the other party disclosed hereunder shall
survive the expiration or sooner termination of this Agreement for a period of
five (5) years; (b) any payment or reporting obligations of Showa Denko
respecting the sale or other disposition of Licensed Products occurring prior to
the date of such expiration or earlier termination; and (c) any other provisions
necessary to interpret the respective rights and obligations of the parties
hereunder.  Any termination of this Agreement shall be in addition to, and not
in lieu of, any other remedies that may be available, at law or equity,
including an action for the recovery of damages.
 
Article 9                      Miscellaneous
 
9.1           Independent Contractors.  This Agreement is not intended by the
parties to constitute, create, give effect to, or otherwise recognize a joint
venture, partnership, or formal business organization of any kind.  Each party
hereto shall act as an independent contractor, and neither shall act as an agent
of the other for any purpose.  Neither party has the authority to assume or
create any obligation, express or implied, on behalf of the other.
 
9.2           Force Majeure.  Neither party shall be in breach of this Agreement
for any failure of performance (other than a failure to pay amounts due and
owing hereunder) caused by an event beyond its reasonable control and not due to
its or its Affiliates’ fault or negligence.  In the event that such a force
majeure event occurs, the party unable to perform shall promptly notify the
other party of such non-performance and its expected duration.  In addition,
such party shall in good faith maintain such partial performance of this
Agreement as is reasonably possible, shall use all reasonable efforts to
overcome the cause of nonperformance and shall resume full performance as soon
as is reasonably possible.
 
9.3           Notices.  Any notices pertaining to the administration of this
Agreement or any breach or alleged breach thereof shall be in writing and shall
be deemed effectively given upon receipt of such notices by the recipient.  Such
notices shall be given by personal delivery, certified mail with postage prepaid
and return receipt requested, or prepaid delivery using a recognized private
courier, to each party at its address set forth below; provided, however, that
the parties may agree to exchange technical data and information by email or
facsimile
 

Universal Display Corporation
 
Page 14 of 19

--------------------------------------------------------------------------------

 

9.4           correspondence in lieu of the methods described above.  Either
party may change its address for such notices at any time by means of a notice
given in the manner provided in this paragraph.
 
All Royalty Reports and any other financial notices, to:

Universal Display Corporation
 
Showa Denko K.K.
375 Phillips Boulevard
 
13-9, Shiba Daimon 1-chome, Minato-ku
Ewing, New Jersey  08618
 
Tokyo, 105-8518 Japan

[The confidential material contained herein has been omitted and has been
separately filed with the Commission.]

All other notices and communications:

[same as above]
[same as above]

[The confidential material contained herein has been omitted and has been
separately filed with the Commission.]

9.5           Assignment.  Neither party may assign or transfer any of its
rights or delegate any of its obligations hereunder, by application of law or
otherwise, without the prior written consent of the other
party.  Notwithstanding the foregoing sentence and subject to Section 2.7 above,
either party may assign or transfer this Agreement, in its entirety and on
written notice to the other party, to a successor in interest to all or
substantially all of such party’s business or assets to which this Agreement
relates.  Any attempted assignment, transfer or delegation in violation of this
paragraph shall be null and void and without force and effect.  Nothing herein
shall confer any rights upon any person other than the parties hereto and their
respective permitted successors and assigns.
 
9.6           Equitable Relief.  In the event of a party’s actual or reasonably
anticipated infringement of the other party’s patents, unauthorized use of the
other party’s proprietary materials or information; or breach of the provisions
of Article 7 respecting the other party’s Confidential Items, the other party
may seek to obtain such injunctions, order and decrees as may be necessary to
restrain the activity, without the necessity of proving actual damages and
without posting any bond or other security.  Such injunctive relief shall be in
addition to any other rights or remedies available to the other party under this
Agreement, at law or in equity.
 
9.7           Choice of Law.  This Agreement shall be governed by and construed
in accordance with, the laws of the State of New York, U.S.A., without respect
to its rules on the conflict of laws.  The United Nations Convention on
Contracts for the International Sale of Goods shall not apply.  Any law or
regulation providing that the language of a contract shall be construed against
the drafter shall also not apply.
 
9.8           Dispute Resolution.  [The confidential material contained herein
has been omitted and has been separately filed with the Commission.]
 
Universal Display Corporation
 
Page 15 of 19

--------------------------------------------------------------------------------

 
 
9.9           Severability.  In the event that any term of this Agreement is
held to be invalid, illegal, or unenforceable, such invalidity, illegality, or
unenforceability shall not affect any other portion of this Agreement, and there
shall be deemed substituted for such term other term(s) that are permitted by
applicable law and that will most fully realize the intent of the parties as
expressed in this Agreement.
 
9.10           No Waivers.  The failure of either party to enforce, or any delay
in enforcing, any right, power or remedy that such party may have under this
Agreement shall not constitute a waiver of any such right, power or remedy, or
release the other party from any obligations under this Agreement, except by a
written document signed by the party against whom such waiver or release is
sought to be enforced.
 
9.11           Entire Agreement; Amendments.  This Agreement constitutes the
entire understanding and agreement of the parties respecting the subject matter
hereof and supersedes any and all prior agreements, arrangements or
understandings between the parties, whether written or oral, relating
thereto.  This Agreement may not be amended or supplemented in any way except by
a written document signed by both parties.
 
9.12           Counterparts.  This Agreement may be executed by the parties
hereto in separate counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
 
9.13           Headings.  The headings used in this Agreement are for reference
only and are not to be used in the interpretation or construction of this
Agreement.
 
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives.

Showa Denko K.K.
 
Universal Display Corporation
                   
By:
/s/ K. Tsukamoto
 
By:
/s/ Steven V. Abramson
         
Name:
Kenji Tsukamoto
 
Name:
Steven V. Abramson
         
Title:
Director, Chief Technology Officer
 
Title:
President
         
Date:
Dec. 15, 2009
 
Date:
Dec. 17, 2009

Universal Display Corporation
 
Page 16 of 19

--------------------------------------------------------------------------------

 

Exhibit A

OLED Light Source

[The confidential material contained herein has been omitted and has been
separately filed with the Commission.]

Universal Display Corporation
 
Page 17 of 19

--------------------------------------------------------------------------------

 

Exhibit B

License Fees and Royalty Rates

License Fees:

[The confidential material contained herein has been omitted and has been
separately filed with the Commission.]

Royalty Rates:

[The confidential material contained herein has been omitted and has been
separately filed with the Commission.]

Universal Display Corporation
 
Page 18 of 19

--------------------------------------------------------------------------------

 

Exhibit C

Universal Display Patents and Patent Publications

Separately attached hereto.

Universal Display Corporation
 
Page 19 of 19

--------------------------------------------------------------------------------