The legal requirements of the tender offer process restrict us in our ability to
respond to some of your questions. Additionally, some of your questions relate
to issues that will be communicated after the tender offer closes. Nevertheless,
we want to at least acknowledge your concerns and provide some feedback. Please
understand that these responses only relate to the on-going tender offer and
proposed merger and will have no relevance unless the tender closes.
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The following are employee questions received through 09.13.2000
This Question and Answer Summary is not intended to affect your decision to
tender any share of EAI stock you may own. Instead, you should base that
decision on the tender offer documents and the Company's recommendation you will
receive as a stockholder, which will also be filed with the Securities and
Exchange Commission.
Benefits
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Q: Will the company's contribution to my 401(k)
plan become 100% vested if the merger is finalized?
A: No. The merger with UGS does not effect vesting under the EAI 401(k) plan.
You are entitled to your own contributions as well as the vested portion of any
company contributions so long as you participate in the plan.
This question received by 09.13.2000
Compensation and Payroll
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Q: Will employees continue to receive annual performance appraisals and merit
salary increases?
A: We currently anticipate no interruption in these practices. Performance
appraisals and merit increases should proceed with "business as usual". UGS
periodically reviews its similar practices and will assess the need to integrate
EAI's practices in the future.
This question received by 09.13.2000
Q: Will our benefits change because of the merger? Will we convert to the UGS
payroll? Will we continue to be paid monthly? Bi-weekly?
A: Benefit questions are a top agenda item because year-end processing and
enrollments are coming up soon for both UGS and EAI. Additionally, there are
various business requirements that must be taken into account when considering a
payroll cycle change. As with so many other items, decisions regarding these
issues will be communicated as soon as more details are known.
This question received by 09.13.2000
Culture
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Q: How will EAI's culture change with regard to issues like dress code, work
schedules, and creativity when the UGS merger is concluded?
A: UGS values EAI's technology, people, and a productive and stimulating work
environment. You will find many similarities between UGS and EAI with regard to
culture and its focus on people. The details on how the two cultures will work
together in a common business environment is an important part of on-going
discussions.
This question received by 09.13.2000
General
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Q: Will EAI keep its name, logo, and legal identity?
A: EAI's identity has value in the marketplace and is an important part of the
merger discussions. UGS has initially indicated that it intends to maintain the
use of EAI's name, logo, federal tax identification number, etc.
This question received by 09.13.2000
Q: Will EAI locations be eliminated or consolidated with UGS facilities?
A: UGS reviews all facility arrangements and leases on an ongoing basis much the
same way as EAI does. Any change will be carefully analyzed with regard to
business needs, cost, staffing, and other factors. UGS has indicated its intent
to maintain a presence in Iowa.
This question received by 09.13.2000
Immigration
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Q: What is an amended H1B petition, and can I continue working if this must be
filed on my behalf due to the merger.
A: An H1B amended petition is an administrative filing that amends your H1B
filing. Its filing does not result in an interruption in work status-you
continue working. The document that is filed for the amended petition (form
I-129) is completed in a way that reflects the change in ownership, name and
control of the new company. Amended petitions are required to be filed if the
company acquires a new tax ID number. Our current understanding is that the
company will continue to operate under the name Engineering Animation, Inc.
after the merger and will maintain its existing tax ID number.
This question received by 09.13.2000
Q: Will I have to transfer my case to a new immigration attorney because of the
merger with Unigraphics Solutions?
A: We do appreciate an employee's concern that there be continuity in the
handling of his or her case; however, there are many reasons other than a merger
that might cause a case to be reassigned to a different attorney. Our current
plan calls for us to continue with our established practices and procedures. You
will be informed in an appropriate manner if any staffing change is to occur in
the handling of your case.
This question received by 09.13.2000
Q: What happens to visa (H1B, TN, etc.) and green card processing during a
tender offer?
A: We understand that by announcing a proposed tender offer, neither an
employee's current immigration status nor the processing of an employee's
paperwork needs to change. Until the tender offer is complete, we intend to
continue processing and supporting applications by following the same policies
and practices that have guided EAI in the past. We will be discussing with
Unigraphics what changes, should be made, if any, after the merger.
As you know, there are many reasons why an individual's immigration status might
change. One of these reasons is a change in an employee's employer. A tender
offer followed by a merger does not necessarily cause a change in an employee's
employer. We are operating today under the assumption that the proposed merger
will not result in a change in employer and that there will be continuity in
your immigration filings.
If the INS were to require amended petitions for H1B applications or new I-140
filings for pending green card cases due to a change in employer, our
understanding is that these filings for our particular circumstances would not
affect current processing timeframes. The purpose of filing the amended or new
filings would be to communicate the merger, company name and change in control
to the Immigration and Naturalization Service.
This question received by 09.13.2000
Q: What will happen to EAI jobs?
A: Two of the main reasons UGS is interested in EAI are EAI's people and
technology. We already know that our respective businesses are complementary.
UGS has publicly stated that initially it expects EAI's business and operations
to continue in substantially the same manner after the merger as before the
merger. UGS will continue to evaluate the business and operations of EAI during
and after the merger, and will take such actions as it deems appropriate.
This question received by 09.13.2000
Stock Option Questions
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This summary of stock option questions and answers is qualified by and subject
to the terms of the Merger Agreement among Unigraphics Solutions, Inc., UGS
Acquisition Corporation and Engineering Animation, Inc., which is included in
the tender offer documents filed with the Securities and Exchange Commission.
Definitions:
- "Closing of the tender" means the day on which UGS accepts and pays for the
tendered EAI shares and, as a result, becomes the majority stockholder of EAI.
- "Tender offer purchase price" means the per share price being paid by UGS
for EAI shares.
Q: How do I know if my stock options have vested?
A: The stock option agreement you received at the time you were granted your
stock options contains the vesting schedule for your stock options.
Additionally, if your stock options were granted under the 1997 Stock Option
Plan or the 1994 Stock Option Plan, generally a change in control (which will
occur as a result of the tender offer) causes all of your stock options granted
under these plans to accelerate and vest as of the closing of the tender offer.
Check your copy of the stock option agreement to determine under which plan your
options were granted, the vesting schedule, the effect of a change in control on
your stock options and the price at which they were granted.
This question received by 09.13.2000
Q: How much cash will I get in exchange for my vested, "above water" stock
options?
A: The amount of cash you receive will equal the difference between the tender
offer purchase price and the price at which your options were granted,
multiplied by the number of vested stock options you have, less applicable tax
withholding.
This question received by 09.13.2000
Q: I have stock options that were granted at a price lower than the tender offer
purchase price. What will happen to these stock options?
A: Because your stock options were granted at a price lower than the tender
offer purchase price, they are said to be "above water." You will receive cash
in exchange for those of your stock options that are vested and "above water"
promptly following the closing of the tender offer, if the conditions of the
offer are satisfied and UGS consummates the offer.
This question received by 09.13.2000
Q: Can my EAI stock options be converted into UGS stock options?
A: No. UGS is offering to pay cash in exchange for EAI stock options. You do not
have the ability to trade your EAI stock options for UGS stock options.
This question received by 09.13.2000
Q: Will UGS issue stock options to EAI employees after the tender offer?
A: This is a decision UGS will be making as the merger progresses.
This question received by 09.13.2000
Q: I have stock options that were granted under one of the plans that states
vesting will accelerate upon a change in control. I have handed in my
resignation and my employment will end before the closing of the tender offer.
Will I get the accelerated vesting? Will I have the 90 days following the
termination of my employment as provided in my stock option agreement in which
to exercise my vested, "above water" stock options?
A: In respect to your question about accelerated vesting, you must be an
employee as of the closing of the tender offer in order to receive accelerated
vesting of your stock options. You may exercise your vested, "above water" stock
options during the 90 days following the termination of your employment or up
until the day before the closing of the tender offer, whichever occurs first. If
you have any unexercised, vested, "above water" stock options as of the closing
of the tender offer, you will automatically receive cash in exchange for these
stock options. Your unvested or "underwater" stock options will expire as of the
closing of the tender offer.
This question received by 09.13.2000
Q: I have ISOs. If I exercise them prior to the closing of the tender offer and
hold the stock I get for a year, then exchange the stock for cash, will I
receive the favorable tax treatment associated with ISOs? A: You should consult
with your personal tax advisor to discuss your personal situation, but we are
advised that the favorable tax treatment associated with ISOs is not available
in a cash tender offer or cash merger.
This question received by 09.13.2000
Q: Will taxes be deducted from the amount of money I am to receive in exchange
for my vested, "above water" stock options?
A: Whether you have non-qualified stock options (NQs) or incentive stock options
(ISOs), federal and state income taxes and FICA (Social Security and Medicare),
unless you have reached the annual maximum, will be deducted from the cash you
receive in exchange for your stock options.
This question received by 09.13.2000
Q: Will I be taxed on the cash I receive in exchange for my vested, "above
water" stock options?
A: Yes, whether you have incentive stock options (ISOs) or non-qualified stock
options (NQs), you will owe taxes on the exchange of your stock options for
cash.
This question received by 09.13.2000
Q: What do I need to do in order to have my vested, "above water" stock options
exchanged for cash?
A: You do not have to do anything in order to receive the money for your vested,
"above water" stock options. You will automatically receive a check in exchange
for your vested, "above water" stock options after the closing of the tender
offer, if the conditions of the offer are satisfied and UGS consummates the
offer.
This question received by 09.13.2000
Q: I also have some stock options that were granted at or above the tender offer
purchase price. What will happen to these stock options?
A: Because the grant price of your stock options exceeds the tender offer
purchase price, your options are "underwater" and will be cancelled as of the
closing of the tender offer. No money, stock or any other consideration will be
paid for these "underwater" options because they have no value.
This question received by 09.13.2000
Stock Questions
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This summary of stock questions and answers is qualified by and subject to the
terms of the Merger Agreement among Unigraphics Solutions, Inc., UGS Acquisition
Corporation and Engineering Animation, Inc., which is included in the tender
offer documents filed with the Securities and Exchange Commission.
Q: I have Engineering Animation, Inc. stock that I received when my previous
employer was purchased by EAI. Some of the stock certificates have a restrictive
legend on them. What should I do?
A: You will automatically receive information in the mail that explains what you
need to do to exchange your EAI stock for cash, even if the certificates have a
legend on them.
This question received by 09.13.2000
Q: I understand that I will be receiving information in the mail about tendering
my EAI stock. If the trading window is closed, will it affect my ability to
respond to the offer?
A: Whether the trading window is open or closed, you are free to respond, or not
respond, as you choose, to the offer.
This question received by 09.13.2000
Q: I have EAI stock that I purchased above the tender offer purchase price. Can
I trade this stock, at some ratio, for UGS stock?
A: UGS has offered to pay cash in exchange for EAI stock. You do not have the
ability to trade your EAI stock for UGS stock.
This question received by 09.13.2000
