SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
UNIVERSAL DISPLAY CORPORATION
------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
[INSERT NAME OF FILER WHEN APPLICABLE]
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
UNIVERSAL DISPLAY CORPORATION
------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 27, 1997
------------------------------
Three Bala Plaza
Suite 104 East
Bala Cynwyd, PA 19004
April 21, 1997
TO ALL HOLDERS OF SHARES OF COMMON STOCK OF
UNIVERSAL DISPLAY CORPORATION:
The 1997 Annual Meeting of Shareholders (the "Annual Meeting") of Universal
Display Corporation will be held at the Holiday Inn -- City Line Avenue, 4100
Presidential Boulevard, Philadelphia, Pennsylvania, 19131 on May 27, 1997 at
1:00 p.m. Eastern Daylight Time, to consider and take action on the following
matters:
(1) To elect six directors to serve for the ensuing year and until
their successors shall have been duly chosen and qualified.
(2) To consider and act upon a proposal to approve the Company's Stock
Option Plan (the "Plan").
(3) To consider and act upon a proposal to ratify the appointment of
Arthur Andersen LLP as the Company's independent auditors for the year
ending December 31, 1997.
(4) To transact such other business as may properly come before the
Annual Meeting.
The Board of Directors has fixed March 17, 1997, as the record date, and
only shareholders of record at the close of business on that date will be
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. The Shareholder List as of that date will be available for inspection
at the Annual Meeting.
By Order of the Board of Directors,
Sidney D. Rosenblatt
Corporate Secretary
- - --------------------------------------------------------------------------------
PLEASE COMPLETE, SIGN, DATE, AND RETURN THE PROXY CARD IN THE ENCLOSED
POSTAGE-PAID RETURN ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN
PERSON. THE GIVING OF A PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN
THE EVENT YOU ATTEND THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR
PROXY AND VOTE YOUR SHARES IN PERSON.
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<PAGE>
UNIVERSAL DISPLAY CORPORATION
------------------------------
PROXY STATEMENT
FOR 1997 ANNUAL MEETING OF SHAREHOLDERS
------------------------------
April 21, 1997
This statement is furnished to the shareholders of Universal Display
Corporation (the "Company") in connection with the solicitation of proxies by
the Board of Directors for use at the annual meeting of shareholders to be held
on May 27, 1997 and at any adjournment thereof. The Company's principal
executive offices are located at Three Bala Plaza, Suite 104 East, Bala Cynwyd,
Pennsylvania 19004.
It is anticipated that the proxy statement and the accompanying form of
proxy will be first mailed to shareholders on or about April 21, 1997. The
expense of this solicitation will be paid by the Company. In addition to
solicitation by mail, some officers, directors, and regular employees of the
Company may solicit proxies by telephone or in person.
The proxy may be revoked by a shareholder at any time before its exercise,
by giving written notice of such revocation to the Secretary of the Company. In
addition, a shareholder who gives such notice of revocation and attends the
meeting in person may vote by ballot at the meeting. The persons named in the
enclosed proxy will vote the share represented by a valid proxy as directed
therein. In the absence of such direction, the persons named in the enclosed
proxy will vote as stated below in favor of the election of directors, in favor
of the proposed Stock Option Plan, and in favor of the appointment of Arthur
Andersen LLP as independent auditors. As to other items of business that may
arise at the meeting, they will vote in accordance with their best judgment.
At the close of business on March 17, 1997 (the "Record Date"), the Company
had outstanding 8,937,268 shares of Common Stock. Each share of Common Stock
outstanding on the Record Date will entitle the holder to one vote per share on
each matter to be acted upon at the meeting. Shareholders do not have cumulative
voting rights with regard to the election of directors. Nominees for directors
must receive a plurality of the votes cast at the meeting to be elected. With
regard to the election of directors, votes may be cast in favor or withheld;
votes that are withheld will be excluded entirely from the vote and will have no
effect, other than for purposes of determining the presence of a quorum.
Abstentions may be specified on the proposals to approve the Plan and to ratify
the selection of the independent accountants (but not for the election of
directors). Abstentions will be considered present and entitled to vote at the
Annual Meeting, but will not be counted as votes cast in the affirmative.
Abstentions on the proposals to approve the Plan and to ratify the selection of
the independent accountants will have the effect of a negative vote because
these proposals require the affirmative vote of a majority of the shares present
at the Annual Meeting in person or represented by proxy at the Annual Meeting
and entitled to vote.
Brokers that are member firms of the New York Stock Exchange ("NYSE") and
who hold shares in street name for customers have the authority under the rules
of the NYSE to vote those shares with respect to the election of directors and
the proposal to ratify the appointment of the independent public accountants if
they have not received instructions from a beneficial owner. A failure by
brokers to vote those shares will have no effect on the outcome of the election
of directors, approval of the Stock Option Plan or the adoption of the proposal
to ratify the appointment of the independent public accountants because such
shares will not be considered shares present and entitled to vote with respect
to such matters.
Your proxy vote is important. Accordingly, the Company asks you to
complete, sign and return the accompanying proxy whether or not you plan to
attend the Annual Meeting. If you plan to attend the Annual Meeting to vote in
person and your shares are registered with the Company's transfer agent in the
name of a broker, bank or other custodian, nominee or fiduciary, you must secure
a proxy from such person assigning you the right to vote your shares.
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<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of March 17, 1997, certain information
regarding the beneficial ownership of shares of Common Stock: (i) by each
director of the Company, (ii) by each person who is known by the Company to
beneficially own 5% or more of the outstanding shares of Common Stock, (iii) by
each executive officer of the Company named in the Summary Compensation Table
included elsewhere herein, and (iv) by all of the Company's executive officers
and directors as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE
BENEFICIAL OF
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNERSHIP(2) COMMON STOCK
--------------------------------------- ---------------------- ------------
<S> <C> <C>
Lori S. Rubenstein(3)(4)................................................... 3,375,500 37.8%
Scott Seligsohn(3)(4)...................................................... 3,455,500 38.7
Clifford D. Schlesinger(3)................................................. 3,000,000 33.6
Sherwin I. Seligsohn(5).................................................... 280,000 3.1
Dean L. Ledger(6).......................................................... 245,000 2.7
Steven V. Abramson(2)...................................................... 80,000 .9
Sidney D. Rosenblatt(2).................................................... 71,667 .8
Camille Naffah............................................................. 300,000 3.4
Elizabeth Gemmill.......................................................... -- *
All executive officers and directors as a group (five persons)............. 976,667 10.9
</TABLE>
- - ------------------
* Less than 1%.
(1) Unless otherwise indicated, the address of each beneficial owner is Three
Bala Plaza East, Suite 104, Bala Cynwyd, Pennsylvania 19004.
(2) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock beneficially owned by them. A person is deemed to be
beneficial owner of securities that can be acquired by such person within 60
days from the date of this Proxy upon the exercise options, warrants and
convertible securities. Each beneficial owner's percentage ownership is
determined by assuming that options, warrants and convertible securities
that are held by such person (but not those held by other persons) and which
are exercisable within 60 days of the date of this Proxy have been exercised
and converted. Includes the following number of shares issuable upon the
exercise of warrants or options. Sherwin Seligsohn -- 80,000; Scott
Seligsohn -- 80,000; Dean Ledger -- 80,000; Steven Abramson -- 80,000; and
Sidney Rosenblatt -- 71,667.
(3) Includes (i) 1,500,000 shares of Common Stock owned by the Sherwin I.
Seligsohn Irrevocable Indenture of Trust dated 7/29/93 FBO Lori S.
Rubenstein (the "Rubenstein Trust"), of which Lori S. Rubenstein, Scott
Seligsohn and Clifford D. Schlesinger are co-trustees and (ii) 1,500,000
shares of Common Stock owned by Sherwin I. Seligsohn Irrevocable Indenture
of Trust dated 7/29/93 FBO Scott Seligsohn (the "Seligsohn Trust"), of which
Lori S. Rubenstein, Scott Seligsohn and Clifford D. Schlesinger are
co-trustees. Mr. Schlesigner's address is 1500 Chestnut Street,
Philadelphia, Pennsylvania.
(4) Includes 250,500 shares of Common Stock owned by American Biomimetics
Corporation ("ABC") of which the Rubenstein Trust and Seligsohn Trust are
principal shareholders.
(5) Does not include (i) 250,500 shares of Common Stock owned by ABC, (ii)
200,000 shares of Series A Preferred Stock owned by ABC, (iii) 1,500,000
shares of Common Stock owned by the Rubenstein Trust, (iv) 1,500,000 shares
of Common Stock owned by the Seligsohn Trust, (v) 125,000 shares of Common
Stock owned by Lori S. Rubenstein, his emancipated daughter and (vi) 125,000
shares of Common Stock owned by Scott Seligsohn, his emancipated son, for
which Mr. Seligsohn disclaims beneficial ownership.
(6) Does not include 24,000 shares of Common Stock owned by the Ledger Family
Trust II, for which Mr. Ledger disclaims beneficial ownership.
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NOMINEES FOR ELECTION AS DIRECTORS
(PROPOSAL 1)
The Board has fixed the number of directors at six, all of whom are to be
elected at the Annual Meeting. Each director elected will serve until the 1998
Annual Meeting and until a successor has been elected and qualified or until the
director's earlier resignation or removal. Each nominee has consented to being
nominated and to serve if elected. If any nominee should subsequently decline or
be unable to serve, the persons named in the proxy will vote for the election of
such substitute nominee as shall be determined by the holders of such proxies.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR DIRECTOR.
The following sets forth pertinent information with respect to nominees for
director:
Sherwin I. Seligsohn, 61, has been Chairman and Chief Executive Officer of
the Company since the Company's inception. He was President of the Company until
May 1996. Mr. Seligsohn founded, and since August 1991 has served as sole
Director, Chairman, President and Secretary of, American Biomimetics Corporation
("ABC"), International Multi-Media Corporation ("IMMC"), and Wireless Unified
Network Systems Corporation ("WUNSC"). He is also Chairman and Chief Executive
Officer of Global Photonic Energy Corporation ("Global"). From June 1990 to
October 1991, Mr. Seligsohn was Chairman Emeritus of InterDigital
Communications, Inc. ("InterDigital"), formerly International Mobile Machines
Corporation. Mr. Seligsohn was the founder of InterDigital and from August 1972
to June 1990 served as its Chairman. Mr. Seligsohn is a member of the Advisory
Board of the Advanced Technology Center for Photonics and Optoelectronic
Materials (POEM) at Princeton University.
Steven V. Abramson, 45, joined Universal Display Corporation as President
and Chief Operating Officer in May 1996. He is also a member of the Board of
Directors. Mr. Abramson is also President and Chief Operating Officer of Global
and a member of its Board of Directors. From March, 1992 -- May, 1996 he was
Vice President, General Counsel, Secretary and Treasurer of Roy F. Weston, Inc.
a worldwide environmental consulting and engineering firm. From 1982 -- 1991 he
was with InterDigital, where he held various positions, including General
Counsel, Executive Vice President and General Manager of the Technology
Licensing Division. Mr. Abramson is a member of the Advisory Board of the
Advanced Technology Center for Photonics and Optoelectronic Materials (POEM) at
Princeton University.
Sidney D. Rosenblatt, 49, has been Executive Vice President, Chief
Financial Officer, Treasurer and Secretary of the Company since June 1995. He
has been a member of the Board of Directors since May 1996. Mr. Rosenblatt is
also Executive Vice President, Chief Financial Officer, Secretary and Treasurer
of Global, and a member of its Board of Directors. Mr. Rosenblatt is the owner
of and has served as the President and Chief Executive Officer of S. Zitner
Company since August 1990. From May 1982 to August 1990, Mr. Rosenblatt served
as the Senior Vice President, Chief Financial Officer and Treasurer of
InterDigital. Mr. Rosenblatt sits on the Board of Directors and Executive
Committee for the Greater Philadelphia Chamber of Commerce, Chairman of the
Board for the Small Business Division of the Greater Philadelphia Chamber of
Commerce and sits on various Boards for non-profit organizations.
Dean L. Ledger, 48, has been a director of the Company since 1995. From
January 1997 until the present and from June 1995 to November 1995, Mr. Ledger
was Executive Vice President of the Company. From November 1995 to December 1996
he was a consultant to the Company. Since October 1992, Mr. Ledger has been Vice
President -- Corporate Development and a consultant to ABC. From May 1992 to
October 1992, Mr. Ledger was a financial consultant to Intelcom Group, a
Denver-based competitive telecommunications access provider. From June 1991 to
May 1992, Mr. Ledger was a financial consultant to Kemper Securities. From
October 1989 until April 1991, Mr. Ledger served as a consultant to
InterDigital.
3
<PAGE>
Camille Naffah, 70 , has been a director since October 1996. Since 1990 he
has been President of Camille Naffah Enterprises, a holding company for leisure
enterprises including hotels, lounges and restaurants.
Elizabeth H. Gemmill, 50, has been a Director of the Company since April
1997. Since 1988, Ms. Gemmill has been Vice President of Tasty Baking Company, a
manufacturer of bakery products. From 1986 to 1987, she was Vice President of
Drexel University. From 1974 to 1986, she was employed by Mellon Bank in a
number of positions including Senior Vice President. Ms. Gemmill is on the
Boards of American Water Works Company, Inc., Philadelphia College of Textiles &
Science, Philadelphia College of Osteopathic Medicine, the Pennsylvania Chamber
of Business & Industry, and Metropolitan YMCA of Greater Philadelphia and
Vicinity.
BOARD ORGANIZATION AND COMPENSATION
The Company's Board of Directors held four meetings during 1996. Each
incumbent director attended at least 75% of the aggregate of all meetings. The
Board of Directors does not have any committees. Members of the Board of
Directors do not presently receive any compensation to serve on the Board.
However, for 1997 it is expected that Board members will receive options to
purchase 5,000 shares of Common Stock of the Company for service on the Board of
Directors.
SUMMARY COMPENSATION TABLE
The following table sets forth the total compensation of the Chief
Executive Officer, the other two most highly compensated executive officers of
the Company for services in all capacities to the Company or its Subsidiaries
for the fiscal year ended December 31, 1996 and the total compensation earned by
such individuals for the Company's two previous fiscal years.
<TABLE>
<CAPTION>
SECURITIES
YEAR ENDED UNDERLYING
NAME AND PRINCIPAL POSITION DECEMBER 31 SALARY ($) OPTIONS
--------------------------- ----------- ---------- ----------
<S> <C> <C> <C>
Sherwin I. Seligsohn ............................................... 1996 $ 85,000 200,000(3)
Chairman of the Board and 1995 $ 77,917 0
Chief Executive Officer 1994 0 0
Steven V. Abramson ................................................. 1996 $110,796(1) 200,000(3)
President and Chief 1995 0 0
Operating Officer 1994 0 0
Sidney D. Rosenblatt ...............................................
Executive Vice President, 1996 $128,672(2) 125,000(3)
Chief Financial Officer, 1995 $ 16,667 75,000
Secretary and Treasurer 1994 0 0
</TABLE>
- - ------------------
(1) Mr. Abramson joined the Company effective May 13, 1996. His current annual
salary is $180,000.
(2) Mr. Rosenblatt joined the Company full time effective April 15, 1996. His
current annual salary is $180,000.
(3) Reflects warrants vesting over five years. See: "Certain Transactions".
No individual named above received perquisites or non-cash compensation
during the years indicated exceeding the lesser of $50,000 or an amount equal to
10% of such person's salary.
No other executive officer of the Company received compensation and bonuses
which exceeded $100,000 during any year.
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The following table summarizes stock options granted during 1996 to the
persons named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT
OF TOTAL
OPTIONS GRANTED
OPTIONS TO EMPLOYEES EXERCISE EXPIRATION
NAME GRANTED IN 1996 PRICE DATE
---- ------- --------------- -------- ----------
<S> <C> <C> <C> <C>
Sherwin I. Seligsohn(1)....................................... 200,000 27% $4.125 4/25/06
Steven V. Abramson(1)......................................... 200,000 27% $4.125 4/25/06
Sidney D. Rosenblatt(1)....................................... 125,000 17% $4.125 4/25/06
All Employees as a Group(1)................................... 745,000 100% $4.125 4/25/06
</TABLE>
- - ------------------
(1) Includes warrants vesting over five years. See "Certain Transactions."
No holder of options exercised their options or warrants during fiscal
1996.
The Company does not currently grant any long-term incentives, other than
stock options and warrants, to its executives or other employees. Similarly, the
Company does not sponsor any defined benefit or actuarial plans at this time.
EMPLOYMENT AND CONSULTING AGREEMENTS
The Company entered into an employment agreement with Sherwin Seligsohn on
November 1, 1995, its Chairman of the Board and Chief Executive Officer. The
agreement provides for an initial two-year term commencing November 1, 1995,
with automatic one year renewals. The agreement requires Mr. Seligsohn to devote
at least 50% of his business time to the management and operations of the
Company and provides for an annual base salary of $85,000. The agreement further
provides that if Mr. Seligsohn is terminated without cause, Mr. Seligsohn will
continue to receive the base salary during the remainder of the employment term.
The agreement also contains a provision prohibiting Mr. Seligsohn from competing
directly with the Company during the term of employment and for a period of two
years thereafter.
From November 1, 1995 to December 31, 1996, the Company was a party to a
Consulting Agreement with Dean Ledger, a director of the Company. The agreement
required Mr. Ledger to devote a majority of his time to the affairs of the
Company. The agreement provided for compensation at an annual rate of $60,000.
Mr. Ledger's responsibilities included hiring and negotiating compensation
packages for employees, establishing and administering health insurance and
other benefit programs and coordinating and administering the Company's in-house
investor relations program. Upon termination of the Consulting Agreement, Mr.
Ledger became an employee of the Company.
CERTAIN TRANSACTIONS
From November 1994 through December 1995, ABC paid on behalf of the Company
professional fees and administrative expenses of $16,154 and $138,019,
respectively. During the year ended December 31, 1995, the Company repaid ABC
$63,245 of such expenses. ABC has also provided the Company with certain
administrative services without cost to the Company. During the same period,
IMMC paid on behalf of the Company payroll expenses of $14,548. In May 1996, the
Company repaid $90,928 and $14,548 of indebtedness to ABC and IMMC,
respectively. Sherwin Seligsohn is the Chairman, President and Secretary of ABC
and IMMC.
In June 1995, the Company and ABC entered into a Technology Transfer
Agreement pursuant to which, among other things, ABC assigned a certain 1994
License Agreement with Princeton University and a certain 1993 Sponsored
Research Agreement with Princeton University to the Company and granted to the
Company an exclusive worldwide sublicense to patents and other intellectual
property rights relating to Organic Light Emitting Diode (OLED) display
technology developed under the 1993 Sponsored Research Agreement. As
consideration, the Company (i) paid
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<PAGE>
$674,000 to ABC for amounts previously paid to Princeton University by ABC under
the 1994 Sponsored Research Agreement and $500,000 to acquire the sublicense
under the 1993 Sponsored Research Agreement, (ii) assumed ABC's obligations to
make future payments to Princeton University under the 1994 Sponsored Research
Agreement, (iii) issued to ABC 200,000 shares of Series A Preferred Stock with a
fair market value of $350,000 and (iv) granted to ABC an exclusive worldwide
sublicense under the 1994 License Agreement to manufacture and market products
based on technology developed under the Sponsored Research Agreement but
unrelated to the OLED technology.
In June 1995, the Company granted to Sidney D. Rosenblatt, (i) options to
purchase 70,000 shares of Common Stock exercisable at a price of $2.00 per
share, of which options to purchase 20,000 shares vested at the time of grant
and the balance vest in equal amounts over three years commencing June 1996, and
(ii) options to purchase 5,000 shares of Common Stock at an exercise price of
$.01 per share, all of which vested at the time of grant.
In April 1996, the Company issued 10-year warrants to purchase 200,000
shares of Common Stock at a per share exercise price of $4.125, the fair market
value on the date of issuance, to each of Sherwin Seligsohn, Scott Seligsohn,
Dean Ledger, and Steven Abramson. The warrants vest as follows: warrants to
purchase 40,000 shares vested immediately and warrants to purchase 40,000 shares
vest on each of the next four anniversary dates thereof, provided those
individuals are employed by the Company on such anniversary date. In April 1995,
Mr. Sidney Rosenblatt was granted warrants to purchase 125,000 shares at a per
share exercise price of $4.125, the fair market value on the date of grant. The
warrants vest as follows: warrants to purchase 15,000 shares vest immediately,
warrants to purchase 15,000 shares vest on each of the next two anniversary
dates and 40,000 shares vest on the next two anniversary dates.
The Company shares office space and certain related expenses with Global
Photonic Energy Corporation, a company for which Messrs. Seligsohn, Rosenblatt,
Ledger and Abramson are directors and executive officers. During 1996, Global
reimbursed the Company $11,361 in connection therewith.
APPROVAL OF STOCK OPTION PLAN
(PROPOSAL 2)
At the Annual Meeting, there will be presented to the shareholders a
proposal to approve and adopt the Company's Stock Option Plan.
The Board of Directors believes that the Company's ability to grant options
under the Plan is a valuable and necessary compensation tool that aligns the
long-term financial interests of employees, consultants and directors with the
financial interests of the Company's shareholders. As of March 15, 1996, options
to purchase 395,000 shares of Common Stock were outstanding under the Plan;
options to purchase 405,000 remain available for future grants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2 FOR THE APPROVAL OF THE
PLAN.
The proposed Plan is set forth as Exhibit A to this proxy statement and the
description of such Plan contained herein is qualified in its entirety by
reference to Exhibit A.
STOCK OPTION PLAN
The Plan is intended to recognize the contributions made to the Company by
employees, directors, consultants and advisors of the Company, to provide such
persons with additional incentive to devote themselves to the future success of
the Company, and to improve the ability of the Company to attract, retain, and
motivate individuals upon whom the Company's sustained growth and financial
success depend, by providing such persons with an opportunity to acquire or
increase their proprietary interest in the Company through receipt of rights to
acquire the Company's Common Stock. The Plan is subject to shareholder approval.
The Company has reserved 800,000 shares of Common Stock for issuance upon
the exercise of options available for future grant under the Plan designated as
either (i) incentive stock options ("ISOs") under the Internal Revenue Code of
1986, as amended (the "Code") or (ii) non-qualified stock options ("NQSOs"),
("NQSOs" and ISOs are collectively referred to as "Options"). ISOs may
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<PAGE>
be granted under the Plan to employees (including directors) and officers of the
Company. NQSOs may be granted to consultants, directors (whether or not they are
employees), employees and officers of the Company. As of April 11, 1997 there
were 6 officers, 2 employees and 3 consultants eligible to participate in the
Plan. In certain circumstances, the exercise of options granted under Plan may
have an adverse effect on the market price of the Common Stock.
Administration of the Plan is performed by the Board of Directors of the
Company (the "Board"). The Board shall grant options in its discretion and may
consider the nature of the optionee's services and responsibilities, the
optionee's present and potential contribution to the Company's success and such
other factors as it may deem relevant. The Board will determine the
excercisability and term (not to exceed ten years), of options granted under the
Plan. The purchase price of Common Stock subject to an option may be equal to,
greater than or less than fair market value at the time of grant. ISOs granted
under the Plan may not be granted at a price less than the fair market value of
the Common Stock on the date of grant (or 110% of fair market value in the case
of persons holding 10% or more of the voting stock of the Company). The
aggregate fair market value of the shares for which ISOs granted to any employee
are exercisable for the first time by such employee during any calendar year
(under all stock option plans of the Company and related corporation) may not
exceed $100,000. Options granted under the Plan will expire not more than ten
years from the date of grant (five years in the case of ISOs granted to persons
holding 10% or more of the voting stock for the Company). Fair market value is
currently the closing price of a share of Common Stock on the NASDAQ National
market on the date of grant, or if there is no sale on such date, the closing
price on the last previous date on which a sale is reported. As of April 11,
1997, the fair market value of a share of Common Stock was $4.44 per share.
Options granted under the Plan are not transferable during an optionee's
lifetime but are transferable at death by will or by the laws of descent and
distribution. Notwithstanding the foregoing, the Board may permit an employee to
transfer rights under an NQSO to the employee's spouse or family member for no
consideration and subject to certain other conditions.
The Board may amend or terminate the Plan at any time; provided that any
amendment that increases the aggregated number of shares of Common Stock that
may be issued or transferred under the Plan or modifies the requirements as to
eligibility for participation in the Plan will be subject to shareholder
approval.
NEW PLAN BENEFITS
The following table sets forth benefits related to the Plan. Future Awards
under the Plan are not determinable because specific awards are made at the
discretion of the Board of Directors, depending upon a variety of factors. For
information concerning awards made under the Plan to the Company's Chief
Executive Officer and other officers, see "Summary Compensation Table." The
following table sets forth additional information with respect to fiscal 1996.
<TABLE>
<CAPTION>
NUMBER
OF OPTIONS
----------
<S> <C>
All executive officers as a group.............................................. 0
All directors not executive officers as a group................................ 0
All employees, as a group, excluding executive officers........................ 20,000
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended to point out the general principles of
current federal income tax law applicable to ISOs and NQSOs granted under the
Plan. Participants should contact their own tax advisors concerning the tax
consequences, if any, of the grant of ISOs and NQSOs, exercise of Options and
the disposition of any shares acquired through the exercise of Options. Since
federal income tax laws may change subsequent to the date hereof, individual
financial situations vary and state and local taxation may also be significant.
A participant is not subject to federal income tax upon the grant or
exercise of ISOs and the Company is not entitled to a federal income tax
deduction by reason of such grant or exercise. The amount by which the fair
market value of the option shares received at the time of exercise exceeds the
option price is, however, a tax preference item for purposes of calculating the
alternative minimum tax. Further, the participants basis in option shares
acquired through exercise of an ISO will, for alternative
7
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minimum tax purposes, equal the fair market value of the option shares taken
into account in determining the participants alternative minimum taxable income.
The disposition of option shares acquired by a participant upon exercise of
an ISO within one year after the issuance of the option shares upon exercise of
the options or before the expiration of two years from the date the options are
granted generally constitute disqualifying dispositions, resulting in the
participant recognizing ordinary income in the year of disposition in an amount
equal to the lesser of (i) the excess of the fair market value of the option
shares on the date of exercise over the exercise price or (ii) the excess of the
amount realized on the disposition over the participants tax basis in the option
shares. Any gain realized on the disposition in excess of the amount of ordinary
compensation income recognized is long-term or short-term capital gain,
depending upon the length of the holding period of the option shares. In the
case of a disqualifying disposition, the Company may claim a tax deduction in an
amount equal to the ordinary compensation income recognized by the participant,
but does not receive a deduction corresponding to any capital gain realized by
the participant. If the option shares are sold more than one year after the date
of the exercise of the option and more than two years after the date the options
are granted, the participant will realize capital gain or loss (assuming the
option shares are held as capital assets) equal to the difference between the
amount realized on disposition and the option price. If the participant
satisfies both of the holding periods described above, then the Company will not
be allowed a deduction by reason of the exercise of the ISO.
For federal income tax purposes, the holder of an option that is a NQSO
will not recognize taxable income at the time of grant, and the Company will not
be allowed a deduction by reason of the grant of an NQSO. Except as described
below, the participant will recognize ordinary compensation income upon exercise
of the NQSO, in an amount equal to the difference between the fair market value
of the option shares received at the time of exercise and the option price of
the NQSO. The Company will generally be entitled to a deduction equal to the
amount of ordinary compensation income recognized by the participant.
For the purpose of computing gain or loss on the subsequent sale or taxable
exchange of option shares purchased upon the exercise of the NQSO, a
participant's tax basis in such shares will be the fair market value of the
option shares on the date the participant recognized ordinary compensation
income. Upon the subsequent sale or taxable exchange by the participant of such
option shares acquired by exercise of an NQSO, assuming the option shares are
held as capital assets, the participant will realize capital gain or loss
(long-term or short-term, depending upon the length of the holding period of the
shares) in an amount equal to the difference between the participant's tax basis
in such option shares and the selling price.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(PROPOSAL 3)
The Board of Directors of the Company has appointed Arthur Andersen LLP as
independent public accountants to examine the financial statements of the
Company for the year ending December 31, 1997. Arthur Andersen LLP has served as
accountants for the Company since 1994. Representatives of Arthur Andersen LLP
will be present at the meeting to make a statement if they desire to do so and
to respond to appropriate questions.
To be ratified, the appointment must be approved by a majority of the votes
cast by all holders of the Common Stock present, in person or by proxy, and
entitled to vote at the meeting.
Although the submission of the appointment of Arthur Andersen LLP is not
required by law or the By-Laws of the Company, the Board is submitting it to the
shareholders to ascertain their views. If the shareholders do not ratify the
appointment, the Board will not be bound to seek other independent accountants
for 1997, but the selection of other independent accountants will be considered
in future years.
THE BOARD RECOMMENDS A VOTE FOR PROPOSAL 3 TO RATIFY
THE APPOINTMENT OF ARTHUR ANDERSEN LLP.
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SHAREHOLDER PROPOSALS
Proposals submitted by shareholders for inclusion in the Board of
Directors' proxy statement and proxy for the 1998 Annual Meeting of Shareholders
must be received by the Corporate Secretary of the Company no later than
December 1, 1997, and must comply in all other respects with applicable rules
and regulations of the Securities and Exchange Commission relating to such
inclusion.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Act") requires
directors and certain officers of the Company and persons or entities holding
beneficial ownership of more than 10% of the Company's equity securities to file
under the Act reports of beneficial ownership and reports of changes in
beneficial ownership. Based solely upon review of the reports and amendments
thereto under Section 16(a) of the Act furnished to the Company during its most
recent fiscal year, all Section 16(a) reports were filed on a timely basis.
ANNUAL REPORT TO SHAREHOLDERS
A copy of the Company's 1996 Annual Report, containing financial statements
for the year ended December 31, 1996, is being transmitted herewith.
A copy of the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996, as filed with the Securities and Exchange Commission,
excluding exhibits thereto, may be obtained, without charge, by contacting Mr.
Sidney D. Rosenblatt, Corporate Secretary, Universal Display Corporation, Three
Bala Plaza East, Suite 104, Bala Cynwyd, Pennsylvania 19004.
OTHER BUSINESS
The Board of Directors knows of no other matter which will be presented at
the Annual Meeting for action by the stockholders. If any such business is
properly presented, however, the persons named in the enclosed proxy will vote
in accordance with their best judgment.
By Order of the Board of Directors,
Sidney D. Rosenblatt
Corporate Secretary
April 21, 1997
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EXHIBIT A
UNIVERSAL DISPLAY CORPORATION
STOCK OPTION PLAN
The purpose of the Universal Display Corporation Stock Option Plan (the
"Plan") is to provide designated key employees (including employees who are also
officers and directors) and directors who are not employees ("Non-Employee
Directors") of Universal Display Corporation and its "subsidiary corporations,"
as that term is defined in section 424(f) of the Internal Revenue Code of 1986,
as amended (the "Code") (hereinafter collectively referred to as the "Company")
and selected consultants ("Consultants") to the Company with the opportunity to
receive grants of incentive stock options and nonqualified stock options;
provided, however, that Non-Employee Directors and Consultants shall only
receive grants of nonqualified stock options. The Company believes that the Plan
will cause the participants to contribute materially to the growth of the
Company, thereby benefiting the Company's stockholders and will align the
economic interests of the participants with those of the stockholders.
1. ADMINISTRATION
The Plan shall be administered and interpreted by the Board of Directors of
the Company (the "Board").
Subject to the provisions of Section 5, the Board shall have the sole
authority to (i) determine the individuals to whom options shall be granted
under the Plan, (ii) determine the type, size and terms of the options to be
granted to each such individual, (iii) determine the time when the options will
be granted and the duration of the exercise period, including the criteria for
vesting and the acceleration of vesting, (iv) select the "Valuation Expert," as
defined below and (v) deal with any other matters arising under the Plan.
The Board shall have full power and authority to administer and interpret
the Plan, to make factual determinations and to adopt or amend such rules,
regulations, agreements and instruments for implementing the Plan and for
conduct of its business as it deems necessary or advisable, in its sole
discretion. The Board's interpretations of the Plan and all determinations made
by the Board pursuant to the powers vested in it hereunder shall be conclusive
and binding on all persons having any interests in the Plan or in any awards
granted hereunder. All powers of the Board shall be executed in the best
interest of the Company and in keeping with the objectives of the Plan.
2. GRANTS
Incentives under the Plan shall consist of options intended to qualify as
incentive stock options ("Incentive Stock Options") within the meaning of
section 422 of the Code or options which are not intended to so qualify
("Nonqualified Stock Options") (hereinafter collectively referred to as "Stock
Options"). All Stock Options shall be subject to the terms and conditions set
forth herein and to those other terms and conditions consistent with this Plan
as the Board deems appropriate and as are specified in writing by the Board to
the individual (the "Grant Letter"). The Board shall approve the form and
provisions of each Grant Letter to an individual. Grants under a particular
section of the Plan need not be uniform as among the Optionees.
3. SHARES SUBJECT TO THE PLAN
(a) Subject to the adjustment specified below, the aggregate number of
shares of the common stock of the Company, par value $[.01] (the "Company
Stock") that have been or may be issued or transferred under the Plan is 500,000
shares, in the aggregate. The shares may be authorized but unissued shares of
Company Stock or reacquired shares of Company Stock, including shares purchased
by the Company for purposes of the Plan. If and to the extent options granted
under the Plan terminate,
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expire, are canceled, forfeited, exchanged or surrendered without having been
exercised, the shares subject to such options shall again be available for
purposes of the Plan.
(b) If there is any change in the number or kind of shares of Company Stock
issuable under the Plan through the declaration of stock dividends or if the
value of outstanding shares of Company Stock is substantially reduced due to the
Company's payment of an extraordinary dividend or distribution, or through a
recapitalization, stock splits, or combinations or exchanges of such shares, or
merger, reorganization or consolidation of the Company, reclassification or
change in par value or by reason of any other extraordinary or unusual events
affecting the outstanding Company Stock as a class without the Company's receipt
of consideration, the maximum number of shares of Company Stock available for
Stock Options, the maximum number of shares of Company Stock for which any one
individual participating in the Plan may be granted over the term of the Plan,
the number of shares covered by outstanding Stock Options, and the price per
share or the applicable market value of such Stock Options, and the other terms
and conditions of the Stock Options, as the Board may deem necessary or
desirable, shall be proportionately adjusted by the Board to reflect any
increase or decrease in the number or kind of issued shares of Company Stock to
preclude the enlargement or dilution of rights and benefits under such Stock
Options; provided, however, that any fractional shares resulting from such
adjustment shall be eliminated. The adjustments determined by the Board shall be
final, binding and conclusive. Notwithstanding the foregoing, no adjustment
shall be authorized or made pursuant to this Section to the extent that such
authority or adjustment would cause any Incentive Stock Option to fail to comply
with Section 422 of the Code.
4. ELIGIBILITY FOR PARTICIPATION
All individuals employed by the Company ("Employees") (including Employees
who are officers or members of the Board) who hold positions of responsibility
and whose performance, in the judgment of the Board, can have a significant
effect on the long-term success of the Company, all Non-Employee Directors and
all consultants whose services, in the judgment of the Board, can have a
significant effect on the long-term success of the Company shall be eligible to
participate in the Plan. Except as provided in Section 5, the Board shall select
the Employees, Non-Employee Directors and consultants to receive Stock Options
(the "Optionees") and determine the number of shares of Company Stock subject to
a particular Stock Option in such manner as the Board determines.
Nothing contained in this Plan shall be construed to limit the right of the
Company to grant options otherwise in connection with the acquisition, by
purchase, lease, merger, consolidation or otherwise, of the business or assets
of any corporation, firm or association, including options granted to employees
thereof who become Employees of the Company, or for other proper corporate
purpose.
5. GRANTING OF OPTIONS
(a) Number of Shares. The Board, in its sole discretion, shall determine
the number of shares of Company Stock that will be subject to each Stock Option
grant.
(b) Type of Option and Price. The Board may grant Incentive Stock Options,
Nonqualified Stock Options or any combination of Incentive Stock Options and
Nonqualified Stock Options, all in accordance with the terms and conditions set
forth herein; provided, however, that neither Non-Employee Directors nor
consultants shall be eligible to receive grants of Incentive Stock Options.
The purchase price of Company Stock subject to a Stock Option shall be
determined by the Board and may be equal to, greater than, or less than the fair
market value of a share of such Stock on the date such Stock Option is granted;
provided, however, that the purchase price of Company Stock subject to an
Incentive Stock Option shall be equal to, or greater than, the fair market value
of a share of such Stock on the date such Stock Option is granted.
During such time that the Company Stock is not listed on an established
stock exchange or traded in the over-the-counter-market, the "fair market value"
of Company Stock shall be determined by an independent firm, i.e., a firm not
otherwise engaged in consulting work for the Company, unless
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determined otherwise by the Board, with expertise in the valuation of business
entities and the securities thereof, selected by the Board (the "Valuation
Expert") or as otherwise determined by the Board in good faith based on the best
available facts and circumstances. Such determination of "fair market value"
shall be made on a periodic basis, but no less frequently than once a calendar
year. If the Company Stock is listed upon an established stock exchange or other
market source, as determined by the Board, "fair market value" on any date of
reference shall be the closing price of a share of Company Stock (on a
consolidated basis) on the principal exchange or other recognized market source,
as determined by the Board on such date, or if there is no sale on such date,
then the closing price of a share of Company Stock on the last previous day on
which a sale is reported.
(c) Exercise Period. The Board shall determine the option exercise period
of each Stock Option. The exercise period shall not exceed ten years from the
date of grant.
(d) Exercisability of Options. Stock Options shall become exercisable in
accordance with the terms and conditions determined by the Board, in its sole
discretion, and specified in the Grant Letter. All outstanding Stock Options
shall become immediately exercisable upon a Change in Control (as defined
herein), unless the Board, in its sole discretion, determines not to accelerate
such Stock Options upon a Change in Control. Notwithstanding the foregoing, if
any right granted pursuant to the foregoing would make a transaction that causes
the Change in Control ineligible for pooling of interests accounting treatment
under APB No. 16 that but for this provision would otherwise be eligible for
such accounting treatment, all outstanding Stock Options shall become
immediately exercisable upon the Change in Control and the Board shall not have
any discretion to determine not to accelerate such Stock Options upon the Change
in Control.
(e) Manner of Exercise. An Optionee may exercise a Stock Option which has
become exercisable by delivering a notice of exercise to the Board with
accompanying payment of the option price in accordance with (g) below. Should a
Stock Option become exercisable on and after the Effective Date specified in
Section 18(b), such notice may instruct the Company to deliver shares of Company
Stock due upon the exercise of the Stock Option to any registered broker or
dealer designated by the Company ("Designated Broker") in lieu of delivery to
the Optionee. Such instructions must designate the account into which the shares
are to be deposited. The Optionee may tender this notice of exercise, which has
been properly executed by the Optionee, and the aforementioned delivery
instructions to any Designated Broker.
(f) Termination of Employment, Disability or Death.
(1) Employees.
(a) In the event the Optionee during the Optionee's lifetime ceases
to be an employee of the Company for any reason other than death,
disability (as defined herein), retirement approved by the Company, or
termination for cause, as defined below, by the Company, any Stock
Option which is otherwise exercisable by the Optionee shall terminate
unless exercised within 3 months of the date on which the Optionee
ceases to be an employee (or within such other period of time as may be
specified in the Grant Letter), but in any event no later than the date
of expiration of the option exercise period (except as the Board may
otherwise provide in the Grant Letter). For purposes of this Section
6(f), a leave of absence at the request, or with the approval, of the
Company shall not be deemed a termination of employment so long as the
period of such leave does not exceed 90 days, or, if longer, so long as
the Optionee's right to re-employment with the Company is guaranteed by
contract. Any of the Optionee's Stock Options which are not otherwise
exercisable as of the date on which the Optionee ceases to be an
employee shall terminate as of such date (except as the Board may
otherwise provide).
(b) In the event the Optionee ceases to be an employee of the
Company on account of a termination for cause by the Company, as
determined in accordance with the personnel policies of the Company in
effect before any Change in Control of the Company, any Stock
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Option held by the Optionee shall terminate as of the date the Optionee
ceases to be an employee (except as the Board may otherwise provide).
(c) In the event the Optionee ceases to be an employee of the
Company on account of becoming disabled within the meaning of section
22(e) of the Code, any Stock Option which is otherwise exercisable by
the Optionee on the date on which the Optionee ceases to be an employee
shall terminate unless exercised within one year from the date on which
the Optionee ceases to be an employee (or within such other period of
time as may be specified in the Grant Letter), but in any event no later
than the date of the expiration of the option exercise period (except as
the Board may otherwise provide in the Grant Letter).
(d) In the event of the death of the Optionee while he is an
employee of the Company or within 30 days of the date on which he ceases
to be an employee for any reason other than a termination for cause by
the Company (or within such other period of time as may be specified in
the Grant Letter), any Stock Option which is otherwise exercisable by
the Optionee on the date on which the Optionee ceases to be an employee
shall terminate unless exercised by the Optionee's personal
representative within six months of the date on which the Optionee
ceases to be an employee (or within such other period of time as may be
specified in the Grant Letter), but in any event no later than the date
of the expiration of the option exercise period (except as the Board may
otherwise provide in the Grant Letter).
(e) Notwithstanding the foregoing provisions, failure to exercise
an Incentive Stock Option within the periods of time prescribed under
sections 421 and 422(a) of the Code shall cause the Incentive Stock
Option to cease to be treated as an "incentive stock option" for
purposes of sections 421 and 422 of the Code.
(2) Non-Employee Directors and Consultants.
(a) In the event the Optionee during the Optionee's lifetime ceases
to be a Non-Employee Director or consultant to the Company for any
reason other than becoming an employee of the Company, or termination
for cause, as defined below, by the Company, any Stock Option which is
otherwise exercisable by the Optionee shall not terminate until the date
of expiration of the option exercise period (except as the Board may
otherwise provide in the Grant Letter). Any of the Optionee's Stock
Options which are not otherwise exercisable as of the date on which the
Optionee ceases his relationship with the Company shall terminate as of
such date (except as the Board may otherwise provide).
(b) In the event the Optionee ceases to be a Non-Employee Director
or consultant to the Company on account of a termination for cause by
the Company, as determined in accordance with the policies of the
Company in effect before any Change in Control of the Company, any Stock
Option held by the Optionee shall terminate as of the date the Optionee
ceases to serve in such capacity (except as the Board may otherwise
provide).
(c) Satisfaction of Option Price. The Optionee shall pay the
option price specified in the Grant Letter in (i) cash, (ii) with the
approval of the Board, by delivering shares of Company Stock owned by
the Optionee including Company Stock acquired in connection with the
exercise of a particular Stock Option and having a fair market value on
the date of exercise equal to the option price (iii) if, as directed by
the Board, shares of Company Stock may not be sold immediately following
the exercise of a Stock Option, with the proceeds of a promissory note
payable by the Optionee to the Company, but only in accordance with the
provisions of a loan program established by the Company, or any
successor program as in effect from time to time, (A) in a principal
amount of up to 100% of the payment due upon the exercise of the Stock
Option, or such applicable lower percentage as may be specified by the
Board pursuant to the loan program, and (B) bearing interest at a rate
not less than the applicable Federal rate prescribed by Section 1274 of
the Code, or such higher rate as may be specified by the Board pursuant
to the loan program or (iv) through any combination of (i), (ii) or
(iii). Any loan by the Company under (iii) above shall be with full
recourse against the
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Optionee to whom the loan is granted, shall be secured in whole or in
part by the shares of Company Stock so purchased. In addition, any such
loan by the Company shall, at the option of the Company, become
immediately due and payable in full upon termination of the Optionee's
employment or position as an officer or director with the Company for
any reason, or upon a sale of any shares of Company Stock acquired with
such loan to the extent of the cash and fair market value of any
property received by the Optionee in such sale. The Board may make
arrangements for the application of payroll deductions from compensation
payable to the Optionee to amounts owing to the Company under any such
loan. Until any loan by the Company hereunder is fully paid in cash, the
shares of Company Stock purchased with the loan shall be pledged to the
Company as security for the loan, and the Company shall retain physical
possession of the stock certificates evidencing such shares together
with a duly executed stock power for such shares. No loan shall be made
hereunder unless counsel for the Company shall be satisfied that the
loan and the issuance of the shares of Company Stock funded thereby will
be in compliance with all applicable federal, state and local laws. The
Optionee shall pay the option price and the amount of withholding tax
due, if any, at the time of exercise. Shares of Company Stock shall not
be issued or transferred upon exercise of a Stock Option until the
option price is fully paid and any amount of withholding tax is paid.
(d) Rule 16b-3 Restrictions. Unless an Optionee could otherwise
transfer Company Stock issued pursuant to a Stock Option granted
hereunder without incurring liability under Section 16(b) of the
Exchange Act, at least six months must elapse from the date of
acquisition of a Stock Option to the date of disposition of the Company
Stock issued upon exercise of such option.
(e) Limits on Incentive Stock Options. Each Incentive Stock Option
shall provide that to the extent that the aggregate fair market value of
the Company Stock on the date of the grant with respect to which
Incentive Stock Options are exercisable for the first time by an
Optionee during any calendar year under the Plan or any other stock
option plan of the Company exceeds $100,000, then such option as to the
excess shall be treated as a Nonqualified Stock Option. An Incentive
Stock Option shall not be granted to any Employee who, at the time of
grant, owns stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company or parent of the
Company, unless the option price per share is not less than 110% of the
fair market value of Company Stock on the date of grant and the option
exercise period is not more than five years from the date of grant.
(f) Optional Purchase by the Company. In the sole discretion of
the Board, in lieu of the exercise of a Stock Option, the Optionee may
be permitted to transfer the Stock Option to the Company in exchange for
a cash payment equal to the excess over the purchase price of the then
fair market value of the shares of Company Stock subject to the
Optionee's outstanding Stock Options.
7. TRANSFERABILITY OF OPTIONS
Only the Optionee or his or her authorized legal representative may
exercise rights under a Stock Option. Such persons may not transfer those rights
except by will or by the laws of descent and distribution or, if permitted under
Rule 16b-3 of the Exchange Act and if permitted in any specific case by the
Board in its sole discretion, pursuant to a qualified domestic relations order
as defined under the Code or Title I of ERISA or the regulations thereunder.
When an Optionee dies, the personal representative or other person entitled to
succeed to the rights of the Optionee ("Successor Optionee") may exercise such
rights. A Successor Optionee must furnish proof satisfactory to the Company of
his or her right to receive the Stock Option under the Optionee's will or under
the applicable laws of descent and distribution.
Notwithstanding the foregoing, the Board may permit an Employee to transfer
rights under a Nonqualified Stock Option to the Employee's spouse or a lineal
descendant or to one or more trusts for the benefit of such family members or to
partnerships in which such family members are the only
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partners (a "Family Transfer") provided that the Employee receives no
consideration for a Family Transfer and the Grant Letter relating to the Stock
Options transferred in a Family Transfer continues to be subject to the same
terms and conditions that were applicable to such Stock Options immediately
prior to the Family Transfer.
8. CHANGE IN CONTROL OF THE COMPANY
As used herein, a "Change in Control" shall be deemed to have occurred if:
(i) As a result of any transaction, any one stockholder other than an
existing stockholder as of the Effective Date specified in Section 18(a) of
the Plan, becomes a beneficial owner, as defined below, directly or
indirectly, of securities of the Company representing more than 50% of the
Common Stock of the Company or the combined voting power of the Company's
then outstanding securities;
(ii) A liquidation or dissolution of or the sale of all or
substantially all of the Company's assets occurs; or
(iii) After the Effective Date specified in Section 18(b):
(a) As a result of a tender offer, stock purchase, other stock
acquisition, merger, consolidation, recapitalization, reverse split, or
sale or transfer of assets (but excluding any sale of the Company's
securities to the public pursuant to a public offering), any person or
group (as such terms are used in and under Section 13(d) of the Exchange
Act) other than an existing stockholder, becomes the beneficial owner
(as defined in Rule 13-d under the Exchange Act), directly or
indirectly, of securities of the Company representing more than 30% of
the combined voting power of the Company's then outstanding securities;
or
(b) During any period of two consecutive years, individuals who at
the beginning of such period constitute the board of directors cease for
any reason to constitute at least a majority thereof unless the
election, or the nomination for election by the Company's shareholders,
of each new director was approved by a vote of at least 2/3 of the
directors then still in office who were directors at the beginning of
the period.
9. CERTAIN CORPORATE CHANGES
(a) Sale or Exchange of Assets, Dissolution or Liquidation, or Merger or
Consolidation Where the Company Does Not Survive. If all or substantially all
of the assets of the Company are to be sold or exchanged, the Company is to be
dissolved or liquidated, or the Company is a party to a merger or consolidation
with another corporation in which the Company will not be the surviving
corporation, then, at least 10 days prior to the effective date of such event,
the Company shall give each Optionee with any outstanding Stock Options written
notice of such event. Each such Optionee shall thereupon have the right to
exercise in full any installments of such Stock Options not previously exercised
(whether or not the right to exercise such installments has accrued pursuant to
such Stock Options), within 10 days after such written notice is sent by the
Company or, if a cashout of such Stock Options would not affect the pooling of
interest accounting treatment under APB No. 16 of any such transaction, to
require that the Company purchase such Stock Options for a cash payment equal to
the excess over the purchase price of the then fair market value of the shares
of Company Stock subject to the Optionee's outstanding Stock Options.
(b) Merger or Consolidation Where the Company Survives. If the Company is
a party to a merger or consolidation in which the Company will be the surviving
corporation, then the Board may, in its sole discretion, elect to give each
Optionee with any outstanding Stock Options written notice of such event. If
such notice is given, each such Optionee shall thereupon have the right to
exercise some or all of any installments of such Stock Options not previously
exercised (whether or not the right to exercise such installments has accrued
pursuant to such Stock Options), within 10 days after such written notice is
sent by the Company or, if a cashout of such Stock Options would not affect the
pooling of interest accounting treatment under APB No. 16 of any such
transaction, to require that the Company purchase such Stock Options for a cash
payment equal to the excess over the purchase price of the then fair market
value of the shares of Company Stock subject to the Optionee's outstanding Stock
Options.
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10. AMENDMENT AND TERMINATION OF THE PLAN
(a) Amendment. The Board, by written resolution, may amend or terminate
the Plan at any time; provided, however, that any amendment that increases the
aggregate number (or individual limit for any single Optionee) of shares of
Company Stock that may be issued or transferred under the Plan (other than by
operation of Section 3(b)), or modifies the requirements as to eligibility for
participation in the Plan, shall be subject to approval by the stockholders of
the Company.
(b) Termination of Plan. The Plan shall terminate on the tenth anniversary
of its effective date unless terminated earlier by the Board of Directors of the
Company or unless extended by the Board with the approval of the stockholders.
(c) Termination and Amendment of Outstanding Stock Options. A termination
or amendment of the Plan that occurs after a Stock Option is made shall not
materially impair the rights of an Optionee unless the Optionee consents or
unless the Board acts under Section 19(b) hereof. The termination of the Plan
shall not impair the power and authority of the Board with respect to an
outstanding Stock Option. Whether or not the Plan has terminated, an outstanding
Stock Option may be terminated or amended under Section 19(b) hereof or may be
amended by agreement of the Company and the Optionee consistent with the Plan.
(d) Governing Document. The Plan shall be the controlling document. No
other statements, representations, explanatory materials, or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company, its successors and assigns and the Optionees
and their assigns.
11. FUNDING OF THE PLAN
This Plan shall be unfunded. The Company shall not be required to establish
any special or separate fund or to make any other segregation of assets to
assure the payment of any Stock Options under this Plan. In no event shall
interest be paid or accrued on any Stock Option, including unpaid installments
of Stock Options.
12. RIGHTS OF INDIVIDUALS
Nothing in this Plan shall entitle any Employee, Non-Employee Director or
other person to any claim or right to be granted a Stock Option under this Plan.
Neither this Plan nor any action taken hereunder shall be construed as giving
any Employee, Non-Employee Director, or consultant any rights to be retained by
or in the employ of the Company or any other employment rights.
13. NO FRACTIONAL SHARES
No fractional shares of Company Stock shall be issued or delivered pursuant
to the Plan or any Stock Option. The Board shall determine whether cash, other
awards or other property shall be issued or paid in lieu of such fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.
14. WITHHOLDING OF TAXES
The Optionee or other person receiving shares of Company Stock upon the
exercise of a Stock Option shall be required to pay to the Company the amount of
any federal, state or local taxes which the Company is required to withhold with
respect to the exercise of such Stock Options or the Company shall have the
right to deduct from other wages paid to the Employee by the Company (including
through the withholding of Company Stock purchased upon the exercise of a Stock
Option, if then authorized by the Board and applicable law) the amount of any
withholding due with respect to such Stock Options.
A-7
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15. AGREEMENTS WITH OPTIONEES
Each Stock Option made under this Plan shall be evidenced by a Grant Letter
containing such terms and conditions as the Board shall approve.
16. REQUIREMENTS FOR ISSUANCE OF SHARES
No Company Stock shall be issued or transferred upon the exercise of any
Stock Option hereunder unless and until all legal requirements applicable to the
issuance or transfer of such Company Stock have been complied with to the
satisfaction of the Board. The Board shall have the right to condition any Stock
Option made to any Optionee hereunder on such Optionee's undertaking in writing
to comply with such restrictions on his subsequent disposition of such shares of
Company Stock as the Board shall deem necessary or advisable as a result of any
applicable law, regulation or official interpretation thereof, and certificates
representing such shares may be legended to reflect any such restrictions.
Certificates representing shares of Company Stock issued under the Plan will be
subject to such stop-transfer orders and other restrictions as may be applicable
under such laws, regulations and other obligations of the Company, including any
requirement that a legend or legends be placed thereon.
17. HEADINGS
Section headings are for reference only. In the event of a conflict between
a title and the content of a Section, the content of the Section shall control.
18. EFFECTIVE DATE
(a) Effective Date of the Plan. Subject to the approval of the Company's
stockholders, this Plan shall be effective as of September 1, 1995.
(b) Effectiveness of Section 16 Provisions. The provisions of the Plan
that refer to, or are applicable to persons subject to, Section 16 of the
Exchange Act shall be effective, if at all, upon registration of the Company
Stock under Section 12(g) of the Exchange Act, and shall remain effective
thereafter for so long as such stock is so registered.
19. MISCELLANEOUS
(a) Substitute Grants. The Board may make a grant to an employee of
another corporation who becomes an Employee by reason of a corporate merger,
consolidation, acquisition of stock or property, reorganization or liquidation
involving the Company or any of its subsidiaries in substitution for a stock
option or restricted stock grant granted by such corporation ("Substituted Stock
Incentives"). The terms and conditions of the substitute grant may vary from the
terms and conditions required by the Plan and from those of the Substituted
Stock Incentives. The Board shall prescribe the provisions of the substitute
grants.
(b) Compliance with Law. The Plan, the exercise of Stock Options and the
obligations of the Company to issue or transfer shares of Company Stock under
Stock Options shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. With respect to persons
subject to Section 16 of the Exchange Act, it is the intent of the Company that
the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act. The Board may
revoke any Stock Option if it is contrary to law or modify a Stock Option to
bring it into compliance with any valid and mandatory government regulation. The
Board may also adopt rules regarding the withholding of taxes on payments to
Optionees. The Board may, in its sole discretion, agree to limit its authority
under this Section.
(c) Ownership of Stock. An Optionee or Successor Optionee shall have no
rights as a stockholder with respect to any shares of Company Stock covered by a
Stock Option until the shares are issued or transferred to the Optionee or
Successor Optionee on the stock transfer records of the Company.
(d) Governing Law. The validity, construction, interpretation and effect
of the Plan and Grant Letters issued under the Plan shall exclusively be
governed by and determined in accordance with the law of the Commonwealth of
Pennsylvania.
A-8
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
UNIVERSAL DISPLAY CORPORATION
May 27, 1997
Please Detach and Mail in the Envelope Provided
A /X/ Please mark your
votes as in this
example
FOR WITHHELD
1. ELECTION OF / / / / Nominees: Steven V. Abramson
DIRECTORS Elizabeth H. Gemmill
Dean L. Ledgear
For, except votes withheld from the following Camille Naffah
nominee(s): Sidney D. Rosenblatt
Sherwin I. Seligsohn
- - -------------------------------------------
FOR AGAINST ABSTAIN
2. Approval of Arthur Andersen LLP as Independent / / / / / /
Accountant.
FOR AGAINST ABSTAIN
3. Ratification and approval of the Company's Stock
Option Plan. / / / / / /
4. In their discretion, the proxies are authorized to return such other business
as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder(s). If no direction is
made, this proxy will be voted for Proposals 1, 2 and 3.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE.
SIGNATURE________________DATE_________SIGNATURE________________DATE_________
Signature if held jointly
NOTE: Please sign exactly as your name appears hereon. When signing as attorney,
executor, administrator, trustee, guardian, or in any other representative
capacity, please indicate.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
UNIVERSAL DISPLAY CORPORATION
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS MAY 27, 1997
The undersigned hereby appoints Sherwin I. Seligsohn, Steven
V. Abramson and Sidney D. Rosenblatt, jointly and severally as proxies, each
with the power to appoint a substitute, and hereby authorizes them to represent
and to vote, as designated on the reverse side, all the shares of Common Stock
of Universal Display Corporation held of record by the undersigned on March 17,
1997 at the Annual Meeting of Shareholders to be held on May 27, 1997, or any
adjournment thereof.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE VOTE, SIGN ON REVERSE SIDE AND RETURN PROMPTLY.
<PAGE>
