Document:

ex10_39.htm

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

 

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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

 

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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

 

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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

 

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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

 

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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

 

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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.]

 

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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.

 

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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

 

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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

 

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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.

 

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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 19exhibit101modificationagt.htm

     

    
      	
              Return
      to:

               

              Donna
      Williams

              RBC
      Bank (USA)

               Lending
      Service Center

               134
      North Church Street, Rocky Mount, North Carolina
  27802

            

    

     

     

     

    ______________________________Space
Above Line for Processing Data
_______________________________________________

     

    
      	
              RBC
      Bank

            	
              Modification
      Agreement

              (Cover
      Page)

            	 

    

     

     

    
      	
              This
      Agreement has been executed and delivered outside the State of Florida and
      is not
      secured by Florida real estate. No documentary stamp taxes are due
      herewith.

               

               

            	 
      	
              Prepared
      by:

              John
      I. Van Voris, Esq

              GreyRobinson,
      P.A.

              201
      N. Franklin Street, Ste 2200

              Tampa,
      Florida 33602

               

            

    

     

    
      	
              State
      of New York

            	 
      	
              County
      of New York

            

    

     

     

    
      	
              From:

            	
              BOVIE
      MEDICAL CORPORATION, a Delaware corporation (whether one or more,
      “Borrower”), with a  business and mailing address of 5115
      Ulmerton Road, Clearwater, Florida
33760.

            

    

     

     

    
      	
              To:

            	
              RBC
      BANK (USA) (“Bank”), with a business address of 134 N. Church Street,
      Rocky Mount, North Carolina 27804 and a mailing address of Post Office Box
      1220, Rocky Mount, North Carolina 27802-1220, which mailing address is the
      place to which all notices and communications should be sent to Bank
      regarding this Modification
Agreement.

            

    

     

    
      	
              Date:      As
      of  December 2, 2009

            
	 
      

    

     

    
      	
              Documents
      Modified:

            	
              Business
      Loan Agreement (Asset Based), Promissory Note and Commercial Security
      Agreement, each dated August 12, 2008

            
	
              Original
      Credit Facility:

            	
              Up
      to $5,000.000.00

            
	
              Revised
      Credit Facility:

            	
              Up
      to $8,000,000.00

            

    

     

     

     

     

    Customer
No.  _____________

    Loan No.
_________________

    
      	
              RBC
      Bank

            	
              MODIFICATION

              AGREEMENT

            

    

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    This
Agreement has been executed and delivered outside the State of Florida and is
not secured by Florida real estate. No documentary stamp taxes are due
herewith.

     

     

    THIS
MODIFICATION AGREEMENT (“Modification Agreement”), entered into as of the
2nd day of December, 2009, by BOVIE MEDICAL CORPORATION, a Delaware corporation
(“Borrower”, whether one or more) with a mailing address of 5115 Ulmerton Road,
Clearwater, Florida 33760, and RBC BANK (USA) (“Bank”), with a mailing address
of Post Office Box 1220, Rocky Mount, North Carolina
27802-1220.

     

    
      	
              A.  

            	
              Borrower
      has made and issued to Bank its promissory note (“Note”) in the original
      principal amount and dated as indicated on Attachment
      1 attached hereto.

            

    

     

    
      	
              B.  

            	
              If
      so indicated on Attachment
      1, the Note is secured and the security is generally as described
      on Attachment
      1.

            

    

     

    
      	
              C.  

            	
              The
      Note, any security documents described on Attachment
      1 and any other loan and security documents that are outstanding
      with respect to the extension of credit evidenced by the Note, even if not
      listed on Attachment
      1, are hereinafter collectively referred to as the “Contract” and
      the Contract is hereby incorporated herein as a part of this Modification
      Agreement.

            

    

     

    
      	
              D.  

            	
              Bank
      and Borrower mutually desire to modify the provisions of the Contract in
      the manner hereinafter set out, it being specifically understood and
      agreed that, except as herein modified, the terms and provisions of the
      Contract and the individual instruments, documents and agreements that
      make up the Contract shall remain unchanged and the Contract, as herein
      modified, shall continue in full force and effect as therein and herein
      written.

            

    

     

    NOW,
THEREFORE, Bank and Borrower, in consideration of the premises and the sum of
One Dollar ($1.00) to each in hand paid by the other, receipt and sufficiency of
which are hereby acknowledged by each, do hereby agree as follows:

     

    Section
1. Modification.  The
Contract shall be, and the same is, modified in the manner set forth in Attachment
2.

     

    Section
2. Effect
of Modification.  Nothing contained in this Modification
Agreement shall in any way impair the security now held for the indebtedness
evidenced by the Contract or the lien priority thereof, nor waive, annul, vary
or affect any provision, condition, covenant and agreement contained in the
Contract, nor affect or impair any rights, powers and remedies under the
Contract, except as herein specifically modified to do any one or more of the
foregoing.  If any provision in this Modification Agreement shall be
interpreted or applied by a court or other tribunal with personal and subject
matter jurisdiction over the parties hereto and the Contract, as modified, so as
to impair the security now held for the indebtedness or lien priority thereof,
or do any one or more of any of the foregoing, such provision shall be
ineffective to the extent it causes an impairment of such security or the lien
priority thereof or causes any of such other consequences, or the application
thereof shall be in a manner and to an extent which does not impair such
security or the lien priority thereof, or result in the occurrence of any of the
other consequences.  This Modification Agreement does not extend the
expiration dates or enlarge the terms of any property, physical damage, credit
and any other insurance written in connection with or financed by said
Contract.

     

    Section
3. Financing
Statements.  Borrower irrevocably authorizes Bank to file such
financing statements as may be necessary to protect, in Bank’s opinion, Bank’s
security interests and liens and, to the extent Bank deems necessary or
appropriate, to sign the name of Borrower with the same force and effect as if
signed by Borrower and to make public in financing statements and other public
filings such information regarding Borrower as Bank deems necessary or
appropriate, including, without limitation, federal tax identification numbers,
social security numbers and other identifying information.

     

    Section
4. Credit
Investigations; Bank’s Responsibilities.  Bank is irrevocably
authorized by Borrower to make and Section 5. have made
such credit investigations as it deems

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    appropriate
to evaluate Borrower’s credit, personal and financial standing and employment,
and Borrower authorizes Bank to share with consumer reporting agencies and
creditors its experiences with Borrower and other information in Bank’s
possession relative to Borrower.  Bank shall not have any obligation
or responsibility to do any of the following: (1) protect and preserve any
collateral and other security given or to be given in connection with the
Contract, as herein modified, against the rights of third persons having an
interest therein; (2) provide information to third persons relative to the
Contract, as herein modified, Bank’s liens and security interests in any
collateral and other security, or otherwise with respect to Borrower; and (3)
subordinate its liens and security interests in any collateral and other
security to the interests of any third persons or to enter into control
agreements relative to such collateral and other security.

     

    Section
6. Usury.  Bank
does not intend to and shall not reserve, charge and collect interest, fees and
charges under the Contract, as herein modified, in excess of the maximum rates
and amounts permitted by applicable law.  If any interest, fees and
charges are reserved, charged and collected in excess of the maximum rates and
amounts, it shall be construed as a mutual mistake, appropriate adjustments
shall be made by Bank and to the extent paid, the excess shall be returned to
the person making such a payment.

     

    Section
7. Documentary
Stamps, etc.  To the extent not prohibited by law and
notwithstanding who is liable for payment of the taxes and fees, Borrower shall
pay, on Bank’s demand, all intangible taxes, documentary stamp taxes, excise
taxes and other similar taxes assessed, charged and required to be paid in
connection with this Modification Agreement, and any future extension, renewal
and modification of the Contract, or assessed, charged and required to be paid
in connection with any of the loan documents which make up the
Contract.

     

    Section
8. Anti-Terrorism.
Borrower represents, warrants and covenants to Bank as follows: (1) Borrower (a)
is not and shall not become a person whose property or interest in property is
blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)), (b) does not engage in and shall not engage in any dealings or
transactions prohibited by Section 2 of such executive order, and is not and
shall not otherwise become associated with any such person in any manner
violative of Section 2, (c) is not and shall not become a person on the list of
Specially Designated Nationals and Blocked Persons, and (d) is not and shall not
become subject to the limitations or prohibitions under any other U.S.
Department of Treasury’s Office of Foreign Assets Control regulation or
executive order; (2) Borrower is and shall remain in compliance, in all material
respects, with (a) the Trading with the Enemy Act, as amended, and each of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or
executive order relating thereto, and (b) the Uniting And Strengthening America
By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA
Patriot Act of 2001); and (3) Borrower has not and shall not use all or any part
of the extension of credit evidenced by the Note, directly or indirectly, for
any payments to any governmental official or employee, political party, official
of a political party, candidate for political office, or anyone else acting in
an official capacity, in order to obtain, retain or direct business or obtain
any improper advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended..

     

    Section
9. Costs
and Expenses.  All of the costs and expenses incurred by Bank
in connection with this Modification Agreement shall be paid by Borrower upon
the request of and at the time of demand for payment thereof made by Bank on
Borrower.  As used herein, “costs and expenses” include, without
limitation, reasonable attorneys’ fees and fees of legal assistants, and
reasonable fees of accountants, engineers, surveyors, appraisers and other
professionals or experts – and all references to attorneys’ fees or fees of
legal assistants, or fees of accountants, engineers, surveyors, appraisers or
other professionals or experts shall mean reasonable fees.

     

    Section
10. Maintenance
of Records.  Bank is authorized to maintain, store and
otherwise retain this Modification Agreement and the other documents
constituting the Contract in their original, inscribed tangible forms or records
thereof in an electronic medium or other non-tangible medium which permits such
records to be retrieved in perceivable forms.

     

    Section
11. Waiver
of Jury Trial.  Borrower, to the extent permitted by law,
waives any right to a trial by jury in any action arising from or related to
this Modification Agreement and waives any right to a trial by jury in any
action or proceeding arising from or related to the Contract, as herein
modified.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    Section
12. Governing
Law.  This Agreement shall be governed and construed in
accordance with the laws of the State whose laws govern the Contract, excepting,
however, its conflict of law provisions.

     

    Section
13. Reservation
of Rights; Entire Agreement.  Bank does hereby reserve all
rights and remedies it may have against all parties secondarily liable for
repayment of the indebtedness evidenced by the Contract. The Contract, as herein
modified, contains the entire agreement of the parties and the undersigned do
hereby ratify and confirm the terms of the Contract, all of which shall remain
in full force and effect, as modified herein.  This Modification
Agreement shall be binding upon any assignee and successor in interest of the
parties hereto. Borrower waives and will not assert against any transferee and
assignee of Bank any claims, defenses, set-offs and rights of recoupment which
Borrower could assert against Bank, except defenses which Borrower cannot
waive.  All references herein to the “Modification Agreement” include
any supplemental agreements filed of record to reflect modifications of any of
the instruments, documents and other agreements making up the Contract that are
of record.

     

    The
undersigned have executed this Modification Agreement under seal as of the day
and year first above stated.

     

    
      	
              BANK:

               

              RBC
      BANK (USA)

               

              By:  _______________________________________

              Print
      Name:_________________________________

              Title:
      ______________________________________

               

               

            

    

     

    
      	
              BOVIE
      MEDICAL CORPORATION,

              a
      Delaware corporation

               

              By:  ________________________________________

              Print
      Name:  Andrew Makrides

              Title:            President

               

            	
              Witness:

               

              _______________________________________

              Print
      Name: _____________________________

               

            

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    Attachment
1

    to

    Modification
Agreement

     

    
      	
              1.

            	
              Describe
      Promissory Note (Date, Original Amount, Current Amount and all
      Modifications):

            
	 
      	 
      
	 
      	
              Promissory
      Note dated August 12, 2009 in the original principal amount of
      $5,000,000.00

            
	 
      	 
      
	
              2.

            	
              Describe
      Security Documents (Type, Date and if recorded, Recording
      Information):

            
	 	 
	 
      	
              Business
      Loan Agreement (Asset Based) dated August 12, 2008

            
	 	 
	 
      	
              Commercial
      Security Agreement dated August 12, 2008

            
	 	 
	 
      	
              Assignment
      of Deposit Agreement dated August 12,
2008

            

    

     

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    Attachment
2

    To

    Modification
Agreement

     

    The
Contract shall be, and the same is, modified as follows:

     

    1. The
maturity date stated in the Note is changed to October 1, 2012 and to the extent
the maturity date is stated in any of the other individual instruments,
documents and agreements that make up the Contracts, the maturity date stated
therein is changed to the date stated herein.

     

    2. The
interest rate stated in the Note is changed by changing the base index used for
determining the rate.  The base index is changed to the LIBOR Base
Rate effective December 2, 2009, and after the change the new interest rate will
be the LIBOR BASE RATE  plus 2.00%. The “LIBOR Base Rate” is the
London Interbank Offer Rate for U.S. Dollars for a term of one month which
appears on Bloomberg Professional Screen BBAM (or any generally recognized
successor method or means of publication) as of 11:00 a.m., London time, two (2)
London business days prior to the day on which the rate will become effective.
The rate for the first month or part thereof will initially become effective on
the date of this Modification Agreement as shown on the face hereof. Thereafter,
the rate will change and a new rate will become effective on the first calendar
day of each succeeding month. If for any reason, the London Interbank Offer Rate
is not available, then the “LIBOR Base Rate” shall mean the rate per annum which
banks charge each other in a market comparable to England’s Eurodollar market on
short-term money in U.S. Dollars for an amount substantially equivalent to the
principal amount due under the Contract as determined at 11:00 A.M., London
time, two (2) London business days prior to the day on which the rate will
become effective, as determined in the Bank’s sole discretion. Bank’s
determination of such interest rate shall be conclusive, absent manifest error.
Under no circumstances will the effective rate of interest on the Note be less
that a minimum floor rate of 4.00% per annum or greater than the maximum rate
allowed by applicable law.

     

    3. The
Note is supplemented by adding the following provisions:

     

    Unused
Fee.  Borrower shall pay a fee to Bank equal to 0.40% per annum
(40 basis points) on the undrawn balance of the Credit Facility. The fee shall
be billed with the interest and shall be due and payable monthly at the time the
interest is due and payable.

     

    Annual
Fee.  Borrower shall pay an annual fee to Bank equal to 0.50%
(50 basis points) which shall be due and payable on the date hereof and on
October 12, 2010.

     

     Late
Charges.  Borrower agrees to pay, upon demand by Bank or if demand
is not sooner made, on maturity of this Note, whether such maturity occurs by
acceleration or on the Maturity Date, for each payment past due for fifteen (15)
or more calendar days, a late charge in an amount equal to the lesser of 
(1) five percent (5%) of the amount of the payment past due or (2) the maximum
percentage of the payment past due permitted by applicable law, or the maximum
amount if not expressed as a percentage. 

     

    4.
The financial reporting requirements set forth in the Business Loan
Agreement (Asset Based) is changed to the following:

     

    Financial
Statements.  Furnish Lender with the
following:

     

    Annual
Statements. As soon as available, but in no event later than ninety (90)
days after the end of each fiscal year, Borrower shall provide an annual budget
for the upcoming calendar year, together with a consolidated and consolidating
balance sheet, statement of income and retained earnings for the period then
ended and a statement of changes in the financial position of Borrower, all
prepared in accordance with GAAP consistently applied. The financial statements
shall be audited by an independent certified accountant satisfactory to the
Bank.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    Quarterly
Reports. As soon as available, but in no event later than 45 days after
the end of each calendar quarter, Borrower shall provide a balance sheet,
statement of income and retained earnings, a borrowing base report, accounts
payable report and an accounts receivable with aging and inventory report for
the period then ended and a statement of changes in financial position, all in
reasonable detail, and all prepared in accordance with GAAP consistently applied
and certified as true and correct by the chief financial officer or Borrower of
other officer approved by Bank.

     

    Monthly
Reports.  As soon as available, but in no event later than 20
days after the end of each calendar month, Borrower shall provide a Borrowing
Base report, accounts receivable with aging and summary inventory report for the
period then ended, together with a foreign receivables report showing the
Accounts that are insured through a Credit Insurance Policy acceptable to
Bank.

     

    Additional
Information. Furnish such additional information and statements, as
Lender may request from time to time.

     

    All
financial reports required to be provided under this Agreement shall be prepared
in accordance with GAAP, applied on a consistent basis, and certified by
Borrower as being true and correct.

     

    5. The
financial covenants set forth in the Business Loan Agreement (Asset Based) are
changed to the following:

     

    Financial
Covenants and Ratios. Comply with the following covenants and
ratios:

     

    Borrower
to maintain a ratio of Maximum Debt to Tangible Net Worth of less than 2.00 to
1.00, defined as the ratio of Total Liabilities [Total Debt] to Tangible
Net Worth. The ratio shall be measured quarterly beginning September 30,
2009.

     

    Tangible
Net Worth is defined as the total of Equity less (a) Intangibles, (b) deferred
charges, (c) leasehold improvements and (d) in certain circumstances, loans,
receivable from and investment in related parties. deferred taxes, doubtful
accounts not provided for, pre-paid expenses, etc.

     

    Intangible
means any asset lacking physical substance or value.

     

    Borrower
to maintain a ratio of Maximum Funded Debt to EBITDA of less than 3.25 to
1.00, defined as the ratio of Funded Debt to EBITDA. The ratio shall be
measured quarterly beginning September 30, 2009

     

    Funded
Debt is defined as the total of (a) all obligations for borrowed money which
bears interest or to which interest is imputed, (b) all obligations for the
deferred payment of the purchase of property, (c) all capital lease obligations,
(d) all indebtedness secured by purchase money security interests (e) the amount
of any contingent liabilities such as guarantees or other financial assistance
provided in respect of liabilities of a third party. The term Funded Debt
excludes Subordinated Debt and Borrower’s indebtedness under that certain
Promissory Note dated as of November 1, 2008 in the original principal amount of
$4,000,000.00 payable to the Pinellas County Economic Development
Authority.

     

    EBITDA is
defined as the total of (a) net income from continuing operations (excluding
extraordinary gains or losses), and to the extent deducted in determining net
income, (b) interest expense, (c) income taxes (d) depreciation, depletion
and/or amortization expenses.

     

    Borrower
to maintain a ratio of Minimum Debt Service Coverage of 1.50 to 1.00,
defined as the ratio of (a) EBITDA to the total of (b) Interest Expense plus
scheduled principal payments in respect of Funded Debt. The ratio shall be
measured quarterly on a rolling four quarter basis, beginning September 30,
2009.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    Except as
provided above, all computations made to determine compliance with the
requirements contained in this paragraph shall be made in accordance with GAAP,
applied on a consistent basis, and certified by Borrower as being true and
correct.

     

    6. The
negative covenants set forth in the Business Loan Agreement (Asset Based) are
supplemented by adding the following:

     

    Change
in Management. Borrower
shall not permit a material change in its senior management as identified in its
10-K Annual Report for the calendar year ending December 31,
2008.

     

    7. The
definitions of “Borrowing Base” and “Note” set forth in the Business Loan
Agreement (Asset Based) are changed to read as follows:

     

    Borrowing
Base. The words "Borrowing Base" means the lesser of (1) $8,000,000.00 or
(2) the sum of (a) 80% of good effective assigned unencumbered trade accounts
receivable, plus (b) 85% advance against eligible foreign Accounts Receivable
that are insured by a Credit Insurance Policy acceptable to the Bank, Plus (c)
50% of the less or cost or current market value of saleable inventory and raw
materials Inventory advances shall be limited to 50% of the total line amount.,
plus (d) 95% of assigned cash held in a deposit instrument at Bank, with a
proper collateral hold.

     

    Note.
The word "Note" means the Renewal Note dated as of October 12, 2009 in the
principal amount of $8,000,000.00 from Borrower to Lender and any other Note
from Borrower to Lender pursuant to which future advances intended to be secured
by this Agreement are made, together with all present and future obligations
evidenced thereby and secured by this Agreement and together with all renewals,
extensions, modifications, refinancings, and substitutions for the
Note.

     

    8. Any
reference to a negative pledge relating to the commercial property located at
5115 Ulmerton Road, Clearwater, Florida is hereby deleted.

     

    9.  Borrower’s
General Intangibles are hereby released as Collateral for the Note and all
references to General Intangibles in the Commercial Security Agreement are
deleted.

    
      	
               

            

    

     

    
      
         

      

      
        8

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