As filed with the Securities and Exchange Commission on November 28, 2001
Registration No.333-72846
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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AMENDMENT NO. 1 TO FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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UNIVERSAL DISPLAY CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania 3575 23-2372688
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification No.)
375 Phillips Boulevard
Ewing, New Jersey 08618
(609) 671-0980
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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SHERWIN I. SELIGSOHN
Chief Executive Officer and Chairman of the Board
Universal Display Corporation
375 Phillips Boulevard
Ewing, New Jersey 08618
(609) 671-0980
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies of all communications to:
STEPHEN M. GOODMAN, ESQ.
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
(215) 963-5000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROSPECTUS
2,737,620 Shares
UNIVERSAL DISPLAY CORPORATION
Common Stock
The shareholders of Universal Display Corporation identified in this
prospectus under "Selling Shareholders," or their pledgees or assignees, are
offering up to 2,737,620 shares of our common stock for resale to the public.
The selling shareholders will be selling shares of common stock (a) that they
can acquire upon the conversion of preferred stock that they own or may acquire
from us in the future and (b) that they can acquire by exercising warrants that
they own.
We will not receive any proceeds from the resale of shares of our
common stock by the selling shareholders. We are paying the expenses of this
offering.
The primary market for our common stock is the Nasdaq National Market
System, where it trades under the symbol "PANL." Our common stock is also traded
on the Philadelphia Stock Exchange under the symbol "PNL." On November 26, 2001,
the last reported sale price of our common stock on the Nasdaq National Market
was $7.99 per share.
An investment in our common stock involves significant risks. You
should carefully consider the risk factors described on pages 5 to 14 before
investing in our common stock.
These securities have not been approved by the Securities and Exchange
Commission or any state securities commission, nor have they determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may change. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
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The date of this Prospectus is November 28, 2001
TABLE OF CONTENTS
Page
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Cautionary Statement Concerning Forward-Looking Statements................ 1
Universal Display Corporation............................................. 2
Risk Factors.............................................................. 5
The Offering ............................................................. 14
Use of Proceeds........................................................... 15
Selling Shareholders...................................................... 15
Plan of Distribution...................................................... 16
About this Prospectus..................................................... 18
Where You Can Find More Information....................................... 18
Legal Opinion............................................................. 19
Experts................................................................... 19
i
CAUTIONARY STATEMENT
CONCERNING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve a
number of risks and uncertainties. For such statements, we claim the protection
of the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. A number of factors could cause our
actual results, performance or achievements or those of the display technology
industry to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. These
factors include, but are not limited to:
o competition in the display technology industry in general and in
our specific target markets;
o changes in prevailing interest rates and the availability of and
terms of financing to fund the growth of our business;
o inflation;
o changes in costs of goods and services;
o economic conditions in general and in our specific target markets;
o changes in consumer preferences and tastes;
o demographic changes;
o changes in, or failure to comply with, federal, state, local or
foreign government regulation;
o liability and other claims asserted against us;
o changes in our commercialization strategy;
o the ability to attract and retain qualified personnel;
o changes in our capital expenditure plans; and
o other factors referred to in this prospectus
In addition, the forward-looking statements included in this prospectus
are not meant to predict future events or circumstances and may not be realized.
Forward-looking statements can be identified by, among other things, the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should," "seek," "pro forma," "anticipates," "intends," or "potential" or the
negative of, or any other variations on, those terms or comparable terminology,
or by discussion of strategy or intentions. Given these uncertainties,
prospective investors are cautioned not to place undue reliance on these
forward-looking statements. We disclaim any obligation to update these factors
or to announce the results of any revisions to any of the forward-looking
statements contained in this prospectus publicly to reflect future events or
developments.
1
UNIVERSAL DISPLAY CORPORATION
This is a summary of information appearing elsewhere in this
prospectus. This summary does not contain all of the information you should
consider before investing in our common stock. This summary is qualified in its
entirety by, and should be read in conjunction with, the more detailed
information and financial statements, including the notes to the financial
statements, appearing elsewhere in this prospectus or in our annual and
quarterly reports and other filings with the Securities and Exchange Commission.
References in this prospectus to "we," "us," "Company" and "our" refer to
Universal Display Corporation, together with its wholly-owned subsidiary, UDC,
Inc.
Our Company
Universal Display Corporation is engaged in the research, development
and commercialization of organic light emitting diode, or OLED, technology for
use in flat panel displays, lasers and light generating devices. We expect the
initial market for our technology to be in the electronic flat panel display
industry. This industry includes such products as:
o cellular phone displays;
o portable personal digital assistants and Internet access-type
devices;
o laptop computers; and
o television and computer monitors.
Stanford Resources, Inc. estimated the size of the electronic display
market to be approximately $41 billion in 2000. The flat panel part of this
market was approximately $17 billion in 2000.
We have the exclusive, perpetual, worldwide license to commercialize
all OLED technology, intellectual property and know-how developed by Princeton
University and the University of Southern California, subject to the terms of
our Sponsored Research Agreement and License Agreement with those universities.
To date, 51 patents have been issued in the United States. Approximately 71
patent applications (with corresponding foreign protection) have been filed, and
additional patents are being filed monthly. We have also obtained a license,
with rights to sublicense, to 70 US patents, approximately 4 US patent
applications, and additional foreign patents related to OLED technology owned by
Motorola, Inc.
Our OLED Technology
Organic light emitting diodes are made of material containing a
carbon-based substance that has the capability to emit light when electric
current is passed through it. We, in collaboration with our research and
development partners, are working towards commercializing innovative OLED
technology, including the following six proprietary OLED technology platforms:
o TOLED(TM) Technology: Our transparent OLED can be used to create
transparent displays for information displays on windshields,
cockpit displays on aircraft and head mounted displays.
Transparent organic light-emitting devices, or TOLEDs, can also be
used in numerous portable electronic applications because of their
bright colors, high contrast, low power requirements and top
emission characteristics.
o SOLED(TM) Technology: Unlike traditional side-by-side display
architecture, which places the red, green and blue picture
elements, or pixels, horizontally next to each other, our stacked
OLED stacks the red, green and blue pixels vertically on top of
each other. Thus, to display green in the conventional
architecture, you turn off the red and blue pixels, leaving spaces
between each of the illuminated green pixels. With a stacked
organic light emitting device, or SOLED, to display green, you
turn off the red and blue sections of the stacked pixel component.
The stacked architecture of the SOLED may increase the resolution
of the display by a factor of three.
2
o FOLED(TM) Technology: Unlike conventional displays, our flexible
OLEDs can be built on flexible materials such as plastic. We
believe that such displays will be lighter in weight and will have
lower power requirements. The flexible organic light emitting
device, or FOLED, also may provide the opportunity to apply low
cost roll to roll (web processing) technologies to display
fabrication, which can reduce the cost, and therefore expand the
market, of electronic flat panel displays.
o Organic Laser Technology: We and our research partners are
attempting to develop a fourth technology platform based upon the
ability to fabricate an organic laser utilizing OLED technology.
In the September 25, 1997 issue of the scientific journal Nature,
our research partners announced what they believed to be the first
evidence of lasing from vacuum deposited thin films of organic
molecules. We believe this is a significant first step towards the
realization of electrically pumped, solid-state lasers based on
organic thin films.
o High Efficiency PHOLED(TM) Materials: A fifth technology platform
respects the use of molecules that emit light through the process
of phosphorescence. This class of molecules has the potential for
higher efficiency, lower power and longer lifetimes than
conventional OLED technology which involves the emission of light
through the process of fluorescence. We and our research partners
first announced this discovery in the September 10, 1999 issue of
Nature.
o Organic Vapor Phase Deposition: A sixth technology platform
involves the use of a carrier gas stream in a hot walled reactor
at low vacuum to precisely deposit the thin layers of organic
materials used in OLED displays. Conventional OLED fabrication
equipment evaporates the organic molecules at high vacuum. We have
entered into a Development and License Agreement with Aixtron AG,
a German company that manufactures precision semiconductor
production equipment for LEDs, to further develop, commercialize
and produce manufacturing equipment for OLEDs based on this
technology.
Our Research Partners
Princeton and USC have been performing research on OLED technology for
many years, and have continued that research for us since 1994. The sponsored
research agreement between us and our research partners, which was originally
executed in 1994, was extended in 1997 for five additional years and is subject
to further extension by mutual agreement.
Key members of our research team include Dr. Stephen Forrest at
Princeton and Dr. Mark R. Thomson at USC. There are approximately 20 researchers
at Princeton and USC who are engaged in OLED research. We also fund research in
OLEDs at the Massachusetts Institute of Technology (MIT) and the Chitose
Institute of Technology in Japan.
Our Commercialization Strategy
Our approach to developing technology and penetrating the electronic
display market has four major components:
o We are continuing to fund our research partners under the current
sponsored research agreement and to obtain the worldwide exclusive
rights to all intellectual property invented in the project.
3
o We are working on the development of reliable commercial
prototypes and the optimization of the fabrication processes. In
1999, we moved into an 11,000 square foot space near Princeton,
New Jersey to serve as a pilot line facility and technology
transfer center. In 2001, we leased an additional 10,000 square
feet in our building, which we plan to start occupying in the
fourth quarter of this year.
o We have entered into agreements with an equipment manufacturer,
Aixtron AG; and an organic materials developer and supplier, PPG
Industries, Inc., to further develop and commercialize our
technology, and potentially obtain royalties from the sales of
certain equipment and revenues from the sales of certain materials
to OLED manufacturers.
o We intend to license our proprietary OLED technology and enter
into joint ventures and other strategic alliances with experienced
manufacturers and users of display products for the volume
manufacture, distribution and sale of products based upon this
technology. We do not presently intend to become a volume
manufacturer.
Our Development Partners
We have announced agreements with the following six companies:
o Effective July 23, 2001, we entered into a Joint Development Agreement with
Samsung SDI Co. Ltd. to develop low-power, full-color active matrix OLED
displays. The initial focus of the agreement will be on the development of
portable OLED displays for use in mobile telephones, personal digital
assistants, electronic games and other consumer and industry electronics.
Pursuant to the development program, we will combine our proprietary OLED
materials and technology with Samsung's active matrix technology.
o Effective April 19, 2001, we entered into a Development and License
Agreement with Luxell Technologies, Inc. Under the agreement, the parties
will cooperate in the development of one or more high-contrast,
high-efficiency OLED displays integrating our TOLED technology and Luxell's
Black LayerTM technology. Pursuant to the terms of the agreement, Luxell
has obtained a royalty-bearing license to our TOLED technology and high
efficiency materials for use in Black Layer TOLED displays that may be
manufactured, marketed or sold. We will be the licensor of the combined
Black Layer TOLED technology, and the parties will share in the revenues
from such licensing activities.
o Effective February 1, 2001, we entered into a Joint Development Agreement
with Sony Corporation to develop active matrix OLED display devices for use
in large area monitor applications. By combining our proprietary
electrophosphorescent materials with Sony's proprietary low temperature
poly silicon active matrix OLED technology, the parties will seek to
develop high power efficiency OLED displays.
o Effective October 1, 2000, we entered into a Development and License
Agreement with PPG Industries, Inc. (PPG) to leverage our OLED flat panel
display technology with PPG's expertise in organic materials development
and manufacturing. A team of PPG scientists and engineers will assist us in
developing and commercializing our proprietary OLED system. Present
staffing levels will provide the full time services of 7 PPG employees,
plus managerial services. Based upon current staffing levels, we anticipate
issuing to PPG approximately 114,000 shares of common stock annually for
the period from January 1, 2001 through December 31, 2005. In addition, we
anticipate issuing to PPG annually warrants to purchase up to an additional
114,000 shares of our common stock over the period from January 1, 2001
through December 31, 2005. The amount of equity to be obtained by PPG under
the agreement is subject to adjustment under certain circumstances. PPG's
services have an estimated value of approximately $11 million. PPG also has
the right to request that we grant royalty bearing licenses to PPG for use
of our OLED technology in certain applications.
We also entered into a Supply Agreement with PPG whereby PPG will be the
exclusive supplier of our proprietary materials through December 31, 2007.
PPG will sell the materials to us, and we will resell them to OLED
manufacturers.
4
o Effective September 29, 2000, we entered into a License Agreement with
Motorola, Inc., whereby we obtained the rights, with the right to
sublicense, to 70 US patents, 4 pending US patents, and certain foreign
patents of Motorola, Inc., related to OLEDs. Our agreement with Motorola
also includes the opportunity to meet with their product development group,
although there are no assurances that Motorola will purchase any products
from the Company or its licensees, or use any of the Company's technology
in their products. In connection with the rights granted to the Company
under the agreement, we issued to Motorola 200,000 shares of common stock,
300,000 shares of Series B Convertible Preferred Stock (each share
convertible into one share of common stock, subject to adjustment under
certain circumstances, and vesting 75,000 shares per year), and Warrants to
purchase an additional 150,000 shares.
o Effective July 19, 2000, we entered into a Development and License
Agreement with Aixtron AG of Germany to further develop and commercialize
manufacturing equipment for OLEDs based on our proprietary technology
called Organic Vapor Phase Deposition (OVPD). Aixtron AG is a world leader
in the production of manufacturing equipment for LEDs using MOCVD
(Metal-organic chemical vapor deposition) technology. Under the agreement,
the Company and Aixtron will engage in a joint development program to
commercialize OVPD equipment. Aixtron has the exclusive license to produce
equipment based on this technology, and we will receive a royalty from the
sale of the equipment.
Executive Offices
Our executive offices are located at 375 Phillips Boulevard, Ewing, New
Jersey 08618. Our phone number is (609) 671-0980. Our web site can be found at
www.universaldisplay.com.
RISK FACTORS
An investment in our common stock involves a high degree of risk. In
addition to the other information contained in this prospectus, you should
carefully consider the following risk factors before making an investment
decision concerning our common stock. You should not purchase our common stock
if you cannot afford the loss of your entire investment.
We do not expect to be profitable in the foreseeable future, and may never be
profitable.
Since inception, we have not generated any product revenues, and have
incurred significant losses, resulting in an accumulated deficit of
approximately $39.4 million, as of September 30, 2001. We expect to incur losses
for the foreseeable future and until such time, if ever, as we are able to
achieve sufficient levels of revenue from the commercial exploitation of the
OLED technology to support our operations. You should note, however, that:
o OLED technology may never become commercially viable;
o markets for flat panel displays utilizing the OLED technology may
be limited; and
o we may never generate sufficient revenues from the commercial
exploitation of the OLED technology to become profitable.
Additionally, even if we find commercially viable applications for our OLED
technology, we may never recover our research and development costs.
If we do not receive additional financing in the future, we will not be able
continue the research, development and commercialization of our OLED technology.
5
Our capital requirements have been and will continue to be significant.
The completion of the research, development and commercialization of the OLED
technology for potential applications will require significant additional effort
and resources. Our cash on hand is not sufficient to meet all of our future
obligations. When we need additional funds, such funds may not be available on
commercially reasonable terms or at all. If we cannot obtain more money when we
need it, our business might fail. Additionally, if we attempt to raise money in
an offering of our common stock, the issuance of additional stock will dilute
our then existing shareholders.
If our OLED technology is not feasible for product applications, we may never
generate significant revenues.
At this time, we are unable to determine the feasibility of our OLED
technology for the commercial viability of any potential applications. We must
make substantial advances in our research and development efforts in a number of
areas including:
o reliability;
o the development of more fully saturated colors for full color
displays;
o integration with drive electronics; and
o issues related to scalability and cost effective fabrication
technologies for product applications
before products utilizing the OLED technology are manufactured and sold. The
development of an electrically pumped laser is also necessary before products
based on the organic laser research are manufactured and sold. Our efforts may
never demonstrate the feasibility of our OLED technology, particularly for use
in full color, large area, high resolution, high information content flat panel
display applications.
Our research and development efforts remain subject to all of the risks
associated with the development of new products based on emerging and innovative
technologies, including, without limitation, unanticipated technical or other
problems and the possible insufficiency of the funds allocated to complete its
development. Technical problems may result in delays and cause us to incur
additional expenses that would increase our losses. If we cannot complete our
research and development of the OLED technology successfully, or if we
experience delays in completing our research and development of the OLED
technology for use in potential applications, particularly after the occurrence
of significant expenditures, our business may fail.
Even if our technology is technically feasible, it may not be accepted by the
market.
The potential size, timing and viability of market opportunities
targeted by us are uncertain at this time. Market acceptance of the OLED
technology will depend, in part, upon such technology providing benefits
comparable to CRT and LCD technology (the current standard for display quality)
at an appropriate cost, and its adoption by consumers, neither of which have
been achieved. Many potential licensees of the OLED technology manufacture flat
panel displays utilizing competing technologies and may, therefore, be reluctant
to redesign their products or manufacturing processes to incorporate the OLED
technology. Potential licensees may never utilize the commercially viable OLED
technology.
If our research partners fail to make advances in their research, or if they
terminate their relationship with us, we might not succeed in commercializing
our OLED technology.
Research and development of commercially viable applications for OLED
technology is dependent on the success of the research efforts of our research
partners conducted under our sponsored research agreement with them. We cannot
assure you that our research partners will make additional advances in the
research and development of the OLED technology.
Although we fund the OLED technology research, the scope of and
technical aspects of the research as well as the resources and efforts directed
to such research is subject to the control of our research partners. Our
sponsored research agreement provides that if Dr. Forrest is unavailable to
continue to serve as a principal investigator, either because he is no longer
associated with Princeton or otherwise, and a successor acceptable to both us
and Princeton is not available, Princeton has the right to terminate the
sponsored research agreement. The 1997 sponsored research agreement, which
expires in July 2002, may not be extended. The termination or expiration of the
sponsored research agreement or the 1997 license agreement would materially and
adversely affect our ability to research, develop and commercialize our OLED
technology.
6
If we cannot form strategic licensing relationships with companies that
manufacture and use products that incorporate our OLED technology, our
commercialization strategy will fail.
Our strategic plan depends upon the development of strategic licensing
relationships with high volume companies that will manufacture and use products
incorporating its OLED technology. We have not yet entered into any such
strategic relationships, although we have entered into
o a Joint Development Agreement with Samsung SDI Co. Ltd.;
o a Joint Development Agreement with Sony Corporation;
o a Development and License Agreement with PPG Industries, Inc.;
o a Development and License Agreement with Luxell Technologies Inc.;
and
o a Development and Licensing Agreement with Aixtron AG to develop
and commercialize a new type of production equipment for OLEDs
based upon our proprietary technology.
Our agreement with Motorola also includes the opportunity to meet with their
product development group, although there are no assurances that Motorola will
purchase any products from us or our licensees. Our agreements with PPG provide
us with the capability to sell chemicals to our licensees. In December 1999, we
moved into a new facility which includes a prototype pilot line and technology
transfer facility to accelerate the development and commercialization of our
technology, We cannot assure you that such a facility will allow us to enter
into such strategic relationships.
Our prospects will be significantly affected by our ability to
sublicense the OLED technology and successfully develop strategic alliances with
third parties for incorporation of the OLED technology into flat panel displays
manufactured by others. Strategic alliances may require financial or other
commitments by us. We might not be able, for financial or other reasons, to
enter into strategic alliances on commercially acceptable terms, or at all.
Failure to do so would have a material adverse effect on us.
If we cannot protect our intellectual property rights, or if our technology
infringes the rights of others, our business will suffer.
Our rights to the OLED technology are dependent on patents and other
intellectual property rights relating to the OLED technology that are licensed
to us by Princeton and USC. Fifty-one U.S. patents have already been issued,
approximately 71 additional patent applications are pending in the United States
and many corresponding international patent applications have been filed to
cover major industrial countries. However, there can be no assurance that
additional patents applied for will be obtained or that any such patents will
afford us commercially significant protection of our OLED technology, or will be
found valid if challenged. In connection with our license agreement with
Motorola, Inc., we have obtained a license to 70 additional OLED-related U.S.
patents, 4 patent applications, related foreign patents and applications, and
the right to sublicense this technology.
The patent laws of other countries may differ from those of the United
States as to the patentability of the OLED technology and the degree of
protection afforded. Older companies and institutions may independently develop
equivalent or superior technologies and may obtain patent or similar rights with
respect thereto. There are a number of other companies and organizations that
have been issued patents and are filing additional patent applications relating
to OLED technology, including Eastman Kodak Corporation, which holds a number of
patents related to OLED technology. There can be no assurance that the exercise
of some aspects of our licensing rights respecting its OLED technology being
developed by Princeton and USC or those licensed from Motorola, Inc. will not
infringe on the patents of others, in which event we or our research partners
may be required to obtain a license, pay damages, modify their products or
method of operation or be prohibited from making, using, selling or offering to
sell some or all products incorporating our OLED technology. We also might not
have the financial or other resources necessary to enforce or defend a patent
infringement action, and the licensors of our licensed technology might not
enforce an action in a timely manner. If products incorporating our OLED
technology are found to infringe upon the patent or other intellectual property
rights of others, it could have a material adverse effect on us.
7
The federal government has rights to our OLED technology that might prevent us
from realizing its benefits.
The United States government, through the Defense Advanced Research
Projects Agency, has provided funding to Princeton and us for research
activities related to certain aspects of its OLED technology. The federal
government could obtain rights to this technology, which would affect our rights
as follows:
o If all or certain aspects of the OLED technology develop from our
funding to Princeton, and those aspects are deemed to fall within
the planned and committed activities of DARPA's funding, the
federal government, pursuant to federal law, could have certain
rights relating to the OLED technology.
o If the federal government determines that we have not taken
effective steps to achieve practical application of such
technology in a field of use in a reasonable time, it may require
us to grant licenses to other parties in any such field of use.
o The federal government could restrict our ability to market the
OLED technology to the federal government for military and other
applications.
o The federal government's continued funding of ours and Princeton's
research activities may also give it rights to aspects of the OLED
technology developed in the future.
If so, we might not realize the benefits of that technology.
Because many of our competitors have better name-recognition, and greater
financial, technical, marketing and research capabilities than us, we may never
be able to compete successfully in the flat panel display industry.
The flat panel display industry is characterized by intense
competition. The market is currently, and will likely continue to be, dominated
by products utilizing LCD technology. Numerous companies are making substantial
investments in, and conducting research to improve characteristics of, LCD
technology. Several other flat panel display technologies have been, or are
being, developed, including field emission, inorganic electroluminescence,
polymeric light emitting diode, gas plasma and vacuum fluorescent displays. In
addition, other companies are engaged in research and development activities
with respect to technology using OLEDs. Advances in LCD technology or any of
these developing technologies may overcome their limitations or become the
leading technology for flat panel displays, either of which could limit the
potential market for flat panel displays utilizing the Company's OLED
technology.
Substantially all of these competitors have better name recognition and
greater financial, technical, marketing, personnel and research capabilities
than us. Our competitors may succeed in developing technologies and applications
that are more cost-effective or have fewer display limitations than our OLED
technology. We may never be able to compete successfully or develop commercial
applications for our OLED technology.
If we cannot keep our key employees or hire other talented persons as we grow,
our business might not succeed.
Our performance is substantially dependent on the continued services of
senior management and other key personnel, and its ability to offer competitive
salaries and benefits to its employees. We do not have employment agreements
with any of our management or key personnel. Additionally, competition for
highly skilled technical, managerial and other personnel is intense. We might
not be able to attract, hire, train, retain and motivate the highly skilled
managers and employees we need to be successful. If we fail to attract and
retain the necessary technical and managerial personnel, we will suffer and
might fail.
8
We can issue shares of preferred stock that can adversely affect your rights as
a shareholder.
Our articles of incorporation authorize us to issue up to 5,000,000
shares of preferred stock with designations, rights and preferences determined
from time-to-time by our board of directors. Accordingly, our board is
empowered, without shareholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights superior to those of our common
shareholders. For example, an issuance of shares of preferred stock could:
o adversely affect the voting power of the common shareholders;
o make it more difficult for a third party to gain control of us;
o discourage bids for our common stock at a premium; or
o otherwise adversely affect the market price of the common stock.
Our board has designated and issued: (a) 200,000 shares of Series A Preferred
Stock, all of which are held by an entity controlled by Sherwin Seligsohn; (b)
300,000 shares of Series B Convertible Preferred Stock; (c) 5,000 shares of
Series C Convertible Preferred Stock, all of which have been exchanged for
shares of Series C-1 Convertible Preferred Stock; and (d) 5,000 shares of Series
C-1 Convertible Preferred Stock. All of the shares of Series A Stock, Series B
Stock and Series C-1 Stock are convertible into shares of our common stock in
accordance with our articles of incorporation. In addition, our board has
designated 5,000 shares of Series D Convertible Preferred Stock that we expect
to issue following the effective date of this Registration Statement. The Series
D Stock will be convertible into shares of our common stock in accordance with
our articles of incorporation. The Series C-1 Stock and Series D Stock will
automatically convert into common stock on the 5th trading day after the
effective date of this Registration Statement, subject to the satisfaction of
certain conditions. See the risk factor under the heading "This offering, as
well as the issuance of other publicly traded shares, could drive our stock
price down" for more information regarding the Series C-1 Stock and Series D
Stock. We may issue additional shares of our authorized preferred stock at any
time in the future.
The market price of our common stock might be highly volatile.
The market price of our common stock might be highly volatile, as has
been the case with the securities of other emerging growth companies. Factors
such as:
o our operating results;
o announcements by us or our competitors of technological
developments, new product applications or license arrangements;
and
o other factors affecting the flat panel display industry generally
may have a significant impact on the market price of our common
stock.
In recent years, the stock market has experienced a high level of price and
volume volatility and market prices for the stock of many companies,
particularly small and emerging-growth companies.
9
If our shares are delisted, you might not be able to sell your investment in our
company.
Our common stock is listed on the Nasdaq National Market System. To
continue to be listed on that market, however, we must maintain, with certain
exceptions, maintenance criteria, including:
o specified levels for total assets;
o market value of the public float;
o total capital and surplus; and
o a minimum bid price per share.
The failure to meet such maintenance criteria in the future may result in the
delisting of our common stock from the Nasdaq National Market System.
Thereafter, trading, if any, in our common stock would be conducted in the
non-Nasdaq over-the-counter market. As a result of such delisting, you could
find it more difficult to dispose of, or to obtain accurate quotations as to the
market value of, our common stock.
If our shares are delisted, trading in our common stock may become subject to
additional regulation that could further limit the liquidity of your investment.
If our common stock were to become delisted from trading on Nasdaq and
the trading price of the common stock were to remain below $5.00 per share,
trading in the common stock would also be subject to the requirements of
additional rules under the Exchange Act. These rules require additional
disclosure by broker-dealers in connection with any trades involving any
non-Nasdaq equity security that has a market price of less than $5.00 per share,
subject to certain exceptions. Such rules require the delivery, prior to any
so-called penny stock transaction, of a disclosure schedule explaining the penny
stock market and the risks associated with it, and impose various sales practice
requirements on broker-dealers who sell penny stocks to persons other than
established customers and accredited investors. For these types of transactions,
the broker-dealer must make a special suitability determination for the
purchaser and have received the purchaser's written consent to the transaction
prior to sale. The broker-dealer also must disclose the commissions payable to
the broker-dealer, current bid and offer quotations for the penny stock and, if
the broker-dealer is the sole market-maker, the broker-dealer must disclose this
fact and the broker-dealer's presumed control over the market. Such information
must be provided to the customer orally or in writing prior to effecting the
transaction and in writing before or with the customer confirmation. Monthly
statements must be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny stocks. The
additional burdens imposed upon broker-dealers by such requirements may
discourage broker-dealers from effecting transactions in our common stock, which
could severely limit the market liquidity of your investment.
This offering, as well as the issuance of other publicly traded shares, could
drive our stock price down.
On August 22, 2001, we completed a private placement transaction in
which we sold shares of our convertible preferred stock, three-year convertible
promissory notes and warrants to purchase shares of our common stock to two of
the selling shareholders, Pine Ridge Financial Inc. and Strong River
Investments, Inc. In addition, Pine Ridge and Strong River agreed to purchase
additional shares of convertible preferred stock from us. As part of that
transaction, we are currently registering for resale the shares issuable upon
the conversion of the preferred stock (including the preferred stock that we
have not yet sold) and the exercise of the warrants. Sales of substantial
amounts of common stock in the public market as a result of this offering could
reduce the market price of our common stock and make it more difficult for us
and our shareholders to sell our equity securities in the future. Following the
effectiveness of this Registration Statement, the 2,737,620 shares of common
stock offered by the selling shareholders will become freely salable in the
public market. This includes 535,704 shares that may be issuab1e upon the
conversion of outstanding shares of our Series C-1 Convertible Preferred Stock,
529,100 shares that may be issuable upon the conversion of shares of Series D
Convertible Preferred Stock to be sold by us after the effectiveness of this
Registration Statement, 930,566 shares that may be issuable upon the exercise of
outstanding warrants, and an additional 742,250 shares that may be issuable upon
the conversion of the Series C-1 Stock and Series D Stock or the exercise of
warrants granted to Pine Ridge and Strong River, if adjustments are made to the
conversion prices of such stock or to the number of shares issuable upon the
exercise of the warrants. All outstanding shares of Series C-1 Stock and Series
D Stock will automatically convert into common stock on the 5th trading day
after the effective date of this Registration Statement, if the following
conditions are met on that date:
10
o we have a sufficient number of authorized but unissued and
otherwise unreserved shares of our common stock available to issue
upon the conversion of the Series C-1 Stock and the Series D
Stock;
o our common stock is listed or quoted on the Nasdaq National Market
or other national stock exchange;
o the issuance of our common stock upon the conversion of the Series
C-1 Stock and Series D Stock is permitted in full without
violating the rules of the Nasdaq National Market;
o the issuance of our common stock upon the conversion of the Series
C-1 Stock and Series D Stock would not result in Pine Ridge and
Strong River then beneficially owning in excess of 9.999% of the
number of shares of our common stock then outstanding; and
o we are not in default of a material provision of an agreement
entered into or security issued as part of the August 22, 2001
private placement transaction.
If the conditions set forth above are not satisfied on the 5th trading day after
the effective date of this Registration Statement, then the shares of Series C-1
Stock and Series D Stock shall automatically convert into shares of common stock
on the first date thereafter on which these conditions are satisfied. If,
however, the conditions set forth above are not satisfied by the third
anniversary of the respective original issuance date of the Series C-1 Stock and
Series D Stock, then the holders of the Series C-1 Stock and Series D Stock, as
applicable, may require us to repurchase their shares of Series C-1 Stock and
Series D Stock for an amount equal to the aggregate stated value of such shares.
The number of shares offered by the selling shareholders includes
substantially more than the number of shares to which they are currently
eligible to receive upon conversion of the Series C-1 Stock and Series D Stock
and the exercise of the warrants. We are registering for resale more shares than
are currently issuable under the warrants pursuant to contractual obligations
with certain selling shareholders and to ensure that a sufficient number of
shares is registered in the event that adjustments, if any, are made to the
conversion prices of the preferred stock or to the number of shares issuable
upon exercise of the warrants. See "THE OFFERING" on page 14. Material terms of
the preferred stock and warrants are explained below.
Series C-1 Convertible Preferred Stock
We issued 5,000 shares of our Series C Convertible Preferred Stock in
the private placement transaction completed on August 22, 2001. All of the
Series C Shares were subsequently exchanged for shares of our Series C-1
Convertible Preferred Stock. Holders of Series C-1 Stock are not entitled to
voting rights except as otherwise required by law. Each share of Series C-1
Stock has an initial stated value of $1,008.32, which increases by $4.16 for
each month that such share is outstanding.
The number of shares of our common stock issuable upon conversion of a
share of Series C-1 Stock equals the quotient obtained by dividing the stated
value of one share of Series C-1 Stock by the then-applicable conversion price
thereof. The initial conversion price of the Series C-1 Stock is $9.45, which
may change in the future based on certain anti-dilution and other adjustments
explained below. All outstanding shares of Series C-1 Stock will automatically
convert into common stock on the 5th trading day after the effective date of
this Registration Statement, subject to the satisfaction of certain conditions.
Series D Convertible Preferred Stock
If the conditions described below are met, on the 3rd trading day after
this Registration Statement is declared effective by the SEC, Pine Ridge and
Strong River will purchase an aggregate of 5,000 shares of a new series of our
preferred stock, which will be called Series D Convertible Preferred Stock. None
of the conditions to the sale of the Series D Stock are within the control of
either Pine Ridge or Strong River.
11
In the event, however, that any of the following conditions has not
been satisfied or waived by Pine Ridge or Strong River on or before the closing
date of the sale of the Series D Stock, then Pine Ridge and Strong River, as
applicable, will not be obligated to purchase any shares of Series D Stock:
o No change of control of the Company shall have occurred since
August 22, 2001;
o If any shares of Series C-1 Stock or convertible promissory notes
sold in the August 22, 2001 private placement had been converted,
or if any warrants granted to the investors in the August 22, 2001
private placement had been exercised, we must have timely
delivered any shares of common stock issuable thereunder;
o We must have filed an amendment to our articles of incorporation
designating the rights and preferences of the Series D Stock; and
o We will not need to obtain approval from our shareholders in order
to issue the aggregate number of shares of common stock issuable
upon the conversion of our Series C-1 Stock, Series D Stock and
convertible promissory notes and upon the exercise of the warrants
that were issued and sold in the August 22, 2001 private
placement.
Pine Ridge and Strong River may elect to not purchase the Series D
Stock if this Registration Statement has not been declared effective by the SEC
by December 12, 2001.
The initial conversion price of the Series D Stock will equal $9.45.
The initial conversion price of the Series D Stock may change in the future
based on certain anti-dilution and other adjustments explained below. Holders of
Series D Stock will not be entitled to voting rights except as otherwise
required by law. Each share of Series D Stock will have a stated value of
$1,000, which will increase by $4.16 for each month that such share is
outstanding. All outstanding shares of Series D Stock will automatically convert
into common stock on the 5th trading day after the effective date of this
Registration Statement, subject to the satisfaction of certain conditions.
Warrants
o Warrants to purchase 429,492 shares of our common stock have an
exercise price of $15.24 per share, which may change in the future based on
certain anti-dilution and other adjustments explained below, and expire on
August 21, 2011. These warrants were granted as part of a private placement
transaction undertaken for capital raising purposes. While these warrants are
exercisable immediately, they may not be exercised to the extent that a holder
thereof would then own, together with its affiliates, more than 4.999% of our
common stock then outstanding. A warrant holder may waive the 4.999% limitation
on ownership by giving us 61 days' prior written notice. In no event, however,
can the warrants be exercised to the extent that Pine Ridge or Strong River
would then own, together with its respective affiliates, more than 9.999% of the
shares of our common stock then outstanding.
o Warrants to purchase 314,960 shares of our common stock have an
exercise price of $9.9225 per share, which may change in the future based on
certain anti-dilution and other adjustments explained below, and expire on
August 21, 2011. These warrants were granted as part of a private placement
transaction undertaken for capital raising purposes. Of these warrants, warrants
to purchase 157,480 shares of common stock are exercisable commencing on the
earlier of (x) the closing of the sale of the Series D Stock or (y) August 22,
2004. The remaining warrants to purchase 157,480 shares of common stock are
exercisable immediately. However, the warrants may not be exercised to the
extent that a holder thereof would then own, together with its affiliates, more
than 4.999% of our common stock then outstanding. A warrant holder may waive the
4.999% limitation on ownership by giving us 61 days' prior written notice. In no
event, however, can the warrants be exercised to the extent that Pine Ridge or
Strong River would then own, together with its respective affiliates, more than
9.999% of the shares of our common stock then outstanding.
o Warrants to purchase 186,114 shares of our common stock have an
exercise price of $15.24 per share, which may change in the future based on
certain anti-dilution and other adjustments explained below, and expire on
August 21, 2008. These warrants were granted as placement agent fees.
12
Adjustment Features of Conversion and Exercise Prices
If we sell stock at a price per share that is below either the
then-applicable conversion price of the preferred stock or convertible notes, or
below the exercise price of the warrants issued in the August 22, 2001 private
placement transaction, then the conversion or exercise price, as applicable, of
these shares of preferred stock, notes and warrants may adjust downward. The
number of additional shares of common stock to which the holders of these
securities would be entitled depends on the price at which we sell our stock. In
addition, if we require a holder of a convertible promissory note to convert
more than $1.5 million of the principal amount of its note, then the exercise
price of warrants to purchase 429,492 shares at an exercise price of $15.24 per
share may be reduced to equal 110% of the then-applicable conversion price of
the relevant note. Finally, if we require the conversion of the promissory
notes, the conversion price of the notes will be reduced to the lower of (x) the
then-applicable conversion price or (y) an amount equal to 87% of the average of
the VWAP for the 12 consecutive trading days ending on the last trading day
immediately prior to the date on which such conversion is effectuated (subject
to a floor equal to the product of (A) .87 and (B) 90% of the VWAP on the date
on which we notified the holder of our election to require conversion of the
notes). As a result of the foregoing, we may be required to issue more shares of
common stock upon the conversion and exercise of the securities issued or
issuable as part of the August 22, 2001 private placement transaction.
If the price of our common stock decreased substantially and we sold
shares at a price lower than the conversion or exercise prices of the securities
issued or issuable as part of the August 22, 2001 private placement, the
issuance of a greater number of shares under those securities could have an
effect on the control of our company. However, these securities cannot be
converted or exercised to the extent that Pine Ridge or Strong River would then
own, together with its respective affiliates, more than 9.999% of the shares of
our common stock then outstanding.
Although the sale of these additional shares to the public might
increase the liquidity of our shareholders' investments, the increase in the
number of shares available for public sale could drive the price of our common
stock down, thus reducing the value of your investment and perhaps hindering our
ability to raise additional funds in the future. In addition, to the extent
other restricted shares become freely salable, whether through an effective
registration statement or under Rule 144 of the Securities Act, or we issue
additional shares that might be or become freely salable, you could expect our
stock price to decrease.
If our stock price goes down, we may have to issue more shares than we
anticipate under the terms of a license and development agreement.
Pursuant to the development and license agreement we entered into with
PPG Industries, Inc., we are required to issue to PPG, for the services they
expect to render to us during a particular calendar year during the term of the
agreement, shares of common stock based on the value of such services at the
beginning of the year. If, at the time of issuance, the price of our common
stock has declined materially since the date we executed the agreement with PPG,
we may be required to issue to PPG more shares of common stock than we initially
anticipated. This increase in the number of shares available for public sale
could cause people to sell our shares, including in short sales, which could
drive the price of our common stock down, thus reducing the value of your
investment and perhaps hindering our ability to raise additional funds in the
future. In addition, this increase in the number of shares outstanding would
further dilute our existing stockholders.
Our executive officers and directors own a large percentage of our voting stock
and could exert significant influence over matters requiring shareholder
approval after this offering, including takeover attempts.
Our executive officers and directors, and their respective affiliates,
own as of November 19, 2001 approximately 12.3% of our outstanding common stock.
Moreover, Pine Ridge Financial Inc. and Strong River Investments, Inc. assigned
to management of the Company their rights to vote the shares of common stock
issuable upon the conversion of the preferred stock, notes and warrants issued
or to be issued to them in a August 22, 2001 private placement transaction.
Accordingly, these shareholders and members of management may, as a practical
matter, be able to exert significant influence over matters requiring approval
by our shareholders, including the election of directors and the approval of
mergers or other business combinations. This concentration could also have the
effect of delaying or preventing a change of control.
13
THE OFFERING
The 2,737,620 shares of our common stock being offered by the selling
shareholders. These shares consist of the following shares:
o 535,704 shares of common stock that may be issuable upon the
conversion of the Series C-1 Stock;
o 529,100 shares of common stock that may be issuable upon the
conversion of the Series D Stock;
o 930,566 shares of common stock that may be issuable upon the
exercise of outstanding warrants; and
o 742,250 shares that may be issuable upon the conversion of the
Series C-1 Stock and Series D Stock or upon the exercise of
warrants granted to Pine Ridge and Strong River, if adjustments
are made to the conversion prices of such preferred stock or the
number of shares issuable upon the exercise of such warrants.
We previously issued the warrants in a private placement transaction on
August 22, 2001. We also issued shares of Series C Convertible Preferred Stock
in the August 22, 2001 private placement, all of which were subsequently
exchanged for shares of our Series C-1 Stock on November 2, 2001. Pursuant to
the terms of the private placement, if certain conditions are met, two of the
selling shareholders, Pine Ridge and Strong River, are obligated to purchase
shares of Series D Stock on the 3rd trading day after the effective date of this
Registration Statement.
Of the 2,737,620 shares of our common stock being offered by the
selling shareholders, Pine Ridge and Strong River are offering an aggregate of
2,551,506 shares. The number of shares offered by Pine River and Strong River,
however, includes substantially more than the number of shares currently
issuable to Pine Ridge and Strong River upon: (a) the conversion of shares of
Series C-1 Stock; (b) the conversion of shares of Series D Stock; and (c) the
exercise of the warrants because, pursuant to our contractual obligations with
Pine Ridge and Strong River, we are registering more than the number of shares
currently issuable under the preferred stock and warrants. Pine Ridge and Strong
River may receive more shares than they are currently entitled to receive upon
conversion of the preferred stock because the conversion prices of the preferred
stock are subject to anti-dilution and other adjustments. In addition, if we
split our common stock, the number of shares issuable under the warrants would
increase.
The selling shareholders pursuant to this prospectus may sell the
shares of common stock offered for resale in a secondary offering. Under the
terms of the transactions described above, we are contractually required to
register all of the shares of common stock that are described above.
USE OF PROCEEDS
The selling shareholders will receive the proceeds from the resale of
the shares of common stock. We will not receive any proceeds from the resale of
the shares of common stock by the selling shareholders.
14
SELLING SHAREHOLDERS
The following table sets forth information regarding the beneficial
ownership of shares of common stock by the selling shareholders as of November
19, 2001, and the number of shares of common stock covered by this prospectus.
Beneficial ownership is determined in accordance with the rules of the SEC and
generally includes voting or investment power with respect to securities. The
shares of common stock issuable upon (i) conversion of preferred stock, (ii)
conversion of convertible notes, or (iii) exercise of warrants, currently
convertible or exercisable within 60 days after November 19, 2001, are deemed
outstanding and to be beneficially owned by the selling shareholders holding
such preferred stock, convertible notes or warrants. However, Pine Ridge
Financial, Inc. and Strong River Investments, Inc. are prohibited from using any
shares of preferred stock, convertible notes or warrants to acquire shares of
common stock to the extent that such acquisition would result in Pine Ridge
and/or Strong River, together with any of their respective affiliates,
beneficially owning in excess of 9.999% of our common stock outstanding after
such acquisition. Except as otherwise noted below, none of the selling
stockholders has held any position or office, or has had any other material
relationship with us or any of our affiliates within the past three years.
The percentage of ownership for each selling shareholder disclosed in
this table is based on 17,047,080 shares of common stock outstanding as of
November 19, 2001, plus any common stock equivalents held by that holder. Both
the number of shares listed as being offered by the selling shareholders in the
table and the holders' respective percentages of share ownership after the
offering are based on the assumptions that all of the shares being offered are
sold pursuant to this offering, and that no other shares of common stock are
acquired or disposed of by the selling shareholders prior to the termination of
this offering. Because the selling shareholders may sell all, some or none of
their shares or may acquire or dispose of other shares of common stock, we
cannot estimate the aggregate number of shares that will be sold in this
offering or the number or percentage of shares of common stock that each selling
shareholder will own upon completion of this offering.
Beneficial Ownership Prior to Beneficial Ownership After
Resale of Shares Resale of Shares
------------------------------ ---------------------------
Number of
Name of Number of Shares Being Number of
Selling Shareholder Shares Percent Offered Shares Percent
------------------- ------ ------- ------- ------ -------
Gerard Klauer Mattison & Co., Inc. 186,114 (1) 1.1% 186,114 (1) 0 0.0%
Pine Ridge Financial Inc. (2) 1,876,112 (3) 9.9% 1,275,753 (4,5) 1,147,330 (9) 5.6%
Strong River Investments, Inc. (2) 1,876,112 (6) 9.9% 1,275,753 (7,8) 1,147,330 (9) 5.6%
--------- ---------
Totals 2,737,620
- -------------
(1) Represents shares issuable upon the exercise of warrants.
(2) Pine Ridge and Strong River are deemed to be affiliates.
(3) Includes: (a) 535,704 shares that may be issuable upon the conversion
of shares of Series C-1 Stock (267,852 to each of Pine Ridge and Strong
River); (b) 742,250 shares that may be issuable upon the exercise of
warrants (371,125 to each of Pine Ridge and Strong River); (c)
1,073,730 shares that may be issuable upon the conversion of
convertible promissory notes (536,865 to each of Pine Ridge and Strong
River); and (d) 529,100 shares that may be issuable upon the conversion
of shares of Series D Stock (264,550 to each of Pine Ridge and Strong
River). Also includes 73,600 shares owned by Strong River. However,
Pine Ridge is not currently deemed to be the beneficial owner of all
the shares described above because it cannot convert its promissory
notes or shares of Series C-1 Stock or Series D Stock, nor may it
exercise its warrants to the extent that it would then own, together
with its affiliates, more than 9.999% of the shares of our common stock
then outstanding.
(4) The number of shares offered by Pine Ridge includes substantially more
than the number of shares currently issuable to Pine Ridge upon: (a)
the conversion of shares of Series C-1 Stock; (b) the conversion of
shares of Series D Stock; and (c) the exercise of the warrants because,
pursuant to our contractual obligations with Pine Ridge, we are
registering more than the number of shares issuable under the preferred
stock and warrants to ensure that a sufficient number of shares is
registered for resale. Pine Ridge may receive more shares than it is
currently entitled to receive upon conversion of the preferred stock
and exercise of the warrants because the conversion prices of the
preferred stock and number of shares issuable under the warrants are
subject to anti-dilution and other adjustments.
15
(5) Does not include any shares offered by Strong River.
(6) Includes: (a) 535,704 shares that may be issuable upon the conversion
of shares of Series C-1 Stock (267,852 to each of Pine Ridge and Strong
River); (b) 742,250 shares that may be issuable upon the exercise of
warrants (371,125 to each of Pine Ridge and Strong River); (c)
1,073,730 shares that may be issuable upon the conversion of
convertible promissory notes (536,865 to each of Pine Ridge and Strong
River); and (d) 529,100 shares that may be issuable upon the conversion
of shares of Series D Stock (264,550 to each of Pine Ridge and Strong
River). Also includes 73,600 shares owned by Strong River. However,
Strong River is not currently deemed to be the beneficial owner of all
the shares described above because it cannot convert its promissory
notes or shares of Series C-1 Stock or Series D Stock, nor may it
exercise its warrants to the extent that it would then own, together
with its affiliates, more than 9.999% of the shares of our common stock
then outstanding.
(7) The number of shares offered by Strong River includes substantially
more than the number of shares currently issuable to Strong River upon:
(a) the conversion of shares of Series C-1 Stock; (b) the conversion of
shares of Series D Stock; and (c) the exercise of the warrants because,
pursuant to our contractual obligations with Strong River, we are
registering more than the number of shares issuable under the preferred
stock and warrants to ensure that a sufficient number of shares is
registered for resale. Strong River may receive more shares than it is
currently entitled to receive upon conversion of the preferred stock
and exercise of the warrants because the conversion prices of the
preferred stock and the number of shares issualbe under the warrants
are subject to anti-dilution and other adjustments.
(8) Does not include any shares offered by Pine Ridge.
(9) Includes (a) 1,073,730 shares that may be issuable upon the conversion
of convertible promissory notes (536,865 to each of Pine Ridge and
Strong River) and (b) 73,600 shares owned by Strong River.
PLAN OF DISTRIBUTION
The selling shareholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling shareholders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately negotiated transactions;
o to cover short sales effected after the date hereof;
16
o broker-dealers may agree with the selling shareholders to sell a
specified number of such shares at a stipulated price per share; and
o any combination of any of the above methods.
The selling shareholders may also sell shares under Rule 144 under the
Securities Act of 1933, if available, rather than under this prospectus.
The selling shareholders may also engage in short sales against the
box, puts and calls and other transactions in our securities or derivatives of
our securities and may sell or deliver shares in connection with these trades.
The selling shareholders may pledge their shares to their brokers under the
margin provisions of customer agreements. If a selling shareholder defaults on a
margin loan, the broker may, from time to time, offer and sell the pledged
shares.
Broker-dealers engaged by the selling shareholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling shareholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling shareholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling shareholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
The selling shareholders will be subject to prospectus delivery
requirements of the Securities Act. We have informed the selling shareholders
that the anti-manipulative provisions of Regulation M promulgated under the
Securities Exchange Act of 1934 may apply to their sales in the market.
We are required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to the
selling shareholders, up to $25,000. We have agreed to indemnify the selling
shareholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act. Brokerage commissions and similar selling
expenses, if any, attributable to the sale of shares by the selling shareholders
will be borne by the selling shareholders. The selling shareholders may agree to
indemnify brokers, dealers or agents that participate in sales by the selling
shareholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
ABOUT THIS PROSPECTUS
You should only rely on the information contained in this prospectus.
We have not authorized anyone to provide you with information different from
that contained in this prospectus. The information contained in this prospectus
is accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of common stock.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any reports, statements or other information we file at the SEC's public
reference rooms located at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
IL 6066. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Our SEC filings are also available to the public from
commercial document retrieval services and at the web site maintained by the SEC
at "http://www.sec.gov."
17
We have filed a Registration Statement on Form S-3, of which this
prospectus forms a part, to register the resale of the shares with the SEC. As
allowed by SEC rules, this prospectus does not contain all the information you
can find in the Registration Statement or the exhibits to the Registration
Statement.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this prospectus, except for
any information superseded by information in this prospectus. This prospectus
incorporates by reference the documents set forth below that we have previously
filed with the SEC. These documents contain important information about us, our
business and our finances.
The documents that we are incorporating by reference are:
o Our Annual Report on Form 10-K for the year ended December 31,
2000;
o Our Quarterly Reports on Form 10-Q for the quarters ended March
31, 2001, June 30, 2001 and September 30, 2001;
o Our Current Report on Form 8-K filed with the SEC on March 19,
2001, as amended on March 21, 2001;
o Our Current Report on Form 8-K filed with the SEC on September 6,
2001;
o Our Current Report on Form 8-K filed with the SEC on September 26,
2001; and
o The description of our common stock that is contained in our
Registration Statement on Form SB-2 filed with the SEC on June 30,
1999, as amended August 25, 1999.
Any documents which we file pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this prospectus but before the end
of any offering of securities made under this prospectus will also be considered
to be incorporated by reference.
If you request, either orally or in writing, we will provide you with a
copy of any or all documents which are incorporated by reference. We will
provide such documents to you free of charge, but will not include any exhibits,
unless those exhibits are incorporated by reference into the document. You
should address written requests for documents to Sidney D. Rosenblatt, Executive
Vice President, Chief Financial Officer, Treasurer and Secretary, Universal
Display Corporation, 375 Phillips Boulevard, Ewing, New Jersey 08618.
LEGAL OPINION
Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania, will pass on the
validity of the shares.
EXPERTS
The audited financial statements incorporated by reference in this
prospectus and elsewhere in this Registration Statement, to the extent and for
the periods indicated in their reports, have been audited by Arthur Andersen
LLP, independent public accountants, and are included herein in reliance upon
the authority of said firm as experts in giving said reports.
18
===============================================================================
2,737,620 Shares
UNIVERSAL DISPLAY CORPORATION
Common Stock
---------------
PROSPECTUS
---------------
November 28, 2001
===============================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses payable by the Registrant in connection
with the issuance and distribution of the securities being registered are as
follows:
SEC Registration fee $ 5,462
Transfer agent and registrar fees $ 1,500
Printing and engraving fees $ 5,000
Legal fees $130,000
Blue Sky fees and expenses $ 5,000
Accounting fees $ 10,000
Miscellaneous $ 6,038
--------
Total $163,000
The selling shareholders described in the prospectus included herewith will not
pay any of the expenses of this offering.
Item 15. Indemnification of Directors and Officers
Chapter 17, Subchapter D of the Pennsylvania Business
Corporation Law of 1988, as amended (the "PBCL") contains provisions permitting
indemnification of officers and directors of a business corporation in
Pennsylvania.
Sections 1741 and 1742 of the PBCL provide that a business
corporation may indemnify directors and officers against liabilities and
expenses they may incur as such in connection with any threatened, pending or
completed civil, administrative or investigative proceeding, provided that the
particular person acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the corporation,
and, with respect to any criminal proceeding, had no reasonable cause to believe
his or her conduct was unlawful. In general, the power to indemnify under these
sections does not exist in the case of actions against a director or officer by
or in the right of the corporation if the person otherwise entitled to
indemnification shall have been adjudged to be liable to the corporation unless
it is judicially determined that, despite the adjudication of liability but in
view of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnification for specified expenses.
Section 1743 of the PBCL provides that the corporation is
required to indemnify directors and officers against expenses they may incur in
defending actions against them in such capacities if they are successful on the
merits or otherwise in the defense of such actions.
Section 1746 of the PBCL grants a corporation broad authority
to indemnify its directors and officers for liabilities and expenses incurred in
such capacity, except in circumstances where the act or failure to act giving
rise to the claim for indemnification is determined by a court to have
constituted willful misconduct or recklessness.
Section 1747 of the PBCL permits a corporation to purchase and
maintain insurance on behalf of any person who is or was a director or officer
of the corporation, or is or was serving at the request of the corporation as a
representative of another corporation or other enterprise, against any liability
asserted against such person and incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not the corporation would
have the power to indemnify the person against such liability under Chapter 17
Subchapter D of the PBCL.
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The Registrant's Bylaws provide a right to indemnification to
the full extent permitted by law, for expenses (including attorney's fees),
damages, punitive damages, judgments, penalties, fines and amounts paid in
settlement, actually and reasonably incurred by any director or officer whether
or not the indemnified liability arises or arose from any threatened, pending or
completed proceeding by or in the right of the Registrant (a derivative action)
by reason of the fact that such director or officer is or was serving as a
director, officer, employee or agent of the Registrant or, at the request of the
Registrant, as a director, officer, partner, fiduciary or trustee of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, unless the act or failure to act giving rise to the claim for
indemnification is financially determined by a court to have constituted willful
misconduct or recklessness. The Bylaws provide for the advancement of expenses
to an indemnified party upon receipt of an undertaking by the party to repay
those amounts if it is finally determined that the indemnified party is not
entitled to indemnification.
The Registrant's Bylaws authorize the Registrant to take steps
to ensure that all persons entitled to indemnification are properly indemnified,
including, if the Board of Directors so determines, purchasing and maintaining
insurance.
Item 16. List of Exhibits
The exhibits filed as part of this Registration Statement are as follows:
Exhibit
Number Description
- ------ -----------
Exhibit Number Exhibit Title
-------------- -------------
4.1 Statement of Designations, Preferences and Rights of Series C-1 Convertible Preferred
Stock(2)
4.2 Statement of Designations, Preferences and Rights of Series D Convertible Preferred
Stock(2)
4.3 Convertible Promissory Note dated as of August 22, 2001 payable to the order of Pine Ridge
Financial Inc.(1)
4.4 Convertible Promissory Note dated as of August 22, 2001 payable to the order of Strong
River Investments, Inc.(1)
4.5 Amended and Restated Warrant of Strong River Investments, Inc. to Purchase 78,740 Shares of
Common Stock dated as of August 22, 2001(2)
4.6 Amended and Restated Warrant of Pine Ridge Financial Inc. to Purchase 78,740 Shares of
Common Stock dated as of August 22, 2001(2)
4.7 Amended and Restated Warrant of Strong River Investments, Inc. to Purchase 78,740 Shares of
Common Stock dated as of August 22, 2001(2)
4.8 Amended and Restated Warrant of Pine Ridge Financial Inc. to Purchase 78,740 Shares of
Common Stock dated as of August 22, 2001(2)
4.9 Amended and Restated Warrant of Strong River Investments, Inc. to Purchase 214,746 Shares
of Common Stock dated as of August 22, 2001(2)
4.10 Amended and Restated Warrant of Pine Ridge Financial Inc. to Purchase 214,746 Shares of
Common Stock dated as of August 22, 2001(2)
4.11 Warrant of Gerard Klauer Mattison & Co., Inc. to Purchase 186,114 Shares of Common Stock
dated as of August 22, 2001(1)
5.1 Opinion of Morgan, Lewis & Bockius LLP(2)
10.1 Securities Purchase Agreement dated as of August 22, 2001 among the Company, Pine Ridge
Financial Inc. and Strong River Investments, Inc.(1)
10.2 Registration Rights Agreement dated as of August 22, 2001 among the Company, Pine Ridge
Financial Inc. and Strong River Investments, Inc.(1)
10.3 Voting Agreement dated as of August 22, 2001 among the Company, Pine Ridge Financial Inc.
and Strong River Investments, Inc.(1)
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Exhibit Number Exhibit Title
-------------- -------------
10.4 Pledge Agreement dated as of August 22, 2001 by UDC, Inc. in favor of First Union National
Bank(1)
10.5 Control Agreement dated as of August 22, 2001 among First Union National Bank, in its
capacity as the issuer of two standby letters of credit, UDC, Inc. and First Union National
Bank, in its capacity as custodian(1)
10.6 Guaranty and Suretyship Agreement dated as of August 22, 2001 made by the Company in favor
of First Union National Bank(1)
10.7 Irrevocable Standby Letter of Credit issued by First Union National Bank in favor of Pine
Ridge Financial Inc.(1)
10.8 Irrevocable Standby Letter of Credit issued by First Union National Bank in favor of Strong
River Investments, Inc.(1)
10.9 First Amendment to Securities Purchase Agreement dated as of September 20, 2001 among the
Company, Pine Ridge Financial Inc. and Strong River Investments, Inc.(2)
10.10 Second Amendment to Securities Purchase Agreement dated as of November 1, 2001 among the
Company, Pine Ridge Financial Inc. and Strong River Investments, Inc.(2)
10.11 First Amendment to Registration Rights Agreement dated as of November 1, 2001 among the
Company, Pine Ridge Financial Inc. and Strong River Investments, Inc.(2)
10.12 Exchange Agreement dated as of November 2, 2001 among the Company, Pine Ridge Financial
Inc. and Strong River Investments, Inc.(2)
23.1 Consent of Morgan, Lewis & Bockius LLP (included in its opinion filed as Exhibit 5.1
hereto)(2)
23.2 Consent of Arthur Andersen LLP(3)
24.1 Powers of Attorney(2)
------------
1. Filed as an exhibit to the Registrant's Current Report on
Form 8-K filed on September 6, 2001 and incorporated
herein by reference.
2. Previously filed.
3 Filed herewith.
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
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(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) That, insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Ewing, New Jersey, on November 27, 2001.
UNIVERSAL DISPLAY CORPORATION
By: /s/ Steven V. Abramson
----------------------
Steven V. Abramson
President and Chief Operating Officer
In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Chief Executive Officer and Chairman of the November 27, 2001
/s/ Sherwin I. Seligsohn * Board (principal executive officer)
- -------------------------------------------------
Sherwin I. Seligsohn
President, Chief Operating Officer and November 27, 2001
/s/ Steven V. Abramson Director
- -------------------------------------------------
Steven V. Abramson
Executive Vice President, Chief Financial November 27, 2001
/s/ Sidney D. Rosenblatt Officer, Treasurer, Secretary and Director
- ------------------------------------------------- (principal financial and accounting officer)
Sidney D. Rosenblatt
Director November 27, 2001
/s/ C. Keith Hartley *
- -------------------------------------------------
C. Keith Hartley
Director November 27, 2001
/s/ Elizabeth H. Gemmill *
- -------------------------------------------------
Elizabeth H. Gemmill
Director November 27, 2001
/s/ Lawrence Lacerte *
- -------------------------------------------------
Lawrence Lacerte
/s/ Leonard Becker * Director November 27, 2001
- --------------------
Leonard Becker
* By: /s/ Sidney D. Rosenblatt
-----------------------
Sidney D. Rosenblatt,
Attorney-in-Fact
II-5