Document:

MEMORANDUM

To:         [Name]

From:       Len Stephens

Date:       November 20, 2001

Re:         Supplemental Options

If you do not tender any of your Eligible Options at all, we will grant you a
Supplemental Option under the 2001 Plan to purchase shares of our common stock,
but only if you continue to be an employee of Leap or one of its subsidiaries
through the grant date of the Supplemental Option. We will grant your
Supplemental Options, if any, shortly after the Offer expires. We expect to
grant Supplemental Options on DECEMBER 19, 2001. Each Supplemental Option will
have an exercise price per share equal to the last reported sale price of our
common stock on the Nasdaq National Market on the grant date of the Supplemental
Option. Supplemental Options will vest and become exercisable with respect to
25% of the shares of common stock covered by the Supplemental Option on each
yearly anniversary of the grant date of the Supplemental Option.

YOUR SUPPLEMENTAL OPTION WILL BE FOR ____________ SHARES.

Please note that if you wish to tender any of your Eligible Options, you must
return your Election Form to Stock Administration by the expiration of the
Offer. The Offer expires on Tuesday, December 18, 2001, at 9:00 p.m., Pacific
Time, unless it is extended by us.<PAGE>

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.

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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.

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<PAGE>

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).

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<PAGE>

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).

                                      - 4 -
<PAGE>

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:

                                      - 5 -
<PAGE>

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.

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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.

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<PAGE>

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.

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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.

                                      - 9 -
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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.

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         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.

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         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.

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         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.

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         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.

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         (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.

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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.

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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.

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                  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.]

                                     - 19 -
<PAGE>

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:

                  _____________________________
                  _____________________________
                  _____________________________
                  _____________________________
                  Fax No.:_____________________

         15.3 All payments set forth in Section 4.0 of this Agreement shall be
paid via bank wire transfer to:

                  _____________________________
                  _____________________________
                  _____________________________
                  ABA #________________________
                  Account #____________________
                  Account Name:________________

or by check to MOTOROLA and mailed via Federal Express or a like express carrier
directly to:

                  MOTOROLA, INC.
                  _____________________________
                  _____________________________
                  _____________________________

                                     - 20 -
<PAGE>

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.

                                     - 21 -
<PAGE>

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]

                                     - 22 -
<PAGE>

CONFIDENTIAL

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

Name: Jon Meyer                     Date:
      -----------------------------      ------------------------

Title: Senior Vice President and
       Assistant General Counsel
       ----------------------------

UNIVERSAL DISPLAY CORPORATION

By: /s/ Steven V. Abramson
    -------------------------------

Name: Steven V. Abramson            Date:
      -----------------------------      ------------------------

Title: President
       ----------------------------

                                     - 23 -

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