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                          SECURITIES PURCHASE AGREEMENT



         This Securities Purchase Agreement (this "Agreement") is dated as of

August 22, 2001 among Universal Display Corporation, a Pennsylvania corporation

(the "Company"), and the purchasers identified on the signature pages hereto

(each a "Purchaser" and collectively the "Purchasers").



         WHEREAS, subject to the terms and conditions set forth in this

Agreement and pursuant to Section 4(2) of the Securities Act of 1933 (the

"Securities Act"), the Company desires to issue and sell to the Purchasers, and

the Purchasers, severally and not jointly, desire to purchase from the Company,

securities of the Company as more fully described in this Agreement.



         NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in

this Agreement, and for other good and valuable consideration the receipt and

adequacy of which are hereby acknowledged, the Company and the Purchasers agree

as follows:



                                    ARTICLE I

                                   DEFINITIONS



         1.1      Definitions. In addition to the terms defined elsewhere in

this Agreement, the following terms have the meanings indicated:



                  "Actual Minimum" means, as of any date, the maximum aggregate

         number of shares of Common Stock then issued or potentially issuable in

         the future pursuant to the Transaction Documents, including any

         Underlying Shares issuable upon exercise or conversion in full of all

         Warrants and convertible Securities, assuming that (a) any previously

         unconverted Notes or Shares are held until the fifth anniversary of the

         Closing Date or, if earlier, until maturity, and all interest and

         dividends thereon are paid in shares of Common Stock, and (b) the

         Closing Price at all times on and after the date of determination

         equals 100% of the actual Closing Price on the Trading Day immediately

         prior to the date of determination.



                  "Affiliate" means any Person that, directly or indirectly

         through one or more intermediaries, controls or is controlled by or is

         under common control with a Person, as such terms are used in and

         construed under Rule 144 under the Securities Act. With respect to a

         Purchaser, any investment fund or managed account that is managed on a

         discretionary basis by the same investment manager as such Purchaser

         will be deemed to be an Affiliate of such Purchaser.



                  "Bankruptcy Event" means any of the following events: (a) the

         Company or any Subsidiary commences a case or other proceeding under

         any bankruptcy, reorganization, arrangement, adjustment of debt, relief

         of debtors, dissolution, insolvency or liquidation or similar law of

         any jurisdiction relating to the Company or any Subsidiary thereof; (b)

         there is commenced against the Company or any Subsidiary any such case

         or proceeding that is not dismissed within 60 days after commencement;

















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         (c) the Company or any Subsidiary is adjudicated insolvent or bankrupt

         or any order of relief or other order approving any such case or

         proceeding is entered; (d) the Company or any Subsidiary suffers any

         appointment of any custodian or the like for it or any substantial part

         of its property that is not discharged or stayed within 60 days; (e)

         the Company or any Subsidiary makes a general assignment for the

         benefit of creditors; (f) the Company or any Subsidiary fails to pay,

         or states that it is unable to pay or is unable to pay, its debts

         generally as they become due; or (g) the Company or any Subsidiary, by

         any act or failure to act, expressly indicates its consent to, approval

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