<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
MLC Holdings, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, Par Value $.01
- --------------------------------------------------------------------------------
(Title of Class of Securities)
55305V107
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(CUSIP NUMBER)
Daniel A. Raskas, Esq.; Thayer Capital Partners, 1455 Pennsylvania Ave., N.W.,
Suite 350 Washington, D.C. 20004
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
October 23, 1998
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(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 which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4),
check the following box [ ].
Check the following box if a fee is being paid with this statement [ ].
<PAGE> 2
SCHEDULE 13D
(Cover Page -- Part II)
CUSIP NO.55305V107
- --------------------------------------------------------------------------------
1) Name of Reporting Person/S.S. or I.R.S. Identification No. of Above
Person TC Leasing, LLC
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3) SEC Use Only
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4) Source of Funds: OO
- --------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e)
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6) Citizenship or Place of Organization: Delaware
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Number of Shares 7) Sole Voting Power: 2,202,020*
Beneficially Owned
By Each Reporting -------------------------------------------
Person With 8) Shared Voting Power: 0
-------------------------------------------
9) Sole Dispositive Power:2,202,020*
-------------------------------------------
10) Shared Dispositive Power: 0
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person: 2,202,020*
- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
- --------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11): 25.8%
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14) Type of Reporting Person: OO
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*Includes 1,090,909 shares obtainable upon the exercise of warrants with an
aggregate purchase price of $11,999,999.
2
<PAGE> 3
SCHEDULE 13D
(Cover Page -- Part II)
CUSIP NO.55305V107
- --------------------------------------------------------------------------------
1) Name of Reporting Person/S.S. or I.R.S. Identification No. of Above
Person Thayer Equity Investors III, L.P.
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2) Check the Appropriate Box if a Member of a Group
(a)
(b)
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3) SEC Use Only
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4) Source of Funds: OO
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5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e)
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6) Citizenship or Place of Organization: Delaware
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Number of Shares 7) Sole Voting Power: 2,202,020*
Beneficially Owned
By Each Reporting -------------------------------------------
Person With 8) Shared Voting Power: 0
-------------------------------------------
9) Sole Dispositive Power: 2,202,020*
-------------------------------------------
10) Shared Dispositive Power: 0
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person: 2,202,020*
- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
- --------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11): 25.8%
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14) Type of Reporting Person: PN
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*Includes 1,090,909 shares obtainable upon the exercise of warrants with an
aggregate purchase price of $11,999,999.
3
<PAGE> 4
SCHEDULE 13D
(Cover Page -- Part II)
CUSIP NO.55305V107
- --------------------------------------------------------------------------------
1) Name of Reporting Person/S.S. or I.R.S. Identification No. of Above
Person TC Equity Partners, L.L.C.
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2) Check the Appropriate Box if a Member of a Group
(a)
(b)
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3) SEC Use Only
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4) Source of Funds: OO
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5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e)
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6) Citizenship or Place of Organization: Delaware
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Number of Shares 7) Sole Voting Power: 2,202,020*
Beneficially Owned
By Each Reporting -------------------------------------------
Person With 8) Shared Voting Power: 0
-------------------------------------------
9) Sole Dispositive Power: 2,202,020*
-------------------------------------------
10) Shared Dispositive Power: 0
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person: 2,202,020*
- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
- --------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11): 25.8%
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14) Type of Reporting Person: OO
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*Includes 1,090,909 shares obtainable upon the exercise of warrants with an
aggregate purchase price of $11,999,999.
4
<PAGE> 5
SCHEDULE 13D
(Cover Page -- Part II)
CUSIP NO.55305V107
- --------------------------------------------------------------------------------
1) Name of Reporting Person/S.S. or I.R.S. Identification No. of Above
Person Frederic V. Malek
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2) Check the Appropriate Box if a Member of a Group
(a)
(b)
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3) SEC Use Only
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4) Source of Funds: OO
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5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e)
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6) Citizenship or Place of Organization: United States of America
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Number of Shares 7) Sole Voting Power: 0
Beneficially Owned
By Each Reporting ---------------------------------------------
Person With 8) Shared Voting Power: 2,202,020*
---------------------------------------------
9) Sole Dispositive Power: 0
---------------------------------------------
10) Shared Dispositive Power: 2,202,020*
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person: 2,202,020*
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12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [X]
Mr. Malek disclaims beneficial ownership of the shares disclosed in this
Schedule 13D.
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13) Percent of Class Represented by Amount in Row (11): 25.8%
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14) Type of Reporting Person: IN
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*Includes 1,090,909 shares obtainable upon the exercise of warrants with an
aggregate purchase price of $11,999,999.
5
<PAGE> 6
SCHEDULE 13D
(Cover Page -- Part II)
CUSIP NO.55305V107
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1) Name of Reporting Person/S.S. or I.R.S. Identification No. of Above
Person Carl J. Rickertsen
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2) Check the Appropriate Box if a Member of a Group
(a)
(b)
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3) SEC Use Only
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4) Source of Funds: OO
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5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e)
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6) Citizenship or Place of Organization: United States of America
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Number of Shares 7) Sole Voting Power: 0
Beneficially Owned
By Each Reporting ---------------------------------------------
Person With 8) Shared Voting Power: 2,202,020*
----------------------------------------------
9) Sole Dispositive Power: 0
----------------------------------------------
10) Shared Dispositive Power: 2,202,020*
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person: 2,202,020*
- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [X]
Mr. Rickertsen disclaims beneficial ownership of the shares disclosed
in this Schedule 13D.
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13) Percent of Class Represented by Amount in Row (11): 25.8%
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14) Type of Reporting Person: IN
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*Includes 1,090,909 shares obtainable upon the exercise of warrants with an
aggregate purchase price of $11,999,999.
6
<PAGE> 7
SCHEDULE 13D
(Cover Page -- Part II)
CUSIP NO.55305V107
- --------------------------------------------------------------------------------
1) Name of Reporting Person/S.S. or I.R.S. Identification No. of Above
Person Paul G. Stern
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2) Check the Appropriate Box if a Member of a Group
(a)
(b)
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3) SEC Use Only
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4) Source of Funds: OO
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5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e)
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6) Citizenship or Place of Organization: United States of America
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Number of Shares 7) Sole Voting Power: 0
Beneficially Owned
By Each Reporting
Person With --------------------------------------------
8) Shared Voting Power: 2,202,020*
--------------------------------------------
9) Sole Dispositive Power: 0
--------------------------------------------
10) Shared Dispositive Power: 2,202,020*
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person: 2,202,020*
- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [X]
Dr. Stern disclaims beneficial ownership of the shares disclosed in this
Schedule 13D.
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13) Percent of Class Represented by Amount in Row (11): 25.8%
- --------------------------------------------------------------------------------
14) Type of Reporting Person: IN
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*Includes 1,090,909 shares obtainable upon the exercise of a warrant with an
aggregate purchase price of $11,999,999.
7
<PAGE> 8
ITEM 1. SECURITY AND ISSUER.
This statement relates to shares of common stock, $.01 par value per
share ("Common Stock"), of MLC Holdings, Inc., a Delaware corporation
(the "Issuer"), which has its principal executive offices at 11150 Sunset
Hills Road, Suite 110, Reston, VA 20190.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) & (f). This statement is filed on behalf of each of the persons
named in paragraphs (i) - (vi) below (together, the "Reporting Persons")
pursuant to their written agreement to the joint filing of this
statement. The following information is furnished with respect to each of
the Reporting Persons:
(i) TC Leasing, LLC
TC Leasing, LLC ("Leasing") is a Delaware limited liability company whose
principal office address is 1455 Pennsylvania Avenue, N.W., Suite 350,
Washington, D.C. 20004. Leasing was formed to hold shares of Common
Stock.
(ii) Thayer Equity Investors III, L.P.
Thayer Equity Investors III, L.P. ("Thayer") is a Delaware limited
partnership whose principal office address is 1455 Pennsylvania Avenue,
N.W., Suite 350, Washington, D.C. 20004. Thayer is the managing member of
Leasing. Thayer is a private equity fund, and its principal business is
making investments in the information technology and services, travel and
leisure services, telecommunications and consumer products industries.
Paragraph (iii) of this Item 2 contains information regarding the general
partner of Thayer and paragraphs (iv) through (vi) of this Item 2 contain
information regarding the persons controlling such general partner.
(iii) TC Equity Partners, L.L.C.
TC Equity Partners, L.L.C. ("TC Equity") is a Delaware limited liability
company whose principal office address is 1455 Pennsylvania Avenue, N.W.,
Suite 350, Washington, D.C. 20004. TC Equity is the sole general partner
of Thayer, and its principal business is making investments in the
information technology and services, travel and leisure services,
telecommunications and consumer products industries. Paragraphs (iv)
through (vi) contain information regarding the principal members of TC
Equity.
(iv) Frederic V. Malek
Mr. Malek, a United States citizen, is one of the members of TC Equity.
His business address is 1455 Pennsylvania Avenue, N.W., Suite 350,
Washington, D.C. 20004.
8
<PAGE> 9
(v) Carl J. Rickertsen
Mr. Rickertsen, a United States citizen, is one of the members of TC
Equity. Mr. Rickertsen is a director of the Issuer. His business address
is 1455 Pennsylvania Avenue, N.W., Suite 350, Washington, D.C. 20004.
(vi) Paul G. Stern
Dr. Stern, a United States citizen, is one of the members of TC Equity.
Dr. Stern also is a director of the Issuer. His business address is 1455
Pennsylvania Avenue, N.W., Suite 350, Washington, D.C. 20004.
(d)-(e). During the last five years, none of the Reporting Persons has
been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or 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 judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation
with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to an agreement dated as of October 23, 1998 by and among the
Issuer and Leasing (the "Agreement"), Thayer used investment capital
contributed by TC Equity, as the general partner of Thayer, and by the
limited partners of Thayer, and their respective members, as the case may
be, to purchase shares of the Issuer's Common Stock at an aggregate
purchase price of $10,000,000. Thayer anticipates using the same source
of funds as it used to purchase shares of the Common Stock to purchase
shares of Common Stock underlying the warrant (a copy of which is
attached hereto as Exhibit 4) granting Leasing the right to purchase
1,090,909 shares of the Issuer's common stock at a price of $11.00 per
share (the "Warrant").
ITEM 4. PURPOSE OF TRANSACTION.
The Reporting Persons acquired their shares of Common Stock pursuant the
Agreement for the purpose of exerting a controlling influence over the
Issuer. Dr. Stern and Mr. Rickertsen currently serve as directors of the
Issuer.
The Reporting Persons do not have any present plans or proposals which
relate to or would result in any of the following actions: (a) the
acquisition or disposition of securities of the Issuer, except for the
acquisition of Common Stock pursuant to the Warrant; (b) any
extraordinary corporate transactions involving the Issuer or any of its
subsidiaries, such as a merger, reorganization or liquidation; (c) a sale
or transfer of a material amount of assets of the Issuer or any of its
subsidiaries; (d) any change in the present board of directors or
management of the Issuer; (e) any material change in the Issuer's present
capitalization or dividend policy; (f) any other material change in the
Issuer's business or corporate structure; (g) changes in the Issuer's
charter or bylaws or
9
<PAGE> 10
any other actions which may impede the acquisition of control of the
Issuer by any person; (h) causing the Common Stock to be delisted from
the National Association of Securities Dealers Automated Quotations
National Market System; (i) causing a class of the Issuer's equity
securities to become eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities Exchange Act of 1934, as amended; or
(j) any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b). The aggregate number and percentage of outstanding shares of
Common Stock beneficially owned by each of the Reporting Persons are set
forth below. Each Reporting Person has the sole power (except as
otherwise noted) to vote and to dispose of the shares of Common Stock
listed opposite its name.
Name of Number of Shares Percent of Outstanding
Beneficial Owner Beneficially Owned (1) Shares Owned (2)
---------------- ------------------ ----------------
TC Leasing, LLC 2,202,020 25.8%
Thayer Equity
Investors III, L.P.(3) 2,202,020 25.8%
TC Equity
Partners, L.L.C. (4) 2,202,020 25.8%
Frederic V. Malek(5) 2,202,020 25.8%
Carl J. Rickertsen(5) 2,202,020 25.8%
Paul G. Stern(5) 2,202,020 25.8%
------------
(1) Including 1,090,909 shares of Common Stock that Leasing has the right
to acquire pursuant to the Warrant.
(2) Based upon shares of Common Stock issued and outstanding on October
23, 1998, including shares underlying the Warrant.
(3) Thayer is the managing member of Leasing.
(4) TC Equity is the sole general partner of Thayer and has sole voting
and investment power with respect to the shares of Common Stock held of
record by Leasing.
(5) Messrs. Malek and Rickertsen and Dr. Stern share power to vote and
dispose of shares of Common Stock.
(c) The Reporting Persons did not effect any transactions in Common Stock
during the past sixty days other than as described above.
(d)-(e) Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
In addition to the Agreement, Leasing entered into a stockholders
agreement, dated as of October 23, 1998 among the Issuer, Phillip G.
Norton, Bruce M. Bowen, JAP Investment Group, L.P., Kevin M. Norton and
Patrick J. Norton (the "Stockholders Agreement").
10
<PAGE> 11
According to the terms and conditions of the Stockholders Agreement, (a)
certain transfer restrictions were imposed on Common Stock owned by the
parties to such agreement, (b) the stockholders agreed to take all action
necessary to cause the Board of Directors of the Issuer to be comprised
of six directors, with three designated by each of Leasing and
management, (c) each management stockholder agreed to appoint Mr.
Rickertsen as his proxy and (d) Leasing obtained certain registration
rights. The Issuer granted Leasing the Warrant, exercisable at any time
from October 23, 1998 until December 31, 2001, for the purchase from the
Issuer of 1,090,909 shares of Common Stock at a price per share of
$11.00.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
Exhibit 1 - Joint Filing Agreement dated November 2, 1998 among TC
Leasing, LLC, Thayer Equity Investors III L.P. and TC Equity
Partners, L.L.C.
Exhibit 2 - Common Stock Purchase Agreement dated October 23, 1998 by and
between MLC Holdings, Inc. and TC Leasing, LLC
Exhibit 3 - Stockholders Agreement dated October 23, 1998 by and between
MLC Holdings, Inc. and Certain of its Stockholders.
Exhibit 4 - Stock Purchase Warrant.
11
<PAGE> 12
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief, we
certify that the information set forth in this statement is true, complete and
correct.
Dated: October 30, 1998
TC LEASING, LLC
By: /s/ JEFFREY W. GOETTMAN
-------------------------
Name: Jeffrey W. Goettman
Authorized Representative
THAYER EQUITY INVESTORS III, L.P.
By: TC Equity Partners, L.L.C. its
General Partner
By: /s/ FREDERIC V. MALEK
----------------------
Frederic V. Malek
Member
TC EQUITY PARTNERS, L.L.C.
By: /s/ FREDERIC V. MALEK
-----------------------
Frederic V. Malek
Member
/s/ FREDERIC V. MALEK
-------------------------
Frederic V. Malek
/s/ CARL J. RICKERTSEN
-------------------------
Carl J. Rickertsen
/s/ PAUL G. STERN
-------------------------
Paul G. Stern
12
<PAGE> 1
EXHIBIT 1
JOINT FILING AGREEMENT
This will confirm the agreement by and among all of the undersigned
that the Schedule 13D filed on or about this date with respect to the beneficial
ownership by the undersigned of shares of the common stock, par value $.01 per
share, of MLC Holdings, Inc. is being filed on behalf of each of the
undersigned. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
Dated: October 30, 1998
TC LEASING, LLC THAYER EQUITY INVESTORS III, L.P.
By: /s/ JEFFREY W. GOETTMAN By: TC Equity Partners, L.L.C. its
--------------------------- General Partner
Name: Jeffrey W. Goettman
Authorized Representative By: /s/ FREDERIC V. MALEK
----------------------
Frederic V. Malek
Member
/s/ PAUL G. STERN
TC EQUITY PARTNERS, L.L.C. -----------------------
Paul G. Stern
By: /s/ FREDERIC V. MALEK
----------------------
Frederic V. Malek /s/ CARL J. RICKERTSEN
Member -----------------------
Carl J. Rickertsen
/s/ FREDERIC V. MALEK
-----------------------
Frederic V. Malek
<PAGE> 1
EXHIBIT 2
================================================================================
COMMON STOCK PURCHASE AGREEMENT
BY AND BETWEEN
MLC HOLDINGS, INC.
AND
TC LEASING, LLC
OCTOBER 23, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. Authorization and Closing.............................................................1
1A. Authorization of the Common Stock.......................................1
1B. Purchase and Sale of the Shares.........................................1
1C. The Closing.............................................................1
2. Deliveries at Closing.................................................................1
2A. The Company's Deliveries at Closing.....................................1
2B. Purchaser's Deliveries at the Closing...................................3
3. Definitions...........................................................................3
3A. Definitions.............................................................3
4. Covenants.............................................................................8
4A. Financial Statements and Other Information..............................8
4B. Restrictions...........................................................10
4C. Public Disclosures.....................................................10
4D. Use of Proceeds........................................................11
4E. Payment of Bonuses to Norton...........................................11
4F. Confidentiality........................................................11
4G. Filings................................................................11
4H. Mergers or Consolidations..............................................12
4I. Material Decisions.....................................................12
4J. Super Majority Board Approval..........................................12
4K. Compensation Committee.................................................13
4L. Determination Letter...................................................13
4M. Transfer Agent Restriction.............................................13
5. Representations and Warranties of the Company................................13
5A. Organization, Corporate Power and Licenses.............................13
5B. Capitalization and Related Matters.....................................14
5C. Subsidiaries...........................................................14
5D. Authorization; No Breach...............................................15
5E. SEC Documents and Financial Statements.................................15
5F. Reports with the SEC...................................................16
5G. Absence of Undisclosed Liabilities.....................................16
5H. Absence of Certain Developments........................................16
5I. Properties.............................................................17
5J. Assets.................................................................18
5K. Tax Matters............................................................18
5L. Brokerage..............................................................20
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
5M. Employees..............................................................20
5N. ERISA..................................................................20
5O. Compliance with Laws...................................................22
5P. Environmental, Health, and Safety Matters..............................22
5Q. Affiliated Transactions................................................23
5R. Contracts and Commitments..............................................23
5S. Intellectual Property..................................................25
5T. Litigation.............................................................25
5U. Year 2000..............................................................25
5V. Disclosure.............................................................26
6. Representations and Warranties of Purchaser..........................................26
6A. Organization and Power of Purchaser....................................26
6B. Authorization; No Breach...............................................26
6C. Brokerage..............................................................27
6D. Purchaser's Investment Representations.................................27
7. Termination..........................................................................27
7A. Termination............................................................27
8. Representations and Warranties.......................................................28
8A. Survival of Representations and Warranties.............................28
8B. Indemnification........................................................28
9. Miscellaneous........................................................................28
9A. Expenses...............................................................28
9B. Consent to Amendments..................................................28
9C. Successors and Assigns.................................................28
9D. Severability...........................................................28
9E. Counterparts...........................................................29
9F. Descriptive Headings; Interpretation...................................29
9G. Governing Law..........................................................29
9H. Notices................................................................29
9I. No Strict Construction.................................................30
9J. Entire Agreement.......................................................30
</TABLE>
EXHIBITS:
Exhibit 2A(ii) -- Amendment to By-Laws
Exhibit 2A(iv) -- Form of Legal Opinion of Alston & Bird, L.L.P.
Exhibit 2A(v) -- Form of Legal Opinion of Geltner & Associates, P.C.
Exhibit 2A(vii) -- Amendment to the Company's 1998 Long-Term Incentive Plan
Exhibit 2B(iv) -- Form of Legal Opinion of Kirkland & Ellis
-ii-
<PAGE> 4
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is
dated as of October 23, 1998, by and between MLC Holdings, Inc., a Delaware
corporation (the "Company"), and TC Leasing, LLC, a Delaware limited liability
company (the "Purchaser"). Capitalized terms used herein are defined in
Section 3A hereof.
The parties hereto agree as follows:
Section 1. Authorization and Closing.
1A. Authorization of the Common Stock. The Company has
authorized the issuance and sale to Purchaser of 1,111,111 shares (the
"Shares") of the Company's newly issued Common Stock, par value $.01 per share
(the "Common Stock").
1B. Purchase and Sale of the Shares. At the Closing,
subject to the terms and conditions set forth herein, the Company shall sell to
Purchaser and Purchaser shall purchase from the Company, the Shares, free of
all Liens (other than transfer restrictions imposed by federal or state
securities laws), for an aggregate price of $10,000,000 (the "Purchase Price").
1C. The Closing. The closing of the purchase and sale of
the Shares (the "Closing") shall take place at the offices of Kirkland & Ellis,
655 Fifteenth Street, N.W., Washington, D.C. 20005 contemporaneously with the
execution and delivery of this Agreement and the execution of the Stockholders
Agreement and the Stock Purchase Warrant. Each of this Agreement, the
Stockholders Agreement and the Stock Purchase Warrant is conditioned upon, and
shall only be effective upon, the consummation of the other agreements.
Section 2. Deliveries at Closing.
2A. The Company's Deliveries at Closing. At or before
the Closing, the Company shall deliver to Purchaser all of the following:
(i) certified copies of the resolutions duly
adopted by the board of directors (including all of the non-employee
directors) of Company authorizing (a) the performance of this
Agreement, the Stockholders Agreement and the Stock Purchase Warrant
by the Company, and (b) the consummation of all transactions
contemplated by this Agreement, the Stockholders Agreement and the
Stock Purchase Warrant by the Company;
(ii) a certified copy of the Certificate of
Incorporation of the Company (the "Charter") as in effect at the
Closing, a certified copy of the by-laws of the Company as in effect
at the Closing (as amended as set forth in Exhibit 2A(ii) attached
hereto, the
<PAGE> 5
"By-Laws") and a certificate of good standing of the Company from
each jurisdiction in which the Company is qualified to do business as
a domestic or foreign corporation dated within 5 days of the Closing;
(iii) a certified copy of the certificate of
incorporation of each domestic Subsidiary as in effect at the Closing,
a certified copy of the by-laws of each domestic subsidiary as in
effect at the Closing and a certificate of good standing of each
domestic Subsidiary from each jurisdiction in which such domestic
Subsidiary is qualified to do business as a domestic corporation dated
within 5 days of the Closing;
(iv) a legal opinion from Alston & Bird, L.L.P. as
to the matters set forth in Exhibit 2A(iv) attached hereto;
(v) a legal opinion from Geltner & Associates,
P.C. as to the matters set forth in Exhibit 2A(v) attached hereto with
respect to J.A.P. Investment Group, Inc.;
(vi) an executed copy of this Agreement and all
other related agreements, documents or certificates to which the
Company is a party;
(vii) an executed copy of an amendment to the
Company's 1998 Long-Term Incentive Plan in the form set forth in
Exhibit 2A(vii) attached hereto;
(viii) stock certificates for the Shares registered
in Purchaser's name;
(ix) certified copies of the resolutions duly
adopted by the board of directors of Company electing Dr. Paul G.
Stern as a "Class I" director of the Company and a member of the
Compensation Committee of the board of directors of the Company;
(x) certified copies of the resolutions duly
adopted by the board of directors of the Company electing Carl J.
Rickertsen a member of the Stock Incentive Committee of the board of
directors of the Company;
(xi) certified copies of the resolutions duly
adopted by the board of directors or stockholders, as appropriate, of
each domestic Subsidiary electing Carl J. Rickertsen to the board of
directors of each such domestic Subsidiary;
(xii) a certificate from First Union National Bank
Corporate Trust, as transfer agent for the Company, stating the number
of outstanding shares of Common Stock; and
(xiii) a certificate from First Union National Bank
Corporate Trust, as transfer agent for the Company, stating that (A)
it shall place as of the date hereof a restriction on transfer on all
Common Stock owned by any of Bruce M. Bowen, Kevin M.
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Norton or Patrick J. Norton, Jr. (including, without limitation, stock
certificates numbered 12, 13, 90, 93, 95, 96, 187 and 190), and (B) it
shall keep such restrictions in place until the legend set forth in
the Stockholders Agreement is placed on such stock certificates.
2B. Purchaser's Deliveries at the Closing. At or before
the Closing, Purchaser shall:
(i) deliver to the Company certified copies of
the resolutions duly adopted by the Purchaser authorizing (a) the
performance of this Agreement, the Stockholders Agreement and the
Stock Purchase Warrant by Purchaser, and (b) the consummation of all
transactions contemplated by this Agreement, the Stockholders
Agreement and the Stock Purchase Warrant by Purchaser;
(ii) pay via wire transfer of immediately
available funds to a bank account designated by the Company an amount
equal to the Purchase Price;
(iii) deliver to the Company an executed copy of
this Agreement and all other related agreements, documents or
certificates to which Purchaser is a party; and
(iv) deliver to the Company a legal opinion from
Kirkland & Ellis as to the matters set forth in Exhibit 2B(iv)
attached hereto.
Section 3. Definitions.
3A. Definitions. For the purposes of this Agreement, the
following terms have the meanings set forth below:
"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise, and in the case of Purchaser shall
include Thayer Equity Investors III, L.P. and any of its partners or
Affiliates.
"Affiliated Group" means an "affiliated group" as defined in
Section 1504 of the Code, or any similar group defined under local, state or
foreign Tax law for which the Company or any Subsidiary is or has been a
member.
"Agreement" has the meaning set forth in the preface hereof.
"Approved Sale" has the meaning set forth in the Stockholders
Agreement.
"By-Laws" has the meaning set forth in Section 2A(ii) hereof.
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"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Charter" has the meaning set forth in Section 2A(ii) hereof.
"Closing" has the meaning set forth in Section 1C hereof.
"COBRA" has the meaning set forth in Section 5N(i) hereof.
"Code" means the Internal Revenue Code of 1986, as amended,
and any reference to any particular Code section shall be interpreted to
include any revision of or successor to that section regardless of how numbered
or classified.
"Common Stock" has the meaning set forth in Section 1A hereof.
"Company" has the meaning set forth in the preface hereof.
"Confidential Information" means any confidential or
proprietary information regarding the Company and any Subsidiary, their
Intellectual Property, their other assets or their operations.
"Credit Agreement" means the Credit Agreement between MLC
Group, Inc. and First Union National Bank, N.A. (successor by merger to
CoreStates Bank, N.A.), dated as of June 5, 1997, as amended by Amendment No.
1, dated September 5, 1997, as further amended by Amendment No. 2, dated
December 19, 1997, and as further amended by Amendment No. 3, dated June 30,
1998, and as further amended from time to time.
"Disclosure Schedule" has the meaning set forth in
Section 5B(i) hereof.
"Environmental and Safety Requirements" means all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning
public health and safety, worker health and safety and pollution or protection
of the environment, including without limitation all such standards of conduct
and bases of obligations relating to the presence, use, production, generation,
handling, transport, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control, or
cleanup of any hazardous materials, substances or wastes, chemical substances
or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum
products or by-products, asbestos, polychlorinated biphenyls (or PCBs), noise
or radiation, each as amended and as now or hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal law then in force.
"GAAP" means United States generally accepted accounting
principles.
"Indebtedness" means at a particular time, without
duplication, (i) any indebtedness for borrowed money or issued in substitution
for or exchange of indebtedness for borrowed money, (ii) any indebtedness
evidenced by any note, bond, debenture or other debt security, (iii) any
indebtedness for the deferred purchase price of property or services with
respect to which a Person is liable, contingently or otherwise, as obligor or
otherwise (other than trade payables and other current liabilities incurred in
the Ordinary Course of Business), (iv) any commitment by which a Person assures
a creditor against loss (including, without limitation, contingent
reimbursement obligations with respect to letters of credit), (v) any
indebtedness guaranteed in any manner by a Person (including, without
limitation, guarantees in the form of an agreement to repurchase or reimburse),
(vi) any obligations under capitalized leases with respect to which a Person is
liable, contingently or otherwise, as obligor, guarantor or otherwise, or with
respect to which obligations a Person assures a creditor against loss, (vii)
any indebtedness secured by a Lien on a Person's assets, (viii) all obligations
and liabilities under foreign-exchange or currency swap contracts or similar
agreements designed to protect against fluctuations in currency values, (ix)
all obligations and liabilities under or with respect to any interest rate
swap, cap, collar, or similar agreement or arrangement designed to protect
against fluctuations in interest rates, (x) all obligations under take or pay
or, similar agreements or under commodities agreements, and (xi) any
unsatisfied obligation for "withdrawal liability" to a "multiemployer plan" as
such terms are defined under ERISA.
"Intellectual Property" shall mean all of the following: (i)
patents, patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); (ii) trademarks, service
marks, trade dress, trade names, corporate names, logos, slogans and Internet
domain names, together with all goodwill associated with each of the foregoing;
(iii) copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; (v) trade secrets, confidential information
and know-how (including but not limited to ideas, formulae, compositions,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, business and marketing plans,
and customer and supplier lists and related information); and (vi) computer
software (including but not limited to data, data bases and documentation).
"IRS" means the United States Internal Revenue Service.
"Knowledge" shall mean, with respect to the Company, the
actual knowledge or awareness after reasonable inquiry of Norton, Bruce M.
Bowen, Thomas B. Howard, Jr., Steven J. Mencarini or Kleyton L. Parkhurst.
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<PAGE> 9
"Latest Balance Sheet" means the audited consolidated balance
sheet as of March 31, 1998 for the Company and the Subsidiaries, which is
contained in the Annual Report of the Company on Form 10-K as filed with the
SEC for the Company's fiscal year ended March 31, 1998.
"Lease" has the meaning set forth in Section 5I(a) hereof.
"Liability" means any obligation or liability (whether known
or unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due), including any liability for Taxes.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind other than (i) mechanic's,
materialmen's, and similar liens not yet delinquent, (ii) liens for Taxes not
yet due and payable, (iii) purchase money liens and liens securing rental
payments under capital lease arrangements, and (iv) other liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing
of money.
"Loss" means, with respect to any Person, any diminution in
value, consequential or other damage, liability, demand, claim, action, cause
of action, cost, damage, deficiency, Tax, penalty, fine or other loss or
expense, whether or not arising out of a third party claim, including all
interest, penalties, reasonable attorneys' fees and expenses and all amounts
paid or incurred in connection with any action, demand, proceeding,
investigation or claim by any third party (including any governmental entity or
any department, agency or political subdivision thereof) against or affecting
such Person or which, if determined adversely to such Person, would give rise
to, evidence the existence of, or relate to, any other Loss and the
investigation, defense or settlement of any of the foregoing.
"Material Adverse Effect" means any material adverse effect on
the business, financial condition, operations, results of operations, employee
relations, customer or supplier relations or assets of the Company and the
Subsidiaries, taken as a whole; provided that any event, fact or circumstance
which has had or has a reasonable likelihood in the future to have a material
adverse effect on the business, financial condition, operations, results of
operations, employee relations, customer or supplier relations or assets of the
Company and the Subsidiaries, taken as a whole, shall also be deemed to have a
Material Adverse Effect.
"Most Recent Financial Statements" means the unaudited
consolidated financial statements as of June 30, 1998 for the Company and the
Subsidiaries, which is contained in the Quarterly Report of the Company on Form
10-Q as filed with the SEC for the Company's fiscal quarter ended June 30,
1998.
"Norton" means Phillip G. Norton.
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<PAGE> 10
"Operating Budget" has the meaning set forth in Section
4A(i)(c) and Section 4A(i)(d) hereof.
"Ordinary Course of Business" means the ordinary course of the
Company's and the Subsidiaries' businesses consistent with past practice
(including, without limitation, with respect to collection of accounts
receivable, purchases of inventory and supplies, repairs and maintenance,
payment of accounts payable and accrued expenses, levels of capital
expenditures and operation of cash management practices generally).
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Purchase Price" has the meaning set forth in Section 1B
hereof.
"Purchaser" has the meaning set forth in the preface hereto.
"Real Property" has the meaning set forth in Section 5I(a)
hereof.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal law then in force.
"SEC" means the United States Securities and Exchange
Commission and any governmental body or agency succeeding to the functions
thereof.
"SEC Reports" has the meaning set forth in Section 5E.
"Shares" has the meaning set forth in Section 1A hereof.
"Stock Purchase Warrant" means, collectively, the Stock
Purchase Warrant, dated as of the date hereof, by the Company in favor of
Purchaser, and any subsequent stock purchase warrant or stock purchase warrants
in favor of Purchaser or any of its Affiliates issued pursuant to or in
connection with the Stock Purchase Warrant, dated as of the date hereof, by the
Company in favor of Purchaser.
"Stockholders Agreement" means the Stockholders Agreement,
dated as of the date hereof, among the Company and certain of its stockholders.
"Subsidiary" means any Person with respect to which the
Company (or a Subsidiary thereof) owns a majority of the common stock or has
the power to vote or direct the voting of sufficient securities to elect a
majority of the directors or other governing body.
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<PAGE> 11
"Tax" or "Taxes" means (i) any federal, state, local, or
foreign income, gross receipts, franchise, estimated, alternative minimum,
add-on minimum, sales, use, transfer, registration, value added, excise,
natural resources, severance, stamp, occupation, premium, windfall profit,
environmental, customs, duties, real property, personal property, capital
stock, social security, unemployment, disability, payroll, license, employee or
other withholding, or other tax of any kind whatsoever, including any interest,
penalties or additional amounts in respect of the foregoing and (ii) any
Liability of the Company for the payment of any amounts of the type described
in clause (i) as a result of any express or implied obligation to indemnify or
otherwise assume of succeed to the liability of another Person.
"Tax Returns" means returns, declarations, reports, claims for
refund, information returns or other documents (including any related or
supporting schedules, statements or information) filed or required to be filed
in connection with the determination, assessment or collection of Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
"Thayer Directors" has the meaning set forth in the
Stockholders Agreement.
"Thayer Shares" has the meaning set forth in the Stockholders
Agreement.
"Treasury Regulations" means the United States Treasury
Regulations promulgated under the Code, and any reference to any particular
Treasury Regulation section shall be interpreted to include any final or
temporary revision of or successor to that section regardless of how numbered
or classified.
Section 4. Covenants.
4A. Financial Statements and Other Information. The
Company shall deliver to Purchaser:
(i) copies of all financial statements and other
documents, notices and information (including any management
discussion and analysis of such financial statements or information)
which the Company is required to (or actually does) deliver under the
Credit Agreement, and giving effect to any subsequent waivers,
amendments, modifications and terminations which do not materially
reduce the scope or detail of, or increase the timing for, such
delivery requirements, at the time such materials are required to be
delivered thereunder, whether or not any Indebtedness is outstanding;
provided that in no event shall delivery of such financial statements
be on a basis which is less frequent than quarterly; and provided
further that, to the extent the following financial statements and
other documents, notices and information are not included among the
foregoing items, and whether or not such financial statements and
other documents, notices and information are required to be delivered
under the Credit Agreement:
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(a) promptly upon its availability, and
in any event within forty-five (45) days after the end of each
of the first three (3) quarters of each fiscal year, an
unaudited consolidated balance sheet of the Company and the
Subsidiaries as of the end of such quarter, an unaudited
consolidated statement of cash flow of the Company and the
Subsidiaries as of the end of such quarter and for the interim
period, and an unaudited consolidated statement of income or
loss of the Company and the Subsidiaries for the interim
period;
(b) promptly upon its availability, and
in any event within ninety (90) days after the end of each
fiscal year, an audited consolidated balance sheet of the
Company and the Subsidiaries as of the end of such fiscal
year, an audited consolidated statement of income or loss of
the Company and the Subsidiaries for such fiscal year, and an
audited consolidated statement of cash flow of the Company and
the Subsidiaries as of the end of such fiscal year, all
accompanied by an opinion thereon of the Company's certified
independent accountants, such balance sheet, statement of
income or loss and statement of cash flow to include a
comparison of such fiscal year with the immediately preceding
fiscal year;
(c) promptly upon its availability, and
in any event prior to December 31, 1998, an operating budget
prepared on a monthly basis for the Company and the
Subsidiaries for the five fiscal quarters ending March 31,
1998 and approved by the board of directors of the Company
(the "Operating Budget");
(d) promptly upon its availability, and
in any event at least 2 months prior to the beginning of each
fiscal year (beginning with the fiscal year beginning on April
1, 1999), an annual operating budget prepared on a monthly
basis for the Company and the Subsidiaries for such fiscal
year and approved by the board of directors of the Company
(also, the "Operating Budget");
(e) promptly upon its availability, and
in any event no more than 10 days after the end of each
calender month (beginning with the month ending April 30,
1999), an update of the then current Operating Budget which
includes updated projections and forecasts.
(ii) to the extent not provided under clause (i)
above, promptly (but in any event within thirty business days) after
the discovery or receipt of notice of any default under any agreement
to which it or any Subsidiary is a party or any other event or
circumstance affecting the Company or any Subsidiary (including
without limitation the filing of any litigation against the Company or
any Subsidiary or the existence of any dispute with any Person which
involves a reasonable likelihood of such litigation being commenced),
which default, event or circumstance would have a Material Adverse
Effect, a certificate from the Company specifying the nature and
period of existence
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thereof and what actions the Company has taken and proposes to take
with respect thereto;
(iii) to the extent not provided under clause (i)
above, concurrently with the transmission or release thereof, copies
of all press releases made available generally by the Company to the
public concerning material developments in the Company's or any
Subsidiary's business;
(iv) within ten days after transmission thereof,
copies of all registration statements, proxy statements and all
regular, special or periodic reports which the Company files, or, to
the Company's Knowledge, any of its officers or directors file with
respect to the Company, with the SEC or with any securities exchange
on which any of its securities are then listed; and
(v) to the extent not provided under clause (i)
above, with reasonable promptness, such other information and
financial data concerning the Company as Purchaser may reasonably
request.
Each of the documents, notices and information referred to in this Section 4A
(other than financial statements and the Operating Budget) shall be true and
correct in all material respects and each of the financial statements referred
to in this Section 4A shall be prepared in accordance with GAAP and shall
present fairly the consolidated financial position, cash flows and results of
operations of the Company and the Subsidiaries as of the dates and for the
periods stated therein; provided, however, that the unaudited financial
statements are subject to changes resulting from normal year-end audit
adjustments (none of which would have a Material Adverse Effect) and may lack
footnotes and other presentation items.
4B. Restrictions. Without the prior written consent of
Purchaser, the Company shall not, and shall cause each Subsidiary not to:
(i) until the first anniversary of the Closing,
directly or indirectly declare or pay any dividends or make any
distributions upon any of its capital stock or other equity
securities;
(ii) authorize, issue, sell or enter into any
"anti-takeover" measure or agreement, including, without limitation,
providing for the issuance or sale (contingent or otherwise) of
securities or other rights which would have the effect of materially
increasing the cost or difficulty of a Person of acquiring (via
purchase, merger or otherwise) the securities or assets of the Company
or any Subsidiary (i.e., a "poison pill"); or
(iii) enter into any transaction with any of its
officers, directors, employees or Affiliates or any individual related
by blood or marriage to any such Person
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<PAGE> 14
or any entity in which any such Person or individual owns a beneficial
interest, except to the extent that (a) such transaction is at
arms-length and on terms that are obtainable from unrelated third
parties, (b) the Company notifies the Purchaser in writing at least 5
business days prior to entering into such transaction and (c) such
transaction involves consideration or has a value of less than
$150,000.
4C. Public Disclosures. Except, in each case, to the
extent required by law or the rules of any relevant stock exchange, neither the
parties hereto, nor the subsidiaries or Affiliates of any of them, shall make
any public announcement after the Closing relating to the other party, this
Agreement, the Stockholders Agreement, the Stock Purchase Warrant or the
consummation of any of the transactions contemplated by this Agreement, the
Stockholders Agreement or the Stock Purchase Warrant (including any exercise of
a Stock Purchase Warrant) without the prior consent of the other party, which
consent shall not be unreasonably withheld. The text of any such public
announcement which any party proposes to make shall be submitted to the other
party not less than three business days before the day on which the
announcement is to be made.
4D. Use of Proceeds. The Company shall use the proceeds
of the sale of the Shares to finance growth and acquisitions.
4E. Payment of Bonuses to Norton. The Company hereby
agrees to withhold and not pay to Norton any bonus otherwise due to him under
any employment, consulting or other similar agreement between the Company and
any Subsidiary and him if the Company is at the time or had been within the
preceding two years in default of its obligations under Section 4A(i)(c),
4A(i)(d) or 4A(i)(e) and such default in the case of Section 4A(i)(c) or
4A(i)(d) remains or remained uncured for 20 business days and in the case of
Section 4A(i)(e) remains or remained uncured for 5 business days.
4F. Confidentiality. Purchaser will treat and hold as
confidential all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, the Stock
Purchase Agreement, the Stock Purchase Warrant, the Stockholders Agreement and
the Purchaser's ownership of Common Stock hereunder and thereunder. In the
event that Purchaser is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process) to disclose any Confidential
Information, Purchaser will notify the Company promptly of the request or
requirement so that such Stockholder may seek an appropriate protective order
or waive compliance with the provisions of this Section 4F. If, in the absence
of a protective order or the receipt of a waiver hereunder, Purchaser is, on
the advice of counsel, compelled to disclose any Confidential Information to
any tribunal or else stand liable for contempt, Purchaser may disclose the
Confidential Information to the tribunal; provided, however, that Purchaser
shall use reasonable efforts to obtain, at the request and expense of the
Company, an order or other assurance that confidential treatment will be
accorded to such portion of the Confidential Information required to be
disclosed as the Company. The
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<PAGE> 15
foregoing provisions shall not apply to any Confidential Information that is
generally available to the public immediately prior to the time of disclosure.
Notwithstanding anything herein to the contrary, Purchaser may provide
Confidential Information to any Person if Purchaser deems necessary or
desirable in connection with any transfer or proposed transfer of Purchaser's
Common Stock so long as such Persons have entered into appropriate
confidentiality arrangements with Purchaser (which shall name the Company as an
intended beneficiary).
4G. Filings. The Company and Purchaser shall make all
filings required to be made with the SEC, any stock exchange in which the
Common Stock is listed and all other governmental or quasi-governmental
entities in connection with the consummation of the transactions contemplated
hereby and under the Stockholders Agreement and the Stock Purchase Warrant.
All such filings shall be in compliance with all applicable laws, regulations,
rules and ordinances of all applicable stock exchanges and governmental and
quasi-governmental entities in all material respects and shall not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they shall be made not misleading.
4H. Mergers or Consolidations. If the Thayer Directors
do not vote in favor of an acquisition, merger, consolidation or other
transaction involving any Person pursuant to Section 4J(ii), neither Purchaser
nor its Affiliates shall acquire (via stock purchase, asset purchase, merger,
recapitalization, share exchange, consolidation or other transaction) or make
an investment in such Person within two years after the date on which the Board
of Directors of the Company voted on such acquisition, merger, consolidation or
other transaction.
4I. Material Decisions. The Company shall not make any
material employment, termination or compensation decision regarding the chief
executive officer, the president, the executive vice president, the chief
financial officer or the chief operating officer of the Company or any
Subsidiary without the prior consent of the board of directors of the Company
or any Subsidiary, as applicable.
4J. Super Majority Board Approval. Without the prior
consent of at least 65% of the members of the Board of Directors of the
Company, the Company shall not, and shall cause each Subsidiary not to:
(i) make any capital expenditures for purchases
of property or equipment (other than capital expenditures for property
or equipment to be leased or sold in the Ordinary Course of Business)
which shall cause the Company's and the Subsidiaries' expenditures for
any fiscal year to exceed by more than 10% the amount set forth for
capital expenditures for purchases of property and equipment (other
than capital expenditures for property and equipment to be leased or
sold in the Ordinary Course of Business) in the applicable Operating
Budget;
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<PAGE> 16
(ii) acquire (via stock purchase, asset purchase,
merger, recapitalization, share exchange, consolidation or other
transaction) or make an investment in any Person or permit any
Subsidiary to acquire (via stock purchase, asset purchase, merger,
recapitalization, share exchange, consolidation or other transaction)
or make an investment in any Person; provided that Company or any
Subsidiary may acquire (via stock purchase, asset purchase, merger,
recapitalization, share exchange, consolidation or other transaction)
or make an investment in any Person without the consent of at least
65% of the members of the Board of Directors of the Company so long as
such transaction involves consideration or has a value of less than
$5,000,000; or
(iii) except in the Ordinary Course of Business,
sell, lease or otherwise dispose of, or permit any Subsidiary to sell,
lease or otherwise dispose of, more than 20% of the consolidated
assets of the Company and its Subsidiaries (computed on the basis of
book value, determined in accordance with GAAP consistently applied,
or fair market value, determined by the Board of Directors of the
Company in its reasonable good faith judgment) in any transaction or
series of related transactions.
4K. Compensation Committee. Without the prior consent of
at least 51% of the members of the Compensation Committee of the Board of
Directors of the Company, the Company shall not, and shall cause each
Subsidiary not to:
(i) grant any stock option, stock appreciation
right, restricted stock or other stock based compensation to any
officer, employee, director or consultant of the Company or any
Subsidiary other than pursuant to the 1998 Long-Term Incentive Plan or
the Employee Share Purchase Plan, each as in effect on the date of
this Agreement; or
(ii) accelerate the vesting of or remove any
restrictions upon any stock option, stock appreciation right,
restricted stock or other stock based compensation except as
specifically required under the terms of such stock option, stock
appreciation right, restricted stock or other stock based
compensation.
4L. Determination Letter. As soon as possible following
the Closing (but in no event later than two months thereafter), the Company
shall cause to be submitted to the IRS an application for a determination that
the MLC Group, Inc. 401(k) Plan is qualified under Section 401(a) of the Code,
and shall take any and all actions as may be required by the IRS (including,
but not limited to, entering into a closing agreement) in order to cause the
IRS to issue such a determination.
4M. Transfer Agent Restriction. The Company shall cause
First Union National Bank Corporate Trust, as transfer agent for the Company,
to (i) place as of the date hereof a restriction on transfer on all Common
Stock owned by any of Bruce M. Bowen, Kevin M. Norton or Patrick J. Norton,
Jr. (including, without limitation, stock certificates numbered 12,
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<PAGE> 17
13, 90, 93, 95, 96, 187 and 190), and (ii) keep such restrictions in place
until the legend set forth in the Stockholders Agreement is placed on such
stock certificates
Section 5. Representations and Warranties of the
Company. As a material inducement to Purchaser to enter into this Agreement
and purchase the Shares hereunder, the Company hereby represents and warrants
as of the date hereof as follows:
5A. Organization, Corporate Power and Licenses. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of Delaware and is qualified to do business in every
jurisdiction in which its ownership of property or conduct of business requires
it to qualify, except where the failure to so qualify would not have a Material
Adverse Effect. The Company possesses all requisite corporate power and
authority and all material licenses, permits and authorizations necessary to
own and operate its properties, to carry on its businesses as now conducted and
as presently proposed to be conducted and to carry out the transactions
contemplated by this Agreement, the Stockholders Agreement and the Stock
Purchase Warrant.
5B. Capitalization and Related Matters.
(i) As of immediately before the Closing, the
authorized capital stock of the Company shall consist of: (x) 2,000,000 shares
of Preferred Stock, $.01 per share par value, of which zero shares are issued
and outstanding, and (y) 25,000,000 shares of Common Stock, $.01 per share par
value, of which 6,348,603 shares are issued and outstanding. As of immediately
before the Closing, neither the Company nor any Subsidiary shall have
outstanding any capital stock, options, convertible securities, securities or
rights containing any profit participation features, or any stock appreciation
right or phantom stock plan, except as set forth on Section 5B of the
Disclosure Schedule attached hereto (the "Disclosure Schedule"). Section 5B of
the Disclosure Schedule accurately sets forth the following information with
respect to all outstanding options and rights to acquire the Company's and the
Subsidiaries' capital stock: the holder, the number of shares covered, the
exercise price and the expiration date. As of immediately before the Closing,
neither the Company nor any Subsidiary shall be subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock or any warrants, options or other rights to acquire
its capital stock, except as set forth on Section 5B of the Disclosure
Schedule. As of the Closing, all of the outstanding shares of the Company's
capital stock shall be validly issued, fully paid and nonassessable.
(ii) There are no statutory or, to the Company's
Knowledge, contractual stockholders' preemptive rights or rights of refusal
with respect to the issuance of the Shares. Assuming Purchaser's
representations and warranties set forth in Section 6 are true and correct as
of the date hereof, the Company has not violated any applicable federal or
state securities laws in connection with the offer, sale or issuance of any of
its capital stock, and the offer, sale and issuance of the Shares do not
require registration under the Securities Act or any applicable state
securities laws. To the Company's Knowledge, other than the Stockholders
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<PAGE> 18
Agreement and the Stock Purchase Warrant, there are no agreements between the
Company's shareholders with respect to the voting or transfer of the Company's
capital stock or with respect to any other aspect of the Company's affairs.
5C. Subsidiaries. Section 5C of the Disclosure Schedule
correctly sets forth the name of each Subsidiary, the jurisdiction of its
incorporation or under which it was formed and the Persons owning the
outstanding securities of such Subsidiary. Each Subsidiary is duly organized,
validly existing and in good standing under the laws of the jurisdiction under
which it was formed, possesses all requisite power and authority and all
material licenses, permits and authorizations necessary to own its properties
and to carry on its businesses as now being conducted and as presently proposed
to be conducted in the future, and is qualified to do business in every
jurisdiction in which its ownership of property or conduct of business requires
it to qualify except where the failure to so qualify would not have a Material
Adverse Effect. All of the outstanding securities of a Subsidiary which are
owned by the Company or another Subsidiary are owned free and clear of any Lien
and are not subject to any option or right to purchase any such shares. Except
as set forth in Section 5C of the Disclosure Schedule, neither the Company nor
any Subsidiary owns or holds the right to acquire any shares of stock or any
other security or interest in any other Person.
5D. Authorization; No Breach. The execution, delivery
and performance of this Agreement, the Stockholders Agreement and the Stock
Purchase Warrant by the Company have been duly authorized by the Company. Each
of this Agreement, the Stockholders Agreement and the Stock Purchase Warrant,
when it is executed by the other parties thereto, will constitute a valid and
binding obligation of the Company enforceable in accordance with its respective
terms except to the extent that the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws of general application relating to or
affecting the enforcement of creditors' rights or by general principles of
equity. Except as set forth in Section 5D of the Disclosure Schedule, the
execution and delivery by the Company of this Agreement, the Stockholders
Agreement and the Stock Purchase Warrant, the offering, sale and issuance of
the Shares hereunder and the fulfillment of and compliance with the respective
terms hereof and thereof by the Company do not and shall not (i) conflict with
or result in a breach of the terms, conditions or provisions of, (ii) constitute
a default under, (iii) result in the creation of any Lien upon the Company's or
any Subsidiaries' securities or assets pursuant to, (iv) give any third party
the right to modify, terminate or accelerate any obligation under, (v) result
in a violation of, or (vi) require any authorization, consent, approval,
exemption or other action by or notice or declaration to, or filing with, any
court or administrative or governmental body or agency pursuant to, (A) the
Charter, the By-Laws or the constituting documents of any Subsidiary, (B) any
law, statute, rule or regulation to which the Company or any Subsidiary is
subject, or (C) any material agreement or instrument, or any order, judgment or
decree to which the Company or any Subsidiary is subject, except in the case of
(B) and (C) were such conflict, default or violation would not have a Material
Adverse Effect.
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<PAGE> 19
5E. SEC Documents and Financial Statements. The Company
has heretofore delivered to Purchaser each of the following:
(i) Annual Report of the Company on Form 10-K as
filed with the SEC for the Company's fiscal year ended March 31, 1998;
and
(ii) Quarterly Report of the Company on Form 10-Q
as filed with the SEC for the fiscal quarter of the Company ended June
30, 1998.
Each of the foregoing documents (the "SEC Reports") did not at the time it was
filed with the SEC, and except as set forth on Schedule 5E of the Disclosure
Schedule or a subsequent SEC Report, do not as of the date hereof, contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, or are now made, respectively, not misleading. All of
the financial statements contained in the SEC Reports have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, fairly present in all material respects the financial position
of the Company and the Subsidiaries as of such dates and the results of
operations and cash flows of the Company and the Subsidiaries for such periods,
and are consistent with the books and records of the Company and the
Subsidiaries; provided, however, that the Most Recent Financial Statements are
subject to normal year-end adjustments (none of which could, alone or in the
aggregate, reasonably be expected to have a Material Adverse Effect) and lack
footnotes and other presentation items.
5F. Reports with the SEC. The Company and the
Subsidiaries have made all filing with the SEC which they are required to make
(including without limitation all required filings under the Securities Act and
the Exchange Act), and have not received any request from the SEC to file any
amendment or supplement to any of the reports filed with the SEC. Section 5F
of the Disclosure Schedule sets forth all substantive correspondence between
the SEC and the Company concerning or relating to Securities Act or Exchange
Act compliance.
5G. Absence of Undisclosed Liabilities. The Company and
the Subsidiaries have no Liabilities except (i) obligations under executory
contracts or commitments described in Section 5R of the Disclosure Schedule or
under executory contracts and commitments which are not required to be
disclosed thereon (but not Liabilities for breaches thereof), (ii) Liabilities
reflected on the liabilities side of the Latest Balance Sheet and (iii)
Liabilities which have arisen after the date of the Latest Balance Sheet in the
Ordinary Course of Business or otherwise in accordance with the terms and
conditions of this Agreement (none of which is a Liability resulting from,
arising out of, or relating to any breach of contract, breach of warranty,
tort, infringement or violation of law or environmental matter, including those
arising under Environmental and Safety Requirements).
5H. Absence of Certain Developments. Except as set forth
on Section 5H of the Disclosure Schedule or expressly contemplated by this
Agreement, since the date of the Latest
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<PAGE> 20
Balance Sheet, (i) neither the Company nor any Subsidiary has suffered an event
which would have a Material Adverse Effect, (ii) the businesses of the Company
and the Subsidiaries have been operated only in the Ordinary Course of
Business, (iii) there has not been any material loss of, or material reduction
in the amount of business done with, or any threat or such material loss or
reduction by, any key customer of the Company or any Subsidiary, or any
material loss or threatened loss of any source of supply for goods or services
to the Company or any Subsidiary that is material to its business and (iv)
neither the Company nor any Subsidiary has taken any of the following actions:
(a) amended its certificate of incorporation or
by-laws;
(b) (w) split, combined or reclassified any of
its respective capital stock, (x) declared, set aside or paid any
dividend or other distribution payable in cash, stock or property with
respect to its capital stock, (y) issued or sold any additional shares
of, or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, shares
of its capital stock, or (z) redeemed, purchased or otherwise acquired
directly or indirectly any capital stock;
(c) (x) acquired, sold, licensed, leased or
disposed of any property, including real property and Intellectual
Property (except in the Ordinary Course of Business), or (y) entered
into any commitment or transaction which individually or in the
aggregate would be material to the Company or any of the Subsidiaries;
(d) (w) incurred or assumed any Indebtedness in
excess of $500,000 in the aggregate, (x) made any material loans,
advances or capital contributions to, or investments in, any other
Person, (y) pledged or otherwise encumbered shares of capital stock,
or (z) mortgaged or pledged any of its material assets, or create any
Liens with respect thereto;
(e) (x) acquired (by merger, consolidation,
acquisition of stock or assets, or otherwise) any Person or division
thereof or any equity interest therein, (y) entered into any contract
or agreement which would be material to the Company and the
Subsidiaries, or (z) authorized any new capital expenditure or
expenditures which, in the aggregate, are in excess of $500,000;
(f) changed any of the accounting methods used
unless required by GAAP;
(g) adopted or amended in any material respect
any collective bargaining agreement;
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<PAGE> 21
(h) filed any amended Tax Return, surrendered any
right to claim a refund of Taxes or take any similar action, or
omitted to take any action relating to the filing of any Tax Return or
the payment of any Tax, if such election, adoption, change, amendment,
agreement, settlement, surrender, consent, or other action or omission
would have the effect of increasing the present or future tax
liability or decreasing any present or future Tax asset of the
Company, Purchaser or any Affiliate of Purchaser; or
(i) authorized or entered into an agreement,
whether in writing or otherwise, to do any of the actions prohibited
above.
5I. Properties.
(a) Attached as Schedule 5I is a list of all
leases, subleases and other occupancy agreements, including all amendments,
extensions and other modifications (the "Leases") for real property (the "Real
Property"). The Company has a good and valid leasehold interest in and to all
of the Real Property, subject to no Liens. Each Lease is in full force and
effect and is enforceable in accordance with its terms. There exists no
default or condition which, with the giving of notice, the passage of time or
both, would become a default under any Lease. Except as described on Schedule
5I, no consent, waiver, approval or authorization is required form any landlord
under any Lease as a result of the execution of this Agreement, the
Stockholders Agreement, the Stock Purchase Warrant or the consummation of the
transactions contemplated hereby or thereby.
(b) The Real Property constitutes all of the real
property owned, lease, occupied or otherwise utilized in connection with the
business of the Company and its Subsidiaries. Other than the Company and the
Subsidiaries, there are no parties in possession or parties having any current
or future right to occupy any of the Real Property. All improvements located
on the Real Property have direct access to a public road adjoining such Real
Property. No such improvements or accessways encroach on land not included in
the Real Property and no such improvement is dependent for its access,
operation or utility on any land, building or other improvement not included in
the Real Property.
(c) There are no proceedings in eminent domain or
other similar proceedings pending or, to the Knowledge of the Company,
threatened, affecting any portion of the material Real Property owned or leased
by the Company or any Subsidiary. There exists no writ, injunction, decree,
order or judgment outstanding, nor any litigation, pending or threatened,
relating to the ownership, lease, use, occupancy or operation by any Person of
any such Real Property. The current use of the Real Property does not violate
in any material respect any instrument of record or agreement affecting such
Real Property. There is no violation of any covenant, condition, restriction,
easement, agreement or order of any governmental authority having jurisdiction
over any of the Real Property that affects such Real Property or the use or
occupancy thereof, except a violation which would not have a Material Adverse
Effect. No
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<PAGE> 22
damage or destruction has occurred with respect to any of the Real Property
that, individually or in the aggregate, has had or will have a Material Adverse
Effect.
5J. Assets. Except as set forth on Section 5J of the
Disclosure Schedule, the Company and the Subsidiaries have good and marketable
title to, or a valid leasehold interest in, the material Real Property and
assets used by them, located on their premises or shown on the Latest Balance
Sheet or acquired thereafter, free and clear of all Liens, except for sales of
inventory in the Ordinary Course of Business since the date of the Latest
Balance Sheet. Except as described on the Section 5J of the Disclosure
Schedule, the assets are in good operating condition in all material respects,
reasonable wear and tear excepted, and are fit for use in the Ordinary Course
of Business. The Company and the Subsidiaries validly own or lease all
buildings, machinery, equipment, and other tangible assets necessary for the
conduct of their businesses as presently conducted.
5K. Tax Matters. Except as set forth on Section 5K of the
Disclosure Schedule:
(i) the Company, the Subsidiaries and each
Affiliated Group have timely filed all material Tax Returns
which are required to be filed, and all such Tax Returns are
true, complete and accurate in all material respects and have
been prepared in all material respects in compliance with
applicable law;
(ii) except for Taxes less than $25,000 in the
aggregate which are being contested in good faith and by appropriate
proceedings (with respect to which adequate reserves have been
established and are being maintained in accordance with GAAP), all
Taxes due and payable by the Company, the Subsidiaries and each
Affiliated Group, whether or not shown on a Tax Return, have been paid
by the Company, the Subsidiaries and each Affiliated Group,
respectively, and no Taxes are delinquent;
(iii) the amount accrued as a current liability for
taxes on the Latest Balance Sheet shall be sufficient to pay in full
all Taxes for taxable periods (or portions thereof) of the Company,
Subsidiaries and each Affiliated Group ending on or before the date of
the Latest Balance Sheet, whether or not such Taxes are due on or
before such date and, since the date of the Latest Balance Sheet, the
Company has not incurred any Liability for Taxes other than in the
Ordinary Course of Business;
(iv) there is no action, suit, taxing authority
proceeding or audit now in progress, pending or, to the Knowledge of
the Company, threatened against or with respect to the Company, any
Subsidiary or any Affiliated Group and neither the Company, any
Subsidiary, nor any Affiliated Group reasonably expect any taxing
authority to claim or assess any additional Taxes in respect of the
Company or any Subsidiary for any period, except in each case which,
if adversely determined, would not have a Material Adverse Effect;
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<PAGE> 23
(v) the Company and the Subsidiaries have not
been members of an Affiliated Group, other than one in which the
Company was the ultimate parent, and the Company and the Subsidiaries
have no liability for Taxes of any Person other than under Treasury
Regulations Section 1.1502-6 or any similar provision of local, state
or foreign Tax law;
(vi) the Company, the Subsidiaries and each
Affiliated Group has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party;
(vii) the Company and the Subsidiaries have not
consented to extend to a date later than the date hereof the time in
which any Tax may be assessed or collected by any taxing authority;
and no Affiliated Group has consented to extend to a date later than
the date hereof the time in which any Tax may be assessed or collected
by any taxing authority with respect to a taxable period during which
the Company or any Subsidiary was a member of the Affiliated Group;
(viii) the Company and the Subsidiaries are not a
party to or bound by any Tax allocation or Tax sharing agreement and
have no current or potential contractual obligation to indemnify any
other Person with respect to Taxes; and
(ix) the Company, each Subsidiary and each
Affiliated Group have not made any payments, and are not and will not
become obligated (under any contract entered into on or before the
Closing) to make any payments, that will be non-deductible under
Section 280G of the Code (or any corresponding provision of state,
local or foreign income Tax law).
5L. Brokerage. Except as set forth in Section 5L of the
Disclosure Schedule, there are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated
by this Agreement based on any arrangement or agreement binding upon the
Company or any Subsidiary. The Company shall pay, and hold Purchaser harmless
against, any Liability, Loss or expense (including, without limitation,
reasonable attorneys' fees and out-of-pocket expenses) arising in connection
with any such claim.
5M. Employees. Except as set forth on Section 5M of the
Disclosure Schedule, to the Knowledge of the Company, no key executive employee
and no group of employees or independent contractors of the Company or any
Subsidiary has any plans to terminate his, her or its employment or
relationship as an independent contractor with the Company or any Subsidiary.
Except as set forth in Section 5M of the Disclosure Schedule, no organizational
effort is presently being made or, to the Knowledge of the Company, threatened
by or on behalf of any labor union with respect to any employees of the Company
or any Subsidiary and none of their employees are represented by any labor
union. Except as set forth in Section 5M of the
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<PAGE> 24
Disclosure Schedule and, in each case, where the failure to comply would not
have a Material Adverse Effect, the Company and the Subsidiaries are in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and are not
engaged in any unfair labor practice and, to the Knowledge of the Company,
there is no reasonable basis for any unfair labor practice complaint or claim
to be asserted against the Company or any Subsidiary, and there is no labor
strike, dispute, slowdown or stoppage actually pending or, to the Knowledge of
the Company, threatened, against the Company or any Subsidiary. The Company
and the Subsidiaries have no labor contracts with any representative of any of
the Company's or any Subsidiary's employees.
5N. ERISA.
(i) Except as set forth on Section 5N of the
Disclosure Schedule, with respect to current or former employees of the Company
or any Subsidiary, the Company and the Subsidiaries do not maintain or
contribute to or have any actual or potential liability with respect to any (a)
deferred compensation or bonus or retirement plans or arrangements, (b)
qualified or nonqualified defined contribution or defined benefit plans or
arrangements which are employee pension benefit plans (as defined in Section
3(2) of ERISA), or (c) employee welfare benefit plans, (as defined in Section
3(1) of ERISA), stock option or stock purchase plans, or material fringe
benefit plans or programs whether in writing or oral and whether or not
terminated. The Company has never contributed to any multiemployer pension
plan (as defined in Section 3(37) of ERISA), and neither the Company nor any of
its Subsidiaries has ever maintained or contributed to any defined benefit plan
(as defined in Section 3(35) of ERISA). The plans, arrangements, programs and
agreements referred to in the preceding two sentences are referred to
collectively as the "Plans." The Company does not maintain or contribute to
any Plan which provides health, accident or life insurance benefits to former
employees, their spouses or dependents, or to any other Person, other than in
accordance with Part 6 of Subtitle B of Title I of ERISA and Section 4980B of
the Code ("COBRA").
(ii) Except as set forth on Section 5N of the
Disclosure Schedule attached hereto, the Plans (and related trusts and
insurance contracts) set forth on Section 5N of the Disclosure Schedule comply
in form and in operation with the requirements of applicable laws and
regulations, including ERISA and the Code and the nondiscrimination rules
thereof. All contributions, premiums or payments which are due on or before the
Closing Date under each Plan have been paid. Each Plan which is intended to be
qualified under Section 401(a) of the Code has received from the Internal
Revenue Service a determination letter stating that such Plan is qualified
under Section 401(a) of the Code, and nothing has occurred since the date of
such determination that could adversely affect the qualification of such Plan.
(iii) All required reports and descriptions
(including Form 5500 annual reports, summary annual reports and summary plan
descriptions) with respect to the Plans set forth on Section 5N of the
Disclosure Schedule have been properly and timely filed with the
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<PAGE> 25
appropriate government agency and distributed to participants as required. The
Company has complied with the requirements of COBRA.
(iv) With respect to each Plan set forth on
Section 5N of the Disclosure Schedule attached hereto, (a) there have been no
non-exempt prohibited transactions as defined in Section 406 of ERISA or
Section 4975 of the Code, (b) no fiduciary (as defined in Section 3(21) of
ERISA) has any liability for breach of fiduciary duty or any other failure to
act or comply in connection with the administration or investment of the assets
of such Plans, and (c) no actions, investigations, suits or claims with respect
to the Plans or assets thereof (other than routine claims for benefits) are
pending or threatened, and the Company has no Knowledge of any facts which
would give rise to or could reasonably be expected to give rise to any such
actions, suits or claims.
(v) With respect to each of the Plans listed on
Section 5N of the Disclosure Schedule attached hereto, the Company has
furnished to Purchaser true and complete copies of (a) the current plan
documents, summary plan descriptions and summaries of material modifications
and other material employee communications, (b) the Form 5500 annual report
(including all schedules and other attachments) for the most recent three
years, (c) all related trust agreements, insurance contracts or other funding
agreements which implement such plans and (d) all contracts relating to each
such plan, including, without limitation, service provider agreements,
insurance contracts, investment management agreements and record keeping
agreements.
(vi) The Company has not incurred and has no
Knowledge of any basis upon which it could reasonably incur any Liability to
the Pension Benefit Guaranty Corporation (other than routine premium payments)
or otherwise under Title IV of ERISA (including any withdrawal liability) or
under the Code with respect to any employee pension benefit plan (as defined in
Section 3(2) of ERISA) that the Company or any member of its "controlled group"
(within the meaning of Code Section 414) maintains or ever has maintained or to
which any of them contributes, ever has contributed, or ever has been required
to contribute.
5O. Compliance with Laws. The Company and the
Subsidiaries are, and at all times have been, in compliance with all applicable
laws, regulations and ordinances of any governmental entity, and no claims have
been filed against the Company or any Subsidiary alleging a violation of any
such laws or regulations, and the Company and the Subsidiaries have not
received notice of any such violations, except, in each case, where the failure
to comply would not have a Material Adverse Effect.
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<PAGE> 26
5P. Environmental, Health, and Safety Matters. Except as
set forth in Section 5P of the Disclosure Schedule:
(i) the Company, the Subsidiaries and their
respective Affiliates have complied and are in compliance with all
Environmental and Safety Requirements (including without limitation
all permits and licenses required thereunder).
(ii) the Company, the Subsidiaries and their
respective Affiliates have not received any written or oral notice,
report or other information regarding any actual or alleged violation
of Environmental and Safety Requirements, or any Liabilities or
potential Liabilities, including any investigatory, remedial or
corrective obligations, relating to any of them or its facilities
arising under Environmental and Safety Requirements;
(iii) none of the following exists at any property
or facility owned or operated by the Company or any Subsidiary or any
of their respective Affiliates: (a) underground storage tanks, (b)
asbestos-containing material in any form or condition, (c) materials
or equipment containing polychlorinated biphenyls, or (d) landfills,
surface impoundments, or disposal areas;
(iv) neither the Company, any Subsidiary nor any
of their predecessors or Affiliates has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or
released any substance, including without limitation any hazardous
substance, or owned or operated any property or facility (and no such
property or facility is contaminated by any such substance) in a
manner that has given or would give rise to Liabilities, including
without limitation any Liability for response costs, corrective action
costs, personal injury, property damage, natural resources damages or
attorney fees, pursuant to the CERCLA, the Solid Waste Disposal Act,
as amended or any other Environmental and Safety Requirements;
(v) neither this Agreement nor the consummation
of the transactions contemplated hereby will result in any obligations
for site investigation or cleanup, or notification to or consent of
government agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer"
Environmental and Safety Requirements;
(vi) the Company, the Subsidiaries and their
Affiliates have not, either expressly or by operation of law, assumed,
undertaken or otherwise become subject to any Liability, including
without limitation any Liability for corrective or remedial action, of
any other Person relating to Environmental and Safety Requirements;
and
(vii) no facts, events or conditions relating to
the past or present facilities, properties or operations of the
Company, any Subsidiary or any ot their
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<PAGE> 27
predecessors of Affiliates will prevent, hinder or limit continued
compliance with Environmental and Safety Requirements, give rise to
any investigatory, remedial or corrective Liabilities pursuant to
Environmental and Safety Requirements, or give rise to any other
Liabilities pursuant to Environmental and Safety Requirements,
including without limitation any Liability relating to onsite or
offsite releases or threatened releases of hazardous materials,
substances or wastes, personal injury, property damage or natural
resources damage;
except, in each case, where the failure to comply would not have a Material
Adverse Effect.
5Q. Affiliated Transactions. Except for those agreements
or transactions listed on Section 5Q of the Disclosure Schedule or contemplated
by this Agreement, neither the Company nor any Subsidiary has (i) paid, loaned
or advanced any amount to, (ii) sold, transferred or leased any properties or
assets to or (iii) entered into or continued any agreement, arrangement or
understanding (written or otherwise) with, any of its officers, directors,
employees or Affiliates or any individual related by blood, marriage or
adoption to any such Person or entity in which any such Person owns a
beneficial interest.
5R. Contracts and Commitments. Section 5R of the
Disclosure Schedule lists the following agreements to which the Company or any
Subsidiary is a party or by which any of their assets are bound:
(i) any indenture, mortgage, note, bond or other
evidence of Indebtedness, any loan, security, credit, factoring or
similar agreement under which the Company or any Subsidiary has
borrowed or may borrow money or issued any note, bond, indenture or
other evidence of Indebtedness for more than $10,000 individually or
$25,000 in the aggregate or under which the Company or any Subsidiary
has imposed (or may impose) a Lien on any of its respective assets,
tangible or intangible (except for non- recourse notes relating to
specific leases entered into by the Company or any Subsidiary in the
Ordinary Course of Business, in which case, the Company has made
available to Purchaser a sample of such notes);
(ii) any confidentiality, non-solicitation or
non-competition agreement or any agreement which restricts, limits or
prohibits the Company or any Subsidiary from entering into any new, or
expanding any existing, line of business or any agreement which
contains geographic or other limitations, prohibitions or restrictions
on the Company's or any Subsidiary's ability to conduct business
activities;
(iii) any agreement under which the Company or any
Subsidiary could have Liabilities after the Closing with any current
or former directors, officers, and employees in the nature of an
employment agreement, a consulting agreement or a severance agreement;
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(iv) any agreement under which the Company or any
Subsidiary could have Liabilities in the future relating to the
acquisition or disposition of material assets or properties by way of
merger, consolidation, purchase, sale or otherwise, or granting to any
Person a right at such Person's option to purchase or acquire any
material asset or property, of the Company or any Subsidiary or any
interest therein (not including dispositions of inventory in the
Ordinary Course of Business);
(v) any agreement for the construction,
acquisition or modification of any land, building, structure,
improvement, fixture or other fixed asset, or for the incurrence of
any other capital expenditure involving amounts in excess of $500,000
in the aggregate;
(vi) any agreement with the Company or any
Subsidiary, on the one hand, and any officer, director, employee or
Affiliate of the Company or any Subsidiary, on the other hand; and
(vii) any agreement not otherwise required to be
disclosed pursuant to this Section 5R the consequences of a default or
termination thereunder would have a Material Adverse Effect.
The Company has made available to Purchaser a correct and complete copy of each
written agreement listed in Section 5R of the Disclosure Schedule and a written
summary setting forth the terms and conditions of each oral agreement listed in
Section 5R of the Disclosure Schedule. Except as set forth in Section 5R of the
Disclosure Schedule, all such agreements are valid, binding and enforceable
obligations of the Company, as applicable, in accordance with their terms,
except to the extent that the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws of general application relating to or
affecting the enforcement of creditors' rights or by general principles of
equity. Neither the Company nor any Subsidiary is in default in the observance
or the performance of any material term or obligation to be performed by it
under any such agreement, and to the Knowledge of the Company, no other Person
is in default in the observance or the performance of any material term or
obligation to be performed by such Person under any such agreement, except
where such default would not have a Material Adverse Effect.
5S. Intellectual Property.
(i) Section 5S of the Disclosure Schedule
contains a complete and accurate list of all (a) patented or registered
Intellectual Property owned by the Company or any Subsidiary, (b) pending
patent applications and applications for registrations of other Intellectual
Property filed by the Company or any Subsidiary, (c) material unregistered
trade names and corporate names owned or used by the Company or any Subsidiary
and (d) material unregistered trademarks, service marks, copyrights, and
computer software owned or used by the Company or any Subsidiary. Section 5S
of the Disclosure Schedule also contains a complete and accurate list
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of all licenses and other rights granted by the Company or any Subsidiary to
any third party with respect to any Intellectual Property and all material
licenses and other rights granted by any third party to the Company or any
Subsidiary with respect to any Intellectual Property, in each case identifying
the subject Intellectual Property. All of the material licenses set forth in
Section 5S of the Disclosure Schedule are valid and binding obligations of the
Company or any Subsidiary, and to the Knowledge of the Company, the other
parties thereto, and are enforceable against the Company or any Subsidiary, and
to the Knowledge of the Company, the other parties thereto, in accordance with
their respective terms, except to the extent that the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws of general application
relating to or affecting the enforcement of creditors' rights or by general
principles of equity.
(ii) Except as set forth in Section 5S the
Disclosure Schedule, the Company or a Subsidiary owns and possesses all right,
title and interest in and to, or has the right to use pursuant to a valid
license, all Intellectual Property necessary for the operation of the
businesses of the Company and the Subsidiaries as presently conducted.
5T. Litigation. Except as set forth in Section 5T of the
Disclosure Schedule, there are no actions, suits, complaints, charges,
proceedings, orders, investigations or claims (i) pending other than those
filed but not yet served on the Company or any Subsidiary or, (ii) to the
Company's Knowledge, threatened against the Company, any Subsidiary or any of
their assets or properties which, if adversely determined, would have a
Material Adverse Effect.
5U. Year 2000. To the Knowledge of the Company,
(i) none of the computer software, computer
firmware, computer hardware (whether general or special purpose) or
other similar or related items of automated, computerized or software
systems that are used or relied on by Company or by any of its
Subsidiaries in the conduct of their respective businesses will
malfunction, will cease to function, will generate incorrect data or
will produce incorrect results when processing, providing or receiving
(a) date-related data from, into and between the twentieth and
twenty-first centuries or (b) date-related data in connection with any
valid date in the twentieth and twenty-first centuries;
(ii) none of the products and services sold,
licensed, leased, rendered, or otherwise provided by the Company or by
any of its Subsidiaries in the conduct of their respective businesses
will malfunction, will cease to function, will generate incorrect data
or will produce incorrect results when processing, providing or
receiving (a) date-related data from, into and between the twentieth
and twenty-first centuries or (b) date-related data in connection with
any valid date in the twentieth and twenty-first centuries; and,
accordingly, neither the Company nor any of its Subsidiaries is or
will be subject to any claim, demand, action, suit, liability, damage,
material loss, or material expense arising from, or related to,
circumstances where such products and services malfunction, cease to
function, generate incorrect data, or produce incorrect results when
-26-
<PAGE> 30
processing, providing or receiving (x) date-related data from, into
and between the twentieth and twenty-first centuries or (y)
date-related data in connection with any valid date in the twentieth
and twenty-first centuries; and
(iii) neither Company nor any of its Subsidiaries
has made any other representations or warranties regarding the ability
of any product or service sold, licensed, leased, rendered, or
otherwise provided by Company or by any of its Subsidiaries in the
conduct of their respective businesses to operate without malfunction,
to operate without ceasing to function, to generate correct data or to
produce correct results when processing, providing or receiving (a)
date-related data from, into and between the twentieth and
twenty-first centuries and (b) date-related data in connection with
any valid date in the twentieth and twenty-first centuries.
5V. Disclosure. Neither this Agreement nor the
Disclosure Schedule or any statements, documents, certificates or other items
prepared or supplied to Purchaser by or on behalf of the Company or any
Subsidiary as set forth in or required under this Agreement contain any untrue
statement of a material fact or omit a material fact necessary to make each
statement contained herein or therein not misleading.
Section 6. Representations and Warranties of Purchaser. As a
material inducement to the Company to enter into this Agreement and sell the
Shares, Purchaser hereby represents and warrants as of the date hereof as
follows:
6A. Organization and Power of Purchaser. Purchaser is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware and is qualified to do business in
every jurisdiction in which its ownership of property or conduct of business
requires it to qualify.
6B. Authorization; No Breach. The execution, delivery
and performance of this Agreement, the Stockholders Agreement and the Stock
Purchase Warrant by Purchaser have been duly authorized by Purchaser. Each of
this Agreement, the Stockholders Agreement and the Stock Purchase Warrant, when
it is executed by the other parties thereto, will constitute a valid and
binding obligation of Purchaser enforceable in accordance with its respective
terms except to the extent that the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws of general application relating to or
affecting the enforcement of creditors' rights or by general principles of
equity. The execution and delivery by Purchaser of this Agreement, the
Stockholders Agreement and the Stock Purchase Warrant, the purchase of the
Shares hereunder and the fulfillment of and compliance with the respective
terms hereof and thereof by Purchaser do not and shall not (i) conflict with or
result in a breach of the terms, conditions or provisions of, (ii) constitute a
default under, (iii) result in the creation of any Lien upon Purchaser's
securities or assets pursuant to, (iv) give any third party the right to
modify, terminate or accelerate any obligation under, (v) result in a violation
of, or (vi) require any authorization, consent, approval, exemption or other
action by or notice or declaration to, or filing with, any
-27-
<PAGE> 31
court or administrative or governmental body or agency pursuant to, (A) the
constituting documents of Purchaser, (B) any law, statute, rule or regulation
to which Purchaser is subject, or (C) any material agreement or instrument, or
any order, judgment or decree to which Purchaser is subject, except in the case
of (B) and (C) were such conflict, default or violation would not have a
material adverse effect on Purchaser.
6C. Brokerage. There are no claims for brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement, based on any arrangement or
agreement binding upon Purchaser for which the Company or the Subsidiaries
could become liable. Purchaser shall pay, and hold the Company harmless
against, any Liability, Loss or expense (including, without limitation,
reasonable attorneys' fees and out-of-pocket expenses) arising in connection
with any such claim.
6D. Purchaser's Investment Representations. Purchaser
hereby represents that it is acquiring the Shares purchased hereunder or
acquired pursuant hereto for its own account with the present intention of
holding such securities for purposes of investment, and that it has no
intention of selling such securities in a public distribution in violation of
the federal securities laws or any applicable state securities laws; provided
that nothing contained herein shall prevent Purchaser and subsequent holders of
Shares from transferring such securities in compliance with the applicable
federal and state securities laws, subject to the provisions of the
Stockholders Agreement.
Section 7. Termination.
7A. Termination. All rights of Purchaser and obligations
of the Company to the Purchaser under Section 4B shall terminate upon Thayer
Shares constituting less than 5% of the issued and outstanding Common Stock,
and such sections shall remain terminated even if Purchaser, its Affiliates and
any holders of Thayer Shares later own in the aggregate 5% or more of the
issued and outstanding Common Stock; provided that the limited partners of
Thayer Equity Investors III, L.P. shall not be treated as Affiliates of Thayer
or the holders of Thayer Shares for the purposes of this Section 7A. Except
with respect to the representations and warranties contained herein, all other
rights of Purchaser and obligations of the Company to Purchaser shall terminate
upon the first to occur of (i) there being no Thayer Shares, and (ii) the
consummation of an Approved Sale.
Section 8. Representations and Warranties.
8A. Survival of Representations and Warranties. All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby and continue in full force and effect until thirty days
after the Company delivers to Purchaser audited financial statements of the
Company and the Subsidiaries as set forth in Section 4A(i)(b) for the fiscal
year ending March 31, 1999.
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<PAGE> 32
8B. Indemnification. Notwithstanding anything herein to
the contrary, the Company shall not be liable for any inaccuracy of any
representation or warranty contained herein unless all such inaccuracies, in
the aggregate, shall have a Material Adverse Effect, provided that for the
purpose of determining any inaccuracy of a representation or warranty, any
qualification as to materiality or Material Adverse Effect contained therein
shall be ignored.
Section 9. Miscellaneous.
9A. Expenses. The Company shall pay all out-of-pocket
fees and expenses (including reasonable attorneys fees) of the Company and the
Purchaser incurred in connection with this Agreement, the Stockholders
Agreement, the Stock Purchase Warrant and the transactions contemplated hereby
and thereby.
9B. Consent to Amendments. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended or waived and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company has obtained the
prior written consent of Purchaser. No other course of dealing between the
Company and Purchaser or any delay in exercising any rights hereunder or under
the Stockholders Agreement or the Stock Purchase Warrant shall operate as a
waiver of any rights of any such holders.
9C. Successors and Assigns. Except as otherwise
expressly provided herein, this Agreement shall bind and inure to the benefit
of and be enforceable by the Company and Purchaser and their respective
permitted successors and assigns, provided, however that Purchaser shall not
assign this Agreement or any of the rights or interests hereunder (except any
right or interest directly related to the ownership of the Shares) to any
Person other than an Affiliate of Purchaser within two years of the date
hereof.
9D. Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
9E. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
shall constitute one and the same Agreement.
9F. Descriptive Headings; Interpretation. The
descriptive headings of this Agreement are inserted for convenience only and do
not constitute a substantive part of this Agreement. The use of the word
"including" in this Agreement shall be by way of example rather than by
limitation.
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<PAGE> 33
9G. Governing Law. All issues and questions concerning
the construction, validity, enforcement and interpretation of this Agreement
and the exhibits and schedules hereto (including the Disclosure Schedule) shall
be governed by, and construed in accordance with, the laws of the State of
Delaware, without giving effect to any choice of law or conflict of law rules
or provisions (whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the
State of Delaware.
9H. Notices. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given (i)
when delivered personally to the recipient, (ii) on the day following the date
on which the same shall have been sent to the recipient by reputable overnight
courier service (charges prepaid), (iii) when delivered via facsimile (with
appropriate confirmation of receipt), or (iv) on the third day following the
date on which the same shall have been mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications shall be sent to Purchaser and to the Company
at the addresses indicated below:
If to Purchaser:
c/o Thayer Equity Investors III, L.P.
1455 Pennsylvania Avenue, Suite 350
Washington, DC 20004
FAX: 202-371-0391
Attention: Carl J. Rickertsen
with a copy to:
Kirkland & Ellis
655 Fifteenth Street, N.W., Suite 1200
Washington, DC 20005-5793
FAX: 202-879-5200
Attention: Jack M. Feder, Esq.
If to the Company:
MLC Holdings, Inc.
11150 Sunset Hills Road, Suite 110
Reston, VA 20190-5321
FAX: 703-834-5718
Attention: Phillip G. Norton
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<PAGE> 34
with a copy to:
Alston & Bird, LLP
601 Pennsylvania Avenue, N.W.
North Building, 11th Floor
Washington, DC 20004
FAX: 202-508-3333
Attention: Frank M. Conner, III, Esq.
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
9I. No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and
no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any of the provisions of this Agreement.
9J. Entire Agreement. This Agreement (including the
Disclosure Schedule and the exhibits attached hereto), the Stockholders
Agreement and the Stock Purchase Warrant embody the complete agreement and
understanding among the parties hereto with respect to the subject matter
hereof and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
[END OF PAGE]
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have executed this
Common Stock Purchase Agreement on the date first written above.
MLC HOLDINGS, INC.
By: /s/ BRUCE M. BOWEN
------------------------------------
Name: Bruce M. Bowen
Title: Executive Vice President
TC LEASING, LLC
By: THAYER EQUITY INVESTORS III,
L.P., its managing member
By: TC EQUITY PARTNERS, L.L.C.,
its general partner
By: /s/ JEFFREY W. GOETTMAN
------------------------------------
Name: Jeffrey W. Goettman
Title: Member
<PAGE> 1
EXHIBIT 3
- --------------------------------------------------------------------------------
STOCKHOLDERS AGREEMENT
Dated as of October 23, 1998
Among
MLC HOLDINGS, INC.
AND CERTAIN OF ITS STOCKHOLDERS
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Section 1. Definitions ........................................................ -1-
Section 2. Voting Arrangements ................................................ -7-
(a) ELECTION OF DIRECTORS .............................................. -7-
(b) ADDITIONAL DIRECTORS ............................................... -7-
(c) REMOVAL OF DIRECTORS ............................................... -8-
(d) VACANCIES .......................................................... -8-
(e) RIGHTS UNIMPAIRED .................................................. -8-
(f) APPOINTMENT OF PROXY ............................................... -8-
(g) COMMITTEES ......................................................... -9-
(h) STOCK PURCHASE WARRANT ............................................. -9-
(i) INITIAL THAYER DIRECTORS ........................................... -9-
(j) FIDUCIARY DUTIES UNCHANGED ......................................... -9-
(k) ELECTION OF SUBSIDIARIES' DIRECTORS ................................ -9-
Section 3. Restrictions on Transfer ........................................... -9-
(a) RESTRICTIONS ON TRANSFER ........................................... -9-
(b) CERTAIN PERMITTED TRANSFERS ....................................... -10-
(c) TAG-ALONG RIGHTS .................................................. -12-
(d) PUBLIC THAYER OFFER ............................................... -14-
(e) TRANSFERS IN VIOLATION OF THIS AGREEMENT .......................... -14-
Section 4. Legends ........................................................... -14-
(a) STOCKHOLDERS AGREEMENT LEGEND ..................................... -14-
(b) REMOVAL OF LEGENDS ................................................ -15-
Section 5. Preemptive Rights ................................................. -15-
(a) RESTRICTIONS ...................................................... -15-
(b) THAYER OFFER ...................................................... -15-
(c) STOCK OFFER ....................................................... -15-
(d) REFUSED SECURITIES ................................................ -16-
(e) EXCLUSIONS ........................................................ -16-
(f) EXCLUDED SECURITIES ............................................... -16-
(g) 33.3% LIMITATION .................................................. -16-
Section 6. Qualified Sale of the Company ..................................... -17-
(a) APPROVED SALE ..................................................... -17-
(b) MANAGEMENT OFFER .................................................. -17-
Section 7. Registration Rights ............................................... -19-
(a) SHELF REGISTRATION ................................................ -19-
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
(b) DEMAND REGISTRATION ............................................... -19-
(c) INCIDENTAL REGISTRATION ........................................... -19-
(d) HOLDBACK AGREEMENTS ............................................... -20-
(e) REGISTRATION AND MAINTENANCE PROCEDURES ........................... -21-
(f) REGISTRATION EXPENSES ............................................. -24-
(g) INDEMNIFICATION; CONTRIBUTION ..................................... -25-
(h) RULE 144 SALES .................................................... -28-
(i) UNDERWRITTEN REGISTRATIONS ........................................ -28-
(j) NO INCONSISTENT AGREEMENTS ........................................ -28-
(k) S-3 DEMANDS ....................................................... -28-
Section 8. Operating Budget .................................................. -29-
Section 9. Redemption ........................................................ -29-
Section 10. Rights of First Refusal or First Offer ............................ -30-
(a) ASSIGNMENT ........................................................ -30-
(b) IRREVOCABLE PROXY AND STOCK RIGHTS AGREEMENT ...................... -30-
Section 11. Amendment and Waiver .............................................. -30-
Section 12. Severability ...................................................... -31-
Section 13. Entire Agreement .................................................. -31-
Section 14. Successors and Assigns ............................................ -31-
Section 15. Counterparts ...................................................... -31-
Section 16. Remedies .......................................................... -31-
Section 17. Notices ........................................................... -31-
Section 18. Governing Law ..................................................... -32-
Section 19. Descriptive Headings .............................................. -33-
Section 20. Survival; Termination ............................................. -33-
Section 21. Other Registration Rights ......................................... -33-
</TABLE>
SCHEDULES AND EXHIBITS:
Schedule I -- Other Management Stockholders
-ii-
<PAGE> 4
Exhibit A -- Form of Joinder Agreement to Stockholders Agreement
-iii-
<PAGE> 5
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "AGREEMENT") is dated as of
October 23, 1998 among (i) MLC HOLDINGS, INC., a Delaware corporation (the
"COMPANY"), (ii) TC Leasing, LLC, a Delaware limited liability company
("THAYER"), (iii) Phillip G. Norton ("NORTON"), Bruce M. Bowen and the other
Persons listed on Schedule I hereto (collectively, the "MANAGEMENT
STOCKHOLDERS") and (iv) each Person who hereafter executes a counterpart of this
Agreement (or otherwise agrees to be bound by the provisions hereof). Thayer,
the Management Stockholders and the other Persons that are or may become parties
to this Agreement are sometimes referred to herein collectively as the
"STOCKHOLDERS").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS. For purposes of this Agreement, the
following terms have the indicated meanings:
"AFFILIATE" of a Person means any other Person controlling,
controlled by or under common control with such Person, whether by ownership of
voting securities, by contract or otherwise, and in the case of Thayer shall
include Thayer Equity Investors III, L.P. and any of its partners or
Affiliates, and in the case of a natural Person shall include any member of
such Person's Family Group.
"AGREEMENT" is defined in the preface.
"ALLOCABLE SHARES" is defined in Section 3(c)(ii).
"APPROVED SALE" is defined in Section 6(a).
"BLOCK OF SHARES" means Thayer Shares which constitute 5% or
more of the Common Shares of the Company, and includes all Thayer Shares which
are transferred pursuant to Section 3(b)(vi) or 3(b)(xiii) in a single
transaction or in a series of related transactions.
"BOARD" means the Company's Board of Directors.
"BUYERS" is defined in Section 6(b).
"COMMON SHARES" means shares of the Company's Common Stock.
"COMMON STOCK" means, collectively, the Company's common stock,
par value $.01 per share, and any other class or series of authorized capital
stock of the Company which is not limited to a fixed sum or percentage of par
or stated value in respect to the rights of the holders thereof to participate
in dividends or in the distribution of assets upon any liquidation, dissolution
or winding up of the Company.
<PAGE> 6
"COMMON STOCK PURCHASE AGREEMENT" means the Common Stock
Purchase Agreement, dated as of the date hereof, by and between the Company and
Thayer.
"COMPANY" is defined in the preface.
"CO-REDEMPTION NOTICE" is defined in Section 9.
"DEMAND REGISTRATION" is defined in Section 7(b)(i).
"DEMAND RIGHT" is defined in Section 7(b)(i).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCLUDED SECURITIES" is defined in Section 5(f).
"FAMILY GROUP" means such Person's spouse and lineal descendants
(whether natural or adopted) and any trust formed and maintained solely for the
benefit of such Person, such Person's spouse or such Person's lineal
descendants.
"INCIDENTAL REGISTRATION" is defined in Section 7(c)(i).
"INCIDENTAL REGISTRATION STATEMENT" is defined in Section
7(c)(i).
"INDEMNIFIED COMPANY" is defined in Section 7(g)(ii).
"INDEMNIFIED PARTIES" is defined in Section 7(g)(ii).
"INDEMNIFIED STOCKHOLDER" is defined in Section 7(g)(i).
"INDEMNIFYING PARTY" is defined in Section 7(g)(iii).
"INDEPENDENT DIRECTORS" is defined in Section 2(a).
"IRREVOCABLE PROXY AND STOCK RIGHTS AGREEMENT" means the
Irrevocable Proxy and Stock Rights Agreement, made as of September 1, 1996,
among Norton, Kevin M. Norton, Patrick J. Norton, Jr. and J.A.P. Investment
Group, Inc.
"JOINDER AGREEMENT" is defined in Section 3(b)(i).
"LOSSES" is defined in Section 7(g)(i).
"MANAGEMENT DIRECTORS" is defined in Section 2(a).
"MANAGEMENT OFFER NOTICE" is defined in Section 6(b).
-2-
<PAGE> 7
"MANAGEMENT REPLY" is defined in Section 6(b).
"MANAGEMENT SHARES" means Stockholder Shares held by the
Management Stockholders and their permitted transferees. Management Shares
shall cease to be such when they cease to be Stockholder Shares.
"MANAGEMENT STOCKHOLDERS" is defined in the preface.
"MARKET VALUE" means, with respect to any security on any date,
(x) if such security is quoted on NASDAQ or listed on a national securities
exchange, the average daily closing sales price of such security on NASDAQ or a
national securities exchange, as applicable, for the 20 trading days prior to
such date, and (y) if such security is not quoted on NASDAQ or listed on a
national securities exchange, the fair value per share determined jointly by
the Company and Thayer, provided that if the Company and Thayer are unable to
reach an agreement within a reasonable period of time, such fair value shall be
determined by a recognized investment banking firm jointly selected by the
Company and Thayer, whose determination shall be final and binding upon the
Company and Thayer (and the fees and expenses of such recognized investment
banking firm shall be paid by the Company).
"NASDAQ" means National Association of Securities Dealers
Automated Quotations National Market System.
"NEW SECURITIES" is defined in Section 5(a).
"NORTON" is defined in the preface.
"NORTON FAMILY STOCKHOLDER" means each of J.A.P. Investment
Group, Inc., Kevin M. Norton and Patrick J. Norton, Jr.
"OFFERED SECURITIES" is defined in Section 3(c)(i).
"OPTIONS" means any options to purchase Common Stock
granted by the Company.
"OTHER HOLDER" is defined in Section 3(c)(i).
"OTHER REDEEMERS" is defined in Section 9.
"OTHER STOCKHOLDERS" is defined in Section 6(a).
"OWNERSHIP PERCENTAGE" means, with respect to any Stockholder, a
percentage equal to the product of (a) a fraction, the numerator of which is
the sum of (i) the number of Common Shares owned by such Stockholder, and (ii)
the number of Common Shares issuable upon the exercise of any Stock Purchase
Warrant or Option owned by such Stockholder, and the denominator of which is
the sum of (x) the number of shares of the Company's outstanding Common
-3-
<PAGE> 8
Shares, and (y) the number of Common Shares issuable upon the exercise of all
Stock Purchase Warrants or Options owned by any of the Stockholders, multiplied
by (b) 100.
"PERMITTED TRANSFERS" is defined in Section 3(b).
"PERSON" means any individual, corporation, partnership, firm,
joint venture, association, limited liability company, joint-stock company,
trust, unincorporated organization, governmental or regulatory body or other
legal entity.
"PROCEEDING" is defined in Section 7(g)(iii).
"PUBLIC OFFERING" means a sale of Common Stock to the public in
an offering pursuant to an effective registration statement filed with the SEC
pursuant to the Securities Act, as then in effect, provided that a Public
Offering shall not include an offering made in connection with a business
acquisition or combination or an employee benefit plan.
"PUBLIC SALE" means a sale of Common Stock pursuant to a Public
Offering or a Rule 144 Sale.
"QUALIFIED SALE OF THE COMPANY" means a Sale of the Company
pursuant to which the effective price per Common Share for the holders of
Stockholder Shares would be as follows: (i) if the Sale of the Company occurs
before the first anniversary of the date hereof, (x) 75% greater than the
average daily closing sales price of the Common Shares on NASDAQ for the 3
months prior to the date of the public announcement of the proposed Sale of the
Company and (y) greater than $20.00 (as such amount is proportionately adjusted
for stock splits, stock combinations, stock dividends and recapitalizations
affecting the Common Shares after the date hereof); (ii) if the Sale of the
Company occurs on or after the first anniversary of the date hereof and before
the second anniversary of the date hereof, (x) 60% greater than the average
daily closing sales price of the Common Shares on NASDAQ for the 3 months prior
to the date of the public announcement of the proposed Sale of the Company and
(y) greater than $18.00 (as such amount is proportionately adjusted for stock
splits, stock combinations, stock dividends and recapitalizations affecting the
Common Shares after the date hereof); (iii) if the Sale of the Company occurs
on or after the second anniversary of the date hereof and before the third
anniversary of the date hereof, (x) 45% greater than the average daily closing
sales price of the Common Shares on NASDAQ for the 3 months prior to the date
of the public announcement of the proposed Sale of the Company and (y) greater
than $16.00 (as such amount is proportionately adjusted for stock splits, stock
combinations, stock dividends and recapitalizations affecting the Common Shares
after the date hereof); and (iv) if the Sale of the Company occurs on or after
the third anniversary of the date hereof, (x) 30% greater than the average
daily closing sales price of the Common Shares on NASDAQ for the 3 months prior
to the date of the public announcement of the proposed Sale of the Company and
(y) greater than $14.00 (as such amount is proportionately adjusted for stock
splits, stock combinations, stock dividends and recapitalizations affecting the
Common Shares after the date hereof), provided that if the Common Shares are
not then traded on NASDAQ, then the average price per Common Shares for the 3
months prior to the date of the public announcement of the proposed Sale of the
Company as determined in good faith by the Board.
-4-
<PAGE> 9
"REDEEMABLE SHARES" is defined in Section 9.
"REDEMPTION NOTICE" is defined in Section 9.
"REFUSED SECURITIES" is defined in Section 5(d).
"REGISTRABLE SECURITIES" means any Common Shares, except Common
Shares which have been Transferred in a Public Sale.
"REGISTRATION NOTICE" is defined in Section 7(b)(i).
"REGISTRATION REQUEST" is defined in Section 7(b)(i).
"REGISTRATION STATEMENT" means any registration statement of the
Company under which any of the Registrable Securities are included therein
pursuant to the provisions of this Agreement, including the prospectus,
amendments and supplements to such registration statement, including
post-effective amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement. The Shelf shall be deemed a Registration Statement.
"REQUESTING HOLDERS" is defined in Section 7(b)(i).
"RULE 144 SALE" means a sale of Common Stock to the public
through a broker, dealer or market-maker pursuant to the provisions of Rule 144
adopted under the Securities Act (or any successor rule or regulation).
"S-3 DEMAND REGISTRATION" is defined in Section 7(k)(i).
"S-3 REGISTRATION NOTICE" is defined in Section 7(k)(i).
"S-3 REGISTRATION REQUEST" is defined in Section 7(k)(i).
"S-3 REQUESTING HOLDERS" is defined in Section 7(k)(i).
"SALE NOTICE" is defined in Section 3(c)(i).
"SALE OF THE COMPANY" means, whether in a single transaction or
in a series of related transactions, (i) a sale of all or substantially all of
the assets of the Company and its Subsidiaries on a consolidated basis, or (ii)
the Transfer or other disposition of more than 50% of the outstanding Common
Stock or the outstanding common equity securities of any of the Company's
Subsidiaries (in each case whether accomplished by stock purchase, asset
purchase, merger, recapitalization, reorganization or other transaction).
"SEC" means the United States Securities and Exchange
Commission.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLING HOLDER" is defined in Section 3(c)(i).
"SHELF" is defined in Section 7(a).
"STOCKHOLDERS" is defined in the preface.
"STOCK NOTICE OF ACCEPTANCE" is defined in Section 5(c).
"STOCK OFFER" is defined in Section 5(c).
"STOCK OFFER PERIOD" is defined in Section 5(c).
"STOCK OPTION PLANS" means the 1998 Long-Term Incentive Plan,
the Employee Share Purchase Plan and any other plan of the Company pursuant to
which the Company issues options, stock appreciation rights, restricted stock
or other stock based compensation to officers, employees, directors or
consultants of the Company or any of its Subsidiaries.
"STOCK PURCHASE WARRANT" means, collectively, the Stock Purchase
Warrant, dated as of the date hereof, by the Company in favor of Thayer, and
any subsequent stock purchase warrant or stock purchase warrants in favor of
Thayer or any of its Affiliates issued pursuant to or in connection with the
Stock Purchase Warrant, dated as of the date hereof, by the Company in favor of
Thayer.
"STOCKHOLDER SHARES" means (i) all shares of Common Stock now
owned or in the future acquired by the Stockholders, including all shares of
Common Stock acquired pursuant to the exercise of Options or the Stock Purchase
Warrant, and (ii) all shares of Common Stock or other securities issued or
issuable directly or indirectly with respect to the securities referred to in
clause (i) by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. Stockholder Shares shall cease to be such as provided in the
last sentence of Section 3(b).
"SUBSIDIARY" means, with respect to any Person, any other Person
of which at least a majority of the outstanding shares or other equity
interests having ordinary voting power for the election of directors or
comparable managers of such Person are owned, directly or indirectly, by the
first Person or one or more Subsidiaries of such first Person.
"TAG-ALONG NOTICE" is defined in Section 3(c)(i).
"THAYER" is defined in the preface.
"THAYER DIRECTORS" is defined in Section 2(a) and 2(b).
"THAYER NOTICE OF ACCEPTANCE" is defined in Section 5(b).
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"THAYER OFFER" is defined in Section 5(b).
"THAYER OFFER PERIOD" is defined in Section 5(b).
"THAYER SHARES" means Stockholder Shares held by the Thayer and
its permitted transferees. Thayer Shares shall cease to be such when they cease
to be Stockholder Shares.
"TRANSFER" means, with respect to any Stockholder Shares, the
gift, sale, assignment, transfer, pledge, hypothecation or other disposition
(whether for or without consideration and whether voluntary, involuntary or by
operation of law) of such Stockholder Shares or any interest therein.
"WARRANT SHARES" means the Common Shares issued in connection
with the exercise of the Stock Purchase Warrant, so long as such Common Shares
continue to be Stockholder Shares.
SECTION 2. VOTING ARRANGEMENTS.
(a) ELECTION OF DIRECTORS. Except as set for in Section 2(b),
each Stockholder agrees that such Person will vote, or cause to be voted, all
voting securities of the Company over which such Person has the power to vote
or direct the voting, and will take all other necessary or desirable action
within such Person's control, and the Company will take all necessary and
desirable actions within its control, to cause the authorized number of
directors for the Company to be established at six directors, and to elect or
cause to be elected to the Board and cause to be continued in such offices as
follows: (i) two individuals designated by Thayer (the "THAYER DIRECTORS"),
(ii) two individuals designated by the Management Stockholders (the "MANAGEMENT
DIRECTORS") and (iii) two individuals who are not employees of the Company or
its Subsidiaries or Affiliates, designated by a nominating committee comprised
of one individual designated by the Management Stockholders and one individual
designated by Thayer (the "INDEPENDENT DIRECTORS"); provided that for so long
as the Board is divided into three classes, the "Class I" directors shall
consist of one Thayer Director and one Independent Director, the "Class II"
directors shall consist of one Thayer Director and one Independent Director and
the "Class III" directors shall consist of two Management Directors.
(b) ADDITIONAL DIRECTORS. Notwithstanding anything herein to the
contrary, in the event that (x) the Board does not approve an Approved Sale and
the Thayer Directors voted in favor of such Approved Sale or (y) the Board does
not vote on whether to approve an Approved Sale within a reasonable period of
time after Thayer requests the Board to approve an Approved Sale, each
Stockholder agrees that such Person will vote, or cause to be voted, all voting
securities of the Company over which such Person has the power to vote or
direct the voting, and will take all other necessary or desirable action within
such Person's control, and the Company will take all necessary and desirable
actions within its control, to cause the authorized number of directors for the
Company and each of its Subsidiaries to be increased from six directors to nine
directors, and to elect or cause to be elected to the Board, and cause to be
continued in such office (for so long as reasonably necessary for the Board to
approve and the Company to consummate such Approved Sale), the three
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additional directors of the Board designated by Thayer (also, the "THAYER
DIRECTORS"); provided, however, that if the Board is then divided into classes,
each Stockholder agrees that such Person will vote, or cause to be voted, all
voting securities of the Company over which such Person has the power to vote
or direct the voting, and will take all other necessary or desirable action
within such Person's control, and the Company will take all necessary and
desirable actions within its control, including if necessary abolishing the
three classes of directors and establishing only one class of directors, to
cause the majority of the directors on the then current Board to consist of
Thayer Directors.
(c) REMOVAL OF DIRECTORS. If at any time Thayer shall notify the
other Stockholders of its desire to remove, with or without cause, any
individual designated by Thayer pursuant to Section 2(a), 2(b) or 2(k) from a
directorship, or if at any time the Management Stockholders shall notify the
other Stockholders of their desire to remove, with or without cause, any
individual designated by the Management Stockholders pursuant to Section 2(a)
above from a directorship, all such Persons so notified will vote, or cause to
be voted, all voting securities of the Company or any Subsidiary of the
Company, as applicable, over which they have the power to vote or direct the
voting, and will take all other necessary or desirable action within such
Person's control, and the Company will take all necessary and desirable actions
within its control, to cause the removal of such director.
(d) VACANCIES. If at any time any director ceases to serve on
the board of directors of the Company or any Subsidiary of the Company (whether
due to resignation, removal or otherwise), then Thayer or the Management
Stockholders, as applicable, shall be entitled to designate a successor
director to fill the vacancy created thereby on the terms and subject to the
conditions of Section 2(a), 2(b) or 2(k), as applicable. Each Stockholder
agrees that he, she or it will vote, or cause to be voted, all voting
securities of the Company or any Subsidiary of the Company over which such
Person has the power to vote or direct the voting, and shall take all such
other actions promptly as shall be necessary or desirable to cause the
successor designated by Thayer or the Management Stockholders, as applicable,
to be elected to fill such vacancy.
(e) RIGHTS UNIMPAIRED. Nothing in this Agreement shall be
construed to impair any rights that the stockholders of the Company or any
Subsidiary of the Company may have to remove any director for cause. No removal
for cause of an individual designated pursuant to this Section 2 shall affect
the right of Thayer or the Management Stockholders, as applicable, to designate
a different individual pursuant to this Section 2 to fill the directorship from
which such individual was removed.
(f) APPOINTMENT OF PROXY. IN ORDER TO SECURE THE OBLIGATIONS OF
EACH AND EVERY MANAGEMENT STOCKHOLDER TO VOTE ALL COMMON SHARES HELD BY SUCH
MANAGEMENT STOCKHOLDER IN ACCORDANCE WITH ALL OF THE PROVISIONS OF SECTION 2(b)
OF THIS AGREEMENT, EACH MANAGEMENT STOCKHOLDER HEREBY IRREVOCABLY CONSTITUTES
AND APPOINTS CARL J. RICKERTSEN AS SUCH MANAGEMENT STOCKHOLDER'S TRUE AND
LAWFUL ATTORNEY, AGENT AND PROXY, WITH FULL POWER OF SUBSTITUTION, TO ATTEND
MEETINGS OF STOCKHOLDERS OF THE COMPANY HELD FROM TIME TO
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TIME, AND TO VOTE ON SUCH MANAGEMENT STOCKHOLDER'S BEHALF AND IN SUCH
STOCKHOLDER'S NAME, PLACE, AND STEAD, OR TO EXECUTE WRITTEN CONSENTS IN LIEU OF
SUCH MEETINGS, THE NUMBER OF VOTES THAT SUCH MANAGEMENT STOCKHOLDER WOULD BE
ENTITLED TO CAST IF ACTUALLY PRESENT OR WITH RESPECT TO WHICH SUCH MANAGEMENT
STOCKHOLDER WOULD BE ENTITLED TO EXECUTE A WRITTEN CONSENT, IN CONNECTION WITH
ANY ELECTION OF DIRECTORS (IN ACCORDANCE WITH SECTION 2(b)) OR ANY APPROVED
SALE (IN ACCORDANCE WITH SECTION 6). THE POWERS GRANTED HEREIN WILL BE DEEMED
TO BE COUPLED WITH AN INTEREST, WILL BE IRREVOCABLE AND WILL SURVIVE THE DEATH,
INCOMPETENCY, DISABILITY OR DISSOLUTION OF ANY MANAGEMENT STOCKHOLDER.
(g) COMMITTEES. The Compensation Committee of the Board shall at
all times grant all awards under the Stock Option Plans. The Compensation
Committee shall consist of four members, two of which shall be Independent
Directors and two of which shall be Thayer Directors. All other committees of
the Board shall at all times consist of at least one Thayer Director.
(h) STOCK PURCHASE WARRANT. Each Stockholder agrees that such
Person will vote, or cause to be voted, all voting securities of the Company
over which such Person has the power to vote or direct the voting, and will
take all other necessary or desirable action within such Person's control, and
the Company will take all necessary and desirable actions within its control,
so that Thayer (or any Person designated by Thayer) may exercise its rights
under the Stock Purchase Warrant pursuant to the terms thereof.
(i) INITIAL THAYER DIRECTORS. Thayer hereby designates Carl J.
Rickertsen as the initial "Class II" Thayer Director and Dr. Paul G. Stern as
the initial "Class I" Thayer Director.
(j) FIDUCIARY DUTIES UNCHANGED. Nothing in this Agreement shall
be construed to limit, change or eliminate any fiduciary duties a director of
the Company or any Subsidiary of the Company may have to the stockholders of
the Company or any Subsidiary of the Company under Delaware law.
(k) ELECTION OF SUBSIDIARIES' DIRECTORS. The Company will take
all necessary and desirable actions within its control to elect or cause to be
elected to the respective boards of directors of each of the Company's domestic
Subsidiaries, and cause to be continued in such offices, at least one Thayer
Director. Thayer hereby designates Carl J. Rickertsen as the initial Thayer
Director for the purposes of this Section 2(k).
SECTION 3. RESTRICTIONS ON TRANSFER.
(a) RESTRICTIONS ON TRANSFER. No holder of Stockholder
Shares may Transfer such Stockholder Shares except in a Permitted Transfer.
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(b) CERTAIN PERMITTED TRANSFERS. Section 3(a) shall not apply to
Transfers ("PERMITTED TRANSFERS") of Stockholder Shares:
(i) to any Affiliate of the holder of such Stockholder Shares,
provided that (x) such Transfers do not violate federal or state securities
laws, and (y) the transferees (other than partners of Thayer Equity Investors
III, L.P.) execute a Joinder Agreement substantially in the form attached
hereto as Exhibit A (a "JOINDER AGREEMENT") and thereby become a party to this
Agreement;
(ii) from a Norton Family Stockholder to Norton pursuant to the
Irrevocable Proxy and Stock Rights Agreement;
(iii) to the Company, subject to the provisions of Section 9,
provided that in no event shall such Transfers occur without the prior written
consent of Thayer if such Transfers (after taking into account all Transfers in
connection with related Co-Redemption Notices as provided in Section 9) would
result in the Management Shares and Thayer Shares, collectively, constituting
less than 51% of the outstanding Common Shares of the Company;
(iv) to Thayer or any Affiliate thereof pursuant to Section
10(a), provided that in no event shall such Transfers occur without the prior
written consent of the holders of at least a majority of the then outstanding
Management Shares if such Transfers would result in the Thayer Shares and
Common Shares issuable in connection with the exercise of a Stock Purchase
Warrant in the aggregate constituting more than 33.3% of the Common Shares of
the Company on a fully diluted basis, provided further that if such Transfers
are to any Affiliate of Thayer, (x) such Transfers do not violate federal or
state securities laws, and (y) such Affiliate executes a Joinder Agreement;
(v) to Thayer or any Affiliate thereof pursuant to Section
10(b), provided that if such Transfers are to an Affiliate of Thayer, (x) such
Transfers do not violate federal or state securities laws, and (y) such
Affiliate executes a Joinder Agreement;
(vi) pursuant to Section 6(b), provided that (x) such Transfers
do not violate federal or state securities laws, and (y) the transferees
execute a Joinder Agreement and thereby become a party to this Agreement
(unless the applicable Block of Shares constituted 85% or more of the Common
Shares then owned by Thayer and its Affiliates (provided that the limited
partners of Thayer Equity Investors III, L.P. shall not be treated as
Affiliates of Thayer for the purposes of this Section 3(b)(vi)) and Thayer
elected in the applicable Management Offer Notice for the transferees not to
execute a Joinder Agreement);
(vii) in a Public Sale, subject to the provisions of Section
3(d), provided that in no event shall such Transfers occur without the prior
written consent of Thayer if such Transfers would result in the Management
Shares and Thayer Shares, collectively, constituting less than 51% of the
outstanding Common Shares of the Company;
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(viii) in a Public Sale, subject to the provisions of Section
3(d), provided that in no event shall such Transfers occur without the prior
written consent of Thayer if (w) such transferor is Bruce M. Bowen or any of
his Affiliates, and such Transfers (combined with all other Transfers pursuant
to this Section 3(b)(viii)(w)) are for more than 20,000 Common Shares in any 3
month period or for more than 80,000 Common Shares, (x) such transferor is JAP
Investment Group, Inc. or any of its Affiliates, and such Transfers (combined
with all other Transfers pursuant to this Section 3(b)(viii)(x)) are for more
than 25,000 Common Shares in any 3 month period or for more than 100,000 Common
Shares, (y) such transferor is Kevin M. Norton or any of his Affiliates, and
such Transfers (combined with all other Transfers pursuant to this Section
3(b)(viii)(y)) are for more than 12,500 Common Shares in any 3 month period or
for more than 50,000 Common Shares or (z) such transferor is Patrick J. Norton,
Jr. or any of his Affiliates, and such Transfers (combined with all other
Transfers pursuant to this Section 3(b)(viii)(z)) are for more than 12,500
Common Shares in any 3 month period or for more than 50,000 Common Shares;
(ix) pursuant to an Approved Sale, subject to the provisions of
Sections 3(c) and 6(b);
(x) incidental to the exercise, conversion or exchange thereof
in accordance with their terms, any combination of shares (including any
reverse stock split) or any recapitalization, reorganization or
reclassification of, or any merger or consolidation involving, the Company;
(xi) from a Management Stockholder to Thayer, any Affiliate
thereof or any Person designated by Thayer, provided that in no event shall
such Transfers occur without the prior written consent of the holders of at
least a majority of the then outstanding Management Shares if such Transfers
would result in the Thayer Shares and Common Shares issuable in connection with
the exercise of a Stock Purchase Warrant in the aggregate constituting more
than 33.3% of the Common Shares of the Company on a fully diluted basis (except
to the extent permitted under Section 3(d)), provided further that if such
Transfers are to an Affiliate of Thayer or any Person designated by Thayer, (x)
such Transfers do not violate federal or state securities laws, and (y) such
Affiliate or any Person designated by Thayer, as applicable, executes a Joinder
Agreement;
(xii) pursuant to Section 3(c), provided that (x) such Transfers
do not violate federal or state securities laws, and (y) if the transferees in
the Transfers to which the tag-along right under Section 3(c) is related
execute a Joinder Agreement, the transferees pursuant to the Transfer pursuant
to this clause (xi) execute a Joinder Agreement and thereby become a party to
this Agreement; and
(xiii) to any Person other than pursuant to a Transfer described
above, subject to the provisions of Sections 3(c) and 6(b), provided that (x)
such Transfers do not violate federal or state securities laws, and (y) the
transferees execute a Joinder Agreement and thereby become a party to this
Agreement (unless such Transfers are by Thayer or any Affiliate thereof of 85%
or more of the Common Shares then owned by Thayer and its
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Affiliates (provided that the limited partners of Thayer Equity
Investors III, L.P. shall not be treated as Affiliates of Thayer for
the purposes of this Section 3(b)(xiii)) Thayer Shares, in which case
such transferees shall only execute a Joinder Agreement if Thayer so
elects).
Any Stockholder Shares transferred pursuant to clause (i), (ii), (iv), (v),
(vi), (x), (xi) or (xiii) above shall continue to be Stockholder Shares for
purposes of this Agreement, any Stockholder Shares transferred pursuant to
clause (iii), (vii), (viii) or (ix) above shall no longer be Stockholder Shares
and hence no longer subject to any of the restrictions set forth herein, and any
Stockholder Shares transferred pursuant to clause (xii) above (x) shall continue
to be Stockholder Shares if the Stockholder Shares transferred in the Transfer
to which the tag-along right under Section 3(c) is related continue to be
Stockholder Shares, and (y) shall no longer be Stockholder Shares if the
Stockholder Shares transferred in the Transfer to which the tag-along right
under Section 3(c) is related cease to be Stockholder Shares.
(c) TAG-ALONG RIGHTS.
(i) Prior to making any Transfer of Stockholder Shares
pursuant to Section 3(b)(ix) or 3(b)(xiii), any holder of Stockholder Shares
proposing to make such a Transfer (for purposes of this Section 3(c), a
"SELLING HOLDER") shall give at least thirty (30) days prior written notice to
each other holder of Stockholder Shares (for purposes of this Section 3(c)
each, an "OTHER HOLDER") and the Company, which notice (for purposes of this
Section 3(c), the "SALE NOTICE") shall identify the type and amount of
Stockholder Shares to be sold (for purposes of this Section 3(c), the "OFFERED
SECURITIES"), describe the terms and conditions of such proposed Transfer, and
identify each prospective transferee. Any of the Other Holders may, within
fifteen (15) days after the receipt of the Sale Notice, give written notice
(each, a "TAG-ALONG NOTICE") to the Selling Holder that such Other Holder
wishes to participate in such proposed Transfer upon the terms and conditions
set forth in the Sale Notice, which Tag-Along Notice shall specify the Common
Shares such Other Holder desires to include in such proposed Transfer;
provided, however, that (1) each Other Holder shall be required, to the extent
applicable, as a condition to being permitted to sell Common Shares pursuant to
Section 3(b)(xiii) and this Section 3(c) in connection with a Transfer of
Offered Securities, to elect to sell Common Shares of the same type and class
and in the same relative proportions as the Common Shares which comprise the
Offered Securities; and (2) to exercise such Person's tag-along rights
hereunder, each Other Holder must agree to make to the transferee the same
representations, warranties, covenants, indemnities and agreements as the
Selling Holder agrees to make in connection with the Transfer of the Offered
Securities (except that in the case of representations and warranties
pertaining specifically to, or covenants made specifically by, the Selling
Holder, the Other Holders shall make comparable representations and warranties
pertaining specifically to (and, as applicable, covenants by) such Persons),
and must agree to bear such Person's pro rata share (which may be joint and
several but shall be based on the value of Common Shares that are Transferred)
of all liabilities to the transferees arising out of representations,
warranties and covenants (other than those representations, warranties and
covenants that pertain specifically to a given Person, who shall bear all of
the liability related thereto), indemnities or other agreements made in
connection with the Transfer. Each Stockholder will bear (x) such Person's own
costs of any sale of Common Shares pursuant to Section 3(b)(xiii) and this
Section 3(c) and (y) such Person's pro rata share (based upon the relative
amount of Common Shares
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sold) of the reasonable costs of any sale of Common Shares pursuant to Section
3(b)(xiii) and this Section 3(c) to the extent such costs are incurred for the
benefit of all selling Stockholders and are not otherwise paid by the acquiring
party.
(ii) If none of the Other Holders gives the Selling
Holder a timely Tag- Along Notice with respect to the Transfer proposed in the
Sale Notice, then the Selling Holder may Transfer such Offered Securities on
the terms and conditions set forth in the Sale Notice to or among any of the
transferees identified (or Affiliates of transferees identified) in the Sale
Notice at any time within ninety days after expiration of the fifteen-day
period for giving Tag-Along Notices with respect to such Transfer. Any such
Offered Securities not Transferred by the Selling Holder during such ninety-day
period will again be subject to the provisions of this Section 3(c) upon a
subsequent Transfer. If one or more Other Holders give the Selling Holder a
timely Tag-Along Notice, then the Selling Holder shall use all reasonable
efforts to obtain the agreement of the prospective transferee(s) to the
participation of the Other Holders in any contemplated Transfer, on the same
terms and conditions as are applicable to the Offered Securities, and no
Selling Holder shall Transfer any of such Person's shares to any prospective
transferee if such prospective transferee(s) declines to allow the
participation of the Other Holders. If the prospective transferee(s) is
unwilling or unable to acquire all of the Offered Securities and all of the
Common Shares to be Transferred by the Other Holders specified in a timely
Tag-Along Notice upon such terms, then the Selling Holder may elect either to
cancel such proposed Transfer or to allocate the maximum number of each class
of Common Shares that the prospective transferees are willing to purchase (the
"ALLOCABLE SHARES") among the Selling Holder and the Other Holders giving
timely Tag-Along Notices as follows (it being understood that the prospective
transferees shall be required to purchase Common Shares of the same class on
the same terms and conditions taking into account the provisions of clause (1)
of Section 3(c)(i), and to consummate such Transfer on those terms and
conditions):
(x) each participating Stockholder (including
the Selling Holder) shall be entitled to sell a number of shares
of Common Shares (not to exceed, for any Other Holder, the
number of shares of such Common Shares identified in such Other
Holder's Tag-Along Notice) equal to the product of (A) the
number of Allocable Shares of such class of Common Shares and
(B) a fraction, the numerator of which is such Stockholder's
Ownership Percentage of such class of Common Shares and the
denominator of which is the aggregate Ownership Percentage for
all participating Stockholders of such class of Common Shares;
and
(y) if after allocating the Allocable Shares of
any class of Common Shares to such Stockholders in accordance
with clause (x) above, there are any Allocable Shares of such
class that remain unallocated, then they shall be allocated (in
one or more successive allocations on the basis of the
allocation method specified in clause (x) above) among the
Selling Holder and each such Other Holder that has elected in
its Tag-Along Notice to sell a greater number of shares of such
class of Common Shares than previously has been allocated to
such Person pursuant to clause (x) and this clause (y) (all of
whom (but no others) shall, for purposes of clause (x) above, be
deemed to be the participating Stockholders) until all such
Allocable Shares have been allocated in accordance with this
clause (y).
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(d) PUBLIC THAYER OFFER. Notwithstanding anything herein to
the contrary, prior to any holder of Management Shares transferring such
Management Shares pursuant to Section 3(b)(vii) or 3(b)(viii), such holder
shall give at least three business days prior written notice to Thayer, which
notice shall identify the type, amount and price per share of the Management
Shares to be sold. Thayer may, within such three business day period, give
written notice to such holder that Thayer and/or any Person designated by
Thayer wishes to purchase all or a portion of such Management Shares at such
price. If Thayer (or any Person designated by Thayer) elects to purchase all or
a portion of such Management Shares by giving a timely notice to such holder,
such Transfer to Thayer or any Person designated by Thayer, applicable, shall
occur within 15 business days after the date the applicable notice was sent to
Thayer pursuant to the terms and conditions set forth in Section 3(b)(xi),
provided that if the holder of Management Shares sent the notice pursuant to
Section 3(b)(viii), the 33.3% limitation regarding Thayer Shares and Common
Shares issuable upon the exercise of a Stock Purchase Warrant shall be waived.
If Thayer does not elect to purchase all of such Management Shares (or a
Transfer of such Management Shares pursuant to Section 3(b)(xi) does not occur
within the applicable 15 business day period despite the reasonable best
efforts of such holder of Management Shares), then such holder of Management
Shares may Transfer such remaining Management Shares at a price per share no
less than 95% of the price per share set forth in the applicable notice at any
time within ninety days after such holder sent the notice of such proposed
Transfer to Thayer. Any Management Shares not transferred by such holder during
such ninety-day period shall again be subject to the provisions of this Section
3(d) upon a subsequent Transfer pursuant to Section 3(b)(vii) or 3(b)(viii).
(e) TRANSFERS IN VIOLATION OF THIS AGREEMENT. Any Transfer or
attempted Transfer of any Stockholder Shares in violation of this Agreement
shall be void, and the Company shall not be obligated to record such Transfer
on its books or treat any purported transferee of such Common Shares as the
owner of such Common Shares for any purpose.
SECTION 4. LEGENDS.
(a) STOCKHOLDERS AGREEMENT LEGEND. The certificates
representing Stockholder Shares shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS AGREEMENT DATED AS OF OCTOBER 23, 1998 AMONG MLC HOLDINGS,
INC. AND CERTAIN OF ITS STOCKHOLDERS, A COPY OF WHICH MAY BE OBTAINED
WITHOUT CHARGE BY THE HOLDER HEREOF AT THE PRINCIPAL PLACE OF BUSINESS
OF MLC HOLDINGS, INC. DISPOSITION OF THIS CERTIFICATE OR THE SECURITIES
REPRESENTED HEREBY OR ANY RIGHTS OR INTERESTS THEREIN IN VIOLATION OF
SUCH STOCKHOLDERS AGREEMENT SHALL BE NULL AND VOID.
Each holder of Stockholder Shares shall provide the Company promptly after the
date hereof (and in no event later than 14 days after the date hereof) with his
or her certificates representing Stockholder Shares so that such legend can be
placed thereon.
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(b) REMOVAL OF LEGENDS. Whenever the restrictions described above
cease to be applicable to any Stockholder Shares, the holder thereof shall be
entitled to receive from the Company, without expense to the holder, a new
certificate not bearing a legend stating such restriction.
SECTION 5. PREEMPTIVE RIGHTS. The Company may authorize, issue,
sell or enter into any agreement providing for the issuance or sale (contingent
or otherwise) of equity securities (including, without limitation, the Common
Stock) only in accordance with the provisions of this Section 5.
(a) RESTRICTIONS. On or prior to the six month anniversary of the
date hereof, except in the case of Excluded Securities, without Thayer's prior
written consent, the Company shall not issue, sell or exchange, agree to issue,
sell or exchange, or reserve or set aside for issuance, sale or exchange, any
(i) Common Shares, (ii) any debt security of the Company which by its terms is
convertible into or exchangeable for any equity security of the Company or has
an equity kicker or other participation rights, (iii) any security of the
Company that is a combination of debt and equity or (iv) any option, warrant or
other right to subscribe for, purchase or otherwise acquire any equity security
or any such debt security of the Company (subsections (i) through (iv),
collectively, the "NEW SECURITIES").
(b) THAYER OFFER. After the six month anniversary of the date
hereof, but on or prior to the second anniversary of the date hereof, except in
the case of Excluded Securities or as set forth in Section 5(g), without
Thayer's prior written consent, the Company shall not issue, sell or exchange,
agree to issue, sell or exchange, or reserve or set aside for issuance, sale or
exchange, any New Securities unless in each case, the Company shall have first
offered to sell all of such New Securities to Thayer, at a price and on such
other terms as shall have been specified by the Company in writing delivered to
Thayer at least 15 business days prior to the proposed consummation of the sale
of the New Securities (the "THAYER Offer"), which Thayer Offer by its terms
shall remain open and irrevocable for a period of 10 business days from the date
it is delivered by the Company (the "THAYER OFFER PERIOD"). Notice of Thayer's
intention to accept, in whole or in part, the Thayer Offer shall be in writing
signed and delivered to the Company prior to the end of the Thayer Offer Period,
setting forth such portion of the New Securities as Thayer elects to purchase
(the "THAYER NOTICE OF ACCEPTANCE").
(c) STOCK OFFER. After the second anniversary of the date hereof,
except in the case of Excluded Securities or as set forth in Section 5(g),
without Thayer's prior written consent, the Company shall not issue, sell or
exchange, agree to issue, sell or exchange, or reserve or set aside for
issuance, sale or exchange, any New Securities unless in each case, the Company
shall have first offered to sell to Thayer a portion of such New Securities
equal to Thayer's Ownership Percentage, at a price and on such other terms as
shall have been specified by the Company in writing delivered to Thayer at least
15 business days prior to the proposed consummation of the sale of the New
Securities (the "STOCK OFFER"), which Stock Offer by its terms shall remain open
and irrevocable for a period of 10 business days from the date it is delivered
by the Company (the "STOCK OFFER PERIOD"). Notice of Thayer's intention to
accept, in whole or in part, the Stock Offer shall be in
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writing and delivered to the Company prior to the end of the Stock Offer
Period, setting forth such portion of the New Securities as Thayer elects to
purchase (the "STOCK NOTICE OF ACCEPTANCE").
(d) REFUSED SECURITIES. The Company shall have three months from
the expiration of the Thayer Offer Period or the Stock Offer Period, as
applicable, to sell all or any of such New Securities which Thayer has not
purchased pursuant to Section 5(b) or 5(c), as applicable (the "REFUSED
SECURITIES"), to any other Person(s), but only at a price no less than 95% of
the price per share set forth in the Thayer Offer or the Stock Offer, as
applicable, and upon such other terms and conditions, which are no more
favorable to such other Person(s) or less favorable to the Company than those
set forth in the Thayer Offer or the Stock Offer, as applicable. Upon the
closing, which shall include full payment to the Company, of the sale to such
other Person(s) of all the Refused Securities, Thayer shall purchase from the
Company, and the Company shall sell to Thayer, the New Securities in respect of
which a Thayer Notice of Acceptance or Stock Notice of Acceptance, as
applicable, was delivered to the Company by Thayer at the terms specified in the
Thayer Offer or the Stock Offer, as applicable.
(e) EXCLUSIONS. In each case, any New Securities not purchased by
Thayer or any other Person(s) within three months after the expiration of the
Thayer Offer Period or the Stock Offer Period, as applicable, in accordance with
Section 5 may not be sold or otherwise disposed of until they are again offered
to Thayer under the procedures specified in this Section 5.
(f) EXCLUDED SECURITIES. The rights of Thayer under this Section
5 shall not apply to the following securities (the "EXCLUDED SECURITIES"):
(i) Common Shares issued in connection with, or
upon exercise of, Options or the Stock Purchase Warrant; and
(ii) Common Shares issued incidental to the
exercise, conversion or exchange thereof in accordance with
their terms, any combination of shares (including any reverse
stock split) or any recapitalization, reorganization or
reclassification of, or any merger, acquisition or consolidation
involving, the Company.
(g) 33.3% LIMITATION. Notwithstanding anything herein to the
contrary, without the prior written consent of the holders of at least a
majority of the then outstanding Management Shares, Thayer shall not purchase
from the Company pursuant to this Section 5 (and the Company need not sell or
offer to sell to Thayer pursuant to this Section 5) any shares of New
Securities which would result in the Thayer Shares and Common Shares issuable
in connection with the exercise of a Stock Purchase Warrant in the aggregate
constituting more than 33.3% of the Common Shares of the Company on a fully
diluted basis; provided, however if both (x) the proposed sale, issuance or
exchange of such New Securities shall occur before the first anniversary of the
date hereof, and (y) the price per share of the New Securities in such proposed
sale, issuance or exchange is equal to or less than $9.00 (as such amount is
proportionately adjusted for stock splits, stock combinations, stock dividends
and recapitalizations affecting the Common Stock after the date hereof), then
Thayer
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shall retain all rights granted in this Section 5 as if this Section
5(g) were not included in this Agreement.
SECTION 6. QUALIFIED SALE OF THE COMPANY.
(a) APPROVED SALE. Subject to Section 6(b), if Thayer
approves a Qualified Sale of the Company (an "APPROVED SALE"), Thayer may
notify the Company and the Stockholders of Thayer's election to exercise its
rights under this Section 6, and the other holders of Stockholder Shares (the
"OTHER STOCKHOLDERS") shall consent to and raise no objections against such
Approved Sale (and shall waive any rights of appraisal arising in connection
therewith) and shall fully cooperate with and take all necessary and desirable
actions in connection with the consummation of such Approved Sale, including
without limitation (i) executing a purchase and sale agreement and any other
agreement reasonably necessary to effectuate such Approved Sale in the form to
be entered into by Thayer, (ii) amending the Company's or any of its
Subsidiaries' Certificate of Incorporation or by-laws, (iii) merging, combining
or consolidating the Company with any other Person, (iv) reorganizing or
recapitalizing the Company, (v) exchanging or splitting stock of the Company,
(vi) selling, leasing or exchanging all or substantially all of the property
and assets of the Company and its Subsidiaries on a consolidated basis or (vii)
if such Stockholder is not an "accredited investor" (within the meaning of Rule
501(a) of the Securities Act), at the request of Thayer, appoint a purchaser
representative (as such term is defined in Rule 501 under the Securities Act)
approved by Thayer. If the Approved Sale is structured as a sale of stock, the
Other Stockholders shall agree to sell all of their shares of Common Stock and
rights to acquire shares of Common Stock on the terms and conditions approved
by Thayer. The obligations of the Other Stockholders with respect to any
Approved Sale are subject to the conditions that (x) the Approved Sale is not
to an Affiliate of Thayer, and (y) upon the consummation of such Approved Sale,
each Stockholder shall receive the same form and amount of consideration per
Common Share, or if any Stockholders are given an option as to the form and
amount of consideration to be received, each Stockholder shall be given the
same option; provided, however if Thayer then owns a Stock Purchase Warrant,
Thayer shall elect, in its sole discretion, to either (A) exercise the Stock
Purchase Warrant prior to the consummation of the Approved Sale and participate
in such sale as a holder of such class of Common Stock, or (B) upon the
consummation of the Approved Sale, receive in exchange for such Stock Warrant
Purchase consideration equal to the amount determined by multiplying (1) the
same amount of consideration per share of a class of Common Stock received by
holders of such class of Common Stock in connection with the Approved Sale less
the exercise price per share of such class of Common Stock of the Stock
Purchase Warrant to acquire such class of Common Stock by (2) the number of
shares of such class of Common Stock represented by the Stock Purchase Warrant.
Notwithstanding anything herein to the contrary, no Approved Sale shall be
consummated until the Company receives, at the Company's expense, a "fairness
opinion" from an investment banking firm reasonably acceptable to the Company.
(b) MANAGEMENT OFFER. Notwithstanding anything in Section
3(b)(ix), 3(b)(xiii) or 6(a) to the contrary, at least 20 days prior to Thayer
transferring a Block of Shares pursuant to Section 3(b)(xiii) or approving a
Qualified Sale of the Company, Thayer shall deliver a written notice (a
"MANAGEMENT OFFER NOTICE") to all Management Stockholders. The Management Offer
Notice shall disclose in reasonable detail the proposed Transfer of a Block of
Shares pursuant to
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Section 3(b)(xiii) or Qualified Sale of the Company, as applicable, and the
prospective transferee(s) (if known). The Management Stockholders, may elect
for any of them and/or any other Person(s) (including the Company) chosen by
the Management Stockholders in their sole discretion (collectively, the
"BUYERS") to purchase all (but not less than all) of the Thayer Shares at the
price and on the terms specified in the Management Offer Notice by delivering
written notice of such election (a "MANAGEMENT REPLY") to Thayer as soon as
practical but in any event within 20 days after delivery of the Management
Offer Notice. The Management Reply shall be signed by each Management
Stockholder (including those who elect not to purchase Thayer Shares), and
shall include (x) evidence reasonably satisfactory to Thayer that the Buyers
shall have within 60 days after the delivery of the Management Offer Notice
sufficient funds to purchase such Thayer Shares, and (y) representations and
warranties from each Management Stockholder that (X) the Buyers shall use
reasonable best efforts to consummate such purchase within 60 days after the
delivery of the Management Offer Notice, and (Y) the Buyers shall have within
60 days after the delivery of the Management Offer Notice sufficient funds to
purchase such Thayer Shares. If the Management Stockholders elect to purchase
the Thayer Shares, such purchase shall be consummated as soon as practical
after the delivery of the Management Reply, but in any event within 60 days
after the delivery of the Management Offer Notice. If either:
(A) Thayer does receive a Management Reply signed by each
Management Stockholder within 20 days after delivery of the Management
Offer Notice;
(B) Thayer is not reasonably satisfied within 20 days
after delivery of the Management Offer Notice that the Buyers will have
within 60 days after the delivery of the Management Offer Notice
sufficient funds to purchase such Thayer Shares;
(C) the purchase of the Thayer Shares pursuant to the
Management Reply is not consummated within 60 days after the delivery
of the Management Offer Notice; or
(D) after 20 days after delivery of the Management Offer
Notice but before 60 days after delivery of the Management Offer
Notice, Thayer gives written notice to the Management Stockholders that
Thayer reasonably believes that despite reasonable best efforts by
Thayer to consummate the purchase the Buyers will not be unable to
consummate the purchase within 60 days after the delivery of the
Management Offer Notice and the Management Stockholders are unable to
provide Thayer reasonable assurance to the contrary within 5 business
days after receiving such notice by Thayer,
then Thayer may, within 210 days after the delivery of the Management Offer
Notice, Transfer such Block of Shares pursuant to Section 3(b)(xiii) or approve
a Qualified Sale of the Company pursuant to Section 6(a), as applicable, at a
price no less than 95% of the price per share specified in the Management Offer
Notice and on other terms no more favorable to the transferees thereof than
offered to the Management Stockholders in the Management Offer Notice. If such
Transfer of such Block of Shares or Qualified Sale of the Company, as
applicable, is not consummated within 210 days after the delivery of the
Management Offer, Thayer shall have to deliver another Management Offer Notice
under this Section 6(b) prior to any subsequent Transfer of a Block of Shares
pursuant to Section 3(b)(xiii) or Qualified Sale of the Company, as applicable.
The Management
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Stockholders shall be jointly and severally liable to Thayer for the breach of
any representation or warranty set forth in the Management Reply.
SECTION 7. REGISTRATION RIGHTS.
(a) SHELF REGISTRATION. Thayer shall have the right at any
time to demand that the Company include any and all Stockholder Shares owned by
Thayer or its Affiliates in the Company's shelf registration statement in
effect as of the date hereof (the "SHELF").
(b) DEMAND REGISTRATION.
(i) So long as any Thayer Shares are not included in
the Shelf and/or the Shelf is not then effective, Thayer shall have the right
(the "DEMAND RIGHT") to request registration under the Securities Act of all or
any portion of the Registrable Securities held by Thayer and its Affiliates (in
each case, referred to herein as the "REQUESTING HOLDERS") by delivering a
written notice to the Company, which notice identifies the Requesting Holders
and specifies the number of Registrable Securities to be included in such
registration (the "REGISTRATION REQUEST"). The Company will give prompt written
notice of such Registration Request (the "REGISTRATION NOTICE") to all other
Stockholders and will thereupon use its reasonable best efforts to effect the
registration (a "DEMAND REGISTRATION") under the Securities Act on any form
available to the Company of:
(x) the Registrable Securities requested to be
registered by the Requesting Holders; and
(y) all other Registrable Securities which the
Company has received a written request from another Stockholder
to register within 30 days after the Registration Notice is
given.
The Company shall be obligated to effect three Demand Registrations.
(ii) A registration undertaken by the Company at the
request of the Requesting Holders will not count as a Demand Registration if,
pursuant to the applicable Demand Right, the Requesting Holders fail to
register and sell at least 50% of the Registrable Securities requested to be
included in such registration by the Requesting Holders.
(iii) If the sole or managing underwriter of a Demand
Registration advises the Company in writing that in its opinion the number of
Registrable Securities and other securities requested to be included exceeds
the number of Registrable Securities and other securities which can be sold in
such offering without adversely affecting the distribution of the securities
being offered, the price that will be paid in such offering or the
marketability thereof, the Company will include in such registration the
greatest number of Registrable Securities proposed to be registered by the
Stockholders which in the opinion of such underwriter can be sold in such
offering without adversely affecting the distribution of the securities being
offered, the price that will be paid in such offering or the marketability
thereof, ratably among the Stockholders proposing to register based on each
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such Stockholder's Ownership Percentage; provided, however, that the Requesting
Holders shall have the right to receive priority over all other Stockholders in
the third Demand Registration.
(c) INCIDENTAL REGISTRATION.
(i) At any time the Company proposes to register any
Common Shares under the Securities Act (other than pursuant to Section 7(b) or
in connection with a business acquisition or combination or an employee benefit
plan), whether in connection with a primary or secondary offering, the Company
will give written notice to each Stockholder at least thirty (30) days prior to
the initial filing of such Registration Statement with the SEC of its intent to
file such Registration Statement and of such Stockholder's rights under this
Section 7(c). Upon the written request of any Stockholder made within twenty
(20) days after any such notice is given (which request shall specify the
Registrable Securities intended to be disposed of by such Stockholder), the
Company will use its reasonable best efforts to effect the registration (an
"INCIDENTAL REGISTRATION") under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the holders
thereof; provided, however, that if, at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
Registration Statement filed in connection with such Incidental Registration
(each an "INCIDENTAL REGISTRATION STATEMENT"), the Company shall determine for
any reason not to register or to delay registration of such securities, the
Company may, at its election, give written notice of such determination to each
Stockholder and, thereupon, (x) in the case of a determination not to register,
the Company shall be relieved of its obligation to register any Registrable
Securities under this Section 7(c) in connection with such registration (but
not from its obligation to pay the expenses incurred in connection therewith),
and (y) in the case of a determination to delay registration, the Company shall
be permitted to delay registering any Registrable Securities under this Section
7(c) during the period that the registration of such other securities is
delayed.
(ii) If the sole or managing underwriter of a
registration advises the Company in writing that in its opinion the number of
Registrable Securities and other securities requested to be included exceeds
the number of Registrable Securities and other securities which can be sold in
such offering without adversely affecting the distribution of the securities
being offered, the price that will be paid in such offering or the
marketability thereof, the Company will include in such registration the
Registrable Securities and other securities of the Company in the following
order of priority:
(x) first, the greatest number of securities of
the Company proposed to be included in such registration by the
Company for its own account which in the opinion of such
underwriter can be so sold; and
(y) second, after all securities that the Company
proposes to register for its own account have been included, the
greatest amount of Registrable Securities requested to be
registered by the Stockholders of which in the opinion of such
underwriter can be sold in such offering without adversely
affecting the distribution of the securities being offered, the
price that will be paid in such offering
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or the marketability thereof, ratably among the Stockholders
proposing to register based on each such Stockholder's Ownership
Percentage.
(d) HOLDBACK AGREEMENTS.
(i) Each Stockholder agrees that if requested in
connection with an underwritten offering made pursuant to this Section 7 by the
managing underwriter or underwriters of such underwritten offering, such
Stockholder will not effect any Public Sale or distribution of any of the
securities being registered or any securities convertible or exchangeable or
exercisable for such securities (except as part of such underwritten offering),
during the period beginning 10 days prior to, and ending 180 days after, the
closing date of each underwritten offering made pursuant to such Registration
Statement (or for such shorter period as to which the managing underwriter or
underwriters may agree).
(ii) The Company agrees not to effect any Public Sale
or distribution of its Common Stock, or any securities convertible into or
exchangeable or exercisable for such Common Stock, during the seven days prior
to and during the 180-day period beginning on the effective date of any
underwritten Demand Registration (or for such shorter period as to which the
managing underwriter or underwriters may agree), except as part of such Demand
Registration or in connection with any employee benefit or similar plan, any
dividend reinvestment plan, or a business acquisition or combination.
(e) REGISTRATION AND MAINTENANCE PROCEDURES. In connection
with the registration of any Registrable Securities and/or the maintenance of
the Shelf and/or any other Registration Statement, the Company shall, to the
extent applicable, at its own expense, as promptly as reasonably possible:
(i) Prepare and file with the SEC a
Registration Statement or Registration Statements on a form
available for the sale of the Registrable Securities by the
holders thereof in accordance with the intended method of
distribution thereof, and use its reasonable best efforts to
cause each such Registration Statement to become effective;
(ii) Prepare and file with the SEC such
amendments and post-effective amendments to each Registration
Statement as may be necessary to keep such Registration
Statement continuously effective for a period ending on the
earlier of (x) 90 days from the effective date and (y) such time
as all of such securities have been disposed of in accordance
with the intended method of disposition thereof; and cause the
related prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule
424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities
Act, the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to it with respect to the
disposition of all securities covered by such Registration
Statement as so amended or in such prospectus as so
supplemented;
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(iii) Notify the selling Stockholders promptly
(but in any event within two business days), and confirm such
notice in writing, (A) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (B) of the
issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus,
(C) if at any time when a prospectus is required by the
Securities Act to be delivered in connection with sales of
Registrable Securities the Company becomes aware that the
representations and warranties of the Company contained in any
agreement (including any underwriting agreement) contemplated by
Section 7(e)(viii) cease to be true and correct in all material
respects, (D) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption
from qualification of a Registration Statement or any of the
Registrable Securities for offer or sale in any jurisdiction,
(E) if the Company becomes aware of the happening of any event
that makes any statement made in such Registration Statement or
related prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect
or that requires the making of any changes in such Registration
Statement, prospectus or documents so that, in the case of such
Registration Statement, it will not contain any untrue statement
of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the prospectus, it will
not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(iv) Use its reasonable best efforts to prevent
the issuance of any order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending
the use of a prospectus or suspending the qualification (or
exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, and, if any such order
is issued, to obtain the withdrawal of any such order at the
earliest possible moment;
(v) Deliver to each selling Stockholder and the
underwriters, if any, without charge, as many copies of the
prospectus or prospectuses (including each form of prospectus)
and each amendment or supplement thereto as such Persons may
reasonably request; and, the Company hereby consents to the use
of such prospectus and each amendment or supplement thereto by
each of the selling Stockholders and the underwriters or agents,
if any, in connection with the offering and sale of the
Registrable Securities covered by such prospectus and any
amendment or supplement thereto;
(vi) Prior to any public offering of Registrable
Securities, to use its reasonable best efforts to register or
qualify, and cooperate with the selling Stockholders, the
underwriters, if any, the sales agents and their respective
counsel
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in connection with the registration or qualification (or
exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities
or "blue sky" laws of such jurisdictions within the United
States as necessary;
(vii) Upon the occurrence of any event
contemplated by Section 7(e)(iii)(E), as promptly as practicable
prepare a supplement or post-effective amendment to the
Registration Statement or a supplement to the related prospectus
or any document incorporated or deemed to be incorporated
therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the
Registrable Securities being sold thereunder, such prospectus
will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(viii) Enter into an underwriting agreement in
form, scope and substance as is customary in underwritten
offerings and take all such other actions as are reasonably
requested by the managing or sole underwriter in order to
expedite or facilitate the registration or the disposition of
such Registrable Securities, and in such connection, (A) make
such representations and warranties to the underwriters, with
respect to the business of the Company and its Subsidiaries, and
the Registration Statement, prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein,
in each case, in form, substance and scope as are customarily
made by issuers to underwriters in underwritten offerings, and
confirm the same if and when requested; (B) obtain opinions of
counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters), addressed to the
underwriters covering the matters customarily covered in
opinions requested in underwritten offerings and such other
matters as may be reasonably requested by underwriters; (C)
obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of
any Subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data are,
or are required to be, included in the Registration Statement),
addressed to each of the underwriters, such letters to be in
customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with
underwritten offerings; and (D) if an underwriting agreement is
entered into, the same shall contain indemnification provisions
and procedures no less favorable to the Stockholders than those
set forth in Section 7(g) (or such other provisions and
procedures acceptable to holders of a majority of the
Registrable Securities covered by such Registration Statement
and the managing underwriters or agents) with respect to all
parties to be indemnified pursuant to Section 7(g). The above
shall be done at each closing under such underwriting agreement,
or as and to the extent required thereunder;
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(ix) Comply with all applicable rules and
regulations of the SEC and make generally available to its
Stockholders earnings statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder (or
any similar rule promulgated under the Securities Act) no later
than 45 days after the end of any 12-month period (or 90 days
after the end of any 12-month period if such period is a fiscal
year) (x) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a firm
commitment or best efforts underwritten offering and (y) if not
sold to underwriters in such an offering, commencing on the
first day of the first fiscal quarter of the Company after the
effectiveness of a Registration Statement, which statements
shall cover said 12- month periods; and
(x) Use its reasonable best efforts to cause all
such Registrable Securities covered by such Registration
Statement to be designated as a NASDAQ "national market system
security" within the meaning of Rule 11Aa2-1 or listed on the
principal securities exchange on which Common Stock is then
listed (if any).
The Company may require each Stockholder as to which any registration is being
effected to furnish to the Company such information regarding such Stockholder
and the distribution of such Registrable Securities as the Company may, from
time to time, reasonably request in writing; provided that such information
shall be used only in connection with such registration. The Company may exclude
from such registration the Registrable Securities of any Stockholder who
unreasonably fails to furnish such information promptly after receiving such
request. Each Stockholder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
7(e)(iii)(B), 7(e)(iii)(D) or 7(e)(iii)(E), such Stockholder will forthwith
discontinue disposition of such Registrable Securities covered by such
Registration Statement or prospectus until such Stockholder's receipt of the
copies of the supplemented or amended prospectus contemplated by Section 7(e),
or until such Stockholder is advised in writing by the Company that the use of
the applicable prospectus may be resumed, and has received copies of any
amendments or supplements thereto.
(f) REGISTRATION EXPENSES. All fees and expenses incident to
the performance of or compliance the Company with the provisions of Section 7
shall be borne by the Company, whether or not any Registration Statement is
filed or becomes effective, including, without limitation, (i) all registration
and filing fees (including, without limitation, fees and expenses of compliance
with state securities or "blue sky" laws), (ii) reasonable messenger, telephone
and delivery expenses, (iii) fees and disbursements of counsel for the Company,
(iv) fees and disbursements of all independent certified public accountants
referred to in Section 7(e)(viii), (v) underwriters' fees and expenses
(excluding discounts, commissions, or fees of underwriters, selling brokers,
dealer managers or similar securities industry professionals relating to the
distribution of the Registrable Securities, which shall be paid by the selling
stockholders), (vi) Securities Act liability insurance, if the Company so
desires such insurance, (vii) internal expenses of the Company, (viii) the
expense of any annual audit, (ix) the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange,
and (x) the fees and expenses of any Person, including special experts,
retained by the Company. In connection with any
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Demand Registration or Incidental Registration hereunder, the Company shall
reimburse the holders of the Registrable Securities being registered in such
registration for the reasonable fees and disbursements of not more than one
counsel (together with appropriate local counsel) chosen by Thayer, if pursuant
to a Demand Registration, or the Company, in all other cases, and other
reasonable out-of-pocket expenses of the Stockholders incurred in connection
with the registration of the Registrable Securities.
(g) INDEMNIFICATION; CONTRIBUTION.
(i) The Company shall, without limitation as to
time, indemnify and hold harmless, to the full extent permitted by law, each
Stockholder, the officers, directors, members, agents and employees of each of
them, each Person who controls each such Person (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act), the officers,
directors, agents and employees of each such controlling person and any
financial or investment adviser (each, an "INDEMNIFIED STOCKHOLDER"), to the
fullest extent lawful, from and against any and all losses, claims, damages,
liabilities, actions or proceedings (whether commenced or threatened) reasonable
costs (including, without limitation, reasonable costs of preparation and
reasonable attorneys' fees) and reasonable expenses (including reasonable
expenses of investigation) (collectively, "LOSSES"), as incurred, arising out of
or based upon any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, prospectus or form of prospectus or in
any amendment or supplements thereto or in any preliminary prospectus, or
arising out of or based upon any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except to the extent, but only to the extent, that such untrue or
alleged untrue statement is contained in, or such omission or alleged omission
is required to be contained in, any information so furnished in writing by the
Company to such Stockholder expressly for use in such Registration Statement or
prospectus and that such statement or omission was reasonably relied upon by
such Stockholder in preparation of such Registration Statement, prospectus or
form of prospectus; provided, however, that the Company shall not be liable in
any such case to the extent that the Company has furnished in writing to such
Stockholder within a reasonable period of time prior to the filing of any such
Registration Statement or prospectus or amendment or supplement thereto
information expressly for use in such Registration Statement or prospectus or
any amendment or supplement thereto which corrected or made not misleading,
information previously furnished to such Stockholder, and such Stockholder
failed to include such information therein; provided, further, however, that the
Company shall not be liable to any Person who participates as an underwriter in
the offering or sale of Registrable Securities or any other Person, if any, who
controls such underwriter(s) within the meaning of the Securities Act to the
extent that any such Losses arise out of or are based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in any
preliminary prospectus if (A) such Person failed to send or deliver a copy of
the prospectus with or prior to the delivery of written confirmation of the sale
by such Person to the Person asserting the claim from which such Losses arise,
(B) the prospectus would have corrected such untrue statement or alleged untrue
statement or such omission or alleged omission, and (C) the Company has complied
with its obligations under Section 7(e)(iii). Each indemnity and reimbursement
of costs and expenses shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Stockholder.
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<PAGE> 30
(ii) In connection with any Registration Statement in
which a Stockholder is participating, such Stockholder, or an authorized
officer of such Stockholder, shall furnish to the Company in writing such
information as the Company reasonably requests for use in connection with any
Registration Statement or prospectus and agrees, severally and not jointly, to
indemnify, to the full extent permitted by law, the Company, its directors,
officers, agents and employees, each Person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such controlling
persons (each, an "INDEMNIFIED COMPANY", and together with the Indemnified
Stockholders, the "INDEMNIFIED PARTIES"), from and against all Losses, as
incurred, arising out of or based upon any untrue or alleged untrue statement
of a material fact contained in any Registration Statement, prospectus or form
of prospectus or in any amendment or supplements thereto or in any preliminary
prospectus, or arising out of or based upon any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, except to the extent, but only to the
extent, that such untrue or alleged untrue statement is contained in, or such
omission or alleged omission is required to be contained in, any information so
furnished in writing by such Stockholder to the Company expressly for use in
such Registration Statement or prospectus and that such statement or omission
was reasonably relied upon by the Company in preparation of such Registration
Statement, prospectus or form of prospectus; provided, however, that such
Stockholder shall not be liable in any such case to the extent that such
Stockholder has furnished in writing to the Company within a reasonable period
of time prior to the filing of any such Registration Statement or prospectus or
amendment or supplement thereto information expressly for use in such
Registration Statement or prospectus or any amendment or supplement thereto
which corrected or made not misleading, information previously furnished to the
Company, and the Company failed to include such information therein. In no
event shall the liability of any selling Stockholder hereunder be greater in
amount than the after-tax dollar amount of the proceeds (net of payment of all
expenses) received by such Stockholder upon the sale of the Registrable
Securities giving rise to such indemnification obligation. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of such Indemnified Company.
(iii) Any Indemnified Party shall give prompt notice to
the party or parties from which such indemnity is sought (the "INDEMNIFYING
PARTIES") of the commencement of any action, suit, proceeding or investigation
or written threat thereof (a "PROCEEDING") with respect to which such
Indemnified Party seeks indemnification or contribution pursuant hereto;
provided, however, that the failure to so notify the Indemnifying Parties shall
not relieve the Indemnifying Parties from any obligation or liability except to
the extent that the Indemnifying Parties have been prejudiced by such failure.
The Indemnifying Parties shall have the right, exercisable by giving written
notice to an Indemnified Party promptly after the receipt of written notice
from such Indemnified Party of such Proceeding, to assume, at the Indemnifying
Parties' expense, the defense of any such Proceeding, with counsel reasonably
satisfactory to such Indemnified Party; provided, however, that an Indemnified
Party or Indemnified Parties (if more than one such Indemnified Party is named
in any Proceeding) shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or
Indemnified Parties unless: (x) the Indemnifying Parties agree to pay such fees
and expenses; (y) the Indemnifying Parties fail promptly to assume the defense
of such Proceeding or fail to employ counsel reasonably satisfactory to such
Indemnified Party or
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<PAGE> 31
Indemnified Parties; or (z) the named parties to any such Proceeding (including
any impleaded parties) include both such Indemnified Party or Indemnified
Parties and the Indemnifying Parties, and there may be one or more defenses
available to such Indemnified Party or Indemnified Parties that are different
from or additional to those available to the Indemnifying Parties, in which
case, if such Indemnified Party or Indemnified Parties notifies the
Indemnifying Parties in writing that it elects to employ separate counsel at
the expense of the Indemnifying Parties, the Indemnifying Parties shall not
have the right to assume the defense thereof and such counsel shall be at the
expense of the Indemnifying Parties, it being understood, however, that, unless
there exists a conflict among Indemnified Parties, the Indemnifying Parties
shall not, in connection with any one such Proceeding or separate but
substantially similar or related Proceedings in the same jurisdiction, arising
out of the same general allegations or circumstances, be liable for the fees
and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for such Indemnified Party or
Indemnified Parties. Whether or not such defense is assumed by the Indemnifying
Parties, such Indemnifying Parties or Indemnified Party or Indemnified Parties
will not be subject to any liability for any settlement made without its or
their consent (but such consent will not be unreasonably withheld). The
Indemnifying Parties shall not consent to entry of any judgment or enter into
any settlement which (A) provides for other than monetary damages without the
consent of the Indemnified Party or Indemnified Parties (which consent shall
not be unreasonably withheld or delayed) or (B) does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Parties of a release, in form and substance
satisfactory to the Indemnified Party or Indemnified Parties, from all
liability in respect of such Proceeding for which such Indemnified Party would
be entitled to indemnification hereunder.
(iv) If the indemnification provided for in this
Section 7(g) is unavailable to an Indemnified Party or is insufficient to hold
such Indemnified Party harmless for any Losses in respect of which this Section
7(g) would otherwise apply by its terms, then each applicable Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall have a joint and
several obligation to contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of and relative benefit to the
Indemnifying Party, on the one hand, and such Indemnified Party, on the other
hand, in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The
relative fault of such Indemnifying Party, on the one hand, and Indemnified
Party, on the other hand, shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been taken by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent any such
action, statement or omission. The amount paid or payable by a party as a
result of any Losses shall be deemed to include any legal or other fees or
expenses incurred by such party in connection with any Proceeding, to the
extent such party would have been indemnified for such expenses if the
indemnification provided for in Section 7(g)(i) or 7(g)(ii) was available to
such party. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(g)(iv) were determined by pro-rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in this Section 7(g)(iv).
Notwithstanding the provisions of this Section 7(g)(iv), an Indemnifying Party
that is a selling Stockholder shall not be
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<PAGE> 32
required to contribute any amount in excess of the amount by which the net
after-tax proceeds received by such Indemnifying Party exceeds the amount of
any damages that such Indemnifying Party has otherwise been required to pay by
reasons of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
(h) RULE 144 SALES. The Company shall file the reports
required to be filed by it under the Securities Act and the Exchange Act and
the rules and regulations promulgated thereunder, and will take such further
action as any Stockholder may reasonably request, all to the extent required
from time to time to enable such Stockholder to sell Registrable Securities
(subject to Section 3(b)(vii) or 3(b)(viii)) without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.
Upon the request of any Stockholder, the Company shall deliver to such
Stockholder a written statement as to whether it has complied with such
requirements.
(i) UNDERWRITTEN REGISTRATIONS. No Stockholder may
participate in any underwritten registration hereunder unless such Stockholder
(x) agrees to sell such Stockholder's Registrable Securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (y) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
(j) NO INCONSISTENT AGREEMENTS. The Company has not and will
not, enter into any agreement with respect to the Company's securities that is
inconsistent with the rights granted to the Stockholders in this Section 7 or
otherwise conflicts with the provisions hereof.
(k) S-3 DEMANDS.
(i) So long as (A) any Thayer Shares are not included
in the Shelf and/or the Shelf is not then effective and (B) the Company is
permitted under Securities Act to register securities on Form S-3, Thayer shall
have the right to request registration on Form S-3 of all or any portion of the
Registrable Securities held by Thayer and its Affiliates (in each case,
referred to herein as the "S-3 REQUESTING HOLDERS") by delivering a written
notice to the Company, which notice identifies the S-3 Requesting Holders and
specifies the number of Registrable Securities to be included in such
registration (the "S-3 REGISTRATION REQUEST"). The Company will give prompt
written notice of such S-3 Registration Request (the "S-3 REGISTRATION NOTICE")
to all other Stockholders and will thereupon use its reasonable best efforts to
effect the registration (a "S-3 DEMAND REGISTRATION") on Form S-3 of:
(x) the Registrable Securities requested to be
registered by the S-3 Requesting Holders; and
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<PAGE> 33
(y) all other Registrable Securities which the
Company has received a written request from another Stockholder
to register within 30 days after the S-3 Registration Notice is
given.
The Company shall be obligated to effect an unlimited number of S-3 Demand
Registrations. S-3 Demand Registrations shall not constitute Demand
Registrations.
(ii) If the sole or managing underwriter of a S-3
Demand Registration advises the Company in writing that in its opinion the
number of Registrable Securities and other securities requested to be included
exceeds the number of Registrable Securities and other securities which can be
sold in such offering without adversely affecting the distribution of the
securities being offered, the price that will be paid in such offering or the
marketability thereof, the Company will include in such registration the
greatest number of Registrable Securities proposed to be registered by the
Stockholders which in the opinion of such underwriter can be sold in such
offering without adversely affecting the distribution of the securities being
offered, the price that will be paid in such offering or the marketability
thereof, ratably among the Stockholders proposing to register based on each
such Stockholder's Ownership Percentage.
SECTION 8. OPERATING BUDGET. Norton hereby agrees that he
shall not accept or attempt to collect from the Company or any of its
Subsidiaries any bonus otherwise do to him under any employment, consulting or
other similar agreement between the Company and any Subsidiary and him if the
Company is at the time or had been within the preceding two years in default of
its obligations under Section 4A(i)(c), 4A(i)(d) or 4A(i)(e) of the Common
Stock Purchase Agreement and such default in the case of Section 4A(i)(c) or
4A(i)(d) of the Common Stock Purchase Agreement remains or remained uncured for
20 business days and in the case of Section 4A(i)(e) of the Common Stock
Purchase Agreement remains or remained uncured for 5 business days.
SECTION 9. REDEMPTION. Subject to the limitations on
transferring Common Shares to the Company set forth in Section 3(b)(iii), prior
to redeeming, purchasing or otherwise acquiring (contingent or otherwise),
directly or indirectly, or entering into any agreement for the redemption,
purchase or acquisition (contingent or otherwise), directly or indirectly, of
any Common Shares from any holder of Management Shares, the Company shall give
at least thirty (30) days prior written notice to Thayer, which notice (for
purposes of this Section 9, the "REDEMPTION NOTICE") shall identify the type
and amount of Common Shares to be redeemed, describe the terms and conditions
of such proposed redemption, and identify each prospective transferor of the
Common Shares to be redeemed (the "OTHER REDEEMERS"). Thayer or any of its
Affiliates may, within fifteen (15) days after the receipt of the Redemption
Notice, give written notice (each, a "CO-REDEMPTION NOTICE") to the Company
that such Person wishes to participate in such proposed redemption upon the
terms and conditions set forth in the Redemption Notice, which Co-Redemption
Notice shall specify the type and amount of Common Shares such Person desires
to redeem. If none of Thayer and its Affiliates give the Company a timely
Co-Redemption Notice, then the Company may redeem such Common Shares on the
terms and conditions set forth in the Redemption Notice of the Other Redeemers
at any time within ninety days after expiration of the fifteen-day period for
giving Co- Redemption Notices with respect to such redemption. Any such Common
Shares not redeemed by the Company during such ninety-day period will again be
subject to the provisions of this Section 9
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<PAGE> 34
upon a subsequent redemption. If Thayer and/or its Affiliates give the Company
a timely Co- Redemption Notice, then the Company, at its option, shall (a)
redeem all Common Shares which Thayer, its Affiliates and the Other Redeemers
desire to redeem, or (b) allocate the maximum number of each class of Common
Shares that the Company is willing to redeem (the "REDEEMABLE SHARES") among
Thayer, its Affiliates and the Other Redeemers as follows:
(i) each Stockholder holding Thayer Shares shall be
entitled to redeem a number of Common Shares (not to exceed, for any
such Stockholder, the number of shares of such Common Shares identified
in such Stockholder's Co-Redemption Notice) equal to the product of (A)
the number of Redeemable Shares of such class of Common Shares and (B)
such Stockholder's Ownership Percentage of such class of Common Shares;
and
(ii) the Other Redeemers shall be entitled to redeem all
Redeemable Shares remaining after taking into account clause (i) above
(with the allocation among the Other Redeemers as decided by the Company
in its sole discretion).
SECTION 10. RIGHTS OF FIRST REFUSAL OR FIRST OFFER.
(a) ASSIGNMENT. Except with respect to the Irrevocable Proxy
and Stock Rights Agreement, each of the Management Stockholders hereby agrees
to assign, or cause to be assigned, to Thayer or any Affiliate of Thayer
designated by Thayer any right of first refusal or first offer or any
preemptive right of any kind with respect to any Common Shares granted to or
otherwise controlled by such Management Stockholder or any Affiliate of such
Management Stockholder, including any such right hereafter created, under any
agreement other than this Agreement, the Common Stock Purchase Agreement or the
Stock Purchase Warrant; provided, however that (i) if such right is not
assignable for any reason and (ii) there is no prohibition under such right or
by law against the Transfer to Thayer or any Affiliate of Thayer designated by
Thayer of the Common Shares underlying such right immediately after the
exercise thereof, then at Thayer's request and expense, such Management
Stockholder shall, or shall cause such Management Stockholder's Affiliate to,
exercise such right and immediately thereafter Transfer to Thayer or any
Affiliate of Thayer designated by Thayer the Common Shares purchased under such
right. Each of the Management Stockholders hereby agrees to notify Thayer as
soon as practical upon receiving notice from any Person or otherwise becoming
aware that such Management Stockholder or any Affiliate of such Management
Stockholder has any exercisable or soon to be exercisable right of first
refusal or first offer or any preemptive right of any kind with respect to any
Common Shares.
(b) IRREVOCABLE PROXY AND STOCK RIGHTS AGREEMENT. Norton
hereby agrees that if Norton elects not to exercise his "right to purchase"
pursuant to Article 3 of the Irrevocable Proxy and Stock Rights Agreement, then
Norton shall assign such right to purchase to Thayer or any Affiliate of Thayer
designated by Thayer; provided, however that notwithstanding anything in the
Irrevocable Proxy and Stock Rights Agreement to the contrary, the purchase
price per share with respect to such assigned right to purchase shall be Market
Value. Norton hereby agrees to notify Thayer as soon as practical upon
receiving notice from any Person or otherwise becoming aware that Norton has
any exercisable or soon to be exercisable right to purchase under the
Irrevocable Proxy and Stock Rights Agreement.
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<PAGE> 35
SECTION 11. AMENDMENT AND WAIVER. Except as otherwise provided
herein, no amendment or waiver of any provision of this Agreement shall be
effective against the Company or Stockholders unless such amendment or waiver
is approved in writing by the Company, Thayer and the holders of at least a
majority of the then-outstanding Management Shares. The failure of any party to
enforce any provision of this Agreement shall not be construed as a waiver of
such provision and shall not affect the right of such party thereafter to
enforce each provision of this Agreement in accordance with its terms.
SECTION 12. SEVERABILITY. If any provision of this Agreement
is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other
jurisdiction, but this Agreement shall be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
SECTION 13. ENTIRE AGREEMENT. Except as otherwise expressly
set forth herein, this document embodies the complete agreement and
understanding among the parties hereto with respect to the subject matter
hereof and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
SECTION 14. SUCCESSORS AND ASSIGNS. This Agreement shall bind
and inure to the benefit of and be enforceable by the Company and the
Stockholders and their respective permitted successors and assigns so long as
such Stockholders and their respective permitted successors and assigns hold
Stockholder Shares, provided, however that Thayer shall not assign this
Agreement or any of the rights or interests hereunder (except any right or
interest directly related to the ownership of the Common Shares) to any Person
other than an Affiliate of Purchaser within two years of the date hereof.
SECTION 15. COUNTERPARTS. This Agreement may be executed in
separate counterparts each of which shall be an original and all of which taken
together shall constitute one and the same agreement.
SECTION 16. REMEDIES. The Company and the Stockholders shall
be entitled to enforce their rights under this Agreement specifically to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights existing in their favor. The parties hereto agree
and acknowledge that money damages may not be an adequate remedy for any breach
of the provisions of this Agreement and that the Company or any Stockholder may
in its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
a bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.
SECTION 17. NOTICES. Any notice provided for in this Agreement
shall be in writing and shall be either personally delivered, or sent via
facsimile, or mailed first class mail (postage prepaid) or sent by reputable
overnight courier service (charges prepaid) to such Person as follows:
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<PAGE> 36
if to the Company:
MLC Holdings, Inc.
11150 Sunset Hills Road, Suite 110
Reston, VA 20190-5321
FAX: 703-834-5718
Attention: Phillip G. Norton
with a copy to:
Alston & Bird, LLP
601 Pennsylvania Avenue, N.W.
North Building, 11th Floor
Washington, DC 20004
FAX: 202-508-3333
Attention: Frank M. Conner, III, Esq.
if to Thayer:
c/o Thayer Equity Investors III, L.P.
1455 Pennsylvania Avenue, Suite 350
Washington, DC 20004
FAX: 202-371-0391
Attention: Carl J. Rickertsen
with a copy to:
Kirkland & Ellis
655 Fifteenth Street, N.W., Suite 1200
Washington, DC 20005-5793
FAX: 202-879-5200
Attention: Jack M. Feder, Esq.
if to a Management Stockholder:
at the address set forth below such Management
Stockholder's signature on the signature page hereto
if to any Person who becomes a Party hereto after the date
hereof:
at the address set forth below such Person's
signature on the signature page to such Person's
Joinder Agreement;
or at such address or to the attention of such other Person as the recipient
party has specified by prior written notice to the sending party. Notices will
be deemed to have been given hereunder when
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<PAGE> 37
delivered personally or sent via facsimile (against receipt therefor), five
business days after deposit in the U.S. mail and one business day after deposit
with a reputable overnight courier service.
SECTION 18. GOVERNING LAW. The corporate law of Delaware shall
govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement shall be governed by the internal law, and not
the law of conflicts, of Delaware.
SECTION 19. DESCRIPTIVE HEADINGS. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.
SECTION 20. SURVIVAL; TERMINATION. Common Shares acquired by
the Stockholders after the date hereof shall be Stockholder Shares and hence
fully subject to the provisions of this Agreement. Stockholder Shares shall
cease to be such as provided in the last sentence of Section 3(b). Sections 2,
5, 6, 7, 8 and 9 hereof shall terminate upon Thayer Shares constituting less
than 5% of the issued and outstanding Common Shares, and such sections shall
remain terminated even if Thayer, its Affiliates and any holders of Thayer
Shares later own in the aggregate 5% or more of the issued and outstanding
Common Shares; provided that the limited partners of Thayer Equity Investors
III, L.P. shall not be treated as Affiliates of Thayer or the holders of Thayer
Shares for the purposes of this Section 20. Any prohibition against Transfers
without the prior written consent of Thayer if such Transfers would result in
Management Shares and Thayer Shares, collectively, constituting less than 51%
of the outstanding Common Shares of the Company shall terminate upon Management
Shares and Thayer Shares, collectively, constituting less than 35% of the
outstanding Common Shares of the Company. All rights and obligations of the
Stockholders and the Company shall terminate upon the first to occur of (i)
there being no Thayer Shares, and (ii) the consummation of an Approved Sale.
SECTION 21. OTHER REGISTRATION RIGHTS. Each of the Management
Stockholders hereby agrees to waive any right to demand that the Company
register any Common Shares under the Securities Act or include any Common
Shares in the Shelf or other registration statement and any other registration
right of any kind granted by the Company to such Management Stockholder under
any agreement other this Agreement.
[END OF PAGE]
[SIGNATURE PAGES FOLLOW]
<PAGE> 38
IN WITNESS WHEREOF, the parties have executed this Stockholders
Agreement as of the date first above written.
MLC HOLDINGS, INC.
By: /s/ PHILLIP G. NORTON
---------------------------------
Name: Phillip G. Norton
Title: President and Chief Executive
Officer
TC LEASING, LLC
By: THAYER EQUITY INVESTORS
III, L.P., its managing
member
By: TC EQUITY PARTNERS,
L.L.C., its general
partner
By: /s/ JEFFREY W. GOETTMAN
---------------------------------
Name: Jeffrey W. Goettman
Title: Member
/s/ PHILLIP G. NORTON
---------------------------------------
PHILLIP G. NORTON
Address:
---------------------------
---------------------------
---------------------------
FAX:
---------------------------
/s/ BRUCE M. BOWEN
---------------------------------------
BRUCE M. BOWEN
Address:
---------------------------
---------------------------
---------------------------
FAX:
---------------------------
S-1
<PAGE> 39
JAP INVESTMENT GROUP, L.P.
By: J.A.P., Inc., its
general partner
By: /s/ PHILLIP G. NORTON
---------------------------------
Name: Phillip G. Norton
Title:
S-2
<PAGE> 40
/s/ KEVIN M. NORTON
---------------------------------------
KEVIN M. NORTON
Address:
---------------------------
---------------------------
---------------------------
FAX:
---------------------------
/s/ PATRICK J. NORTON, JR.
---------------------------------------
PATRICK J. NORTON, JR.
Address:
---------------------------
---------------------------
---------------------------
FAX:
---------------------------
S-3
<PAGE> 41
SCHEDULE I
OTHER MANAGEMENT STOCKHOLDERS
JAP Investment Group, L.P.
Kevin M. Norton
Patrick J. Norton, Jr.
S-4
<PAGE> 42
EXHIBIT A
FORM OF JOINDER
TO
STOCKHOLDERS AGREEMENT
This Joinder (this "Agreement") is made as of the date written
below by the undersigned (the "Joining Party") in favor of and for the benefit
of MLC Holdings, Inc., TC Leasing, LLC, the Management Stockholders and the
other parties to the Stockholders Agreement, dated as of October 23, 1998 (the
"Stockholders Agreement"). Capitalized terms used but not defined herein shall
have the meanings given such terms in the Stockholders Agreement.
The Joining Party hereby acknowledges, agrees and confirms that,
by his or her execution of this Agreement, the Joining Party will be deemed to
be a party to the Stockholders Agreement and shall have all of the obligations
of a Stockholder thereunder as if he or she had executed the Stockholders
Agreement. The Joining Party hereby ratifies, as of the date hereof, and agrees
to be bound by, all of the terms, provisions and conditions contained in the
Stockholders Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Joinder as
of the date written below.
---------------------------------------------
Name:
---------------------------------
Date:
---------------------------------
Address:
---------------------------------
---------------------------------
---------------------------------
FAX:
---------------------------------
<PAGE> 1
EXHIBIT 4
THIS WARRANT, AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF, HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS OR "BLUE SKY" LAWS, AND MAY NOT
BE TRANSFERRED UNLESS SO REGISTERED OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
MLC HOLDINGS, INC.
STOCK PURCHASE WARRANT
Date of Issuance: October 23, 1998 Certificate No. W-1
FOR VALUE RECEIVED, MLC Holdings, Inc., a Delaware corporation
(the "Company"), hereby grants to TC Leasing, LLC or its registered assigns
(the "Registered Holder") the right to purchase from the Company 1,090,909
shares of Warrant Stock at a price per share of $11.00 (as adjusted from time
to time hereunder, the "Exercise Price"). The amount and kind of securities
obtainable pursuant to the rights granted hereunder and the purchase price for
such securities are subject to adjustment pursuant to the provisions contained
in this Stock Purchase Warrant (this "Warrant").
This Warrant is subject to the following provisions:
Section 1. Definitions. The following terms have meanings set
forth below:
"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise.
"Aggregate Exercise Price" has the meaning set forth in
Section 2B(i)(d)(1) hereof.
"Assignee" has the meaning set forth in Section 6A hereof.
"Assignment" has the meaning set forth in Section 2B(i)(c)
hereof.
"Base Price" has the meaning set forth in Section 3A(i)
hereof.
"Common Stock" means, collectively, the Company's Common
Stock, par value $.01 per share, and any capital stock of any class of the
Company hereafter authorized which is not limited to a fixed sum or percentage
of par or stated value in respect to the rights of the holders
<PAGE> 2
thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Company.
"Common Stock Deemed Outstanding" means, at any given time,
the number of shares of Common Stock actually outstanding at such time, plus
the number of shares of Common Stock deemed to be outstanding pursuant to
paragraphs 3B(i) and 3B(ii) hereof regardless of whether the Options or
Convertible Securities are actually exercisable at such time.
"Common Stock Purchase Agreement" means the Common Stock
Purchase Agreement, dated as of the date hereof, by and between the Company and
TC Leasing, LLC.
"Company" has the meaning set forth in the preface hereof.
"Convertible Securities" means any stock or securities
(directly or indirectly) convertible into or exchangeable for Common Stock,
except for any such stock or securities issued or granted pursuant to the
Company's Master Stock Incentive Plan (including any of its component plans) or
1998 Long-Term Incentive Plan, each as in effect on the Date of Issuance.
"Date of Issuance" means October 23, 1998.
"Exercise Agreement" has the meaning set forth in Section 2C
hereof.
"Exercise Period" has the meaning set forth in Section 2A
hereof.
"Exercise Price" has the meaning set forth in the preamble
hereto.
"Exercise Time" has the meaning set forth in Section 2B
hereof.
"GAAP" means United States generally accepted accounting
principles.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended from time to time.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind.
"Liquidating Dividend" has the meaning set forth in Section 4
hereof.
"Market Price" means, with respect to any security on any
date, (x) if such security is quoted on NASDAQ or listed on a national
securities exchange, the closing sales price of such security on NASDAQ or a
national securities exchange, as applicable, on the last trading day prior to
such date, and (y) if such security is not quoted on NASDAQ or listed on a
national securities exchange, the fair value per share determined jointly by
the Company and the Registered Holder,
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provided that if the Company and the Registered Holder are unable to reach an
agreement within a reasonable period of time, such fair value shall be
determined by a recognized investment banking firm jointly selected by the
Company and the Registered Holder, whose determination shall be final and
binding upon the Company and the Registered Holder (and the fees and expenses
of such recognized investment banker shall be paid by the Company).
"Material Adverse Effect" has the meaning set forth in the
Common Stock Purchase Agreement.
"NASDAQ" means National Association of Securities Dealers
Automated Quotations National Market System.
"Options" means any rights or options to subscribe for or
purchase Common Stock or Convertible Securities, except for any rights or
options to subscribe for or purchase Common Stock or Convertible Securities
issued or granted pursuant to the Company's Master Stock Incentive Plan
(including any of its component plans) or 1998 Long-Term Incentive Plan, each
as in effect on the Date of Issuance.
"Organic Change" has the meaning set forth in Section 3D
hereof.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Public Offering" means a sale of Common Stock to the public
in an offering pursuant to an effective registration statement filed with the
SEC pursuant to the Securities Act, as then in effect, provided that a Public
Offering shall not include an offering made in connection with a business
acquisition or combination or an employee benefit plan.
"Purchase Rights" has the meaning set forth in Section 5
hereof.
"Purchaser" has the meaning set forth in Section 2B(i)(A)
hereof.
"Requirement Date" has the meaning set forth in Section 6B
hereof.
"Requirement Notice" has the meaning set forth in Section 6A
hereof.
"Sale of the Company" means, whether in a single transaction
or in a series of related transactions, (i) a sale of all or substantially all
of the assets of the Company and its Subsidiaries on a consolidated basis, or
(ii) the transfer or other disposition of more than 50% of the outstanding
Common Stock or the outstanding common equity securities of any of the
Company's Subsidiaries (in each case whether accomplished by stock purchase,
asset purchase, merger, recapitalization, reorganization or other transaction).
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"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal law then in force.
"SEC" means the United States Securities and Exchange
Commission and any governmental body or agency succeeding to the functions
thereof.
"Stockholders Agreement" means the Stockholders Agreement,
dated as of the date hereof, among the Company and certain of its stockholders.
"Subsidiary" means any Person with respect to which the
Company (or a Subsidiary thereof) owns a majority of the common stock or has
the power to vote or direct the voting of sufficient securities to elect a
majority of the directors or other governing body.
"Warrant" has the meaning set forth in the preamble hereto.
"Warrant Stock" means the Company's Common Stock, par value
$.01 per share; provided that if there is a change such that the securities
issuable upon exercise of this Warrant are issued by an entity other than the
Company or there is a change in the type or class of securities so issuable,
then the term "Warrant Stock" shall mean one share of the security issuable
upon exercise of the Warrant if such security is issuable in shares, or shall
mean the smallest unit in which such security is issuable if such security is
not issuable in shares.
Section 2. Exercise of Warrant.
2A. Exercise Period. The Registered Holder may exercise,
in whole or in part (but not as to a fractional share of Warrant Stock), the
purchase rights represented by this Warrant at any time and from time to time
after the Date of Issuance to and including December 31, 2001 (as may be
extended pursuant to Section 2B(vi) hereof, the "Exercise Period").
2B. Exercise Procedure.
(i) This Warrant shall be deemed to have
been exercised when the Company has received all of the following items (the
"Exercise Time"):
(a) a completed Exercise
Agreement, executed by the Person exercising all or part of
the purchase rights represented by this Warrant (the
"Purchaser");
(b) this Warrant;
(c) if this Warrant is not
registered in the name of the Purchaser, an assignment (an
"Assignment") in the form set forth in Exhibit II hereto
evidencing
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the assignment of this Warrant to the Purchaser, in which case
the Registered Holder shall have complied with the provisions
set forth in Section 7 hereof; and
(d) either (1) a check or wire
transfer payable to the Company in an amount equal to the
product of the Exercise Price multiplied by the number of
shares of Warrant Stock being purchased upon such exercise
(the "Aggregate Exercise Price"), (2) with the prior approval
of the Company, the surrender to the Company of debt or equity
securities of the Company having a Market Price equal to the
Aggregate Exercise Price of the Warrant Stock being purchased
upon such exercise (provided that for purposes of this
subsection, the Market Price of any note or other debt
security or any preferred stock shall be deemed to be equal to
the aggregate outstanding principal amount or liquidation
value thereof plus all accrued and unpaid interest thereon or
accrued or declared and unpaid dividends thereon) or (3) with
the prior approval of the Company, a written notice to the
Company that the Purchaser is exercising the Warrant (or a
portion thereof) by authorizing the Company to withhold from
issuance a number of shares of Warrant Stock issuable upon
such exercise of the Warrant which when multiplied by the
Market Price of the Warrant Stock is equal to the Aggregate
Exercise Price (and such withheld shares shall no longer be
issuable under this Warrant).
(ii) Certificates for shares of Warrant Stock
purchased upon exercise of this Warrant shall be delivered by the Company to
the Purchaser within five business days after the date of the Exercise Time.
Unless this Warrant has expired or all of the purchase rights represented
hereby have been exercised, the Company shall prepare a new Warrant,
substantially identical hereto, representing the rights formerly represented by
this Warrant which have not expired or been exercised and shall, within such
five-business day period, deliver such new Warrant to the Person designated for
delivery in the Exercise Agreement.
(iii) The Warrant Stock issuable upon the
exercise of this Warrant shall be deemed to have been issued to the Purchaser
at the Exercise Time, and the Purchaser shall be deemed for all purposes to
have become the record holder of such Warrant Stock at the Exercise Time.
(iv) The issuance of certificates for shares
of Warrant Stock upon exercise of this Warrant shall be made without charge to
the Registered Holder or the Purchaser for any issuance tax in respect thereof
or other cost incurred by the Company in connection with such exercise and the
related issuance of shares of Warrant Stock. Each share of Warrant Stock
issuable upon exercise of this Warrant shall, upon payment of the Exercise
Price therefor, be fully paid and nonassessable and free from all Liens with
respect to the issuance thereof.
(v) The Company shall not close its books
against the transfer of this Warrant or of any share of Warrant Stock issued or
issuable upon the exercise of this Warrant in any manner which interferes with
the timely exercise of this Warrant.
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(vi) The Company and the Registered Holder or
Purchaser, as applicable, shall use their best efforts to make any filings with
any governmental body, NASDAQ or any stock exchange in which the Warrant Stock
is listed or obtain any approvals of any governmental body, NASDAQ, any stock
exchange in which the Warrant Stock is listed or the stockholders of the
Company (including those in connection with under the HSR Act) required prior
to or in connection with any exercise of this Warrant within a reasonable
period of time. The Exercise Period shall be extended to the extent necessary
to allow such filings to be made and such approvals to be obtained. The costs
and expenses (including reasonable attorneys fees) associated with any filing
or approval required (including those in connection with the HSR Act) shall be
paid by the Company.
(vii) Notwithstanding any other provision
hereof, if an exercise of any portion of this Warrant is to be made in
connection with a Public Offering or the Sale of the Company, the exercise of
any portion of this Warrant may, at the election of the holder hereof, be
conditioned upon the consummation of the Public Offering or the Sale of the
Company in which case such exercise shall not be deemed to be effective until
the consummation of such transaction.
(viii) The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Warrant Stock
solely for the purpose of issuance upon the exercise of the Warrants, such
number of shares of Warrant Stock issuable upon the exercise of all outstanding
Warrants. The Company shall take all such actions as may be necessary to
assure that all such shares of Warrant Stock may be so issued without violation
of any applicable law or governmental regulation or any requirements of any
domestic securities exchange upon which shares of Warrant Stock may be listed
(except for official notice of issuance which shall be immediately delivered by
the Company upon each such issuance). The Company shall not take any action
which would cause the number of authorized but unissued shares of Warrant Stock
to be less than the number of such shares required to be reserved hereunder for
issuance upon exercise of the Warrants.
2C. Exercise Agreement. Upon any exercise of this
Warrant, the exercise agreement (the "Exercise Agreement") shall be
substantially in the form set forth in Exhibit I hereto, except that if the
shares of Warrant Stock are not to be issued in the name of the Person in whose
name this Warrant is registered, the Exercise Agreement shall also state the
name of the Person to whom the certificates for the shares of Warrant Stock are
to be issued, and if the number of shares of Warrant Stock to be issued does
not include all the shares of Warrant Stock purchasable here under, it shall
also state the name of the Person to whom a new Warrant for the unexercised
portion of the rights hereunder is to be delivered. Such Exercise Agreement
shall be dated the actual date of execution thereof.
Section 3. Adjustment of Exercise Price and Number of Shares.
In order to prevent dilution of the rights granted under this Warrant, the
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 3, and the number of shares of Warrant Stock obtainable upon
exercise of this Warrant shall be subject to adjustment from time to time as
provided in this Section 3.
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<PAGE> 7
3A. Adjustment of Exercise Price and Number of Shares
upon Issuance of Common Stock.
(i) Except as set forth in Section 3A(iii), if
and whenever the Company issues or sells, or in accordance with Section 3B is
deemed to have issued or sold, any shares of Common Stock for a gross
consideration per share (not net of discounts and commissions to underwriters)
less than either (A) $11.00 (as such amount is proportionately adjusted for
stock splits, stock combinations, stock dividends and recapitalizations
affecting the Common Stock after the Date of Issuance, the "Base Price") or (B)
the Market Price of the Common Stock determined as of the date of such issue or
sale, then immediately upon such issue or sale the Exercise Price shall be
reduced to whichever of the following Exercise Prices is lower:
(a) the Exercise Price determined by
dividing (1) the sum of (x) the product derived by multiplying
the Exercise Price in effect immediately prior to such issue
or sale by the number of shares of Common Stock Deemed
Outstanding immediately prior to such issue or sale, plus (y)
the gross consideration (not net of discounts and commissions
to underwriters), if any, received by the Company upon such
issue or sale, by (2) the number of shares of Common Stock
Deemed Outstanding immediately after such issue or sale; or
(b) the Exercise Price determined by
multiplying the Exercise Price in effect immediately prior to
such issue or sale by a fraction, the numerator of which shall
be the sum of (1) the number of shares of Common Stock Deemed
Outstanding immediately prior to such issue or sale multiplied
by the Market Price of the Common Stock determined as of the
date of such issuance of sale, plus (2) the gross
consideration (not net of discounts and commissions to
underwriters), if any, received by the Company upon such issue
or sale, and the denominator of which shall be the product
derived by multiplying the Market Price of the Common Stock by
the number of shares of Common Stock Deemed Outstanding
immediately after such issue or sale.
(ii) Upon each such adjustment of the Exercise
Price hereunder, the number of shares of Warrant Stock acquirable upon exercise
of this Warrant shall be adjusted to the number of shares determined by
multiplying the Exercise Price in effect immediately prior to such adjustment
by the number of shares of Warrant Stock acquirable upon exercise of this
Warrant immediately prior to such adjustment and dividing the product thereof
by the Exercise Price resulting from such adjustment.
(ii) Notwithstanding the foregoing, there shall be no
adjustment to the Exercise Price or the number of shares of Warrant Stock
obtainable upon exercise of this Warrant with respect to (w) the issuance and
sale of Common Stock, or the granting of any rights or options to subscribe for
or purchase Common Stock or Convertible Securities, pursuant to an acquisition
by the Company or any Subsidiary, (x) the granting of any rights or options to
subscribe for or purchase
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<PAGE> 8
Common Stock or Convertible Securities pursuant to the Company's Master Stock
Incentive Plan (including any of its component plans) or 1998 Long-Term
Incentive Plan, each as in effect on the Date of Issuance, (y) the exercise of
such rights and options or (z) the issuance and sale of Common Stock pursuant to
the Employee Stock Purchase Plan, as in effect on the date hereof.
3B. Effect on Exercise Price of Certain Events. For
purposes of determining the adjusted Exercise Price under Section 3A, the
following shall be applicable:
(i) Issuance of Rights or Options. If the
Company in any manner grants or sells any Options and the price per
share for which Common Stock is issuable upon the exercise of such
Options, or upon conversion or exchange of any Convertible Securities
issuable upon exercise of such Options, is less than either (a) the
Base Price in effect immediately prior to the time of the granting or
sale of such Options or (b) the Market Price determined as of such
time, then the total maximum number of shares of Common Stock issuable
upon the exercise of such Options, or upon conversion or exchange of
the total maximum amount of such Convertible Securities issuable upon
the exercise of such Options, shall be deemed to be outstanding and to
have been issued and sold by the Company at such time for such price
per share. For purposes of this Section 3B(i), the "price per share
for which Common Stock is issuable upon exercise of such Options or
upon conversion or exchange of such Convertible Securities" is
determined by dividing (A) the total amount, if any, received or
receivable by the Company as consideration for the granting or sale of
such Options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of all such
Options, plus in the case of such Options which are exercisable into
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the issuance or
sale of such Convertible Securities and the conversion or exchange
thereof, by (B) the total maximum number of shares of Common Stock
issuable upon exercise of such Options or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise
of such Options. No further adjustment of the Exercise Price shall be
made upon the actual issuance of such Common Stock or of such
Convertible Securities upon the exercise of such Options or upon the
actual issuance of such Common Stock upon conversion or exchange of
such Convertible Securities.
(ii) Issuance of Convertible Securities. If the
Company in any manner issues or sells any Convertible Securities and
the price per share for which Common Stock is issuable upon conversion
or exchange thereof is less than either (a) the Base Price in effect
immediately prior to the time of such issue or sale or (b) the Market
Price determined as of such time, then the maximum number of shares of
Common Stock issuable upon conversion or exchange of such Convertible
Securities shall be deemed to be outstanding and to have been issued
and sold by the Company for such price per share. For the purposes of
this Section 3B(ii), the "price per share for which Common Stock is
issuable upon conversion or exchange thereof" is determined by
dividing (A) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities,
plus
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<PAGE> 9
the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange thereof, by (B)
the total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities. No further
adjustment of the Exercise Price shall be made upon the actual issue
of such Common Stock upon conversion or exchange of such Convertible
Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustments
of the Exercise Price had been or are to be made pursuant to other
provisions of this Section 3B, no further adjustment of the Exercise
Price shall be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate.
If the purchase price provided for in any Options, the additional
consideration, if any, payable upon the issue, conversion or exchange
of any Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock
changes at any time, the Exercise Price in effect at the time of such
change shall be adjusted immediately to the Exercise Price which would
have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may
be, at the time initially granted, issued or sold and the number of
shares of Warrant Stock shall be correspondingly adjusted. For
purposes of this Section 3B, if the terms of any Option or Convertible
Security which was outstanding as of the date of issuance of this
Warrant are changed in the manner described in the immediately
preceding sentence, then such Option or Convertible Security and the
Common Stock deemed issuable upon exercise, conversion or exchange
thereof shall be deemed to have been issued as of the date of such
change; provided that no such change shall at any time cause the
Exercise Price hereunder to be increased.
(iv) Treatment of Expired Options and Unexercised
Convertible Securities. Upon the expiration of any Option or the
termination of any right to convert or exchange any Convertible
Securities without the exercise of such Option or right, the Exercise
Price then in effect and the number of shares of Warrant Stock
acquirable hereunder shall be adjusted immediately to the Exercise
Price and the number of shares which would have been in effect at the
time of such expiration or termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such
expiration or termination, never been issued. For purposes of this
Section 2B, the expiration or termination of any Option or Convertible
Security which was outstanding as of the date of issuance of this
Warrant shall not cause the Exercise Price hereunder to be adjusted
unless, and only to the extent that, a change in the terms of such
Option or Convertible Security caused it to be deemed to have been
issued after the date of issuance of this Warrant.
(v) Calculation of Consideration Received. If
any Common Stock, Options or Convertible Securities are issued or sold
or deemed to have been issued or sold for cash, the consideration
received therefor shall be deemed to be the net amount received by the
Company therefor. In case any Common Stock, Options or Convertible
Securities are
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<PAGE> 10
issued or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be the
fair value of such consideration, except where such consideration
consists of securities, in which case the amount of consideration
received by the Company shall be the Market Price thereof as of the
date of receipt. In case any Common Stock, Options or Convertible
Securities are issued to the owners of the non- surviving entity in
connection with any merger in which the Company is the surviving
entity the amount of consideration therefor shall be deemed to be the
fair value of such portion of the net assets and business of the
non-surviving entity as is attributable to such Common Stock, Options
or Convertible Securities, as the case may be. The fair value of any
consideration other than cash or securities shall be determined
jointly by the Company and the Registered Holder. If such parties are
unable to reach agreement within a reasonable period of time, such
fair value shall be determined by a recognized investment banking firm
jointly selected by the Company and the Registered Holder. The
determination of such recognized investment banker shall be final and
binding on the Company and the Registered Holder of the Warrants, and
the fees and expenses of such recognized investment banker shall be
paid by the Company.
(vi) Integrated Transactions. In case any Option
is issued in connection with the issue or sale of other securities of
the Company, together comprising one integrated transaction in which
no specific consideration is allocated to such Options by the parties
thereto, the Options shall be deemed to have been issued without
consideration.
(vii) Treasury Shares. The number of shares of
Common Stock outstanding at any given time does not include shares
owned or held by or for the account of the Company or any Subsidiary,
and the disposition of any shares so owned or held shall be considered
an issue or sale of Common Stock.
(viii) Record Date. If the Company takes a record
of the holders of Common Stock for the purpose of entitling them (A)
to receive a dividend or other distribution payable in Common Stock,
Options or in Convertible Securities or (B) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase,
as the case may be.
3C. Subdivision or Combination of Common Stock. If the
Company at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced and the
number of shares of Warrant Stock obtainable upon exercise of this Warrant
shall be proportionately increased. If the Company at any time combines (by
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price in effect
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<PAGE> 11
immediately prior to such combination shall be proportionately increased and
the number of shares of Warrant Stock obtainable upon exercise of this Warrant
shall be proportionately decreased.
3D. Reorganization, Reclassification, Consolidation, Merger
or Sale. Except as provided in Section 9, any recapitalization,
reorganization, reclassification, consolidation, merger, sale of all or
substantially all of the Company's assets or other transaction, which in each
case is effected in such a way that the holders of Common Stock are entitled to
receive (either directly or upon subsequent liquidation) stock, securities or
assets with respect to or in exchange for Common Stock is referred to herein as
"Organic Change." Prior to the consummation of any Organic Change, the Company
shall make appropriate provision (in form and substance satisfactory to the
Registered Holder) to insure that the Registered Holder shall thereafter have
the right to acquire and receive, in lieu of or addition to (as the case may
be) the shares of Warrant Stock immediately theretofore acquirable and
receivable upon the exercise of this Warrant, such shares of stock, securities
or assets as may be issued or payable with respect to or in exchange for the
number of shares of Warrant Stock immediately theretofore acquirable and
receivable upon exercise of this Warrant had such Organic Change not taken
place. In any such case, the Company shall make appropriate provision (in form
and substance satisfactory to the Registered Holder) with respect to the
Registered Holders' rights and interests to insure that the provisions of this
Section 3 and Sections 4 and 5 hereof shall thereafter be applicable to the
Warrants. The Company shall not effect any such consolidation, merger or sale,
unless prior to the consummation thereof, the successor entity (if other than
the Company) resulting from consolidation or merger or the entity purchasing
such assets assumes by written instrument (in form and substance satisfactory
to the Registered Holder), the obligation to deliver to the Registered Holder
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.
3E. Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 3 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features
(except in each case pursuant to the Company's Master Stock Incentive Plan
(including any of its component plans) or 1998 Long-Term Incentive Plan, each
as in effect on the Date of Issuance)), then the Company's board of directors
shall make an appropriate adjustment in the Exercise Price and the number of
shares of Warrant Stock obtainable upon exercise of this Warrant so as to
protect the rights of the Registered Holder; provided that no such adjustment
shall increase the Exercise Price or decrease the number of shares of Warrant
Stock obtainable as otherwise determined pursuant to this Section 3.
3F. Notices.
(i) Immediately upon any adjustment of the
Exercise Price, the Company shall give written notice thereof to the Registered
Holder, setting forth in reasonable detail and certifying the calculation of
such adjustment.
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(ii) The Company shall give written notice to the
Registered Holder at least 20 days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend or
distribution upon the Common Stock, (B) with respect to any pro rata
subscription offer to holders of Common Stock or (C) for determining rights to
vote with respect to any Organic Change, Sale of the Company, dissolution or
liquidation.
(iii) The Company shall also give written notice to
the Registered Holders at least 20 days prior to the date on which any Organic
Change, dissolution or liquidation shall take place.
Section 4. Liquidating Dividends. If the Company declares or
pays a dividend upon the Common Stock payable otherwise than in cash out of
earnings or earned surplus (determined in accordance with GAAP) except for a
stock dividend payable in shares of Common Stock (a "Liquidating Dividend"),
then the Company shall pay to the Registered Holder at the time of payment
thereof the Liquidating Dividend which would have been paid to the Registered
Holder on the Warrant Stock (after netting out the Aggregate Exercise Price)
had this Warrant been fully exercised immediately prior to the date on which a
record is taken for such Liquidating Dividend, or, if no record is taken, the
date as of which the record holders of Common Stock entitled to such dividends
are to be determined.
Section 5. Purchase Rights. If at any time the Company
grants, issues or sells any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property pro rata to the record
holders of any class of Common Stock (the "Purchase Rights"), then the
Registered Holder shall be entitled to acquire, upon the terms applicable to
such Purchase Rights, the aggregate Purchase Rights which such holder could
have acquired if the Registered Holder had held the number of shares of Warrant
Stock acquirable upon complete exercise of this Warrant immediately before the
date on which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of which the
record holders of Common Stock are to be determined for the grant, issue or
sale of such Purchase Rights.
Section 6. Company's Right to Require Exercise.
6A. Requirement Notice. Subject to Section 6B, if on any
date during the Exercise Period the daily closing sales price of a share of
Warrant Stock quoted on NASDAQ equals or exceeds $11.00 per share (as such
amount is proportionately adjusted for stock splits, stock combinations, stock
dividends and recapitalizations affecting the Warrant Stock after the Date of
Issuance) for the 20 consecutive trading days immediately prior to such date,
the Company may, by giving written notice (the "Requirement Notice") to the
Registered Holder within three business days of such date, require the
Registered Holder to exercise, in whole or in part (but not as to a fractional
share of Warrant Stock), the purchase rights represented by this Warrant within
15 business days of receipt of the Requirement Notice; provided, however such
15 business day period shall be extended to the extent necessary for the
Company and the Registered Holder to make any filings with any governmental
body, NASDAQ or any stock exchange in which the Warrant Stock is listed or
obtain
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any approvals of any governmental body, NASDAQ, any stock exchange in which the
Warrant Stock is listed or the stockholders of the Company (including those in
connection with under the HSR Act) required prior to or in connection with any
exercise of this Warrant. Except as explicitly set forth in this Section 6,
the exercise of this Warrant shall follow the procedures set forth in Section
2B. Notwithstanding anything in this Section 6 to the contrary, the Registered
Holder can satisfy its obligations under this Section 6 by assigning this
Warrant pursuant to Section 8 to another Person (the "Assignee") within 10
business days of receipt of the Requirement Notice, so long as the Assignee
exercises the assigned Warrant within 10 business days of such assignment;
provided, however such 10 business day period shall be extended to the extent
necessary for the Company and the Assignee to make any filings with any
governmental body, NASDAQ or any stock exchange in which the Warrant Stock is
listed or obtain any approvals of any governmental body, NASDAQ, any stock
exchange in which the Warrant Stock is listed or the stockholders of the
Company (including those in connection with under the HSR Act) required prior
to or in connection with any exercise of the assigned Warrant.
6B. Conditional Precedent to Requirement Notice.
Notwithstanding anything in Section 6A to the contrary, the obligations of the
Registered Holder or the Assignee, as applicable, under Section 6A shall be
subject to the Registered Holder or the Assignee, as applicable, having
received on or before the date of the closing of the exercise of the Warrant
pursuant to this Section 6 (the "Requirement Date") a certificate signed by the
chief executive officer of the Company certifying that as of the Requirement
Date, (x) the representations and warranties of the Company set forth in the
Common Stock Purchase Agreement shall be true, correct and complete in all
respects on and as of the Requirement Date to the same extent as though made on
and as of such date, except to the extent such representations and warranties
specifically related to an earlier date, in which case such representations and
warranties shall have been true, correct and complete in all respects on and as
of such earlier date (provided that the requirements of this clause (x) shall
be deemed satisfied unless all inaccuracies of such representations and
warranties in the aggregate have a Material Adverse Effect, ignoring any
qualification as to materiality or Material Adverse Effect contained therein),
(y) the Company shall have performed in all material respects all agreements
which the Common Stock Purchase Agreement provides shall be performed by the
Company and (z) the Company is not subject to any debt or credit agreement
under which a default, an event of default, a right of acceleration or a right
to bring an action against any property of the Company may be triggered if (A)
Phillip G. Norton does not maintain effective control of the Company or MLC
Group, Inc., or (B) any specified Person does not own any specified number or
percentage of shares of Common Stock (provided, however, such agreement can
provide a default, an event of default, a right of acceleration or a right to
bring an action against any property of the Company may be triggered if (1) one
or more of Phillip G. Norton, Patricia A. Norton, any of their lineal
descendants or siblings and any trust formed and maintained solely for the
benefit of any such Persons beneficially owns in the aggregate less than
1,600,000 shares of Common Stock, or (2) one or more of Phillip G. Norton,
Bruce M. Bowen, Thomas B. Howard, Jr., Steven J. Mencarini, Kleyton L.
Parkurst, any other employee of the Company, any of their lineal descendants,
siblings or spouses and any trust formed and maintained solely for the benefit
of any such Persons beneficially owns in the aggregate less than 2,000,000
shares of Common Stock).
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<PAGE> 14
6C. No Manipulation. Each of the parties hereto hereby
agrees that neither it nor any of its Affiliates shall take any action or omit
to take any action which increases or decreases the daily closing sales price
of a share of Warrant Stock quoted on NASDAQ for the primary purpose of
effecting whether or not the Company shall have the right to require the
Registered Holder to exercise, in whole or in part, the purchase rights
represented by this Warrant.
Section 7. No Voting Rights; Limitations of Liability. Except
as otherwise provided in the Stockholders Agreement, this Warrant shall not
entitle the holder hereof to any voting rights or other rights as a stockholder
of the Company. No provision hereof, in the absence of affirmative action by
the Registered Holder to purchase Warrant Stock, and no enumeration herein of
the rights or privileges of the Registered Holder shall give rise to any
liability of such holder for the Exercise Price of Warrant Stock acquirable by
exercise hereof or as a stockholder of the Company.
Section 8. Warrant Transferable. Subject to federal and state
securities laws, this Warrant and all rights hereunder are transferable, in
whole or in part, without charge to the Registered Holder, upon surrender of
this Warrant with a properly executed Assignment at the address of the Company
set forth in Section 12.
Section 9. Sale of the Company. Notwithstanding anything
herein the contrary, prior to the consummation of a Sale of the Company, the
Registered Holder shall be given the option, in its sole discretion, to either
(x) exercise this Warrant prior to the consummation of the Sale of the Company
and participate in such sale as a holder of such class of Common Stock, or (y)
upon the consummation of the Sale of the Company, receive in exchange for this
Warrant consideration equal to the amount determined by multiplying (1) the
same amount of consideration per share of a class of Common Stock received by
holders of such class of Common Stock in connection with the Approved Sale less
the Exercise Price by (2) the number of shares of such class of Common Stock
represented by this Warrant.
Section 10. Warrant Exchangeable for Different Denominations.
This Warrant is exchangeable, upon the surrender hereof by the Registered
Holder at the address of the Company set forth in Section 12, for new Warrants
of like tenor representing in the aggregate the purchase rights hereunder, and
each of such new Warrants shall represent such portion of such rights as is
designated by the Registered Holder at the time of such surrender. The date
the Company initially issues this Warrant shall be deemed to be the "Date of
Issuance" hereof regardless of the number of times new certificates
representing the unexpired and unexercised rights formerly represented by this
Warrant shall be issued. Each holder of a new Warrant shall have the rights and
privileges of the Registered Holder of this Warrant as provided herein.
Section 11. Replacement. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation
of any certificate evidencing this Warrant, and in the case of any such loss,
theft or destruction, upon receipt of indemnity reasonably satisfactory to the
Company (provided that if the Registered Holder is Thayer Equity Investors III,
L.P. or any of its Affiliates,
14
<PAGE> 15
then its own agreement shall be satisfactory), or, in the case of any such
mutilation upon surrender of such certificate, the Company shall (at its
expense) execute and deliver in lieu of such certificate a new certificate of
like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
Section 12. Notices. Any notice provided for in this Warrant
shall be in writing and shall be either personally delivered, or sent via
facsimile, or mailed first class mail (postage prepaid) or sent by reputable
overnight courier service (charges prepaid) to such Person as follows:
if to the Company:
MLC Holdings, Inc.
11150 Sunset Hills Road, Suite 110
Reston, VA 20190-5321
FAX: 703-834-5718
Attention: Phillip G. Norton
with a copy to:
Alston & Bird, LLP
601 Pennsylvania Avenue, N.W.
North Building, 11th Floor
Washington, DC 20004
FAX: 202-508-3333
Attention: Frank M. Conner, III, Esq.
if to the Registered Holder:
c/o Thayer Equity Investors III, L.P.
1455 Pennsylvania Avenue, Suite 350
Washington, DC 20004
FAX: 202-371-0391
Attention: Carl J. Rickertsen
with a copy to:
Kirkland & Ellis
655 Fifteenth Street, N.W., Suite 1200
Washington, DC 20005-5793
FAX: 202-879-5200
Attention: Jack M. Feder, Esq.
15
<PAGE> 16
or at such address or to the attention of such other Person as the recipient
party has specified by prior written notice to the sending party. Notices will
be deemed to have been given hereunder when delivered personally or sent via
facsimile (against receipt therefor), five business days after deposit in the
U.S. mail and one business day after deposit with a reputable overnight courier
service.
Section 13. Amendment and Waiver. Except as otherwise
provided herein, the provisions of this Warrant may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the written
consent of the Registered Holder.
Section 14. Descriptive Headings; Governing Law. The
descriptive headings of the several sections of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporation
laws of the State of Delaware shall govern all issues concerning the relative
rights of the Company and its stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Warrant shall be
governed by the internal law of the State of Delaware, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of Delaware.
* * * *
16
<PAGE> 17
IN WITNESS WHEREOF, the Company has caused this Stock Purchase
Warrant to be signed and attested by its duly authorized officers under its
corporate seal and to be dated the Date of Issuance hereof.
MLC HOLDINGS, INC.
By: /s/ BRUCE M. BOWEN
--------------------------------
Name: Bruce M. Bowen
Title: Executive Vice President
[Corporate Seal]
Attest:
/s/ KLEYTON L. PARKHURST
---------------------------------------
Kleyton L. Parkhurst, Secretary
ACKNOWLEDGED AND AGREED TO
AS OF THE DATE OF ISSUANCE:
TC LEASING, LLC
By: THAYER EQUITY INVESTORS III, L.P., its managing member
By: TC EQUITY PARTNERS, L.L.C., its general partner
By: /s/ JEFFREY W. GOETTMAN
---------------------------------
Name: Jeffrey W. Goettman
Title: Member
<PAGE> 18
EXHIBIT I
EXERCISE AGREEMENT
Dated:
-------------
The undersigned, pursuant to the provisions set forth in the
attached Stock Purchase Warrant (Certificate No. W-____), hereby agrees to
subscribe for the purchase of ______ shares of the Warrant Stock covered by
such Stock Purchase Warrant and makes payment herewith in full therefor at the
price per share provided by such Stock Purchase Warrant. A certificate for
such shares of Warrant Stock shall be made in the name of _______________,
and shall be mailed to the following address:___________________________. [A
new stock purchase warrant for the unexercised portion of the rights under the
attached Stock Purchase Warrant shall be issued in the name of ______________,
and shall be mailed to the following address: _____________________________.]
Name of Registered Holder:
-------------------------
Signature:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
<PAGE> 19
EXHIBIT II
ASSIGNMENT
Dated:
--------------
FOR VALUE RECEIVED, _________________________________ hereby
sells, assigns and transfers all of the rights of the undersigned under the
attached Stock Purchase Warrant (Certificate No. W-_____) with respect to the
number of shares of the Warrant Stock covered thereby set forth below, unto:
<TABLE>
<S> <C>
Names of Assignee Address No. of Shares
- ----------------- ------- -------------
Name of Assignor:
----------------------------------
Signature:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
</TABLE>
