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AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT

This Amended and Restated Change in Control Agreement (the “Agreement”) is made
as of November 4, 2008, by and between Universal Display Corporation (the
“Company”), and Janice K. Mahon (“Employee”).
 
WHEREAS, Employee is employed by UDC, Inc., an affiliate of the Company,
currently serving in a capacity as Vice President, Technology Commercialization
of the Company; and
 
WHEREAS, the Company believes that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of Employee to
the Company without distraction notwithstanding the fact that the Company could
be subject to a “Change in Control” (as hereinafter defined), and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of key management
personnel to the detriment of the Company;
 
WHEREAS, in consideration for Employee agreeing to continue in employment with
the Company and its affiliate and agreeing to keep Company information
confidential and not to compete with the Company (as hereinafter defined), the
Company agrees that Employee shall receive the compensation set forth in this
Agreement as a cushion against the financial and career impact on Employee in
the event Employee’s employment with the Company is involuntarily terminated in
connection with a Change in Control; and
 
WHEREAS, the parties previously entered into a Change in Control Agreement dated
April 28, 2003, and the parties wish to amend such agreement to ensure
conformity with the provisions of Section 409A of the Internal Revenue Code of
1986, as amended, and the regulations issued thereunder (the “Code”).
 
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements hereinafter set forth and intending to be legally bound hereby, the
Company and Employee (individually a “Party” and together, the “Parties”) agree
as follows:
 
1. Definitions.
 
(a) “Annual Base Salary” shall mean twelve (12) times the greater of: (a) the
highest monthly base salary paid or payable (including any base salary which has
been earned but deferred and any car allowance) to Employee by the Company and
its affiliates (as defined in Section 1504 of the Code without regard to
subsection (b) thereof), together with any and all salary reduction authorized
amounts under any of the Company’s and its affiliates’ benefit plans or
programs, during the twenty-four (24) month period immediately preceding the
date of the Change in Control, or (b) the monthly base salary paid or payable to
Employee by the Company and its affiliates (including authorized deferrals,
salary reduction amounts and any car allowance), together with any and all
salary reduction authorized amounts under any of the Company’s and its
affiliates’ benefit plans or programs, for the last full month immediately prior
to Employee’s Termination of Employment.
 

 
 

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(b) “Annual Bonus” shall mean an amount equal to Employee’s highest annual bonus
for the last three (3) full fiscal years prior to the Change in Control
(annualized in the event that Employee was not employed for the whole of such
fiscal year).  If any such amount was paid in whole or in part in the form of
stock options, stock appreciation rights, warrants, stock awards or performance
units, whether or not restricted or subject to the satisfaction of any
performance goals or other criteria, the annual bonus for such fiscal year shall
include the fair market dollar value equivalent of all such stock options, stock
appreciation rights, warrants, stock awards and performance units, determined as
of the date of grant.
 
(c) “Board” shall mean the board of directors of the Company.
 
(d) “Cause” shall mean (i) conviction of a crime involving moral turpitude, or
(ii) gross negligence in the performance of duties, which gross negligence is
willful, has or has the potential to have a material adverse effect on the
business, operations, assets, properties or financial condition of the Company
and its affiliates taken as a whole, and is not cured within sixty (60) days
after reasonable written notice from the Company.
 
(e) “Change in Control” shall mean the occurrence of any of the following:
 
(i) if any Person or affiliated group of Persons (other than in their capacities
as trustees of a trust existing on the Effective Date or any successor trust
having the same beneficiaries) first become the “beneficial owners” (as defined
in Rule 13d-3 under the Securities Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities beneficially owned by
such Persons any securities acquired directly from the Company or its
affiliates) representing thirty percent (30%) or more of either the
then-outstanding shares of stock of the Company or the combined voting power of
the Company’s then-outstanding securities;
 
(ii) if, during any period of twenty-four (24) consecutive months during the
existence of this Agreement commencing on or after the date hereof, the
individuals who, at the beginning of such period, constitute the Board (the
“Incumbent Directors”) cease for any reason other than death to constitute at
least a majority thereof; provided that a director who was not a director at the
beginning of such twenty-four (24) month period shall be deemed to have
satisfied such twenty-four (24) month requirement (and be an Incumbent Director)
if such director was elected by, or on the recommendation of or with the
approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually (because they were directors at the
beginning of such twenty-four (24) month period) or by prior operation of this
clause (ii);
 
(iii) the consummation of a merger or consolidation of the Company with any
other corporation other than (A) a merger or consolidation that would result in
the voting securities of the Company outstanding immediately prior to such
merger or consolidation continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving of the Company or
such surviving entity or any parent thereof) at least  fifty percent
 

 
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(iv) (50%) of the combined voting power of the voting securities of the Company
or such surviving entity or any parent outstanding immediately after such merger
or consolidation, or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or a similar transaction) in which no Person or
group of affiliated Persons (other than in their capacities as trustees of a
trust existing on the Effective Date or any successor trust having the same
beneficiaries) first become the “beneficial owners” (as defined in Rule 13d-3
under the Securities Exchange Act), directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by such Persons any
securities acquired directly from the Company or its affiliates) representing
thirty percent (30%) or more of either the then-outstanding shares of stock of
the Company or the combined voting power of the Company’s then-outstanding
securities;
 
(v) the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company, or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets,
other than a sale or disposition by the Company of all or substantially all of
the Company’s assets to an entity, at least fifty percent (50%) of the combined
voting power of the voting securities of which are owned by Persons in
substantially the same proportion as their ownership of the Company immediately
prior to such sale; or
 
(vi) any Person has consummated a tender offer or exchange for voting stock of
the Company and, directly or indirectly, has become (in one or more
transactions) the “beneficial owner” of securities of the Company representing a
majority of the voting power of the then outstanding shares of stock of the
Company.
 
Upon the occurrence of a Change in Control as provided above, no subsequent
event or condition shall constitute a Change in Control for purposes of this
Agreement, with the result that there can be no more than one Change in Control
hereunder.
 
(f) “Code” shall mean the Internal Revenue Code of 1986, as amended, and the
regulations issued thereunder.
 
(g) “Cure Period” shall mean the thirty (30) day period after the Company
receives Employee’s Notice of Termination as described in Section 2 below,
during which period the Company shall have the opportunity, if the act or
omission is capable of correction, to correct the action or failure to act that
constitutes the applicable occurrence as set forth in the Notice of Termination.
 
(h) “Effective Termination Date” shall mean:
 
(i) in the case of a Termination of Employment initiated by the Company at the
time of or within two (2) years after a Change in Control, the date of
Employee’s receipt of the Notice of Termination described in Section 2 hereof,
 

 
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(ii) or any later date specified therein on which a Termination of Employment is
to occur (which date shall not be more than fifteen (15) days after the giving
of such notice), as the case may be;
 
(iii) in the case of a Termination of Employment initiated by Employee at the
time of or within two (2) years after a Change in Control, the date immediately
following the end of the Cure Period for the action or failure to act that
constitutes the applicable occurrence as set forth in the Employee’s Notice of
Termination, provided that the Company shall not have, prior to such date,
corrected such action or failure to act or Employee has not waived such failure;
and
 
(iv) in the case of a Termination of Employment initiated by either the Company
or Employee during the one (1) year period immediately preceding a Change in
Control, the date of the Change in Control or, if sooner, the date the Company
or its affiliates publicly announce an intention to consummate the Change in
Control.
 
(i) “Person” shall mean any corporation, partnership, limited liability company,
joint venture, other entity or natural person.
 
(j) “Separation Period” shall mean the twenty-four (24) month period beginning
on the Effective Termination Date.
 
(k) “Termination of Employment” shall mean the termination of Employee’s active
employment relationship with the Company or its affiliates.
 
(l) “Termination in Connection with a Change in Control” shall mean:
 
(i) Subject to the requirements of Section 2, a Termination of Employment at the
time of or within two (2) years after a Change in Control either:
 
A. initiated by the Company or its affiliates for any reason other than (I)
Employee’s death, continuous illness, injury or incapacity for a period of
twelve (12) consecutive months, or (II) for Cause; or
 
B. initiated by Employee upon the occurrence of one or more of the following
events without Employee’s consent, subject to any applicable Cure Period:
 
(I) any material failure of the Company to comply with and satisfy any of the
terms of this Agreement or any other material obligations of the Company or its
affiliates to Employee;
 
(II) any significant reduction by the Company or its affiliates of the
authority, duties, reporting responsibilities or job responsibilities of
Employee;
 

 
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(III) any removal by the Company or its affiliates of Employee from the
employment grade, compensation level or officer positions which Employee holds
as of the effective date hereof (except in connection with a promotion to higher
office);
 
(IV) the relocation of the offices of the Company at which Employee is
principally employed to a location more than fifty (50) miles from such location
immediately prior to the date that is six (6) months before the Change in
Control, except for required travel on the Company’s business to any extent
substantially consistent with Employee’s business travel obligations as of the
date of this Agreement;
 
(ii) a Termination of Employment during the one (1) year period immediately
preceding a Change in Control, which termination is initiated by the Company, or
by Employee upon the occurrence of one or more of the events in clauses (I) –
(IV) of subsection (l)(i)(B) above and without Employee’s consent, unless the
Company establishes by clear and convincing evidence that such Termination of
Employment was for good faith business reasons not related to the Change in
Control.
 
2. Notice of Termination of Employment.
 
(a) The party initiating a Termination of Employment, whether Employee or the
Company, shall communicate the Termination of Employment to the other party by a
written notice of termination given in accordance with Section 16 hereof (a
“Notice of Termination”).  The Notice of Termination shall (i) briefly summarize
the facts and circumstances deemed to provide a basis for the Termination of
Employment; (ii) indicate, to the extent known, whether the party initiating
termination considers the Termination of Employment to be a Termination in
Connection with a Change in Control and, if so, the specific reasons why; (iii)
if the Effective Termination Date is other than the date of receipt of such
notice, specify the Effective Termination Date to the extent determinable,
subject to any applicable Cure Period.
 
(b) If termination is initiated by Employee based on an event described in
Section 1(l)(i)(B)(III)-(IV) above, such Notice of Termination shall be
delivered to the Company within a reasonable period of time after the date on
which Employee first has actual knowledge of the facts or circumstances giving
rise thereto, such period not to exceed ninety (90) days following such date.
 
(c) To the extent the Termination of Employment is initiated during the one (1)
year period immediately preceding a Change in Control, it is understood that
whether the Termination of Employment is a Termination in Connection with a
Change in Control may be unknown and the Effective Termination Date may be
undeterminable at the time the Notice of Termination is delivered.  In such
event, the party initiating the Termination of Employment shall provide a
supplemental written notice to the other party providing the additional
information that was unknown or undeterminable at the time the original Notice
of Termination was delivered (a “Supplemental Notice”).  This Supplemental
Notice shall be delivered within a
 

 
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(d) reasonable period of time after the first date on which the initiating party
learns of the Change in Control or, if sooner, the date of the publicly
announced intention of the Company or its affiliates to consummate the Change in
Control, such period not to exceed ninety (90) days after the earlier of the two
dates.
 
3. Compensation upon Termination in Connection with a Change in Control.  In the
event of a Termination in Connection with a Change in Control, the Company shall
pay to Employee, or provide to Employee at no additional cost for the length of
the Separation Period, the following:
 
(a) An amount equal to Employee’s earned or accrued but unpaid compensation
(including any unused paid time off) as of the date of Termination of
Employment, said amount to be paid in a lump sum within fifteen (15) days after
the Effective Termination Date, but in any event no later than March 15 of the
year following the year of the Effective Termination Date.
 
(b) An amount equal to all reasonable out-of-pocket business expenses properly
incurred but not yet reimbursed by the Company or its affiliates, said amount to
be paid in a lump sum within fifteen (15) days after the Effective Termination
Date, but in any event no later than March 15 of the year following the year of
the Effective Termination Date.
 
(c) An amount equal to two (2) times the sum of the Annual Base Salary and the
Annual Bonus, said amount to be paid in a lump sum within fifteen (15) days
after the Effective Termination Date, but in any event no later than March 15 of
the year following the year of the Effective Termination Date.
 
(d) An amount equal to the estimated after-tax premium cost to Employee of
continuing any Company-sponsored life, travel and accident and disability
insurance coverage for Employee (and where applicable, his or her spouse and
dependents) based on the coverage levels in effect for Employee (and where
applicable, his or her spouse and dependents) immediately prior to the Effective
Termination Date (less any amount that Employee would have been required to
contribute toward the cost of such coverage), for the length of the Separation
Period, as if Employee had continued to be employed by the Company during the
Separation Period at his or her Annual Base Salary, said amount to be paid in a
lump sum within fifteen (15) days after the Effective Termination Date, but in
any event no later than March 15 of the year following the year of the Effective
Termination Date.
 
(e) An amount equal to the Company provided contributions to which Employee
would be entitled under the Company’s or its affiliates’ 401(k) savings and
retirement plans (whether qualified or non-qualified) (the “Benefit Plans”), if
Employee had continued working for the Company during the Separation Period at
his or her Annual Base Salary, and were making the maximum amount of employee
contributions, if any, as are required under such Benefit Plans, said amount to
be paid in a lump sum within fifteen (15) days after the Effective Termination
Date, but in any event no later than March 15 of the year following the year of
the Effective Termination Date.
 

 
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(f) Effective immediately preceding the Change in Control (but contingent upon
the consummation of the Change in Control), all outstanding equity awards held
by Employee immediately preceding the Change in Control that have not yet become
vested (and exercisable to the extent applicable) shall become fully vested (and
exercisable to the extent applicable); provided that awards that vest based upon
attainment of performance criteria shall not accelerate and vest pursuant to
this Section 3(f) but shall instead be governed by the terms of the plan or
award agreement evidencing the terms of such award.
 
(g) Continued group hospitalization, health and dental care coverage during the
Separation Period, at the level in effect as of the Effective Termination Date
(or generally comparable coverage) for Employee and, where applicable,
Employee’s spouse and dependents, as the same may be changed by the Company from
time to time for employees generally, as if Employee had continued in employment
during the Separation Period.  The COBRA healthcare continuation coverage period
under Section 4980B of the Code shall run concurrently with the Separation
Period.
 
(h) Outplacement assistance services during the Separation Period provided by an
outplacement agency selected by Employee, said amount to be paid in a lump sum
equal to $10,000 within fifteen (15) days after the Effective Termination Date,
but in any event no later than March 15 of the year following the year of the
Effective Termination Date.
 
Notwithstanding the foregoing, no such payments, benefits or services shall be
made or provided (except as may be required by law) unless Employee executes,
and does not revoke, a written release, substantially in the form attached
hereto as ANNEX I (the “Release”), of any and all claims against the Company and
all related parties with respect to all matters arising out of Employee’s
employment by the Company or its affiliates (other than any entitlements under
the terms of this Agreement or under any other plans or programs of the Company
in which Employee participated and under which Employee has accrued or become
entitled to a benefit), or the termination thereof.
 
4. Other Payments; Non-Exclusivity of Rights.  The payments and benefits due
under Section 3 hereof shall be in addition to and not in lieu of any payments
or benefits due to Employee under any other plan, policy or program of the
Company or its affiliates, including, without limitation, any employee benefit
programs, compensation plans and programs, or other program permitting Employee
to obtain benefits based on exceeding compensation limitations imposed by the
Code, and any employee perquisite programs maintained for the benefit of the
Company’s officers or employees, except that no cash payments shall be paid to
Employee under the Company’s then-current severance pay policies.  Moreover,
nothing in this Agreement shall prevent or limit Employee’s continuing or future
participation in or rights under any benefit, bonus, incentive or other plan or
program provided by the Company or its affiliates and for which Employee may
qualify.
 
5. Enforcement.
 
(a) In the event that the Company shall fail or refuse to make payment of any
amounts due Employee under Sections 3 and 4 hereof within the respective time
periods provided therein, the Company shall pay to Employee, in addition to the
payment of any other
 

 
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(b) sums provided in this Agreement, interest, compounded daily, on any amount
remaining unpaid from the date payment is required under Section 3 and 4, as
appropriate, until paid to Employee, at the rate from time to time reported by
The Wall Street Journal as its “prime rate” plus 2%, each change in such rate to
take effect on the effective date of the change in such prime rate.
 
(c) It is the intent of the Parties that Employee not be required to incur any
expenses associated with the enforcement of his or her rights under Sections 3
or 4 hereof by arbitration, litigation or other legal action because the cost
and expense thereof would substantially detract from the benefits intended to be
extended to Employee hereunder.  Accordingly, the Company shall pay Employee, on
demand, the amounts necessary to advance to, or reimburse Employee in full for,
all expenses (including all attorneys’ fees and legal expenses) reasonably
incurred by Employee in enforcing any of Employee’s rights under this Agreement.
 
6. No Mitigation.  Employee shall not be required to mitigate the amount of any
payment or benefit provided for in this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for herein be
reduced by any compensation earned by other employment or otherwise.
 
7. No Set-Off.  The Company’s obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company or its
affiliates may have against Employee or others.
 
8. Tax Withholding.  Any payment required under this Agreement shall be subject
to all requirements of the law with regard to the withholding of taxes, filing,
making of reports and the like, and the Company shall use its best efforts to
satisfy promptly all such requirements.
 
9. Tax Reimbursement Payments.  In the event that any amount or benefit paid or
distributed to Employee pursuant to this Agreement, taken together with any
amounts or benefits otherwise paid or distributed to Employee by the Company or
its affiliates (collectively, the “Covered Payments”), including, without
limitation, any profits realized in respect of the receipt, vesting or exercise
of stock options or warrants and similar events, are or become subject to the
tax (the “Excise Tax”) imposed under Section 4999 of the Code, the Company shall
pay to Employee at the time specified below an additional amount (the “Tax
Reimbursement Payment”), such that the net amount retained by Employee with
respect to such Covered Payments, after deducting any Excise Tax on the Covered
Payments, as well as any Federal, state and local income taxes and Excise Tax on
the Tax Reimbursement Payment provided for by this Section 9, but before
deduction for any Federal, state or local income or employment tax withholding
on such Covered Payments, shall be equal to the amount of the Covered
Payments.  The Company shall reimburse Employee only as a result of excise taxes
imposed under Section 4999 of the Code (or a successor Code provision of
comparable intent).
 
(a) For purposes of determining whether any of the Covered Payments will be
subject to the Excise Tax and the amount of such Excise Tax,
 

 
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(b) such Covered Payments will be treated as “parachute payments” within the
meaning of Section 280G of the Code, and all “parachute payments” in excess of
the “base amount” (as defined under Section 280G(b)(3) of the Code) shall be
treated as subject to the Excise Tax, unless, and except to the extent that, in
the good faith judgment of the Company’s independent certified public
accountants or tax counsel selected by such Accountants (the “Accountants”),
such Covered Payments, in whole or in part, either do not constitute “parachute
payments” or represent reasonable compensation for personal services actually
rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of
the “base amount,” or such “parachute payments” are otherwise not subject to the
Excise Tax, and
 
(i) the value of any non-cash benefits or any deferred payments or benefits
shall be determined by the Accountants in accordance with the principles of
Section 280G of the Code.
 
(c) For purposes of determining the amount of the Tax Reimbursement Payment,
Employee shall be deemed to pay:
 
(i) Federal income taxes at the highest applicable marginal rate of Federal
income taxation for the calendar year in which the Tax Reimbursement Payment is
to be made, and taking into account the effect of loss of the value of itemized
deductions and personal exemptions as a result of Employee’s receipt of the Tax
Reimbursement Payment; and
 
(ii) any applicable state and local income taxes at the highest applicable
marginal rate of taxation for the calendar year in which the Tax Reimbursement
Payment is to be made, net of the maximum reduction in Federal incomes taxes
that could be obtained from the deduction of such state or local taxes if paid
in such year.
 
(d) In the event that the Excise Tax is subsequently determined by the
Accountants, or pursuant to any proceeding or negotiations with the Internal
Revenue Service, to be less than the amount taken into account hereunder in
calculating the Tax Reimbursement Payment made, Employee shall repay to the
Company, at the time that the amount of such reduction in the Excise Tax is
finally determined, the portion of such prior Tax Reimbursement Payment that
would not have been paid if such Excise Tax had been applied in initially
calculating such Tax Reimbursement Payment, plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the
Code.  Notwithstanding the foregoing, in the event any portion of the Tax
Reimbursement Payment to be refunded to the Company has been paid to any
Federal, state or local tax authority, repayment thereof shall not be required
until actual refund or credit of such portion has been made to Employee, and
interest payable to the Company shall not exceed interest received or credited
to Employee by such tax authority for the period it held such portion.  Employee
and the Company shall mutually agree upon a course of action to be pursued (and
the method of allocating the expenses thereof) if Employee’s good faith claim
for refund or credit is denied.
 
(e) In the event that the Excise Tax is later determined by the Accountants, or
pursuant to any proceeding or negotiations with the Internal Revenue Service, to
exceed the
 

 
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(f) amount taken into account hereunder at the time the Tax Reimbursement
Payment is made (including, but not limited to, by reason of any payment the
existence or amount of which cannot be determined at the time of the Tax
Reimbursement Payment), the Company shall make an additional Tax Reimbursement
Payment in respect of such excess (plus any interest or penalty payable with
respect to such excess) at the time that the amount of such excess is finally
determined.
 
(g) The Tax Reimbursement Payment (or any portion thereof) provided for in this
Section 9 shall be paid to Employee not later than fifteen (15) days following
payment of the Covered Payments; provided, however, that if the amount of such
Tax Reimbursement Payment (or any portion thereof) cannot be finally determined
on or before the date on which payment is due, the Company shall pay to Employee
by such date an amount estimated in good faith by the Accountants to be the
minimum amount of such Tax Reimbursement Payment, and shall pay to Employee the
remainder of such Tax Reimbursement Payment (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can
be determined, but in no event later the end of Employee’s taxable year next
following Employee’s taxable year in which Employee remits the taxes for which
the Tax Reimbursement Payment is being paid.  In the event that the amount of
the estimated Tax Reimbursement Payment exceeds the amount subsequently
determined to have been due, such excess shall be paid by the Company to
Employee, within fifteen (15) days after written demand by the Company for
repayment (together with interest at the rate provided in Section 1274(b)(2)(B)
of the Code).
 
(h) Notwithstanding anything in this Agreement to the contrary, if applicable,
the Company shall not pay Covered Payments and Tax Reimbursement Payments under
this Agreement earlier than the earliest date permitted by Section 409A of the
Code, or later than the latest date permitted by Section 409A of the Code, if,
as determined in the reasonable judgment of outside counsel hired by the
Company, payment on the originally scheduled date would cause the Employee to
incur adverse tax consequences under Section 409A of the Code.  Covered Payments
and Tax Reimbursement Payments that are subject to Section 409A of the Code
shall only be paid upon an event permitted by Section 409A of the Code, and this
Agreement shall be administered consistently with Section 409A of the Code, to
the extent applicable.
 
10. Section 409A of the Code.
 
(a) Amounts payable under this Agreement are intended, in whole or in part, to
meet the requirements of the “short-term deferral” exception or another
exception under Section 409A of the Code.  For purposes of Section 409A of the
Code, all payments to be made upon a termination of employment under this
Agreement may only be made upon a “separation from service” within the meaning
of such term under Section 409A of the Code and each payment made under this
Agreement shall be treated as a separate payment.  In no event shall the
Employee, directly or indirectly, designate the calendar year of payment.  All
reimbursements and in-kind benefits provided under this Agreement shall be made
or provided in accordance with the requirements of Section 409A of the Code,
including, where applicable, the requirement that (i) any reimbursement is for
expenses incurred during the Employee’s lifetime (or during a shorter period of
time specified in this Agreement), (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits provided, during a calendar year may not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other calendar year, (iii) the
 

 
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(b) reimbursement of an eligible expense will be made on or before the last day
of the calendar year following the year in which the expense is incurred, and
(iv) the right to reimbursement or in-kind benefits is not subject to
liquidation or exchange for another benefit.
 
(c) Notwithstanding anything in this Agreement to the contrary, if at the time
of the Employee’s “separation from service” with the Company, the Company has
securities which are publicly-traded on an established securities market and the
Employee is a “specified employee,” and it is necessary to postpone payment of
any amount under this Agreement for a period of six (6) months after the
Employee’s “separation from service” with the Company to prevent any accelerated
or additional tax under Section 409A of the Code, payment of such amount shall
be postponed as required by Section 409A of the Code, and the accumulated
postponed amount, with interest (as described below), shall be paid in a lump
sum payment within ten (10) days after the end of the six-month period.  If the
Employee dies during the postponement period prior to the payment of postponed
amount, the amounts postponed on account of Section 409A of the Code, with
interest, shall be paid to the personal representative of the Employee’s estate
within sixty (60) days after the date of the Employee’s death.  A “specified
employee” shall mean an employee who, at any time during the twelve (12) month
period ending on the identification date, is a “specified employee” under
Section 409A of the Code, as may be determined by the Company’s Board of
Directors or its delegate.  The determination of “specified employees,”
including the number and identity of persons considered “specified employees”
and the identification date, shall be made by the Company’s Board of Directors
or its delegate in accordance with the provisions of Sections 416(i) and 409A of
the Code and the regulations issued thereunder.  If amounts are postponed on
account of Section 409A, the postponed amounts will be credited with interest
for the postponement period.  Said interest shall be compounded daily at an
annualized rate equal to the interest rate reported by The Wall Street Journal
as its “prime rate” on the Effective Termination Date.
 
11. Confidential Information.  Employee recognizes and acknowledges that, by
reason of his or her employment by and service to the Company, he or she has had
and will continue to have access to confidential information of the Company,
including, without limitation, information and know-how pertaining to the
Company’s products and services, innovations, designs, ideas, plans, trade
secrets, proprietary inventions, distribution and sales methods and systems,
sales and profit figures, customer and supplier lists, and relationships with
customers, suppliers and others (“Confidential Information”).  Employee
acknowledges that such Confidential Information is a valuable and unique asset
of the Company and covenants that he or she will not, either during or after his
or her employment by the Company, disclose or use any Confidential Information
for any purpose known to be adverse to the interests of the Company, unless the
information is already in the public domain through no fault of Employee or such
disclosure or use is required by law or in a judicial or administrative
proceeding.
 
12. Non-Competition and Non-Solicitation.
 
(a) During Employee’s employment by the Company and for a period of six (6)
months after Employee’s Termination in Connection with a Change in Control,
Employee will not, except with the prior written consent of the Board (which
consent shall not be unreasonably withheld or delayed), own, manage, operate,
join, control or finance, or participate in the ownership, management,
operation, control or financing of, or be connected as an officer,
 

 
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(b) director, employee, partner, principal, agent, representative, consultant or
otherwise with, or use or permit Employee’s name to be used in connection with,
any business or enterprise directly engaged in, or with affiliates directly
engaged in, the business of researching, developing, licensing, selling,
distributing, marketing or otherwise commercializing organic light emitting
device (“OLED”) technology, chemicals or manufacturing equipment.  The foregoing
restrictions shall not be construed to prohibit the ownership by Employee of
less than five percent (5%) of any class of securities of a corporation engaged
in any of the foregoing business activities that has a class of securities
registered pursuant to the Securities Exchange Act, provided that such ownership
represents a passive investment and that neither Employee nor any group of
Persons including Employee, either directly or indirectly, manages or exercises
control over any such corporation, guarantees any of its financial obligations,
otherwise takes any part in the conduct of its business (other than in
exercising their rights as shareholders), or seeks to do any of the foregoing.
 
(c) During his or her employment by the Company, and thereafter during the
Separation Period, Employee will not knowingly (i) solicit, divert, take away,
redirect or unreasonably interfere with the Company’s business relationships
with any of its suppliers, customers, partners or joint venturers with whom
Employee had any direct or indirect involvement during the term of this
Agreement; or (ii) solicit, induce, recruit or attempt to influence any person
who is now or is hereafter an employee of the Company to become an employee or
be engaged as an independent contractor of any entity engaged in activities
competitive with those of the Company.
 
(d) An amount equal to one-half of the severance benefits payable under this
Agreement is specifically designated as additional consideration for the
covenants described in this Section 12.  The covenants described in this Section
12 shall continue to apply during the period specified herein after Employee’s
Termination of Employment for any reason, without regard to whether Employee
executes a Release or receives any severance benefits as a result of such
termination.  If Employee breaches any of the covenants described in this
Section 12, the applicable period during which the covenant applies shall be
tolled during the period of such breach.
 
13. Equitable Relief.
 
(a) Employee acknowledges that the restrictions contained in Sections 11 and 12
hereof are reasonable and necessary to protect the legitimate interests of the
Company and its affiliates, that the Company would not have entered into this
Agreement in the absence of such restrictions, and that any violation of any
provision of those Sections will result in irreparable injury to the
Company.  Employee agrees that the Company shall be entitled to preliminary and
permanent injunctive relief, without the necessity of proving actual damages, as
well as an equitable accounting of all earnings, profits and other benefits
arising from any violation of Sections 11 or 12 hereof, which rights shall be
cumulative and in addition to any other rights or remedies to which the Company
may be entitled.  In the event that any of the provisions of Sections 11 or 12
hereof should ever be adjudicated to exceed the time, geographic, service, or
other limitations permitted by applicable law in any jurisdiction, then such
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, service, or other limitations permitted by applicable law.
 

 
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(b) Employee irrevocably and unconditionally (i) agrees that any suit, action or
other legal proceeding arising out of Section 11 or 12 hereof, including without
limitation, any action commenced by the Company for preliminary and permanent
injunctive relief or other equitable relief, may be brought in the state or
federal courts of the State of New Jersey, (ii) consents to the non-exclusive
jurisdiction of any such court in any such suit, action or proceeding, and (iii)
waives any objection which Employee may have to the laying of venue of any such
suit, action or proceeding in any such court.  Employee also irrevocably and
unconditionally consents to the service of any process, pleadings, notices or
other papers in a manner permitted by the notice provisions of Section 16
hereof.
 
14. Term of Agreement.  This Agreement shall continue in full force and effect
until all of the obligations of the Parties hereunder are satisfied or have
expired.
 
15. Successor Company.  The Company shall require any successor or successors
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company, by
written agreement in form and substance reasonably satisfactory to Employee, to
acknowledge expressly that this Agreement is binding upon and enforceable
against the Company in accordance with the terms hereof, and to become jointly
and severally obligated with the Company to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession or successions had taken place.  Failure of the Company to
obtain such agreement prior to the effectiveness of any such succession shall be
a breach of this Agreement.  As used in this Agreement, the Company shall mean
the Company as hereinbefore defined and any such successor or successors to its
business and/or assets, jointly and severally.
 
16. Notices.  All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be delivered personally or mailed by registered or certified mail,
return receipt requested, or by overnight express courier service, as follows:
 
If to the Company, to:
   
Universal Display Corporation
375 Phillips Boulevard
Ewing, New Jersey  08618
Attention: President and Chief Executive Officer
 
If to Employee, to Employee’s address of record with the Company

or to such other names or addresses as the Company or Employee, as the case may
be, shall designate by notice to the other in the manner specified in this
Section 16; provided, however, that if no such notice is given by the Company
following a Change in Control, notice at the last address of the Company or to
any successor pursuant to this Section 16 shall be deemed sufficient for the
purposes hereof.  Any such notice shall be deemed delivered and effective when
received in the case of personal delivery, five (5) days after deposit, postage
prepaid, with the U.S. Postal Service in the case of registered or certified
mail, or on the next business day in the case of overnight express courier
service.

 
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17. Governing Law.  This Agreement shall be governed by and interpreted under
the laws of the State of New Jersey, without giving effect to any conflict of
laws provisions.
 
18. Contents of Agreement, Amendment and Assignment.
 
(a) This Agreement supersedes all prior agreements, sets forth the entire
understanding between the Parties hereto with respect to the subject matter
hereof and cannot be changed, modified, extended or terminated except upon
written amendment executed by Employee and executed on the Company’s behalf by a
senior executive officer or a senior management representative having
supervisory responsibility with respect to Employee and/or Board approval.  The
provisions of this Agreement may provide for payments to Employee under certain
compensation or bonus plans under circumstances where such plans would not
provide for payment thereof.  It is the specific intention of the Parties that
the provisions of this Agreement shall supersede any provisions to the contrary
in such plans, and such plans shall be deemed to have been amended to correspond
with this Agreement without further action by the Company or the Board.
 
(b) Nothing in this Agreement shall be construed as giving Employee any right to
be retained in the employ of the Company, or as changing or modifying the “at
will” nature of Employee’s employment status.
 
(c) All of the terms and provisions of this Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective heirs,
representatives, successors and assigns of the Parties hereto, except that the
duties and responsibilities of Employee and the Company hereunder shall not be
assignable, in whole or in part, except as expressly authorized herein.  If
Employee should die after a Termination in Connection with a Change in Control
and while any amount payable hereunder would still be payable to Employee if
Employee had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to
Employee’s devises, legates or other designees or, if there is no such designee,
to Employee’s estate.
 
(d) Notwithstanding the foregoing, the Company may amend this Agreement at any
time without the consent of the Employee if the Company determines, based on the
advice of outside counsel, that such amendment is necessary to comply with the
requirements of Section 409A of the Code with respect to any particular amount
or benefit that the Employee is entitled to receive under this
Agreement.  However, no amendment shall reduce the aggregate amounts and
benefits the Employee is entitled to receive hereunder unless such aggregate
amounts and benefits are prohibited by Section 409A of the Code or other
applicable law.
 
19. Severability; Effect of Legal Restrictions.  If any provision of this
Agreement or application thereof to anyone or under any circumstances shall be
determined to be invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions or applications of this Agreement which
can be given effect without the invalid or unenforceable provision or
application.  Moreover, the terms of this Agreement shall be deemed modified to
the extent necessary for the Company, in the written opinion of its outside
counsel, to avoid violating the requirements of the Sarbanes-Oxley Act of 2002,
or any other law applicable to the
 

 
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20. employment arrangements between Employee and the Company.  Any delay in
providing benefits or payments, any failure to provide a benefit or payment, or
any repayment of compensation that is required due to operation of the preceding
sentence shall not, in and of itself, constitute a breach of this Agreement;
provided, however, that the Company shall provide economically equivalent
payments or benefits to Employee to the extent permitted by law.
 
21. Remedies Cumulative; No Waiver.  Except as otherwise expressly set forth
herein, no right conferred upon either Party by this Agreement is intended to be
exclusive of any other right or remedy, and each and every such right or remedy
shall be cumulative and shall be in addition to any other right or remedy given
hereunder, or now or hereafter existing at law or in equity.  No delay or
omission by either Party in exercising any right, remedy or power hereunder or
existing at law or in equity shall be construed as a waiver thereof.
 
22. Miscellaneous.  All section headings are for convenience only.  This
Agreement may be executed in several counterparts, each of which is an
original.  It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.
 

 
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EMPLOYEE REPRESENTS AND ACKNOWLEDGES THAT (I) HE OR SHE HAS BEEN ADVISED BY THE
COMPANY TO CONSULT HIS OR HER OWN LEGAL COUNSEL IN RESPECT OF THIS AGREEMENT,
AND (II) THAT HE OR SHE HAS HAD FULL OPPORTUNITY, PRIOR TO EXECUTION OF THIS
AGREEMENT, TO REVIEW THOROUGHLY THIS AGREEMENT WITH HIS OR HER COUNSEL.
 
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.
 

 
UNIVERSAL DISPLAY CORPORATION
         
By:        /s/ Sidney D. Rosenblatt
   
Name:   Sidney Rosenblatt
 
 
Title:     CFO
     
/s/ Scott Bovino                                           
 
    /s/ Janice K. Mahon
 Witness    EMPLOYEE

 
 

 
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ANNEX I

SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE
 

WHEREAS Janice K. Mahon (“Employee”) has been employed by Universal Display
Corporation (the “Company”) and its affiliate, UDC, Inc., and because the
Employee’s employment with the Company terminated or will terminate effective as
of ____________________ (the “Effective Termination Date”), Employee and the
Company agree as follows:
 
In consideration of the promises of the Company set forth in paragraph 3 below,
Employee, and his or her heirs, executors and administrators, intending to be
legally bound, hereby permanently and irrevocably agrees to the termination of
Employee’s employment with the Company as of the Effective Termination Date, and
hereby REMISE, RELEASE and FOREVER DISCHARGE the Company and any individual or
organization related to the Company against whom or which Employee could assert
a claim, including any and all affiliates, and their officers, directors,
shareholders, partners, employees and agents, together with their respective
successors and assigns, heirs, executors and administrators (hereinafter
referred to collectively as the “Releasees”), of and from any and all causes of
action, suits, debts, claims and demands whatsoever, which Employee had, has, or
may have against Releasees up until the date of execution of this Separation of
Employment Agreement and General Release, other than the Release Exclusions (as
defined below).  Particularly, but without limitation, Employee so releases all
claims relating in any way to his employment or the termination of his
employment relationship with the Company, including without limitation claims
under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 et al., Title
VII of the Civil Rights Act of 1964, as amended, § 42 U.S.C. 2000e et seq., the
Americans with Disabilities Act, 42 U.S.C. § 12101 et seq., Employee Retirement
Income Security Act of 1974, as amended 29 U.S.C. § 1001 et seq., the Age
Discrimination in Employment Act, as amended 29 U.S.C. § 621 et seq. (the
“ADEA”), any common law claims and all claims for attorneys’ fees and costs.
 
Employee agrees and covenants that, should any other person, organization or
other entity file, charge, claim, sue, or cause or permit to be filed any civil
action, suit or legal proceeding involving any matter occurring at any time in
the past, up to and including the date of execution of this Separation of
Employment Agreement and General Release, Employee will not seek or accept any
personal relief in such civil action, suit or legal proceeding.  Moreover,
Employee shall promptly take all steps necessary to dismiss, with prejudice, any
and all pending complaints, charges and grievances against the Company or the
Releasees, regardless of whether they are or have been filed internally or
externally.
 
Notwithstanding anything to the contrary in this Separation of Employment
Agreement and General Release, nothing herein relinquishes any rights Employee
may have to the following claims, or to any civil actions, suits or legal
proceedings involving such claims (the “Release Exclusions”):  (i) claims to
seek indemnification pursuant to applicable state law, the Company’s By-Laws,
applicable Company resolutions, applicable Company employee benefit plans or
other such documents maintained or required to be maintained by the Company,
(ii) claims to seek coverage under directors’ and officers’ liability insurance
policies maintained or required to be
 

 
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maintained by the Company, and (iii) claims to seek enforcement of Employee’s
rights under the Change in Control Agreement between Employee and the Company
(the “Change in Control Agreement”).
 
In full consideration of Employee’s execution of this Separation of Employment
Agreement and General Release, and his or her agreement to be legally bound by
its terms, the Company has agreed to provide Employee with the payments,
benefits and other consideration specified in the Change in Control
Agreement.  Except as set forth in this Separation of Employment Agreement and
General Release, or as may be required by applicable law, it is expressly agreed
and understood that Releasees do not have, and will not have, any obligation to
provide Employee, at any time in the future, with any payments, benefits or
other consideration not specified in the Change in Control Agreement.
 
Employee hereby agrees and recognizes that, as of the Effective Termination
Date, Employee’s employment relationship with the Company will be permanently
and irrevocably severed.  Accordingly, Employee will not apply for a position
with the Company or any of its affiliates and Employee waives his or her right
to be hired or rehired in the future by the Company or any of its
affiliates.  It is further agreed and understood that Employee will continue to
be available and cooperate in a reasonable manner in providing assistance to the
Company in concluding any matters which are reasonably related to the duties and
responsibilities which Employee had while employed by the Company, provided that
such cooperation and assistance does not interfere with any subsequent
employment obtained by Employee.
 
Employee agrees and acknowledges that this Separation of Employment Agreement
and General Release is not and shall not be construed to be an admission of any
violation by the Releasees of any federal, state or local statute or regulation,
or of any duty owed by the Releasees to Employee or any other person.
 
Employee agrees, covenants and promises that Employee will not communicate or
disclose the terms of this Separation of Employment Agreement and General
Release to any persons with the exception of members of Employee’s immediate
family and Employee’s attorneys and financial advisors, except as may be
required by applicable law.
 
Employee hereby certifies that Employee has read the terms of this Separation of
Employment Agreement and General Release, that Employee has been advised by the
Company to consult with an attorney of his or her own choice prior to executing
this Separation of Employment Agreement and General Release, that Employee has
had an opportunity to do so, and that Employee understands the terms and effects
of this Separation of Employment Agreement and General Release.  Employee
further certifies that neither the Releasees, nor any representative of
Releasees, have made any representations to Employee concerning this Separation
of Employment Agreement and General Release other than those contained herein.
 
Employee acknowledges that Employee has been informed that this Separation of
Employment Agreement and General Release includes a waiver of claims under the
ADEA, and that Employee has the right to reconsider this Separation of
Employment Agreement and General Release as it pertains to claims under the ADEA
for a period of twenty-one (21) days (or forty-five (45) days in the event of a
group termination).  Employee also understands that he or she has
 

 
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the right to revoke this Separation of Employment Agreement and General Release
in its entirety for a period of seven (7) days following Employee’s execution
thereof.  Should Employee desire to exercise any of the foregoing rights,
Employee shall do so by providing written notice to the Company within the
applicable period at the following address:  Universal Display Corporation at
375 Phillips Boulevard, Ewing, New Jersey 08618, Attention: President.
 
This Separation of Employment Agreement and General Release, together with the
Change in Control Agreement, constitute the complete and entire understanding
between the parties relating to the subject matter of such documents, and
supersede any and all prior agreements and understandings between the parties
relating thereto.  If any provision of this Separation of Employment Agreement
and General Release is deemed invalid, the remaining provisions shall not be
affected.  The provisions of this Separation of Employment Agreement and General
Release shall be governed by the laws of New Jersey, without giving effect to
any conflict of laws provisions.
 

 
IN WITNESS WHEREOF, and intending to be legally bound hereby, Employee has
executed this Separation of Employment Agreement and General Release as of the
date indicated below.
 

 
 
 

   
EMPLOYEE
 
Date
     
Acknowledgment of Receipt by:
 
UNIVERSAL DISPLAY CORPORATION
           By:      Name:      Title:

 
 

 
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