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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,
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EIS International
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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
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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
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By: James E. McGowan
President & Chief Executive Officer
5 Oct. 1999
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