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OLED MATERIALS SUPPLY AND SERVICE AGREEMENT
THIS AGREEMENT (the "Agreement") between PPG INDUSTRIES, INC.
("PPG"),
a Pennsylvania corporation having its
principal place of business at One PPG
Place, Pittsburgh, Pennsylvania 15272, and
UNIVERSAL DISPLAY CORPORATION
("UDC"), a Pennsylvania corporation having
its principal place of business at
375 Phillips Boulevard, Ewing, New Jersey
08618, each a "Party" and collectively
the "Parties," is effective as of January
1, 2006 (the "Effective Date").
WHEREAS, PPG and UDC are Parties to a Supply Agreement (the
"Supply
Agreement") and a Development and License
Agreement (the "Development
Agreement"), each dated as of October 1,
2000, as amended; and
WHEREAS, PPG and UDC desire to terminate the Supply Agreement
and
Development Agreement and continue the
relationship of the Parties under the
terms of this Agreement as of the Effective
Date.
NOW, THEREFORE, intending to be legally bound, PPG and UDC agree
as
follows:
ARTICLE 1 - DEFINITIONS
Whenever used in this Agreement, unless otherwise clearly indicated
in
the context, the following terms shall have
the meanings as defined in this
Article. As used herein, the singular
includes the plural and vice versa, and
the words "shall" and "will" are each
understood to be imperative or mandatory
in nature and are interchangeable with one
another.
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the
Securities Exchange Act of 1934, as amended.
"Ancillary Development Chemical" means a Development OLED Chemical
that
UDC does not currently, and does not intend
during the Term, to resell to third
parties for their manufacture of OLEDs for
commercial sale.
"Analytical Services" means analytical services provided or to
be
provided by PPG with respect to the
development, production or supply of OLED
Chemicals hereunder.
"Batch Sheet" means PPG's standard written operator instructions
for
the manufacture of Products or purification
or conversion of Third-Party OLED
Materials, and/or one or more Intermediates
in the Synthetic Pathway for such
Products, which instructions are intended
to embody the equipment-specific
information for manufacturing the Products
or purification or conversion of
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Third-Party OLED Materials and/or
Intermediates at PPG's Monroeville,
Pennsylvania manufacturing facility.
"Calendar Quarter" means the three-month period beginning on each
of
January 1, April 1, July 1 and October 1 of
a year.
"Commercial OLED Chemical" means an OLED Chemical supplied or to
be
supplied by PPG to UDC pursuant to a
Purchase Order hereunder and following the
establishment of a Validated Process for
such OLED Chemical, which OLED Chemical
is being supplied to UDC with the
understanding that UDC will be reselling it to
third parties for their manufacture of
OLEDs for commercial sale, or which OLED
Chemical is in fact resold to a third party
for such purpose.
"Commission" means the Securities and Exchange Commission.
"Competitive OLED Chemical" means an OLED Chemical or Intermediate
that
is neither a Product nor an Evaluation OLED
Chemical.
"Confidential Information" of a Party shall include all trade
secret,
confidential and/or proprietary information
of such Party, whether of a
technical, engineering, operational,
financial or marketing nature (including,
without limitation, their respective
proprietary materials), that is (i) in
writing and marked as "Trade Secret,"
"Confidential," "Proprietary" or with
words of a similar nature; or (ii) orally
or visually disclosed and clearly
identified as "Trade Secret,"
"Confidential" or "Proprietary" at the time of
such disclosure and confirmed in writing as
such within thirty (30) days
following such oral or visual disclosure.
Notwithstanding the foregoing, the
information in each Batch Sheet, Materials
Research Technical Report and Process
Development Technical Report shall be
deemed Confidential Information of UDC.
"Contract Year" means any calendar year beginning January 1st
and
ending on December 31st during the
Term.
"Development OLED Chemical" means an OLED Chemical and/or
Intermediate
supplied or to be supplied by the Process
Development Team to UDC hereunder,
pursuant to a Purchase Order or Statement
of Work and prior to the establishment
of a Validated Process for such OLED
Chemical, which OLED Chemical is being
supplied to UDC with the understanding that
UDC will not be reselling it to
third parties for their manufacture of
OLEDs for commercial sale.
"Developed Technology" means all inventions, discoveries, Know-How
and
materials, patentable or unpatentable, that
are conceived, created, made or
reduced to practice by the Materials
Development Team and/or the Process
Development Team (alone or with UDC
personnel) in their performance of work
under agreed-upon Statements of Work. This
includes all OLED Chemicals and
Intermediates, their compositions of
matter, their Synthetic Pathways and
relevant detailed process descriptions,
their Material Specifications and any
specifications for raw materials used to
produce them, their uses in all fields
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of application, and their associated
analytical characterization techniques.
"Developed Technology" shall also encompass
all "Developed Technology,"
"Development Discoveries" and "UDC
Improvements" as such terms are defined in
the Development Agreement or the Supply
Agreement. Furthermore, for purposes of
clarification, the Know-How embodied in any
Batch Sheet, Process Development
Technical Report or a Materials Research
Technical Report for an OLED Chemical
or Intermediate is encompassed within
Developed Technology.
"Development Program" means the joint research and development
program
undertaken or to be undertaken by PPG and
UDC pursuant to this Agreement, as
such program is detailed in one or more
Statements of Work for the Material
Development Team and/or Process Development
Team, which Program is or shall be
directed to (i) Materials Development, (ii)
Process Development; and (iii) such
other items as are agreed upon by the
Parties in a Statement of Work.
"Developmental Quantities" means those quantities of an OLED
Chemical
that can be reasonably produced by the
Materials Development Team in
laboratory-scale equipment, which
quantities are typically not in excess of one
(1) gram of material.
"Disclosing Party" has the meaning given in Section 4.1.
"EH&S Services" means the environmental, health and safety
services
provided or to be provided by PPG with
respect to the development, production or
supply of OLED Chemicals hereunder,
including, without limitation, toxicity
testing and chemicals inventory
registration.
"Evaluation OLED Chemical" means an OLED Chemical supplied or to
be
supplied to UDC by the Materials
Development Team pursuant to a Statement of
Work.
"Intermediate" means a material that occurs somewhere in a
Synthetic
Pathway between the introduction of the
basic precursor raw materials and the
creation of one or more unrefined OLED
Chemicals.
"Know-How" means trade secrets and other unpatented proprietary
technical and/or scientific information,
data, specifications, plans, drawings,
designs, copyrights, blueprints, formulae,
processes and other similar items and
materials.
"Materials Development" means the exploration, identification
and
development, pursuant to a Statement of
Work, of (i) new or improved OLED
Chemicals, including variants of existing
OLED Chemicals; (ii) Synthetic
Pathways for making such OLED Chemicals;
and (iii) analytical methodologies,
data and data analyses for characterizing
such OLED Chemicals.
"Materials Development Team" means a team of one or more
qualified
research and development chemists,
technicians, engineers and/or supervisors as
assembled by PPG and having as its members
those individuals in place as of
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January 1, 2006, unless reduced in number
during the Term as otherwise provided
in this Agreement, and such other
individuals assigned by PPG to work on
Materials Development hereunder.
"Materials Research Technical Report" means a document prepared by
the
Materials Development Team, which document
details for a particular OLED
Chemical, in a reasonably comprehensive
manner consistent with past reports of a
similar nature, one or more of the
following, as applicable in view of the
relevant Statement(s) of Work: (i) the
viable Synthetic Pathway(s) and relevant
detailed process descriptions for making
such OLED Chemical in Developmental
Quantities; (ii) the Materials
Specifications for such OLED Chemical and any
associated Intermediates, (iii) raw
materials required for the manufacture of
such OLED Chemical and its associated
Intermediates by such Synthetic
Pathway(s), including the specifications
for such raw materials and any existing
and potential suppliers of such raw
materials; (iv) EH&S information pertaining
to such OLED Chemical and its associated
Intermediates and their raw materials;
and (v) the analytical methodologies, data
and data analyses for characterizing
such OLED Chemical and its associated
Intermediates and their raw materials.
"Material Specifications" means, with respect to each OLED
Chemical
and/or Intermediate produced or supplied,
or to be produced or supplied
hereunder, the written analytical and
visual specifications for such OLED
Chemical and/or Intermediate, and for its
packaging, storage and shipment, as
such specifications may be changed by
written agreement of the Parties from time
to time.
"OLED Chemicals" means organic or organometallic molecules or
compounds
positioned between the two electrodes in a
device that radiates light by
applying electrical current or voltage to
the electrodes.
"Patents" means United States and foreign patents and patent
applications, together with all divisions,
continuations, continuations-in-part,
reissues, re-examinations, renewals and
extensions of the same.
"Person" or "person" means any natural person, corporation,
partnership, limited liability company,
proprietorship, association, trust or
other legal entity.
"PPG's Material Development Costs" means all of PPG's actual costs
of
conducting Materials Development work under
an agreed-upon Statement of Work and
budget for such work, the applicable
categories of which shall be specified on
Exhibit A-1 attached hereto, as the same
may be amended by mutual written
agreement of the Parties from time to
time.
"PPG's OLED Material Conversion Costs" means all of PPG's actual
costs
of producing and supplying Development OLED
Chemicals or Pre-Commercial OLED
Chemicals to UDC under an agreed-upon
Statement of Work or Purchase Order
(excluding the costs of raw materials and
Third-Party OLED Materials purchased
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under subsection 6.2.1 below and
Intermediates produced under subsection 6.2.2
below, all of which shall be invoiced
separately to UDC under Section 9.1
below), the applicable categories of which
shall be specified on Exhibit A-2
attached hereto, as the same may be amended
by mutual written agreement of the
Parties from time to time.
"PPG's Commercial OLED Material Costs" means all of PPG's actual
costs
of producing and supplying Commercial OLED
Chemicals to UDC under an agreed-upon
Purchase Order (including the costs of raw
materials and Third-Party OLED
Materials purchased under subsection 6.2.1
below and Intermediates produced
under subsection 6.2.2 below), the
applicable categories of which shall be
specified on Exhibit A-3 attached hereto,
as the same may be amended by mutual
written agreement of the Parties from time
to time.
"PPG's Process Development Costs" means all of PPG's actual,
fully-loaded man-hour costs of conducting
Process Development work under an
agreed-upon Statement of Work and budget
for such work, the applicable
categories of which shall be specified on
Exhibit A-4 attached hereto, as the
same may be amended by mutual written
agreement of the Parties from time to
time.
"Pre-Commercial OLED Chemical" means an OLED Chemical supplied or
to be
supplied by PPG to UDC pursuant to a
Purchase Order hereunder and following the
establishment of a Validated Process for
such OLED Chemical, which OLED chemical
is being supplied to UDC with the
understanding that UDC does not intend to
resell it to third parties for their
manufacture of OLEDs for commercial sale;
provided, however, that if an ordered or
supplied quantity of any Pre-Commercial
OLED Chemical is in fact resold to a third
party for such purpose, it shall be
reclassified as a Commercial OLED Chemical,
whereupon there shall be a
corresponding additional charge or credit
to UDC to reflect any cost differences
as set forth below.
"Primary Development Chemical" means a Development OLED Chemical
that
UDC does not currently, but that UDC
intends during the Term to, resell to third
parties for their manufacture of OLEDs for
commercial sale.
"Princeton License Agreement" means that Amended License Agreement
by
and among UDC, The Trustees of Princeton
University ("Princeton University") and
the University of Southern California
("USC"), dated as of October 9, 1997, as
amended.
"Process Development" means the exploration, identification,
development and scale-up, pursuant to a
Statement of Work, of (i) one or more
new or improved Synthetic Pathways for
manufacturing OLED Chemicals in
quantities sufficient for supply on a
commercial scale and on a cost-effective
basis, including any processes intended to
qualify as Validated Processes; (ii)
new or improved Materials Specifications
for such OLED Chemicals; and (iii) new
or improved analytical methodologies, data
and data analyses for characterizing
such OLED Chemicals.
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"Process Development Team" means a team of one or more
qualified
research and process development chemists,
technicians, engineers and/or
supervisors employed or utilized by PPG in
the Specialty Synthesis Group of its
Optical Products business, or any successor
to such group or business, which
individuals PPG, in its sole discretion,
shall select and assign from time to
time during the Term to perform Process
Development work hereunder.
"Process Development Technical Report" means a document prepared by
the
Process Development Team, which document
details for a particular OLED Chemical,
in a manner sufficiently comprehensive so
as to facilitate and assist a
reasonably competent specialty chemicals
manufacturer to manufacture such OLED
Chemical in commercial-scale quantities and
according to its corresponding
Material Specifications, one or more of the
following, as applicable in view of
the relevant Statement(s) of Work and
subject to Section 11.5: (i) the viable
Synthetic Pathway(s) and relevant detailed
process descriptions for
manufacturing such OLED Chemical in
quantities appropriate for commercial-scale
sales by UDC, including any processes
intended to qualify as Validated
Processes; (ii) the Materials
Specifications for such OLED Chemical and any
associated Intermediates; (iii) raw
materials required for the manufacture of
such OLED Chemical and its associated
Intermediates by such Synthetic
Pathway(s), including the specifications
for such raw materials and any existing
and potential suppliers of such raw
materials and current Certificates of
Analysis for such raw materials; (iv) PPG's
current procedures for the handling
of such OLED Chemical and its associated
Intermediates and their raw materials,
together with EH&S information
pertaining thereto; (v) the analytical
methodologies, data and data analyses for
characterizing such OLED Chemical and
its associated Intermediates and their raw
materials; and (vi) a reasonably
detailed description of problems
encountered by PPG during Process Development
work on such OLED Chemical that in PPG's
opinion are significant, including any
material failed approaches and solutions or
proposed solutions thereto. The
Parties acknowledge that they will promptly
and in good faith agree upon a
representative Process Development
Technical Report in a mutually acceptable
format.
"Product" means any Development OLED Chemical, Pre-Commercial
OLED
Chemical or Commercial OLED Chemical.
"Purchase Order" means a written order from UDC to PPG, or an
instruction under a blanket written order
from UDC to PPG, including email
correspondence confirmed by an authorized
representative of each Party, for the
purchase of a Product, or for the
performance of any Analytical Services or EH&S
Services not encompassed within Materials
Development work, but excluding any
preprinted terms and conditions
therein.
"Receiving
Party" has the meaning given in Section 4.1.
"Records" has the meaning given in Section 2.8.1.
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"Rule 144" means Rule 144 promulgated by the Commission pursuant to
the
1933 Act.
"Securities" means the shares of UDC Common Stock issuable to
PPG
pursuant to this Agreement.
"Statement of Work" means one or more agreed-upon written
protocols,
plans or other documents, including email
correspondence confirmed by an
authorized representative of each Party,
describing the work to be performed by
the Materials Development Team and/or the
Process Development Team, as the same
may be amended from time to time in writing
by mutual agreement of the Parties.
Separate Statements of Work will be
mutually agreed upon in writing for each of
the Materials Development Team and the
Process Development Team.
"Sublimation" or "Sublimate" means the conversion of an unrefined
OLED
Chemical from solid to vapor, and its
subsequent de-sublimation from vapor to
solid under appropriate temperature and
pressure conditions to recover the
desired sublimated OLED Chemical, with the
purpose of such conversion being to
enhance the purity of such OLED
Chemical.
"Synthetic Pathway" means generalized process step(s) for the
conversion of precursor materials and/or
Intermediates to other Intermediates
and/or OLED Chemicals, including, without
limitation, the structural formulas
for such precursor materials and/or
Intermediates, and the general processing
conditions for synthesis and purification
of such Intermediates and/or OLED
Chemicals (e.g., solvent usage, temperature
conditions, etc.).
"Third-Party OLED Material" means an Intermediate or unrefined
OLED
Chemical, produced by a party other than
PPG, to be subjected to Sublimation
and/or other additional processing
hereunder.
"UDC Common Stock" means the common stock of UDC, $0.01 par value
per
share.
"UDC Chemical Know-How" means any and all Know-How relating to
OLED
Chemicals or methods of producing OLED
Chemicals, or that might reasonably be
useful in connection with producing OLED
Chemicals, that UDC owns or otherwise
is authorized to disclose and license or
sublicense to PPG hereunder, including,
without limitation, any such Know-How
constituting Developed Technology and any
such Know-How acquired or licensed by UDC
from Princeton University or USC under
the Princeton License Agreement, or under
other agreements, whether prior to or
after the Effective Date.
"UDC Chemical Patents" means any and all Patents, whether or
not
currently existing, that claim or cover any
OLED Chemicals or methods of
producing OLED Chemicals, or any methods or
processes that might reasonably be
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useful in connection with producing OLED
Chemicals, and that UDC is authorized
to license or sublicense to PPG hereunder,
including, without limitation, any
such Patents claiming Developed Technology
and any such Patents acquired or
licensed by UDC from Princeton University
or USC under the Princeton License
Agreement, or under other agreements,
whether prior to or after the Effective
Date.
"UDC Proprietary
Materials for Chemicals" means all UDC Chemical
Patents, UDC Chemical Know-How and
Developed Technology.
"Validated Process" means a process, including a Synthetic Pathway,
for
manufacturing an OLED Chemical, in
quantities appropriate for commercial-scale
sales by UDC, so as to meet its
corresponding Material Specifications and UDC's
criteria for qualifying the material for
use in OLED devices, which process has
been successfully proven reproducible in
three consecutive pilot batch
manufacturing runs at PPG's Monroeville,
Pennsylvania facility.
"Waste" means any "hazardous substance," "hazardous material"
and/or
"hazardous waste" as provided under any
environmental law, rule or regulation,
as well as any other waste material,
pollutant and/or contaminant of any kind,
including, without limitation, any routine
process waste or any by-product
arising from the manufacture of any OLED
Chemical hereunder.
ARTICLE 2 - DEVELOPMENT TEAMS
2.1. Development Teams. PPG shall maintain the Materials
Development
Team and Process Development Team to work
on the tasks set forth in Statements
of Work.
2.1.1 Materials Development Team. For the Materials
Development Team, PPG shall provide, as
requested by UDC, a maximum of [The
confidential material contained herein has
been omitted and has been separately
filed with the Commission.], full-time
advanced-degree chemists and [The
confidential material contained herein has
been omitted and has been separately
filed with the Commission.] full-time
technicians plus part-time senior
supervision. PPG shall make available the
part-time services of [The
confidential material contained herein has
been omitted and has been separately
filed with the Commission.] and [The
confidential material contained herein has
been omitted and has been separately filed
with the Commission.], provided such
individuals continue to be employed by PPG
and their responsibilities are such
that they are available to provide such
services, PPG employees who are not
members of the Materials Development Team
but whose work will be deemed
Materials Development hereunder, to provide
analytical and computational
services, respectively. Subject to the
following provision regarding staff
reductions, PPG shall maintain the
Materials Development Team until December 31,
2006, unless UDC requests that the
Materials Development Team be disbanded at an
earlier date.
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2.1.2 Process Development Team. PPG shall maintain the Process
Development Team to work on the tasks set
forth in Statements of Work. PPG shall
sufficiently staff the Process Development
Team so as to reasonably ensure the
timely and proper completion of such
tasks.
2.2 Team
Management.
2.2.1 Materials Development Team. The Materials Development
Team shall report to [The confidential
material contained herein has been
omitted and has been separately filed with
the Commission.], who in turn shall
report to the PPG Director, Optical
Products R&D. For so long as the Materials
Development Team is maintained at PPG,
PPG's Director, Manufacturing & Applied
Technology, and Director, Optical Products
R&D will meet periodically with UDC
management to review and discuss the
direction and performance of the Materials
Development work. Such meetings will take
place at least twice each year at
mutually agreed times, or more frequently
as requested by PPG or UDC.
2.2.2 Process Development Team. The Process Development Team
shall report to PPG's Operations Manager
Specialty Synthesis Group, who shall
communicate periodically with UDC's Vice
President Technology Commercialization
to discuss the direction and performance of
the Process Development work.
2.3 Materials
Development Team Staffing.
2.3.1 Timing. Upon ninety (90) days' written notice from UDC
with an effective date of not earlier than
January 2006, PPG shall reduce the
Materials Development Team staffing level.
PPG and UDC shall cooperate in good
faith to minimize turnover of members of
the Materials Development Team.
However, PPG shall not hire any new
employees for the Materials Development
Team, regardless of any unplanned
vacancies.
2.3.2 Severance Costs. All out-of-pocket severance costs of
PPG related to any reduction in the
Materials Development Team staffing level
incurred at UDC's request and in accordance
with PPG's customary severance
policies and procedures shall be for UDC's
account, it being UDC's understanding
that PPG currently estimates such costs to
be approximately [The confidential
material contained herein has been omitted
and has been separately filed with
the Commission.]. Upon UDC's request, PPG
shall assist UDC in hiring such
individuals as its own employees or
consultants, and PPG shall reasonably
facilitate the transition of such
individuals to UDC. With respect to any such
individuals not hired by UDC, PPG shall use
reasonable efforts to redeploy such
individuals within PPG so as to minimize
severance costs. Within thirty (30)
days after the date of a staff reduction,
PPG shall provide UDC with an invoice
for the out-of-pocket severance costs that
were incurred by PPG related to such
reduction, and UDC shall reimburse PPG,
within thirty (30) days of the date of
the invoice, in cash for all such
costs.
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2.4
Statements of Work and
Budgets.
2.4.1 Materials Development Work. The Statement of Work and
budget for Materials Development work in
2006 shall be mutually agreed to by the
Parties in good faith on or before January
1, 2006.
2.4.2 Process Development Work. The Parties shall in good
faith mutually agree upon Statements of
Work and budgets for Process Development
work on an as-needed basis prior to the
commencement of such work. PPG shall in
good faith agree to perform all Process
Development work reasonably requested by
UDC hereunder, provided, however, PPG in
its reasonable discretion may refuse to
perform certain Process Development Work if
(i) PPG does not have and cannot
reasonably reassign sufficient staffing to
perform the work, (ii) PPG does not
have appropriate capital equipment and
facilities reasonably available to
perform the work, or (iii) the chemical
nature of the materials involved is such
that PPG is not reasonably equipped to
manage their associated chemical hazards.
If there is a problem that can be
circumvented through outsourcing any of the
Process Development Work, then the Parties
shall use commercially reasonable
efforts to pursue and facilitate such
outsourcing.
2.4.3 Changes. Upon either Party's request, the Parties will
in good faith discuss and endeavor to agree
upon revisions to any Statement of
Work and/or budget for the Development
Program. However, such Statements of Work
and budgets may be amended only by mutual
written agreement of the Parties,
which may include email correspondence
confirmed by an authorized representative
of each Party.
2.5 Materials
Development Team Compensation.
2.5.1 For all Materials Development work performed by the
Materials Development Team under the
Materials Development Statement of Work and
budget, UDC shall pay PPG at the rate of
(i) [The confidential material
contained herein has been omitted and has
been separately filed with the
Commission.] PPG's Materials Development
Costs for so long as the aggregate
cumulative annual amount of such costs
remains less than or equal to [The
confidential material contained herein has
been omitted and has been separately
filed with the Commission.]; and (ii) [The
confidential material contained
herein has been omitted and has been
separately filed with the Commission.]
PPG's Materials Development Costs once the
aggregate cumulative annual amount of
such costs exceeds [The confidential
material contained herein has been omitted
and has been separately filed with the
Commission.] (such collective amounts
referred to herein as "PPG's Materials
Development Charges").
2.5.2 Within fifteen (15) days following the end of each of
the first and third Calendar Quarters of
2006, PPG shall calculate and provide
UDC with written notice of: (i) the actual
dollar amount of PPG's Materials
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Development Charges for such Calendar
Quarter; and (ii) the expected dollar
amount of PPG's Materials Development
Charges for the then-current Calendar
Quarter, based on the agreed-upon Statement
of Work and budget for such work,
both such amounts being broken down by cost
categories per the applicable
budget. Accompanying such written notice
shall be an invoice to UDC for the
total of the amounts specified in clauses
(i) and (ii) above, less (a) any
credit to be applied against such total
pursuant to subsection 2.5.4 below and,
(b) for the first Calendar Quarter of 2006,
any credit that has been carried
over from the Development Agreement based
on actual Materials Development work
performed in the fourth Calendar Quarter of
2005. Upon UDC's request, PPG shall
provide a reasonably detailed breakdown of
all of PPG's Materials Development
Charges, which shall be subject to
reasonable confirmation by UDC.
2.5.3 Within fifteen (15) days following the end of each of
the second and fourth Calendar Quarters of
2006, PPG shall calculate and provide
UDC with written notice of: (i) the actual
dollar amount of PPG's Materials
Development Charges for such Calendar
Quarter, and (ii) the difference, in
dollars, between such amount and previously
provided estimate of PPG's Materials
Development Charges for such Calendar
Quarter. If the difference calculated
under clause (ii) above is a positive
number (i.e., actual costs exceed
estimated costs), then accompanying such
written notice shall be an invoice to
UDC for the amount of the difference. If
the difference calculated under clause
(ii) above is a negative number (i.e.,
estimated costs exceed actual costs),
then accompanying such written notice shall
be a credit statement to UDC for the
amount of the difference.
2.5.4 Any credit available to UDC under subsection 2.5.3 above
shall first be applied against the actual
dollar amount of PPG's Materials
Development Charges for the then-current
Calendar Quarter, as specified in
subsection 2.5.2 above. If any portion of
the credit still remains following
such application, it shall then be applied
against the actual dollar amount of
PPG's Processing Charges for the
then-current Calendar Quarter, as specified in
subsection 9.2.1 below. If any portion of
the credit still remains thereafter,
it shall be repaid to UDC in cash within
thirty (30) days following the end of
the then-current Calendar Quarter.
2.5.5 UDC shall pay all amounts invoiced under subsections
2.5.2 and 2.5.3 above in shares of UDC
Common Stock as specified in Article 15
below.
2.6
Compensation for Other Development Work.
2.6.1 UDC shall separately pay PPG, in UDC Common Stock, for
any UDC-approved services of [The
confidential material contained herein has
been omitted and has been separately filed
with the Commission.] and [The
confidential material contained herein has
been omitted and has been separately
filed with the Commission.] performed
during each Calendar Quarter of 2006. PPG
shall invoice UDC for such services at the
2005 billing rates for these
individuals with any increase in these
rates subject to UDC's approval, which
shall not be unreasonably withheld.
Invoiced amounts for such services are to be
included in PPG's Materials Development
Charges (as defined in Section 2.5) and
shall be invoiced at [The confidential
material contained herein has been
UDC and PPG Confidential
Page 11 of 66
<PAGE>
omitted and has been separately filed with
the Commission.] PPG's Materials
Development Costs.
2.6.2 UDC shall pay PPG for Process Development as specified
in Articles 6 and 9 below.
2.6.3 Except as set forth in Article 17 below, PPG shall be
solely responsible for all salary and other
compensation of its employees and/or
researchers in connection with the
performance of any Materials Development
work, including, without limitation, all
tax withholding with respect thereto
and payment, if any, of employment-related
taxes and workers' compensation
insurance premiums.
2.7 Party
Responsibilities.
2.7.1 PPG's responsibilities under the Development Program
shall include, without limitation, using
commercially reasonable efforts to do
the following:
(i) PPG shall
direct the Materials Development Team to
perform Materials Development work.
(ii) PPG shall direct
the Materials Development Team to
supply UDC with Developmental Quantities of Evaluation
OLED Chemicals under a Statement of Work. PPG shall not
be obligated to direct the Materials Development Team
to supply UDC with Evaluation OLED Chemicals in greater
than Developmental Quantities.
(iii) PPG shall direct the Materials Development Team to
provide UDC with Materials Research Technical Reports
for Evaluation OLED Chemicals upon UDC's request.
(iv) PPG shall direct
the Process Development Team to
perform Process Development work.
(v)
PPG shall direct
the Process Development Team to supply
UDC with Development OLED Chemicals under a Statement
of Work.
(vi) PPG shall direct
the Process Development Team to
provide UDC with Process Development Technical Reports
for Development OLED Chemicals upon UDC's request.
(vii) PPG shall direct the Materials Development Team and
Process Development Team to disclose to UDC all
Developed Technology, by periodically providing copies
of laboratory notebooks at a reasonable frequency
requested by UDC, or by such other means as the Parties
may agree upon in writing.
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<PAGE>
2.7.2 UDC's responsibilities under the Development Program
shall include, without
limitation, using commercially reasonable efforts to
do the following:
(i) UDC shall
direct its personnel to perform their
obligations as specified in a Statement of Work.
(ii) UDC shall
maintain a qualified team to reasonably
evaluate in OLED applications any Evaluation OLED
Chemicals supplied by the Materials Development Team
and any Development OLED Chemicals supplied by the
Process Development Team. UDC shall report the results
of such evaluations to the Materials Development Team
or the Process Development Team, as applicable.
(iii) UDC shall direct its personnel to cooperate with the
Material Development Team and the Process Development
Team in performance of their responsibilities under the
Development Program.
(iv) For OLED
Chemicals, including Third-Party OLED
Materials, transferred by UDC to PPG's Process
Development Team for Process Development work pursuant
to a Statement of Work, UDC shall direct its personnel
to provide the Process Development Team with such of
the reasonably available UDC Chemical Know-How as is
necessary in connection with PPG's performance
hereunder.
(v) UDC shall be
responsible, in its sole discretion, for
protecting and maintaining the intellectual property
rights to Developed Technology as set forth in Section
3.4 below.
2.7.3 Each
Party agrees to the following responsibilities
under this Agreement:
(i) The Parties'
researchers will work together in a team
environment using their respective expertise and
Know-How to facilitate performance of the Development
Program.
(ii) While working at
the other Party's facilities, each
Party's chemists and other personnel shall: (a) at all
times comply with all of the other Party's safety,
security and mutually agreed confidentiality policies
and procedures; and (b) limit their activities solely
to assisting the other Party in the conduct of the
Development Program.
(iii) The Parties shall work together in a jointly
cooperative manner in support of Product sales by UDC
and the timely availability of Products meeting current
or future requirements of the OLED industry.
UDC and PPG Confidential
Page 13 of 66
<PAGE>
2.8 Recordkeeping and
Reporting.
2.8.1 During the Term, PPG shall direct the Material
Development Team and the Process
Development Team to diligently maintain
tangible records of work conducted under
the Development Program ("Records").
These Records shall be kept in bound
laboratory notebooks, each page of which
shall be timely dated, signed and
witnessed. PPG will retain the Records for two
(2) years beyond the Term.
2.8.2 PPG shall provide UDC with such reports and other
supporting documentation as UDC may
reasonably request in connection with
monitoring PPG's charges for the
Development Program.
2.8.3 During the Term and for at least two (2) years
thereafter, UDC shall have the right to
examine Records kept by PPG hereunder.
Each such examination shall take place
during normal business hours of PPG and
on at least ten (10) business days' advance
written notice to PPG. Each such
examination shall be at a location selected
by PPG and in accordance with
procedures reasonably acceptable to PPG,
including, without limitation,
procedures designed to protect any
Confidential Information of PPG. PPG shall
not be required to permit examination of
its Records more often than once during
any Calendar Quarter.
2.9 Other
Research Work.
2.9.1 PPG acknowledges that UDC intends to continue working
with Princeton University, USC and others
to explore and develop new and
improved OLED Chemicals, and that PPG's
work under the Development Program may
involve work on such chemicals, to the
extent set forth in a Statement of Work.
2.9.2 Except in connection with conducting the Development
Program hereunder, during the Term and for
[The confidential material contained
herein has been omitted and has been
separately filed with the Commission.]
thereafter, PPG shall not conduct or fund
any research program specifically
directed to developing OLED Chemicals for
use in OLEDs, whether on its own or in
collaboration with any other person;
provided, however, that nothing in this
Agreement shall prohibit PPG from
continuing to perform work on its photochromic
and electrochromic development
programs.
ARTICLE 3 - INTELLECTUAL PROPERTY
3.1 Developed Technology. All Developed Technology shall be
owned
solely by UDC, and PPG hereby assigns and
transfers any and all right, title and
interest it may have in and to such
Developed Technology to UDC. Upon UDC's
request, PPG shall execute and deliver to
UDC all instruments and other
documents, and shall take such other
actions as may be reasonably necessary so
that UDC may protect and defend its rights
in and to the Developed Technology.
UDC and PPG Confidential
Page 14 of 66
<PAGE>
Subject to the express terms of this
Agreement, UDC shall have no obligation of
accounting to PPG with respect to any
Developed Technology. UDC shall bear all
costs associated with patenting and
protecting the Developed Technology.
3.2 Other
Technology.
3.2.1 All inventions, discoveries, Know-How and materials,
that are not Developed Technology,
patentable or unpatentable, that are
conceived, created, made or reduced to
practice under this Agreement ("Other
Technology"), if conceived, created, made
or reduced to practice solely by the
personnel of one Party, shall be owned
solely by that Party. Each Party shall
bear all costs associated with patenting
and protecting its solely-owned Other
Technology.
3.2.2 All Other Technology conceived, created, made or reduced
to practice jointly by the personnel of
both Parties shall be owned jointly by
both Parties. Subject to the express terms
of this Agreement, neither Party
shall have any obligation of accounting to
the other Party with respect to any
jointly-owned Other Technology. The Parties
shall in good faith agree upon and
implement procedures for the preparation,
filing, prosecution and maintenance of
patent applications and patents claiming
any jointly-owned Other Technology, and
shall allocate responsibility for the costs
and expenses associated with such
patent activities. Should either Party
elect not to pay its fair share of such
costs and expenses for patents in any
country of the world, that Party shall,
upon request, assign to the other Party all
of such Party's rights to such
patents in said country.
3.2.3 Upon either Party's request, the other Party shall
execute and deliver to such Party all
instruments and other documents, and shall
take such other actions as may be
reasonably necessary so that such Party may
protect and defend its rights in and to any
Other Technology.
3.3 License
Grants to PPG.
3.3.1 UDC hereby grants to PPG, during the Term and subject to
the terms and conditions set forth herein,
a worldwide, royalty-free,
non-exclusive, non-transferable (except as
permitted under Section 21.2 below)
license, with the right to sublicense under
subsection 3.3.4 below, to practice
under any and all UDC Chemical Patents, and
to use, improve, enhance and modify
any and all unpatented UDC Proprietary
Materials for Chemicals, for the sole
purposes of (i) performing PPG's
obligations under the Development Program as
contemplated hereunder; (ii) producing and
selling OLED Chemicals to UDC as
contemplated hereunder; and (iii) providing
Analytical Services and EH&S
Services as requested by UDC hereunder.
3.3.2 UDC hereby further grants to PPG a worldwide, perpetual,
royalty-free, non-exclusive,
non-transferable (except as permitted under Section
21.2 below) license, with the right to
sublicense as permitted under subsection
3.3.4 below, to practice under any and all
Patents claiming Developed Technology
UDC and PPG Confidential
Page 15 of 66
<PAGE>
and all Know-How encompassed by Developed
Technology, solely for PPG's own use
in its current and future business, but not
otherwise in competition with UDC
with respect to OLEDs or OLED
Chemicals.
3.3.3 UDC shall not grant rights to others that will adversely
affect PPG's license contemplated under
this Section 3.3.
3.3.4 The licenses granted to PPG under this Agreement shall
extend to any division of or subsidiary
controlled by PPG. Any sublicenses, in
whole or in part, to other Persons shall be
subject to UDC's prior written
approval, such approval not to be withheld
unreasonably; provided, however, that
UDC, in its sole discretion, may withhold
approval of sublicenses other than
those for purposes of permitting such third
Parties to practice under the
applicable Patents and/or Know-How on PPG's
behalf and/or for PPG's benefit or
account (e.g., for purposes of exercising
the equivalent of "have made" or "have
sold" rights as such rights are generally
understood, or performing
manufacturing activities on PPG's behalf
with respect to Products to be supplied
to UDC hereunder). PPG shall provide UDC
with written notice of the names and
addresses of each such sublicensee, as well
as a full, unredacted copy of the
sublicense agreement and all subsequent
amendments and modifications thereof,
before or within a reasonable period of
time after PPG enters into such
sublicense. Each sublicense granted by PPG
hereunder shall (i) expressly provide
that such sublicense is nontransferable and
nonassignable, (ii) prohibit the
initial sublicensee from granting any
further licenses or sublicenses
thereunder, (iii) expressly provide that
UDC is a third-party beneficiary of the
sublicense agreement with rights to enforce
its terms directly against the
sublicensee, and (iv) obligate the
sublicensee to abide by the terms and
conditions of this Agreement applicable to
sublicensees.
3.3.5 Except for the license and other rights expressly
granted or promised to PPG under this
Agreement, the Parties retain their
respective rights to their respective
Patents and Know-How.
3.4 Acknowledgment of Derivative Rights. Notwithstanding anything
to
the contrary in this Agreement, PPG
acknowledges that some of its rights to
certain UDC Chemical Patents derive from
the Princeton License Agreement. Each
Party agrees that PPG's rights to said UDC
Chemical Patents under this Agreement
shall be a sublicense under and subject to
the provisions of the Princeton
License Agreement.
3.5 Patent
Procurement, Maintenance and Enforcement.
3.5.1 The desirability of applying for, prosecuting and
maintaining Patents claiming the Developed
Technology (and the countries in
which Patents should be applied for,
prosecuted and maintained) shall be
determined by UDC in its sole and absolute
discretion. If UDC decides to obtain
Patent protection for any Developed
Technology, PPG shall reasonably cooperate
with UDC in preparing, filing and
prosecuting applications for such Patents and
in maintaining any Patents issuing thereon.
UDC shall bear all expenses incurred
UDC and PPG Confidential
Page 16 of 66
<PAGE>
in preparing, filing and prosecuting such
Patent applications and in maintaining
any resulting Patents.
3.5.2 UDC shall provide PPG with copies of all Patent
applications claiming any Developed
Technology before they are filed, in order
for PPG to promptly review said
applications to be certain that no PPG
Confidential Information is being disclosed
without PPG's prior approval. If PPG
claims that its Confidential Information is
disclosed in an application
submitted for review, UDC shall not file
such application until the claim has
been resolved to the reasonable
satisfaction of PPG. The Parties shall in good
faith attempt to resolve any such claim as
expeditiously as possible.
3.5.3 Each Party shall promptly notify the other Party of any
known or reasonably suspected infringement
or misappropriation of UDC
Proprietary Materials for Chemicals.
3.5.4 UDC shall protect and enforce all Patents and Patent
applications claiming any Developed
Technology, at its sole expense and in its
sole and absolute discretion. PPG shall
reasonably assist UDC in its efforts to
protect and/or enforce such Patents and
Patent applications at UDC's sole cost
and expense.
ARTICLE 4 - CONFIDENTIALITY
4.1 General
Obligations. Each Party (in such capacity, the "Receiving
Party") shall review and maintain
Confidential Information of the other Party
(in such capacity, the "Disclosing Party")
in accordance with the following
terms and conditions:
4.1.1 The Receiving Party agrees to treat all Confidential
Information of the Disclosing Party as
confidential and not to disclose such
Confidential Information to any other
person, or use such Confidential
Information for any purpose other than to
perform its obligations or exercise
its rights hereunder, except as expressly
permitted by the Disclosing Party in
writing.
4.1.2 The Receiving Party shall make only such copies of the
Confidential Information of the Disclosing
Party as are reasonable for the
Receiving Party's performance of its
obligations or exercise of its rights
hereunder.
4.1.3 At all times, the Receiving Party shall keep and
maintain all Confidential Information of
the Disclosing Party in a safe and
secure place with reasonable safeguards to
insure that unauthorized persons do
not have access to such Confidential
Information. Upon discovery of any
unauthorized disclosure or use of
Confidential Information of the Disclosing
Party, the Receiving Party shall
immediately notify the Disclosing Party and
take all reasonable steps to prevent its
further unauthorized disclosure or use.
UDC and PPG Confidential
Page 17 of 66
<PAGE>
4.1.4 The Receiving Party is prohibited from disclosing
Confidential Information of the Disclosing
Party to third parties unless such
other person has a need-to-know such
Confidential Information in connection with
the Receiving Party's performance of its
obligations or exercise of its rights
under this Agreement. In addition,
disclosure of such Confidential Information
to any third party shall be permitted only
after such third party has agreed in
writing to abide by provisions of
confidentiality and restrictive use no less
stringent than those set forth herein. The
Receiving Party shall be responsible
for enforcing such provisions against such
third party.
4.1.5 With respect to all Confidential Information of the
Disclosing Party in the Receiving Party's
possession or control (including,
without limitation, all copies and
summaries thereof and regardless of the
format in which such Confidential
Information is stored), the Receiving Party,
promptly upon the Disclosing Party's
request, shall either: (i) return all such
Confidential Information to the Disclosing
Party, or (ii) destroy all such
Confidential Information and certify the
same to the Disclosing Party in
writing. Notwithstanding the foregoing
sentence, the Receiving Party may retain
one copy of each tangible item of
Confidential Information of the Disclosing
Party in a secure location solely for
purposes of enforcement of this Agreement;
provided, however, that all such
Confidential Information shall continue to be
governed in all respects by the other
provisions of this Article. The provisions
of this Section 4.1.5 shall not apply to
any Developed Technology.
4.2 Exceptions. Notwithstanding anything to the contrary herein,
the
provisions of this Article shall not apply
with respect to any Confidential
Information of the Disclosing Party
that:
4.2.1 is already in or subsequently enters the public domain
through no fault of the Receiving
Party;
4.2.2 is supplied by the Disclosing Party to another person
without a duty of confidentiality;
4.2.3 is
known to the Receiving Party or is in its
possession (as shown by tangible evidence)
prior to receipt from the Disclosing
Party;
4.2.4 is developed independently by the Receiving Party (as
shown by competent written records) without
reliance on any Confidential
Information of the Disclosing Party;
4.2.5 is lawfully received by the Receiving Party from another
person without a duty of confidentiality to
the Disclosing Party; or
4.2.6 is disclosed by the Receiving Party pursuant to judicial
order or governmental regulation or
administrative process so long as the
Receiving Party notifies the Disclosing
Party promptly before the disclosure and
UDC and PPG Confidential
Page 18 of 66
<PAGE>
cooperates with the Disclosing Party in the
event that the Disclosing Party
decides to contest or limit the
disclosure.
4.3 Other Persons. To the extent any person that is subject to
the
restrictions set forth in this Article is
not a Party to this Agreement, the
terms of this Article 4 shall apply to such
person to the same extent as if he,
she or it were a Party hereto.
4.4 Injunctive Relief. In the event of any breach or threatened
breach
by any person of any provision of this
Article 4, the Party harmed or likely to
be harmed by such breach or threatened
breach shall be entitled to seek
injunctive or other equitable relief
restraining such person from engaging in
conduct that would constitute a breach of
the obligations of such person under
this Article 4. Such relief, if granted,
shall be in addition to and not in lieu
of any other remedies that may be
available, at law or equity, including an
action for the recovery of damages.
4.5 Survival. The obligations of confidentiality pursuant to
this
Article 4 will survive termination or
expiration of this Agreement for a period
of ten (10) years after the date of
expiration or termination.
ARTICLE 5 - APPOINTMENT AND EXCLUSIVE OLED MATERIAL SUPPLY
5.1 Exclusive Appointment. Subject to the terms and conditions of
this
Agreement, UDC hereby appoints PPG as its
exclusive supplier of, and PPG hereby
agrees to manufacture and sell to UDC, all
of UDC requirements for OLED
Chemicals that (i) are developed solely by
UDC and are materials that UDC
intends during the Term to resell to third
parties for their manufacture of
OLEDs for commercial sale; or (ii) are or
were developed jointly by UDC and PPG
through Process Development work conducted
hereunder or under the Development
Agreement (collectively, "Covered OLED
Chemicals"). UDC shall not sell or
otherwise supply Covered OLED Chemicals for
use in OLEDs, except those provided
by PPG to UDC hereunder.
5.2 Exceptions. The obligations and restrictions under Section
5.1
above shall not apply under the following
circumstances:
5.2.1 UDC's requirements for the Covered OLED Chemical are in
excess of such quantities as PPG is able to
reasonably manufacture, alone or in
the aggregate with other Covered OLED
Chemicals, using its current or
anticipated capital equipment and
facilities. For each current Covered OLED
Chemical, such maximum quantity has been
separately agreed to in writing by the
Parties and each of UDC and PPG agrees that
such maximum quantity is sufficient
for UDC's reasonably foreseeable needs. For
other Covered OLED Chemicals, or if
UDC's expected requirements for a current
Covered OLED Chemical increase
substantially, the Parties shall discuss
and in good faith endeavor to agree
upon a new or revised maximum quantity for
the Covered OLED Chemical. If PPG is
to perform Process Development work on the
Covered OLED Chemical, PPG shall
provide UDC with PPG's proposed maximum
quantity for the Covered OLED Chemical
UDC and PPG Confidential
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<PAGE>
and the Parties shall endeavor to reach
such agreement prior to or promptly
following UDC's request for PPG to commence
such Process Development work. If
there is a problem that can be circumvented
through PPG's outsourcing of any of
the manufacturing process steps, or through
the purchase of a Third-Party OLED
Material, then the Parties shall use
commercially reasonable efforts to pursue
such an alternative approach and the
foregoing obligations and restrictions
shall continue to apply unless the Parties,
despite their good faith efforts,
are unable to agree on a viable
alternative.
5.2.2
PPG's pricing or projected pricing for commercial-scale
quantities of the Covered OLED Chemical is
in excess of that which allows UDC to
resell the Covered OLED Chemical for a
reasonable profit and UDC has good reason
to believe that it can obtain the Covered
OLED Chemical from another source at
pricing that would enable UDC to resell the
Covered OLED Chemical for such a
profit. For each current Covered OLED
Chemical, PPG pricing or projected pricing
for commercial-scale quantities has been
separately agreed to in writing by the
Parties and each of UDC and PPG agrees that
such pricing or projected pricing is
currently sufficient for UDC to resell the
Covered OLED Chemical for a
reasonable profit. For other Covered OLED
Chemicals, or if the pricing at which
UDC is able to resell a current Covered
OLED Chemical decreases substantially,
the Parties shall discuss and in good faith
endeavor to agree upon new or
revised pricing or projected pricing for
commercial-scale quantities of the
Covered OLED Chemical. If PPG is to perform
Process Development work on the
Covered OLED Chemical, PPG shall provide
UDC with PPG's projected pricing for
commercial-scale quantities of the Covered
OLED Chemical and the Parties shall
endeavor to reach such agreement prior to
or promptly following UDC's request
for PPG to commence such Process
Development work. If there is a problem that
can be circumvented through PPG's
outsourcing of any of the manufacturing
process steps, or through the purchase of a
Third-Party OLED Material, then the
Parties shall use commercially reasonable
efforts to pursue such an alternative
approach and the foregoing obligations and
restrictions shall continue to apply
unless the Parties, despite their good
faith efforts, are unable to agree on a
viable alternative.
5.2.3 PPG is regularly unable to provide commercial-scale
quantities of the Covered OLED Chemical
that meet its corresponding Material
Specifications and pass UDC's OLED device
qualification testing and the Parties,
despite their good faith efforts, are
unable to timely agree upon and implement
a plan for the situation to be remedied. If
there is a problem that can be
circumvented through PPG's outsourcing of
any of the manufacturing process
steps, or through the purchase of a
Third-Party OLED Material, then the Parties
shall use commercially reasonable efforts
to pursue such an alternative approach
and the foregoing obligations and
restrictions shall continue to apply unless
the Parties, despite their good faith
efforts, are unable to agree on a viable
alternative.
5.2.4 The Covered OLED Chemical cannot be manufactured by PPG
and supplied to UDC for resale to third
parties for use in OLEDs without
infringing or otherwise violating the
Patent or other proprietary rights of a
third party.
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Page 20 of 66
<PAGE>
5.2.5 The Covered OLED Chemical is only being obtained by UDC
in limited quantities for demonstration,
testing, evaluation and/or research and
development purposes.
5.2.6 The Covered OLED Chemical is designed or intended to be
used [The confidential material contained
herein has been omitted and has been
separately filed with the Commission.].
5.2.7 UDC and PPG otherwise mutually agree that the Covered
OLED Chemical will not be subject to the
foregoing obligations and restrictions.
For clarification, UDC shall be entitled to
[The confidential material contained
herein has been omitted and has been
separately filed with the Commission.] as
and to the extent deemed appropriate by
UDC, such that PPG shall not claim any
information contained therein is
Confidential Information of PPG.
5.3 Other OLED
Chemical Sales by PPG.
5.3.1 During the Term and for [The confidential material
contained herein has been omitted and has
been separately filed with the
Commission.] thereafter, PPG shall not sell
or supply Products or Evaluation
OLED Chemicals to persons other than UDC,
or assist or authorize any other
person to sell or supply Products or
Evaluation OLED Chemicals to persons other
than UDC.
5.3.2 During the Term and for [The confidential material
contained herein has been omitted and has
been separately filed with the
Commission.] thereafter, PPG shall not sell
or supply Competitive OLED Chemicals
for any OLED-related uses to persons other
than UDC, or assist or authorize any
other person to sell or supply Competitive
OLED Chemicals for any OLED uses to
persons other than UDC.
5.3.3 Should PPG, during the Term or within [The confidential
material contained herein has been omitted
and has been separately filed with
the Commission.] thereafter, learn that any
person to whom PPG is selling any
Competitive OLED Chemical for non-OLED uses
is using such OLED Chemical for OLED
uses, PPG agrees to immediately cease
supplying such person with such OLED
Chemical unless otherwise agreed in writing
by UDC. Nothing in this Agreement,
by implication or otherwise, authorizes PPG
to use any UDC Proprietary Materials
for Chemicals and/or any Confidential
Information of UDC in manufacturing,
purifying, analyzing or distributing
Products, Evaluation OLED Chemicals or
Competitive OLED Chemicals to persons other
than UDC, either during or following
the Term.
UDC and PPG Confidential
Page 21 of 66
<PAGE>
ARTICLE 6 - PRODUCTS AND SERVICES
6.1
General.
6.1.1 The
OLED Chemicals to be supplied pursuant to this
Agreement are Evaluation OLED Chemicals and
Products. PPG shall use commercially
reasonable efforts to allocate sufficient
resources and adopt sufficient
planning procedures to fulfill its
obligations to supply Products to UDC
hereunder in a timely manner.
6.1.2 The maximum quantity of each current Product that PPG
may be required to supply to UDC during any
Calendar Quarter has been separately
agreed to in writing by the Parties. The
Parties will cooperate in good faith to
agree in writing upon such maximum quantity
for other Products, or if either
Party proposes any changes to an existing
maximum quantity.
6.1.3 All Products supplied by PPG hereunder shall be
manufactured, packaged, stored and shipped
according to and in compliance with
their corresponding Material
Specifications, and in accordance with
manufacturing practices as implemented by
PPG with respect to other, similar
products manufactured by PPG.
6.1.4 The Parties will cooperate in good faith to control
PPG's costs and expenses for each Product
supplied to UDC hereunder, and shall
use their reasonable best efforts to reduce
such costs to the fullest extent
reasonably practicable in light of the
Product's corresponding Material
Specifications and UDC's required volumes
and lead times. PPG shall provide UDC
with such reports and other supporting
documentation as UDC may reasonably
request in connection with monitoring such
costs and expenses and PPG's efforts
to control the same.
6.1.5 The Parties recognize that detailed and continuing
exchanges of information shall be necessary
in order to optimize the
administration of this Agreement and PPG's
supply of Products to UDC, consistent
with the respective rights and obligations
of the Parties hereunder. To that
end, each Party shall designate a
representative (and notify the other Party of
the individual so designated) responsible
for exchanging information and for
resolving issues relating to the
forecasting, ordering, production, shipment and
sales of Products which may arise under
this Agreement. The designated
representatives of each Party shall conduct
planning meetings (which may be by
teleconference if practicable) periodically
and as may be necessary to address
any issues that may arise.
6.2 Raw
Materials, Intermediates and Third-Party OLED Materials.
6.2.1 PPG's Purchase of Raw Materials and Third-Party OLED
Materials. PPG will recommend to UDC in
writing all purchases of raw materials
and Third-Party OLED Materials based upon
written Product forecasts to be
provided by UDC. Unless otherwise
specifically agreed, PPG shall be responsible
administratively for ordering and arranging
for the delivery of all raw
UDC and PPG Confidential
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<PAGE>
materials and Third-Party OLED Materials
required for Process Development and
the manufacture of said Products to PPG's
Monroeville Chemicals Center, and PPG
shall arrange for the conversion of such
raw materials and Third-Party OLED
Materials into said Products which PPG
shall supply to UDC as set forth herein.
Unless otherwise agreed, PPG shall also
serve as the technical interface with
the supplier of such raw materials and
Third-Party OLED Materials for quality
control and related purposes.
(i) Raw Materials for Products Other Than Commercial
OLED Chemicals. Upon written approval by
UDC to the Operations Manager,
Specialty Synthesis Group of PPG, PPG will
purchase all raw materials for
Products other than Commercial OLED
Chemicals for UDC's account.
(ii) Raw Materials for Commercial OLED Chemicals. As
a general matter, PPG shall be responsible
for obtaining raw materials
sufficiently in advance to as to reasonably
ensure the timely manufacture and
supply of Commercial OLED Chemicals for
which UDC has issued a Purchase Order to
PPG. However, should UDC specifically
request that PPG purchase and maintain an
inventory of one or more critical raw
materials above and beyond that which is
usual and customary for the production of a
particular Commercial OLED Chemical,
PPG shall maintain said additional
inventory at such levels as UDC and PPG, from
time to time, shall agree in good faith and
in writing. Such additional
inventory shall be for PPG's account,
subject to subsection 6.2.4 below.
(iii) Third-Party OLED Materials - Intermediates.
Where the Third-Party OLED Material is an
Intermediate, unless otherwise agreed
by the Parties such Third-Party OLED
Material shall be treated as if it were a
raw material covered under clause (i) or
clause (ii) above, as applicable.
(iv) Third-Party OLED Materials - Unrefined OLED
Chemicals. Where the Third-Party OLED
Material is an unrefined OLED Chemical,
unless otherwise agreed by the Parties such
Third-Party OLED Material shall be
purchased by UDC and UDC shall retain title
thereto at all times during the
conversion of such Third-Party OLED
Material into the associated Product.
However, as indicated above, PPG shall be
responsible, subject to UDC's
approval, for administratively ordering and
arranging for the delivery of such
material from the supplier on UDC's behalf
in connection with filling UDC's
Purchase Orders for the associated
Product.
6.2.2 PPG's Production of Intermediates. PPG will recommend to
UDC in writing the production and
maintenance of inventories of Intermediates
based upon written Product forecasts to be
provided by UDC.
(i) Intermediates for Products Other Than Commercial
OLED Chemicals. Upon written approval by
UDC to the Operations Manager,
Specialty Synthesis Group of PPG, PPG will
produce and maintain a reasonable
inventory of Intermediates for Products
other than Commercial OLED Chemicals for
UDC's account.
UDC and PPG Confidential
Page 23 of 66
<PAGE>
(ii) Intermediates for Commercial OLED Chemicals. As
a general matter, PPG shall be responsible
for producing Intermediates
sufficiently in advance so as to reasonably
ensure the timely manufacture and
supply of Commercial OLED Chemicals
hereunder. However, should UDC specifically
request that PPG produce and maintain an
inventory of one or more Intermediates
above and beyond that which is usual and
customary for the production of a
particular Commercial OLED Chemical, PPG
shall maintain said additional
inventory at such levels as UDC and PPG,
from time to time, shall agree in good
faith and in writing. Such additional
inventory shall be for PPG's account,
subject to subsection 6.2.4 below.
6.2.3 Maintenance and Records. All raw materials and
Third-Party OLED Materials purchased by PPG
for UDC's account will be maintained
separate from other PPG materials and shall
be used solely for the production of
Products for UDC hereunder. PPG will
maintain records as to disposition of such
raw materials and Third-Party OLED
Materials for a period of six (6) months
following the close of each Contract Year.
Upon at least thirty (30) days' prior
written notice to PPG, UDC may engage an
independent third party to audit such
records, subject to PPG's reasonable
confidentiality limitations.
6.2.4 Disposal of Unused Inventory. If any inventory of raw
materials obtained or Intermediates
produced for PPG's account is not converted
to a Commercial OLED Chemical within six
(6) months of receipt or production by
PPG, then PPG shall bill UDC for the
inventory. If such inventory is no longer
required, then UDC, at its option, shall
either (i) pay for disposal of the
inventory; (ii) have the inventory shipped
to UDC at UDC's sole cost and
expense; or (iii) in the case of raw
materials, return such inventory for credit
from supplier of such inventory.
6.3 Material Specifications. As a general matter, all Material
Specifications shall be proposed by PPG but
are subject to final comment and
revision and written approval by UDC. Once
approved, the Material Specifications
for a given OLED Chemical or Intermediate
may be changed only by written
agreement of the Parties, which agreement
in the case of PPG shall not be
unreasonably withheld. The Parties shall
endeavor to establish and agree upon
changes to the Material Specifications in a
manner designed to ensure that all
Products are of high quality and purity,
are fit for use in connection with
OLEDs, and can be manufactured at a
commercially reasonable price; provided
however that the Parties are only agreeing
to use their good faith efforts to
achieve the foregoing goals and, subject
thereto, neither Party makes any
representation or warranty with respect to
the Material Specifications. With
respect to Development OLED Chemicals that
are the subject of Process
Development, the Parties shall in good
faith attempt to agree upon the Material
Specifications for such Development OLED
Chemicals as part of the Process
Development work. The Parties acknowledge
that they will promptly and in good
faith agree upon a representative Material
Specification in a mutually
acceptable format.
UDC and PPG Confidential
Page 24 of 66
<PAGE>
6.4 Services and Charges. Except as otherwise set forth herein,
upon
UDC's request by a written Statement of
Work and/or Purchase Order, PPG shall
supply the following OLED Chemicals and
services to UDC, for the charges set
forth herein:
6.4.1 Evaluation OLED Chemicals. PPG shall supply Evaluation
OLED Chemicals as requested by UDC. Charges
for the supply of Evaluation OLED
Chemicals, including all raw materials and
conversion costs, are [The
confidential material contained herein has
been omitted and has been separately
filed with the Commission.].
6.4.2 Process Development Work. UDC shall pay PPG at the rate
of [The confidential material contained
herein has been omitted and has been
separately filed with the Commission.]
PPG's Process Development Costs for all
Process Development work performed by
chemists on the Process Development Team.
If supplied to UDC, Development OLED
Chemicals produced by chemists on the
Process Development Team shall be [The
confidential material contained herein
has been omitted and has been separately
filed with the Commission.].
6.4.3
Development OLED Chemicals.
(i) For the supply of each Primary Development
Chemical produced by PPG personnel other
than chemists on the Process
Development Team and in cumulative
quantities of [The confidential material
contained herein has been omitted and has
been separately filed with the
Commission.] or less, UDC shall pay PPG at
the rate of [The confidential
material contained herein has been omitted
and has been separately filed with
the Commission.] PPG's OLED Material
Conversion Costs. For the supply of any
such Primary Development Chemical in
cumulative quantities of more than [The
confidential material contained herein has
been omitted and has been separately
filed with the Commission.], UDC shall pay
PPG at the rate of [The confidential
material contained herein has been omitted
and has been separately filed with
the Commission.] PPG's OLED Material
Conversion Costs for the excess quantity.
(ii) For the supply of each Ancillary Development
Chemical produced by PPG personnel other
than chemists on the Process
Development Team, UDC shall pay PPG at the
rate of [The confidential material
contained herein has been omitted and has
been separately filed with the
Commission.] PPG's OLED Material Conversion
Costs.
(iii) Notwithstanding clauses (i) and (ii) above, if
the Development OLED Chemical is a
Third-Party OLED Material that [The
confidential material contained herein has
been omitted and has been separately
filed with the Commission.] PPG's OLED
Material Conversion Costs shall be [The
confidential material contained herein has
been omitted and has been separately
filed with the Commission.] in lieu of the
rates specified above.
UDC and PPG Confidential
Page 25 of 66
<PAGE>
(iv) For clarification, the amounts specified above
do not include the cost of raw materials
and Third-Party OLED Materials
purchased for UDC's account in accordance
with subsection 6.2.1 above, or
Intermediates produced for UDC's account in
accordance with subsection 6.2.2
above, for which UDC shall pay PPG at PPG's
cost according to Section 9.1 below.
6.4.4 Pre-Commercial OLED Chemicals. For the supply of each
Pre-Commercial OLED Chemical, UDC shall pay
PPG at the rate of [The confidential
material contained herein has been omitted
and has been separately filed with
the Commission.] PPG's OLED Material
Conversion Costs. Notwithstanding the
foregoing sentence, if the Pre-Commercial
OLED Chemical is a Third-Party OLED
Material that [The confidential material
contained herein has been omitted and
has been separately filed with the
Commission.] PPG's OLED Material Conversion
Costs shall be [The confidential material
contained herein has been omitted and
has been separately filed with the
Commission.] in lieu of [The confidential
material contained herein has been omitted
and has been separately filed with
the Commission.]. For clarification, these
amounts do not include any costs for
raw materials and Third-Party OLED
Materials purchased for UDC's account in
accordance with subsection 6.2.1 above, or
for Intermediates produced for UDC's
account in accordance with subsection 6.2.2
above, for which UDC shall pay PPG
at PPG's cost according to Section 9.1
below.
6.4.5 Commercial OLED Chemicals. For the supply of each
Commercial OLED Chemical, UDC shall pay PPG
at the rate of [The confidential
material contained herein has been omitted
and has been separately filed with
the Commission.] PPG's Commercial OLED
Material Cost, subject to adjustment
based on the Credit Pool described in
Section 6.5 below. For clarification,
these amounts include all costs for raw
materials and Third-Party OLED Materials
purchased for UDC's account in accordance
with subsection 6.2.1 above, and for
Intermediates produced for UDC's
account
