AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT
AMENDED
AND RESTATED
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 Xxxxxx X. Xxxxxxxxxx (“Employee”).
WHEREAS,
Employee is employed by UDC, Inc., an affiliate of the Company, currently
serving in a capacity as Executive Vice President, Chief Financial Officer,
Treasurer and Secretary 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
(b) Company’s
and its affiliates’ benefit plans or programs, for the last full month
immediately prior to Employee’s Termination of Employment.
(c) “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.
(d) “Board” shall mean the
board of directors of the Company.
(e) “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.
(f) “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
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(iv) 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
(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.
(g) “Code” shall mean the
Internal Revenue Code of 1986, as amended, and the regulations issued
thereunder.
(h) “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.
(i) “Effective Termination
Date” shall mean:
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(j) 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, 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;
(i) 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
(ii) 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.
(k) “Person” shall mean
any corporation, partnership, limited liability company, joint venture, other
entity or natural person.
(l) “Separation Period”
shall mean the twenty-four (24) month period beginning on the Effective
Termination Date.
(m) “Termination of
Employment” shall mean the termination of Employee’s active employment
relationship with the Company or its affiliates.
(n) “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;
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(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
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(d) 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
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
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(f) Termination
Date, but in any event no later than March 15 of the year following the year of
the Effective Termination Date.
(g) 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.
(h) 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.
(i) 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.
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6. 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 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.
(a) 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.
7. 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.
8. 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.
9. 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.
10. 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).
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11. For
purposes of determining whether any of the Covered Payments will be subject to
the Excise Tax and the amount of such Excise Tax,
(i) 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
(ii) 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.
(b) 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.
(c) 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
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(d) 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
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.
(f) 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).
(g) 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.
12. 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
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(b) 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 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.
13. 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.
14. Non-Competition and
Non-Solicitation.
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15. 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, 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.
(a) 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.
(b) 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.
16. 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
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(b) 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.
(c) 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.
17. 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.
18. 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.
19. 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
000
Xxxxxxxx Xxxxxxxxx
Xxxxx,
Xxx Xxxxxx 00000
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,
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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.
20. 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.
21. 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.
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(e) 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 Xxxxxxxx-Xxxxx Act
of 2002, or any other law applicable to the 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.
22. 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.
23. 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.
-15-
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/ Xxxxxx X. Xxxxxxxx
|
||
|
Name: Xxxxxx
X. Xxxxxxxx
|
||
|
Title: President
|
||
|
/s/ E.T.
Xxxxxxxxxx
|
/s/ Xxxxxx X.
Xxxxxxxxxx
|
|
|
Witness
|
EMPLOYEE
|
-16-
ANNEX
I
SEPARATION
OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE
WHEREAS
Xxxxxx X. Xxxxxxxxxx (“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 Xxxxxxxxxxxx Xxx, 00 X.X.X. § 00000 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, xxx, 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
-17-
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
-18-
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 000 Xxxxxxxx Xxxxxxxxx, Xxxxx, Xxx Xxxxxx 00000, 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: |
-19-
