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EXECUTION COPY
TENDER AGREEMENT
THIS TENDER AGREEMENT (this "Agreement'), made and entered into this
16th day of July, 1998, is by and among IAT REINSURANCE SYNDICATE LTD.
("Buyer"), a Bermuda corporation with its principal office in Bermuda, and the
persons listed on SCHEDULE A hereto (each, individually a "Shareholder" and,
collectively, the "Shareholders").
BACKGROUND STATEMENT
Buyer desires to acquire approximately 49% of the issued and
outstanding shares ("Shares") of common stock, par value $1.00 per share (the
"Common Stock"), of McM Corporation ("McM"), a North Carolina corporation
headquartered in Raleigh, North Carolina, through the acquisition of
approximately 14% of such Shares from the McMillen Trust (the "Trust") and a
tender offer (the "Offer") to purchase up to 35% of such Shares for $3.65 per
share net to the sellers thereof in cash (such amount or any greater per share
amount paid in the Offer, the "Per Share Amount").
Buyer and McM have entered into an Offer and Rights Agreement, dated as
of the date hereof (the "Offer and Rights Agreement"), which provides, among
other things, upon the terms and subject to the conditions thereof, for the
Offer. The Offer and Rights Agreement provides that holders of options
("Options") to purchase Shares ("Option Shares") may elect, in their sole
discretion, to cancel their Options in return for a cash payment from Buyer
equal to the Per Share Amount for each Option Share less the exercise price for
each Option Share.
The Shareholders are each directors of McM. As of the date hereof, the
Shareholders own (beneficially or of record) the number of Shares and Options
set forth opposite such Shareholder's name on SCHEDULE A attached hereto.
As a condition to the willingness of Buyer to enter into the Offer and
Rights Agreement, Buyer has required that the Shareholders agree, and in order
to induce Buyer to enter into the Offer and Rights Agreement, the Shareholders
have agreed, (i) to tender and not withdraw, or to cause to be tendered and not
withdrawn, pursuant to the Offer, all of the Shares listed on Schedule A hereto
and all other Shares now owned (beneficially or of record) by such Shareholders
or which may hereafter be acquired by such Shareholders (the "Tendered Shares")
and (ii) in connection with the Offer, to elect to cancel their Options in
consideration of the cash-out payment from Buyer described above.
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STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound, the parties hereto agree as follows:
1. Tender of Shares. Subject to the terms and conditions of this
Agreement, each Shareholder agrees to validly tender and not withdraw, or to
cause to be tendered and not withdrawn, pursuant to the Offer, all of Tendered
Shares; provided, that no such tender shall be required if such Shareholder
would as a result of such tender incur liability under Section 16(b) of the
Securities Exchange Act of 1934, as amended ("Section 16(b)"). Notwithstanding
the foregoing, in the event any Shareholder fails to tender any Tendered Shares
due to Section 16(b) liability, as soon as such liability lapses with respect to
any Tendered Shares, such Shareholder agrees to tender in the Offer, or if Buyer
has accepted for payment Shares pursuant to the Offer, to sell to Buyer for the
Per Share Amount, such Tendered Shares.
2. Cash-Out and Cancellation of Options. Subject to the terms and
conditions of this Agreement, each Shareholder holding Options listed on
SCHEDULE A hereto ("Cash-Out Options") agrees, in accordance with the procedures
set forth in the Offer, to instruct McM to cancel all of his or her Cash-Out
Options in consideration of a cash payment by Buyer for each such Cash-Out
Option in an amount, subject to applicable withholding of taxes, equal to (x)
the product of (i) the aggregate number of Option Shares subject to such
Cash-Out Option times (ii) the Per Share Amount, minus (y) the aggregate
exercise price for all Option Shares subject to such Cash-Out Option. In
consideration of Buyer's Offer and entry into this Agreement, each Shareholder
agrees that each Cash-Out Option with a per share exercise price in excess of
the Per Share Amount ("Under Water Options"), upon Buyer's acceptance for
payment and payment for Shares validly tendered and not withdrawn pursuant to
the Offer, shall be cancelled by McM without payment by Buyer of any additional
consideration therefor.
3. Representations and Warranties by the Shareholders. Each
Shareholder hereby severally represents and warrants to Buyer as follows:
(a) At the time the Tendered Shares are tendered in the Offer,
each Shareholder, either individually or together with his spouse, will have
good and valid title to the Tendered Shares, free and clear of all restrictions,
claims, liens, charges and encumbrances.
(b) Each Shareholder has good and valid title to the Cash-Out
Options (including, without limitation, the Under Water Options), free and clear
of all restrictions, claims, liens, charges and encumbrances other than those
set forth in the 1986 Employee Incentive Stock Option Plan and the 1996 Employee
Incentive Stock Option Plan (together, the "Plans").
(c) Each Shareholder has the power, authority, and capacity to
enter into and perform its obligations under this Agreement, and to consummate
the transactions contemplated herein. This Agreement has been duly and validly
executed by each Shareholder and is the legal, valid and binding obligation of
each Shareholder, enforceable in accordance with its terms, except as
enforceability may be limited by equitable principles or by bankruptcy,
fraudulent conveyance or insolvency laws affecting the enforcement of creditors'
rights generally.
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(d) Neither the execution and delivery of, nor the performance of
its obligations under, this Agreement by each Shareholder, nor the consummation
of the transactions contemplated herein, will conflict with, violate or result
in a breach of any of the terms or provisions of, or constitute a default (with
the passage of time or giving of notice or both) or give rise to any right of
termination, cancellation or acceleration under any agreement or instrument to
which such Shareholder is a party or violate any law, order, judgment, decree,
rule or regulation of any court or governmental authority having jurisdiction
over each Shareholder or any of the Tendered Shares or Cash-Out Options.
(e) No Shareholder has retained any broker or finder in connection
with the transactions contemplated herein so as to give rise to any valid claim
against Buyer for any fee, sales commissions, finders' fees, financial advisory
fee or other fees or expenses for which Buyer shall be liable.
4. Representations and Warranties of Buyer. Buyer hereby
represents and warrants to each Shareholder as follows:
(a) Buyer is a corporation duly incorporated, validly existing and
in good standing under the laws of Bermuda, and has full corporate power and
authority to carry on its business as now conducted.
(b) The execution, delivery and performance by Buyer of this
Agreement and the transactions contemplated hereby have been duly and validly
authorized and approved by all requisite shareholder and corporate action. Buyer
has the power, authority and capacity to enter into and perform its obligations
under this Agreement, and to consummate the transactions contemplated herein.
This Agreement has been duly and validly executed by Buyer and is the legal,
valid and binding obligation of Buyer, enforceable in accordance with its terms,
except as enforceability may be limited by equitable principles or by
bankruptcy, fraudulent conveyance or insolvency laws affecting the enforcement
of creditors' rights generally.
(c) Neither the execution and delivery of, nor the performance of
its obligations under, this Agreement by Buyer, nor the consummation of the
transactions contemplated herein, will conflict with, violate or result in a
breach of any of the terms or provisions of, or constitute a default (with the
passage of time or giving of notice or both) or give rise to any right of
termination, cancellation or acceleration under any agreement or instrument to
which Buyer is a party, conflict with any provision of the charter documents of
Buyer, or violate any law, order, judgment, decree, rule or regulation of any
court or governmental authority having jurisdiction over Buyer or its property.
(d) The Tendered Shares acquired by Buyer pursuant to this
Agreement are being acquired for investment purposes only and not with a view to
any public distribution thereof, and Buyer will not offer to sell or otherwise
dispose of the shares so acquired by it in violation of any federal or state law
applicable to the sale, resale, or distribution of securities.
(e) Buyer has not retained any broker or finder in connection with
the transactions contemplated herein so as to give rise to any valid claim
against any Shareholder for any fee,
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sales commissions, finders' fees, financial advisory fee or other fees or
expenses for which any Shareholder shall be liable.
5. Certain Covenants.
(a) Each Shareholder covenants and agrees that it will not buy any
Shares from the Trust.
(b) Each Shareholder covenants and agrees, at the request of Buyer
made at any time after the purchase of the Tendered Shares and the cash-out of
the Cash-Out Options by Buyer pursuant to the Offer, to resign as a director of
McM, effective immediately upon such request or such later time as Buyer shall
designate.
(c) Each Shareholder not requested by Buyer to resign agrees to
appoint to fill the vacancies created by the resignations given pursuant to
clause (b) above, director nominees designated by Buyer, effective immediately
upon Buyer's request or such later time as Buyer shall designate.
(d) Except as contemplated by Sections 1 and 2 of this Agreement,
each Shareholder hereby covenants and agrees that such Shareholder shall not,
and shall not permit any other beneficial owner of his Tendered Shares to, sell,
transfer, tender, exercise, assign, hypothecate or otherwise dispose of, or
create or permit to exist any security interest, lien, claim, pledge, option,
right of first refusal, agreement, limitation on such Shareholder's voting
rights, charge or other encumbrance of any nature whatsoever with respect to
such Tendered Shares or such Cash-Out Options, or agree to do any of the
foregoing, at any time prior to the earlier of (x) the purchase by Buyer of the
Tendered Shares and the cash-out by Buyer of the Cash-Out Options pursuant to
the Offer or (y) the termination of this Agreement.
(e) Each Shareholder agrees on the date hereof to terminate any
election made by such Shareholder under the Company's 1996 Non-Employee
Directors' Stock Plan (the "Directors Plan") to receive Shares in lieu of any
accrued directors' fees otherwise payable in cash, which termination shall be
effective with respect to all accrued fees payable on or after July 1, 1998.
6. Miscellaneous.
(a) This Agreement may be terminated (i) at any time by mutual
written consent of Buyer and the Shareholders or (ii) by Buyer or any
Shareholder, at any time the date 180 days after the date hereof, if Buyer has
not purchased the Tendered Shares and cashed out the Cash-Out Options by such
date. If this Agreement is terminated in accordance with the foregoing
provisions, all further obligations of the parties hereunder shall terminate.
(b) The parties hereto shall assume and bear all expenses, costs
and fees incurred or assumed by them in the preparation and execution of this
Agreement and compliance herewith, whether or not the transactions contemplated
hereby are consummated.
(c) This Agreement shall not be assigned by any party without the
prior written consent of the other party, which consent shall not be
unreasonably withheld; provided, however,
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that Buyer may cause any of its direct or indirect subsidiaries to take title to
the Tendered Shares so long as Buyer shall guarantee punctual performance in
full by such subsidiary of any and all obligations it may have under this
Agreement or any agreement executed in connection herewith. This Agreement shall
inure to the benefit of, and be binding upon and enforceable against, the
successors, heirs and permitted assigns of the respective parties.
(d) This Agreement or any term hereof may be changed, waived,
discharged or terminated only by an agreement in writing signed by both parties.
No waiver by a party of any condition or of any breach of any term, covenant,
representation or warranty contained herein shall be effective unless in
writing, and no waiver in any one or more instances shall be deemed to be a
further or continuing waiver of any such condition or breach in any other
instances or a waiver of any other condition or breach of any other term,
covenant, representation or warranty.
(e) This Agreement constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, and all of which, together, shall constitute one and the same
instrument. This instrument shall be governed in all respects, including
validity, interpretation and effect, by the laws of the State of North Carolina
(without reference to conflict of law provisions).
(f) The parties hereto agree that irreparable damage would occur
in the event any provision of this Agreement was not performed in accordance
with the terms hereof and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at law or in
equity.
(g) If any term or other provision of this Agreement is invalid ,
illegal or incapable of being enforced by any rule of law, or public policy, all
other conditions and provision of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of this
Agreement is not affected in any manner materially adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the terms of
this Agreement remain as originally contemplated to the fullest extent possible.
(h) Except as otherwise required by applicable law, each party
agrees to keep this Agreement and the transactions contemplated hereby in
strictest confidence and not to disclose the existence or terms of this
Agreement to any third party without the written consent of Buyer and McM.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
BUYER:
IAT REINSURANCE SYNDICATE LTD.
ATTEST: By: /s/ Peter R. Kellogg
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Title: President
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/s/ Marguerite R. Gorman Printed Name: Peter R. Kellogg
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Marguerite R. Gorman, Secretary
SHAREHOLDERS:
/s/ Michael A. DiGregorio
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Michael A. DiGregorio
/s/ Jesse Greenfield
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Jesse Greenfield
/s/ George E. King
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George E. King
/s/ Laurence F. Lee, Jr.
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Laurence F. Lee, Jr.
/s/ Laurence F. Lee III
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Laurence F. Lee III
/s/ Claude G. Sanchez, Jr.
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Claude G. Sanchez, Jr.
/s/ Stephen L. Stephano
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Stephen L. Stephano
/s/ R. Peyton Woodson III
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R. Peyton Woodson III
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SCHEDULE A
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OPTION CASH-OUT
AMOUNT
EXERCISE (ASSUMING $3.65
SHAREHOLDER(S) SHARES* OPTIONS PRICE PER SHARE AMOUNT)
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Michael A. DiGregorio 80 -- -- $ 0
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Jesse Greenfield 364,464 -- -- $ 0
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George E. King 44,300 21,481 $1.38 $48,761.87
9,500 $2.25 $13,300.00
40,500 $2.75 $36,450.00
7,500 $3.94 --
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$98,511.87
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Laurence F. Lee, Jr. 779 -- -- $ 0
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Laurence F. Lee III 10 -- -- $ 0
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Claude G. Sanchez, Jr. 50 -- -- $ 0
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Stephen L. Stephano 32,515 21,481 $1.38 $48,761.87
9,500 $2.25 $13,300.00
40,500 $2.75 $36,450.00
7,500 $3.94 --
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$98,511.87
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R. Peyton Woodson III 39,734 --
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* As reported on McM Corporation's Proxy Statement dated April 21, 1998.
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