-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MDq5QOmiewrToe48VJM8OPOyTfYL1hqSplvgnRZCn2QzCX3En720174PkHtogIh8 X1YV3WsLVRA51S3HVcyh1w== /in/edgar/work/0000910643-00-000134/0000910643-00-000134.txt : 20001024 0000910643-00-000134.hdr.sgml : 20001024 ACCESSION NUMBER: 0000910643-00-000134 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20001023 GROUP MEMBERS: LANCER OFFSHORE, INC. GROUP MEMBERS: LANCER PARTNERS L P /NEW GROUP MEMBERS: MICHAEL LAUER SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DRS TECHNOLOGIES INC CENTRAL INDEX KEY: 0000028630 STANDARD INDUSTRIAL CLASSIFICATION: [3812 ] IRS NUMBER: 132632319 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-35380 FILM NUMBER: 744225 BUSINESS ADDRESS: STREET 1: 3RD FLOOR STREET 2: 5 SYLVAN WAY CITY: PARSIPPANY STATE: NJ ZIP: 07054 BUSINESS PHONE: 9738981500 MAIL ADDRESS: STREET 1: 16 THORNTON RD CITY: OAKLAND STATE: NJ ZIP: 07436 FORMER COMPANY: FORMER CONFORMED NAME: DIAGNOSTIC RETRIEVAL SYSTEMS INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LANCER PARTNERS L P /NEW CENTRAL INDEX KEY: 0001018915 STANDARD INDUSTRIAL CLASSIFICATION: [ ] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 200 PARK AVE STE 3900 CITY: NEW YORK STATE: NY ZIP: 10166 BUSINESS PHONE: 2128083700 MAIL ADDRESS: STREET 1: 980 POST ROAD EAST CITY: WESTPORT STATE: CT ZIP: 06880 SC 13D/A 1 0001.txt SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. 3)(1) DRS Technologies, Inc. (f/k/a Diagnostic/Retrieval Systems, Inc.) ---------------------------------------- (Name of Issuer) Common Stock, $.01 par value per share ---------------------------------------- (Title of Class of Securities) 23330X 10 0 ----------- (CUSIP Number) Copy to: Robert G. Leonard Robinson Silverman Pearce Michael Lauer Aronsohn & Berman LLP 475 Steamboat Road 1290 Avenue of the Americas Greenwich, CT 06930 New York, NY 10104 (203) 221-4646 (212) 541-2000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 12, 2000 (Date of event which requires filing of this statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ] Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. _____________________ (1) The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section of the Exchange Act but shall be subject to all other provisions of the Exchange Act (however, see the Notes). Continued on following pages Page 1 of 10 Pages CUSIP No 23330X 10 0 SCHEDULE 13D Page 2 of 10 Pages - ---------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Lancer Partners, Limited Partnership (f/k/a Lancer Partners, L.P., a New York limited partnership) - ---------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] Joint Filing (b) [ ] - ---------------------------------------------------------------------------- 3 SEC USE ONLY - ---------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - ---------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ---------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Connecticut - ---------------------------------------------------------------------------- 7 SOLE VOTING POWER 549,750 NUMBER OF -------------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 EACH -------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 549,750 -------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 549,750 - ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.7% (Based on 9,632,390 outstanding on August 11, 2000) - ---------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - ---------------------------------------------------------------------------- CUSIP No 23330X 10 0 SCHEDULE 13D Page 3 of 10 Pages - ---------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Lancer Offshore, Inc. - ---------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] Joint Filing (b) [ ] - ---------------------------------------------------------------------------- 3 SEC USE ONLY - ---------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - ---------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ---------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION British Virgin Islands - ---------------------------------------------------------------------------- 7 SOLE VOTING POWER 1,151,350 NUMBER OF -------------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 EACH -------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 1,151,350 -------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,151,350 - ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.0% (Based on 9,632,390 outstanding on August 11, 2000) - ---------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ---------------------------------------------------------------------------- CUSIP No 23330X 10 0 SCHEDULE 13D Page 4 of 10 Pages - ---------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Michael Lauer - ---------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] Joint Filing (b) [ ] - ---------------------------------------------------------------------------- 3 SEC USE ONLY - ---------------------------------------------------------------------------- 4 SOURCE OF FUNDS* PF - ---------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ---------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America - ---------------------------------------------------------------------------- 7 SOLE VOTING POWER 27,800 NUMBER OF -------------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 EACH -------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 27,800 -------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 27,800 - ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.3% (Based on 9,632,390 outstanding on August 11, 2000) - ---------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - ---------------------------------------------------------------------------- CUSIP No 23330X 10 0 SCHEDULE 13D Page 5 of 10 Pages Item 1. Security and Issuer. This Amendment No. 3 ("Amendment No. 3") to Schedule 13D relates to the grant of an option to purchase shares of common stock, $.01 par value per share (the "DRS Common Stock"), of DRS Technologies, Inc. (formerly known as Diagnostic/Retrieval Systems Inc.) ("DRS"), a Delaware corporation. The principal executive offices of DRS are located at 5 Sylvan Way, Parsippany, New Jersey, 07054. This Amendment No. 3 hereby amends and restates in its entirety the Amendment No. 2 to the Schedule 13D filed on July 7, 1999. Item 2. Identity and Background. (a) This Amendment No. 3 is filed by Lancer Partners, Limited Partnership, Lancer Offshore, Inc. and Michael Lauer (collectively the "Group"; each member of the Group being referred to as "Member"). Lancer Partners, Limited Partnership ("Lancer Partners") is a Connecticut private investment limited partnership formed in November 1997 to succeed by merger and carry on the business of, Lancer Partners, L.P., a New York limited partnership formed in December 1994. Lancer Offshore, Inc. ("Lancer Offshore") is a British Virgin Islands private investment corporation formed in September 1995. Michael Lauer is a United States citizen. (b) Lancer Partners principal office is located at: 475 Steamboat Road Greenwich, CT 06930 Lancer Offshore's principal office is located at: c/o CITCO Fund Services (Curacao) N.V. Kaya Flamboyan 9 P.O. Box 812 Curacao, Netherlands Antilles Michael Lauer's principal business office is located at: 475 Steamboat Road Greenwich, CT 06930 (c) The principal business of Lancer Partners and Lancer Offshore is the making of diversified investments. Michael Lauer's principal business is the operation and management of private investment entities that engage in making diversified investments. Lancer Management Group II, LLC, a Connecticut limited liability company ("LMG II"), is the sole general partner of Lancer Partners. The principal business of LMG II is investment management. Michael Lauer is the sole manager and principal member of LMG II and he controls all of its operations and activities. Lancer Management Group, LLC, a Connecticut limited liability company ("LMG"), is the sole investment manager of Lancer Offshore. The principal business of LMG is investment management. Michael Lauer is the sole manager and principal member of LMG and he controls all of its operations and activities. The principal office address of LMG II and LMG is 475 Steamboat Road, Greenwich, CT 06930. The directors of Lancer Offshore are Anthony J. Stocks and Kieran Conroy. All of the directors of Lancer Offshore are affiliates of CITCO Fund Services (Curacao) N.V ("Citco"), the administrator of Lancer Offshore. Lancer Offshore does not have any officers. The principal business of Messrs. Stocks and Conroy is serving as employees of Citco. Citco's principal business is that of an administrator, registrar and transfer agent for non-U.S. private investment companies. The principal business office for Messrs. Stocks and Conroy is Kaya Flamboyan 9, P.O. Box 812, Curacao, Netherlands Antilles. (d) During the last five years, neither Lancer Partners, Lancer Offshore, Michael Lauer, LMG II, LMG or any of the directors of Lancer Offshore have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). CUSIP No 23330X 10 0 SCHEDULE 13D Page 6 of 10 Pages (e) During the last five years, neither Lancer Partners, Lancer Offshore, Michael Lauer, LMG II, LMG or any of the directors of Lancer Offshore was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgement, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or state securities laws or finding violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration. Lancer Partners and Lancer Offshore are each private investment entities that pool their respective participants' contributions. Michael Lauer is an individual investor. All funds used by Lancer Partners and Lancer Offshore to acquire DRS Common Stock came from working capital. Michael Lauer used personal funds to acquire the DRS Common Stock he owns. Lancer Partners has used $5,999,446.64 in the aggregate to acquire the 549,750 shares of DRS Common Stock it currently beneficially owns. Lancer Offshore has used $13,477,097.15 in the aggregate to acquire the 1,151,350 shares of DRS Common Stock it currently beneficially owns. Michael Lauer has used $221,282.10 to acquire the 27,800 shares of DRS Common Stock he currently beneficially owns. Pursuant to a Stock Option Agreement, dated October 12, 2000, among the Members and The Veritas Capital Fund, L.P., a Delaware limited partnership ("Veritas"), a copy of which Option Agreement is attached hereto as Exhibit 7.2, the Members have collectively granted to Veritas an option (the "Option") to purchase all shares of DRS Common Stock they respectively own (the "Optioned Shares") for a purchase price of $17.50 per share in cash (the "Per Share Price") or an aggregate purchase price of $30,255,750 (the "Purchase Price"). The Option may be exercised in whole (and not in part) at any time prior to April 11, 2001 subject to, if applicable, the expiration or termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. It is currently anticipated that Veritas will provide the funds required to pay the Purchase Price if the Option is exercised. If at any time prior to the expiration of the Option, any person, including Veritas or any of its affiliates, shall have commenced a tender offer for any shares of DRS Common Stock, shall have effected a merger or other business combination with DRS, or shall have acquired 20% or more of the outstanding shares of DRS Common Stock or all or substantially all of the assets of DRS, then in any such event, at the time of its exercise of the Option, Veritas shall pay to the Members 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 for any shares of DRS 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 DRS Common Stock then outstanding, over (ii) the Per Share Price, multiplied by (b) the total number of Optioned Shares. Item 4. Purpose of Transaction. Each of the Members has granted to Veritas an option to purchase all shares of DRS Common Stock they respectively own. The Group is aware that Veritas has been in discussions with DRS concerning the possibility of Veritas acquiring DRS by way of a merger in which each share of DRS's outstanding Common Stock would be converted into the right to receive an agreed upon cash amount. If such a transaction were to occur, the Common Stock would no longer be publicly traded and would be eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act. It is the Group's understanding that to date, no agreement or understanding has been reached between Veritas and DRS and that no assurance can be given that an agreement or understanding will be reached. The Group supports any transaction that would maximize shareholder value, including a potential transaction with Veritas. The Group's view regarding a transaction that would maximize shareholder value has been communicated to DRS. The Group, however, is not acting in concert with Veritas and neither the Group nor any Member has agreed to act together with Veritas for purposes of acquiring any shares of Common Stock. CUSIP No 23330X 10 0 SCHEDULE 13D Page 7 of 10 Pages The Group intends to evaluate continuously their investment in DRS and, based on such evaluation, may determine at a future date to change their respective current positions as to any action enumerated above. Item 5. Interest in Securities of the Issuer. (a) Lancer Offshore presently owns 1,151,350 shares of DRS Common Stock, which amount represents 12.0% of the outstanding shares of DRS Common Stock (based on 9,632,390 shares outstanding on August 11, 2000). Lancer Partners presently owns 549,750 shares of DRS Common Stock, which amount represents approximately 5.7% of the outstanding shares of DRS Common Stock (based on 9,632,390 shares outstanding on August 11, 2000). Michael Lauer presently owns 27,800 shares of DRS Common Stock, which amount represents approximately 0.3% of the outstanding shares of DRS Common Stock (based on 9,632,390 shares outstanding on August 11, 2000). On October 12, 2000, the Members have granted to Veritas an option to buy all shares of DRS Common Stock each Member respectively owns. Such option is exercisable on October 12, 2000 and expires on April 11, 2001. No other person named in Item 2 above beneficially owns any shares of DRS Common Stock. (b) Until the options described in subsection (a) above are exercised, each Member is the sole record owner of the securities identified in subsection (a) above, and has sole power to vote or direct the vote of such securities. Until the options described in subsection (a) above are exercised, each Member has the sole power to dispose or direct the disposition of all of their respective securities identified in subsection (a) above. (c) The following transactions have been effected since filing of the Amendment No. 2 to the Schedule 13D on July 7, 1999:
Name of Member Date Nature of Number of Date Expiration Exercise Transaction Underlying Shares of Exercisable Date Price DRS Common Stock Lancer Partners 10/12/00 Grant of 549,750 10/12/00 04/11/01 $17.50 Option to per Buy Share Lancer Offshore 10/12/00 Grant of 1,151,350 10/12/00 04/11/01 $17.50 Option to per Buy Share Michael Lauer 10/12/00 Grant of 27,800 10/12/00 04/11/01 $17.50 Option to per Buy Share
CUSIP No 23330X 10 0 SCHEDULE 13D Page 8 of 10 Pages (d) No person other than Michael Lauer, as the sole manager of LMG II, which is the sole general partner of Lancer Partners, and Michael Lauer, as the sole manager of LMG, which is the sole investment manager of Lancer Offshore, is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the respective securities identified in subsection (a) above. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer. On October 12, 2000, the Members have entered into a Stock Option Agreement with Veritas, whereby they have granted to Veritas an option to buy all shares of DRS Common Stock each Member respectively owns. Item 7. Materials to be Filed as Exhibits. 7.1. Joint Filing Agreement 7.2. Stock Option Agreement CUSIP No 23330X 10 0 SCHEDULE 13D Page 9 of 10 Pages SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: October 23, 2000 LANCER PARTNERS, LIMITED PARTNERSHIP By: Lancer Management Group II, LLC, General Partner By: /s/ MICHAEL LAUER __________________________ Name: Michael Lauer Title: Manager LANCER OFFSHORE, INC. By: Lancer Management Group, LLC, Investment Manager By: /s/ MICHAEL LAUER __________________________ Name: Michael Lauer Title: Manager /s/ MICHAEL LAUER __________________________ MICHAEL LAUER CUSIP No 23330X 10 0 SCHEDULE 13D Page 10 of 10 Pages Exhibit 7.1 JOINT FILING AGREEMENT JOINT FILING AGREEMENT made as of this 23th day of October 2000 by and among LANCER PARTNERS LIMITED PARTNERSHIP, a Connecticut limited partnership ("Lancer Partners") LANCER OFFSHORE, INC. a British Virgin Islands corporation ("Lancer Offshore") and MICHAEL LAUER, an individual ("ML"). WHEREAS, Lancer Partners, Lancer Offshore, and ML collectively beneficially own more than five (5%) percent of the issued and outstanding common stock, $.01 par value of DRS Technologies, Inc. (formerly known as Diagnostic/Retrieval Systems, Inc.) ("DRS Common Stock"), a Delaware corporation; and WHEREAS, pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder, the parties hereto are required to file an Amendment No. 3 to a Schedule 13D with the Securities and Exchange Commission ("SEC"). NOW, THEREFORE, the parties agree as follows: 1. Lancer Partners, Lancer Offshore and ML hereby agree to jointly file an Amendment No. 3 to a Schedule 13D with the SEC regarding the beneficial ownership of DRS Common Stock and to file any and all amendments and supplements thereto. 2. This Agreement contains the entire agreement among the parties concerning the subject matter hereof and may not be amended, modified or changed except pursuant to a written instrument signed by all parties. IN WITNESS WHEREOF, the parties have signed this Agreement the day and year first above written. LANCER PARTNERS, LIMITED PARTNERSHIP By: Lancer Management Group II, LLC, General Partner By: /s/ MICHAEL LAUER __________________________ Name: Michael Lauer Title: Manager LANCER OFFSHORE, INC. By: Lancer Management Group, LLC, Investment Manager By: /s/ MICHAEL LAUER __________________________ Name: Michael Lauer Title: Manager /s/ MICHAEL LAUER __________________________ MICHAEL LAUER EX-99 2 0002.txt 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 -----END PRIVACY-ENHANCED MESSAGE-----