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Exhibit 2.3
ACQUISITION AND STOCK EXCHANGE AGREEMENT
This Agreement is made as of March 18, 1999, among UBICS, INC., a
Delaware corporation ("UBICS"), R sYSTEMS (SINGAPORE) pte limited, a Singapore
limited exempt private company (the "COMPANY") and the individuals listed as
shareholders on the signature page hereof (each such person a "SHAREHOLDER" and
collectively the "SHAREHOLDERS").
PREAMBLE
The Shareholders collectively own all of the issued and outstanding
shares of capital stock of the Company. A full and complete list setting forth
the names of the Shareholders and their respective holdings in the Company is
attached hereto as Exhibit A.
The Boards of Directors of UBICS and the Company deem it advisable and
in the best interests of their respective stockholders to consummate (1) the
acquisition of the Company by UBICS upon the terms and subject to the conditions
set forth herein and (2) the acquisition of R Systems (India) Private Limited,
an Indian corporation ("R SYSTEMS-INDIA"), and R Systems, Inc., a California
corporation ("R SYSTEMS"), both of which are affiliated with the Company, by
UBICS upon the terms and conditions set forth in separate Acquisition and Stock
Exchange Agreements to be executed of even date herewith and in conjunction
herewith (the "RELATED ACQUISITION AGREEMENTS").
The parties desire to structure the Exchange as a tax-free
reorganization within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended (together with the rules and regulations
promulgated thereunder, the "CODE"), and desire that the Exchange be accounted
for as a pooling of interests pursuant to generally accepted accounting
principles ("GAAP").
UBICS would not be willing to enter into this Agreement unless Xxxxxxxx
Xxxxx Xxxxx and Xxxxxxxx Xxxxx agreed to refrain from competing with UBICS, R
Systems, R Systems-India and the Company (collectively, the "COMBINED
COMPANIES") for a reasonable period of time, and accordingly each of Xxxxxxxx
Xxxxx Rekhi and Xxxxxxxx Xxxxx has agreed to execute and deliver to UBICS a
noncompetition agreement.
Therefore, in consideration of the premises and the mutual covenants,
agreements, representations, and warranties herein contained, the parties
hereto, intending to be legally bound, agree as follows.
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ARTICLE I
EXCHANGE
1.01. Exchange. The parties desire to engage in a tax-free
stock-for-stock exchange under Section 368(a)(1)(B) of the Code, for the purpose
of developing and enhancing the parties' respective businesses. Therefore, on
the Closing Date (as defined below), the Shareholders will exchange all of their
shares of the Company Stock (as defined below) for shares of UBICS Common Stock
(as defined below) upon the terms and subject to the conditions set forth below
(the "EXCHANGE").
1.02. Exchange of Shares. At and as of the Closing Date:
(a) The Shareholders will transfer and deliver to UBICS all of
the 70,000 ordinary shares, par value one (1.00) Singapore dollar, of the
Company (the "COMPANY STOCK") issued and outstanding immediately prior to the
Closing Date in exchange for 10,000 shares (the "EXCHANGE SHARES") of UBICS'
common stock, par value $.01 per share (the "UBICS COMMON STOCK"), such Exchange
Shares to be apportioned among the Shareholders as set forth on Exhibit A
hereto;
(b) upon the surrender by the Shareholders of certificates (or
evidence of lost certificates reasonably acceptable to UBICS) representing all
of the outstanding shares of the Company Stock to UBICS, together with the
relevant share transfer forms duly executed by the respective shareholders and
all other documents and instruments required to be presented to the Singapore
Stamp Office to obtain the necessary stamping of the share transfer forms for
the Company Stock, UBICS shall deliver to the Shareholders certificates
representing the Exchange Shares;
(c) all of the shares of UBICS Common Stock previously issued
and outstanding shall remain issued and outstanding and shall not be affected by
the Exchange; and
(d) the Exchange Shares to be issued to the Shareholders will
not at the time of issuance be registered under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), on the ground that the issuance thereof in the
Exchange is exempt from registration pursuant to Section 4(2) thereof and/or
Regulation D thereunder. The parties understand that the availability of such
exemption is based in part upon the imposition of restrictions on the transfer
of the Exchange Shares, upon certain information supplied to UBICS by the
Company and the Shareholders and upon the representations of the Company and the
Shareholders set forth in this Agreement. The Exchange Shares may not be
transferred except pursuant to an effective registration statement under the
Securities Act or an exemption from such registration requirements and
compliance with applicable state securities law. The following legend will be
placed on the certificates representing the Exchange Shares:
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THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES
LAWS, AND SUCH SHARES MAY NOT BE SOLD, ENCUMBERED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION
FROM SUCH REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION SHALL BE
APPLICABLE, THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
UBICS may instruct its transfer agent to place stop transfer orders against any
transfer of the Exchange Shares in violation of this subsection (d).
1.03. Waiver of Preemptive Rights. Each of the Shareholders hereby
waives any and all preemptive rights which such Shareholder may have pursuant to
the Company's Articles of Association or otherwise in connection with any of the
Company Stock or the Exchange pursuant to this Agreement.
1.04. Pooling Matters. The Company and each of the Shareholders hereby
affirms and agrees to the matters set forth in Schedule 1.04 hereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder, severally and not jointly, hereby represents and
warrants to UBICS as follows:
2.01. Investor Status and Investment Interest. The Shareholder, if a
resident of the United States, either (a) is an "accredited investor" as such
term is defined in Rule 501 promulgated under the Securities Act or (b) has such
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of acquiring the UBICS Common Stock pursuant
to this Agreement. The Shareholder (i) is acquiring the UBICS Common Stock
pursuant to the Exchange solely for his own account for investment purposes and
not with a view to the distribution thereof within the meaning of the Securities
Act; and (ii) has had access to all forms, reports, schedules, statements and
other documents required to be filed by UBICS since September 1, 1997 under the
Securities Exchange Act of 1934, as amended, or the Securities Act and has had
the opportunity to obtain such additional information as he deemed necessary in
order to evaluate the merits and risks inherent in acquiring and holding the
UBICS
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Common Stock. The Shareholder resides at the address set forth below the
Shareholder's name on Exhibit A hereto. The Shareholder, if a resident of
California, either (i) has a preexisting business or personal relationship with
UBICS or any of its officers or directors or (ii) has such business or financial
experience as to have the capacity to protect his or her own interests in
connection with the transactions pursuant to this Agreement.
2.02. Title to Capital Stock. The Shareholder is the sole legal and
beneficial owner of the Company Stock shown on Exhibit A as owned by the
Shareholder, has good and marketable title to such Company Stock, and there
exist no liens, claims, pledges, options, proxies, voting agreements, charges or
encumbrances of any kind affecting such Company Stock. The Shareholder has the
sole and absolute right, power and authority to sell, assign and transfer such
Company Stock as provided in this Agreement. UBICS will acquire good and
unencumbered title to such Company Stock, free and clear of all liens, claims,
restrictions, charges and encumbrances ("Liens") and not subject to any adverse
claim when acquired by UBICS pursuant to this Agreement.
2.03. Authorization of Transaction. Subject to the need to make
certain governmental filings described in Schedule 2.04 to the R Systems
Disclosure Schedule delivered with the Related Acquisition Agreement for R
Systems the Shareholder has the full right, power and authority (i) to execute
and deliver this Agreement, and (ii) to perform the Shareholder's obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Shareholder, enforceable against the Shareholder in accordance with its
terms, except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the
enforcement of creditors' rights generally, now or hereafter in effect and
subject to the application of equitable principles and the availability of
equitable remedies.
2.04. No Violation. The Shareholder is not a party to, subject to or
bound by any agreement or any judgment, order, writ, prohibition, injunction or
decree of any court or other governmental entity (a "GOVERNMENTAL ORDER") which
would prevent the execution, delivery or performance of this Agreement by the
Shareholder.
2.05. No Breach, Default, Violation or Consent. Except as set forth
on Schedule 2.04 to the R Systems Disclosure Schedule delivered with the Related
Acquisition Agreement for R Systems, the execution, delivery and performance by
the Shareholder of this Agreement do not and will not:
(a) breach or result in a default (or an event which, with the
giving of notice or the passage of time, or both, would constitute a default)
under, require any consent under or give to others any rights of termination,
acceleration, suspension, revocation, cancellation or amendment of any contract,
agreement, instrument or
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document to which the Shareholder is a party or by which the Shareholder or his
assets are bound;
(b) breach or otherwise violate any Governmental Order which
names the Shareholder, or is directed to the Shareholder or any of his assets;
(c) result in the creation of a Lien held by any third party
on any of his shares of Company Stock;
(d) violate any law, rule, regulation, ordinance or code of
any governmental entity (each a "GOVERNMENTAL RULE") applicable to the
Shareholder; or
(e) require any consent, authorization, approval, exemption or
other action by, or any filing, registration or qualification with, any person
or entity (each a "PERSON").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF UBICS
UBICS hereby delivers to the Company and the Shareholder a copy of the
Related Acquisition Agreement with respect to R Systems, and makes, to and for
the benefit of the Company and the Shareholders, each of the representations and
warranties set forth in Article IV of such Related Acquisition Agreement. In
addition, UBICS hereby represents and warrants to the Company and the
Shareholders as follows:
3.01. UBICS Common Stock. The shares of UBICS Common Stock to be
issued in the Exchange, when issued in accordance with the terms of this
Agreement, will be duly authorized and validly issued in compliance with
applicable United States federal and state Governmental Rules relating to the
issuance of securities, fully paid and nonassessable, and the issuance of all
such shares is not subject to any preemptive rights.
ARTICLE IV
CLOSING
4.01. Closing. The closing of the transactions contemplated by
this Agreement will take place at 10:00 a.m., local time, on the date (the
"CLOSING DATE") that UBICS acquires all of the outstanding stock of R Systems
and R Systems-India, pursuant to the Related Acquisition Agreements, at the
offices of Xxxxx & Xxxxxxx, P.C., 00 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxx 00000, unless another time, date or place is agreed to in writing
by the parties hereto.
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ARTICLE V
MISCELLANEOUS
5.01. Amendments. This Agreement may be amended only by a
writing signed by each of the parties, and any such amendment shall be effective
only to the extent specifically set forth in such writing.
5.02. Assignment. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned, pledged or otherwise
transferred by any party, whether by operation of law or otherwise, without the
prior consent of the other party or parties.
5.03. Counterparts; Telefacsimile Execution. This Agreement
may be executed in any number of counterparts, and by each of the parties on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all of which shall constitute but one and the same instrument.
Delivery of an executed counterpart of this Agreement by telefacsimile shall be
equally as effective as delivery of a manually executed counterpart. Any party
delivering an executed counterpart of this Agreement by telefacsimile also shall
deliver a manually executed counterpart of this Agreement, but the failure to
deliver a manually executed counterpart shall not affect the validity,
enforceability or binding effect of this Agreement.
5.04. Entire Agreement. This Agreement, together with the
other agreements referred to herein and the schedules and exhibits attached
hereto, contains the entire agreement of the parties with respect to the
transactions contemplated hereby and supersedes all prior written and oral
agreements, and all contemporaneous oral agreements, relating to such
transactions.
5.05. Further Assurances. The parties shall from time to time
do and perform such additional acts and execute and deliver such additional
documents and instruments as may be required by applicable Governmental Rules or
reasonably requested by any party to establish, maintain or protect its rights
and remedies or to effect the intents and purposes of this Agreement.
5.06. Governing Law. This Agreement shall be a contract under
the laws of the State of Delaware and for all purposes shall be governed by and
construed and enforced in accordance with the laws of said State without giving
effect to the principles of conflicts of law thereof or of any other
jurisdiction.
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5.07. Notices. Unless otherwise specifically provided herein,
all notices, consents, requests, demands and other communications required or
permitted hereunder:
(a) shall be in writing;
(b) shall be sent by messenger, certified or registered U.S.
mail or air mail, a reliable express delivery service or telecopier (with a copy
sent by one of the foregoing means), charges prepaid as applicable, to the
appropriate address(es) or number(s) set forth below; and
(c) shall be deemed to have been given on the date of
receipt by the addressee (or, if the date of receipt is not a business day, on
the first business day after the date of receipt), as evidenced by (i) a receipt
executed by the addressee (or a responsible person in his or her office), the
records of the Person delivering such communication or a notice to the effect
that such addressee refused to claim or accept such communication, if sent by
messenger, U.S. mail or express delivery service, or (ii) a receipt generated by
the sender's telecopier showing that such communication was sent to the
appropriate number on a specified date, if sent by telecopier.
All such communications shall be sent to the following addresses or numbers, or
to such other addresses or numbers as any party may inform the others by giving
five business days' prior notice:
If to the Company: With a copy to:
R Systems (Singapore) Pte Limited Xxxxxx & Xxxxx LLP
0000 Xxxxxxxx Xxxxx, Xxxxx 0 000 Xxxxxxx Xxxx, 00xx Xxxxx
Xx Xxxxxx Xxxxx, XX 00000 Xxxxxxxxxx, XX 00000-0000
Attn: Rekhi Singh Attn: Xxxxx Xxxxx
Telecopier No.: (000) 000-0000 Telecopier No.: (000) 000-0000
If to UBICS : With a copy to:
UBICS, Inc. Xxxxx & Xxxxxxx, P.C.
000 Xxxxxxxxxx Xxxxx, Xxxxx #000 00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000 15th Floor
Attn: Dr. Xxxxx Xxxxxx Xxxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000 Attn: Xxxxx X. Xxxx
Telecopier No.: (000) 000-0000
5.08. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the
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extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
5.09. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of each of the parties and their respective
legal representatives, heirs, successors and permitted assigns.
5.10. Termination. This Agreement may be terminated at any
time prior to the Closing (i) by mutual agreement of UBICS, the Company and the
Shareholders; or (ii) automatically if either of the Related Acquisition
Agreements is terminated. If this Agreement is terminated as provided above,
then neither party shall have any further obligations or liabilities hereunder
except for obligations or liabilities arising from a breach of this Agreement
prior to such termination or which survive such termination by their own terms
and except for obligations under confidentiality agreements between UBICS and
the Company. Notwithstanding the foregoing, the maximum amount of damages that
may be recovered with respect to any breach of this Agreement or either of the
Related Acquisition Agreements which results in termination of this Agreement
prior to closing shall not exceed the amount set forth in the Related
Acquisition Agreement with respect to R Systems.
5.11 Arbitration. Any claim, controversy or dispute arising
between the parties with respect to this Agreement (a "DISPUTE"), to the maximum
extent allowed by applicable law, shall be submitted to and finally resolved by
binding arbitration. Either party may file a written Demand for Arbitration with
the American Arbitration Association's Sacramento, California Regional Office,
and shall send a copy of the Demand for Arbitration to the other party. The
arbitration shall be conducted pursuant to the terms of the Federal Arbitration
Act and the Commercial Arbitration Rules of the American Arbitration
Association, except that discovery may be had in accordance with the Federal
Rules of Civil Procedure. The venue for the arbitration shall be the Sacramento,
California office of the American Arbitration Association. The arbitration shall
be conducted before a panel of three arbitrators selected as follows:. Within 15
business days after a Demand for Arbitration is filed, each party shall select
an arbitrator and, within 10 business days after the end of such 15-day period,
such two arbitrators shall select a third arbitrator. Each arbitrator must
either have professional experience relating to the business or legal aspects of
the subject of the arbitration or be a retired judge. No arbitrator shall (i)
have any material interest in the result of the arbitration or (ii) be, or shall
ever have been, an Affiliate, equity holder or creditor of, or an attorney,
accountant, agent or consultant for, any party to such arbitration proceeding.
The arbitrators shall meet promptly, fix the time, date and place of the hearing
and notify the parties. The parties shall stipulate that the arbitration hearing
shall last no longer than five business days. A majority of the panel shall
render a decision within 10 days of the completion of the hearing, which
decision may include
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an award of legal fees, costs of arbitration and interest. The panel of
arbitrators shall promptly transmit an executed copy of its decision to the
parties. The decision of the arbitrators shall be final, binding and conclusive
upon the parties. Each party shall have the right to have the decision enforced
by any court of competent jurisdiction. Notwithstanding any other provision of
this Section, any Dispute in which a party seeks equitable relief may be brought
in any court having jurisdiction. The obligations of the parties under this
Section shall be specifically enforceable and shall survive any termination of
this Agreement.
[SIGNATURE PAGE FOLLOWS]
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SIGNATURE PAGE TO ACQUISITION AND STOCK EXCHANGE AGREEMENT
R SYSTEMS (SINGAPORE) PTE LIMITED
By: /s/ Xxxxxxxx Xxxxx Rekhi
--------------------------------
UBICS, INC.
By: /s/ Dr. Xxxxx Xxxxxx
--------------------------------
Dr. Xxxxx Xxxxxx, Chairman
SHAREHOLDERS:
/s/ Xxxxxxxx Xxxxx Xxxxx
-----------------------------------
Xxxxxxxx Xxxxx Rekhi
/s/ Xxxxxxxx Xxxxx
-----------------------------------
Xxxxxxxx Xxxxx
/s/ Seow Siang Eng Xxxx
-----------------------------------
Seow Siang Eng Xxxx
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EXHIBIT A
SHAREHOLDERS
-------------------------------- -------------------------------- ---------------------------
NAME AND ADDRESS SHARES OF COMPANY SHARES OF UBICS COMMON
STOCK OWNED STOCK TO BE RECEIVED
-------------------------------- -------------------------------- ---------------------------
Xxxxxxxx Xxxxx Xxxxx 69,800 9,972
0000 Xxxx Xxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
-------------------------------- -------------------------------- ---------------------------
Xxxxxxxx Xxxxx 100 14
2051 Last Xxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
-------------------------------- -------------------------------- ---------------------------
Seow Siang Eng Xxxx 100 14
43 Lucky View
Singapore 1646
-------------------------------- -------------------------------- ---------------------------
Total 70,000 10,000
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Schedule 1.04
POOLING MATTERS
In accordance with Accounting Principles Board Opinion (APB) No. 16, Business
Combinations, the Company and the Shareholders have complied with or agreed to
comply with the following pooling requirements:
1. The Company is autonomous and has not been a subsidiary or division of
another corporation within two years before the acquisition pursuant to
the Agreement (the "Acquisition") with UBICS was initiated.
2. The Company is independent of UBICS and holds less than 10% of the
outstanding voting common stock of UBICS.
3. Neither the Company nor any of the Shareholders has taken or agreed to
take any action which will result in the Acquisition being effected
other than by the exchange of Company Stock for UBICS Common Stock.
4. The Shareholders will exchange all of the outstanding capital stock of
the Company for UBICS Common Stock upon consummation of the
Acquisition.
5. The Shareholders have not within two years before the date of this
Agreement (a) taken or agreed to take any action to effect or otherwise
made (i) distributions or dividends in cash, stock or any form of
consideration to shareholders, (ii) additional issuances, exchanges and
retirements of common, preferred, restricted or convertible stock or
securities, (iii) changes in the voting rights or other rights of
outstanding common stock, (iv) changes in the terms of any existing
equity securities, (v) grants or issuance of other classes of common
stock with different voting rights or other rights, (vi) stock splits
or dividends paid, declared or planned, (vii) issuance of debt or
debentures convertible into an equity interest and (viii) any
disproportionate distribution of stock or any form of consideration
from an agreement among shareholders and, (b) have not otherwise
changed the equity interest of the Company's voting capital stock.
6. The Company has not reacquired any shares of voting capital stock
within the two years before the date of this Agreement.
7. The Acquisition will be consummated at the Closing and no provisions of
the Agreement relating to the issue of securities or other
consideration will be pending.
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8. Neither the Company nor any of the Shareholders, has entered into or
intends to enter into any agreement or arrangement pursuant to which
the Company or UBICS has agreed or will agree directly or indirectly to
retire or reacquire all or any part of the UBICS Common Stock issued
pursuant to the Agreement, except as contemplated by the Agreement and
transactions contemplated thereby.
9. Neither the Company nor any of the Shareholders has entered into or
intends to enter into any agreement or arrangement pursuant to which
the Company or UBICS has agreed or will agree to provide any financial
arrangements for the benefit of former shareholders of R Systems, other
than Xxxxxxxx Xxxxx Rekhi who will become party to an employment
agreement with UBICS.
10. The Shareholders have not and do not intend to reduce their risk
relative to any shares of UBICS Common Stock received in the
Acquisition until publication of financial results covering at
least 30 days of post-Acquisition combined operations.
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