EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (the "Agreement"), dated as of the __27____ day of ___October___________, 2006 (the "Commencement Date"), between Cambridge Display Technology, Inc., a Delaware corporation (the "Company"), and David Fyfe ("Executive").

W I T N E S S E T H:

WHEREAS, the Company and Executive are parties to an Employment Agreement, dated as of August 12, 2002, which was amended by instrument dated as of August 31, 2004; and

WHEREAS, the Company desires to continue the services of Executive and to amend and restate the Agreement to embody the terms of such continued employment and to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the "Code");

WHEREAS, the Company and Executive agree that Executive will continue to have a prominent role in the management of the business, and the development of the goodwill, of the Company and its subsidiaries and will establish and develop relations and contacts with the principal customers and suppliers of the Company and its subsidiaries in the United States of America and the rest of the world and maintain and develop relations with investors in the Company in both Europe and the USA;

WHEREAS, (i) in the course of his employment with the Company, Executive will obtain confidential and proprietary information and trade secrets concerning the business and operations of the Company and its subsidiaries in the United States and the rest of the world that could be used to compete unfairly with the Company and its subsidiaries; (ii) the covenants and restrictions contained in Section 7 are intended to protect the legitimate interests of the Company and its subsidiaries in their respective goodwill, trade secrets and other confidential and proprietary information; and (iii) Executive desires to be bound by such covenants and restrictions; and

WHEREAS, Executive desires to accept such employment and enter into such amended and restated Agreement;

NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and value consideration, the Company and Executive hereby agree as follows:

1. Employment.

      Agreement to Employ. Upon the terms and subject to the conditions of this Agreement, the Company hereby employs Executive and Executive hereby accepts such employment by the Company.

(b) Term of Employment. The Company shall employ Executive pursuant to the terms of the Agreement for the period commencing on the Commencement Date and ending on December 31, 2008, unless Executive's employment with the Company terminates earlier pursuant to Section 6 below. The period during which Executive is employed pursuant to the Agreement shall be referred to as the "Employment Period."

2. Positions and Duties. During the Employment Period, Executive shall serve as Chief Executive Officer and as a Director of the Company and in such other position or positions with the Company or any of its subsidiaries consistent with the foregoing as the Board of Directors of the Company (the "Board") may from time to time specify. During the Employment Period, Executive shall have the duties, responsibilities and obligations customarily assigned to individuals serving in the position or positions in which Executive serves hereunder and such other duties, responsibilities and obligations consistent with such positions as the Board may from time to time specify. Executive shall devote all of his full business time to the services required of him hereunder, except for vacation time and reasonable periods of absence due to sickness, personal injury or other disability, and shall use his best efforts, judgment, skill and energy to perform the duties of his employment in a manner consistent with his position and to improve and advance the business and interests of the Company and its subsidiaries. The principal location of Executive's employment shall be at the Company's office in Jacksonville, Florida, although Executive understands and agrees that he may be required to travel from time to time for business reasons. Executive represents that his employment hereunder and compliance by him with the terms and conditions of this Agreement will not conflict with or result in the breach of any other agreement to which he is a party or by which he may be bound.

3. Compensation.

(a) Base Salary. During the Employment Period, the Company shall pay Executive a base salary of $480,690 per year, payable in accordance with the Company's practices in effect from time to time, but not less often than monthly. The Board shall review Executive's base salary annually and may, in its discretion, increase such base salary if and to the extent it deems appropriate. Executive's annual base salary payable under this Agreement, as it may be increased from time to time, is referred to herein as "Base Salary."

(b) Incentive Compensation. During the Employment Period, Executive shall be eligible to participate in the Company's annual incentive compensation plan for its senior executive officers (the "Annual Plan"), in accordance with the terms thereof as in effect from time to time. Notwithstanding the foregoing, commencing as of January 1, 2006, the maximum bonus payable to Executive under the Annual Plan will be 65% of the Base Salary as adjusted from time to time.

(c) Payments to Executive. The Base Salary and the bonus payable to Executive pursuant to the Annual Plan will be paid by the Company by direct deposit into the banking account designated by Executive from time to time.

(d) 401(k) Plan Contributions. Each year during the Employment Period, the Company shall contribute five percent (5%) of Executive's Base Salary to the Company's 401(k) Plan as a nonelective contribution; provided, however, that if in any plan year such contribution may not be made, in whole or in part, because of the legal limitations on contributions to or under the terms of the Company's 401(k) Plan, the difference between five percent (5%) of Executive's Base Salary and the amount contributed by the Company to the Company's 401(k) Plan as a nonelective contribution, less all applicable withholdings, shall be paid to Executive via payroll, promptly after the end of the plan year.

(e) Special Pension Provision. On the earlier of December 31, 2008 or the date of termination of Executive's employment with the Company for reasons described in Section 6 (a)(i), (ii), (iv) or (v) hereto, the Company shall pay to Executive a pension sum of $100,000 per annum for each of five (5) years, such pension to be paid in monthly installments. However, if the pension shall become payable because of the Executive's death prior to Separation from Service, such pension shall be paid promptly in one lump sum to his surviving spouse, if any, or his estate if there is no surviving spouse. If the pension shall become payable for any other reason, subject to Section 6(f), it shall be paid in monthly installments commencing as of the first day of the month following the Executive's Separation from Service. In the event of the Executive's death following Separation from Service, the six month delay, if any, in benefit commencement shall be waived and the balance of any pension payments shall be paid promptly in one lump sum to his surviving spouse, if any, or his estate if there is no surviving spouse. Promptly following a Change in Control (as defined in Section 6(d)), the Company shall promptly pay to the Executive, in a single lump sum, the amount that remains due to him pursuant to this Section 3(e) as of such date. For the avoidance of doubt, the Executive shall not be entitled to any pension payments under this Section 3(e) if his employment is terminated by the Company for Cause or by Executive without Good Reason on or prior to December 31, 2008.

(f) Overseas Services. The Overseas Benefits Agreement dated as of August 12, 2002 between the Company and Executive terminated effective as of December 31, 2005. Nevertheless, the Company shall continue to make tax equalization payments with respect to the period ending December 31, 2005 and provide professional advice in relation to Executive's tax filings in accordance with the Overseas Benefits Agreement and on the same terms subsequently for any tax year in which he is liable for taxes in jurisdictions outside of the United States in relation to his earnings from the Company. The Company shall pay to or on behalf of the Executive any remaining taxes and tax equalization payments due for the period to December 31, 2005 no later than the end of the second calendar year beginning after the calendar year in which Executive's U.S. Federal income tax return is required to be filed (including extensions) for the year to which such tax equalization payment relates. Save as otherwise expressly provided in this Agreement, the Company shall not be liable to bear the cost of tax liabilities incurred by the Executive on income or gains in respect of periods from and after January 1, 2006. To the extent that the cost of professional advice is regarded as a taxable benefit, the Company will for the period of this Agreement gross-up or reimburse all applicable taxes with the result that Executive receives such advice on a tax free basis. In the event that Executive's accumulated United States foreign tax credits are not sufficient to offset any additional tax liability he incurs due to any of his responsibilities to the Company and its affiliates outside of the United States which are taxed by non-United States jurisdictions, the Company shall, no later than ninety (90) days after separation from service at the termination of the Employment Period, make a payment to Executive of non-U.S. taxes on his United States general limitation income which he has paid or reasonably expects to pay with respect to income earned during the Employment Period and which, in reliance on professional advice, he does not expect to credit against his United States taxes in the five-year period after the Employment Period. Within thirty (30) days after the Commencement Date, the Company shall provide Executive with a statement of amounts paid to or on behalf of Executive in respect of the period beginning January 1, 2006 and ending on the Commencement Date. In the event that the Company pays Executive a bonus for 2006 under the Annual Plan, such bonus shall be reduced by any such amounts in respect of income or gains accrued from January 1, 2006 which have been borne by the Company on behalf of the Executive otherwise than by deduction out of his gross remuneration. If no bonus shall be paid in respect of 2006, any such amounts which have paid or borne by the Company shall not be repayable by Executive. The Company shall withhold all applicable income taxes from all payments described in this Section 3(f) in accordance with applicable law.

4. Indemnification. Executive and the Company shall enter into the Company's Indemnification Agreement for executives of the Company.

5. Benefits and Expenses.

(a) Benefit Plans. During the Employment Period, employee and senior executive benefits (other than severance benefits), including life, medical, dental, vision and disability insurance will be provided to Executive in accordance with the programs, if any, of the Company available to its senior executives, as in effect from time to time. Executive will also be entitled to participate in the Company's 401(k) plan in accordance with the terms thereof.

(b) Other Benefits. During the Employment Period, Executive shall be entitled to five weeks of paid vacation annually and shall also be entitled to such other benefits and perquisites as may be provided by Company from time to time to its other senior executive officers, in accordance with the policies and practices of the Company as in effect from time to time.

(c) Business Expenses. During the Employment Period, the Company shall pay or reimburse Executive for all reasonable expenses incurred or paid by Executive in the performance of Executive's duties hereunder, upon presentation of expense statements or vouchers and such other information as the Company may require, in accordance with the generally applicable policies and procedures of the Company as in effect from time to time.

6. Termination of Employment.

(a) Early Termination of the Employment Period. Notwithstanding Section 1(b) of the Agreement, the Employment Period shall end upon the earliest to occur of a termination of Executive's employment (i) on account of Executive's death, (ii) due to Disability, (iii) by the Company for Cause (iv) effective as of the date specified by the Company in a written notice delivered to Executive by the Company of his termination without Cause, (v) by Executive for Good Reason, or (vi) effective as of the delivery by Executive of written notice to the Company of his resignation without Good Reason, provided that with respect to a termination pursuant to clause (iv), (v) or (vi), the terminating party must give at least twelve months' notice to the other party in order for such termination to be effective. The Company reserves the right to require Executive not to report to work during the twelve month notice period.

(b) Benefits Payable Upon Termination. In the event of the early termination or following the end of the Employment Period pursuant to Section 6(a), Executive (or, in the event of his death, his surviving spouse, if any, or his estate if there is no surviving spouse) shall be paid the type or types of compensation determined to be payable in accordance with the following table at the times established pursuant to Section 6(c):

(c) Timing of Payments. Any payments due to Executive pursuant to Section 6(b) shall be paid as follows:

(i) Earned Salary.       Earned Salary and all accrued but unused paid time off shall be paid within 14 days after the effective date of termination. Vested Benefits shall be payable in accordance with the terms of the plan, policy, practice, program, contract or agreement under which such benefits have accrued.

(ii) Severance Payment. If Executive's employment terminates prior to December 31, 2008 pursuant to Section 6(a)(iv) or (v), the Company shall pay Executive Severance Payments in accordance with this Section 6(c)(ii); provided that Executive first executes an irrevocable general release on a form provided by the Company. Subject to Section 6(f), each Severance Payment shall be made as of the last day of each month during the Severance Period (as defined below). Severance Payments shall cease as of the last day of the Employment Period, provided, however, that Severance Payments shall cease immediately if Executive breaches any of the provisions of Section 7, and if Executive has not yet received any Severance Payment at the time of such breach, he shall only be entitl