<PAGE> 1
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- --------------------------------------------------------------------------------
SCHEDULE 14A
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14a-12
</TABLE>
UBICS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- --------------------------------------------------------------------------------
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<PAGE> 2
UBICS, INC.
333 TECHNOLOGY DRIVE
SUITE 210, SOUTHPOINTE
CANONSBURG, PENNSYLVANIA 15317
November 4, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of UBICS, Inc. to be held on Wednesday, December 1, 1999, at 11:00 a.m., at the
Holiday Inn Pittsburgh South, 164 Fort Couch Road, Pittsburgh, Pennsylvania
15241.
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 December 1, 1999.
Sincerely,
/S/ VIJAY MALLYA
Vijay Mallya
Chairman
<PAGE> 3
UBICS, INC.
333 TECHNOLOGY DRIVE
SUITE 210, SOUTHPOINTE
CANONSBURG, PENNSYLVANIA 15317
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 1, 1999
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders (the
"Annual Meeting") of UBICS, Inc., a Delaware corporation ("UBICS" or the
"Company"), will be held at the Holiday Inn Pittsburgh South, 164 Fort Couch
Road, Pittsburgh, Pennsylvania 15241, on Wednesday, December 1, 1999, at 11:00
a.m. local time, for the purpose of considering and acting upon the following
matters:
(1) The election of one (1) Class II director to serve for a term of
three years and until his successor is duly elected and qualified;
(2) An amendment to the Company's 1997 Stock Option Plan to increase
the maximum number of shares of Common Stock authorized for issuance
thereunder from 750,000 to 1,300,000 and to increase the maximum aggregate
number of shares of Common Stock which may be covered by options granted to
any individual under such plan from 10% to 40% of the total shares
authorized for issuance under such plan; and
(3) The transaction of such other and further business as may properly
come before the Annual Meeting and any and all adjournments and
postponements thereof.
The Board of Directors of UBICS has fixed the close of business on October
27, 1999 as the record date (the "Record Date") for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting. Only
stockholders of record at the close of business on the Record Date are entitled
to notice of, and to vote at, the Annual Meeting. Shares represented by duly
executed but unmarked proxies will be deemed to be voted in favor of the nominee
for director.
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
Canonsburg, Pennsylvania
November 4, 1999
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.
ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
This Proxy Statement is being furnished to the holders of common stock, par
value $.01 per share ("UBICS Common Stock"), of UBICS, Inc., a Delaware
corporation ("UBICS"), in connection with the solicitation of proxies by UBICS's
Board of Directors for use at the 1999 Annual Meeting of Stockholders to be held
on Wednesday, December 1, 1999 and at any and all adjournments or postponements
thereof (the "Annual Meeting"). This Proxy Statement is being mailed to
stockholders of UBICS on or about November 4, 1999.
GENERAL INFORMATION
The Annual Meeting will be held at the Holiday Inn Pittsburgh South, 164
Fort Couch Road, Pittsburgh, Pennsylvania 15241, on Wednesday, December 1, 1999,
at 11:00 a.m. local time, or at any adjournment thereof. At the Annual Meeting,
stockholders will vote on the following matters:
(1) The election of one Class II Director to serve a term of three years
and until his successor is duly elected and qualified;
(2) An amendment to the Company's 1997 Stock Option Plan to increase the
maximum number of shares of Common Stock authorized for issuance
thereunder from 750,000 to 1,300,000 and to increase the maximum
aggregate number of shares of Common Stock which may be covered by
options granted to any individual under such plan from 10% to 40% of
the total shares authorized for issuance under such plan; and
(3) The transaction of such other and further business as may properly come
before the Annual Meeting.
Stockholders are encouraged to review the detailed discussion presented in
this Proxy Statement and either return the completed and executed proxy or
attend the Annual Meeting.
QUORUM; VOTES REQUIRED
Stockholders of record at the close of business on October 27, 1999 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. As
of the close of business on the Record Date there were outstanding 6,479,800
shares of common stock of UBICS ("UBICS Common Stock"). The holders of UBICS
Common Stock are entitled to one vote for each share owned of record on the
Record Date.
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 that is, in favor of the Exchange and
the Amendment. 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 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 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
<PAGE> 5
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 vote on the election of director.
The proposed amendment to the Company's 1997 Stock Option Plan will be
approved if the votes cast by the shares of Common Stock represented and
entitled to vote at the Annual Meeting in favor of the proposal exceed the votes
cast against the proposal. With respect to this proposal, stockholders may (i)
vote "for" the proposal, (ii) vote "against" the proposal or (iii) abstain from
voting. An abstention or broker non-vote will have no effect on the outcome of
the proposal.
Each stockholder of UBICS is requested to complete, sign, date and return
the enclosed proxy without delay in order to ensure that his or her shares are
voted at the Annual Meeting. The return of a signed proxy will not affect a
stockholder's right to attend the Annual Meeting and vote in person. Any
stockholder giving a proxy has the right to revoke it at any time before it is
exercised by executing and returning a proxy bearing a later date, by giving a
written notice of revocation to the Secretary of UBICS, or by attending the
Annual Meeting and voting in person. There is no required form for a proxy
revocation. All properly executed proxies not revoked will be voted at the
Annual Meeting in accordance with the instructions contained therein.
IF A PROXY IS SIGNED AND RETURNED, BUT NO INSTRUCTIONS ARE INDICATED, THE
SHARES REPRESENTED BY SUCH PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTOR
NOMINEE AND FOR THE PROPOSED AMENDMENT TO THE COMPANY'S 1997 STOCK OPTION PLAN.
COST OF SOLICITATION
UBICS will bear the costs of soliciting proxies from its stockholders.
UBICS will request that brokers and other custodians, nominees and fiduciaries
forward proxy material to the beneficial holders of the UBICS Common Stock held
of record by such persons, where appropriate, and will, upon request, reimburse
such persons for their reasonable out-of-pocket expenses incurred in connection
therewith.
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 has
established the number of directors at six. However, due to the recent
resignation of director Craig A. Wolfanger, 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 presently comprised of two Class I
Directors, two Class II Directors and one 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 terms of the current Class II directors expire at the Annual
Meeting. The terms of the Class III and Class I directors will expire at the
2000 and 2001 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.
Manohar B. Hira, currently President and a Class II director of UBICS, is
not a nominee for election as a Class II director. Immediately following the
Annual Meeting, the Board will vote to reduce the number of directors of UBICS
from six to five. The nominee for election this year as Class II director is
nominated for a three-year term expiring at the 2002 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 II 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
2
<PAGE> 6
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 II director and each continuing Class I and Class III
director.
NOMINEE FOR ELECTION AS CLASS II DIRECTOR
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- ------------ --------------------------------------
<S> <C>
Scott R. Heldfond......................... Director of the Company since December 1998. Since
Age 54 February 1997 Mr. Heldfond has been President and Chief
Executive Officer of Frank Crystal & Co. of California,
Inc., an insurance brokerage company. Prior to joining
Frank Crystal & Co., from 1994 to February 1997 he was
Chairman of Hales Capital LLC, an investment banking
firm, and President of AON Real Estate and Investments.
</TABLE>
DIRECTORS CONTINUING AS CLASS I DIRECTORS
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- ------------ --------------------------------------
<S> <C>
O'Neil Nalavadi........................... Senior Vice President, Chief Financial Officer and a
Age 39 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.
Kent D. Price............................. Director of the Company since July 1998. Since August
Age 56 1998 Mr. Price has been President of Robert Kent &
Company, a financial advisory firm. Prior thereto, from
January 1994 to July 1994 he was Chairman of San
Francisco Company and Bank of San Francisco and from
August 1994 to July 1998 was General Manager of
Securities and Capital Markets for International
Business Machines Corporation (IBM). He is currently a
member of the board of directors of San Francisco
Company and Mendocino Brewing Company.
</TABLE>
DIRECTOR CONTINUING AS CLASS III DIRECTOR
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- ------------ --------------------------------------
<S> <C>
Vijay Mallya.............................. Chairman of the Company since its inception in July
Age 43 1993. 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.
</TABLE>
3
<PAGE> 7
The Board intends to fill the vacancy in Class III created by Mr.
Wolfanger's resignation, in accordance with the Company's Amended and Restated
By-Laws, as soon as it has identified a suitable candidate. Manohar Hira,
currently President and a Class II director of UBICS, is not a nominee for
election to the Board as a Class II director at the Annual Meeting but has
agreed to continue as an employee of UBICS until January 1, 2000. See "Executive
Compensation -- Employment Agreements."
BOARD OF DIRECTORS AND COMMITTEES
The Board met five times during the fiscal year ended December 31, 1998
("fiscal 1998"). No director attended fewer than 75% of the total number of
meetings of the Board during fiscal 1998. The Board has an Audit Committee and a
Compensation Committee.
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 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. Price, Nalavadi and
Heldfond. The Audit Committee met once during fiscal 1998.
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, Price and Heldfond. The Compensation Committee met once during fiscal
1998.
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 By-Laws 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
By-Laws.
4
<PAGE> 8
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...................... 43 Chairman and Director
Manohar B. Hira................... 59 President and Director
O'Neil Nalavadi................... 39 Senior Vice President and Chief Financial
Officer
Dennis M. Stocker................. 57 Senior Vice President, Marketing and Sales
Babu Srinivas..................... 44 Vice President, Finance and Accounting and
Secretary
Vijay P. Reddy.................... 50 Vice President, Personnel and Administration
Patrick Ghilani................... 26 Vice President, Enterprise Solutions
</TABLE>
Additional information regarding Messrs. Mallya and Nalavadi is set forth
above under "Election of Directors."
Manohar B. Hira has been President and a director of the Company since it
was founded 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 M. Stocker was appointed Vice President, Marketing and Sales in
September 1999. Prior to joining UBICS, from 1997 to 1999 Mr. Stocker was
founder and owner of Stocker & Associates, a sales training company. From 1993
to 1997, Mr. Stocker was Vice President of Mastech Corporation, where he was in
charge of its IBM Division and Commercial Division. Mr. Stocker holds a
Bachelors degree in Accounting.
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.
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.
Patrick Ghilani was appointed Vice President, Enterprise Solutions of UBICS
in June 1998. Prior to joining UBICS, from 1994 to July 1995 Mr. Ghilani was
production control manager for DECO-Grand, Inc., an automotive parts supplier.
From August 1995 to 1998 he was employed in various capacities with Ernst &
Young LLP, including senior consultant in business process reengineering and
package enabled reengineering projects and national sales coordinator and
manager focusing on the Baan ERP Service line.
5
<PAGE> 9
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth information regarding compensation paid to
Vijay Mallya, Chairman of the Company, and each other current or former
executive officer whose total compensation exceeded $100,000 for the fiscal year
ended December 31, 1998 (together, the "named executive officers"), for the
fiscal years ended December 31, 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------- ------------
NAME AND PRINCIPAL OTHER ANNUAL OPTIONS/SARS ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION (#) COMPENSATION
- ------------------ ---- ------ ----- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Vijay Mallya......... 1998 $150,000 -- -- -- --
Chairman 1997 150,000 -- -- 75,000 --
1996 125,000(1) -- -- -- --
Manohar B. Hira...... 1998 $120,000 -- $22,802(3) -- $18,000(4)
President 1997 109,000 $20,000(2) 19,000 90,000 --
1996 60,000 15,000 25,000 -- --
O'Neil Nalavadi...... 1998 $100,000 -- $30,171(6) -- $15,000(4)
Senior Vice
President 1997 58,333 -- -- 52,000 --
and CFO(5)
Scott Baxendell...... 1998 $166,333 -- -- 35,000 --
Vice President,
Sales and 1997 348,602 -- -- -- --
Marketing(7) 1996 333,002 -- -- -- --
</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) Includes amounts paid by UBICS for use of an automobile ($15,746) and
payment of travel expenses by UBICS on behalf of Mr. Hira ($7,056).
(4) Represent payments for contributions to retirement accounts for Mr. Hira and
Mr. Nalavadi pursuant to their respective employment agreements.
(5) Mr. Nalavadi became employed by UBICS in August 1997.
(6) Includes payment of travel expenses by UBICS on behalf of Mr. Nalavadi
($21,168) and amounts paid by UBICS for use of an automobile ($9,003).
(7) Mr. Baxendell terminated his employment with UBICS in August 1998. Salary
information includes sales commissions.
STOCK OPTIONS
The Company currently maintains the UBICS, Inc. 1997 Stock Option Plan (the
"1997 Plan") under which stock option awards may be made to eligible employees
of the Company. A maximum of 750,000 shares of Common Stock may be issued
pursuant to exercise of options granted under the 1997 Plan which number may be
adjusted to prevent dilution or enlargement of rights in the event of any stock
dividend, reorganization, reclassification, recapitalization, stock split,
combination, merger, consolidation or other relevant capitalization change. As
of December 31, 1998, there were options to purchase an aggregate of 438,000
shares of UBICS Common Stock outstanding under the 1997 Plan.
The following tables set forth certain information with respect to options
granted to the named executive officers during the fiscal year ended December
31, 1998 and the value of options held by the named executive officers on
December 31, 1998. None of the named executive officers exercised any options to
purchase common stock during the fiscal year ended December 31, 1998.
6
<PAGE> 10
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS/SARS EMPLOYEES IN OR BASE EXPIRATION ---------------------
NAME GRANTED(#) FISCAL YEAR PRICE($/SH) DATE 5%($) 10%($)
- ---- ------------ ---------------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Vijay Mallya...................... -- -- -- -- -- --
Manohar B. Hira................... -- -- -- -- -- --
O'Neil Nalavadi................... -- -- -- -- -- --
Scott Baxendell................... 35,000(1) 20.2% $13.75 1/28/09(1) $783,906 $1,248,239
</TABLE>
- ---------------
(1) Options were granted subject to vesting in three equal installments on
1/25/99, 1/25/00 and 1/25/01. Options terminated after Mr. Baxendell
terminated his employment in August 1998.
(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 ($13.75 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
number of shares of UBICS 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 UBICS Common Stock.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED IN-THE-MONEY
HELD AT FISCAL YEAR-END OPTIONS AT FISCAL YEAR-END(1)
----------------------------- ---------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Vijay Mallya...................... 25,000 50,000 -- --
Manohar B. Hira................... 30,000 60,000 -- --
O'Neil Nalavadi................... 17,333 34,667 -- --
Scott Baxendell(2)................ -- 35,000 -- --
</TABLE>
- ---------------
(1) All options listed were out of the money as of December 31, 1998.
(2) Mr. Baxendell terminated his employment with UBICS in August 1998, as a
result of which all options granted to Mr. Baxendell are no longer
exercisable.
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. Hira and Nalavadi also provide for annual payments by UBICS to
retirement accounts designated by Messrs. Hira and Nalavadi, respectively, equal
to 15% of their respective annual base salaries. 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
7
<PAGE> 11
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 Vijay Mallya or an affiliate of Vijay Mallya)
becomes the beneficial owner (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended), 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 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
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.
UBICS and Manohar B. Hira, currently President and a director of UBICS,
have entered into an Agreement of Severance, Waiver and Release (the "Severance
Agreement") which provides that Mr. Hira will not be nominated and will not
stand for reelection to the Board of Directors of UBICS at the Annual Meeting.
Mr. Hira will continue as an employee of UBICS until his retirement on January
1, 2000 and will perform such duties as may be designated from time to time by
the Board, the Chairman or the President of UBICS.
The Severance Agreement provides that UBICS will pay Mr. Hira a severance
payment of $450,000, payable in installments of $150,000 on January 1, 2000 (the
"Termination Date") and $100,000 on each of the first through third
anniversaries of the Termination Date. In addition, all stock options held by
Mr. Hira shall vest and be exercisable by Mr. Hira or his estate effective upon
his resignation as President of UBICS until the expiration date of such options.
UBICS also agreed to amend a mortgage note dated June 24, 1998 from Mr. Hira
8
<PAGE> 12
to UBICS in the principal amount of $250,000 to eliminate all scheduled
installment payments and provide that the principal amount and all accrued
interest shall be due and payable on the fourth anniversary of the Termination
Date. Mr. Hira agreed to release UBICS and its present and former officers,
directors, employees, agents and attorneys from any and all claims, suits,
damages and expenses related to or arising out of Mr. Hira's employment or
termination of employment with UBICS.
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, Mr. Price was granted options to
purchase 20,000 shares of Common Stock at an exercise price of $13.63 per share
upon his appointment as a director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Mallya, Chairman and the beneficial owner of approximately 62% of the
outstanding shares of Common Stock of the Company, may 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, and Mr.
Mallya is Chairman and a significant shareholder of such companies. Any
transaction between the Company, on the one hand, and a company in the UB Group,
on the other hand, may be deemed to be a transaction between "affiliates"
(within the meaning of the Securities Act). In addition, Mr. Hira, currently
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
currently a director of the Company, was employed in various senior management
capacities with the UB Group from 1984 to 1997. See "Election of Directors."
From time to time, the UB Group has provided administrative services to the
Company by UB Group employees and allowed the Company the use of office space
and facilities in India and other foreign 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 $20,000 in 1998. In October 1997 the Company entered into
Services Agreements with Mr. Mallya and two UB Group companies, UB International
Limited and United Breweries Limited (the "Services Agreements"), pursuant to
which the UB Group agreed to 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 three UB Group companies (UB Services, United Breweries Limited and
UB International Limited) pursuant to which the UB
9
<PAGE> 13
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 was party to a sublease agreement with United
Breweries of America ("UBA"), a UB Group company, pursuant to which the Company
subleased a portion of its office space in Sausalito, California to UBA.
Pursuant to the sublease, UBA agreed to pay its pro rata share of the rent and
operating expenses payable by the Company under its lease. UBA's annual rental
and operating expense payment under the sublease was approximately $83,000. As
of September 30, 1999, UBA owed an aggregate of $192,801 in rent and expenses to
UBICS under the sublease. Effective on June 2, 1999, the Company terminated its
lease of such office space and its sublease agreement with UBA and UBA became
the lessee of such office space. The Company now subleases a portion of such
office space from UBA on a month-to-month basis. The rental amount for such
subleased space is $4,288 per month or $51,456 per year.
Manohar B. Hira, president and a director of UBICS, executed and delivered
to UBICS a Mortgage Note dated June 24, 1998 in the principal amount of $250,000
(the "Note") evidencing a loan in such amount by UBICS to Mr. Hira to finance a
portion of the purchase price of a personal residence. The Note is secured by a
second mortgage on such property in favor of UBICS. The terms of the Note were
amended pursuant to the Severance Agreement which is described above under
"Executive Compensation -- Employment Agreements" to provide that no installment
payments of principal or interest are required to be made until the maturity
date (January 1, 2004), at which date all principal and accrued interest will be
due and payable.
REPORT OF THE COMPENSATION COMMITTEE
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 met once during fiscal 1998 to pursue the aforementioned
duties.
The base salaries of most of UBICS's executive officers, including Vijay
Mallya, Manohar B. Hira, O'Neil Nalavadi and Babu Srinivas, are as provided in
such officers' respective employment agreements with UBICS. Other executive
officers receive a base salary as determined by the Compensation Committee at
the time of appointment of the officer. No bonuses were awarded to any officer
of UBICS for the 1998 fiscal year because the Company did not achieve the
increase in earnings from 1997 to 1998 that was expected.
Mr. Mallya, Chairman of UBICS, and Mr. Hira, President of UBICS, are
eligible to receive compensation in the form of base salary, bonus and stock
options. The base salaries paid to Messrs. Mallya and Hira are determined
pursuant to their respective employment agreements and are not related to the
financial performance of UBICS. Bonuses may be paid to Messrs. Mallya and Hira
under their employment agreements, in the discretion of the Compensation
Committee; this component of compensation takes into account factors such as the
financial performance of UBICS for the year in question and the Compensation
Committee's assessment of the individual officer's performance. As noted above,
no bonuses were paid to UBICS officers, including Messrs. Mallya and Hira, for
1998 because the Compensation Committee concluded that payment of bonuses was
not warranted since UBICS did not achieve the expected increase in earnings from
1997 to 1998. Finally, Messrs. Mallya and Hira are eligible to receive stock
option grants under the 1997 Plan, which are intended primarily as an incentive
to retain such officers and encourage them to continue to work for the growth of
UBICS. Neither Mr. Mallya nor Mr. Hira were granted any stock options during
1998.
10
<PAGE> 14
During 1998 the Board granted stock options covering an aggregate of
105,000 shares of Common Stock to the Corporation's executive officers. No
options were granted during 1998 to Mr. Mallya, the Company's Chairman or Mr.
Hira, the Company's President. All options granted to executive officers were
granted in connection with the promotion (in the case of one officer) or initial
hiring (in the case of two other officers) of the officer. No options were
granted during 1998 to existing executive officers. Although in general the
Compensation Committee has the power to approve option grants under the 1997
Plan, the option grants to such executive officers were approved by the full
Board since they related to the initial hiring or promotion of such officers.
The number of options granted to such executive officers was determined based on
negotiations between management and the respective officers in consultation with
the Board, with regard to the officer's relative position and the Board's and
management's assessment of the officer's anticipated value to the Company and
anticipated contributions to the growth of the Company.
By the Compensation Committee
of the Board of Directors:
Vijay Mallya
Kent D. Price
Scott B. Heldfond
By the Board of Directors:
Vijay Mallya
Manohar B. Hira
Scott R. Heldfond
O'Neil Nalavadi
Kent D. Price
11
<PAGE> 15
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, 1998, 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>
UBICS COMMON STOCK NASDAQ COMPUTER AND
------------------ NASDAQ NATIONAL MARKET DATA PROCESSING SERVICES
COMPOSITE INDEX STOCK INDEX
---------------------- ------------------------
<S> <C> <C> <C>
'10/30/97' 100.00 100.00 100.00
'12/31/97' 125.00 98.54 94.75
'12/31/98' 44.79 137.59 173.71
</TABLE>
CERTAIN TRANSACTIONS
The Company has entered and intends to enter into certain arrangements and
agreements with companies in the UB Group. See "Executive
Compensation -- 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.
12
<PAGE> 16
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the UBICS Common Stock as of October 27, 1999 by (1) each person
who is known by UBICS to have been the beneficial owner of more than five
percent of the UBICS Common Stock on such date, (2) each director and named
executive officer of UBICS and (3) all directors and executive officers of UBICS
as a group as of such date (based on 6,479,800 shares of UBICS Common Stock
outstanding as of October 27, 1999).
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
--------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------------------ --------- -------
<S> <C> <C>
United Breweries Information Consultancy Services Ltd.(2)... 4,033,751 62.3%
Vijay Mallya(3)(4)(5)....................................... 4,083,751 62.5
Manohar B. Hira(4)(5)....................................... 60,700 *
Scott Heldfond(4)(5)(6)..................................... 2,000 *
O'Neil Nalavadi(4)(5)....................................... 34,666 *
Kent Price(4)(5)............................................ 21,000 *
All directors and executive officers as a group (9
persons)(3)(5)(6)......................................... 4,252,115 63.5
</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 UBICS 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. Heldfond, Mr. Nalavadi and Mr.
Price is c/o UBICS, Inc., 333 Technology Drive, Suite 210, Southpointe,
Canonsburg, Pennsylvania 15317.
(5) Includes shares of UBICS 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, 50,000; Mr. Hira, 60,000; Mr. Nalavadi,
34,666; Mr. Heldfond, 0; Mr. Price, 20,000; all directors and executive
officers as a group, 214,664.
(6) Does not include 20,000 shares of UBICS Common Stock that may be acquired by
Mr. Heldfond pursuant to the exercise of options granted pursuant to the
1997 Plan, which grant was effective on November 2, 1999.
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.
For the fiscal year ended December 31, 1998 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 except as
follows: Forms 3 for Vijay Reddy, Kent Price and Scott Heldfond and Forms 4 for
13
<PAGE> 17
Messrs. Price and Heldfond reporting purchases of UBICS Common Stock (one
purchase by each) were not timely filed; and Forms 5 for Kent Price, Vijay Reddy
and Patrick Ghilani reporting a grant of exempt stock options to each were not
timely filed.
PROPOSED AMENDMENT TO THE COMPANY'S 1997 STOCK OPTION PLAN
GENERAL
The Company currently maintains the 1997 Plan, under which options to
purchase shares of Common Stock may be granted to directors and selected
employees of the Company. As of October 27, 1999, there were 289,000 shares
remaining available for awards under the 1997 Plan. On October 27, 1999, the
Board of Directors recommended, subject to shareholder approval, certain
amendments to the 1997 Plan, as described below.
A summary of the 1997 Plan, as proposed to be amended, is set forth below.
The summary is qualified in its entirety by the full text of the 1997 Plan. The
Company will provide, upon request and without charge, a copy of the full text
of the 1997 Plan to each person to whom a copy of this Proxy Statement is
delivered. Requests should be directed to: Babu Srinivas, Secretary of the
Company.
PURPOSE
The purpose of the 1997 Plan is to encourage eligible directors, officers
and employees of the Company to increase their efforts to make the Company more
successful, to provide an additional inducement for such employees to remain
with the Company, to reward such persons by providing an opportunity to acquire
Common Stock on favorable terms and to provide a means through which the Company
may attract able persons to become directors or employees of the Company. As of
September 30, 1999, there were approximately 30 persons eligible to participate
in the 1997 Plan.
SHARES AVAILABLE AND INDIVIDUAL LIMITATION
Subject to adjustment as provided in the 1997 Plan, the aggregate number of
shares of Common Stock reserved and available for options currently is 750,000.
The aggregate number of shares available for options under the 1997 Plan is
proposed to be increased to 1,300,000.
The maximum number of shares of Common Stock with respect to which options
may be granted under the 1997 Plan to any one participant currently is 10% of
the total number of shares available under the 1997 Plan, or 75,000 shares. This
individual participant limitation is proposed to be increased to 40% of the
total number of shares of Common Stock available under the 1997 Plan. If the
stockholders approve the proposed amendments to the 1997 Plan, the individual
participant limitation would be 520,000 shares.
ADMINISTRATION
The 1997 Plan is administered by the Compensation Committee. The
Compensation Committee has the power, authority and discretion to determine the
employees to whom options will be granted; determine the number and type of
options to be granted and the terms and conditions thereof; prescribe such
rules, regulations and procedures as it may deem necessary and advisable to
administer the 1997 Plan; and make all other decisions and determinations that
may be required under, or as the Compensation Committee deems necessary or
advisable to administer, the 1997 Plan.
OPTIONS
The 1997 Plan permits the Company to grant to participants incentive stock
options as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), non-statutory stock options, (i.e., stock options not
meeting the requirements of Section 422) and, in connection with a stock option
grant, stock appreciation rights ("SARs") and limited stock appreciation rights
("LSARs"). The term "option" as used in the following discussion without further
qualification means any of the foregoing.
14
<PAGE> 18
All securities to be issued upon exercise of options granted under the 1997
Plan will be issued by the Company out of its authorized, unissued stock or out
or repurchased shares held by the Company, or partly each. Such repurchased
shares held by the Company may have been purchased by the Company on the open
market or in private transactions from time to time.
The Compensation Committee will establish the exercise price of options at
the time of each grant. The exercise price of incentive stock options must be no
less than 100% of the fair market value (determined as set forth in the 1997
Plan) of a share of Common Stock on the grant date. The exercise price of
incentive stock options granted to a stockholder of the Company that owns more
than 10% of the total combined voting power of all classes of stock of the
Company (a "Ten Percent Employee"), must be no less than 110% of the fair market
value of a share of Common Stock on the grant date. Options become exercisable
at such times and in such installments as the Compensation Committee shall
provide at the date of grant. Options have a maximum term of 10 years (5 years
for an incentive stock option granted to a Ten Percent Employee). The option's
exercise price may be paid in cash, in stock held by the optionee for at least
six months prior to the exercise date and owned free and clear of all liens or
otherwise as the Compensation Committee may approve.
If an optionee's employment by the Company is terminated for cause, all
options held by optionee (whether or not then vested) will terminate and be
forfeited. The 1997 Plan also provides that outstanding vested options held by
an optionee who dies, becomes disabled, retires or voluntarily terminates his
employment may be exercised for a specified period following such event or as
determined by the Committee.
All outstanding options will vest in full and become exercisable upon the
occurrence of certain events specified in the 1997 Plan relating to a change in
control or possible change in control of the Company. In addition, any LSARs
granted in connection with a stock option will be exercisable for a period of 60
days following the occurrence of such events.
The Board has the authority to amend or terminate the 1997 Plan, provided
that stockholder approval of any amendment shall be obtained if the Board
determines, based on the recommendation of counsel, that stockholder approval is
necessary or advisable. No such amendment or termination may adversely affect
any outstanding option unless the holder of such option has consented in writing
thereto. The 1997 Plan will terminate ten years from September 2, 1997.
CERTAIN FEDERAL INCOME TAX EFFECTS
Non-qualified Stock Options. Under present federal income tax laws and
regulations, there will be no federal income tax consequences to either the
Company or the participant upon the grant of a non-qualified stock option.
However, the participant will realize ordinary income on the exercise of the
non-qualified stock option in an amount equal to the excess of the fair market
value of the Common Stock acquired upon the exercise of such option over the
exercise price, and the Company will receive a corresponding deduction. A
subsequent sale or exchange of such shares will result in gain or loss measured
by the difference between (a) the exercise price, increased by any compensation
reported upon the participant's exercise of the option, and (b) the amount
realized on such sale or exchange. Such gain or loss will be capital in nature
if the shares were held as a capital asset and will be long-term if such shares
were held for the applicable long-term capital gain holding period.
Incentive Stock Options. Under present federal income tax laws and
regulations, there will be no federal income tax consequences to either the
Company or the participant upon the grant of an incentive stock option or the
exercise thereof by the participant. If the participant holds the shares of
Common Stock for the greater of two years after the date the option was granted
or one year after the acquisition of such shares of Common Stock (the "required
holding period"), the difference between the aggregate exercise price and the
amount realized upon disposition of the shares of Common Stock will constitute a
capital gain or loss, and the Company will not be entitled to a federal income
tax deduction. If the shares of Common Stock are disposed of in a sale, exchange
or other "disqualifying disposition" during the required holding period, the
participant will realize taxable ordinary income in an amount equal to the
excess (if any) of the fair market value of the Common Stock purchased at the
time of exercise (or, if less, the amount realized on the disposition of the
shares) over the aggregate exercise price, and the Company will be entitled to a
federal income tax deduction equal to such amount (subject to the provisions of
Section 162(m) of the Code). Upon exercise of an incentive stock option, the
participant may be
15
<PAGE> 19
subject to alternative minimum tax on certain items of tax preference. If an
incentive stock option is exercised at a time when it no longer qualifies as an
incentive stock option, the option will be treated as a non-qualified stock
option.
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
As of October 27, 1999, options had been granted or approved for grant
under the 1997 Plan to the following persons and groups. Any future awards will
be made at the discretion of the Compensation Committee. Therefore, it is not
presently possible to determine the benefits or amounts that will be received by
such persons or groups pursuant to the 1997 Plan in the future.
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE(1) NUMBER OF OPTIONS
- ----------------- --------------- -----------------
<S> <C> <C>
Vijay Mallya, Chairman...................................... $ 0 75,000
Manohar B. Hira, President.................................. 0 90,000
O'Neil Nalavadi, Senior Vice President and Chief Financial
Officer................................................... 0 52,000
Scott Baxendell(2).......................................... 0 0
Scott R. Heldfond, Director Nominee(3)...................... 0 0
All Current Executive Officers as a Group................... 0 377,000
All Current Non-Executive Directors as a Group.............. 0 20,000
All Non-Executive Employees as a Group...................... 0 24,000
</TABLE>
- ---------------
(1) The dollar value of the above options is dependent on the difference between
the exercise price and the fair market value of the underlying shares on the
date of the exercise.
(2) Mr. Baxendell terminated his employment with UBICS in August, 1998, as a
result of which all options granted to Mr. Baxendell expired and are no
longer exercisable.
(3) Does not include 20,000 shares of UBICS Common Stock that may be acquired by
Mr. Heldfond pursuant to the exercise of options granted pursuant to the
1997 Plan, which grant was effective on November 2, 1999.
The closing price, as reported on the Nasdaq National Market on October 27,
1999, of the Common Stock underlying options outstanding under the 1997 Plan was
$2.47.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSED
AMENDMENT TO THE 1997 PLAN.
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
2000 Annual Meeting, shareholder proposals must be received by the Company no
later than July 7, 2000 and must otherwise comply with the requirements of Rule
14a-8. Shareholder proposals submitted outside the processes of Rule 14a-8 must
be received by the Company no later than September 20, 2000 and must otherwise
comply with the requirements of Rule 14a-4(c) under the Exchange Act; in
accordance with Rule 14a-4(c), proxy holders will have discretionary authority
to vote in accordance with their judgment upon any such proposal which is not
timely received by the Company or which does not otherwise comply with Rule
14a-4(c).
16
<PAGE> 20
INDEPENDENT AUDITORS
The Company engaged Arthur Andersen LLP, independent certified public
accountants, as auditors for the fiscal year ended December 31, 1998.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting and, while they are not expected to make a statement, they will have the
opportunity to do so if they desire. Such representatives will be available to
respond to appropriate questions from the stockholders.
OTHER MATTERS
The Board of Directors of UBICS does not know of any matters to be
presented at the Annual Meeting other than the proposals set forth herein. If
any other matters should properly come before the Annual Meeting, however, it is
the intention of the persons named in the enclosed proxy to vote thereon in
accordance with their best judgment.
AVAILABLE INFORMATION
UBICS is subject to certain informational requirements of the Exchange Act,
and in accordance therewith files reports and other information with the
Commission. Such reports and other information can be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 or at the regional offices of the
Commission at Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661
and Seven World Trade Center, New York, New York 10048. Copies of such material
can be obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The address of such site is http//www.sec.gov.
ANNUAL REPORT AND FORM 10-K
THE COMPANY HAS PREVIOUSLY SENT TO ITS STOCKHOLDERS THE COMPANY'S 1998
ANNUAL REPORT. STOCKHOLDERS MAY OBTAIN A COPY OF THE 1998 ANNUAL REPORT, AND/OR
A COPY (WITHOUT EXHIBITS) OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 1998 AS FILED WITH THE COMMISSION WITHOUT CHARGE BY
WRITING TO: UBICS, INC., 333 TECHNOLOGY DRIVE, SUITE 210, SOUTHPOINTE,
CANONSBURG, PENNSYLVANIA 15317, 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 stockholders, it is the
intention of those named in the accompanying Proxy to vote such Proxy in
accordance with their judgement upon such matters.
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YOUR VOTE IS IMPORTANT.
THE ENCLOSED PROXY SHOULD BE COMPLETED, DATED, SIGNED AND RETURNED IN THE
ENCLOSED ENVELOPE FOR WHICH POSTAGE HAS BEEN PAID. PROMPT MAILING OF THE PROXY
WILL BE APPRECIATED.
BY ORDER OF THE BOARD OF DIRECTORS OF UBICS
BABU SRINIVAS
VICE PRESIDENT, FINANCE AND
ACCOUNTING AND SECRETARY
Date: November 4, 1999
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ANNEX A
UBICS, INC.
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1997 STOCK OPTION PLAN, AS AMENDED
The purposes of the UBICS, Inc. 1997 Stock Option Plan (the
"Plan") are to encourage eligible directors, officers and employees of UBICS,
Inc. (the "Corporation") and its Subsidiaries (as defined below) to increase
their efforts to make the Corporation and each Subsidiary more successful, to
provide an additional inducement for such employees to remain with the
Corporation or a Subsidiary, to reward such persons by providing an opportunity
to acquire the Common Stock, par value $.01 per share, of the Corporation (the
"Common Stock") on favorable terms and to provide a means through which the
Corporation may attract able persons become directors or to enter the
employment of the Corporation or one of its Subsidiaries. For purposes of the
Plan, the term "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Corporation if each of the corporations (other
than the last corporation in the unbroken chain) owns stock possessing more
than fifty percent (50%) of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
SECTION 1
Administration
The Plan shall be administered by the Compensation Committee
of the Board of Directors of the Corporation (the "Committee"); provided that
the Board of Directors shall administer the Plan until a Compensation Committee
has been established by the Board. References in the Plan to "the Committee"
shall be deemed to include the Board of Directors during any period in which
the Board administers the Plan as provided in the preceding sentence.
The Committee shall interpret the Plan and prescribe such
rules, regulations and procedures in connection with the operation of the Plan
as it shall deem to be necessary and advisable for the administration of the
Plan consistent with the purposes of the Plan.
The Committee shall keep records of action taken at its
meetings. A majority of the Committee shall constitute a quorum at any meeting
and the acts of a majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by a majority of the Committee,
shall be the acts of the Committee.
SECTION 2
Eligibility
Directors of the Corporation or any Subsidiary and those
employees of the Corporation or any Subsidiary who share the responsibility for
the management, growth or protection of the business of the Corporation or any
Subsidiary shall be eligible to receive stock options (with or without stock
appreciation rights) as described herein.
<PAGE> 23
Subject to the provisions of the Plan, the Committee shall
have full and final authority, in its discretion, to grant stock options (with
or without stock appreciation rights) as described herein and to determine the
employees to whom stock options (with or without stock appreciation rights)
shall be granted and the number of shares to be covered by each stock option.
In determining the eligibility of any employee, as well as in determining the
number of shares covered by each stock option, the Committee shall consider the
position and the responsibilities of the employee being considered, the nature
and value to the Corporation or a Subsidiary of his or her services, his or her
present and/or potential contribution to the success of the Corporation or a
Subsidiary and such other factors as the Committee may deem relevant.
SECTION 3
Shares Available under the Plan
The aggregate number of shares of the Common Stock which may
be issued or delivered and as to which stock options may be granted under the
Plan is 1,300,000 shares of Common Stock. All such shares are subject to
adjustment and substitution as set forth in Section 6.
If any stock option granted under the Plan is canceled by
mutual consent or terminates or expires for any reason without having been
exercised in full, the number of shares subject to such stock option shall
again be available for purposes of the Plan, except that to the extent that
stock appreciation rights granted in conjunction with a stock option under the
Plan are exercised and the related stock option surrendered, the number of
shares available for purposes of the Plan shall be reduced by the number of
shares, if any, of Common Stock issued or delivered upon exercise of such stock
appreciation rights.
The shares which may be issued or delivered under the Plan
may be either authorized but unissued shares or repurchased shares or partly
each.
SECTION 4
Grant of Stock Options,
Stock Appreciation Rights, and
Limited Stock Appreciation Rights
The Committee shall have authority, in its discretion, to
grant "incentive stock options" pursuant to Section 422 of the Internal Revenue
Code of 1986 (the "Code"), to grant "non-statutory stock options" (stock
options which do not qualify under such Section 422 of the Code) or to grant
both types of stock options (but not in tandem). The Committee also shall have
the authority, in its discretion, to grant stock appreciation rights in
conjunction with incentive stock options or non-statutory stock options with
the effect provided in Section 5(D). Stock appreciation rights granted in
conjunction with an incentive stock option may only be granted at the time such
incentive stock option is granted. Stock appreciation rights granted in
conjunction with a non-statutory stock option may be granted either at the time
such stock option is granted or at any time thereafter during the term of such
stock option. The Committee shall also have the authority, in its discretion,
to grant limited stock appreciation rights in accordance with the provisions
of, and subject to the terms and conditions set forth in, Section 8.
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No employee shall be granted a stock option or stock options
under the Plan (disregarding canceled, terminated or expired stock options) for
an aggregate number of shares in excess of forty percent (40%) of the total
number of shares which may be issued or delivered under the Plan. For the
purposes of this limitation, any adjustment or substitution made pursuant to
Section 6 with respect to shares which have not been issued or delivered under
the Plan upon the exercise of stock options shall also be made with respect to
shares already issued or delivered under the Plan upon the exercise of stock
options and with respect to shares which would have been issued or delivered
under the Plan but for the exercise of stock appreciation rights in lieu of the
exercise of stock options prior to such adjustment or substitution.
SECTION 5
Terms and Conditions of Stock Options and
Stock Appreciation Rights
Stock options and stock appreciation rights granted under the
Plan shall be subject to the following terms and conditions:
(A) The purchase price at which each stock option may be
exercised (the "option price") shall be such price as the Committee,
in its discretion, shall determine but shall not be less than one
hundred percent (100%) of the fair market value per share of Common
Stock covered by the stock option on the date of grant, except that in
the case of an incentive stock option granted to an employee who,
immediately prior to such grant, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of
stock of the Corporation or any Subsidiary (a "Ten Percent Employee"),
the option price shall not be less than 110% of such fair market value
on the date of grant. For purposes of this Section 5(A), the fair
market value of the Common Stock shall be determined as provided in
Section 5(H). Also, for purposes of this Section 5(A), an individual
(i) shall be considered as owning not only shares of the Common Stock
owned individually, but also all shares that are at the time owned,
directly or indirectly, by or for the spouse, ancestors, lineal
descendants and brothers and sisters (whether by the whole or half
blood) of such individual and (ii) shall be considered as owning
proportionately any shares owned, directly or indirectly, by or for
any corporation, partnership, estate or trust in which such individual
shall be a stockholder, partner or beneficiary.
(B) The option price shall be payable in full in any one or
more of the following ways:
(i) in cash; and/or
(ii) in shares of the Common Stock (which are owned
by the optionee free and clear of all liens and other
encumbrances and which are not subject to the restrictions
set forth in Section 7) having a fair market value on the
date of exercise of the stock option, determined as provided
in Section 5(H), equal to the option price for the shares
being purchased.
If the option price is paid in whole or in part in shares of
Common Stock, any portion of the option price representing a fraction
of a share shall be paid in cash. The date of exercise of a stock
option shall be determined under procedures established by the
Committee, and the option price shall be payable at such time or times
as the Committee, in its discretion, shall determine.
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No shares shall be issued or delivered upon exercise of a stock option
until full payment of the option price has been made. When full payment
of the option price has been made and subject to the restrictions set
forth in Section 7, the optionee shall be considered for all purposes
to be the owner of the shares with respect to which payment has been
made. Payment of the option price with shares shall not increase the
number of shares of Common Stock which may be issued or delivered under
the Plan as provided in Section 3.
(C) Subject to Section 9 hereof, no stock option shall be
exercisable during the first six months of its term, except that this
limitation on exercise shall not apply (i) if the optionee dies during
such six-month period or (ii) if the optionee becomes disabled within
the meaning of Section 422(c)(6) of the Code (a "Disabled Optionee"),
or if his or her employment is voluntarily terminated with the consent
of the Corporation or a Subsidiary during such six-month period. No
incentive stock option shall be exercisable after the expiration of
ten years (five years in the case of a Ten Percent Employee) from the
date of grant. No non-statutory stock option shall be exercisable
after the expiration of ten years and six months from the date of
grant. Subject to this Section 5(C) and Sections 5(F), 5(G) and 5(H),
stock options may "vest" and be exercised at such times, in such
amounts and subject to such restrictions as shall be determined, in
its discretion, by the Committee and set forth in individual stock
option agreements.
(D) Stock appreciation rights shall be exercisable to the
extent that the related stock option is exercisable and only by the
same person or persons who are entitled to exercise the related stock
option. Stock appreciation rights shall entitle the optionee to
surrender the related stock option, or any portion thereof, and to
receive from the Corporation in exchange therefor that number of
shares of Common Stock having an aggregate fair market value equal to
the excess of the fair market value of one share of Common Stock on
such date of exercise over the option price per share, multiplied by
the number of shares covered by the stock option, or portion thereof,
which is surrendered. Cash shall be paid in lieu of any fractional
shares. The Committee shall have the authority, in its discretion, to
determine that the obligation of the Corporation shall be paid in cash
or part in cash and part in shares. The date of exercise of stock
appreciation rights shall be determined under procedures established
by the Committee, and payment under this Section 5(D) shall be made by
the Corporation as soon as practicable after the date of exercise. To
the extent that a stock option as to which stock appreciation rights
have been granted in conjunction therewith is exercised, the stock
appreciation rights shall be canceled. For the purposes of this
Section 5(D), the fair market value of Common Stock shall be
determined as provided in Section 5(H).
(E) No stock option or stock appreciation rights shall be
transferable by an optionee other than by will, or if an optionee dies
intestate, by the laws of descent and distribution of the state of
domicile of the optionee at the time of death, and all stock options
and stock appreciation rights shall be exercisable during the lifetime
of an optionee only by the optionee.
(F) Unless otherwise determined by the Committee and set
forth in the stock option agreement referred to in Section 5(G) or an
amendment thereto:
(i) Voluntary Termination or Retirement (Incentive
Stock Options): If the employment of an optionee who is not a
Disabled Optionee is voluntarily terminated with the written
consent of the Corporation or a Subsidiary or an optionee
retires under any retirement plan of the Corporation or a
Subsidiary, any then outstanding incentive stock option held
by such an optionee shall be exercisable (to the extent
exercisable on the date
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<PAGE> 26
of termination of employment) by such an optionee at any time
prior to the expiration date of such incentive stock option or
within three months after the date of termination of
employment, whichever is the shorter period;
(ii) Voluntary Termination (Non-Statutory Stock
Options): If the employment of an optionee who is not a
Disabled Optionee is voluntarily terminated with the written
consent of the Corporation or a Subsidiary, any then
outstanding non-statutory stock option held by such an
optionee shall be exercisable (to the extent exercisable on
the date of termination of employment) by such an optionee at
any time prior to the expiration date of such non-statutory
stock option or within three months after the date of
termination of employment, whichever is the shorter period;
(iii) Retirement (Non-Statutory Stock Options): If
an optionee retires under any retirement plan of the
Corporation or a Subsidiary, any then outstanding
non-statutory stock option held by such an optionee shall be
exercisable (to the extent exercisable on the date of
termination of employment) by such an optionee at any time
prior to the expiration date of such non-statutory stock
option or within one year after the date of termination of
employment, whichever is the shorter period;
(iv) Disabled Optionees: If the employment of an
optionee who is a Disabled Optionee is voluntarily terminated
with the written consent of the Corporation or a Subsidiary,
any then outstanding stock option held by such optionee shall
be exercisable in full (whether or not so exercisable on the
date of termination of employment) by the optionee at any
time prior to the expiration date of such stock option or
within one year after the date of termination of employment,
whichever is the shorter period; and
(v) Death of Optionee: Following the death of an
optionee during employment, any outstanding stock option held
by the optionee at the time of death shall be exercisable in
full (whether or not so exercisable on the date of the death
of the optionee) by such optionee's estate or by the person
or persons entitled to do so under the will of the optionee,
or, if the optionee shall fail to make testamentary
disposition of the stock option or shall die intestate, by
the legal representative of the optionee, at any time prior
to the expiration date of such stock option or within one
year after the date of death, whichever is the shorter
period. Following the death of an optionee after termination
of employment but during a period when a stock option is
exercisable as provided in clauses (i), (ii), (iii) and (iv)
above, any outstanding stock option held by the optionee at
the time of death shall be exercisable by such optionee's
estate or by such person or persons entitled to do so under
the Will of the optionee or by such legal representative to
the extent the stock option was exercisable by the optionee
at the time of death at any time prior to the expiration date
of such stock option or within one year after the date of
death, whichever is the shorter period.
(vi) If the employment of an optionee terminates for
any reason other than voluntary termination with the consent
of the Corporation or a Subsidiary, retirement under any
retirement plan of the Corporation or a Subsidiary, voluntary
termination while a Disabled Optionee with the consent of the
Corporation or death, the rights of such optionee under any
then outstanding stock option shall terminate at the time of
such termination of employment. In addition, if an optionee
engages in the operation or
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<PAGE> 27
management of a business, whether as owner, partner, officer,
director, employee or otherwise and whether during or after
termination of employment, which is in competition with the
Corporation or any of its Subsidiaries, the Committee may in
its discretion immediately terminate all stock options held by
the optionee.
Whether termination of employment is a voluntary termination with the
written consent of the Corporation or a Subsidiary, whether an
optionee is a Disabled Optionee and whether an optionee has engaged in
the operation or management of a business which is in competition with
the Corporation or any of its Subsidiaries shall be determined in each
case by the Committee and any such determination by the Committee
shall be final and binding.
(G) All stock options and stock appreciation rights shall be
confirmed by a stock option agreement, or an amendment thereto, which
shall be executed by the Chairman or the President (if other than the
Chairman) on behalf of the Corporation and by the employee to whom
such stock options and stock appreciation rights are granted.
(H) Fair market value of the Common Stock,
(i) so long as the Common Stock is listed for
trading on the NASDAQ Small-Cap Market or the NASDAQ National
Market, shall be as set forth in such reliable publication as
the Committee, in its discretion, may choose to rely upon, by
taking the average of the "bid" and "ask" prices per share of
the Common Stock as quoted in such reliable publication on
the trading date immediately preceding the date as of which
fair market value is to be determined, or
(ii) in the event the Common Stock ceases to be
listed for trading on either of such NASDAQ Markets and is
traded on another exchange, shall be as set forth in such
reliable publication as the Committee, in its discretion, may
choose to rely upon, by taking the average of the highest and
lowest price per share of the Common Stock as quoted in such
reliable publication on the nearest date before the date as
of which fair market value is to be determined or by such
other reasonable method or formula as may be determined by
the Committee in its discretion.
(I) The obligation of the Corporation to issue or deliver
shares of Common Stock under the Plan shall be subject to (i) the
effectiveness of a registration statement under the Securities Act of
1933, as amended, with respect to such shares, if deemed necessary or
appropriate by counsel for the Corporation, (ii) the condition that
the shares shall have been listed (or authorized for listing upon
official notice of issuance) upon each stock exchange on which the
Common Stock may then be listed on the NASDAQ National Market or
Small-Cap Market if the Common Stock is then listed thereon and (iii)
all other applicable laws, regulations, rules and orders which may
then be in effect.
Subject to the foregoing provisions of this Section 5 and the
other provisions of the Plan, any stock option or stock appreciation rights
granted under the Plan shall be subject to such other terms and conditions as
the Committee shall deem advisable.
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SECTION 6
Adjustment and Substitution of Shares
If a dividend or other distribution shall be declared upon
the Common Stock payable in shares of Common Stock, the number of shares of
Common Stock then subject to any outstanding stock option and the number of
shares which may be issued or delivered under the Plan but are not then subject
to an outstanding stock option shall be adjusted by adding thereto the number
of shares which would have been distributable thereon if such shares had been
outstanding on the date fixed for determining the stockholders entitled to
receive such stock dividend or distribution.
If the outstanding shares of Common Stock shall be changed
into or exchangeable for a different number or kind of shares of stock or other
securities of the Corporation or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for each
share of Common Stock subject to any then outstanding stock option and for each
share of Common Stock which may be issued or delivered under the Plan but is
not then subject to an outstanding stock option, the number and kind of shares
of stock or other securities into which each outstanding share of Common Stock
shall be so changed or for which each such share shall be exchangeable.
In the case of any adjustment or substitution as provided for
in this Section 6, the aggregate option price for all shares subject to each
then outstanding stock option prior to such adjustment or substitution shall be
the aggregate option price for all shares of stock or other securities
(including any fraction) to which such shares shall have been adjusted or which
shall have been substituted for such shares. Any new option price per share
shall be carried to at least three decimal places with the last decimal place
rounded upwards to the nearest whole number.
No adjustment or substitution provided for in this Section 6
shall require the Corporation to issue or sell a fraction of a share or other
security. Accordingly, all fractional shares or other securities which result
from any such adjustment or substitution shall be eliminated and not carried
forward to any subsequent adjustment or substitution.
If any such adjustment or substitution provided for in this
Section 6 requires the approval of shareholders in order to enable the
Corporation to grant incentive stock options, then no such adjustment or
substitution shall be made without prior shareholder approval. Notwithstanding
the foregoing, in the case of incentive stock options, if the effect of any
such adjustment or substitution would be to cause the stock option to fail to
continue to qualify as an incentive stock option or to cause a modification,
extension or renewal of such stock option within the meaning of Section 424 of
the Code, the Committee may elect that such adjustment or substitution not be
made but rather shall use reasonable efforts to effect such other adjustment of
each then outstanding stock option as the Committee in its sole discretion
shall deem equitable and which will not result in any disqualification,
modification, extension or renewal (within the meaning of Section 424 of the
Code) of such incentive stock option.
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SECTION 7
Restrictions on Transfer of
Certain Shares
Shares of Common Stock acquired upon exercise of an option by
a person then subject to the provisions of Section 16 of the Exchange Act shall
not be sold or otherwise transferred prior to the expiration of six months
after the date of grant of the stock option. Shares of Common Stock acquired
upon exercise of an incentive stock option shall not be sold or otherwise
transferred until after the expiration of any holding period required by
Section 422 of the Code, as may be amended from time to time. The Corporation
is authorized to (i) retain the certificate(s) representing such shares or
place such certificates in the custody of its transfer agent, (ii) place a
restrictive legend on such shares, and/or (iii) issue a stop transfer order to
the transfer agent with respect to such shares in order to enforce the transfer
restrictions of this Section.
SECTION 8
Limited Stock Appreciation Rights
Limited stock appreciation rights may, in the discretion of
the Committee, be granted in connection with all or part of (i) an incentive
stock option granted under this Plan at the time of the grant of such stock
option or (ii) a non-statutory option, at the time such option is granted or at
any time thereafter during the term of the such option.
Limited stock appreciation rights shall entitle the holder of
an option in connection with which such limited stock appreciation rights are
granted, upon exercise of the limited stock appreciation rights, to surrender
the stock option, or any applicable portion thereof, and any related stock
appreciation rights, to the extent unexercised, and to receive an amount of
cash determined pursuant to this Section 8. Such option, and any related stock
appreciation rights, shall, to the extent so surrendered, thereupon cease to be
exercisable.
Limited stock appreciation rights shall be subject to the
following terms and conditions and to such other terms and conditions not
inconsistent with the Plan as shall from time to time be approved by the
Committee:
(A) Limited stock appreciation rights shall be exercisable,
subject to Section 8(B), during any one or more of the following
periods:
(i) for a period of 60 days beginning on the date on
which shares of Common Stock are first purchased pursuant to
a tender offer or exchange offer (other than such an offer by
the Corporation), whether or not such offer is approved or
opposed by the Corporation and regardless of the number of
shares of Common Stock purchased pursuant to such offer;
(ii) for a period of 60 days beginning on the date
the Corporation acquires knowledge that any person or group
deemed a person under Section 13(d)(3) of the Exchange Act
(other than any director of the Corporation on January 30,
1997, any Affiliate or Associate of any such director (with
such terms having the respective
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<PAGE> 30
meanings set forth in Rule 12b-2 under the Exchange Act as in
effect on January 30, 1997), any member of the family of any
such director, any trust (including the trustees thereof)
established by or for the benefit of any such persons, or any
charitable foundation, whether a trust or a corporation
(including the trustees and directors thereof) established by
or for the benefit of any such persons), in a transaction or
series of transactions shall become the beneficial owner,
directly or indirectly (with beneficial ownership determined
as provided in Rule 13d-3, or any successor rule, under the
Exchange Act), of securities of the Corporation entitling the
person or group to 20% or more of all votes (without
consideration of the rights of any class of stock to elect
directors by a separate class vote) to which all shareholders
of the Corporation would be entitled if the election of
Directors were an election held on such date;
(iii) for a period of 60 days beginning on the date
of filing under the Exchange Act of a Statement on Schedule
13D, or any amendment thereto, by any person or group deemed
a person under Section 13(d)(3) of the Exchange Act,
disclosing an intention or possible intention to acquire or
change control of the Corporation;
(iv) for a period of 60 days beginning on the date,
during any period of two consecutive years, when individuals
who at the beginning of such period constitute the Board of
Directors of the Corporation cease for any reason to
constitute at least a majority thereof, unless the election,
or the nomination for election by the shareholders of the
Corporation, of each new Director was approved by a vote of
at least two-thirds of the Directors then still in office who
were Directors at the beginning of such period; and
(v) for a period of 60 days beginning on the date of
approval by the shareholders of the Corporation of an
agreement (a "reorganization agreement") providing for (a)
the merger or consolidation of the Corporation with another
corporation where the shareholders of the Corporation,
immediately prior to the merger or consolidation, do not or
will not beneficially own, immediately after the merger or
consolidation, shares of the corporation issuing cash or
securities in the merger or consolidation entitling such
shareholders to 50% or more of all votes (without
consideration of the rights of any class of stock to elect
directors by a separate class vote) to which all shareholders
of such corporation would be entitled in the election of
Directors or where the members of the Board of Directors of
the Corporation, immediately prior to the merger or
consolidation, do not or will not, immediately after the
merger or consolidation, constitute a majority of the Board
of Directors of the corporation issuing cash or securities in
the merger or consolidation or (b) the sale or other
disposition of all or substantially all the assets of the
Corporation.
(B) Subject to Section 9 hereof, limited stock appreciation
rights shall in no event be exercisable unless and until the holder of
the limited stock appreciation rights shall have completed at least
six months of continuous service with the Corporation or a Subsidiary,
or both, immediately following the date upon which the limited stock
appreciation rights shall have been granted.
(C) Upon exercise of limited stock appreciation rights, the
holder thereof shall be entitled to receive an amount of cash in
respect of each share of Common Stock subject to the related option
equal to the excess of the fair market value of such share over the
option price of such related option, and for this purpose fair market
value shall mean the highest last sale price of
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the Common Stock as reported on the NASDAQ during the period beginning
on the 90th day prior to the date on which the limited stock
appreciation rights are exercised and ending on such date, except that
(a) in the event of a tender offer or exchange offer for Common Stock,
fair market value shall mean the greater of such last sale price or the
highest price paid for Common Stock pursuant to any tender offer or
exchange offer in effect at any time beginning on the 90th day prior to
the date on which the limited stock appreciation rights are exercised
and ending on such date, (b) in the event of the acquisition by any
person or group of beneficial ownership of securities of the
Corporation entitling the person or group to 10% or more of all votes
to which all shareholders of the Corporation would be entitled in the
election of Directors or in the event of the filing of a Statement on
Schedule 13D, or any amendment thereto, disclosing an intention or
possible intention by any person or group to acquire control of the
Corporation, fair market value shall mean the greater of such last sale
price or the highest price per share paid for Common Stock shown on the
Statement on Schedule 13D, or any amendment thereto, filed by the
person or group becoming a 10% beneficial owner or disclosing an
intention or possible intention to acquire control of the Corporation
and (c) in the event of approval by shareholders of the Corporation of
a reorganization agreement, fair market value shall mean the greater of
such last sale price or the fixed or formula price specified in the
reorganization agreement if such price is determinable as of the date
of exercise of the limited stock appreciation rights. Any securities or
property which are part or all of the consideration paid for Common
Stock in a tender offer or exchange offer or under an approved
reorganization agreement shall be valued at the higher of (a) the
valuation placed on such securities or property by the person making
the tender offer or exchange offer or by the corporation other than the
Corporation issuing securities or property in the merger or
consolidation or to whom the Corporation is selling or otherwise
disposing of all or substantially all the assets of the Corporation and
(b) the valuation placed on such securities or property by the
Committee.
(D) To the extent that limited stock appreciation rights
shall be exercised, the option in connection with which such limited
stock appreciation rights shall have been granted shall be deemed to
have been exercised and any related stock appreciation rights shall be
canceled. To the extent that the option in connection with which
limited stock appreciation rights shall have been granted or any
related stock appreciation rights shall be exercised, the limited
stock appreciation rights granted in connection with such option shall
be canceled.
SECTION 9
Acceleration of the Exercise Date of
Stock Options and Related Stock Appreciation Rights
Notwithstanding any other provision of this Plan, all stock
options and stock appreciation rights shall become exercisable upon the
occurrence of any of the events specified in Section 8(A) whether or not such
options are then exercisable under the provisions of the applicable agreements
relating thereto, except that if stock appreciation rights have been granted
along with limited stock appreciation rights to the same option holder with
respect to the same option, in no event may the stock appreciation rights be
exercised for cash during any of the 60-day periods provided for in Section 8.
10
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SECTION 10
Effect of the Plan on the Rights
of Employees and Employer
Neither the adoption of the Plan nor any action of the Board
or the Committee pursuant to the Plan shall be deemed to give any employee any
right to be granted a stock option (with or without stock appreciation rights)
under the Plan and nothing in the Plan, in any stock option or stock
appreciation rights granted under the Plan or in any stock option agreement
shall confer any right to any employee to continue in the employment of the
Corporation or any Subsidiary or interfere in any way with the rights of the
Corporation or any Subsidiary to terminate the employment of any employee at
any time.
SECTION 11
Amendment
The right to alter and amend the Plan at any time and from
time to time and the right to revoke or terminate the Plan are hereby
specifically reserved to the Board; provided always that no such revocation or
termination shall terminate any outstanding stock option or stock appreciation
rights theretofore granted under the Plan; and provided further that any
amendment to the Plan also shall be approved by the stockholders if the Board
determines, based upon the recommendation of counsel to the Corporation, that
such approval is necessary or advisable, no such alteration or amendment of the
Plan shall, without prior stockholder approval, (a) increase the total number
of shares which may be issued or delivered under the Plan, or (b) make any
changes in the class of eligible employees. No alteration, amendment,
revocation or termination of the Plan shall, without the written consent of the
holder of a stock option or stock appreciation rights theretofore granted under
the Plan, adversely affect the rights of such holder with respect to such stock
option or stock appreciation rights.
SECTION 12
Effective Date and Duration of Plan
The effective date and date of adoption of the Plan shall be
September 2, 1997 (the "Effective Date"), the date of adoption of the Plan by
the Board, provided that such adoption of the Plan by the Board is approved by
the affirmative vote of the holders of at least a majority of the outstanding
shares of Common Stock at a meeting of such holders duly called, convened and
held within one year of the Effective Date. No stock option or stock
appreciation rights granted under the Plan prior to such shareholder approval
may be exercised until after such approval. No stock option or stock
appreciation rights may be granted under the Plan subsequent to September 2,
2007.
11
<PAGE> 33
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
1999 Annual Meeting of Stockholders of UBICS, Inc. (the "Company") to be held
at the Holiday Inn Pittsburgh South, 164 Fort Couch Road, Pittsburgh,
Pennsylvania on Wednesday, December 1, 1999 at 11:00 a.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 *
Please mark
your votes as
indicated on [X]
this example
1. ELECTION OF ONE (1) DIRECTOR
NOMINEE: For the Class II Director Whose Term
Expires in 2002: Scott R. Heldfond
FOR WITHHELD
[ ] [ ]
2. Amendment of the UBICS 1997 Stock Option Plan to increase the number of
shares of Common Stock authorized for issuance under the Plan to 1,300,000
and to increase the maximum aggregate number of shares of Common Stock which
may be covered by options granted to any individual under the Plan to 40% of
the total shares authorized for issuance under the Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL HAVE NO AFFECT ON THE VOTE ON ANY MATTER TO COME
BEFORE THE STOCKHOLDERS AT THE ANNUAL MEETING.
DATE: __________________________________ 1999
___________________________________________________________________
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
December 1, 1999
Holiday Inn, Pittsburgh South
164 Fort Couch Road
Pittsburgh, Pa.
Beginning at 11:00 A.M.
