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 Michael Lauer, an individual ("Lauer", 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 Lauer 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 Lauer 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 Hart-Scott-Rodino 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.
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.
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:
If to the Buyer, addressed to:
The Veritas Capital Fund, L.P.
660 Madison Avenue
New York, New York 10021
Facsimile: 212/688-9411
Confirmation: 212/688-0020
Attention: Robert B. McKeon
If to the Sellers, addressed to:
Lancer Partners, Limited Partnership
475 Steamboat Road
Greenwich, CT 06390
Facsimile: 203/629-5325
Confirmation: 203/629-0300
Attention: Michael Lauer
(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.
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/ Robert B. McKeon
---------------------------------
Name: Robert B. McKeon
Title: Authorized Signatory
SELLERS: LANCER OFFSHORE, INC.
By: Lancer Management Group, LLC,
Investment Manager
By:/s/ Michael Lauer
---------------------------------
Name: Michael Lauer
Title: Manager
LANCER PARTNERS, LIMITED PARTNERSHIP
By: Lancer Management Group II, LLC,
General Partner
By:/s/ Michael Lauer
---------------------------------
Name: Michael Lauer
Title: Manager
/s/ Michael Lauer
_____________________________________
MICHAEL LAUER, Individually
