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June 6, 2000
Dan R. Cook
President and CEO
USTMAN Technologies, Inc.
12265 W. Bayaud Avenue, #110
Lakewood, Colorado 80228
Gentlemen:
Danaher Corporation ("Danaher" or "Buyer") is pleased to confirm our interest in
USTMAN Technologies, Inc. ("USTMAN" or "Seller"). Danaher's offer for
substantially all of USTMAN's assets, plus the assumption of certain
liabilities, is $17.35 million. Specifically, Danaher will assume certain
liabilities of USTMAN, other than funded indebtedness, set forth on USTMAN's
financial statements, accounts payables incurred by USTMAN in the ordinary
course of business that are outstanding on the closing date and that were
incurred after the date of USTMAN's financial statements, and other liabilities
as mutually agreed. Buyer intends to acquire Seller through Veeder-Root Company
or one of Buyer's wholly-owned affiliates.
This transaction is contingent on regulatory approval, if applicable, and
satisfactory due diligence. Further, this offer is subject to the negotiation
and execution of a mutually acceptable definitive purchase agreement. Such
definitive purchase agreement shall contain normal representations, warranties,
covenants and conditions concerning the conduct of the business and the accuracy
of its financial statements, as well as customary deal protection mechanisms.
Both parties agree that the contents of this letter agreement will be kept in
the strictest of confidence and discussed only with key management and advisors
on a need-to-know basis. Both parties further agree that no press release will
be issued until a definitive purchase agreement is completed and executed.
Notwithstanding the foregoing, Buyer and Seller agree that Seller and
Veeder-Root Company will issue press releases upon the filing of a Schedule 13D
by Sagaponack Partners, L.P. describing its purchase of (or intent to purchase)
additional interests in the Seller and of Sagaponack's intentions with respect
thereto. Buyer and Seller shall have an opportunity review and approve the form
of the Press Releases and Sagaponack agrees to allow Buyer and Seller an
opportunity to review and comment on the proposed Schedule 13D filing in advance
of such filing or release.
This letter agreement between the parties is contingent upon the satisfaction or
verification of the following assumptions:
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Dan R. Cook
June 6, 2000
Page 2 of 5
1. December 31, 1999 balance sheet "cash and debt-free net equity" of
$7.6 million. For purposes of this calculation, the term "cash and
debt-free net equity" shall mean shareholders' equity less cash
and cash equivalents plus current and long term debt. "Cash and
debt-free net equity" will include certain other liabilities. The
$17.35M purchase price will be increased by the amount, if any,
that the closing balance sheet (on a comparable basis) is in
excess of the December cash and debt-free net equity; conversely,
the purchase price will be reduced by the amount, if any, that the
closing balance sheet is less than the December cash and debt-free
net equity.
2. December 31, 1999, six month revenues of approximately $3.45
million and operating profit of $425,000 (before write-off of
offering costs) in the same time period.
3. Accuracy of all present and prior years' financial statements. FY
2000's financial statements may be subject to normal and
consistent year-end adjustments. USTMAN will endeavor to provide
Danaher with full access to its auditors and their USTMAN work
papers as reasonably requested.
4. Danaher shall assume all of USTMAN's service contracts, subject to
the consent of the third parties to these contracts, and USTMAN
agrees to work with Danaher, in good faith, to effect the
assignment of all such service contracts to Danaher.
5. USTMAN will continue to conduct business as usual during the
period through to closing and not engage in any reorganization,
merger or other transaction out of the ordinary course of
business. There will be no dividends paid to shareholders during
this time.
6. There are no material adverse changes in the business of USTMAN
including no material adverse changes in customer relationships.
7. USTMAN, Sagaponack Partners, L.P. ("Sagaponack") and Danaher will
negotiate in good faith with one another in an effort to enter
into a definitive purchase agreement. Following the date of this
letter and until the termination of this letter agreement, Seller
and Sagaponack Partners, L.P. shall not, directly or indirectly
(i) initiate, solicit or encourage any inquiries or proposals that
constitute, or could reasonably be expected to lead to, a proposal
or offer for a merger, consolidation, or business combination of
Seller, or the sale of all or substantially all of its assets, or
the sale of shares of capital stock of Seller, including, without
limitation, by way of a tender offer or exchange
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Dan R. Cook
June 6, 2000
Page 3 of 5
offer by any person or entity (any of the foregoing inquiries or
proposals being referred to in this letter agreement as an
"Acquisition Proposal"), (ii) engage in negotiations or
discussions concerning, or provide to any person or entity any
confidential information or data relating to Seller for the
purposes of, or otherwise cooperate with or assist or participate
in, facilitate or encourage, any inquiries or the making of any
Acquisition Proposal, (iii) agree to, approve or recommend any
Acquisition Proposal, or (iv) take any other action that may lead
to an Acquisition Proposal or that are otherwise inconsistent with
the obligations and commitments assumed by Seller pursuant to this
Section 7 provided, however, that nothing contained in this letter
agreement shall prevent Seller or its Board of Directors from
furnishing confidential information to, or entering into
discussions or negotiations with, any person or entity in
connection with an unsolicited bona fide written Acquisition
Proposal to Seller or its stockholders, if and only to the extent
that the Board of Directors of Seller determines in good faith
(after consultation with outside legal counsel) that such action
is required for such Board of Directors to comply with its
fiduciary duties to stockholders under applicable law. Seller and
Sagaponack Partners, L.P. shall (i) promptly notify Buyer in
writing after receipt by Seller or any of its subsidiaries or
their respective officers, directors, employees, representative or
agents of any Acquisition Proposal or any inquiries indicating
that any Person is considering making or wishes to make an
Acquisition Proposal, which notification shall be in writing and
shall contain the principle financial terms of such Acquisition
Proposal and the identity of the Person making any such
Acquisition Proposal, and (ii) promptly notify Buyer in writing
after receipt of any request for Confidential Information relating
to it or for access to its properties, books or records by any
person that may be considering making, or has made, an Acquisition
Proposal.
8. Formal approval of the final purchase agreement by the Danaher and
USTMAN Board of Directors and/or shareholders, as applicable.
9. Danaher shall offer employment to Dan Cook and Jim Grant at no
less than each of their respective levels of current compensation.
Other USTMAN employees that receive continued offers of employment
from Danaher will receive offers at comparable levels to their
current compensation, alternatively, Danaher will provide for
severance to those employees who are not offered continued
employment.
10. Any necessary governmental or regulatory approvals.
11. In addition, USTMAN and Sagaponack Partners, L.P. and Danaher
agree to
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Dan R. Cook
June 6, 2000
Page 4 of 5
the following termination and termination fee provisions, which shall be binding
and enforceable on all parties, and shall be incorporated into the definitive
purchase agreement:
(a) This letter agreement may be terminated at any time,
whether before or after Buyer or Seller enter into a definitive agreement or
before or after approval of the definitive agreement by Seller's stockholders or
its or Buyer's Board of Directors, solely:
(i) upon mutual agreement of USTMAN and Danaher;
(ii) by Seller, on the one hand, or by Buyer, on the
other hand, if the closing of the acquisition described in this letter agreement
shall not have occurred on or before 5:00 p.m. Washington, D.C. time on
September 30, 2000, provided that the right to terminate this letter agreement
shall not be available to either party whose material misrepresentation,
material breach of warranty or material failure to fulfill any obligation under
this letter agreement has been the cause of, or resulted in, the failure of the
closing to occur before such date; or
(iii) if Sagaponack is the beneficial owner of in
excess of 50% of the Company's issued and outstanding voting securities, by
either Seller or Buyer if the stockholder approval has not been obtained on or
before September 1, 2000 at either (x) a Seller Stockholders Meeting, as
applicable, or (y) by majority consent of the USTMAN stockholders in lieu of a
meeting; or
(iv) prior to September 30, 2000, by Seller pursuant
to the provisions of section 7 above for the purposes of pursuing an Acquisition
Proposal or in the event that Seller consummates a transaction in violation of
the provisions of Section 7 above.
(b) If this letter agreement is terminated pursuant to the
termination provisions in clauses (iii) or (iv) above, then Seller shall pay to
Buyer a termination fee equal to $1,000,000 in cash and the reasonable
out-of-pocket expenses (not to exceed $75,000) incurred by Buyer in connection
with this letter agreement and the negotiation of a definitive agreement, which
shall be payable within ten (10) days from termination of this letter agreement.
Additionally, if Sagaponack is unable to obtain beneficial ownership of more
than 50% of the Company's issued and outstanding voting securities prior to
September 1, 2000, and this letter agreement or a definitive agreement is
terminated, then Seller, within ten (10) days from termination of this letter
agreeement or a definitive agreement, shall reimburse Buyer its reasonable
out-of-pocket expenses (not to exceed $75,000) incurred by Buyer in connection
with this letter agreement and the negotiation of a definitive agreement. The
termination fee provisions set forth in this letter agreement are an integral
part of the transaction and constitute liquidated damages
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Dan R. Cook
June 6, 2000
Page 5 of 5
in the event of the occurrence of the circumstances specified in this section
and not a penalty and constitute the sole and exclusive remedies of the Buyer
hereunder. In the event of the termination of this letter agreement, the letter
agreement shall forthwith become void, and there shall be no liability or
obligation on the part of any party hereto or its officers, directors or
shareholders. Notwithstanding the foregoing sentence, (i) the provisions of this
section and the confidentiality agreement previously signed between the parties
shall survive any termination of this letter agreement and (ii) each party shall
remain liable for any breach of this letter agreement prior to its termination.
This letter agreement supercedes and replaces in its entirety the letter
agreement between the parties dated April 4, 2000.
We look forward to working with you. Please forward your response as soon as
possible, so that we may begin our due diligence in a timely fashion.
Sincerely,
DANAHER CORPORATION
By: /s/ Daniel L. Comas
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Daniel L. Comas
Vice President Corporate Development
Please countersign below if these terms
are acceptable.
By: /s/ Dan R. Cook Date: 6/6/00
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Dan R. Cook
USTMAN Technologies, Inc.
Solely with respect to the provisions
of Sections 7 and 11 above.
Sagaponack Partners, L.P.
a Delaware Limited Partnership
By its General Partner
RSP Capital, L.L.C.
By: /s/ Barry Rosenstein Date: 6/6/00
---------------------------------
Barry Rosenstein
