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MCI Everest Wroclaw, March 29th 2005

MCI Everest Wroclaw, March 29th 2005. Uli Kottmann CEO | Process4E S.A. March 9 th 2005: update software AG acquires Process4E S.A. Agenda. 20 Minutes about … Update Software AG Process4E S.A. Expectations & Motivations Timelines Key issues & challenges Year-end fight The deal

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MCI Everest Wroclaw, March 29th 2005

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  1. MCI EverestWroclaw, March 29th 2005 Uli Kottmann CEO | Process4E S.A.

  2. March 9th 2005: update software AG acquires Process4E S.A.

  3. Agenda • 20 Minutes about … • Update Software AG • Process4E S.A. • Expectations & Motivations • Timelines • Key issues & challenges • Year-end fight • The deal • Key success factors • Recommendations & learning's

  4. update software AG – overview For our staff and partners, »go relate« means commitment and open communication. Valuing everyone’s individual contributions. Pursuing and achieving common goals. An active exchange for motivational drive. »go relate« the driving force for mutual advantage Business ————————— Foundation ————————— Customers ————————— Employees ————————— Product ————————— Technology ————————— Languages One of Europe‘s leading Customer Relationship Management vendors 1988 in Vienna, Austria (Frankfurt Stock Exchange) >750 customers, >80,000 user <>150 employees in 7 subsidiaries (A/D/CH/NL/F/CZ/HU) + Process4E “marketing.manager 6” Client-Server / Web / PDA / Telephone integrationInterfaces to all front office and back office solutions “marketing.manager” is available in 18 languages

  5. > 750 customers | > 80.000 users worldwide

  6. Process4E S.A. – now a subsidiary of update software AG Established July 2000 Joint Stock Company (SA) • 2.5 Mio PLN S-capital • Founding Shareholders • 66,66% MCI S.A. • 33,34% Uli Kottmann Business • CRM Solutions & Services • Business ProcessManagement • Strategy Consulting • Project Management Mission “We help our customers by competing better”

  7. Over 60 customers 2/3 for CRM services & solutions Dedicated to CRM Signed contracts for > 600 Enterprise class CRM licences in 2004 strong experience in all relevant fields

  8. Why “update” - from first contact to “marriage” .. Vienna Romance … • excellent products • 17 years of CRM experience • focused on CRM • focused on Poland and CEE • excellent customer base • outstanding support • same “wave length” • “size” match • trust & respect • similar attitude to values & business ethics

  9. Key expectations & motivations Uli Kottmann • Establish a profitable presence in Poland • 1.5 years time to market advantage • Fair and realistic price (low) • Lowest possible deal risk • Process4E team and management continuity • Invest in market development and not in subsidizing Process4E current operations • Maximizing the exit value • Maximize cash-flow • Minimize guarantees • Positive PR and Stock Exchange information • Continue positive relations to Uli Kottmann • Customer and project continuity • Protect team • Investment in team know-how and training • Clear Roles and Responsibilities • No additional admin burden due to new shareholder • Investment of Update in developing the business (Marketing, Sales) • Career opportunities • Clear commitment to update • No disturbance of my vision of the “profitable & human enterprise” • No interference to my people (I manage the team) • Keep long-term the direct or indirect control over Process4E and Clix Software • Clarity over personal future and clear exit conditions (no gray zones)

  10. Timelines • 05 – 2004 First contact reg. partnership • 05 – 2004 Partner contract signed • 08 – 2004 First contact reg. acquisition • 09 – 2004 UK proposes 1st deal construction • 09 – 2004 TC and UK visit Vienna • 10 – 2004 Update SpvBd meeting rejects • 10 – 2005 UK decides to sell • 10 – 2004 LoI • 11 – 2004 Legal and tax due diligence • 12 – 2004 First 2 customer contracts • 01 – 2005 Financial audit 2004 (10.1) • 01 – 2005 Update & MCI SpvBd agree • 02 – 2005 Contract workshop in Warsaw • 03 – 2005 Acquisition • 03 – 2005 Sell Clix Software Ltd. • 04 – 2005 First financial report Q1 to Update 8 Month to close the deal

  11. key issues & challenges • Contract structure • Applicable law & court • Meet 2004 financial objectives • Guarantees • Due Diligence • Country risk • Valuation methods • Timing • Distance & Language • 2 public companies • Cash vs. shares • Triangle construction with 1:1 side letters • Manage the business and the “deal” Multiple complexities and issues had to be solved

  12. The year end fight • Sell Okay CRM to Clix • Maximize customer deals • Sell MCI shares • Loan to Clix Software Ltd. • Tight collection process • Reduced cost (salaries, etc.) • Day-to-day project management • Around 100 individual transactions • Excellent team-work

  13. High quality exit and a return which is within VC ‘s expectations The deal • MCI • Price 4.5 Mio PLN • Cash 3.3 Mio at signing • Cash 1.2 Mio at YE • 57% of Clix for 0,67 PLN • UK • Price 515 kEuro • Cash from 05 to 08 • 3 Years earn-out model • 3 Years contract as CEO • 28% of Clix for 0.33 PLN • Rights to Process4E name • MCI and UK • Reps & warranties risk • Employees • Update Stock options • Development • International standards

  14. Key success factors • Behaviors • Trust - no hidden agenda – no “bullshit” • Be realistic and focus on the big picture • Understand all expectations & motivations • Respect for each parties position • Skills • Tight project management & milestones • Strong legal, business and financial skills • Close minor gaps > compromises 1:1 • Be persistent & drive the process • Expect problems & propose solutions • Bridge the cultures • Key success factors • Our value was not our balance sheet but the team know-how, continuity, attitude, culture & vision • We met the financial expectations at year-end • We were “clean” and had the proper internal controls in place • We managed the acquisition process in the interest of all parties • I focused 100% on the deal Skills & Attitudes to close such deals

  15. You can drive the exit, not only the VC • Intangible assets can be equally or more important than hard facts and numbers • Long term ethical behavior pay’s back (employees, customers, vendors etc.) • You cannot fix in 3 month what you screwed up in 3 years • Follow your vision and do not make quarterly compromises • Priorities: 1. Customers, 2. team, 3. shareholders, 4. management Values are larger than money Recommendations & Learning's

  16. Thanks • Thank You! • Tomasz Czechowicz • Kasia Figat • Roman Cisek • Marek Piatkowski • Andrzej Jasieniecki • And all other MCI staff! • Ryszard Ptasiñski

  17. LOJALNOŚĆ KLIENTA

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