Page 10 of 14 Pages
SCHEDULE 13D
CUSIP NO. 00000X000
EXHIBIT 7.2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT dated as of October 12, 2000, among The Veritas
Capital Fund, L.P., a Delaware limited partnership (the "Buyer"), and Lancer
Offshore, Inc., a British Virgin Islands corporation ("Lancer Offshore"), Lancer
Partners, Limited Partnership, a Connecticut limited partnership ("Lancer
Partners"), and Xxxxxxx Xxxxx, an individual ("Xxxxx", and together with Lancer
Offshore and Lancer Partners collectively, the "Sellers").
WHEREAS, as of the date hereof, Sellers own a total of 1,728,900 shares
of common stock, par value $.01 per share (the "Common Stock"), of DRS
Technologies, Inc., a Delaware corporation (the "Company"), Lancer Offshore
owning 1,151,350 shares of Common Stock, Lancer Partners owning 549,750 shares
of Common Stock and Xxxxx owning 27,800 shares of Common Stock;
WHEREAS, the Company is supplier of defense electronic systems;
WHEREAS, the Buyer is a private equity firm which has several portfolio
companies which are engaged in businesses similar to and compatible with the
business of the Company; and
WHEREAS, the Sellers are willing to grant the Buyer an irrevocable
option as set forth herein, to purchase their shares of Common Stock;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
1. Grant of Option. The Sellers hereby grant to the Buyer an
irrevocable option (the "Option") to purchase for a price of $17.50 per share in
cash (the "Per Share Price") a total of 1,728,900 shares of Common Stock
(collectively, the "Optioned Shares"), Lancer Offshore hereby granting the
Option with respect to 1,151,350 Optioned Shares, Lancer Partners hereby
granting the Option with respect to 549,750 Optioned Shares and Xxxxx hereby
granting the Option with respect to 27,800 Optioned Shares. The Option shall
expire if not exercised prior to April 11, 2001, provided that if the Option
cannot be exercised by such day because of any injunction, order or similar
restraint issued by a court of competent jurisdiction, the Option shall expire
on the third business day after such injunction, order or restraint shall have
been dissolved or when such injunction, order or restraint shall have become
permanent and no longer subject to appeal, as the case may be.
2. Exercise of Option. The Buyer may exercise the Option in whole (and
not in part) at any time prior to the expiration of the Option. If the Buyer
wishes to exercise the Option, the Buyer shall give written notice (the date of
such notice being herein called the "Notice Date") to the Sellers specifying a
place and date (not later than the later of three business days from the Notice
Date or the first business day following expiration or termination of any
waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976
applicable to the exercise of the Option) for the closing of such purchase.
3. Payment of Purchase Price and Delivery of Certificates for Optioned
Shares. At the closing hereunder, (a) the Buyer will make payment to the Sellers
of the full purchase price of the Optioned Shares in immediately available funds
by wire transfer to a bank account or accounts designated in writing by the
Sellers, in an amount equal to the product of the Per Share Price multiplied by
the number of Optioned Shares being purchased at the closing (i.e., $30,255,750)
(the "Aggregate Purchase Price") and (b) the Sellers will deliver to the Buyer
duly executed stock powers reasonably acceptable to the Buyer which will enable
the Buyer to receive from the Company's transfer agent without the payment of
any additional consideration, a certificate or certificates representing the
Optioned Shares so purchased, registered in the name of the Buyer or its
designee or designees in the denominations designated by the Buyer in its notice
of exercise.
Page 11 of 14 Pages
SCHEDULE 13D
CUSIP NO. 00000X000
4. Optioned Share Appreciation Right. If at any time prior to the
expiration of the Option, any person or "group" as defined in Section 13(d)(3)
of the Securities and Exchange Act of 1934 (the "Exchange Act"), including the
Buyer or any Affiliate of the Buyer, shall have commenced a tender offer for any
shares of Common Stock, shall have effected a merger or other business
combination with the Company, or shall have acquired 20% or more of the
outstanding shares of Common Stock or all or substantially all of the assets of
the Company, then in any such event, at the time of its exercise of the Option,
the Buyer shall pay to the Sellers an amount in addition to the Per Share Price
equal to 50% of the product of (a) the excess, if any, of (i) the greater of (A)
the highest price paid or proposed to be paid by such person or group for any
shares of Common Stock or (B) the aggregate consideration paid, or proposed to
be paid in such tender, merger or other business combination or for such assets
divided by the number of shares of Common Stock then outstanding (the value of
any consideration other than cash to be determined, in the case of consideration
with a readily ascertainable market value, by reference to such market value
and, in the case of any consideration other than cash, by agreement in good
faith between the Buyer and the Sellers), over (ii) the Per Share Price, as
adjusted pursuant to Section 7, multiplied by (b) the total number of Optioned
Shares, as adjusted pursuant to Section 7. Such payment shall extinguish all
other rights of the Sellers under this Agreement.
5. Representations and Warranties of the Sellers. The Sellers hereby
represent and warrant to the Buyer as follows:
(a) Lancer Offshore is a corporation duly organized, validly
existing and in good standing under the laws of the British Virgin Islands.
Lancer Partners is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Connecticut. Each of the Sellers
has good and marketable title to the Optioned Shares, free and clear of any
claims, security interests, liens and encumbrances. Upon the exercise of the
Option by the Buyer hereunder, good and marketable title to the Optioned Shares
will be transferred to the Buyer and/or its designee(s), free and clear of any
claims, security interests, liens and encumbrances whatsoever.
(b) The execution and delivery of this Agreement by the
Sellers and the consummation by the Sellers of the transactions contemplated
hereby have been duly authorized by all necessary corporate, partnership or
other action on the part of the Sellers, as the case may be, and this Agreement
constitutes the legal, valid and binding agreements of the Sellers enforceable
in accordance with its terms.
6. Representations and Warranties of the Buyer. The Buyer hereby
represents and warrants to the Sellers as follows:
(a) The Buyer is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) The execution and delivery of this Agreement by the Buyer
and the consummation by the Buyer of the transactions contemplated hereby have
been duly authorized by all necessary partnership action on the part of the
Buyer, and this Agreement constitutes the legal, valid and binding agreement of
the Buyer enforceable in accordance with its terms.
(c) Any Optioned Shares purchased by the Buyer will be
acquired for investment only and not with a present view to any public
distribution thereof and the Buyer will not offer to sell or otherwise dispose
of any Optioned Shares so acquired by it in violation of the registration
requirements of the Securities Act of 1933, as amended.
(d) The Buyer acknowledges that it has not received any
representations from the Sellers regarding the Company, that the Buyer has
conducted its own investigation of the Company and is satisfied with its
prospects, and that it is entering into this Agreement relying solely on the
results of such investigation.
Page 12 of 14 Pages
SCHEDULE 13D
CUSIP NO. 00000X000
7. Adjustment Upon Changes in Capitalization. In the event of any
change in the number of outstanding shares of Common Stock by reason of any
stock dividend, stock split, recapitalization, combination, exchange of shares,
merger, consolidation, reorganization or the like or any other change in the
corporate or capital structure of the Company (each a "Capital Transaction"),
the Option evidenced by this Agreement shall be to acquire, for the Aggregate
Purchase Price (subject to increases provided for in Section 4 above), the
Optioned Shares, if any, and other securities, if any, received by Sellers as a
result of such Capital Transaction.
8. Not Acting as Group. The Buyer and the Sellers expressly acknowledge
hereby that they are not acting and do not intend to act as a partnership,
limited partnership, syndicate, or other group in connection with the Optioned
Shares, or otherwise constitute a "group" under Section 13(d)(3) of the Exchange
Act. Without limiting the generality of the foregoing, the Buyer acknowledges
that it is acting on its own behalf and not, in any way, in concert with the
Sellers.
9. Further Assurances. If the Buyer shall exercise the Option in
accordance with the terms of this Agreement, from time to time and without
additional consideration, the Sellers will execute and deliver, or cause to be
executed and delivered, such additional or further transfer, assignments,
endorsements, consents and other instruments as the Buyer may reasonably request
for the purposes of effectively carrying out the transactions contemplated by
this Agreement, including the transfer of all of the Optioned Shares to the
Buyer and the release of any and all liens, claims and encumbrances with respect
thereto.
10. Assignments. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned by any of the
parties without the prior written consent of the other parties, except that the
Buyer may assign, in its sole discretion, any or all of its rights, interests
and obligations under this Agreement to any Affiliate of the Buyer and promptly
thereafter Buyer shall give a written notice of such assignment to the Sellers.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
11. General Provisions.
(a) Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for any breach of the provisions of this
Agreement and agree that the obligations of the parties hereunder shall be
specifically enforceable.
(b) Expenses. Whether or not the Option is exercised, all
costs and expenses incurred in connection with the Option, this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expense.
(c) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(d) Definitions. As used in this Agreement, an "Affiliate" of
another person means a person controlled by, in control of or under common
control with such other person.
(e) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
by hand or facsimile (provided a copy thereof is sent by overnight courier), or
one business day after sent by overnight courier, or five business days after
mailed by certified mail, return receipt requested, as follows:
Page 13 of 14 Pages
SCHEDULE 13D
CUSIP NO. 00000X000
If to the Buyer, addressed to:
The Veritas Capital Fund, L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 212/688-9411
Confirmation: 212/688-0020
Attention: Xxxxxx X. XxXxxx
If to the Sellers, addressed to:
Lancer Partners, Limited Partnership
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Facsimile: 203/629-5325
Confirmation: 203/629-0300
Attention: Xxxxxxx Xxxxx
(f) Interpretation. When a reference is made in this Agreement
to a Section, such reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Wherever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation".
(g) Counterparts. This Agreement may be executed with
counterpart signature pages or in one or more counterparts, all of which shall
be considered one and the same agreement, and shall become effective when one or
more of such signature pages or counterparts have been signed by each of the
parties and delivered to the other parties, it being understood that all parties
need not sign the same signature pages or counterparts.
(h) Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior and contemporaneous
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto any rights or remedies herein.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
(j) Partial Invalidity. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.
Page 14 of 14 Pages
SCHEDULE 13D
CUSIP NO. 00000X000
IN WITNESS WHEREOF, the Buyer and the Sellers have duly executed this
Agreement as of the date first written above.
BUYER: THE VERITAS CAPITAL FUND, L.P.
By: /s/ Xxxxxx X. XxXxxx
-----------------------------------
Name: Xxxxxx X. XxXxxx
Title: Authorized Signatory
SELLERS: LANCER OFFSHORE, INC.
By: Lancer Management Group, LLC,
Investment Manager
By: /s/ Xxxxxxx Xxxxx
-----------------------------------
Name: Xxxxxxx Xxxxx
Title: Manager
LANCER PARTNERS, LIMITED PARTNERSHIP
By: Lancer Management Group II, LLC,
General Partner
By: /s/ Xxxxxxx Xxxxx
-----------------------------------
Name: Xxxxxxx Xxxxx
Title: Manager
/s/ Xxxxxxx Xxxxx
-----------------------------------
XXXXXXX XXXXX, Individually
