Exhibit 99
JB ACQUISITION LLC
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxx 00000
(000) 000-0000
March 6, 2001
Xx. Xxxxxx X. Xxxxxx
Chairman
Eagle Point Software Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxx 00000-0000
Xx. Xxxxxx X. Xxxxxx
Director
Eagle Point Software Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxx 00000-0000
CONFIDENTIAL
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Gentlemen:
This letter outlines the basic terms and conditions of the proposed
acquisition (the "Merger") of Eagle Point Software Corporation ("Eagle Point" or
the "Company") in the manner described below, by JB Acquisition LLC ("Buyer"), a
company formed by Xxxx X. Xxxxx. While this letter does not constitute a legally
binding agreement (except to the extent described below), and Xxxxx's proposal
is subject to a thorough examination of the business, products, assets and
financial and other records of the Company and to the negotiation and execution
of a definitive merger agreement (the "Agreement"), this letter does evidence
Xxxxx's good faith intention to proceed on the following basic terms and
conditions:
1. Merger Structure. The Merger would be accomplished by a merger of
Eagle Point with a new company (a "merger subsidiary") that would be a wholly
owned subsidiary of Buyer. The Agreement would provide for each Eagle Point
shareholder, other than Buyer or Xxxx X. Xxxxx, to receive $6.40 per share, in
cash, except that Xxxxxx X. Xxxx and Xxxxxx X. Xxxxxx xxxx receive $500,000 and
$250,000, respectively, of the price for their shares in the form of a seven-
year subordinated note with terms and conditions acceptable to them and to
Buyer. Holders of the Company's options, warrants, convertible securities, etc.
would receive a cash payment based on a price of $6.40 per share of Company
stock, less any applicable consideration payable by the holders upon the
exercise, conversion, etc. of such securities. Following the Merger, Xxxxx would
own 100% of the equity interest in Eagle Point on a fully diluted basis.
2. Definitive Agreement. Buyer and the Company will proceed in good
faith toward negotiation and execution of the Agreement, which shall contain
mutually agreeable
Xx. Xxxxxx X. Xxxxxx
March 6, 2001
Page 2
terms, representations, conditions, covenants and indemnities, consistent with
the terms of this letter. If the Agreement has not been executed by 5:00 p.m.,
Xxxxx's time, on March 30, 2001, either party may terminate this letter upon
written notice to the other party, except for the items enumerated in paragraph
9, which shall remain in full force and effect.
3. Conditions. This letter is and, to the extent applicable, the
Agreement will be (except as specified below) subject to the following
conditions: (a) a complete review by Buyer of the books, records, business and
affairs of the Company; (b) negotiation and execution of the Agreement with
mutually agreeable terms, representations, conditions, covenants and
indemnities; (c) approval of the Merger by the Board of Directors of the
Company; (d) approval of the Merger by stockholders of the Company; (e) receipt
of all necessary consents without payment by Buyer or the Company of any penalty
from creditors, lessors or customers of the Company; (f) receipt of any
regulatory approvals necessary to complete the transaction; (g) financing to
complete the transaction in the amount of not less than $11,000,000 on terms and
conditions acceptable to Buyer; (h) delivery of an opinion of the Company's
investment banker, to the effect that the Merger is fair to the stockholders of
the Company from a financial point of view; and (i) completion of an acquisition
of the assets, and assumption of related liabilities, of the Building Design and
Construction and Structural Engineering divisions from the Company by Xxxxxx X.
Xxxx or an entity controlled by him, to be effective immediately following the
completion of the Merger, for a price of $1,100,000 (subject to mutually
acceptable closing adjustments) and on other terms and conditions acceptable to
Buyer.
4. Due Diligence. The Company agrees to provide to Buyer and its agents
(including any agents of those providing financing to Buyer for the Merger)
complete access to all of the Company's books, records, premises, personnel,
customers and suppliers (excluding only information protected by the attorney-
client privilege, but including such information to the extent that the
disclosure thereof to Buyer would not waive such privilege) for purposes of
conducting Buyer's investigation. Xxxxx agrees that all information so provided
by the Company and identified as "confidential" will be treated by Buyer as
such, that Buyer will not disclose any use of such information except to the
extent (a) required by law, (b) such information is otherwise available from
third parties or (c) such information is previously known by Buyer from sources
other than the Company and that, if this letter shall be terminated without an
Agreement having been executed, Xxxxx will return to the Company all information
so identified or will certify to the Company the destruction of such information
not returned to the Company.
5. Agreements. Until execution of the Agreement or termination of this
letter, the Company agrees that, without Xxxxx's prior consent, it will: (a)
conduct its business only in the ordinary course, and not engage in any
extraordinary transactions; (b) not dispose of any assets of the Company, except
in the ordinary course of business; (c) not materially increase the annual level
of compensation of any employee, not increase the annual level of compensation
of any person whose compensation from the Company in the last preceding fiscal
year exceeded $75,000 and not grant any unusual or extraordinary bonuses,
benefits or other forms of direct or indirect compensation to any employee,
officer, director or consultant, except in amounts in keeping with past
practices by formula or otherwise; (d) not increase, terminate, amend or
otherwise modify any plan for the benefit of employees of the
Xx. Xxxxxx X. Xxxxxx
March 6, 2001
Page 3
Company; (e) not issue any equity securities or any instrument convertible into,
exchangeable for or exercisable into (including stock options) equity
securities; (f) not pay any dividends, redeem any securities or otherwise cause
assets of the Company to be distributed or cash paid to stockholders of the
Company; (g) not borrow any funds, under existing lines of credit or otherwise,
except as reasonably necessary for the ordinary operation of the Company's
business in a manner, and in amounts, in keeping with historical practices; and
(h) not enter into an employment agreement, severance agreement or similar
agreement with any person, whether or not such person is currently employed by
the Company. In addition, the Agreement will provide that, upon execution of the
Agreement, the Company will appoint Xxxx X. Xxxxx as its chief executive
officer, with the authority customarily accorded to that position, until the
earlier of the closing of the Merger or the termination of the Agreement.
6. Non-Applicability of Certain Provisions of State Law. The Company
represents and warrants to Buyer that none of the business combination
provisions of Section 203 of the Delaware General Corporation Law or any similar
provisions of such Law or any provisions of the certificate of incorporation or
bylaws of the Company will, at the time of the closing of the Merger, be
applicable to the Merger or other transactions contemplated by this letter
because such provisions do not apply by their terms or because any required
approvals of the Company's board of directors have been obtained (without any
requirement for the transactions to be approved by more than a majority of the
Company's outstanding shares).
7. Fees and Expenses. Each party will be responsible for its own legal,
accounting, investment banking and other expenses incurred in connection with
this letter, the Agreement and all matters related thereto. Each party will
indemnify and hold harmless the other against the claims of any brokers or
finders in respect of the Merger.
8. Non-Binding Agreement. This letter evidences the intent of Buyer to
proceed in good faith to pursue the Merger described above, subject to the
conditions stated herein. Except for the provisions of paragraphs 4, 5, 6 and 7,
and this sentence, however, nothing herein shall constitute a legally binding
agreement of Buyer or the Company. The proposed Merger is expressly conditioned
upon Buyer and the Company entering into a mutually acceptable Agreement and
upon satisfaction of the conditions contained therein. Unless the Agreement is
entered into in writing by such parties, regardless of the reason that the
Agreement is not executed, neither Buyer nor the Company shall be under any
obligation to the other (except as set forth in paragraphs 4, 5, 6 and 7) for
damages, expenses or otherwise, irrespective of any negotiations, agreements or
understandings heretofore or hereafter existing between the parties, and
irrespective of any implied course of conduct between the parties.
10. Governing Law. The letter shall be governed by and construed in
accordance with the internal laws of the State of Iowa without giving effect to
the conflict of laws provisions thereof.
If the foregoing accurately reflects the basic terms and conditions upon
which the Company would be willing to consummate the transactions contemplated
by this letter, please sign one copy of this letter of intent and return it to
Buyer. This letter may be
Xx. Xxxxxx X. Xxxxxx
March 6, 2001
Page 4
withdrawn by Xxxxx, upon notice to the Company, at any time prior to Xxxxx's
receipt of the Company's acceptance of this letter.
Very truly yours,
JB ACQUISITION LLC
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx, Manager
Accepted and Agreed as of , 2001.
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EAGLE POINT SOFTWARE CORPORATION
By:
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Name:
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Title:
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