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 Julia J. Brown
(“Employee”).
WHEREAS, Employee is employed by UDC, Inc., an
affiliate of the Company, currently serving in a capacity as Senior
Vice President and Chief Technical Officer 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:
(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.
(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
(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,
(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;
(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
(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.
(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.
(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
(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 o
