COPY

OUR CREDIT NO. ISSUE DATE EXPIRY DATE LETTER OF CREDIT AMOUNT
- -------------- ---------- ----------- -----------------------

XXX 08-21-2001 02-21-2003 USD7,500,000.00

BENEFICIARY APPLICANT
----------- ---------
PINE RIDGE FINANCIAL INC. UDC, INC.
C/O ICAZA, GONZALEZ-RUIZ & ALEMAN 375 PHILLIPS BLVD.
(BVI) LTD. EWING, NEW JERSEY 08618
VANDER POOL PLAZA, 2ND FLOOR, WICKHAMS CAY I
ROAD TOWN, TORTOLA, BRITISH VIRGIN ISLANDS

DEAR BENEFICIARY:

WE HEREBY ESTABLISH OUR CLEAN IRREVOCABLE STANDBY LETTER OF CREDIT IN YOUR
FAVOR, AS BENEFICIARY, WHICH IS AVAILABLE BY PAYMENT AGAINST THE FOLLOWING
DOCUMENTS:

1) A DOCUMENT TITLED ON ITS FACE "SIGHT DRAFT" IN ACCORDANCE WITH EXHIBIT A,
ATTACHED HERETO AND APPROPRIATELY COMPLETED.

2) AN ORIGINAL OF A "CERTIFICATE OF DRAW", IN THE FORM OF EXHIBIT B, ATTACHED
HERETO, APPROPRIATELY COMPLETED AND SIGNED BY AN AUTHORIZED OFFICER OF THE
BENEFICIARY.

3) THE ORIGINAL OF THIS LETTER OF CREDIT AND ALL AMENDMENTS, IF ANY, FOR OUR
ENDORSEMENT. (IF YOUR DEMAND REPRESENTS A PARTIAL DRAWING HEREUNDER, WE
WILL ENDORSE THE ORIGINAL CREDIT AND RETURN SAME TO YOU FOR POSSIBLE FUTURE
CLAIMS. IF, HOWEVER, YOUR DEMAND REPRESENTS A FULL DRAWING OR IF SUCH
DRAWING IS PRESENTED ON THE DAY OF THE RELEVANT EXPIRATION DATE HEREOF, WE
WILL HOLD THE ORIGINAL FOR OUR FILES AND REMOVE SAME FROM CIRCULATION.)

THIS LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OF OUR UNDERTAKING AND SUCH
UNDERTAKING SHALL NOT IN ANY WAY BE MODIFIED, AMENDED OR AMPLIFIED BY REFERENCE
TO ANY DOCUMENT OR INSTRUMENT REFERRED TO HEREIN OR IN WHICH THIS LETTER OF
CREDIT IS REFERRED TO OR TO WHICH THIS LETTER OF CREDIT RELATES AND ANY SUCH
REFERENCE SHALL NOT BE DEEMED TO INCORPORATE HEREIN BY REFERENCE ANY DOCUMENT OR
INSTRUMENT.

WE ENGAGE WITH YOU THAT ALL DOCUMENTS PRESENTED IN COMPLIANCE WITH THE TERMS OF
THIS LETTER OF CREDIT WILL BE DULY HONORED BY US IF DELIVERED TO FIRST UNION
NATIONAL BANK, P.O. BOX 13866, 1345 CHESTNUT STREET, NINTH FLOOR, MAIL CODE
PA4928, ATTENTION: LETTER OF CREDIT DEPARTMENT, PHILADELPHIA, PA. 19107 PRIOR TO
3 P.M. ON OR BEFORE THE EXPIRATION DATE HEREOF.

SEE CONTINUATION

ATTACHED TO AND FORMING PART OF STANDBY CREDIT NO. SM417923P
PAGE TWO

UPON RECEIPT BY THE UNDERSIGNED OF A CERTIFICATE SUBSTANTIALLY IN THE FORM OF
EXHIBIT C ATTACHED HERETO SIGNED BY AN AUTHORIZED OFFICER OF BENEFICIARY,
STATING THAT THE AGGREGATE OUTSTANDING PRINCIPAL AMOUNT OF THE NOTE HAS BEEN
REDUCED BY EITHER PAYMENT OR CONVERSION INTO CAPITAL STOCK AND SETTING FORTH THE
AMOUNT OF SUCH REDUCTION, AND ACCOMPANIED BY THE ORIGINAL COPY OF THIS
IRREVOCABLE STANDBY LETTER OF CREDIT, WE WILL ENDORSE THIS IRREVOCABLE STANDBY
LETTER OF CREDIT TO REFLECT A REDUCTION OF THE UNDRAWN FACE AMOUNT THEREOF BY AN
AMOUNT EQUAL TO THE AMOUNT OF SUCH REDUCTION AS SET FORTH IN SUCH CERTIFICATE,
AND WILL RETURN SUCH IRREVOCABLE STANDBY LETTER OF CREDIT TO BENEFICIARY.

IT IS A CONDITION OF THIS LETTER OF CREDIT THAT DOCUMENTS MAY ALSO BE PRESENTED
AT THE COUNTERS OF OUR NEW YORK BRANCH LOCATED AT 11 PENN PLAZA, NEW YORK, NY
10001 FOR FURTHER DELIVERY TO FIRST UNION NATIONAL BANK, 1345 CHESTNUT STREET,
NINTH FLOOR, MAIL CODE PA4928, ATTENTION: LETTER OF CREDIT DEPARTMENT,
PHILADELPHIA, PA 19107 .

NOTE: IN THE EVENT THAT THE BENEFICIARY ELECTS TO PRESENT DOCUMENTS AT THE
COUNTER OF OUR NEW YORK BRANCH, THE BENEFICIARY MUST IMMEDIATELY INSTRUCT THE
BRANCH MANAGER TO CONTACT ONE OF THE FOLLOWING PERSONS IN THE STANDBY LETTER OF
CREDIT DEPARTMENT:
1) RICH FORTINO, SUPERVISOR (215) 973-3520
2) ANDREA SCHULTZ, TEAM LEADER (215) 973-5981

EXCEPT SO FAR AS OTHERWISE EXPRESSLY STATED HEREIN THIS LETTER OF CREDIT IS
SUBJECT TO THE "UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS: (1993
REVISION), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500".

ALL INQUIRIES REGARDING THIS CREDIT SHOULD BE DIRECTED TO US AT OUR PHONE
NUMBERS (215) 973-5981; (215) 973-8793; (215) 973-1944; (215) 973-8803.

- ----------------------------------------
AUTHORIZED SIGNATURE

EXHIBIT A

SIGHT DRAFT

$__________________ [CITY], [STATE]
[MONTH] __, 200_

AT SIGHT, PAY TO THE ORDER OF PINE RIDGE FINANCIAL INC. THE SUM OF
[AMOUNT IN WORDS] DOLLARS ($__________).

VALUE RECEIVED, AND CHARGE TO THE ACCOUNT OF UDC, INC.

DRAWN UNDER FIRST UNION NATIONAL BANK IRREVOCABLE STANDBY LETTER OF
CREDIT NO. XXX, DATED AUGUST 21, 2001, ISSUED BY FIRST UNION NATIONAL BANK
IN FAVOR OF PINE RIDGE FINANCIAL INC. FOR THE ACCOUNT OF UDC, INC.

PINE RIDGE FINANCIAL INC.

BY:_______________________
NAME:
TITLE:

PLEASE REMIT PROCEEDS TO OUR ACCOUNT AT:

EXHIBIT B

CERTIFICATE OF DRAW

THE UNDERSIGNED HEREBY CERTIFIES TO FIRST UNION NATIONAL BANK (THE
"BANK") WITH REFERENCE TO THE IRREVOCABLE STANDBY LETTER OF CREDIT NO. XXX
(THE "LETTER OF CREDIT") ISSUED BY THE BANK IN FAVOR OF PINE RIDGE FINANCIAL
INC.,THAT:

1. I AM THE __________ OF PINE RIDGE FINANCIAL INC AND AM AUTHORIZED TO
EXECUTE AND DELIVER THIS CERTIFICATE TO THE BANK ON BEHALF OF PINE RIDGE
FINANCIAL INC.

2. PURSUANT TO SECTION 12( C ) OF THE CONVERTIBLE PROMISSORY NOTE DATED AUGUST
22, 2001, MADE BY UNIVERSAL DISPLAY CORPORATION PAYABLE TO THE ORDER OF
PINE RIDGE FINANCIAL INC. IN THE ORIGINAL PRINCIPAL AMOUNT OF $7,500,000.00
(THE "NOTE"), PINE RIDGE FINANCIAL INC. IS ENTITLED TO $_________ UNDER THE
LETTER OF CREDIT.

3. THE AMOUNT OF THE LETTER OF CREDIT DISBURSEMENT DEMANDED HEREBY IS
$________.

IN WITNESS WHEREOF, I HAVE HEREUNTO SET MY HAND THIS __ DAY OF _____
200__.

PINE RIDGE FINANCIAL INC

BY:___________________________
NAME:
TITLE:

EXHIBIT C

CERTIFICATE OF REDUCTION

1. I AM THE ____________ OF PINE RIDGE FINANCIAL INC AND AM AUTHORIZED TO
EXECUTE AND DELIVER THIS CERTIFICATE TO THE BANK ON BEHALF OF PINE RIDGE
FINANCIAL INC.

2. THE UNDRAWN FACE AMOUNT OF THE LETTER OF CREDIT AS OF THE DATE HEREOF
EQUALS $__________.

3. THE AGGREGATE OUTSTANDING PRINCIPAL AMOUNT UNDER THE CONVERTIBLE PROMISSORY
NOTE DATED AUGUST 22, 2001, MADE BY UNIVERSAL DISPLAY CORPORATION PAYABLE
TO THE ORDER OF PINE RIDGE FINANCIAL INC. IN THE ORIGINAL PRINCIPAL AMOUNT
OF $7,500,000.00 (THE "NOTE") HAS BEEN REDUCED BY [PAYMENT IN THE AMOUNT OF
$______ BY UNIVERSAL DISPLAY CORPORATION] [VIRTUE OF THE CONVERSION OF
$_________ OF SUCH PRINCIPAL AMOUNT OUTSTANDING ON THE NOTE INTO SHARES OF
CAPITAL STOCK OF UNIVERSAL DISPLAY CORPORATION] ON ______, 200_.

4. WE CONSENT TO A REDUCTION IN THE UNDRAWN FACE AMOUNT OF THE LETTER OF
CREDIT BY $[INSERT DOLLAR AMOUNT SET FORTH IN PARAGRAPH 3 ABOVE] AS OF
[INSERT DATE SET FORTH IN PARAGRAPH 3 ABOVE].

5. THE ORIGINAL COPY OF THE LETTER OF CREDIT IS ATTACHED HERETO.

IN WITNESS WHEREOF, I HAVE HEREUNTO SET MY HAND THIS __ DAY OF _____
200__.

PINE RIDGE FINANCIAL INC.

BY:________________________
NAME:
TITLE: