UNIVERSAL ELECTRONICS INC, DEF 14A, 1998-04-20

UNIVERSAL ELECTRONICS INC
DEF 14A, 1998-04-20
HOUSEHOLD AUDIO & VIDEO EQUIPMENT

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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:

<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>

UNIVERSAL ELECTRONICS INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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: .......

(2) Aggregate number of securities to which transaction applies: ..........

(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: ......................

(5) Total fee paid: .......................................................

[ ] 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: ...............................................

(2) Form, Schedule or Registration Statement No.: .........................

(3) Filing Party: .........................................................

(4) Date Filed: ...........................................................

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Universal Electronics Logo

April 21, 1998

Dear Stockholder:

You are cordially invited to attend the 1998 Annual Meeting of Stockholders of
Universal Electronics Inc. to be held on Wednesday, May 27, 1998 at 9:00 a.m.,
Los Angeles, California, local time, at The Renaissance Los Angeles Hotel, 9620
Airport Boulevard, Los Angeles, California, 90045. We urge you to be present in
person or represented by proxy at this Meeting of Stockholders.

You will be asked to consider and vote upon the election of the Company's Board
of Directors, the ratification and approval of the Company's 1998 Stock
Incentive Plan, and the ratification of the Board of Directors' engagement of
the Company's independent auditors for the year ending December 31, 1998.
Details of these proposals and a description of the general business, directors
and management of Universal Electronics are set forth in the accompanying Proxy
Statement. The Board of Directors unanimously recommends that stockholders vote
to approve all of the proposals.

Whether or not you plan to attend the Annual Meeting in person, it is important
that your shares are represented. Therefore, please promptly complete, sign,
date, and return the enclosed proxy card in the accompanying envelope, which
requires no postage if mailed in the United States. You are, of course, welcome
to attend the Annual Meeting and vote in person even if you previously returned
your proxy card.

On behalf of the Board of Directors and management of Universal Electronics
Inc., we would like to thank you for all of your support.

Sincerely yours,

/s/ David M. Gabrielsen
David M. Gabrielsen
Chairman and Chief Executive Officer
<PAGE> 3

UNIVERSAL ELECTRONICS INC.

Corporate Headquarters:
6101 Gateway Drive
Cypress, California 90630
(Effective after May 31, 1998)

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, MAY 27, 1998

The 1998 Annual Meeting of Stockholders of Universal Electronics Inc., a
Delaware corporation ("Universal" or the "Company"), will be held on Wednesday,
May 27, 1998 at 9:00 a.m., Los Angeles, California, local time, at The
Renaissance Los Angeles Hotel, 9620 Airport Boulevard, Los Angeles, California.
Doors to the meeting will be open at 8:00 a.m.

The meeting will be conducted:

1. To consider and to vote upon the following proposals (collectively, the
"Proposals"), each of which is described in more detail in the
accompanying Proxy Statement:

(i) Proposal One: The election of Paul D. Arling, David M. Gabrielsen
and Camille Jayne, each as a Class I Director as directors to serve
on the Board of Directors until the next Annual Meeting of
Stockholders to be held in 1999 or until election and qualification
of their successors; and the election of Peter L. Gartman, Bruce A.
Henderson, F. Rush McKnight, and William C. Mulligan each as a
Class II Director to serve on the Board of Directors until the
Annual Meeting of Stockholders to be held in 2000 or until election
and qualification of their respective successors;

(ii) Proposal Two: Ratification and approval of the Universal
Electronics Inc. 1998 Stock Incentive Plan; and

(iii) Proposal Three: Ratification of the appointment of Price
Waterhouse LLP, a firm of independent accountants, as the
Company's auditors for the year ending December 31, 1998.

2. To consider and act upon such other matters as may properly come before
the meeting or any and all postponements or adjournments thereof.

Only stockholders of record at the close of business on March 31, 1998 will
be entitled to notice of and to vote at the meeting or any adjournments or
postponements thereof.

/s/ Richard A. Firehammer, Jr.
Richard A. Firehammer, Jr.
Vice President, General Counsel and
Secretary

April 21, 1998

EACH STOCKHOLDER IS REQUESTED TO EXECUTE AND PROMPTLY RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED PREPAID ENVELOPE.
<PAGE> 4

UNIVERSAL ELECTRONICS INC.

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

To be held on Wednesday, May 27, 1998

Mailed on or About April 21, 1998

INTRODUCTION

This Proxy Statement (the "Proxy Statement") is being furnished to
stockholders of Universal Electronics Inc., a Delaware corporation ("Universal"
or the "Company"), in connection with the solicitation of proxies by the Board
of Directors of the Company (the "Board" or the "Board of Directors") from
holders of record of the Company's outstanding shares of common stock, par value
$.01 per share (the "Company Common Stock"), as of the close of business on
March 31, 1998 (the "Annual Meeting Record Date") for use at the 1998 Annual
Meeting of Stockholders of the Company (the "Annual Meeting") to be held on
Wednesday, May 27, 1998, at 9:00 a.m. (Los Angeles, California local time) at
The Renaissance Los Angeles Hotel, 9620 Airport Boulevard, Los Angeles,
California 90045 and at any adjournments or postponements thereof. This Proxy
Statement and the accompanying form of proxy are first being mailed to
stockholders on or about April 21, 1998. The world headquarters and principal
executive offices of the Company are presently located at 1864 Enterprise
Parkway West, Twinsburg, Ohio 44087. Effective after May 31, 1998, the Company's
world headquarters and principal executive offices will be located at 6101
Gateway Drive, Cypress, California 90630.

VOTING RIGHTS AND PROXY INFORMATION

Only holders of record of shares of Company Common Stock as of the close of
business on the Annual Meeting Record Date will be entitled to notice of and to
vote at the Annual Meeting or any adjournments or postponements thereof. Such
holders of shares of Company Common Stock are entitled to one vote per share on
any matter which may properly come before the Annual Meeting. The presence,
either in person or by properly executed and delivered proxy, of the holders of
a majority of the then outstanding shares of Company Common Stock is necessary
to constitute a quorum at the Annual Meeting and to permit action to be taken by
the stockholders at such meeting. Under Delaware law, shares of Company Common
Stock represented by proxies that reflect abstentions or "broker non-votes"
(i.e., shares held by a broker or nominee which are represented at the Annual
Meeting, but with respect to which such broker or nominee is not empowered to
vote on a particular proposal) will be counted as shares that are present and
entitled to vote for purposes of determining the presence of a quorum.

The affirmative vote of a plurality of shares of Company Common Stock
present in person or represented by proxy at the Annual Meeting is required to
elect the directors nominated pursuant to Proposal One. "Plurality" means that
the individuals who receive the largest number of votes cast are elected as
directors up to the maximum number of directors to be chosen at the meeting.
Consequently, any shares not voted (whether by abstention, broker non-vote, or
otherwise) as to Proposal One will have no impact on the election of directors,
except to the extent that the failure to vote for an individual results in
another individual receiving a larger number of votes.

Unless otherwise provided by law or the Company's Certificate of
Incorporation, as amended, the affirmative vote of the holders of at least a
majority of the shares of Company Common Stock present in person or represented
by proxy at the Annual Meeting is required to approve all other questions and
matters properly brought before the Annual Meeting, including, without
limitation, Proposals Two and Three. Abstentions as to all such questions and
matters, including Proposals Two and Three, will have the same effect
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as votes against such proposals. Broker non-votes, however, will be treated as
not voted for purposes of determining approval of such questions and matters and
will not be counted as votes for or against such questions and matters.

As of March 31, 1998, there were 6,365,862 shares of Company Common Stock
outstanding and entitled to vote at the Annual Meeting. The directors and
executive officers of the Company intend to vote the shares of Company Common
Stock held by them in accordance with the recommendations of the Board with
respect to the Proposals.

All shares of Company Common Stock that are represented at the Annual
Meeting by properly executed and delivered proxies received prior to or at the
Annual Meeting and not revoked will be voted at the Annual Meeting in accordance
with the instructions indicated in such proxies. If no instructions are
indicated for the Proposals, such proxies will be voted in accordance with the
recommendations of the Board as set forth herein with respect to such Proposals.

In the event that a quorum is not present at the time the Annual Meeting is
convened or if for any other reason, the Company believes that additional time
should be allowed for the solicitation of proxies, the Company may adjourn the
Annual Meeting with or without a vote of the stockholders. If the Company
proposes to adjourn the Annual Meeting by a vote of the stockholders, the
persons named in the enclosed form of proxy will vote all shares of Company
Common Stock for which they have voting authority in favor of such adjournment.

Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with Star Bank, in its capacity as transfer agent for the Company (the "Transfer
Agent"), at or before the Annual Meeting, a written notice of revocation bearing
a later date than the proxy, (ii) duly executing a subsequent proxy relating to
the same shares of Company Common Stock and delivering it to the Transfer Agent
at or before the Annual Meeting, or (iii) attending the Annual Meeting and
voting in person (although attendance at the Annual Meeting will not, in and of
itself, constitute a revocation of a proxy). Any written notice revoking a proxy
should be sent to Star Bank, 425 Walnut Street, Mail Location #5155, 6th Floor,
Cincinnati, Ohio 45202, Attention: Proxy Department.

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OWNERSHIP OF COMPANY SECURITIES

The Company Common Stock is the only outstanding class of equity security
of the Company.

Ownership as of March 31, 1998 of the Company Common Stock by directors,
nominees, each executive officer named in the Executive Compensation tables
below, as well as by all directors and executive officers of the Company as a
group, and to the Company's knowledge, beneficial holders of more than five
percent of the Company Common Stock, is as follows:

<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK % OF SHARES
BENEFICIALLY OWNED OUTSTANDING
NAME AS OF MARCH 31, 1998 AS OF MARCH 31, 1998
---- -------------------- --------------------
<S> <C> <C>
DIRECTORS AND NOMINEES
Paul D. Arling................................ 42,233(1) *
David M. Gabrielsen........................... 174,999(2) 2.68
Peter L. Gartman.............................. 5,413 *
Bruce A. Henderson............................ 4,813 *
Camille Jayne(3).............................. 0 *
F. Rush McKnight.............................. 2,603 *
William C. Mulligan........................... 8,063(4) *
NON-DIRECTOR EXECUTIVE OFFICERS
Joseph E. Miketo.............................. 30,417(5) *
Richard A. Firehammer, Jr..................... 36,375(6) *
Dennis P. Mansour............................. 14,667(7) *
Mark S. Kopaskie(8)........................... 0 *
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
(11 persons).................................. 319,583(9) 4.81
OTHER BENEFICIAL OWNERS OF MORE THAN 5% OF THE
OUTSTANDING COMPANY COMMON STOCK:
Geoffrey Nixon and MCM Associates, Ltd........ 377,100(10) 5.92
</TABLE>

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* Less than one percent.

(1) Includes 40,833 shares subject to currently exercisable options. Also
includes 500 shares held by Mr. Arling's wife as to which Mr. Arling
disclaims beneficial ownership. Does not include 39,167 shares of Company
Common Stock subject to options held by Mr. Arling that will become vested
upon his termination of employment during the second quarter of 1998 with
the Company as a part of the discontinuation of the Company's North American
retail line of business.

(2) Includes 154,999 shares subject to currently exercisable options.

(3) On March 11, 1998, Ms. Jayne was appointed to the Company's Board of
Directors as a Class I Director, filling the vacancy created by the
resignation of Mr. Mark S. Kopaskie as a member of the Company's Board of
Directors.

(4) Includes 5,000 shares subject to currently exercisable options.

(5) Includes 30,417 shares subject to currently exercisable options. Does not
include 14,583 shares of Company Common Stock subject to options held by Mr.
Miketo that will become vested upon his termination of employment during the
second quarter of 1998 with the Company as a part of the discontinuation of
the Company's North American retail line of business.

(6) Includes 29,375 shares subject to currently exercisable options. Does not
include 12,625 shares of Company Common Stock subject to options held by Mr.
Firehammer that will become vested upon his termination of employment during
the second quarter of 1998 with the Company as a part of the discontinuation
of the Company's North American retail line of business.

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(7) Includes 11,667 shares subject to currently exercisable options. Does not
include 8,333 shares of Company Common Stock subject to options held by Mr.
Mansour that will become vested upon his termination of employment during
the second quarter of 1998 with the Company as a part of the
discontinuation of Company's North American retail line of business.

(8) Mr. Kopaskie resigned as the Company's Executive Vice President and Chief
Operating Officer and as a member of the Board of Directors of the Company
effective August 15, 1997 and is listed here pursuant to Rule S-K403(b).

(9) Includes 272,291 shares subject to currently exercisable options. Does not
include 74,708 shares of Company Common Stock subject to options held by
Messrs. Arling, Miketo, Firehammer and Mansour that will become vested upon
their termination of employment during the second quarter of 1998 with the
Company as a part of the discontinuation of Company's North American retail
line of business.

(10) As reported on Schedule 13D as filed with the Securities and Exchange
Commission by Geoffrey Nixon, whose principal business address is 11 West
42nd Street, 19th Floor, New York, New York 10036 ("Nixon"), Mission
Partners, L.P., whose principal business address is 11 West 42nd Street,
19th Floor, New York, New York 10036 ("Mission"); Liberty Nominees Limited,
whose principal business address is P.O. Box 10-246, Wellington, New
Zealand ("Liberty"); Horizon Offshore, Ltd., whose principal business
address is c/o International Management Services, Limited, Harbour Centre,
North Church Street, P.O. Box 616, George Town, Grand Cayman, Cayman
Islands, B.W.I. ("Horizon"); and M Partners L.P., whose principal business
address is 42 Pleasant Street, Watertown, Massachusetts 02172 ("M
Partners") reporting ownership as of February 6, 1998. Each of Nixon,
Mission, Liberty, Horizon, and M Partners is the beneficial owner of
approximately 0.20%, 4.21%, 0.60%, 0.52%, and 0.39%, respectively, of
Company Common Stock. Nixon is the sole stockholder and director of MCM
Associates, Ltd., whose principal business address is 11 West 42nd Street,
19th Floor, New York, New York 10036 ("MCM"). MCM (i) is the sole general
partner of Mission, (ii) has sole investment discretion over the accounts
established by each of Liberty and M Partners that purchased shares of the
Company Common Stock, and (iii) is the sole investment manager with full
voting and dispositive power with respect to all of the securities owned by
Horizon, including the Company Common Stock beneficially owned by Horizon.

PROPOSAL ONE: ELECTION OF DIRECTORS

GENERAL

The number of directors of the Company's Board of Directors is presently
set at nine and is divided into two classes. There are currently seven
directors, three of whom are Class I Directors and four of whom are Class II
Directors, and two vacancies. The Class I Directors are directors who are also
employees of the Company and/or any subsidiary of the Company, and are elected
each year at the Annual Meeting of Stockholders to serve a one-year term. The
Class II Directors are directors of the Company who are not also employees of
the Company and/or any subsidiary of the Company, and are elected every
even-numbered year at the Annual Meeting of Stockholders to serve a two-year
term.

Each of the Class I and Class II Directors' terms expires at this year's
Annual Meeting.

On March 11, 1998, Ms. Camille Jayne, the Company's President and Chief
Operating Officer, was appointed to the Company's Board of Directors as a Class
I Director to fill the vacancy resulting from the resignation by Mr. Mark
Kopaskie as an officer and director of the Company. The remaining two vacancies
are a result of the resignations of Messrs. Thomas G. Murdough, Jr. and Brian J.
Jackman, as Class II Directors.

The Board has nominated and recommends the reelection of each of Messrs.
Gabrielsen and Arling and Ms. Jayne as a Class I Director for a one-year term
expiring at the next Annual Meeting of Stockholders to be held in 1999. In
addition, the Board has nominated and recommends the reelection of each of Peter
L. Gartman, Bruce A. Henderson, F. Rush McKnight and William C. Mulligan as a
Class II Director for a two-year term expiring at the Annual Meeting of
Stockholders to be held in 2000.

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Unless otherwise instructed, the proxy holders will vote the proxies
received by them FOR Ms. Jayne and Messrs. Gabrielsen, Arling, Gartman,
Henderson, McKnight and Mulligan.

If elected, Messrs. Gabrielsen and Arling and Ms. Jayne have consented to
serve as directors of the Company for a one-year term and until their respective
successors are elected and qualified. If elected, Messrs. Gartman, Henderson,
McKnight and Mulligan have consented to serve as directors of the Company for a
two-year term and until their respective successors are elected and qualified.
Although it is not contemplated that any nominee will be unable to serve as
director, in such event, the proxies will be voted by the proxy holders for such
other person or persons as may be designated by the present Board of Directors.

Information with respect to each nominee is set forth below.

NOMINEES FOR ELECTION AS CLASS I DIRECTORS

<TABLE>
<S> <C>
David M. Gabrielsen Mr. Gabrielsen is Chairman and Chief Executive Officer of
Chairman and Chief Executive the Company. He has been Chairman of the Board of the
Officer Company since August 1996, has been the Company's Chief
Director since 1995 Executive Officer since January 1995 and a director since
Member of the Nominating Committee February 1995. He was the Company's President from January
of the Board of Directors 1995 until February 1998. Prior to that, upon joining the
Age: 41 Company in December 1994, he held the position of Chief
Operating Officer. Prior to joining the Company, Mr.
Gabrielsen served in various capacities at Mr. Coffee, inc.
(a manufacturer of home coffee and tea makers and filters)
with the most recent being Executive Vice President and
Chief Operating Officer. At the 1997 Annual Meeting of
Stockholders, Mr. Gabrielsen was reelected as a Class I
Director of the Company to serve until the 1998 Annual
Meeting of Stockholders.

Camille Jayne Ms. Jayne has been President and Chief Operating Officer of
President and Chief Operating the Company since February 2, 1998 and prior to that, she
Officer was President and CEO of The Jayne Group (a consulting firm
Director since March 1998 specializing in the development, introduction and operation
Age: 45 of digital cable TV products and services) and a Senior
Partner at BHC Consulting (a business management and market
research firm). Prior to The Jayne Group and BHC, Ms. Jayne
was Senior Vice President in charge of the digital TV
business unit at TeleCommunications, Inc. (TCI). Ms. Jayne
became a Class I Director of the Company in March 1998 to
fill the vacancy created by the resignation of Mr. Mark S.
Kopaskie, the Company's past Executive Vice President and
Chief Operating Officer, to serve for the remainder of his
term which was until the 1998 Annual Meeting of
Stockholders.

Paul D. Arling Mr. Arling is Senior Vice President and Chief Financial
Senior Vice President, Chief Officer of the Company, positions he has held since joining
Financial Officer and the Company in May 1996. He has been a Director since August
Treasurer 1996. Prior to joining the Company, from 1993 through May
Director since 1996 1996, he served in various capacities at LESCO, Inc. (a
Age: 35 manufacturer and distributor of professional turf care
products) with the most recent being Acting Chief Financial
Officer. Prior to LESCO, he worked for Imperial
Wallcoverings (a manufacturer and distributor of
wallcovering products) as Director of Planning and The
Michael Allen Company (a strategic management consulting
company) where he was employed as a management consultant.
At the 1997 Annual Meeting of Stockholders, Mr. Arling was
reelected as a Class I Director of the Company to serve
until the 1998 Annual Meeting of Stockholders.
</TABLE>

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NOMINEES FOR ELECTION AS CLASS II DIRECTORS

<TABLE>
<S> <C>
Peter L. Gartman Mr. Gartman is President and Chief Operating Officer of IPS,
Director since 1996 Inc. (a division of The Limited, a publicly held apparel
Member of the Audit Committee of retailer), which position he has held since 1997. From 1992
the Board to 1997, he served as Executive Vice President of Mast
of Directors Industries (a procurement division of The Limited). From
Age: 49 1989 to 1992, he served as Vice Chairman of MNC Financial (a
regional bank in Maryland). From 1986 to 1989, he served in
various capacities with Spectrum Group (a direct investment
group) including as its Chief Executive Officer and
President. Prior to that, he served in various capacities
with Emerson Electric Company from 1983 to 1986 and with
Black & Decker Corporation from 1974 to 1983. At the 1996
Annual Meeting of Stockholders, Mr. Gartman was reelected as
a Class II Director of the Company to serve until the 1998
Annual Meeting of Stockholders.
Bruce A. Henderson Mr. Henderson is President of Siebe Appliance Controls (a
Director since 1996 manufacturer of electronic and electromechanical controls
Member of the Compensation for the appliance industry) and President of Robertshaw
Committee of the Board Controls Company, both of which are divisions of Siebe, PLC
of Directors (a manufacturer of electronics controls for the automotive
Age: 48 industry), which positions he has held since 1995. From 1983
to 1995, he served in various capacities with TRW Inc. Prior
to that, he held various positions with McKinsey & Company,
a management consulting firm from 1977 to 1983 and with
Raytheon Company from 1972 to 1977. At the 1996 Annual
Meeting of Stockholders, Mr. Henderson was reelected as a
Class II Director of the Company to serve until the 1998
Annual Meeting of Stockholders.
F. Rush McKnight Mr. McKnight is a retired partner of the law firm Calfee,
Director since 1997 Halter & Griswold LLP. He has been associated with the firm
Member of the Compensation since 1961. From 1957 to 1961, he was with the law firm
and Nominating Committees Falsgraf, Kundtz, Reidy & Shoup. Mr. McKnight is presently a
of the Board of Directors member of the Board of Directors of Figgie International,
Age: 68 Inc. (a diversified manufacturing company of various
defense, commercial and fire support products), and United
Tube Corporation (a manufacturer of small dimensional steel
tubing). At the 1997 Annual Meeting of Stockholders, Mr.
McKnight was elected as a Class II Director of the Company
to fill a vacancy existing on the Board and to serve until
the 1998 Annual Meeting of Stockholders.
William C. Mulligan Mr. Mulligan is a general partner with Primus Venture
Director since 1992 Partners (a Cleveland-based venture capital partnership),
Member of the Audit which position he has held since 1987. At the 1996 Annual
and Nominating Committees Meeting of Stockholders, Mr. Mulligan was reelected as a
of the Board of Directors Class II Director of the Company to serve until the 1998
Age: 44 Annual Meeting of Shareholders.
</TABLE>

VOTE REQUIRED

Approval of the election of the nominees is subject to the affirmative vote
of a plurality of shares of Company Common Stock present in person or
represented by proxy at the Annual Meeting.

THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR
EACH OF THE FOREGOING NOMINEES AS DIRECTORS OF THE COMPANY.

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<PAGE> 10

THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD

In 1997, the Board met three times and acted by unanimous written consent
five times. No director attended less than 75% of the number of meetings of the
Board of Directors and the committees on which he served during the period for
which he was a member of the Board.

The Board has three standing committees: (i) Audit; (ii) Compensation; and
(iii) Nominating. The members of each committee are appointed by the Board of
Directors and serve at its discretion. A majority of each of the committees
constitutes a quorum, and the acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in writing by all of the
members, are acts of any of the respective committees.

The members of the Audit Committee are Peter L. Gartman and William C.
Mulligan, neither of whom is an officer or employee of the Company or any of its
subsidiaries. Brian J. Jackman resigned as a member of the Audit Committee in
January 1998. The Audit Committee's functions include meeting with the Company's
independent auditors and management representatives, making recommendations to
the Board regarding the appointment of the independent auditors, approving the
scope of audits and other services to be performed by the independent auditors,
considering whether the performance of any professional service by the auditors
could impair their independence, and reviewing the results of external audits,
the accounting principles applied in financial reporting, and financial and
operational controls. The independent auditors have unrestricted access to the
Audit Committee and vice versa. The Audit Committee met one time during 1997 and
acted once by unanimous written consent.

The members of the Compensation Committee are Bruce A. Henderson and F.
Rush McKnight, neither of whom is an officer or employee of the Company or any
of its subsidiaries. Thomas G. Murdough, Jr. ceased as a member of the
Compensation Committee in May 1997 when Mr. McKnight was named to the Committee.
The Compensation Committee's functions include making recommendations to the
Board on policies and procedures relating to executive officers' compensation
and various employee stock plans and approving individual salary adjustments and
stock awards in those areas. The Compensation Committee acted once by unanimous
written consent in 1997.

The members of the Nominating Committee are David M. Gabrielsen, the
Chairman and Chief Executive Officer of the Company, F. Rush McKnight and
William C. Mulligan. Neither Mr. McKnight nor Mr. Mulligan is an officer or
employee of the Company or any of its subsidiaries. This committee considers
nominees for election as directors. The committee utilizes the same procedure to
consider nominees recommended by stockholders made pursuant to procedures
identified in the Company's Amended and Restated By-laws, which are described in
this Proxy Statement in "STOCKHOLDER NOMINATIONS OF DIRECTORS", as is used to
consider nominees recommended by any other source. In addition, the committee
fulfills an advisory function with respect to a range of matters affecting the
Board and its committees, including making recommendations with respect to
qualifications of director candidates, compensation of directors, the selection
of committee assignments and chairs, and related matters affecting the
functioning of the Board. The Nominating Committee did not meet during 1997;
instead, the full Board considered and made recommendations for nominees to the
Company's Board of Directors.

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<PAGE> 11

COMPENSATION OF DIRECTORS

Directors who are not officers of the Company or any of its subsidiaries
receive an annual fee of $18,000, $12,000 of which is paid in shares of Company
Common Stock, with the balance being paid in cash. Directors who are also
officers of the Company receive no additional compensation for their services as
directors (see "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION").
All directors are also reimbursed for travel expense and other out-of-pocket
costs incurred in attending meetings.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and certain of its officers and persons who own
more than ten percent of a registered class of the Company's equity securities
to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with
the Securities and Exchange Commission. Such persons are further required to
furnish the Company with copies of all such forms they file. Based solely on the
Company's review of the copies of such forms it has received, the Company
believes that all of the Section 16(a) filing requirements for 1997 were
satisfied by the Company's directors and executive officers. To the Company's
knowledge, no person owns more than ten percent of Company Common Stock.

8
<PAGE> 12

EXECUTIVE OFFICER COMPENSATION

SUMMARY OF COMPENSATION

Table I below sets forth a summary of the compensation paid by the Company
to its chief executive officer and the four additional most highly compensated
executive officers of the Company.

TABLE I

SUMMARY COMPENSATION TABLE FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION(1) COMPENSATION AWARDS
($) (#) ALL OTHER
NAME AND ------------------ ------------------- COMPENSATION(4)
PRINCIPAL POSITION YEAR SALARY BONUS(2) STOCK OPTIONS(3) ($)
------------------ ---- ------- -------- ------------------- ---------------
<S> <C> <C> <C> <C> <C>
David M. Gabrielsen............ 1997 289,696 124,000 0 6,525
Chairman and 1996 250,000 0 200,000 5,979
Chief Executive Officer 1995 240,000 55,000 60,000 1,502
Paul D. Arling................. 1997 156,867 49,500 0 4,410
Senior Vice President, Chief 1996 89,231 0 80,000 2,502
Financial Officer and
Treasurer 1995 N/A N/A N/A N/A
Joseph E. Miketo............... 1997 126,403 32,000 0 3,549
Vice President 1996 120,000 0 25,000 3,329
of Operations 1995 85,944 12,500 20,000 953
Richard A. Firehammer, Jr...... 1997 119,314 37,500 0 4,023
Vice President, General 1996 110,000 0 15,000 3,777
Counsel and Secretary 1995 100,000 7,500 7,000 3,012
Dennis P. Mansour.............. 1997 107,414 22,400 0 4,673
Corporate Controller 1996 101,942 0 10,000 4,327
1995 33,248 3,500 10,000 501
Mark S. Kopaskie(5)............ 1997 119,139 0 0 7,906
Executive Vice President 1996 180,000 0 50,000 5,402
and Chief Operating Officer 1995 125,481 32,000 50,000 0
</TABLE>

- ---------------

(1) Excludes certain perquisites and other amounts which for any executive
officer did not exceed the lesser of $50,000 or 10% of the total annual
salary and bonus for such executive officer.

(2) Bonus includes the amount of cash bonus earned and accrued during the
relevant year and paid subsequent to the end of such year.

(3) Awards referenced above represent options to purchase shares of the Company
Common Stock granted during the relevant year.

(4) The amounts shown reflect Company contributions to the executive officers'
401(k) plan accounts and supplemental life insurance premiums and moving
allowances paid by the Company. For 1997 they are as set forth in the
following table:

<TABLE>
<CAPTION>
DAVID M. PAUL D. JOSEPH E. RICHARD A. DENNIS P. MARK S.
GABRIELSEN ARLING MIKETO FIREHAMMER, JR. MANSOUR KOPASKIE
---------- ------- --------- --------------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
401(k) Company Contributions..... $2,375 $1,662 $2,375 $2,375 $2,375 $1,661
Supplemental Life Insurance
Premiums....................... 4,150 2,748 1,174 1,648 2,298 0
Moving Allowance................. 0 0 0 0 0 6,245
------ ------ ------ ------ ------ ------
$6,525 $4,410 $3,549 $4,023 $4,673 $7,906
====== ====== ====== ====== ====== ======
</TABLE>

(5) Mr. Kopaskie resigned as the Company's Executive Vice President and Chief
Operating Officer and as a member of the Board of Directors of the Company
effective August 15, 1997 and is listed here pursuant to Rule
S-K402(a)(3)(iii).

9
<PAGE> 13

STOCK OPTIONS

Grant of Stock Options. Neither the Chief Executive Officer nor any of the
four additional most highly compensated executive officers were granted options
to acquire Company Common Stock in 1997.

Aggregated Stock Option Exercises and Year-End Value. Table II below sets
forth, on an aggregated basis, information regarding the exercise during 1997 of
options to purchase Company Common Stock by the Company's named executives and
the value on December 31, 1997 of all unexercised stock options held by such
individuals.

TABLE II

AGGREGATED STOCK OPTION EXERCISES DURING THE YEAR ENDED DECEMBER 31, 1997
AND YEAR-END STOCK OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY STOCK OPTIONS
STOCK OPTIONS AT YEAR END AT YEAR END(1)
SHARES ACQUIRED VALUE (#) ($)
ON EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David M. Gabrielsen........ -- -- 142,499 117,501 552,299 425,326
Paul D. Arling............. -- -- 40,833 39,167(2) 177,030 171,720
Joseph E. Miketo........... -- -- 26,667 18,333(2) 120,333 84,392
Richard A. Firehammer,
Jr....................... -- -- 28,500 13,500(2) 112,479 54,017
Dennis P. Mansour.......... -- -- 11,667 8,333(2) 42,188 27,810
Mark S. Kopaskie(3)........ 35,417 149,069 22,916 0 86,325 0
</TABLE>

- ---------------

(1) Based on a per share price for Company Common Stock of $10.00, which price
reflects the closing price of the Company Common Stock as reported on The
Nasdaq Stock Market on December 31, 1997, the last trading day of 1997.

(2) Stock options and their corresponding value listed as unexercisable in the
above table will become fully vested and therefore exercisable upon the
termination of employment of each of Messrs. Arling, Miketo, Firehammer and
Mansour with the Company during the second quarter of 1998 as part of the
Company's discontinuation of its North American retail line of business.

(3) Mr. Kopaskie resigned as the Company's Executive Vice President and Chief
Operating Officer and as a member of the Board of Directors of the Company
effective August 15, 1997 and is listed here pursuant to Rule
S-K402(a)(3)(iii). In connection with his resignation, Mr. Kopaskie ceased
vesting in his options after December 31, 1997, and all unvested options to
which he had been granted terminated on January 1, 1998. In February 1998,
Mr. Kopaskie exercised 22,916 shares and the value realized on such exercise
was $97,027.

EMPLOYMENT AGREEMENTS

In 1995 and 1996, the Company entered into salary continuation agreements
with each of the named executives and certain other officers of the Company. The
salary continuation agreements were amended in January 1997 (the salary
continuation agreements, as amended, are hereinafter referred to as the "SCAs").
The SCAs take effect upon the occurrence of certain triggering events (as
defined within the agreements (the discontinuation of the Company's North
American retail line of business is a triggering event under certain of the
SCAs)). When effective, the SCAs operate as employment agreements providing for
terms of employment with the Company for periods ranging from twelve (12) to
twenty-four (24) months. In addition, the SCAs provide for the executives and
officers to receive increases in salary and bonuses during the term of the SCAs
in accordance with the Company's standard policies and practices; however, in no
event are such base salary and bonuses to be less than the base salary and
bonuses such executives and officers received in the year immediately preceding
the effective date of the SCAs. Further, the SCAs provide that each of the
executives and officers would be entitled to receive stock option grants and to
otherwise participate in the Company's

10
<PAGE> 14

incentive compensation and benefits plans and other customary benefits programs
in effect from time to time, but in no event is such participation to be less
than that provided such executives and officers immediately prior to the
effective date of the SCAs.

Under the SCAs, in the event the Company terminates the executives' and
officers' employment for reasons other than the executives' or officers' death
or disability or for "cause" (as such term is defined in the SCAs) or the
executives or officers resign for "good reason" (as such term is defined in the
SCAs, which definition includes resigning in connection with the occurrence of a
change in control), the executives and officers will receive, in one lump sum,
an amount equal to salary, bonus and other incentive compensation (including the
cash value of all options held by such executives and officers, which options
become immediately fully vested on the executives' or officers' termination or
resignation date) and to continue all health, disability and life insurance
benefits each for periods ranging from twelve (12) to twenty-four (24) months
(thirty-six (36) months in the event of a hostile acquisition) following such
termination or resignation.

Concurrent with the announcement of the discontinuation of the Company's
North American retail line of business in December 1997, Messrs. Arling, Miketo,
Firehammer, and Mansour and certain other officers of the Company were each
notified that their respective employment with the Company would be terminated
by the Company without "cause" during the second quarter of 1998, and each of
them and certain other officers of the Company would be paid under the severance
provisions of the SCAs. Each of Messrs. Arling, Miketo, Firehammer, and Mansour
and the other applicable officers have agreed to accept the continuing right to
exercise their respective options for the thirty month period following such
termination in lieu of receiving the cash value of the options as provided in
the SCAs.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

As stated above, the Compensation Committee currently consists of Messrs.
Henderson and McKnight, both of whom are non-employees. The Compensation
Committee recommends compensation arrangements for the Company's executive
officers and is also responsible for determining and otherwise administering the
timing, amount, exercise price and other terms of options granted under the
Company's various stock incentive plans. Under certain of those plans, options
may be granted to non-employee directors of the Board of Directors. In all
instances of stock option grants, the recommendations of the Compensation
Committee are passed upon and approved by the full Board of Directors. There
were no options granted to non-employee directors of the Board of Directors
during 1997.

CERTAIN TRANSACTIONS

In May 1994, the Company entered into agreements with certain of its
executive officers and other employees whereby the Company loaned $484,989 to
them to fund their purchase, on the open market, of shares of the Company Common
Stock. These borrowings are evidenced by secured promissory notes, are due in
five years from the date of the advance together with simple interest calculated
at a local bank's prevailing interest rate for loans of this nature, and are
secured by a pledge of the purchased stock. None of these loans exceeded
$60,000. With the exception of Mr. Firehammer, who received loans amounting to
$42,875, neither the Company's chief executive officer nor any of the other
named officers received loans as declared herein. As a result of the Company's
restructuring efforts and other termination of certain executive officers and
other employees of the Company through March 31, 1998, $331,817 of these loans
were forgiven (with the purchased stock being retained by the borrowers) and
$69,782 of these loans were repaid, all in accordance with the terms of the
loans. Mr. Firehammer's loan will be forgiven in its entirety during the second
quarter of 1998 and he will retain the purchased stock due to the termination of
his employment with the Company as part of the Company's discontinuation of its
North American retail line of business.

F. Rush McKnight, a nominee for reelection to the Company's Board of
Directors, is a retired partner of the law firm of Calfee, Halter & Griswold
LLP, which has been retained by the Company in connection with certain legal
matters.

11
<PAGE> 15

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors, first established
after the Company's February 1993 initial public offering, met once during 1997.
The members of the Committee are Bruce A. Henderson and F. Rush McKnight and the
Committee recommends compensation arrangements for the Company's executive
officers and administers its various stock incentive plans.

The Compensation Committee will review the compensation policies of the
Company throughout the coming year. All compensation actions taken during 1997
were consistent with principles previously established by the Board of
Directors. These principles include building a strong relationship between
stockholder return and executive compensation, providing incentives to achieve
both near and long-term goals, and providing an overall level of remuneration
which is fair and reflective of performance. Further, consistent with past
practice, the Board has decided that management of the Company should make
decisions with respect to the compensation of all employees other than the chief
executive officer and all other executive officers of the Company.

Compensation Philosophy and Program. In administering executive officer
compensation, the Compensation Committee's objective is to establish a total pay
program for the Company which appropriately balances compensation costs with
salaries and incentives sufficient to retain and motivate key executives. The
other executive officers, except for Mr. Gabrielsen, are not present at the
discussions or deliberations of the Compensation Committee unless requested by
the Compensation Committee, and were not present at the meeting in 1997. To
establish compensation targets, the Compensation Committee uses data provided by
the Company which reflects overall and individual executive officer compensation
history, the Company's recent and planned performance and, to the extent
available, data reflecting compensation practices of companies who are
competitors of the Company (the "Compare Group"). The Compare Group includes
members of the Company's Peer Group and private companies. However, because the
Company has found that the companies comprising the Compare Group are
substantially larger than the Company, the Compensation Committee discounts such
comparison data and relies more on internal information and criteria in
establishing its overall pay program for the executive officers.

Base Salary. Actual base salaries are based on an assessment of various
factors including position, tenure, experience, salary history, and individual
performance. This assessment is subjective, not subject to weightings or
formulas and only considers Compare Group data to the extent available and
believed by the Compensation Committee to be helpful. Individual base salary
increases reflect what the Compensation Committee believes to be fair and
appropriate after considering the subjective factors and an assessment of the
Company's current and projected labor costs. Based upon the Company's financial
performance for the year ended December 31, 1997, the Committee assessed the
base salaries of Mr. Gabrielsen (whose base salary in 1997 was $310,000) and the
other executive officers and determined that no increases in base salary for the
executives, including Mr. Gabrielsen, would occur in 1998.

Annual Bonus Incentives. The Company believes that incentives help
motivate attainment of annual objectives, including the Company's performance
relative to that year's plan and the individual performance of each executive
officer. For 1997, individual payouts were based upon a percentage of the
executive's base salary, provided that certain earnings per share targets were
met. In certain circumstances, an additional bonus may be awarded if the
Compensation Committee determines that an executive officer's individual
performance warrants such award. Based on the earnings per share achieved by the
Company during 1997, Mr. Gabrielsen received a bonus for 1997 equal to 40% of
his base salary and the other named executive officers received bonuses in 1997
ranging from 20% to 30% of their respective base salaries. For 1998, the
Compensation Committee determined that the method for determining bonuses should
continue to be based upon a percentage of the executive's base salary, provided
certain earnings per share targets have been met.

Common Stock Incentives. In addition to the Company's 401(k) and Profit
Sharing Plan, the Company, through its various stock incentive plans, may grant
options to purchase Company Common Stock, stock appreciation rights or phantom
stock awards to executive officers and employees of the Company and its
subsidiaries with a view toward providing the executive officers and employees a
stake in the Company's future
12
<PAGE> 16

and compensation directly aligned with the creation of stockholder value. The
Compensation Committee may also issue stock options to attract new executive
officers and other employees to the Company. The Compensation Committee
generally establishes the terms and conditions of such grants. Individual awards
are determined based on a subjective assessment of individual performance,
contribution and potential. No stock options were granted to any of the named
executives, including Mr. Gabrielsen, during 1997. On March 11, 1998, the Board
of Directors of the Company authorized and approved the creation of the
Universal Electronics Inc. 1998 Stock Incentive Plan (the "1998 Plan").

Perquisites. The Company offers very few perquisites or special benefits
to executive officers. In general, the Compensation Committee believes that the
benefits offered are less than that offered at typical companies of similar
size, and are not material when considering total compensation.

The Compensation Committee does not believe that the provisions of the
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
will limit the deductibility of compensation expected to be paid by the Company
during 1998. The Compensation Committee will continue, however, to evaluate the
impact of Section 162(m) of the Code and any other such provisions and take such
actions as is deemed appropriate.

Employment Agreements. In 1995 and 1996, the Company entered into salary
continuation agreements with each of the named executives and certain other
officers of the Company. The salary continuation agreements were amended in
January 1997 (the salary continuation agreements, as amended, are hereinafter
referred to as the "SCAs"). The SCAs take effect upon the occurrence of certain
triggering events (as defined within the agreements (the discontinuation of the
Company's North American retail line of business is a triggering event under
certain of the SCAs)). When effective, the SCAs operate as employment agreements
providing for terms of employment with the Company for periods ranging from
twelve (12) to twenty-four (24) months. In addition, the SCAs provide for the
executives and officers to receive increases in salary and bonuses during the
term of the SCAs in accordance with the Company's standard policies and
practices; however, in no event are such base salary and bonuses to be less than
the base salary and bonuses such executives and officers received in the year
immediately preceding the effective date of the SCAs. Further, the SCAs provide
that each of the executives and officers would be entitled to receive stock
option grants and to otherwise participate in the Company's incentive
compensation and benefits plans and other customary benefits programs in effect
from time to time, but in no event is such participation to be less than that
provided such executives and officers immediately prior to the effective date of
the SCAs.

13
<PAGE> 17

On February 2, 1998, the Company hired Camille Jayne as its President and
Chief Operating Officer and entered into an employment agreement with her. In
addition, on March 11, 1998, Ms. Jayne was appointed to the Company's Board of
Directors to fill one of the vacancies existing at that time. Ms. Jayne's
employment agreement has an initial term of two years, set to expire at the end
of business on February 1, 2000 and, unless terminated by either party as
provided in the agreement, such agreement shall renew for additional successive
one year terms. The agreement also provides for an initial annual base salary of
$300,000 and a bonus payable at the end of the 1998 fiscal year in an amount
equal to a percentage of her base salary, provided that certain earnings per
share targets are met. The agreement also permits the Company to award Ms. Jayne
a discretionary bonus determined by the Company and provides for the grant of an
option to acquire up to 175,000 shares of Company Common Stock. The options have
an exercise price of $9.9688 per share, the fair market value of the Company
Common Stock on her hire date, and vest in equal increments over four years. The
agreement further entitles Ms. Jayne to a commuting allowance and corporate
housing during the initial term of the agreement and for Ms. Jayne's
participation in benefits plans of the Company in effect from time to time and
for other customary benefits.

If during the term of the agreement, Ms. Jayne should resign for "good
reason" (as such term is defined in the agreement), Ms. Jayne will receive
salary, bonus, other incentive compensation and perquisites, and may continue to
participate in Company benefits plans, for an 18-month period following such
resignation. The agreement prohibits Ms. Jayne from disclosing and/or using any
of the Company's trade secrets and proprietary information and from soliciting
any of its customers or employees anytime after her employment with the Company.

It is the view of the Compensation Committee that the compensation programs
of the Company are well structured to encourage attainment of objectives, offer
opportunities for a total level of compensation which is consistent with other
companies of similar size, and foster a stockholder perspective in management.
The Compensation Committee believes that the overall levels of compensation
provided by these programs are fair and appropriate for the year just ended, and
that they serve stockholders' long-term interests.

Compensation Committee of the Board of
Directors

Bruce A. Henderson
F. Rush McKnight

14
<PAGE> 18

PERFORMANCE CHART

The following line graph compares the yearly percentage change in the
cumulative total stockholder return with respect to the Company Common Stock
versus the cumulative total return of the Company's Peer Group Index (the "Peer
Group Index") and the Nasdaq Composite Index (the "Nasdaq Composite Index") for
the period commencing February 12, 1993 (the initial trading date for the
Company Common Stock) and ended December 31, 1997. The graph assumes an
investment of $100 on February 12, 1993, a reinvestment of dividends (no
dividends were declared on the Company Common Stock during the period) and
actual market value increases and decreases of the Company Common Stock relative
to an initial investment of $100.

The Company believes that the information provided within this performance
chart has only limited relevance to an understanding of the Company's
compensation policies during the indicated periods, does not reflect all matters
appropriately considered by the Company in developing its compensation strategy,
shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933, as amended, or under the Securities Exchange Act of
1934, as amended, and is not necessarily indicative of future price performance.

[GRAPH]

COMPARISON OF STOCKHOLDER RETURNS AMONG UNIVERSAL ELECTRONICS INC.,
THE PEER GROUP INDEX(1) AND THE NASDAQ COMPOSITE INDEX

02/12/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
<S> <C> <C> <C> <C> <C> <C> <C>
Universal Electronics $100 $152 $ 34 $ 58 $ 42 $ 77
Inc.
Peer Group Index $100 $112 $121 $116 $147 $113
Nasdaq Composite Index $100 $111 $108 $151 $185 $139
</TABLE>

- ---------------

(1) Companies in the Peer Group Index are as follows: Harman International
Industries, Inc.; Recoton Corporation; Royal Appliance Manufacturing Co.;
Voice Powered Technology, Inc.; and Zenith Electronics Corporation.

PROPOSAL TWO: RATIFICATION AND APPROVAL OF 1998 STOCK INCENTIVE PLAN

BACKGROUND

As of March 11, 1998, options to acquire 198,230, 394,750 and 385,000
available shares of Company Common Stock had been granted under the Company's
existing 1993 Stock Incentive Plan (the "1993 Plan"), 1995 Stock Incentive Plan
(the "1995 Plan") and 1996 Stock Incentive Plan, leaving 1,770,

15
<PAGE> 19

5,250 and 15,000 available for future grants under the 1993 Plan, the 1995 Plan
and 1996 Plan, respectively. As a result, the Board of Directors, believing that
the remaining number of shares available for future grants under the 1993 Plan,
1995 Plan and 1996 Plan was insufficient to attract and retain key employees,
authorized the adoption of a new Universal Electronics Inc. 1998 Stock Incentive
Plan (the "1998 Plan") to make an additional 315,000 shares of Company Common
Stock (approximately 4.95% of the outstanding shares of Company Common Stock (as
of March 31, 1998)) available for distribution to the Company's key officers and
employees.

Consequently, the stockholders will be asked at the Annual Meeting to vote
on a proposal to ratify and approve the adoption of the 1998 Plan. The 1998 Plan
was approved by the Board of Directors on March 11, 1998, subject to stockholder
approval.

The Board of Directors believes that substantial benefits will accrue to
the Company from the granting of stock awards under the 1998 Plan to its key
officers and employees. Such awards encourage such persons to acquire a
proprietary interest in the Company through stock ownership and thereby afford
them a greater incentive to enhance the value of the Company Common Stock
through their own efforts in improving the Company's business. The granting of
awards under the 1998 Plan also assists in obtaining and attracting competent
personnel who will contribute to the Company's success through their ability,
ingenuity and industry and to provide incentive to the participating personnel
which will inure to the benefit of all stockholders of the Company. For these
reasons, the Board adopted the 1998 Plan. Accordingly, the Board of Directors
and management believe that ratification and approval of the 1998 Plan is in the
best interests of the Company and recommend that stockholders vote in favor of
the proposal. IN THIS CONNECTION, UNLESS OTHERWISE INSTRUCTED, THE PROXYHOLDERS
WILL VOTE THE PROXIES RECEIVED BY THEM FOR THE RATIFICATION AND APPROVAL OF THE
1998 PLAN.

The following is a summary of the material features of the 1998 Plan and is
qualified in its entirety by reference to it. A copy of the 1998 Plan is
attached hereto as Exhibit A.

GENERAL

The 1998 Plan provides for the issuance of stock options, stock
appreciation rights, performance stock units, restricted stock units or any
combination thereof (each an "Award"). Stock options may be granted to Eligible
Employees (as such term is defined within the 1998 Plan). Eligible Employees may
be granted "incentive stock options" within the meaning of Section 422A of the
Code and non-qualified (for federal income tax purposes) stock options.

Stock appreciation rights, which may be granted to Eligible Employees, give
the grantee of a stock option the right to elect an alternative payment equal to
the appreciation of the stock value instead of exercising a stock option.
Payment of the stock appreciation right may be made in cash, shares of Company
Common Stock or a combination thereof.

Performance stock units and restricted stock units may be granted to
Eligible Employees and represent the right to receive one share of Company
Common Stock. In the case of performance stock units, Company Common Stock would
be received upon the attainment of certain Company performance objectives. Such
performance objectives would be set by the Committee. In the case of restricted
stock units, Company Common Stock would be received upon completion of a
restriction period, the duration of which would be determined by the Committee.

In all cases, Awards are subject to the terms and provisions of the 1998
Plan. The maximum number of shares of Company Common Stock reserved and
available for issuance under the 1998 Plan is 315,000 shares, which constitutes
approximately 4.95% of the outstanding shares of Company Common Stock (as of
March 31, 1998).

DURATION AND ADMINISTRATION OF THE 1998 PLAN

The 1998 Plan will terminate on May 27, 2008, unless otherwise terminated
by resolution of the Board of Directors. Initially, the 1998 Plan will be
administered by the Company's Compensation Committee (the
16
<PAGE> 20

"Committee"). The Committee is composed solely of two or more directors who are
non-employee Directors. The current members of the Committee are Bruce A.
Henderson and F. Rush McKnight (see "THE BOARD OF DIRECTORS AND COMMITTEES OF
THE BOARD"). Subject to the terms and conditions of the 1998 Plan, the Committee
has full and final authority in its absolute discretion to, without limitation:
(i) determine the terms and conditions of Awards; (ii) construe and interpret
the 1998 Plan and any agreement or instrument entered into thereunder; (iii)
adopt, amend, or rescind rules and regulations that may be advisable in the
administration of the 1998 Plan; (iv) establish, amend or waive the rules and
regulations and the instruments evidencing Awards granted under the 1998 Plan;
and (v) make all other determinations deemed necessary or advisable for the
administration of the 1998 Plan. Any decision made or action taken by the
Committee in connection with the administration, interpretation and
implementation of the 1998 Plan and of its rules and regulations will be, to the
extent permitted by law, conclusive and binding upon all Eligible Employees and
upon any person claiming under or through any of them. Neither the Committee nor
any of its members is liable for any action taken by the Committee pursuant to
the 1998 Plan. No member of the Committee is liable for the act of any other
member.

SECURITIES SUBJECT TO THE 1998 PLAN

Not more than 315,000 shares of Company Common Stock may be issued pursuant
to the 1998 Plan in the aggregate, subject to equitable adjustment by the
Committee in the event of stock splits, stock dividends, combinations, exchanges
of shares or similar capital adjustments. If any Award expires without having
been fully exercised, the shares with respect to which such Award has not been
exercised will be available for further Awards.

GRANT AND METHOD OF EXERCISE OF AWARDS

Subject to certain conditions, the duration of each Award granted under the
1998 Plan will be determined by the Committee, provided that no Award shall be
granted after the tenth anniversary of the establishment of the 1998 Plan and no
such Award shall be exercisable or vest, as applicable, later than the tenth
anniversary of the date the Award was granted.

Each stock option granted under the 1998 Plan will have an exercise price
of no less than the fair market value at the date of grant which will be
determined by averaging the highest and lowest sales prices for the Company
Common Stock on The Nasdaq Stock Market on the date of the grant. A stock option
granted under the 1998 Plan will become exercisable in equal increments of 25%
of the shares of Company Common Stock which are covered by the stock option on
each of the first four anniversary dates of the grant.

Shares of the Company Common Stock shall be deliverable upon the vesting of
performance stock unit Awards or restricted stock units Awards for no
consideration other than services rendered or, in the Committee's sole
discretion, the minimum amount of consideration other than services, required to
be received by the Company in order to assure compliance with applicable state
law, which amount shall not, in any case, exceed 10% of the fair market value of
such shares of Company Common Stock on that date of issuance.

Awards may be exercised by the giving of written notice to the Company of
the exercise of the Award accompanied by full payment of the exercise price (if
applicable) in cash or, in the Committee's discretion, its equivalent. The
Committee also may allow cashless exercise as permitted under the Federal
Reserve Board's Regulation T.

EXERCISE OF STOCK OPTIONS UPON TERMINATION OF EMPLOYMENT

Termination due to Death or Disability. If an Eligible Employee's
employment with the Company and all subsidiaries ceases because of death or
disability, the option may be exercised by the Eligible Employee (or, in the
event of death, such person's estate or personal representative) until the
earlier of either (i) the first anniversary of such termination of employment or
(ii) the expiration of the option, but only to the extent the option was
exercisable at the date of such termination of employment.

17
<PAGE> 21

Termination without cause or due to Constructive Termination. If an
Eligible Employee's employment with the Company and all subsidiaries is
terminated by the Company without "cause" or in the event of "Constructive
Termination" (including a "Change In Control") (as all such terms are defined
within the 1998 Plan) the option may be exercised by the Eligible Employee (or,
in the event of death, such person's estate or personal representative) until
the expiration of the option, but only to the extent the option was exercisable
at the date of such termination of employment.

Termination for any other reason. If an Eligible Employee's employment
with the Company and all subsidiaries ceases for any reason other than death,
disability, without cause or Constructive Termination, the option may be
exercised by the Eligible Employee (or, in the event of the death of the
Eligible Employee after such cessation of employment, such person's estate or
personal representative) until the earlier of either (i) the 90th day following
such termination of employment or (ii) the expiration of the option, but only to
the extent the option was exercisable at the date of such termination of
employment.

Subject to certain limitations set forth in the 1998 Plan, the Committee
may waive any restrictions or conditions set forth in an option agreement
concerning an Eligible Employee's right to exercise any stock option and/or the
time and method of exercise.

CANCELLATION OF RESTRICTED STOCK UNITS AWARDS OR PERFORMANCE STOCK UNITS AWARDS

If an Eligible Employee's employment with the Company and all subsidiaries
terminates for any reason, the unvested portion of any restricted stock units
Award or performance stock unit Award will be canceled and the Eligible Employee
shall not be entitled to receive any consideration in respect of such
cancellation; provided, however, that the Committee, subject to certain
limitations set forth in the 1998 Plan, may waive any restrictions or conditions
relating to the vesting of restricted stock units Awards and performance stock
units Awards.

INCOME TAX TREATMENT

The Company has been advised that under current law, certain of the income
tax consequences under the laws of the United States to Eligible Employees and
the Company of Awards granted under the 1998 Plan generally should be as set
forth in the following summary. This summary only addresses federal income tax
consequences for Eligible Employees and the Company.

An Eligible Employee who is granted an incentive stock option which
qualifies under Section 422 of the Code will not recognize income at the time of
grant or exercise of such Award. No federal income tax deduction will be
allowable to the Company upon the grant or exercise of such Award. Upon the
exercise of an incentive stock option, however, special alternative minimum tax
rules apply for the Eligible Employee. When the Eligible Employee sells such
shares more than one year after the date of exercise of the Award and more than
two years after the date of grant of the incentive stock option, the employee
will normally recognize a long-term capital gain or loss equal to the
difference, if any, between the sales price of such shares and the option
exercise price. If the Eligible Employee does not hold such shares for this
period, when the employee sells such shares, the employee will recognize
ordinary compensation income and possibly capital gain or loss in such amounts
as are prescribed by the Code and the regulations thereunder. Subject to
applicable provisions of the Code and regulations, the Company generally will be
entitled to a federal income tax deduction in the amount of such ordinary
compensation income.

An Eligible Employee to whom a non-qualified option (an option which is not
an incentive stock option) is granted will not recognize income at the time of
grant of such option. When the Eligible Employee exercises such non-qualified
option, such person will recognize ordinary compensation income equal to the
difference, if any, between the option exercise price and the fair market value,
as of the date of the option exercise, of the shares such person receives. The
tax basis of such shares to such person will be equal to the fair market value,
as of the date of the option exercise, of the shares such person receives (or
the exercise price, if greater) and the holding period for such shares will
commence on the day on which such person recognized taxable income in respect to
such shares. Subject to applicable provisions of the Code and regulations, the
Company generally

18
<PAGE> 22

will be entitled to a federal income tax deduction in respect of non-qualified
options in the amount of such ordinary compensation income recognized by the
Eligible Employee.

An Eligible Employee to whom a restricted stock units Award or a
performance stock units Award is granted will not recognize income at the time
of grant of such Award. When such Eligible Employee receives shares of Company
Common Stock, the Eligible Employee will recognize ordinary compensation income
equal to the fair market value of any shares received. Subject to applicable
provisions of the Code and regulations thereunder, the Company generally will be
entitled to a federal income tax deduction in respect of the Award of Company
Common Stock in an amount equal to the ordinary compensation income recognized
by the Eligible Employee.

The discussion set forth above does not purport to be a complete analysis
of all potential tax consequences relevant to recipients of Awards of the
Company or to describe tax consequences based on particular circumstances. It is
based on the United States federal income tax law and interpretational
authorities as of the date of this Proxy Statement, which are subject to change
at any time. This discussion does not address state or local income tax
consequences or income tax consequences for taxpayers who are not subject to
taxation in the United States.

VOTE REQUIRED

The action of the Board of Directors in adopting the 1998 Plan requires the
ratification and approval by an affirmative vote of the holders of a majority of
shares of Company Common Stock present in person or represented by proxy at the
Annual Meeting.

THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR THE
RATIFICATION AND APPROVAL OF THE UNIVERSAL ELECTRONICS INC. 1998 STOCK INCENTIVE
PLAN.

PROPOSAL THREE: APPOINTMENT OF AUDITORS

The Board of Directors, acting on the recommendation of its Audit
Committee, has appointed Price Waterhouse LLP ("Price Waterhouse"), a firm of
independent public accountants, as auditors, to examine and report to the Board
and to the Company's stockholders on the consolidated financial statements of
the Company and its subsidiaries for 1998. The Board of Directors is requesting
stockholder ratification of such appointment. Representatives of Price
Waterhouse will be present at the Annual Meeting and will be given an
opportunity to make a statement. They will be available to respond to
appropriate questions.

Unless otherwise instructed, the proxy holders will vote the proxies
received by them FOR the ratification of the appointment of Price Waterhouse as
the Company's independent auditors. If the stockholders of the Company reject
the nomination, the Board of Directors will reconsider its selection.

VOTE REQUIRED

The ratification of the Board of Directors' appointment of Price Waterhouse
as the Company's independent auditors for 1998 requires an affirmative vote of
the holders of a majority of shares of Company Common Stock present in person or
represented by proxy at the Annual Meeting.

THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR THE
RATIFICATION OF SUCH APPOINTMENT.

19
<PAGE> 23

STOCKHOLDER PROPOSAL FOR 1999 ANNUAL MEETING

Any stockholder who meets the requirements of the proxy rules under the
Exchange Act may submit to the Board of Directors proposals to be considered for
submission to the Annual Meeting of Stockholders to be held in 1999. Any such
proposal should be submitted in writing by notice delivered or mailed by
first-class United States mail, postage prepaid, to the Secretary, Universal
Electronics Inc., 6101 Gateway Drive, Cypress, California 90630 and must be
received no later than December 30, 1998. Any such notice shall set forth: (a)
the name and address of the stockholder and the text of the proposal to be
introduced; (b) the number of shares of stock held of record, owned beneficially
and represented by proxy by such stockholder as of the date of such notice; and
(c) a representation that the stockholder intends to appear in person or by
proxy at the meeting to introduce the proposal specified in the notice. The
chairman of the meeting may refuse to acknowledge the introduction of any
stockholder proposal not made in compliance with the foregoing procedures.

STOCKHOLDER NOMINATIONS OF DIRECTORS

The Nominating Committee of the Company's Board of Directors will consider
nominees to the Company's Board of Directors to the extent permitted under, and
made pursuant to the procedures established by, Article IV of the Company's
Amended and Restated By-laws.

SOLICITATION OF PROXIES

Proxies will be solicited by mail, telephone, or other means of
communication. Solicitation may be made by directors, officers and other
employees of the Company not specifically employed for this purpose. The Company
will reimburse brokerage firms, custodians, nominees and fiduciaries in
accordance with the rules of the National Association of Securities Dealers,
Inc., for reasonable expenses incurred by them in forwarding materials to the
beneficial owners of shares. The entire cost of solicitation will be borne by
the Company.

FORM 10-K ANNUAL REPORT

Any stockholder who desires a copy of the Company's 1997 Annual Report on
Form 10-K filed with the Securities and Exchange Commission may obtain a copy
(excluding exhibits) without charge by addressing a request to Investor
Relations, Universal Electronics Inc., 6101 Gateway Drive, Cypress, California
90630. A charge equal to the reproduction cost will be made if the exhibits are
requested.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Richard A. Firehammer, Jr.
Richard A. Firehammer, Jr.
Vice President, General Counsel and
Secretary

April 21, 1998

20
<PAGE> 24

EXHIBIT A

UNIVERSAL ELECTRONICS INC.
1998 STOCK INCENTIVE PLAN

TO BE EFFECTIVE MAY 27, 1998

A-1
<PAGE> 25

TABLE OF CONTENTS

<TABLE>
<S> <C> <C>
Section 1. General Purpose of Plan; Definitions........................ A-3
Section 2. Administration.............................................. A-4
Section 3. Number of Shares of Stock Subject to Plan................... A-5
Section 4. Eligibility................................................. A-6
Section 5. Stock Options............................................... A-6
Section 6. Stock Appreciation Rights................................... A-8
Section 7. Restricted Stock Units and Performance Stock Units.......... A-10
Section 8. Grant Of Stock Options to Non-Affiliated Directors.......... A-11
Section 9. Amendment and Termination................................... A-11
Section 10. Unfunded Status of Plan..................................... A-12
Section 11. General Provisions.......................................... A-12
Section 12. Effective Date of Plan...................................... A-13
Section 13. Term of Plan................................................ A-13
</TABLE>

A-2
<PAGE> 26

UNIVERSAL ELECTRONICS INC.
1998 STOCK INCENTIVE PLAN

SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.

The name of the plan is the Universal Electronics Inc. 1998 Stock Incentive
Plan (the "Plan"). The purpose of the Plan is to enable the Corporation (as
hereinafter defined) and its Subsidiaries (as hereinafter defined) to obtain and
retain competent personnel who will contribute to the Corporation's success
through their ability, ingenuity and industry and to provide incentives to the
participating officers, key employees and Non-affiliated Directors (as
hereinafter defined) which are related to increases in stockholder value and
will therefore inure to the benefit of all stockholders of the Corporation.

For purposes of the Plan, the following terms shall be defined as set forth
below:

(a) "Award" means any grant under the Plan in the form of Stock
Options, Stock Appreciation Rights, Performance Stock Units, Restricted
Stock Units or any combination of the foregoing.

(b) "Board" means the Board of Directors of the Corporation.

(d) "Committee" means the Compensation Committee or any other
committee the Board may subsequently appoint to administer the Plan. The
Committee shall be composed entirely of directors who meet the
qualifications referred to in Section 2 of the Plan.

(e) "Corporation" means Universal Electronics Inc., a corporation
incorporated under the laws of the State of Delaware (or any successor
corporation).

(f) "Disability" means an event of illness or other incapacity of
Optionee resulting in Optionee's failure or inability to discharge
Optionee's duties as an employee or Non-affiliated Director of the
Corporation, any Subsidiary or any Related Entity for ninety (90) or more
days during any period of 120 consecutive days.

(g) "Disinterested Person" shall have the meaning set forth in Rule
16b-3 ("Rule 16b-3"), as promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended from time
to time (the "Exchange Act"), or any successor definition adopted by the
Securities and Exchange Commission.

(h) "Eligible Employee" means an employee of the Corporation, any
Subsidiary or any Related Entity as described in Section 4 of the Plan.

(i) "Fair Market Value" means, as of any given date, with respect to
any Awards granted hereunder, the mean of the high and low trading price of
the Stock on such date as reported on The Nasdaq Stock Market or if the
Stock is not then traded on The Nasdaq Stock Market, on such other national
securities exchange on which the Stock is admitted to trade or, if none, on
the National Association of Securities Dealers Automated Quotation System
if the Stock is admitted for quotation thereon; provided, however, that if
any such system, exchange or quotation system is closed on any day on which
Fair Market Value is to be determined, Fair Market Value shall be
determined as of the first day immediately proceeding such day on which
such system, exchange or quotation system was open for trading; provided,
further, that in all other circumstances, "Fair Market Value" means the
value determined by the Committee after obtaining an appraisal by one or
more independent appraisers meeting the requirements of regulations issued
under Section 170(a)(1) of the Code.

(j) "Incentive Stock Option" means any Stock Option intended to
qualify as an "incentive stock option" within the meaning of Section 422 of
the Code.

(k) "Nonqualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.

A-3
<PAGE> 27

(l) "Optionee" means a Participant granted a Stock Option pursuant to
Section 5 of the Plan which remains outstanding.

(m) "Participant" means any Eligible Employee selected by the
Committee, pursuant to the Committee's authority in Section 2 of the Plan,
to receive Awards and, solely to the extent provided by Section 8 of the
Plan, Non-affiliated Directors of the Corporation.

(n) "Performance Stock Unit" means the right to receive one share of
Stock as set forth in an Award granted pursuant to Section 7 of the Plan.

(o) "Related Entity" means any corporation, joint venture or other
entity, domestic or foreign, other than a Subsidiary, in which the
Corporation owns, directly or indirectly, a substantial equity interest.

(p) "Restricted Stock Unit" means the right to receive one share of
Stock as set forth in an Award granted pursuant to Section 7 of the Plan.

(q) "Retirement" means (i) retirement from active employment under a
retirement plan of the Corporation, any Subsidiary or Related Entity or
under an employment contract with any of them or (ii) termination of
employment at or after age 55 under circumstances which the Committee, in
its sole discretion, deems equivalent to retirement.

(r) "Stock" means the common stock of the Corporation.

(s) "Stock Appreciation Right" means the right pursuant to an Award
granted under Section 6 of the Plan, (i) in the case of a Related Stock
Appreciation Right (as defined in Section 6 of the Plan), to surrender to
the Corporation all or a portion of the related Stock Option and receive an
amount equal to the excess of the Fair Market Value of one share of Stock
as of the date such Stock Option or portion thereof is surrendered over the
option price per share specified in such Stock Option, multiplied by the
number of shares of Stock in respect of which such Stock Option is being
surrendered and (ii) in the case of a Freestanding Stock Appreciation Right
(as defined in Section 6 of the Plan) and receive an amount equal to the
excess of the Fair Market Value of one share of Stock as of the date of
exercise over the price per share specified in such Freestanding Stock
Appreciation Right, multiplied by the number of shares of Stock in respect
of which such Freestanding Stock Appreciation Right is being exercised.

(t) "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5 of the Plan.

(u) "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Corporation, if each of the corporations
(other than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.

SECTION 2. ADMINISTRATION.

The Plan shall be administered by the Committee, composed of not less than
two directors who are Disinterested Persons, who shall be appointed by the Board
and who shall serve at the pleasure of the Board. In the event that a Committee
has not been appointed, then the Plan shall be administered by the Board which
shall have all of the power and authority of the Committee set forth below until
such time as a Committee is appointed. The Committee shall have the power and
authority in its sole discretion to grant Awards pursuant to the terms and
provisions of the Plan.

In particular, the Committee shall have the full authority, not
inconsistent with the Plan:

(a) to select Participants;

(b) to determine whether and to what extent Awards are to be granted
to Participants hereunder;

(c) to determine the number of shares of Stock to be covered by each
such Award granted hereunder, but in no case shall such number be in the
aggregate greater than that allowed under the Plan;
A-4
<PAGE> 28

(d) to determine the terms and conditions of any Award granted
hereunder (including, without limitation, (i) the restrictive periods
applicable to Restricted Stock Unit Awards and (ii) the performance
objectives and periods applicable to Performance Stock Unit Awards);

(e) to waive compliance by a Participant with any obligation to be
performed by such Participant under any Award and to waive any term or
condition of any such Award (provided, however, that no such waiver shall
detrimentally affect the rights of the Participant without such
Participant's consent); and

(f) to determine the term and conditions which shall govern all
written agreements evidencing the Awards.

The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time deem advisable; to interpret the provisions of the Plan and
the terms and conditions of any Award issued, expired, terminated, canceled or
surrendered under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan.

All decisions made by the Committee pursuant to the provisions of the Plan
and as to the terms and conditions of any Award (and any agreements relating
thereto) shall be final and binding on all persons, including the Corporation
and the Optionees.

SECTION 3. NUMBER OF SHARES OF STOCK SUBJECT TO PLAN.

The total number of shares of Stock reserved and available for issuance
under the Plan shall be three hundred fifteen thousand (315,000). Such shares of
Stock may consist, in whole or in part, of authorized and unissued shares of
Stock or issued shares of Stock reacquired by the Corporation at any time, as
the Board may determine.

To the extent that (a) a Stock Option expires or is otherwise terminated,
cancelled or surrendered without being exercised (including, without limitation,
in connection with the grant of a replacement option) or (b) any Restricted
Stock Unit Award or Performance Stock Unit Award granted hereunder expires or is
otherwise terminated or is cancelled, the shares of Stock underlying such Stock
Option or subject to such Restricted Stock Unit Award or Performance Stock Unit
Award shall again be available for issuance in connection with future Awards
under the Plan. Upon the exercise of a Related Stock Appreciation Right (as
defined in Section 6 of the Plan), the Stock Option, or the part thereof to
which such Related Stock Appreciation Right is related, shall be deemed to have
been exercised for the purpose of the limitation on the number of shares of
Stock in respect of which the Related Stock Appreciation Right was exercised.

In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure or
capitalization affecting the Stock, the Committee in its sole discretion may
make an equitable adjustment or substitution in the number and class of shares
reserved for issuance under the Plan, the number and class of shares covered by
outstanding Awards and the option price per share of Stock Options or the
applicable price per share specified in Stock Appreciation Rights to reflect the
effect of such change in corporate structure or capitalization on the Stock;
provided, however, that any fractional shares resulting from such adjustment
shall be eliminated; provided further, however, that if by reason of any such
change in corporate structure or capitalization a Participant holding a
Restricted Stock Unit Award or Performance Stock Unit Award shall be entitled,
subject to the terms and conditions of such Award, to additional or different
shares of any security, the issuance of such additional or different shares
shall thereupon be subject to all of the terms and conditions (including
restrictions and performance criteria) which were applicable to such Award prior
to such change in corporate structure or capitalization; and, provided, further,
however, that unless the Committee in its sole discretion determines otherwise,
any issuance by the Corporation of shares of stock of any class or securities
convertible into shares of stock of any class shall not affect, and no such
adjustment or substitution by reason thereof shall be made with respect to, the
number or class of shares reserved for issuance under the Plan, the number or
class of shares covered by outstanding Awards or any option price or applicable
price.

A-5
<PAGE> 29

SECTION 4. ELIGIBILITY.

Officers and other key employees of the Corporation, its Subsidiaries and
its Related Entities who are responsible for or contribute to the management,
growth or profitability of the business of the Corporation, its Subsidiaries or
its Related Entities shall be eligible to be granted Awards; provided however,
with respect to an employee of a Related Entity, that such person was an
employee of the Corporation, a Subsidiary or, if originally an employee of the
Corporation or a Subsidiary, or another Related Entity immediately prior to
becoming employed by such Related Entity and accepted employment with such
Related Entity at the request of the Corporation or a Subsidiary. The
Participants under the Plan shall be selected, from time to time, by the
Committee, in its sole discretion, from among those Eligible Employees or, as
set forth in Section 8 of the Plan, Non-affiliated Directors.

SECTION 5. STOCK OPTIONS.

(a) Grant and Exercise. Stock Options may be granted either alone or in
addition to other Awards granted under the Plan. Any Stock Option granted under
the Plan shall be in such form as the Committee may, from time to time, approve,
and the terms and conditions of Stock Option Awards need not be the same with
respect to each Optionee. Each Optionee shall enter into a Stock Option
agreement ("Stock Option Agreement") with the Corporation, in such form as the
Corporation shall determine, which agreement shall set forth, among other
things, the option price of the option, the term of the option and conditions
regarding exercisability of the option granted thereunder.

(i) Nature of Options. The Committee shall have the authority to
grant any Participant either Incentive Stock Options, Nonqualified Stock
Options or both types of Stock Options (in each case with or without Stock
Appreciation Rights), except that the Committee shall not grant any
Incentive Stock Options to an employee of a Related Entity. Any Stock
Option which does not qualify as an Incentive Stock Option, or the terms of
which at the time of its grant provide that it shall not be treated as an
Incentive Stock Option, shall constitute a Nonqualified Stock Option.

(ii) Exercisability. Subject to such terms and conditions as shall be
determined by the Committee in its sole discretion at or after the time of
grant, Stock Options shall be exercisable from time to time to the extent
of 25% of the number of shares of Stock covered by the Stock Option on and
after the first anniversary and before the second anniversary of the date
of grant of the Stock Option, to the extent of 50% of the number of shares
of Stock covered by the Stock Option, on and after the second anniversary
and before the third anniversary of the date of grant of the Stock Option
to the extent of 75% of the number of shares of Stock covered by the Stock
Option on and after the third anniversary and before the fourth anniversary
of the date of grant of the Stock Option, and to the extent of 100% on and
after the fourth anniversary of the date of grant of the Stock Option and
before the expiration of the stated term of the Stock Option (or to such
lesser extent as the Committee in its sole discretion shall determine at
the time of grant or to such greater extent as the Committee in its sole
discretion shall determine at or after the time of grant).

(iii) Method of Exercise. Stock Options may be exercised by giving
written notice of exercise delivered in person or by mail as required by
the terms of any Stock Option Agreement at the Corporation's principal
executive office, specifying the number of shares of Stock with respect to
which the Stock Option is being exercised, accompanied by payment in full
of the option price in cash or its equivalent as determined by the
Committee in its sole discretion. If requested by the Committee, the
Optionee shall deliver to the Corporation the Stock Option Agreement
evidencing the Stock Option being exercised for notation thereon of such
exercise and return thereafter of such agreement to the Optionee. As
determined by the Committee in its sole discretion at or after the time of
grant, payment of the option price in full or in part may also be made in
the form of shares of unrestricted Stock already owned by the Optionee
(based on the Fair Market Value of the Stock on the date the Stock Option
is exercised); provided, however, that in the case of an Incentive Stock
Option, the right to make payment of the option price in the form of
already owned shares of Stock may be authorized only at the time of grant.
The Committee also may allow cashless exercise as permitted under the
Federal Reserve Board's

A-6
<PAGE> 30

Regulation T, subject to applicable securities law restrictions, or by any
other means which the Committee determines to be consistent with the Plan's
purpose and applicable law. An Optionee shall generally have the rights to
dividends or other rights of a stockholder with respect to shares of Stock
subject to the Stock Option when the Optionee has given written notice of
exercise, has paid in full for such shares of Stock, and, if requested, has
made representations described in Section 11(a) of the Plan.

(b) Terms and Conditions. Stock Options granted under the Plan shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem desirable.

(i) Option Price. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Committee at the time of
grant, but shall be not less than 100% of the Fair Market Value of the
Stock on the date of the grant; provided, however, that if any Participant
owns or is deemed to own (by reason of the attribution rules of Section
424(d) of the Code) more than 10% of the combined voting power of all
classes of stock of the Corporation or any Subsidiary when an Incentive
Stock Option is granted to such Participant, the option price of such
Incentive Stock Option (to the extent required by the Code at the time of
grant) shall be not less than 110% of the Fair Market Value of the Stock on
the date such Incentive Stock Option is granted.

(ii) Option Term. The term of each Stock Option shall be fixed by the
Committee at the time of grant, but no Stock Option shall be exercisable
more than ten years after the date such Stock Option is granted; provided,
however, that if any Participant owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Corporation or any
Subsidiary when an Incentive Stock Option is granted to such Participant,
such Stock Option (to the extent required by the Code at time of grant)
shall not be exercisable more than five years from the date such Incentive
Stock Option is granted.

(iii) Transferability of Options. Except as otherwise determined by
the Committee, no Stock Options shall be transferable by the Optionee
otherwise than by will or by the laws of descent and distribution and all
Stock Options shall be exercisable, during the Optionee's lifetime, only by
the Optionee.

(iv) Option Exercise After Termination by Reason of Death or
Disability. If an Optionee's employment with the Corporation, any
Subsidiary or any Related Entity terminates by reason of death or
Disability, and Stock Option held by such Optionee may thereafter be
exercised for a period of one year (or such shorter period as the Committee
in its sole discretion shall specify at or after the time of grant) from
the date of such termination or until the expiration of the stated term if
such Stock Option, whichever period is shorter, to the extent to which the
Optionee would on the date of termination have been entitled to exercise
the Stock Option (or to such greater or lesser extent as the Committee in
its sole discretion shall determine at or after the time of grant). In the
event of a termination of employment by reason of death or Disability, if
an Incentive Stock Option is exercised after the expiration of the exercise
period that applies for purposes of Section 422 of the Code, such Stock
Option will thereafter be treated as a Nonqualified Stock Option.

(v) Option Exercise After Termination Without Cause or Due to
Constructive Termination. If an Optionee's employment with the Corporation
or any Subsidiary is terminated, by the Corporation or such Subsidiary,
without "Cause" (as such term is defined within the Stock Option Agreement)
or in the event of "Constructive Termination" (as such term is defined
within the Stock Option Agreement) of the Optionee's employment with the
Corporation or such Subsidiary or if an Optionee's employment with a
Related Entity is so terminated, the Committee, in its sole discretion, may
permit the Optionee to exercise any Stock Option held by such Optionee, to
the extent not theretofore exercised, in whole or in part with respect to
all remaining shares covered by the Stock Option at any time prior to the
expiration of the Stock Option (or such shorter period as the Committee in
its sole discretion shall specify at or after the time of grant), to the
extent to which the Optionee would on the date of termination have been
entitled to exercise the Stock Option (or to such greater or lesser extent
as the Committee in it sole

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discretion shall determine at or after the time of grant). An Optionee's
acceptance of employment, at the request of the Corporation or a
Subsidiary, with a Related Entity (or acceptance of employment, at the
request of the Corporation or a Subsidiary, with any other Related Entity),
shall not be deemed a termination of employment hereunder and any Stock
Option held by Optionee may be exercised thereafter to the extent that the
Optionee would on the date of exercise have been entitled to exercise such
Stock Option if such Optionee had continued to be employed by the
Corporation or such Subsidiary (or such initial Related Entity), provided
that the Optionee has been in continuous employ with the Related Entity to
which such Optionee has moved from the date of acceptance of employment
therewith until the date of exercise. In the event of termination of
employment by the Corporation, any Subsidiary or any Related Entity without
"Cause" or in the event of "Constructive Termination" of the Optionee's
employment or the acceptance of employment with a Related Entity, if an
Incentive Stock Option is exercised after the expiration of the exercise
period that applies for purposes of Section 422 of the Code, such Stock
Option will thereafter be treated as a Nonqualified Stock Option.

(vi) Option Exercise After Termination to Resignation. If an
Optionee's employment with the Corporation, any Subsidiary, or any Related
Entity terminates for any reason not set forth in Sections 5(iv) or (v)
above, the Committee, in its sole discretion, may permit the Optionee to
exercise any Stock Option held by such Optionee to the extent such Option
was exercisable on the date of such termination (or to such greater or
lesser extent as the Committee in its sole discretion shall determine at or
after the time of grant) for a period of ninety (90) days from the date of
such termination (or such shorter period as the Committee in its sole
discretion shall specify at or after the time of grant).

(vii) Other Termination. Except as otherwise provided in this Section
5 of the Plan, or as determined by the Committee in its sole discretion, if
an Optionee's employment with the Corporation, any Subsidiary or any
Related Entity terminates, all Stock Options held by the Optionee will
terminate.

(viii) Annual Limit on Incentive Stock Options. To the extent
required for incentive stock option treatment under Section 422 of the
Code, the aggregate Fair Market Value (determined as of the date of
Incentive Stock Option is granted) of the shares of Stock with respect to
which Incentive Stock Options granted under the Plan and all other option
plans of the Corporation or any Subsidiary become exercisable for the first
time by an Optionee during any calendar year shall not exceed $100,000;
provided, however, that if the aggregate Fair Market Value (so determined)
of the shares of Stock covered by such options exceeds $100,000 during any
year in which they become exercisable, such options with a Fair Market
Value in excess of $100,000 will be Nonqualified Stock Options.

SECTION 6. STOCK APPRECIATION RIGHTS.

(a) Grant and Exercise. Stock Appreciation Rights may be granted either in
conjunction with all or part of any Stock Option granted under the Plan
("Related Stock Appreciation Rights") or alone ("Freestanding Stock Appreciation
Rights") and, in either case, in addition to other Awards granted under the
Plan. Participants shall enter into a Stock Appreciation Rights Agreement with
the Corporation if requested by the Committee, in such form as the Committee
shall determine.

(i) Time of Grant. Related Stock Appreciation Rights related to a
Nonqualified Stock Option may be granted either at or after the time of the
grant of such Nonqualified Stock Option. Related Stock Appreciation Rights
related to such an Incentive Stock Option may be granted only at the time
of the grant of such Incentive Stock Option. Freestanding Stock
Appreciation Rights may be granted at any time.

(ii) Exercisability. Related Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that the Stock
Options to which they relate shall be exercisable in accordance with the
provisions of Section 5(a)(ii) of the Plan and Freestanding Stock
Appreciation Rights shall be exercisable, subject to such terms and
conditions as shall be determined by the Committee in its sole discretion
at or after the time of grant, from time to time, to the extent that Stock
Options are exercisable in accordance with the provisions of Section
5(a)(ii) of the Plan; provided, however, that any Stock Appreciation Right
granted to a director or officer of the Corporation shall not be
exercisable during the
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<PAGE> 32

first six months from the date of grant of such Stock Appreciation Rights,
except that this additional limitation shall not apply in the event of
death or Disability of the director or officer prior to the expiration of
the six-month period. A Related Stock Appreciation Right granted in
connection with an Incentive Stock Option may be exercised only if and when
the Fair Market Value of the Stock subject to the Incentive Stock Option
exceeds the option price of such Stock Option.

(iii) Method of Exercise. Stock Appreciation Rights shall be
exercised by a Participant by giving written notice of exercise delivered
in person or by mail as required by the terms of any agreement evidencing
the Stock Appreciation Right at the Corporation's principal executive
office, specifying the number of shares of Stock in respect of which the
Stock Appreciation Right is being exercised. If requested by the Committee,
the Participant shall deliver to the Corporation the agreement evidencing
the Stock Appreciation Right being exercised and, in the case of a Related
Stock Appreciation Right, the Stock Option Agreement evidencing any related
Stock Option, for notation thereon of such exercise and return thereafter
of such agreements to the Participant.

(iv) Amount Payable. Upon the exercise of a Related Stock
Appreciation Right, an Optionee shall be entitled to receive an amount in
cash or shares of Stock equal in value to the excess of the Fair Market
Value of one share of Stock on the date of exercise over the option price
per share specified in the related Stock Option, multiplied by the number
of shares of Stock in respect of which the Related Stock Appreciation
Rights shall have been exercised, with the Committee having in its sole
discretion the right to determine the form of payment. Upon the exercise of
a Freestanding Stock Appreciation Right, a Participant shall be entitled to
receive an amount in cash or shares of Stock equal in value to the excess
of the Fair Market Value of one share of Stock on the date of exercise over
the price per share specified in the Freestanding Stock Appreciation Right,
which shall be not less than 100% of the Fair Market Value of the Stock on
the date of Grant, multiplied by the number of shares of Stock in respect
of which the Freestanding Stock Appreciation Rights shall have been
exercised, with the Committee having in its sole discretion the right to
determine the form of payment

(b) Terms and Conditions. Stock Appreciation Rights under the Plan shall
be subject to the following terms and conditions and shall contain such
additional terms and conditions not inconsistent with the terms of the Plan, as
the Committee shall deem desirable.

(i) Terms of Stock Appreciation Rights. The term of a Related Stock
Appreciation Right shall be the same as the term of the related Stock
Option. A Related Stock Appreciation Right or applicable portion thereof
shall terminate and no longer be exercisable upon the exercise,
termination, cancellation or surrender of the related Stock Option, except
that, unless otherwise provided by the Committee in its sole discretion at
or after the time of grant, a Related Stock Appreciation Right granted with
respect to less than the full number of shares of Stock covered by a
related Stock Option shall terminate and no longer be exercisable if and to
the extent that the number of shares of Stock covered by the exercise,
termination, cancellation or surrender of the related Stock Option exceeds
the number of shares of Stock not covered by the Related Stock Appreciation
Right.

The term of each Freestanding Stock Appreciation Right shall be fixed
by the Committee, but no Freestanding Stock Appreciation Right shall be
exercisable more than ten years after the date such right is granted.

(ii) Transferability of Stock Appreciation Rights. Stock Appreciation
Rights shall be transferable only when and to the extent that a Stock
Option would be transferable under Section 5(b)(iii) of the Plan.

(iii) Termination of Employment. In the event of the termination of
employment of an Optionee holding a Related Stock Appreciation Right, such
right shall be exercisable to the same extent that the related Stock Option
is exercisable after such termination. In the event of the termination of
employment of the holder of a Freestanding Stock Appreciation Right, such
right shall be exercisable to the same extent that a Stock Option with the
same or substantially similar terms and conditions as such

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<PAGE> 33

Freestanding Stock Appreciation Right would have been exercisable in the
event of the termination of employment of the holder of such Stock Option.

SECTION 7. RESTRICTED STOCK UNITS AND PERFORMANCE STOCK UNITS.

(a) Grant. Awards of Restricted Stock Units or Performance Stock Units may
be granted either alone or in addition to other Awards granted under the Plan.
Each Restricted Stock Unit or Performance Stock Unit represents the right to
receive, subject to the terms and provisions of the Plan and any agreements
evidencing such Awards, one share of Stock. If the Committee in its sole
discretion so determines at the time of grant, a Participant to whom a
Restricted Stock Unit Award or Performance Stock Unit Award has been granted may
be credited with an amount equivalent to all cash dividends ("Dividend
Equivalents") that would have been paid to the holder of such Restricted Stock
Unit Award or Performance Stock Unit Award if one share of Stock for every
Restricted Stock Unit or Performance Stock Unit awarded had been issued to the
holder on the date of grant of such Restricted Stock Unit Award or Performance
Stock Unit Award. The Committee shall determine the terms and conditions of each
Restricted Stock Unit Award and Performance Stock Unit, including without
limitation, the number of Restricted Stock Units or Performance Stock Units to
be covered by such Awards, the restricted period applicable to Restricted Stock
Unit Awards and the performance objectives applicable to Performance Stock Unit
Awards. The Committee in its sole discretion may prescribe terms and conditions
applicable to the vesting of such Restricted Stock Unit Awards or Performance
Stock Unit Awards in addition to those provided in the Plan. The Committee shall
establish such rules and guidelines governing the crediting of Dividend
Equivalents, including the timing, form of payment and payment contingencies of
Dividend Equivalents, as it may deem desirable. The Committee in its sole
discretion may at any time accelerate the time at which the restrictions on all
or any part of a Restricted Stock Unit Award lapse or deem the performance
objectives with respect to all or any part of a Performance Stock Unit Award to
have been attained. Restricted Stock Unit Awards and Performance Stock Unit
Awards shall not be transferable otherwise than by will or by the laws of
descent and distribution. Shares of Stock shall be deliverable upon the vesting
of Restricted Stock Unit Awards and Performance Stock Unit Awards for no
consideration other than services rendered or, in the Committee's sole
discretion, the minimum amount of consideration other than services or, in the
Committee's sole discretion, the minimum amount of consideration other than
services (such as the par value of Stock) required to be received by the
Corporation in order to assure compliance with applicable state law, which
amount shall not exceed 10% of the Fair Market Value of such shares of Stock on
the date of issuance. Each such Award shall be evidenced by a Restricted Stock
Unit agreement ("Restricted Stock Unit Award Agreement") or Performance Stock
Unit Award agreement ("Performance Stock Unit Award Agreement").

(b) Terms and Conditions. Unless otherwise determined by the Committee in
its sole discretion:

(i) a breach of any term or condition provided in the Plan, the
Restricted Stock Unit Award Agreement or the Performance Stock Unit Award
Agreement or established by the Committee with respect to such Restricted
Stock Unit Award or Performance Stock Unit Award will cause a cancellation
of the unvested portion of such Restricted Stock Unit Award or Performance
Stock Unit Award (including any Dividend Equivalents credited in respect
thereof) and the Participant shall not be entitled to receive any
consideration in respect of such cancellation; and

(ii) termination of such holder's employment with the Corporation, any
Subsidiary or any Related Entity prior to the lapsing of the applicable
restriction period or attainment of applicable performance objectives will
cause a cancellation of the unvested portion of such Restricted Stock Unit
Award or Performance Stock Unit Award (including any Dividend Equivalents
credited in respect thereof) and the Participant shall not be entitled to
receive any consideration in respect of such cancellation.

(c) Completion of Restriction Period and Attainment of Performance
Objectives. To the extent that restrictions with respect to any Restricted
Stock Unit Award lapse or performance objectives with respect to

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<PAGE> 34

any Performance Stock Unit Award are attained and provided that other applicable
terms and conditions have been satisfied:

(i) such of the Restricted Stock Units or Performance Stock Units as
to which restrictions have lapsed or performance objectives have been
attained shall become vested and the Committee shall cause to be issued and
delivered to the Participant a stock certificate representing a number of
shares of Stock equal to such number of Restricted Stock Units or
Performance Stock Units, and, subject to Section 11(a) hereof, free of all
restrictions; and

(ii) any Dividend Equivalents credited in respect of such Restricted
Stock Units or Performance Stock Units shall become vested to the extent
that such Restricted Stock Units or Performance Stock Units shall have
become vested and the Committee shall cause such Dividend Equivalents to be
delivered to the Participant.

Any such Restricted Stock Unit Award or Performance Stock Unit Award
(including any Dividend Equivalents credited in respect thereof) that shall not
have become vested at the end of the applicable restricted period or the period
given for the attainment of performance objectives shall expire, terminate and
be cancelled and the Participant shall not thereafter have any rights with
respect to the Restricted Stock Units or Performance Stock Units (or any
Dividend Equivalents credited in respect thereto) covered thereby.

SECTION 8. GRANT OF STOCK OPTIONS TO NON-AFFILIATED DIRECTORS.

Each person who is not an employee of the Corporation, any Subsidiary or
any Related Entity, who is elected as a director and who is not prior to such
election affiliated with the Corporation or otherwise has a similar relationship
to the Corporation (a "Non-affiliated Director"), may as of the date of each
such election and any subsequent reelection or such other dates as shall be
determined by the Committee in its sole discretion, be granted an Award
consisting of a Stock Option to purchase shares of Stock for an option price
equal to 100% of the Fair Market Value of the Stock on the date of such election
or reelection. All such Stock Options shall be designated as Nonqualified Stock
Options. A Non-affiliated Director must serve continuously as a Non-affiliated
Director of the Corporation for a period of twelve (12) consecutive months from
the date such Award is granted before such Non-affiliated Director can exercise
any part of such Award. Thereafter, on and after the first anniversary of the
date of granting the Award and before the second anniversary, the Non-
affiliated Director may exercise the Award with respect to not more than
one-third (1/3rd) of the number of shares of Stock covered thereby; on and after
the second anniversary and before the third anniversary, the Non-affiliated
Director may exercise the Award with respect to not more than two-thirds
(2/3rds) of the number of shares of Stock covered thereby; and on and after the
third anniversary and before the expiration of the stated term of the Award,
which shall be no more than ten years from the date of its granting, the Non-
affiliated Director may at any time or from time to time exercise the Award with
respect to all or any portion of the shares of Stock covered thereby. If a
Non-affiliated Director's service with the Corporation terminates by reason of
death or Disability or retirement from active service as a director of the
Corporation or if such Non-affiliated Director ceases being a Non-affiliated
Director, any Award held by such Non-affiliated Director may be exercised for a
period of three years from the date of such termination or until the expiration
of the Award, whichever is shorter, to the extent to which the individual would
on the date of exercise have been entitled to exercise the Award if such
individual had continued to serve as a Non-affiliated Director. All applicable
provisions of the Plan not inconsistent with this Section 8 shall apply to
Awards granted to Non-affiliated Directors; provided, however, the Committee may
not exercise discretion under any provisions of the Plan with respect to Awards
granted under this Section 8 to the extent that such discretion is inconsistent
with Rule 16b-3 under the Exchange Act.

SECTION 9. AMENDMENT AND TERMINATION.

The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of a
Participant under any Award theretofore granted without such Participant's
consent, or which, without the approval of the stockholders of the Corporation
(where such

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<PAGE> 35

approval is necessary to satisfy then applicable requirements of Rule 16b-3
under the Exchange Act, any federal tax law relating to Incentive Stock Options,
or applicable state law), would:

(a) except as provided in Section 3 of the Plan, increase the total
number of shares of Stock which may be issued under the Plan;

(b) except as provided in Section 3 of the Plan, decrease the option
price of any Stock Option to less than 100% of the Fair Market Value on the
date of the grant of the Option;

(d) extend (i) the period during which Stock Options may be granted or
(ii) the maximum period of any Award under Sections 5(b)(ii) or 6(b)(i) of
the Plan.

Except as restricted herein with respect to Incentive Stock Options, the
Committee may amend or alter the terms and conditions of any Award theretofore
granted, and of any agreement evidencing such Award, prospectively or
retroactively, but no such amendment or alteration shall impair the rights of
any Optionee under such Award or agreement without such Optionee's consent.

SECTION 10. UNFUNDED STATUS OF PLAN.

The Plan is intended to constitute an "unfunded" plan. With respect to any
payments not yet made and due to a Participant by the Corporation, nothing
contained herein shall give any such Participant any rights that are greater
than those of a general unsecured creditor of the Corporation.

SECTION 11. GENERAL PROVISIONS.

(a) The Committee may require each Optionee purchasing shares of Stock
pursuant to a Stock Option to represent to and agree with the Corporation in
writing that such Optionee is acquiring the shares of Stock without a view to
distribution thereof.

All certificates for shares of Stock delivered under the Plan and, to the
extent applicable, all evidences of ownership with respect to Dividend
Equivalents delivered under the Plan, shall be subject to such stock-transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Stock is then listed or quotation
system on which the Stock is admitted for trading and any applicable Federal or
state securities law, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such restrictions.

(b) Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval
if such approval is required, and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of the Plan shall
not confer upon any employee of the Corporation, any Subsidiary or any Related
Entity any right to continued employment with the Corporation, any Subsidiary or
any Related Entity as the case may be, nor shall it interfere in any way with
the right of the Corporation, any Subsidiary or any Related Entity to terminate
the employment of any of its employees at any time.

(c) Each Participant shall be deemed to have been granted an Award on the
date the Committee took action to grant such Award under the Plan or such later
date as the Committee in its sole discretion shall determine at the time such
grant is authorized.

(d) Unless the Committee otherwise determines, each Participant shall, no
later than the date as of which the value of an Award first becomes includable
in the gross income of the Participant for federal income tax purposes, pay to
the Corporation, or make arrangements satisfactory to the Committee regarding
payment of, any federal, state or local taxes of any kind required by law to be
withheld with respect to the Award. The obligations of the Corporation under the
Plan shall be conditional on such payment or arrangements and the Corporation
(and, where applicable, its Subsidiaries and its Related Entities) shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the

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<PAGE> 36

Participant. A Participant (other than a Non-affiliated Director) may elect to
have such tax withholding obligation satisfied, in whole or in part, by (i)
authorizing the Corporation to withhold from shares of Stock to be issued upon
the exercise of a Stock Option or upon the vesting of any Restricted Stock Unit
Award or the Performance Stock Unit Award a number of shares of Stock with an
aggregate Fair Market Value that would satisfy the withholding amount due, or
(ii) transferring to the Corporation shares of Stock owned by the Participant
with an aggregate Fair Market Value that would satisfy the withholding amount
due. With respect to any Participant who is a director or officer, the following
additional restrictions shall apply:

(i) the election to satisfy the tax withholding obligations relating
to the exercise of a Stock Option or to the vesting of a Restricted Stock
Unit Award or Performance Stock Unit Award in the manner permitted by this
subsection (d) shall be made either (x) during the "window period" as
described within the Corporation Insider Trading Policy, or (y) at lease
six months prior to the date on which the amount of tax to be withheld upon
the exercise of such Stock Option or the vesting of such Restricted Stock
Unit Award or Performance Stock Unit Award is determinable;

(ii) such election shall be irrevocable;

(iii) such election shall be subject to the consent or disapproval of
the Committee; and

(iv) such election shall not be made within six months of the date of
the grant of such Award.

(e) No member of the Board or the Committee, nor any officer or employee of
the Corporation acting on behalf of the Board or the Committee, shall be
personally liable for any action, failure to act, determination or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Corporation acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Corporation in respect of any such
action, failure to act, determination or interpretation.

(f) The Plan is intended to satisfy the conditions of Rule 16b-3 under the
Exchange Act, and all interpretations of the Plan shall, to the extent permitted
by law, regulations and rulings, be made in a manner consistent with and so as
to satisfy the conditions of Rule 16b-3 under the Exchange Act. The phrase
"director or officer" as used in the Plan means any director or officer who is
subject to the provisions of Section 16(b) of the Exchange Act. Any provisions
of the Plan or the application of any provision of the Plan inconsistent with
Rule 16b-3 under the Exchange Act shall be inoperative and shall not affect the
validity of the Plan.

(g) In interpreting and applying the provisions of the Plan, any Stock
Option granted as an Incentive Stock Option pursuant to the Plan shall, to the
extent permitted by law, regulations and rulings be construed as, and any
ambiguity shall be resolved in favor of preserving its status as, an "incentive
stock option" within the meaning of Section 422 of the Code. Once an Incentive
Stock Option has been granted, no action by the Committee that would cause such
Stock Option to lose its status under the Code as an "incentive stock option"
shall be effective as to such Incentive Stock Option unless taken at the request
of or with the consent of the Participant. Notwithstanding any provision to the
contrary in the Plan or in any Incentive Stock Option granted pursuant to the
Plan, if any change in law or any regulation or ruling of the Internal Revenue
Service shall have the effect of disqualifying any Stock Option granted under
the Plan which is intended to be an "incentive stock option" within the meaning
of Section 422 of the Code, the Stock Option granted shall nevertheless continue
to be outstanding as and shall be deemed to be a Nonqualified Stock Option under
the Plan.

SECTION 12. EFFECTIVE DATE OF PLAN.

The Plan shall be effective May 27, 1998, the date it is approved by the
affirmative vote of the holders of a majority of the shares of Stock of the
Corporation present in person or by proxy at the meeting of stockholders on that
date.

SECTION 13. TERM OF PLAN.

No Award shall be granted under the Plan on or after the tenth anniversary
of the effective date of the Plan; provided, however, that Awards granted prior
to such tenth anniversary may extend beyond that date.

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<PAGE> 37

PROXY UNIVERSAL ELECTRONICS INC. PROXY

THIS PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS
ON MAY 27, 1998, 9:00 A.M., LOS ANGELES, CALIFORNIA TIME

The undersigned appoints Camille Jayne and Paul D. Arling as proxy holders.
Each shall have the power to appoint a substitute and is authorized to represent
and vote, as designated hereon, all shares of Universal Electronics Inc. held of
record by the undersigned as of March 31, 1998 at the Annual Meeting of
Stockholders to be held on May 27, 1998, 9:00 a.m., Los Angeles, California
time, or any adjournments or postponements thereof. The Board of Directors
recommends a vote FOR the election of all persons nominated as Directors by the
Board of Directors and FOR proposals 2 and 3.

(continued on reverse side)

------------------------------------------------------------------------------

<TABLE>
<S> <C> <C> <C>
1. Election of Directors [ ]FOR all nominees listed below [ ] WITHHOLD
(except as marked to the contrary) AUTHORITY to vote for all nominees
listed below

Class I Nominees: Paul D. Arling Class II Nominees: Peter L. Gartman
David M. Gabrielsen Bruce A. Henderson
Camille Jayne F. Rush McKnight
William C. Mulligan
</TABLE>

(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)

------------------------------------------------------------------------------

2. Proposal to ratify and approve Universal Electronics Inc. 1998 Stock
Incentive Plan.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. Proposal to ratify appointment of Price Waterhouse LLP as independent
auditors.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL PERSONS NOMINATED AS DIRECTORS BY THE BOARD OF
DIRECTORS AND FOR PROPOSALS 2 AND 3 AND, AS TO ANY OTHER MATTERS PROPERLY
BROUGHT BEFORE THE MEETING, AS THE PROXIES MAY DIRECT.

Please sign name exactly as name appears on the other side. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.

<TABLE>
<S> <C>
- ------------------------------------------------------ ------------------------------------------------------
Signature Date Signature Date
</TABLE>