<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<S> <C> <C>
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box: [ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as
permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c)
or sec. 240.14a-12
</TABLE>
UBICS, INC.
-----------------------------------------------------
(Name of Registrant as Specified in its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (check the appropriate box):
<TABLE>
<S> <C> <C>
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
------------------------------------------------------------
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 No.:
------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------
</TABLE>
<PAGE> 2
[UBICS LETTERHEAD]
April 13, 1998
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of UBICS, Inc. to be held on Thursday, May 14, 1998, at 12:00 p.m., at the
Pittsburgh Hilton and Towers, Ballroom No. 2, Gateway Center, Pittsburgh,
Pennsylvania.
The Annual Meeting will begin with a report on Company operations, followed
by discussion and voting on the matters described in the accompanying Notice of
Annual Meeting and Proxy Statement.
Please read the accompanying Notice of Annual Meeting and Proxy Statement
carefully. Whether or not you plan to attend, you can ensure that your shares
are represented and voted at the Annual Meeting by promptly completing, signing,
dating and returning the enclosed proxy card in the envelope provided.
We look forward to seeing you on May 14, 1998.
Sincerely,
/s/ VIJAY MALLYA
Vijay Mallya
Chairman
<PAGE> 3
UBICS, INC.
100 SAINTE CLAIRE PLAZA
1121 BOYCE ROAD
PITTSBURGH, PENNSYLVANIA 15241
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 14, 1998
The Annual Meeting of Stockholders (the "Annual Meeting") of UBICS, Inc., a
Delaware corporation (the "Company"), will be held on Thursday, May 14, 1998, at
12:00 p.m., local time, at the Pittsburgh Hilton and Towers, Ballroom No. 2,
Gateway Center, Pittsburgh, Pennsylvania 15222, for the following purposes:
1. To elect one Class I director to serve for a term of three years
and until his successor is duly elected and qualified;
2. To transact such other business as may properly come before the
Annual Meeting and any and all adjournments and postponements thereof.
The Board of Directors has fixed the close of business on March 20, 1998 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting and any adjournment or postponement thereof.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the accompanying Proxy Statement for further information
with respect to the business to be transacted at the Annual Meeting.
A complete list of the stockholders entitled to vote at the Annual Meeting
will be available at the Annual Meeting for examination by any stockholder, for
any purpose germane to the Annual Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOU ARE CORDIALLY
INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. THE RETURN OF THE ENCLOSED PROXY
CARD WILL NOT AFFECT YOUR RIGHT TO REVOKE YOUR PROXY OR TO VOTE IN PERSON IF YOU
DO ATTEND THE ANNUAL MEETING.
By Order of the Board
of Directors,
/s/ BABU SRINIVAS
Babu Srinivas
Vice President, Finance and Accounting
and Secretary
Pittsburgh, Pennsylvania
April 13, 1998
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY SHARES
YOU OWNED ON THE RECORD DATE.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE IT,
SIGN IT AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR
CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE TO THE COMPANY OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN MAILING YOUR PROXY PROMPTLY.
<PAGE> 4
UBICS, INC.
100 SAINTE CLAIRE PLAZA
1121 BOYCE ROAD
PITTSBURGH, PENNSYLVANIA 15241
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of UBICS, Inc., a Delaware
corporation (the "Company" or "UBICS"), for use at the Company's 1998 Annual
Meeting of Stockholders, together with any and all adjournments and
postponements thereof (the "Annual Meeting"), to be held on Thursday, May 14,
1998, at 12:00 p.m., local time, at the Pittsburgh Hilton and Towers, Ballroom
No. 2, Gateway Center, Pittsburgh, Pennsylvania 15222, for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders (the
"Notice"). This Proxy Statement, together with the accompanying Notice and the
enclosed proxy card, are first being sent to shareholders on or about April 13,
1998.
RECORD DATE; VOTING SECURITIES; VOTING AND PROXIES
The Board has fixed the close of business on March 20, 1998 as the record
date (the "Record Date") for the determination of stockholders entitled to
notice of, and to vote at, the Annual Meeting. On the Record Date, there were
6,500,000 shares of Common Stock of the Company, par value $.01 per share
("Common Stock"), outstanding and entitled to vote. Each share of Common Stock
is entitled to one vote per share on each matter properly brought before the
Annual Meeting. Abstentions may be specified as to all proposals to be brought
before the Annual Meeting other than the election of directors.
Shares can be voted at the Annual Meeting only if the stockholder is
present in person or is represented by proxy. If the enclosed proxy card is
properly executed and returned prior to voting at the Annual Meeting, the shares
represented thereby will be voted in accordance with the instructions marked
thereon. In the absence of instructions, shares represented by executed proxies
will be voted as recommended by the Board. Brokers, banks, and other nominee
holders will be requested to obtain voting instructions of beneficial owners of
shares registered in their names, and shares represented by a duly completed
proxy submitted by such a nominee holder on behalf of a beneficial owner will be
voted to the extent instructed by the nominee holder on the proxy card. Rules
applicable to nominee holders may preclude them from voting shares held by them
in nominee capacity on certain kinds of proposals unless they receive voting
instructions from the beneficial owners of the shares (the failure to vote in
such circumstances is referred to as a "broker non-vote").
The Board knows of no matters which are to be brought before the Annual
Meeting other than those set forth in the accompanying Notice. If any other
matters properly come before the Annual Meeting, the persons named in the
enclosed proxy card, or their duly appointed substitutes acting at the Annual
Meeting, will be authorized to vote or otherwise act thereon in accordance with
their judgment on such matters.
Any stockholder may revoke his or her proxy at any time prior to its
exercise by attending the Annual Meeting and voting in person, by notifying the
Secretary of the Company of such revocation in writing or by delivering a duly
executed proxy bearing a later date, provided that such notice or proxy is
actually received by the Company prior to the taking of any vote at the Annual
Meeting.
The cost of solicitation of proxies for use at the Annual Meeting will be
borne by the Company. Solicitations will be made primarily by mail or by
facsimile, but regular employees of the Company may solicit proxies personally
or by telephone.
QUORUM; VOTES REQUIRED
The presence at the Annual Meeting, in person or by proxy, of shares of
Common Stock representing at least a majority of the total number of shares of
Common Stock entitled to vote on the Record Date will constitute a quorum for
purposes of the Annual Meeting. Shares represented by duly completed proxies
submitted by
1
<PAGE> 5
nominee holders on behalf of beneficial owners will be counted as present for
purposes of determining the existence of a quorum (even if some such proxies
reflect broker non-votes). In addition, abstentions will be counted as present
for purposes of determining the existence of a quorum.
Under applicable Delaware law and the Company's Amended and Restated
By-Laws, the nominee for election as a director who receives the highest number
of votes actually cast will be elected. Abstentions and broker non-votes will be
treated as shares that neither are capable of being voted nor have been voted
and, accordingly, will have no effect on the outcome of the election of
directors.
ELECTION OF DIRECTORS
The Amended and Restated By-Laws of the Company provide that the number of
directors (which is to be not less than three nor more than twelve) is to be
determined from time to time by resolution of the Board. The Board is currently
comprised of five persons.
The Board of Directors is divided into three classes, with each class to be
as nearly equal in number as reasonably possible, each of whose members serve
for a staggered three-year term. The Board is comprised of one Class I Director,
two Class II Directors and two Class III Directors. At each annual meeting of
stockholders, the appropriate number of directors will be elected for a
three-year term to succeed the directors of the same class whose terms are then
expiring. The term of the Class I director expires at the Annual Meeting. The
terms of the Class II and Class III directors will expire at the 1999 and 2000
annual meeting of stockholders, respectively.
At each Annual Meeting, the directors elected to succeed those whose terms
expire are of the same class as the directors they succeed and are elected for a
term to expire at the third Annual Meeting of Stockholders after their election
and until their successors are duly elected and qualified. A director of any
class who is elected to fill a vacancy resulting from an increase in the number
of directors holds office for the remaining term of the class to which he is
elected and a director who is elected to fill a vacancy arising in any other
manner holds office for the remaining term of his predecessor.
The incumbent Class I director is a nominee for election this year for a
three-year term expiring at the 2001 annual meeting of stockholders. In the
election, the person who receives the highest number of votes actually cast is
elected. The proxies named in the proxy card intend to vote for the election of
the Class I nominee listed below unless otherwise instructed. If a holder does
not wish his or her shares to be voted for the nominee, the holder must so
indicate in the appropriate space provided on the proxy card and identify the
person for whom his or her vote is to be cast. If the nominee becomes unable to
serve, the proxies may vote for another person designated by the Board or the
Board may reduce the number of directors. The Company has no reason to believe
that the nominee will be unable to serve.
Set forth below is certain information with regard to the nominee for
election as Class I director and each continuing Class II and Class III
director.
NOMINEE FOR ELECTION AS CLASS I DIRECTOR
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
------------ --------------------------------------
<S> <C>
O'Neil Nalavadi Senior Vice President, Chief Financial Officer and a
Age 38 director of the Company since August 1997. Mr. Nalavadi also
has served in various senior management capacities for
companies in the UB Group from 1984 to August 1997,
including Senior Vice President of the Corporate Management
Division--UB Group from 1995 to August 1997, Chief Operating
Officer and director of United Breweries Plc. from December
1992 to January 1995 and General Manager--Corporate Planning
& Coordination of UB International Ltd. from January 1989 to
December 1992. Mr. Nalavadi is a Chartered Accountant in
India.
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
DIRECTORS CONTINUING AS CLASS II DIRECTORS
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- ------------------------------------- ------------------------------------------------------------
Manohar B. Hira President and a director of the Company since it was founded
Age 57 in 1993. Mr. Hira also served in various senior management
capacities for companies in the UB Group from 1981 to 1995,
including Chief Operating Officer--U.S. IT Operations,
Export Manager, General Manager--Human Resources and Vice
President--Administration. Mr. Hira is a mechanical engineer
and has a Masters degree in management.
Dennis S. Meteny Director of the Company since October 30, 1997. Mr. Meteny
Age 44 has been a director of Respironics, Inc. ("Respironics")
since January 1986 and President and Chief Executive Officer
of Respironics since November 1994. From August 1992 through
November 1994, Mr. Meteny served as Executive Vice President
and Chief Operating and Financial Officer of Respironics. He
also served as Vice President--General Manager and Chief
Financial Officer of Respironics from January 1988 through
August 1992 and was Vice President--Finance and Accounting
from 1984 through January 1988. For eight years prior to
joining Respironics he was employed as an accountant in
various auditing capacities by Ernst & Young, L.P.
DIRECTORS CONTINUING AS CLASS III DIRECTORS
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- ------------------------------------- ------------------------------------------------------------
Vijay Mallya Chairman of the Company since its inception in July 1993.
Age 42 Mr. Mallya has been chairman of the UB Group since 1983. Mr.
Mallya also is Chairman of Mendocino Brewing Company, Inc.,
United Breweries Limited, UB Engineering Limited, Mangalore
Chemicals and Fertilisers Ltd., Herbertsons Limited,
McDowell & Co. Ltd. and other UB Group companies. He also
sits on boards of several foreign companies and
organizations including companies comprising the UB Group,
The Institute of Economic Studies (India) and the Federation
of the Indian Chamber of Commerce and Industries.
Craig A. Wolfanger Director of the Company since October 30, 1997. Mr.
Age 39 Wolfanger has been Senior Managing Director of Parker/Hunter
Incorporated, an investment banking firm, since 1995. Mr.
Wolfanger also serves on the Management Committee at
Parker/Hunter Incorporated. From 1991 to 1995, Mr. Wolfanger
was Senior Managing Director of the Corporate Finance
Division of PNC Securities Corp. Mr. Wolfanger previously
was employed in the investment banking departments of Alex.
Brown & Sons Incorporated and Kidder, Peabody & Co.
Incorporated.
</TABLE>
BOARD OF DIRECTORS AND COMMITTEES
The Board met three times during the fiscal year ended December 31, 1997.
No director attended fewer than 75% of the total number of meetings of the Board
during the fiscal year ended December 31, 1997. The Board has an Audit Committee
and a Compensation Committee, both of which were formed following completion by
the Company of its initial public offering in November 1997.
The Company's Audit Committee is responsible for: (i) making an annual
recommendation to the Board of Directors to appoint independent public
accountants to audit the financial statements of the Company and to determine
the scope of such audits; (ii) meeting with the Company's independent public
accountants and with its internal accountants to review all accounting controls
and procedures of the Company; (iii) reviewing the reports from the Company's
independent public accountants with respect to management's compliance with U.S.
laws and regulations and the Company's policies with respect to ethics,
conflicts of interest and disbursements of
3
<PAGE> 7
funds; and (iv) reporting to the Board of Directors with respect to the results
of clauses (i), (ii) and (iii) above. The members of the Audit Committee are
Messrs. Meteny, Nalavadi and Wolfanger. The Audit Committee did not meet during
the fiscal year ended December 31, 1997.
The Compensation Committee is responsible for administering any stock
option or stock purchase plans, unless otherwise provided by such plan or the
Board of Directors, and for reviewing and making recommendations to the Board of
Directors with respect to salaries, bonuses and other compensation of the
Company's executive officers. The Compensation Committee also administers the
1997 Stock Option Plan. The members of the Compensation Committee are Messrs.
Mallya, Meteny and Wolfanger. The Compensation Committee did not meet during
fiscal 1997.
The Board does not have a standing Nominating Committee; the selection of
nominees for the Board of Directors will be made by the entire Board of
Directors. The Company's Amended and Restated Bylaws provide that any
stockholder of the Company entitled to vote in the election of directors may
nominate one or more persons for election to the Board of Directors by giving
timely notice in writing to the Secretary of the Company in accordance with the
Bylaws.
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the executive
officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Vijay Mallya 42 Chairman and Director
Manohar B. Hira 57 President and Director
O'Neil Nalavadi 38 Senior Vice President, Chief Financial Officer and
Director
Babu Srinivas 43 Vice President, Finance and Accounting and Secretary
Scott Baxendell 34 Vice President, Marketing and Sales
Vijay P. Reddy 48 Vice President, Personnel and Administration
</TABLE>
Additional information regarding Messrs. Mallya, Hira and Nalavadi is set
forth above under "Election of Directors."
Babu Srinivas has been Vice President, Finance and Accounting of the
Company since April 1996. Mr. Srinivas served in various senior management
capacities for companies in the UB Group, including senior manager--internal
audit, controller and general manager, from 1990 to March 1996. Mr. Srinivas is
a Chartered Accountant in India.
Scott A. Baxendell was appointed Vice President, Marketing and Sales in
January 1998. He had served as Director of Marketing of the Company since June
1995 with responsibilities including sales, hiring sales professionals,
geographic distribution of sales territories and training junior sales
representatives. From 1992 to June 1995, Mr. Baxendell was employed by Mastech
Corporation as a National Account Manager with responsibilities including
contacting prospective clients, sales, maintaining client relationships and
training junior sales representatives.
Vijay P. Reddy was appointed Vice President, Personnel and Administration
in January 1998. Prior to joining the Company he served as a senior executive
for personnel administration for the UB Group from November 1996 to January
1998. Mr. Reddy is a graduate of the U.S. Army Command and General Staff
College, Ft. Leavenworth, Kansas, and holds a Master's Degree in management of
human resources. Mr. Reddy has 27 years of experience in personnel and
administration matters and served in various capacities for the Armed Forces in
India from 1971 to 1996.
4
<PAGE> 8
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth information regarding compensation paid to
Vijay Mallya, Chairman of the Company, and Manohar B. Hira, President of the
Company (together, the "named executive officers"), for the fiscal years ended
December 31, 1997 and 1996. No other executive officer received total
compensation in excess of $100,000 for the fiscal years ended December 31, 1997
or 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
--------------------------- ---- ------ ----- ------------
<S> <C> <C> <C> <C>
Vijay Mallya 1997 $150,000 $ -- $ --
Chairman 1996 125,000(1) -- --
Manohar B. Hira 1997 109,000 20,000(2) 19,000(3)
President 1996 60,000 15,000 25,000
</TABLE>
- ---------
(1) Amounts shown were paid in January 1997 for services rendered by Mr. Mallya
in 1996.
(2) Represents bonuses paid to Mr. Hira in 1998 but earned in 1997.
(3) Represents amounts paid by the Company for Mr. Hira's use of a residence
($13,500) and an automobile ($5,500).
STOCK OPTIONS
The Company currently maintains the UBICS, Inc. 1997 Stock Option Plan (the
"1997 Plan") under which stock option awards may be made to eligible employees
of the Company. A maximum of 750,000 shares of Common Stock may be issued
pursuant to exercise of options granted under the 1997 Plan which number may be
adjusted to prevent dilution or enlargement of rights in the event of any stock
dividend, reorganization, reclassification, recapitalization, stock split,
combination, merger, consolidation or other relevant capitalization change. As
of December 31, 1997, there were options to purchase an aggregate of 437,500
shares of Common Stock outstanding under the 1997 Plan.
The following tables set forth certain information with respect to options
granted to the named executive officers during the fiscal year ended December
31, 1997 and the value of options held by the named executive officers on
December 31, 1997. Neither Mr. Mallya nor Mr. Hira exercised any options to
purchase common stock during the fiscal year ended December 31, 1997.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(2)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ----------- ----------- ------ ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Vijay Mallya 75,000(1) 18.9% $10.00 10/30/07 $471,671 $1,195,307
Manohar B. Hira 90,000(1) 22.6% $10.00 10/30/07 $566,005 $1,434,368
</TABLE>
- ---------
(1) Options vest in three equal installments on April 30, 1998, October 30,
1999 and October 30, 2000.
(2) Based on the product of (a) the difference between (i) the per share market
price of the Common Stock on the date of the grant (in the case of options
granted on October 30, 1997, the initial public offering price in the
Company's initial public offering, or $10.00 per share), compounded
annually over the term of the option (10 years) at the assumed annual rate
indicated, and (ii) the exercise price per share and (b) the
5
<PAGE> 9
number of shares of Common Stock obtainable upon exercise of the option.
Amounts shown were calculated at the assumed 5% and 10% annual rates
required by the Securities and Exchange Commission and are not intended as
a forecast of future appreciation in the price of the Common Stock.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
HELD AT FISCAL YEAR-END FISCAL YEAR-END(1)
----------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Vijay Mallya -- 75,000 -- $375,000
Manohar B. Hira -- 90,000 -- 450,000
</TABLE>
- ---------
(1) Represents the difference between the closing price per share of Common
Stock as reported on the Nasdaq National Market on December 31, 1997
($15.00) and the exercise price of the options, multiplied by the number of
shares of Common Stock issuable upon exercise of the options.
EMPLOYMENT AGREEMENTS
UBICS has entered into substantially identical employment agreements with
Messrs. Mallya, Hira, Nalavadi and Srinivas pursuant to which each of them serve
as an executive officer of the Company. The initial terms of the employment
agreements are three years and the agreements provide for payment of an annual
base salary to Messrs. Mallya, Hira, Nalavadi and Srinivas of $150,000,
$120,000, $100,000 and $75,000, respectively, and an annual bonus as determined
by the Compensation Committee of the Board of Directors. The agreements with
Messrs. Mallya, Hira and Nalavadi automatically extend beginning on the second
anniversary of the agreements, so that the remaining term of each agreement is
always one year unless either party gives notice of their intention to terminate
the agreement at the end of the term. The agreements are terminable by UBICS
immediately for cause. The agreements prohibit the executive officers from
competing with UBICS during their employment with UBICS and for one year
thereafter, and from improperly disclosing or using UBICS' proprietary
information. The employment agreements also include the provisions relating to
severance described below.
The employment agreements with each of Messrs. Mallya, Hira, Nalavadi and
Srinivas provide that if, on or after the date of a "Change in Control" (as
defined herein), UBICS, for any reason, terminates the employee's employment or
the employee resigns "for good reason" (as defined herein), then UBICS shall pay
to the employee within five days following the date of termination or date of
resignation, as applicable: (i) the employee's salary and benefits through the
termination date or resignation date, both as in effect on the date prior to the
date of the Change in Control; and (ii) the amount of any bonus payable to the
employee for the year in which the Change in Control occurred, pro rated to take
into account the number of days that have elapsed in such year prior to the
termination date or resignation date. In addition, during a period following the
termination or resignation date equal to the remaining term of the employee's
employment agreement as of the date immediately prior to such termination or
resignation date, UBICS shall continue to pay to the employee his annual salary,
as in effect on the day prior to the date of the Change in Control, on the dates
when such salary would have been payable had the employee remained employed by
UBICS and shall continue to provide to the employee during such specified
period, at no cost to the employee, the benefits the employee was receiving on
the day prior to the date of the Change in Control or benefits substantially
similar thereto.
For purposes of the employment agreements, a "Change in Control" is deemed
to occur upon any of the following events: (i) any individual, corporation,
partnership, association, trust or other entity (other than Mallya or an
affiliate of Mallya) becomes the beneficial owner (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
directly or indirectly, of securities of UBICS representing 50% or more of the
combined voting power of UBICS' then outstanding voting securities; (ii) the
individuals who as of the date of the agreements are members of the Board of
Directors of UBICS (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board of Directors of UBICS (provided, however, that if
the election, or nomination for election by UBICS' stockholders, of any new
director was approved by a vote of at
6
<PAGE> 10
least a majority of the Incumbent Board, such new director will, for purposes of
such agreements, be considered as a member of the Incumbent Board); (iii) an
agreement by UBICS to consolidate or merge with any other entity pursuant to
which UBICS will not be the continuing or surviving corporation or pursuant to
which shares of the Common Stock of UBICS would be converted into cash,
securities or other property, other than a merger of UBICS in which holders of
the Common Stock of UBICS immediately prior to the merger would have the same
proportion of ownership of Common Stock of the surviving corporation immediately
after the merger; (iv) an agreement of UBICS to sell, lease, exchange or
otherwise transfer in one transaction or a series of related transactions
substantially all of the assets of UBICS; (v) the adoption of any plan or
proposal for a complete or partial liquidation or dissolution of UBICS; or (vi)
an agreement to sell more than 50% of the outstanding voting securities of UBICS
in one or a series of related transactions other than an initial public offering
of voting securities registered with the Securities and Exchange Commission.
The term "good reason" means: (i) a material diminution by UBICS of the
employee's title or responsibilities, as that title and those responsibilities
existed on the day prior to the date of a Change in Control; or (ii) a material
diminution by UBICS in the employee's salary, benefits or incentive or other
forms of compensation, all as in effect on the day prior to the date of a Change
in Control.
INDEMNIFICATION AGREEMENTS
The Company has entered into indemnification agreements with each of its
directors pursuant to which the Company has agreed to indemnify such party to
the full extent permitted by law, subject to certain exceptions, if such party
becomes subject to an action because such party is a director, officer,
employee, agent or fiduciary of the Company.
COMPENSATION OF DIRECTORS
The Company pays each director who is not an executive officer an annual
retainer of $20,000, and all directors are reimbursed for travel expenses
incurred in connection with attending board and committee meetings. Directors
are not entitled to additional fees for serving on committees of the Board of
Directors. In addition, under the 1997 Plan, on October 30, 1997 each
independent director of the Company was granted options to purchase 20,000
shares of Common Stock at an exercise price of $10.00 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company did not have a Compensation Committee prior to completion of
its initial public offering in November 1997. Accordingly, Messrs. Mallya and
Hira, the Company's Chairman and President, respectively, had responsibility for
all decisions with respect to executive officer compensation.
Mr. Mallya, Chairman and the beneficial owner of approximately 67% of the
outstanding shares of Common Stock of the Company, is also deemed to be in
"control" (within the meaning of the Securities Act of 1933, as amended (the
"Securities Act")) of each company that is a member of the UB Group. The UB
Group is a multinational group of companies headquartered in India, which
companies are controlled by Mr. Mallya. Any transaction between the Company, on
the one hand, and a company in the UB Group, on the other hand, is a transaction
between "affiliates" (within the meaning of the Securities Act). In addition,
Mr. Hira, President and a director of the Company, was employed in various
senior management capacities with the UB Group and its affiliate, UB Information
Consultancy Services Ltd., an Indian corporation ("UB Services") from 1981 to
1995, and Mr. Nalavadi, Senior Vice President, Chief Financial Officer and a
director of the Company, was employed in various senior management capacities
with the UB Group from 1984 to 1997. See "Election of Directors."
Mr. Mallya was the guarantor with respect to the Company's obligations to
PNC Bank, National Association under a $1,000,000 Committed Line of Credit (the
"Line of Credit"). Such guaranty was released by PNC Bank in November 1997.
In 1995, the Company made an advance to the UB Group of $150,000 which was
repaid in 1996. This represents the largest amount of indebtedness of the UB
Group to the Company in each of 1995 and 1996. In 1996, the Company borrowed
$258,000 from the UB Group, of which $100,000 was repaid in 1996. During
7
<PAGE> 11
1997, the Company had repayments to the UB Group of $158,000. At December 31,
1997, advances to the UB Group were $0. Generally, such advances were for
working capital. The advances to and the borrowings from the UB Group did not
bear interest. In July 1996, the Company obtained the Line of Credit and ceased
utilizing advances from the UB Group to fund its working capital needs.
From time to time, the UB Group has provided certain services to the
Company, primarily involving the provision of administrative services to the
Company by UB Group employees and allowing the Company the use of certain office
space and facilities in locations where the UB Group has an office. Prior to
1997, such services were provided on an informal basis and not under a written
contractual arrangement, although the Company reimbursed the UB Group for any
out-of-pocket cost of the services provided.
The aggregate annual value of the services provided by the UB Group to the
Company was less than $10,000 in each of 1995 and 1996 and was less than $30,000
in 1997. In October 1997 the Company entered into Services Agreements with Mr.
Mallya and certain UB Group companies (the "Services Agreements") pursuant to
which the UB Group will provide services and accommodations to the Company,
including the right to use the "UB Group" name, both in India and in other
countries where the UB Group has an office or location, from time to time on an
as needed basis. The Services Agreements, which have an initial term of five
years, require the Company to pay the UB Group company providing the services or
accommodations compensation on terms no less favorable to the Company than those
which would be made to non-affiliated parties. Compensation for services will be
based on the estimated costs, including a reasonable allocation of direct and
indirect overhead costs, incurred by the UB Group company providing the
services. Compensation for use of facilities of a UB Group company will be based
on the provider's costs (including rent, taxes, utilities and other operating
expenses) for the portion of the facility used by the Company, prorated based on
the number of days of each month the Company actually uses the facility. The
costs incurred by the Company in the future pursuant to these agreements are
expected to be comparable to the costs incurred for such services for prior
fiscal years.
The Company also has entered into non-competition agreements with Mr.
Mallya and certain UB Group companies pursuant to which the UB Group (including
UB Services) and Mr. Mallya have agreed not, and to cause their respective
affiliates not, to compete with the Company or use the name "UBICS" and to cause
UB Services to cease business operations. Each non-competition agreement has a
term of five years subject to earlier termination upon certain events involving
a change in control of the Company.
In addition, the Company has entered into a sublease agreement with the UB
Group pursuant to which the Company subleases a portion of its office space in
Sausalito, California to the UB Group. Pursuant to the sublease, which expires
on June 2, 1999, the UB Group agreed to pay its pro rata share of the rent and
operating expenses payable by the Company under its lease. The UB Group's annual
rental and operating expense payment under the sublease currently is
approximately $83,000.
The Company incurred various expenses and personnel costs on behalf of the
UB Group during 1997. Such expenses and costs totaled $458,000 for 1997. In
November 1997 the Company was reimbursed for the expenses and costs incurred by
the Company on behalf of the UB Group during 1997.
REPORT OF THE COMPENSATION COMMITTEE
The Company did not have a Compensation Committee prior to completion of
its initial public offering in November 1997. Accordingly, for 1997, Messrs.
Mallya and Hira, the Company's Chairman and President, respectively, had
responsibility for all decisions with respect to executive officer compensation.
For 1997, Messrs. Mallya and Hira determined the compensation of each executive
officer based upon their evaluation of the Company's performance and each
individual's contribution to that performance.
Effective November 4, 1997, the Board established the current Compensation
Committee, a majority of the members of which are independent directors. The
Compensation Committee is responsible for reviewing and making recommendations
to the Board with respect to salaries, bonuses and other compensation of the
Company's executive officers and administering any stock option or stock
purchase plans unless otherwise provided by such plan or the Board. The
Compensation Committee is expected to meet twice during fiscal 1998 to pursue
the aforementioned duties.
8
<PAGE> 12
In October 1997 the Board granted stock options covering an aggregate of
257,000 shares of Common Stock to the Corporation's executive officers,
including options covering 75,000 shares granted to Mr. Mallya, the Company's
Chairman, and 90,000 shares granted to Mr. Hira, the Company's President. The
number of options granted to executive officers was based primarily on the
officer's relative position and the Board's assessment of the officer's value to
the Company and contributions to the growth of the Company.
By the Compensation Committee
of the Board of Directors
Vijay Mallya
Dennis S. Meteny
Craig A. Wolfanger
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE OCTOBER 30, 1997
The following graph shows the cumulative total shareholder return on the
Common Stock from October 30, 1997 (the date on which the Common Stock commenced
trading on the Nasdaq National Market) through December 31, 1997, as compared to
the returns of the Nasdaq National Market Composite Index and the Nasdaq
Computer and Data Processing Services Stock Index. The graph assumes that $100
was invested in the Common Stock on October 30, 1997, and in the Nasdaq National
Market Composite Index and the Nasdaq Computer and Data Processing Services
Stock Index and assumes reinvestment of dividends.
<TABLE>
<CAPTION>
Nasdaq Nasdaq
Measurement Period Composite Computer &
(Fiscal Year Covered) UBICS Index D.P. Services
- --------------------- ----- --------- -------------
<S> <C> <C> <C>
10/31/97 100.0 100.0 100.0
11/30/97 121.9 100.4 101.8
12/31/97 125.0 98.5 94.7
</TABLE>
CERTAIN TRANSACTIONS
The Company has entered and intends to enter into certain arrangements and
agreements with companies in the UB Group. See "Executive Officers and
Directors" and "Compensation Committee Interlocks and Insider Participation."
The Company has a policy requiring all future transactions, including any
loans from the Company to its officers, directors, principal stockholders or
affiliates, to be approved by a majority of the Board of Directors, including a
majority of the independent and disinterested directors or, if required by law,
a majority of the disinterested stockholders, and requiring such transactions to
be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
9
<PAGE> 13
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Common Stock as of March 25, 1998 by each person who is known
by the Company to have been the beneficial owner of more than five percent of
the Common Stock on such date, by each director and named executive officer of
the Company and by all directors and executive officers of the Company as a
group (based on 6,500,000 shares of Common Stock outstanding as of such date).
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
-----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
------------------------------------ --------- -------
<S> <C> <C>
United Breweries Information Consultancy Services Ltd.(2)... 4,333,751 66.7%
Vijay Mallya(3)(4)(5)....................................... 4,358,751 66.8
Manohar B. Hira(4)(5)....................................... 30,000 *
Dennis S. Meteny(4)(5)...................................... 22,000 *
O'Neil Nalavadi(4)(5)....................................... 17,333 *
Craig A. Wolfanger(4)(5).................................... 21,000 *
All directors and executive officers as a group
(6 persons)(3)(5)......................................... 4,560,937
</TABLE>
- ---------
* Represents less than 1% of the outstanding shares.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "Commission"), and includes shares
as to which the listed person has or shares voting and/or investment power.
Shares of Common Stock subject to options or warrants currently exercisable
or exercisable within 60 days after the date of this Proxy Statement are
deemed outstanding for computing the percentage ownership of the person
holding such options or warrants, but are not deemed outstanding for
computing the percentage of any other person.
(2) United Breweries Information Consultancy Services Ltd. (the "Principal
Stockholder"), is a corporation organized under the laws of the British
Virgin Islands. The Principal Stockholder's address is P.O. Box 3149, Pasea
Estate, Road Town, BVI. Vijay Mallya (directly and through other entities
owned and controlled by Mr. Mallya) owns all of the outstanding equity
interests in the Principal Stockholder and therefore is the indirect
beneficial owner of such shares.
(3) Includes shares owned by the Principal Stockholder, which shares are
indirectly beneficially owned by Mr. Mallya as set forth in footnote 2.
(4) The address of Mr. Mallya, Mr. Hira, Mr. Meteny, Mr. Nalavadi and Mr.
Wolfanger is c/o UBICS, Inc., 100 Sainte Claire Plaza, 1121 Boyce Road,
Pittsburgh, Pennsylvania 15071.
(5) Includes shares of Common Stock that may be acquired by the following
directors and officers pursuant to the exercise of options granted pursuant
to the 1997 Plan: Mr. Mallya, 25,000; Mr. Hira, 30,000; Mr. Nalavadi,
17,333; Mr. Meteny, 20,000; Mr. Wolfanger, 20,000; all directors and
executive officers as a group, 125,666.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Company's directors, officers, and persons who are directly
or indirectly the beneficial owners of more than 10% of the Common Stock of the
Company are required to file with the Commission, within specified monthly and
annual due dates, a statement of their initial beneficial ownership and all
subsequent changes in ownership of Common Stock. Rules of the Commission require
such persons to furnish the Company with copies of all Section 16(a) forms they
file.
10
<PAGE> 14
For the fiscal year ended December 31, 1997 all officers and directors of
the Company filed the required Section 16(a) forms on a timely basis to report
their ownership of and changes in beneficial ownership of Common Stock.
SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, shareholders may present
proper proposals for inclusion in the Company's proxy statement and for
consideration at the next Annual Meeting of Shareholders by submitting such
proposals to the Company in a timely manner. In order to be so included for the
1998 Annual Meeting, shareholder proposals must be received by the Company no
later than December 11, 1998 and must otherwise comply with the requirements of
Rule 14a-8.
AUDITORS
The Company engaged Arthur Andersen, LLP, independent certified public
accountants, as auditors for the fiscal year ended December 31, 1997. A
representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting, and will have the opportunity to make a statement and respond to
appropriate questions.
FORM 10-K
STOCKHOLDERS MAY OBTAIN A COPY (WITHOUT EXHIBITS) OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997 AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION WITHOUT CHARGE BY WRITING TO: UBICS, INC.,
100 SAINTE CLAIRE PLAZA, 1121 BOYCE ROAD, PITTSBURGH, PENNSYLVANIA 15241,
ATTENTION: BABU SRINIVAS.
ADDITIONAL INFORMATION
The Company knows of no other matters which will be presented to
stockholders for action at the Annual Meeting. However, if other matters are
presented which are proper subjects for action by shareholders, it is the
intention of those named in the accompanying Proxy to vote such Proxy in
accordance with their judgement upon such matters.
By Order of the Board of Directors,
/s/ BABU SRINIVAS
Babu Srinivas
Vice President, Finance and Accounting
and Secretary
11
<PAGE> 15
FORM OF
PROXY
UBICS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
Vijay Mallya, Manohar B. Hira and O'Neil Nalavadi, with full power of
substitution in each, are hereby authorized to represent the undersigned at the
1998 Annual Meeting of Stockholders of UBICS, Inc. (the "Company") to be held
at the Pittsburgh Hilton, Ballroom No. 2, Gateway Center, Pittsburgh,
Pennsylvania on Thursday, May 14, 1998 at 12:00 p.m., and at any adjournment
thereof, and thereat to vote the same number of shares as the undersigned would
be entitled to vote if then personally present.
(IMPORTANT - TO BE SIGNED AND DATED ON REVERSE SIDE)
* FOLD AND DETACH HERE *
<PAGE> 16
Please mark
your votes as
indicated on [ X ]
this example
1. ELECTION OF ONE (1) DIRECTOR
NOMINEE: For the Class I Director Whose Term
Expires in 2001: O'Neil Nalavadi
FOR WITHHELD
[ ] [ ]
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 HAVE NO AFFECT ON THE VOTE ON ANY MATTER TO COME
BEFORE THE STOCKHOLDERS AT THE ANNUAL MEETING.
DATE: 1998
-------------------------------------------------------
----------------------------------------------------------------------
Stockholder(s) sign above exactly as name is printed on label. If
signing as representative, so indicate. For joint accounts, all
owners should sign.
- -------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
ANNUAL MEETING
OF
SHAREHOLDERS
OF
UBICS
May 14, 1998
The Pittsburgh Hilton Hotel
Ballroom #2 Gateway Center
Pittsburgh, Pa.
Beginning at 12:00 P.M.
