-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JnOiLNOBaBbAhi4jhAjY0A7k4x7jij+GELrHW71QTjxY+0aU1uvp32NeF9gdRhmK tUuOuTDaFRH8CEBFaKOX+A== 0000950133-99-003999.txt : 19991224 0000950133-99-003999.hdr.sgml : 19991224 ACCESSION NUMBER: 0000950133-99-003999 CONFORMED SUBMISSION TYPE: SC 14D9 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19991223 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: EIS INTERNATIONAL INC /DE/ CENTRAL INDEX KEY: 0000032251 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 061017599 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 SEC ACT: SEC FILE NUMBER: 005-43073 FILM NUMBER: 99779762 BUSINESS ADDRESS: STREET 1: 555 HERNDON PARKWAY CITY: HERNDON STATE: VA ZIP: 20170 BUSINESS PHONE: 7033266400 FORMER COMPANY: FORMER CONFORMED NAME: ELECTRONIC INFORMATION SYSTEMS INC DATE OF NAME CHANGE: 19940218 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: EIS INTERNATIONAL INC /DE/ CENTRAL INDEX KEY: 0000032251 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 061017599 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 BUSINESS ADDRESS: STREET 1: 555 HERNDON PARKWAY CITY: HERNDON STATE: VA ZIP: 20170 BUSINESS PHONE: 7033266400 FORMER COMPANY: FORMER CONFORMED NAME: ELECTRONIC INFORMATION SYSTEMS INC DATE OF NAME CHANGE: 19940218 SC 14D9 1 SCHEDULE 14D-9 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-9 SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ EIS INTERNATIONAL, INC. (NAME OF SUBJECT COMPANY) EIS INTERNATIONAL, INC. (NAME OF PERSON(S) FILING STATEMENT) COMMON STOCK, PAR VALUE $0.01 PER SHARE (TITLE OF CLASS OF SECURITIES) 268539103 (CUSIP NUMBER OF CLASS OF SECURITIES) ------------------------ JAMES E. MCGOWAN PRESIDENT AND CHIEF EXECUTIVE OFFICER EIS INTERNATIONAL, INC. 555 HERNDON PARKWAY HERNDON, VIRGINIA 20170 (703) 478-9808 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT) WITH A COPY TO: RANDALL S. PARKS HUNTON & WILLIAMS 951 EAST BYRD STREET RIVERFRONT PLAZA, EAST TOWER RICHMOND, VIRGINIA 23219-4074 (804) 788-8200 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 ITEM 1. SECURITY AND SUBJECT COMPANY The name of the subject company is EIS International, Inc., a Delaware corporation (the "Company"). The address of the principal executive offices of the Company is 555 Herndon Parkway, Herndon, Virginia, 20170. The title of the class of equity securities to which this Solicitation/Recommendation Statement on Schedule 14D-9 (this "Statement") relates is common stock, par value $0.01 per share, of the Company, together with the associated rights to purchase Series A Preferred Stock, par value $0.01 per share, pursuant to that certain Rights Agreement (the "Rights Agreement"), dated as of May 16, 1997 between the Company and BankBoston N.A., as amended (collectively, the "Shares"). ITEM 2. TENDER OFFER OF THE BIDDER This Statement relates to the tender offer by SERSys Acquisition Corporation, a Delaware corporation ("Purchaser") that is a wholly owned subsidiary of SER (USA), Inc., a Delaware corporation ("SER USA") that is a wholly owned subsidiary of SER Systeme AG, a German corporation ("Parent"), disclosed in a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") dated December 23, 1999 offering to purchase all of the outstanding Shares at a price of $6.25 per Share, net to the seller in cash (the "Offer Consideration"), upon the terms and subject to the conditions set forth in the Offer to Purchase dated December 23, 1999 (the "Offer to Purchase") and the related Letter of Transmittal (which, together with the Offer to Purchase, as maybe amended from time to time, constitute the "Offer"). The Offer is being made pursuant to an Agreement and Plan of Merger dated as of December 17, 1999 (the "Merger Agreement"), by and among Parent, Purchaser and the Company. The Merger Agreement provides, among other things, that following satisfaction or waiver of the conditions set forth in the Merger Agreement and in accordance with the Delaware General Corporation Law (the "DGCL"), Purchaser will be merged with and into the Company (the "Merger"), the separate corporate existence of Purchaser will cease and the Company will continue as the surviving corporation (the "Surviving Corporation") and become a wholly owned subsidiary of SER USA and an indirect wholly owned subsidiary of Parent. A copy of the Merger Agreement is filed as Exhibit (c)(1) to this Statement and is incorporated herein by reference. As set forth in the Schedule 14D-l, the principal executive offices of Parent are located at Innovationspark Rahms, D-53577 Neustadt/Wied, Germany, and the principal executive offices of Purchaser are located at 7200 Wisconsin Avenue, Suite 1001, Bethesda, Maryland 20814. ITEM 3. IDENTITY AND BACKGROUND (a) The name and address of the Company, which is the person filing this Statement, are set forth in Item 1 above. (b) Except as set forth in this Item 3(b), to the best knowledge of the Company, there are no material contracts, agreements, arrangements or understandings and no actual or potential conflicts of interest between the Company or its affiliates and (i) the Company's executive officers, directors or affiliates or (ii) Parent or Purchaser or their respective executive officers, directors or affiliates. The information included in the Offer to Purchase under the headings "The Tender Offer -- Background of the Offer; Contacts with the Company," "-- The Merger Agreement and Other Agreements" and "-- Certain Conditions of the Offer," is incorporated herein by reference. Each material contract, agreement, arrangement and understanding and actual or potential conflict of interest between the Company or its affiliates and (i) its executive officers, directors or affiliates or (ii) Parent or Purchaser, or their respective executive officers, directors or affiliates, is either incorporated by reference by the preceding sentence, disclosed in the excerpt from the Company's Proxy Statement, dated April 5, 1999, for its 1999 Annual Meeting of Shareholders, attached hereto as Exhibit (c)(9), or set forth in this Item 3 below or in Item 5 (the provisions of which are incorporated by reference herein) below. All information in this Statement relating to Parent or Purchaser and their respective officers, directors, representatives or affiliates, or actions or events with respect to any of them, was provided by Parent or Purchaser, respectively, and the Company takes no responsibility for such information. 1 3 INDEMNIFICATION OF OFFICERS AND DIRECTORS The Company is a Delaware corporation. Pursuant to Section 145 of the DGCL, a corporation incorporated under the laws of the State of Delaware is permitted to indemnify its current and former directors and officers under certain circumstances against certain liabilities and expenses incurred by them by reason of their serving in such capacities, if such persons acted in good faith for a purpose which they reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. Pursuant to Article Eighth of the Company's Amended and Restated Certificate of Incorporation (the "Certificate of Incorporation"), no director will be personally liable to the Company or any stockholder for damages resulting from any breach of fiduciary duty in such capacity to the fullest extent permitted by Delaware law. The Company's Certificate of Incorporation further provides that neither the amendment nor repeal of Article Eighth thereof may limit or eliminate the effect of Article Eighth in respect of any acts or omissions occurring prior to such repeal or modification. Article Eighth of the Certificate of Incorporation is filed herewith as Exhibit (c)(9) and is incorporated herein by reference. ITEM 4. THE SOLICITATION OR RECOMMENDATION (a) Recommendation of the Board of Directors On December 16, 1999, the Board of Directors of the Company (the "Company Board") unanimously (with Messrs. McGowan and Burton abstaining) approved the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, determined that the Offer and the Merger, taken together, are fair to, and in the best interests of, the Company and its stockholders and recommended that (i) the stockholders accept the Offer and tender their Shares in the Offer and (ii) the stockholders entitled to vote thereon, approve and adopt the Merger Agreement, subject to the terms and conditions therein, and the transactions contemplated thereby. This recommendation is based in part upon an opinion of the Company's financial advisor, Updata Capital, Inc. ("Updata"), dated as of December 16, 1999, to the effect that, as of such date, the consideration to be received by the Company's stockholders in the Offer and the Merger is fair to the Company's stockholders from a financial point of view (the "Fairness Opinion"). The Fairness Opinion contains a description of the factors considered, the assumptions made and the scope of the review undertaken by Updata in rendering its opinion. The full text of the Fairness Opinion is attached as Exhibit (a)(9) to this Statement and is incorporated herein by reference. Stockholders are urged to read the Fairness Opinion in its entirety. (b) Background; Reasons for the Recommendation of the Company's Board of Directors Over the past several years, the management of the Company and the Company Board have regularly reviewed the Company's performance, strategic direction and prospects in light of changes in the contact center industry, including the possibility of increased competition. In May, 1999, Parent authorized its financial advisor, Broadview Int'l LLC ("Broadview"), to contact the Company regarding Parent's interest in exploring the possibility of a strategic relationship or business combination between the Company and Parent. Over the course of the next several months, Mr. Kevin R. McClelland, a Principal of Broadview, had multiple conversations with Mr. James E. McGowan, President and Chief Executive Officer of the Company, regarding the potential benefits of a strategic relationship or business combination. On September 1, 1999, Dr. Philip A. Storey, Executive Vice President of Parent, and Mr. McGowan held a meeting at Mr. McGowan's office in Herndon, Virginia, the first informal senior executive discussions between the Company and Parent. As a result of this meeting, representatives of Parent and Company believed that there was potential for a good strategic fit between the two organizations, along the lines of a business combination, OEM product agreement or other strategic venture or transaction. A second meeting between Dr. Storey and Mr. McGowan occurred on the afternoon of September 13, 1999. Prior to this meeting, Parent and the Company entered into a mutual non-disclosure agreement, which was amended and superseded by a confidential mutual non-disclosure agreement on October 15, 1999 (the "Confidentiality 2 4 Agreement"). At this meeting, the parties discussed the Company's planned business direction in light of changes in the contact center industry and Parent's technological capabilities with respect to the Internet and process automation. As a result of this meeting, and in light of the parties' strategies discussed thereat, Dr. Storey and Mr. McGowan began to consider the prospect of a business combination between the Company and Parent. Following the meeting of September 13, 1999, Dr. Storey discussed the possibility of a merger between the Company and Parent with other members of the Management Board of Parent, and Gert J. Reinhardt, Chief Executive Officer of Parent, fully briefed the Parent's supervisory board about the situation. In addition, on September 17, representatives from Broadview held a conference call with Mr. McGowan and other representatives from the Company to discuss the Company's strategy and its historical and projected financial results. On September 23, 1999, Broadview and the Parent outlined to the Company preliminary proposed transaction terms for a merger of the Company and Parent. On October 6, 1999, Mr. McGowan and Updata, the Company's financial advisor, presented to the Company Board the preliminary proposed transaction terms for a merger of the Company and Parent. At this meeting, the Company Board considered the Company's business, financial condition, results of operations, current business strategy and future prospects, recent and historical market prices and trading ranges for the Shares and strategic and other potential alternatives to a potential business combination. After conferring with the Company Board, Mr. McGowan informed Dr. Storey, in early October, that the Company would continue exploring a possible transaction with Parent and would allow Parent to commence a preliminary senior level due diligence review of the Company. Representatives of Parent commenced the preliminary due diligence investigation on October 15, 1999, and continued their investigation during November, 1999, including holding meetings between certain members of each of the Company's and Parent's senior managements in Germany from October 26 to 29, 1999. During this time, the senior management of each of Parent and the Company discussed generally the possible structures and potential synergies of a business combination. In early November, 1999, the senior management and financial advisors of each of the Company and Parent began to negotiate the amount and form of consideration that would be payable to Company stockholders in connection with a business combination. The parties also discussed various strategies for retaining the services of key Company employees in the event of a business combination. During the negotiations of early November, and prior to November 7, 1999, Dr. Storey fully informed the Management Board of Parent of the status of the discussions and obtained suitable authorizations to proceed on behalf of Parent. Also, during this period, Mr. Reinhardt consulted fully with the Supervisory Board of Parent concerning the negotiations. On November 7, 1999, following negotiations regarding the amount and form of consideration, Dr. Storey called Mr. McGowan and informed him that a price of $6.25, payable in cash for each outstanding Share, would be Parent's best and highest proposal. Parent indicated that it would require Mr. McGowan and Frederick C. Foley, the Company's Chief Financial Officer, to enter into employment agreements and certain stockholders of the Company to enter into a tender agreements, as a conditions to its willingness to enter into a definitive merger agreement. While these conversations were occurring, representatives of Parent continued various aspects of their due diligence review. On November 10, 1999, certain members of the Company Board met to discuss Parent's final offer price and related matters. At this meeting, the Company Board considered the Company's business, financial condition, results of operations, current business strategy and future prospects, recent and historical market prices and trading ranges for the Shares, strategic and other potential alternatives to Parent's offer, and the relevant matters, including information presented by senior management and by the Company's financial advisors regarding the progress of the negotiations between Parent and the Company over the terms of a definitive merger agreement. Senior management and the Company's financial advisors discussed with the Company Board the proposed terms of the merger agreement, which contemplated a cash tender offer followed by a cash merger, and a tender agreement pursuant to which certain officers and directors of the 3 5 Company would agree to tender their Shares into the Offer and vote in favor of the Merger. Based on the information presented at these and previous meetings, and after extensive deliberation, the Company Board authorized senior management of the Company to proceed with the negotiation of definitive documentation relating to the proposed transaction. Also at this meeting, the Company Board authorized Mr. McGowan and senior management of the Company to enter into a non-solicitation and standstill agreement to be negotiated by such management in consultation with legal and financial advisors (the "Non-Solicitation and Standstill Agreement"). Senior management of the Company and the Parent executed the Non-Solicitation and Standstill Agreement on November 17, 1999. From November 22, 1999 through December 15, 1999, Parent and its counsel continued their due diligence review of the Company, and the parties and their advisors negotiated the provisions of the Merger Agreement and the Tender Agreement. On the morning of December 16, 1999, the members of the Company's Board received from the Company certain materials in preparation for deliberations considering the proposed offer, including a summary of the Merger Agreement and the transactions contemplated thereby, the final draft of the Merger Agreement, a summary of the proposed terms of the employment agreements for Mr. McGowan and Mr. Foley, drafts of those employment agreements, an outline of the Company Board's duties under the DGCL and proposed resolutions with respect to the Merger Agreement and the transactions contemplated thereby. Also on the morning of December 16, 1999, the members of the Company's Board received from Updata, the Company's financial advisors, a presentation and financial analysis concerning the Merger Agreement and the transactions contemplated thereby. After having been afforded the full business day to review their materials, the Company Board held a meeting during the evening of December 16, 1999. At that meeting, Mr. McGowan, other members of the Company's senior management and the Company's financial and legal advisors presented to the Company Board the terms of the proposed Merger Agreement and discussed with the Company Board various business issues relating to the contemplated transactions. Updata presented a detailed financial analysis of the proposed transaction and rendered its written opinion that, as of December 16, 1999, the $6.25 per Share cash consideration to be received in the Offer and the Merger by holders of Shares was fair to such holders (other than Parent and its affiliates) from a financial point of view. The Company's legal advisors discussed with the Company Board the legal standards applicable to its decisions with respect to the proposed transaction and reviewed the terms of the transaction documents. After discussion and due consideration, including discussion while Mr. McGowan and Mr. Foley had excused themselves from the meeting, the Company Board unanimously approved (with Messrs. Burton and McGowan abstaining) the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, and resolved to recommend that holders of Shares tender their Shares in the Offer and vote in favor of the Merger. After execution and delivery of the Merger Agreement on the evening of December 17, 1999, the parties issued a joint press release, before the opening of Nasdaq on December 20, 1999, announcing the definitive agreement, the Offer and the Merger. Reasons for the Company Board's Recommendation In light of the Board of Directors' review of the Company's competitive and financial position, recent operating results and prospects, the Board determined that the Offer and the Merger, taken together, are fair to, and in the best interests of, the Company and its stockholders and recommended that (i) the stockholders accept the Offer and tender their Shares in the Offer and (ii) the stockholders entitled to vote thereon, approve and adopt the Merger Agreement, subject to the terms and conditions therein, and the transactions contemplated thereby. In making such recommendation and in approving the Merger Agreement and the transactions contemplated thereby, the Board considered a number of factors, including, but not limited to, the following: (1) the terms and conditions of the Merger Agreement, including the parties' representations, warranties and covenants, the conditions to their respective obligations, the limited ability of Parent and 4 6 Purchaser to terminate the Offer or the Merger Agreement and the provision for payment of the Offer Consideration in cash with no financing condition; (2) the financial condition, results of operations, cash flows and prospects of the Company; (3) the prospects of the Company if the Company were to remain independent and the risks inherent in remaining independent, including competitive risks; (4) the extensive arms-length negotiations between the Company and Parent that resulted in the $6.25 per share price; (5) the history of the Company's discussions with Parent and other parties; (6) that the Offer and the Merger provide for a prompt cash tender offer for all outstanding Shares to be followed by a merger for the same consideration, thereby enabling the Company's stockholders to obtain the benefits of the transaction in exchange for their Shares at the earliest possible time; (7) the current status of the industries in which the Company competes and the technological and financial resources available to the Company's competitors; (8) the likelihood of continued consolidation in the industries in which the Company competes and the possibility that changes in those industries, including the rapid evolution of technology, could adversely affect the Company and its stockholders; (9) the recent trading price of the Shares and that the $6.25 per Share to be paid in the Offer and the Merger represents (i) a premium of approximately 19% over the $5.25 closing sale price for the Shares on The Nasdaq National Market on December 14, 1999, and (ii) a premium of approximately 33.3% over the $4.688 closing sale price for the Shares on The Nasdaq National Market on November 14, 1999; (10) the Company's and Updata's determination that the likelihood that an unconditional superior offer could be found was insufficient to justify the risk of delay in proceeding with the favorable transaction with Parent; (11) the presentations of Updata made to the Board on October 6, 1999, November 10, 1999 and December 16, 1999, and the Fairness Opinion of Updata delivered to the Company Board at the December 16, 1999 Board meeting to the effect that, as of such date and based upon and subject to certain matters stated in such opinion, the cash consideration of $6.25 per share to be received by holders of the Shares in the Offer and the Merger was fair, from a financial point of view, to such holders (STOCKHOLDERS ARE URGED TO READ THE FAIRNESS OPINION IN ITS ENTIRETY); (12) the Merger Agreement permits the Company Board, in the exercise of its fiduciary duties, to furnish information and data, and enter into discussions and negotiations, in connection with a Superior Proposal (as defined in the Merger Agreement) and to withdraw its recommendation of the Merger with Parent and Purchaser in favor of a Superior Proposal to the Company's stockholders; (13) the Merger Agreement permits the Company Board, in the exercise of its fiduciary duties, to terminate the Merger Agreement in favor of a Superior Proposal, provided, that following such termination, the Company must pay Parent a fee of $3,000,000, (representing approximately 4.3% of the total value of the consideration to be paid to stockholders in the Offer and the Merger); and (14) the business reputation of Parent and its management, and Parent's financial strength, including its ability to finance the Offer. The Company Board did not assign relative weights to the above factors or determine that any factor was of particular importance. Rather, the Company Board viewed its position and recommendations as being based on the totality of the information presented to and considered by it. In addition, it is possible that different members of the Company Board assigned different weights to the factors. 5 7 The Company Board recognized that, while the consummation of the Offer gives the Company's stockholders the opportunity to realize a premium over the price at which the Shares were traded before the public announcement of the Offer, tendering in the Offer would eliminate the opportunity for such stockholders to participate in the future growth and profits of the Company. The Company Board believes that the loss of the opportunity to participate in the growth and profits of the Company was reflected in the Offer Consideration of $6.25 per Share. The Company Board also recognized that there can be no assurance as to the level of growth or profits, if any, to be attained by the Company in the future. ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED Pursuant to the terms of an engagement letter dated October 4, 1999 (the "Updata Engagement Letter"), the Company retained Updata as its financial advisor in considering the Company's financial and strategic alternatives, including the possible sale of (or other extraordinary transactions involving) the Company and/or its subsidiaries. Mr. Burton, a director of the Company, is also a Managing Director of Updata. The Company agreed in the Updata Engagement Letter to pay Updata a transaction fee, based on a formula set forth therein, which will result in a cash payment to Updata of approximately $786,200, payable in pro rata installments upon consummation of the Offer and the Merger. Whether or not any transaction is consummated, the Company has agreed to reimburse Updata for reasonable out-of-pocket expenses, including reasonable legal fees and expenses. In the Updata Engagement Letter, the Company agreed to indemnify Updata against certain liabilities arising out of Updata's engagement. The Company has also retained Innovative Software Engineering Practices, Inc. ("Instep") to assist the Company in evaluating and developing product positioning, whole product definition and strategic alternatives, and signed an engagement letter with Instep to such effect on October 15, 1999 (the "Instep Engagement Letter"). Pursuant to the Instep Engagement Letter, the Company will pay Instep a transaction fee, based on a formula set forth therein, which will result in a cash payment to Instep of approximately $275,000. Whether or not any transaction is consummated, the Company has agreed to reimburse Instep for reasonable travel expenses and reasonable legal fees and expenses. In the Instep Engagement Letter, the Company agreed to indemnify Instep against certain liabilities arising out of Instep's engagement. Except as disclosed herein, neither the Company nor any person acting on its behalf has employed, retained or agreed to compensate any person to make solicitations or recommendations to the stockholders concerning the Offer or the Merger on its behalf. ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES (a) During the past 60 days, no transactions in Shares have been effected by the Company or, to the best of the Company's knowledge, by any of its executive officers, directors, affiliates or subsidiaries. (b) To the best knowledge of the Company, all of its executive officers, directors, affiliates and subsidiaries currently intend to tender pursuant to the Offer all Shares held of record or beneficially owned by such persons (other than Shares issuable upon the exercise of Options and Shares, if any, which if tendered could cause such persons to incur liability under the provisions of Section 16(b) of the Securities Exchange Act of 1934), subject to and consistent with any fiduciary obligations of such persons. In a Tender and Voting Agreement dated December 17, 1999 between Parent and the executive officers and directors of the Company, each of the Company's executive officers and directors agreed with Parent, among other things, to tender his Shares in the Offer and to vote for and otherwise to support the Merger. ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY (a) Except as set forth in this Statement, the Company is not engaged in any negotiation in response to the Offer that relates to or would result in; (i) an extraordinary transaction, such as a merger or reorganization, involving the Company or any subsidiary of the Company; (ii) a purchase, sale or transfer of a material amount of assets by the Company or any subsidiary of the Company; (iii) a tender offer for or other 6 8 acquisition of securities by or of the Company; or (iv) any material change in the present capitalization or dividend policy of the Company. (b) Except as described in Item 3(b) or 4 above (the provisions of which are hereby incorporated by reference), there are no transactions, board of directors' resolutions, agreements in principle, or signed contracts in response to the Offer that relate to or would result in one or more of the events referred to in Item 7(a) above. ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED Not applicable. ITEM 9. MATERIALS TO BE FILED AS EXHIBITS Exhibit (a)(1) Form of Offer to Purchase, dated as of December 23, 1999 (incorporated by reference to Exhibit (a)(1) to the Schedule 14D-1).* Exhibit (a)(2) Form of Letter of Transmittal (incorporated by reference to Exhibit (a)(2) to the Schedule 14D-1).* Exhibit (a)(3) Form of Notice of Guaranteed Delivery (incorporated by reference to Exhibit (a)(3) to the Schedule 14D-1).* Exhibit (a)(4) Form of Letter from the Information Agent to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees (incorporated by reference to Exhibit (a)(4) to the Schedule 14D-1).* Exhibit (a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees (incorporated by reference to Exhibit (a)(5) to the Schedule 14D-1).* Exhibit (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (incorporated by reference to Exhibit (a)(6) to the Schedule 14D-1).* Exhibit (a)(7) Letter to Company Stockholders, dated December 23, 1999.* Exhibit (a)(8) Summary Advertisement, as published on December 23, 1999 (incorporated by reference to Exhibit (a)(7) to the Schedule 14D-1). Exhibit (a)(9) Fairness Opinion of Updata Capital, Inc. dated December 16, 1999.* Exhibit (a)(10) Joint Press Release issued by Parent and Company on December 20, 1999 (incorporated by reference to Exhibit (a)(8) to the Schedule 14D-1). Exhibit (c)(1) Agreement and Plan of Merger dated as of December 17, 1999 by and among Parent, Purchaser and the Company (incorporated by reference to Exhibit (c)(1) to the Schedule 14D-1). Exhibit (c)(2) Tender and Voting Agreement, dated as of December 17, 1999, among Parent and certain officers and directors of the Company named therein (incorporated by reference to Exhibit (c)(2) to the Schedule 14D-1). Exhibit (c)(3) Employment Agreement by and between Purchaser and James E. McGowan dated as of December 17, 1999, with exhibits thereto, (incorporated by reference to Exhibit (c)(3) to the Schedule 14D-1). Exhibit (c)(4) Employment Agreement by and between Purchaser and Frederick C. Foley dated as of December 17, 1999, with exhibits thereto, (incorporated by reference to Exhibit (c)(4) to the Schedule 14D-1). 7 9 Exhibit (c)(5) Confidential Mutual Non-Disclosure Agreement dated as of October 15, 1999 between Parent and the Company (incorporated by reference to Exhibit (c)(5) to the Schedule 14D-1). Exhibit (c)(6) Stockholders Agreement, dated as of December 17, 1999 by and among Parent, Purchaser and James E. McGowan (incorporated by reference to Exhibit (c)(6) to the Schedule 14D-1). Exhibit (c)(7) Stockholders Agreement dated as of December 17, 1999 by and among Parent, Purchaser and Frederick C. Foley (incorporated by reference to Exhibit (c)(7) to the Schedule 14D-1). Exhibit (c)(8) Article Eighth of the Certificate of Incorporation of the Company. Exhibit (c)(9) Excerpts from the Company's Proxy Statement, dated April 5, 1999. Exhibit (c)(10) Form of Stock Option Plan of Purchaser (incorporated by reference to Exhibit (c)(8) to the Schedule 14D-1. Exhibit (c)(11) Engagement Letter between the Company and Updata dated October 4, 1999. - --------------- * Included in copies mailed to the stockholders. 8 10 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. EIS INTERNATIONAL, INC. December 23, 1999 By: /s/ JAMES E. MCGOWAN ------------------------------------ Name: James E. McGowan Title: President and Chief Executive Officer 9 EX-99.A.7 2 LETTER TO COMPANY STOCKHOLDERS 1 EXHIBIT (a)(7) EIS INTERNATIONAL, INC. 555 HERNDON PARKWAY HERNDON, VIRGINIA 20170 DECEMBER 23, 1999 Dear Stockholder: We are pleased to report that EIS International, Inc. has entered into a merger agreement with SER Systeme AG, a German corporation, that provides for the acquisition of EIS by SER at a price of $6.25 per share in cash. Under the terms of the proposed transaction, SER is today commencing a cash tender offer for all outstanding shares of EIS's common stock at $6.25 per share. Following the successful completion of the tender offer, a subsidiary of SER will be merged with and into EIS and all shares not purchased by SER in the tender offer will be converted into the right to receive $6.25 per share in cash in the merger. YOUR BOARD OF DIRECTORS HAS APPROVED THE TENDER OFFER AND DETERMINED THAT THE TERMS OF THE TENDER OFFER AND THE MERGER, TAKEN TOGETHER, ARE FAIR TO, AND IN THE BEST INTERESTS OF, EIS AND ITS STOCKHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS ACCEPTANCE OF SER'S TENDER OFFER AND APPROVAL AND ADOPTION OF THE MERGER AGREEMENT BY THE STOCKHOLDERS OF EIS. In arriving at its recommendations, the Board of Directors gave careful consideration to a number of factors. These factors included the opinion, dated December 16, 1999, of Updata Capital, Inc., financial advisor to EIS, to the effect that, as of such date and based upon and subject to certain matters stated in such opinion, the cash consideration of $6.25 per share to be received by EIS stockholders in the tender offer and the merger is fair from a financial point of view to such stockholders. Accompanying this letter is a copy of EIS's Solicitation/Recommendation Statement on Schedule 14D-9. Also enclosed is SER's Offer to Purchase and related materials, including a Letter of Transmittal for your use in tendering shares. We urge you to read carefully the enclosed materials, including Updata's opinion, which is attached to the Schedule 14D-9. The management and directors of EIS International, Inc. thank you for the support you have given EIS. Sincerely, /S/ JAMES E. MCGOWAN ------------------------------ James E. McGowan President and Chief Executive Officer EX-99.A.9 3 FAIRNESS OPINION OF UPDATA CAPITAL, INC. 1 EXHIBIT (a)(9) [UPDATA CAPITAL LOGO] DECEMBER 16, 1999 CONFIDENTIAL Board of Directors EIS International, Inc. 555 Herndon Parkway Herndon, Virginia 20170 Dear Members of the Board: We understand that EIS International, Inc. ("EIS" or the "Company") and SER Systeme AG a German corporation, and Sersys Acquisition Corporation, a Delaware corporation (together "SER") have entered into an Agreement and Plan of Merger (the "Agreement") pursuant to which SER will offer to purchase (the "Offer") all of the outstanding shares of EIS common stock, par value $0.01 per share ("EIS Common Stock"), for $6.25 cash per share (the "Consideration") and subsequently merge with and into EIS (the "Merger"). Pursuant to the Merger, each issued and outstanding share of EIS not acquired in the Offer will be converted into the right to receive an amount of cash equal to the Consideration. The terms and conditions of the above described Offer and Merger (together the "Transaction") are more fully detailed in the Agreement. You have requested our opinion as to whether the Consideration to be received by EIS shareholders in the Transaction is fair, from a financial point of view, to EIS shareholders. Updata Capital, Inc. ("Updata") focuses on providing merger and acquisition advisory services to information technology ("IT") companies. In this capacity, we are continually engaged in valuing such businesses, and we maintain an extensive database of IT mergers and acquisitions for comparative purposes. We are currently acting as financial advisor to you, the Board of Directors of EIS, and will receive a fee from EIS upon the successful conclusion of the Transaction. In rendering our opinion, we have among other things: 1. reviewed the most recent draft of the Agreement and based our opinion on our understanding that the terms and conditions of the Agreement will not materially change; 2. reviewed EIS's annual reports and Forms 10-K for the fiscal years ended December 31, 1998 and 1997, including the audited financial statements included therein, and EIS's Form 10-Q for the nine months ended September 30, 1999, including the unaudited financial statements included therein; 3. reviewed certain internal financial and operating information, including certain projections, relating to EIS prepared by EIS management; 4. participated in discussions with EIS management concerning the operations, business strategy, financial performance and prospects for EIS; 5. reviewed the recent reported closing prices and trading activity for EIS Common Stock; 6. compared certain aspects of the financial performance of EIS with public companies we deemed comparable; 7. analyzed available information, both public and private, concerning other mergers and acquisitions we believe to be comparable in whole or in part to the Transaction; 8. reviewed SER's annual reports for the fiscal years ended December 31, 1998 and December 31, 1997, including the audited financial statements included therein; 2 9. reviewed the recent reported closing prices and trading activity for SER common stock on the Neuer Market; 10. assessed, based on discussions with EIS and SER management, the strategic rationale for the Transaction; 11. assisted in negotiations and discussions related to the Transaction among EIS, SER and their respective legal and investment banking advisors; and 12. conducted other financial studies, analyses and investigations as we deemed appropriate for purposes of this opinion. In rendering our opinion, we have relied, without independent verification, on the accuracy and completeness of all the financial and other information (including without limitation the representations and warranties contained in the Agreement) that was publicly available or furnished to us by EIS. With respect to the financial projections examined by us, we have assumed that they were reasonably prepared and reflected the best available estimates and good faith judgments of the management of EIS as to the future performance of EIS. We have neither made nor obtained an independent appraisal or valuation of any of EIS's assets. Based upon and subject to the foregoing, we are of the opinion that the Consideration to be received by EIS shareholders in the Transaction is fair, from a financial point of view, to EIS shareholders. For purposes of this opinion, we have assumed that EIS is not currently involved in any material transaction other than the Transaction and those activities undertaken in the ordinary course of conducting its business. Our opinion is necessarily based upon market, economic, financial and other conditions as they exist and can be evaluated as of the date of this opinion. Any change in such conditions may impact this opinion. This opinion speaks only as of the date hereof. It is understood that this opinion is for the information of the Board of Directors of EIS in connection with its consideration of the Transaction and does not constitute a recommendation to any EIS shareholder as to whether such shareholder should tender its shares in the Offer or as to how such shareholder should vote on the Merger. Updata does not believe that any person other than the Board of Directors of EIS has the legal right under state law to rely on this opinion, and, in the absence of any governing precedents, we would resist any assertion otherwise by any such person. THIS OPINION MAY NOT BE PUBLISHED OR REFERRED TO, IN WHOLE OR PART, WITHOUT OUR PRIOR WRITTEN PERMISSION. SINCERELY, /s/ UPDATA CAPITAL, INC. UPDATA CAPITAL, INC. EX-99.C.8 4 ARTICLE EIGHTH OF CERTIFICATE OF INCORPORATION 1 EXHIBIT (c)(8) -------------- Excerpt of Article Eighth of the Amended and Restated Articles of Incorporation of EIS International, Inc. EIGHTH: (1) Directors of the Corporation shall, to the fullest extent permitted by Section 102(b)(7) of the GCL, have no personal liability for monetary damages for breach of fiduciary duty of a director. (2) The Corporation shall indemnify each director and officer of the Corporation against and hold each such director and officer harmless from, any and all claims made against any such director or officer in his capacity as such, whether brought by the Corporation, or by any stockholder, whether in such stockholder's individual capacity or on behalf of the Corporation, and shall pay all costs and other losses (including legal fees in the defense thereof) resulting to each such director or officer from such claims, and shall advance any and all reasonable costs with respect to the defense thereof, all to the fullest extent permitted by law. (3) Nothing contained in Paragraph (1) of this Article EIGHTH shall be deemed to limit or preclude indemnification of a director or officer by the Corporation (a) for any liability which has not been eliminated by the provisions of said paragraph or (b) the cost of defending any claim the liability for which has been eliminated thereby. (4) Any repeal or modification of this Article EIGHTH shall not limit or eliminate the Corporation's obligation to indemnify and hold harmless directors and officers with respect to claims arising out of matters occurring prior to the effective date of such repeal or modification. EX-99.C.9 5 EXCERPTS FROM THE COMPANY'S PROXY STATEMENT 1 EXHIBIT (c)(9) --------------- Excerpts from the Proxy Statement, dated April 5, 1999 of EIS International, Inc. relating to its 1999 Annual Meeting of Shareholders PROPOSAL 1 -- ELECTION OF DIRECTORS The Board currently consists of five directors, divided into two classes of two directors each and one class of one director. If all of the nominees for election as a director are elected at the Annual Meeting, the Board will consist of seven directors, divided into two class of two directors each and one class of three directors. The term of the current Class I Directors will expire at the Annual Meeting. The terms of the current Class II and Class III Directors will expire in 2000 and 2001, respectively, at such times as their respective successors are duly elected and qualified. Directors of each class are elected for a full term of three years (or any lesser period representing the balance of the previous term of such class) and until their respective successors are duly elected and qualified or until their earlier resignation or removal. At the Annual Meeting, the holders of record of Common Stock are to elect (i) three Class I Directors to serve until the annual meeting of the Company's stockholders to be held in 2002 and (ii) one Class III Director to serve until the annual meeting of the Company's stockholders to be held in 2001 and, in each case, until such director's successor is duly elected and qualified or until his earlier resignation or removal. The election of directors requires the affirmative vote of the holders of a plurality of the Common Stock present and voting at the Annual Meeting. It is intended that proxies in the accompanying form that do not withhold the authority to vote for the nominee will be voted for the election as director of such nominee. All of the nominees except Messrs. Burton and Foreman are currently directors of the Company. The nominees have indicated their willingness to serve if elected; however, if any of the nominees should become unable or unwilling for any reason before the Annual Meeting to serve as a director, the proxies will be voted for a substitute person to be selected by the current Board. The Board has no reason to expect that the nominees will not be candidates at the Annual Meeting and therefore does not at this time have in mind any substitute for any of the nominees. There are no family relationships between any of the Company's directors and executive officers. Nominees for Election as a Director The following table sets forth certain information with respect to each nominee. Information set forth below concerning age, occupation(s) and other directorships has been furnished to the Company by the individuals named. Information with respect to the number of shares of Common Stock beneficially owned by each director, directly or indirectly, as of January 31, 1999, appears below under the heading "Security Ownership of Certain Beneficial Holders and Management." Class I Directors (terms expire at the Annual Meeting):
Name Age Principal Occupation(s) ---- --- ----------------------- Robert M. Jesurum 57 Founder of the Company and Private Consultant (1) Charles W. McCall 54 President and Chief Executive Officer of McKesson HBOC, Inc. (1)
2 John F. Burton 47 Managing Director, Updata Capital, Inc.
- --------------- (1) Member of the Compensation Committee Robert M. Jesurum founded the Company in January 1980 and has served as a director since its inception. He also served as the Company's Chairman of the Board (from inception to February 1993) and as the Company's Executive Vice President and Chief Technical Officer (from inception until October 1991). Mr. Jesurum retired as an employee of the Company in October 1991 and is currently pursuing noncompetitive independent business research and product development as a sole proprietor. Charles W. McCall has been a director of the Company since April 1993. Mr. McCall has been Chairman of the Board of Directors and Chief Executive Officer of McKesson HBOC, Inc. since January 1999. He had been President, Chief Executive Officer and a director of HBO & Company, a company in the business of providing software in the medical field from January 1991 to January 1999, at which time HBO & Company merged with McKesson, Inc. to form McKesson HBOC, Inc. From April 1985 to January 1991, Mr. McCall served as President and Chief Executive Officer of CompuServe Inc., a computer communications and information services company. Mr. McCall serves on the board of directors of WestPoint Stevens, Inc., a publicly-held company. John F. Burton has been a Managing Director of Updata Capital, Inc., an investment banking firm, since 1997. From 1995 to March 1997, Mr. Burton was the Managing Director of Burton Technology Partners, Ltd. From September 1995 to September 1996, Mr. Burton was Chief Executive Officer of Nat Systems International, Inc. From 1990 through January 1995, Mr. Burton served as President, Chief Executive Officer, Chief Operating Officer and a director of LEGENT Corporation. Mr. Burton serves as a director of Banyan Systems, Inc., Treev, Inc., and MapInfo Corporation, all publicly-held companies. Class III Director (term expires at the 2001 Annual Meeting) Peter B. Foreman 63 President, Sirius Corporation
Peter B. Foreman has been the President of Sirius Corporation, an investment management firm which he founded since 1994. From 1976 to 1994, Mr. Foreman was a founding partner of Harris Associates L.P., an investment advisory firm. Mr. Foreman continues to manage Hesperus Partners, Ltd., a partnership focusing on value-oriented investing. He is a member of the boards of directors of Glacier Water Services, Inc. and Eagle Food Centers, Inc., both publicly-held companies. Current Directors The following table sets forth certain information about those directors whose terms of office will continue after the Annual Meeting. Information set forth below concerning age, occupations and other directorships has been furnished to the Company by the individuals named. Class II Directors (terms expire at the 2000 Annual Meeting):
Name Age Principal Occupation(s) ---- --- ----------------------- Kent M. Klineman 66 Secretary of the Company; Attorney and Private Investor (1)(2) James E. McGowan 55 President and Chief Executive Officer of the Company
- - -------------------- (1) Member of the Audit Committee. (2) Member of the Compensation Committee. 3 Kent M. Klineman has been a director since June 1988. He also served as Treasurer of the Company from June 1988 until December 1989 and has served as Secretary since June 1988. He is an attorney and private investor and serves as a director of a number of closely held companies. He is also a director of Concord Camera Corp., a publicly held corporation. James E. McGowan has been EIS' Chief Executive Officer, President and a director of the Company since February 1997. He was also President and Chief Operating Officer of EIS Systems, an operating division of the Company, from April 1996 until February 1997. From September 1993 to January 1996, he was President and Chief Executive Officer of Deluxe Data, a provider of electronic funds transfer processing and software for financial institutions and automated teller machine networks. From January 1993 to September 1993, he ran McGowan Associates, a consulting company which he founded. From January 1990 to December 1992, he served as President and Chief Executive Officer at Xerox Imaging Systems. Other Class III Director (term expires at the 2001 Annual Meeting):
Name Age Principal Occupation(s) ---- --- ----------------------- Robert J. Cresci 54 Chairman of the Board of Directors of the Company; Managing Director of Pecks Management Partners Ltd. ("Pecks") (1)
- --------------- (1) Member of the Audit Committee Robert J. Cresci has been a director of the Company since March 1991 and has served as Chairman of the Board of Directors of the Company since February 1997. He has been a Managing Director of Pecks, an investment management firm, since September 1990. Mr. Cresci currently serves on the boards of directors of Bridgeport Machines, Inc., Serv-Tech, Inc., Vestro Natural Foods, Inc., Olympic Financial Ltd., Hitox, Inc., Sepracor Inc., Garnet Resources Corporation, HarCor Energy, Inc., Meris Laboratories, Inc., Natures Elements, Inc. and GeoWaste, Inc., all publicly-held companies, as well as several private companies. . . . Compensation of Directors Each director of the Company who is not an employee of the Company is paid an annual fee of $10,000, plus $1,000 for each meeting of the Board attended (which was increased to $1,500 for meetings after January 1999) and $500 for each meeting of the Audit Committee and Compensation Committee attended. In addition, the Company's 1993 Stock Option Plan for Non-Employee Directors provides for grants of stock options to non-employee directors at such times, in such amounts and on such vesting terms as the Board may determine. 4 EXECUTIVE COMPENSATION The following Summary Compensation Table sets forth certain information concerning the compensation of the Company's Chief Executive Officer and the four other executive officers whose total annual salary and bonus for 1998 exceeded $100,000 (collectively, the "Named Executive Officers") for each of the last three fiscal years. Summary Compensation Table
Long Term Compensation Annual Compensation Awards ------------------- ------------ Securities Other Underlying Annual Options Compen- (number of All Other Name and Principal Position Year Salary Bonus(1) sation shares) Compensation(3) - ----------------------------- ---- -------- -------- ------ ----------- --------------- James E. McGowan 1998 $300,000 $125,000 (2) 50,000 $ 49,663 President and Chief Executive 1997 268,447 125,000 (2) 150,000 62,103 Officer 1996 178,042 -- (2) -- 17,612 Frederick C. Foley 1998 $180,000 $ 63,000 (2) 25,000 $ 5,287 Senior Vice President, Finance, 1997 152,832 52,000 (2) 60,000 26,425 Chief Financial Officer and 1996 139,182 -- (2) 5,000 2,163 Treasurer Edward J. Sarkisian(4) 1998 $164,600 $ 33,000 (2) -- $ 4,667 Senior Vice President, Worlwide Sales, Marketing, Customer Operations Jonathan M. Wineberg(4) 1998 $165,400 $ 32,000 (2) 48,000 $ 94,379 Senior Vice President, Engineering and Product Development Joseph E. Smith(5) 1998 $146,900 $ -- (2) 25,000 $147,028 Former Senior Vice President, 1997 129,079 34,000 (2) 75,000 63,334 Worldwide Sales and Marketing
(1) Except as otherwise noted below, all amounts set forth in this column constitute performance bonuses. (2) As to each individual named, the aggregate amounts of personal benefits not included in the Summary Compensation Table do not exceed the lesser of either $50,000 or 10% of the total annual salary and bonus reported for the named executive officer. (3) For 1998, represents premiums paid by EIS with respect to group term life insurance for the benefit of the Named Executive Officer, and (i) with respect to Mr. McGowan, $37,428 of loan forgiveness, and a $2,000 401(k) matching contribution; (ii) with respect to Mr. Foley, a $2,000 401(k) matching contribution; (iii) with respect to Mr. Sarkisian, a $2,000 401(k) matching contribution; (iv) with respect to Mr. Wineberg, $92,379 for relocation expenses and a $2,000 401(k) matching contribution; and (v) with respect to Mr. Smith, $55,874 for relocation expenses and $91,154 as severance. (4) Mr. Wineberg and Mr. Sarkisian became executive officers of EIS in 1998. Accordingly, no information is provided for 1996 and 1997. (5) Mr. Smith joined EIS in 1997. Accordingly, no information is provided 5 for 1996. Mr. Smith resigned from EIS in August 1998. 1998 Option Information Option Grants in 1998 The following table summarizes certain information regarding options granted to Named Executive Officers during 1998.
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Individual Grants Terms (1) --------------------------------------------------------- -------------------------- Percent of Total Shares Options Subject to Granted to Exercise Options Employees Price Per Expiration Name Granted in FY Share Date 5% 10% - ---- --------- ---------- --------- ----------- -------- -------- James E. McGowan 24,000 4.7% $7.00 1/28/08 $105,654 $267,749 26,000 5.1% 6.28125 4/28/08 102,706 260,278 Frederick C. Foley 12,500 2.5% $7.00 1/28/08 $55,028 $139,452 12,500 2.5% 6.28125 4/28/08 49,378 125,134 Edward J. Sarkisian -- -- -- -- -- -- Jonathan M. Wineberg 11,500 2.3% $7.00 1/28/08 $50,626 $128,296 11,500 2.3% 6.28125 4/28/08 45,428 115,123 25,000 4.9% 2.00 10/22/08 31,445 77,687 Joseph E. Smith 12,500 2.5% $7.00 1/28/08 (2) (2) 12,500 2.5% 6.28125 4/28/08
- ----------- (1) Amounts represent hypothetical gains that could be achieved for the respective options if exercised at the end of the option term. These gains are based on assumed rates of stock appreciation of 5% and 10% compounded annually from the date the respective options were granted to their expiration date. Actual gains, if any, on stock option exercises will depend on the future performance of the Common Stock and the date on which the options are exercised. (2) Mr. Smith's options expired upon his resignation from EIS in 1998. Accordingly, as of December 31, 1998, there was no potential realizable value of these options. Option Exercises in 1998 The following table sets forth the number of options exercised in 1998 and the dollar value realized thereon by the Named Executive Officers, along with the number and dollar value of any options remaining unexercised on December 31, 1998. 6 Aggregated Option Exercises in 1998 and 1998 Year-End Option Values
Number of Securities Underlying Unexercised Options at 1998 Year-End(1)(2) ------------------------------- Name Exercisable Unexercisable ---- ----------- ------------- James E. McGowan 37,500 162,500 Frederick C. Foley 15,000 70,000 Edward J. Sarkisian 54,750 56,250 Jonathan M. Wineberg 6,750 68,250 Joseph E. Smith -- --
(1) On December 31, 1998, the average of the closing bid and asked prices per share of Common Stock as reported by the Nasdaq National Market was $1.688. As of December 31, 1998, none of the Named Executive Officers held any in-the-money options. (2) None of the Named Executive Officers exercised options during 1998. Compensation Committee Report on Executive Compensation General. The Compensation Committee is responsible for developing the Company's executive compensation policies and determining the compensation paid to the Company's Chief Executive Officer and its other executive officers. To that end, the Compensation Committee has sought to (i) provide sufficient compensation to attract, motivate and retain the best available executive officers, (ii) provide additional incentives to them to exert their maximum efforts toward the Company's success, and (iii) align the executive officers' interests with the Company's success by making a portion of their pay dependent upon the Company's performance. The Compensation Committee has used its discretion to set executive compensation at levels warranted, in its judgment, by external, internal or individual circumstances. Executive officer compensation consists of base salary, annual cash incentive compensation, long-term incentive compensation in the form of stock options, and various benefits, including medical and tax-deferred savings plans generally available to the Company's employees. Base Salary. In determining base salary levels for the Company's executive officers, the Compensation Committee takes into account the compensation of companies in the telecommunications and electronics industries and other comparable companies, individual responsibilities, experience and performance and specific issues particular to the Company. Annual Bonus. To provide the Company's executive officers and other key employees with direct financial incentives to achieve the Company's annual goals, the Company currently maintains an incentive arrangement for payment of bonuses, subject to the Company's achievement of certain financial and operating results and the accomplishment of certain individual performance goals. Target bonus levels are set at a level competitive with companies in the telecommunications and electronics industries as well as a broader group of companies of comparable size and complexity. The Company paid performance-related bonuses of $125,000 to Mr. McGowan, $63,000 to Mr. Foley, $33,000 to Mr. Sarkisian, $32,000 to Mr. Wineberg, and $0 to Mr. Smith relating to fiscal 1998. Stock Option and Stock Purchase Plans. To provide additional incentives to its executive officers and employees to exert their maximum efforts toward the Company's success, and to provide them with an opportunity to 7 acquire a proprietary interest in the Company through ownership of Common Stock, the Company maintains a stock option plan and a stock purchase plan. During 1998, options to purchase an aggregate of 148,000 shares of Common Stock were granted under the Company's 1998 Stock Incentive Plan to executive officers of the Company. Other Benefits. The Company provides all employees, including executive officers, with group medical, dental, disability and life insurance on a non-discriminatory basis. The Company maintains a savings and investment plan intended to qualify under Section 401(a) of the Internal Revenue Code of 1986 (the "Code") and to permit employee salary reductions for tax-deferred savings purposes pursuant to Section 401(k) of the Code. Contributions to this plan by the Company are discretionary, and contributions of approximately $119,300 were made on behalf of all employees in 1998, including $8,000 on behalf of Named Executive Officers. The Company also maintains a pretax premium plan, intended to qualify under Section 125 of the Code and to permit salary reductions for pretax payment of employee health plan contributions. Compensation of Chief Executive Officer. Mr. McGowan received total salary and bonus amounting to $425,000 in 1998 and was awarded options to purchase 24,000 and 26,000 shares of the Company's Common Stock at exercise prices of $7.00 and $6.28125, respectively, per share. The foregoing report on executive compensation has been approved by Messrs. Jesurum, Klineman and McCall, the members of the Compensation Committee. Employment, Termination and Change-in-Control Arrangements The Company is party to an employment arrangement with James McGowan, its President and Chief Executive Officer and a director of the Company. Pursuant to this arrangement, the Company will pay Mr. McGowan an annual salary of $300,000 in 1999, with a possible bonus equal to up to 50% of his annual salary, assuming the achievement of certain performance targets, and additional possible bonus amounts if such performance targets are exceeded. In addition, this arrangement provides that Mr. McGowan will be paid monthly severance at a rate commensurate with his annual salary and will continue to receive health care and insurance benefits for a period of one year following the termination of his employment without cause, or until such time as he obtains full- time employment, whichever occurs first. Furthermore, pursuant to this arrangement, the Company extended to Mr. McGowan a $100,000 loan, bearing interest at a rate of 6% per annum and maturing on February 6, 2000. One twelfth of the original principal amount of this loan, and all accumulated interest thereon, will be forgiven at the end of each three-month period commencing on May 7, 1997 and ending on February 7, 2000, unless Mr. McGowan voluntarily terminates his employment with the Company, at which point any such forgiveness will cease and he will be required to pay the remaining principal balance of the loan and remaining accrued interest thereon at maturity. As of December 31, 1998, there remained $41,875 outstanding under the loan. Compensation Committee Interlocks and Insider Participation Mr. Klineman, a director of the Company and a member of its Compensation Committee, performs legal and consulting services for the Company and was paid a retainer of $5,000 per month in consideration of these services, plus an additional amount for extraordinary services rendered, an aggregate of $83,000 in respect of services rendered during 1998. The Company believes that this represented the fair market value of such services and that such services are provided on terms at least as favorable to the Company as those that could be obtained from an unaffiliated third party. The Company and Mr. Klineman terminated this arrangement effective January 1, 1999. . . . CERTAIN TRANSACTIONS In February 1997, the Company made a loan to Mr. McGowan in the amount of $100,000 bearing interest at a rate of 6% per annum and quarterly amounts are forgiven and included as compensation to Mr. McGowan over 8 the three year term of the loan. If Mr. McGowan leaves the employ of the Company prior to the end of the three year term, the balance due at such time must be repaid in full. As of December 31, 1998, there was $41,875 outstanding under this loan. . . . THE COMPANY'S 1993 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS On January 28, 1999, subject to stockholder approval, the Board of Directors of the Company adopted an amendment (the "Amendment") to the Company's 1993 Stock Option Plan for Non-Employee Directors (the "Director Plan") to increase the number of shares of Common Stock issuable under the Director Plan from 310,000 shares to 410,000 shares. The reason for the Amendments is to have additional shares available for future grants under the Director Plan (under which there are currently 30,000 shares available) to those directors who will contribute to the future success of the Company. Terms of the Director Plan The Director Plan provides for grants of nonstatutory stock options to purchase shares of Common Stock to non-employee directors of the Company. As of January 31, 1999, the total number of such persons eligible to receive options under the Director Plan was four. The grant of options under the Director Plan is discretionary; therefore, the Company cannot now determine the number of options to be granted in the future to any particular person. In the event of a merger, consolidation, reorganization or sale of all or substantially all of the assets of the Company, the holders of options are treated as if all shares subject to such stock options had been issued and outstanding prior to such event. The total number of shares of Common Stock issuable pursuant to options granted under the Director Plan (subject to adjustment in the event of stock splits and other similar events) is 310,000. This number would increase to 410,000 upon adoption of the Company's stockholders of the Amendment. As of January 31, 1999, 42,500 shares had been issued upon exercise of outstanding options, 217,500 shares were subject to outstanding options at exercise prices per share ranging from $5.00 to $12.375 (expiring on dates ranging from December 2003 to April 2007). As of January 29,1999, the last reported sale price of the Company Common Stock on the Nasdaq National Market was $2.188. The Director Plan is administered by the Compensation Committee of the Board, whose determinations under the Director Plan are conclusive. The Compensation Committee has the authority, subject to the terms of the Director Plan, to: interpret the Director Plan; prescribe, amend and rescind rules and regulations relating to the Director Plan; and make all other determinations and take all other actions necessary or advisable for the administration of the Director Plan. The Compensation Committee also determines (i) the number of shares of Common Stock covered by options and the dates upon which such options become exercisable, (ii) the exercise price of options, and (iii) the duration of options. The exercise price of each option may be paid, as determined by the Compensation Committee, in cash or shares of Common Stock having a fair market value equal to the exercise price. If the total number of shares of Common Stock subject to options to be granted on a particular date under the Director Plan exceeds the number of remaining shares available, a pro rata reduction will be made in the number of shares subject to each such option granted on such date. Each option will terminate on the tenth anniversary of the date of grant. Shares obtained upon exercise of an option may not be sold until six months after the date the option was granted. If an optionee ceases to be a member of the Board, any options granted to such optionee to the extent not theretofore exercised will expire three months thereafter (or, if such optionee ceased to be a member of the Board by reason of his death, six months thereafter) or, if earlier, on the tenth anniversary of the date of grant; provided, however, that if the optionee was removed or terminated as a member of the Board for fraud, dishonesty or intentional misrepresentation in connection with the optionee's duties as a member of the Board or embezzlement, misappropriation or conversion of assets or opportunities of the Company or any of its subsidiaries, any unexercised options held by such optionee will expire 9 forthwith. No option will be transferable by the optionee other than by will or the laws of descent and distribution, and each option will be exercisable during the lifetime of the optionee only by such optionee. The Board may at any time terminate the Director Plan or from time to time make such modifications or amendments of the Director Plan as it may deem advisable; provided, however, that the Board may not, without approval by the affirmative vote of the holders of a majority of the outstanding shares of the capital stock of the Company entitled to vote thereon, (i) increase the maximum number of shares as to which options may be granted under the Director Plan or (ii) change the class of persons eligible to receive options under the Director Plan; and provided, further, that the Director Plan may not be amended more than once every six months other than to comport with certain changes in the law. The Director Plan (but not options granted thereunder) will terminate on February 23, 2003, unless sooner terminated by the Board. No termination, modification or amendment of the Director Plan may, without the consent of any person then holding an option, adversely affect the rights of such person under such option. . . . EX-99.C.11 6 ENGAGEMENT LETTER 1 Exhibit (c)(11) UPDATA CAPITAL October 4, 1999 PRIVILEGED & CONFIDENTIAL Mr. James E. McGowan President & Chief Executive Officer EIS INTERNATIONAL, INC. 555 Herndon Parkway Herndon, Virginia 20170 Dear Jim: Updata Capital, Inc. ("Updata") would be pleased to represent EIS International, Inc. ("EIS" or "the Company") in negotiations to merge or sell the Company. This letter summarizes our proposed approach to this assignment and outlines the fee arrangement. Background/Analytical Phase We will independently determine the value of EIS. Based on our appraisal and your input, we will determine a fair value range for the company. Due Diligence Phase Once a potential buyer has ascertained their interest in the company, we will make recommendations in order to prepare the Company for proper analysis. We will also assist you in gathering and presenting the appropriate data requested by any potential buyer. Bidding Phase Once a potential buyer has determined that they are interested in a purchase of the Company, we will work with this entity in formulating the Letter of Intent. We will analyze the structure of the transaction, including consideration of your financial, accounting, tax and legal effects of the transaction structure. We will advise you as to our recommendation to the most suitable method for satisfying your objectives. Confidential Information During the term hereof and thereafter, Updata will not directly or indirectly disclose to any third party EIS Confidential Information without EIS' prior written consent. EIS hereby consents to the release of EIS Confidential Information to officers, directors, employees or agents of SER Systems A.G. on a need-to-know basis. Execution of the Sale Following an agreement in principle, we will assist you in organizing and coordinating the many parties (legal, accounting and others) involved and will help attend to the numerous technical details required in closing a transaction. These tasks are often the most time-consuming aspects of a transaction, requiring an anticipation of problems and experienced coordination of attorneys, 2 EIS International Page 2 of 3 accountants and other experts as appropriate, while at the same time, making sure the understandings between the principals are not unnecessarily affected. Our experience has shown that the anticipation and solution of problems between the time that agreement is reached among the parties and the closing, materially increase the chances of bringing the transaction to a successful and timely conclusion. Compensation, Expenses and Indemnification Our fees for services in connection with this assignment are as follows: 1) A non-refundable retainer fee of $25,000 to be applied against the success fees in No. 2 below. 2) A "success" fee, upon consummation of an acquisition of EIS, of 1.1% of the consideration paid to EIS if the acquirer is SER Systems, AG. If acquirer is another entity, then the consideration shall be 5% of the first five million dollars of consideration, 3% of the next five million dollars of consideration and 1% of all consideration beyond the first ten million dollars received initially and subsequently. If any portion of the aggregate consideration is paid in the form of securities, the value of such securities, for purposes of calculating the success fee, will be determined by the average of the last sales prices for such securities on the five trading days ending prior to the date of consummation of the transaction. This success fee shall be based upon the sale price and any other economic benefits inuring to the seller. The calculated success fee shall be due and payable in cash at the dosing of a transaction. All success fees due under this paragraph shall be reduced by the retainer fee paid pursuant to No. 1 above. For the purpose of calculating the success fee, the consideration shall include the gross amount paid by the Buyer, including (i) the assumption of or re-payment of any indebtedness due to any external financing source or affiliate of the Company and (ii) the value of the balance sheet, if retained by the Company. 3) If the transaction consummated by the Company includes "contingent payments", Updata and EIS shall mutually attempt to agree on the net present value of such payments. Updata's success fee would then be calculated including the net present value of the future contingent payments. If Updata and EIS do not agree on the net present value of the contingent payments, then Updata shall receive its success fees as EIS is paid by the acquiring entity. 4) It is our practice to be reimbursed monthly for out-of-pocket expenses. These expenses shall be reasonable in their purpose and amount, and shall be subject to review and acceptance by EIS. Out-of-pocket expenses shall be paid regardless of whether or not the transaction is completed. In consideration of this agreement to act on your behalf in connection with the sale of the Company, EIS agrees to indemnify us from and against any third-party losses, claims, damages 3 EIS International Page 3 of 3 or liabilities related to or arising out of this engagement or our role in connection therewith and EIS agrees to reimburse us for all expenses (including reasonable counsel fees) in connection with any such action or claim except for losses, claims, liabilities or expenses that result from Updata's negligence, omissions or misconduct EIS also agrees we shall not have any liability to EIS in connection with this engagement, except for losses, claims, damages, liabilities or expenses incurred by EIS that result from our negligence, omissions or misconduct. This effort will take place at once, and will continue until terminated by either party, in writing, on at least 30 days notice, but not earlier than (6) months from the date hereof ("Initial Term"). During the term of our agreement, our representation of EIS shall be exclusive and we shall be entitled to our schedule of fees should a sale take place, in whole or in part, whether or not we effected the original introductions. Upon termination of our services, we will prepare a list of companies ("Schedule of Potential Buyers") whom we contacted at the Company's request or were in direct contact with the Company during the Initial Term. We would also be entitled to our fees should a sale take place within the first twelve months after expiration of this period with a party listed on the Schedule of Potential Buyers. We look forward to assisting you in this very important transaction. Please return one executed copy of this letter. Very truly yours, UPDATA CAPITAL, INC. /s/ John F. Burton JOHN F. BURTON Managing Director Accepted And Agreed To: EIS INTERNATIONAL, INC. /s/ James E. McGowan ---------------------------------------- By: James E. McGowan President & Chief Executive Officer 5 Oct. 1999 ----------------------------------------- Date -----END PRIVACY-ENHANCED MESSAGE-----