SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 11, 2000
EPLUS INC.
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(Exact name of registrant as specified in its charter)
Delaware 000-28926 54-1817218
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
400 Herndon Parkway, Herndon, Virginia 20176
(Address, including zip code, of principal executive office)
(703) 834-5710
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(Registrant's telephone number, including area code)
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Item 5. Other Events
On April 12, 2000, ePlus inc. ("ePlus") announced by press release, which
is attached hereto as Exhibit 99.1 and incorporated herein by reference, that it
had priced its follow-on public offering for the sale of 1,000,000 shares of its
common stock at a price of $28.50 per share. The offering was completed on April
17, 2000.
Previously, on October 23, 1998, ePlus had sold 1,111,111 shares of its
common stock to TC Plus, LLC (formerly TC Leasing, LLC, "TC Plus") at a price of
$9.00 per share pursuant to a stock purchase agreement dated October 23, 1998,
by and between MLC Holdings, Inc. and TC Leasing LLC (the "Stock Purchase
Agreement"). It had also entered into a stockholders agreement, dated as of
October 23, 1998, with TC Plus, Phillip G. Norton, Bruce M. Bowen, J.A.P.
Investment Group, L.P., Kevin M. Norton and Patrick J. Norton, Jr. (the
"Stockholders Agreement").
Additionally, ePlus had issued a warrant dated, October 23, 1998, to
acquire an additional 1,090,909 shares of its common stock at an exercise price
of $11.00 per share, subject to certain anti-dilution adjustment (the
"Warrant"), for total consideration of $10 million. The Warrant gave ePlus the
right to require TC Plus to exercise the Warrant if its common stock closed at
or above $11.00 per share for 20 consecutive days. On December 23, 1999, this
condition was satisfied, and ePlus gave notice to TC Plus, LLC to require
exercise.
The Stock Purchase Agreement imposed certain super-majority voting
requirements on ePlus' board of directors and restricted ePlus' ability to
engage in mergers or other material transactions. The Stockholders Agreement
provided for restrictions on transfers of shares, restriction on the issuance of
shares, board representation, the forced sale of ePlus by TC Plus in certain
circumstances and registration rights. The Stock Purchase Agreement, the Warrant
and the Stockholders Agreement were filed as exhibits to ePlus' Current Report
on Form 8-K filed on November 13, 1998.
In connection with its follow-on offering, ePlus entered into an agreement
with TC Plus, dated February 25, 2000 (the "Agreement), which ePlus previously
filed as Exhibit 99.3 to its Current Report on Form 8-K, filed on March 9, 2000.
The Agreement was amended as of April 11, 2000 by an amendment (the
"Amendment"), which is attached hereto as Exhibit 99.2 and incorporated by
reference herein.
Under the terms of the Agreement, as amended by the Amendment, ePlus agreed
to allow TC Plus to defer its exercise the Warrant and to permit TC Plus to
exercise the Warrant in full immediately prior to the closing of the Offering on
a cashless basis at an exercise price of $11.00 per share in exchange for a
commitment by TC Plus to waive certain provisions of the Stock Purchase
Agreement and to amend the Stockholders Agreement. TC Plus exercised the Warrant
on a cashless basis on April 11, 2000 and was issued 709,956 shares of common
stock by ePlus.
The Agreement, as amended by the Amendment provided that the waiver of the
provisions of the Stock Purchase Agreement and the amendment of the Stockholders
Agreement were contingent upon the completion of the offering.
The Agreement, as amended by the Amendment provided for the waiver of all
super-majority voting requirements and restrictions on mergers and material
transactions contained in the Stock Purchase Agreement. The Stockholders
Agreement, as amended, which is Exhibit A to the Amendment and incorporated
herein by reference, provides as follows:
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o ePlus' board of directors will continue to have six members with two
directors designated by TC Plus, two directors designated by the
management stockholders party to the Stockholders Agreement and two
directors designated by a nominating committee comprised of one
individual designated by TC Plus and one individual designated by the
management stockholders party to the Stockholders Agreement. The two
directors named by TC Plus will continue to be Carl J. Rickertsen, who
has served as a director since November 1996, and Paul G. Stern.
Phillip G. Norton and Bruce M. Bowen serve as the directors designated
by the management stockholders.
o TC Plus has the right to have the shares of ePlus' common stock that it
has purchased and that it has acquired through exercise of the warrant
included in ePlus' shelf registration statement. If those shares are
not included in the shelf registration statement or if the shelf
registration statement is not effective, TC Plus has the right to
demand registration of its shares on three separate occasions. TC Plus
also has the right to request inclusion of its shares in any other
registration by ePlus of its common stock, such as the Offering. ePlus
is responsible for all of the registration expenses incurred in
connection with TC Plus' exercise of its registration rights. TC Plus
has used its registration rights under the Stockholders Agreement to
register shares in the Offering.
o If ePlus agrees to purchase any shares of its common stock held by the
management stockholders party to the Stockholders Agreement, it must
give notice to TC Plus. If TC Plus wishes to participate, ePlus must
purchase its shares on the same terms and conditions.
o Shares held by stockholders party to the Stockholders Agreement will no
longer subject to the terms of the Stockholders Agreement, as amended,
when they are transferred in a registered offering or pursuant to Rule
144 under the Securities Act of 1933.
o All rights and obligations under the Stockholders Agreement, as
amended, terminate when TC Plus no longer holds 5% of ePlus'
outstanding stock and shall remain terminated even if TC Plus later
acquires 5% or more of ePlus' outstanding stock.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
Exhibit
Number Exhibit Description
99.1 Press Release
99.2 Amendment, dated as of April 11, 2000, by and between ePlus inc. and TC
Plus, LLC.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ePlus inc.
Dated May 11, 2000 By: /s/ Phillip G. Norton
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Phillip G. Norton
Chairman, President and
Chief Executive Officer
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Exhibit Index
Exhibit Page
Number Exhibit Description Number
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99.1 Press Release
99.2 Amendment, dated as of April 11, 2000, by and between
ePlus inc. and TC Plus, LLC.
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Exhibit 99.1
Wednesday April 12, 8:16 am Eastern Time
Company Press Release
ePlus Completes Follow-On Offering
HERNDON, Va.--(BUSINESS WIRE)--April 12, 2000--ePlus inc. (NASD NM: "PLUS"), a
leading provider of outsourced e-commerce supply chain management solutions,
announced today the pricing of its follow- on public offering for the sale of
1,000,000 shares of common stock by the Company at $28.50 per share. The Company
will receive net proceeds from the offering of approximately $26.2 million. The
proceeds will be used to repay indebtedness, and for general corporate purposes
including the sales and marketing of ePlusSuite, research and development, and
potential acquisitions. The lead manager for the offering was J.P. Morgan & Co.
and co-managers were U.S. Bancorp Piper Jaffray, First Union Securities, Inc.
and Friedman, Billings, Ramsey & Co., Inc. An additional 150,000 shares may be
purchased by the underwriters at the offering price, which would generate an
additional $4.0 million of equity for the Company.
Phillip G. Norton, president and CEO of ePlus commented, "We are very pleased at
the success of this offering. The capital will allow ePlus to aggressively
pursue its goal of scaling ePlusSuite, capturing customers, and becoming the
breakout leader in outsourced supply chain solutions for the middle market."
Copies of the prospectus related to this offering may be obtained from the
offices of J.P. Morgan Securities Inc., 60 Wall Street, New York, N.Y 10206,
attention: Syndicate Department, or from ePlus Investor Relations.
About ePlus
ePlus inc. provides Internet based supply chain management solutions with an
integrated suite of products for the procurement, management, financing and
disposition of operating resources. Its remotely hosted application, ePlusSuite,
covers the customer's total ownership experience, beginning with the end-user
order and ending with the asset disposition. ePlusSuite consists of four modules
that can be operated independently or integrated seamlessly: Procure+, Manage+,
Finance+ and Service+. ePlusSuite provides a comprehensive outsourcing solution
that includes workflow management, procurement, order tracking and verification,
asset management, tracking and reporting, financing, sales, property and use tax
compliance and payment, software license compliance, technology rollout and
upgrades, technical and maintenance services, and asset disposition. The
company, which was founded in 1990, is headquartered in Herndon, Va., and has 16
locations in the United States.
ePlus inc. has applied to register the service marks ePlus inc., ePlusSuite,
Procure+, Manage+, Finance+ and Service+.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: The statements contained in this release which are not historical facts
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may be deemed to contain forward-looking statements. Actual results may vary due
to the following risks and uncertainties, including, without limitation, general
economic conditions; fluctuations in operating results; its ability to
effectively manage future growth, to retain and efficiently integrate our
executive management team, and to identify, hire, train and retain, in a highly
competitive market, individuals highly skilled in the Internet and its rapidly
changing technology, the lack of long-term contracts in certain business units;
its ability to enter into, and retain its existing, strategic relationships;
market acceptance, rapid technological change, a decline in Internet usage, and
intense competition in its market; its ability to effectively integrate the
operational, managerial and financial aspects of future acquisitions; demand and
competition for the Company's lease financing and equipment sales and asset
management services, and the products to be leased or sold by the Company, the
continued availability to the Company of adequate financing in general and for
the companies mentioned in this release in particular, the ability of the
Company to recover its investment in equipment through remarketing, the
successful execution of its e-commerce strategy, the amount of equipment
ordered, purchased and/or leased by the companies in this release, and other
risks or uncertainties detailed in the Company's Securities and Exchange
Commission filings especially in the company's Registration Statement on Form
S-3 filed on February 24, 2000, as amended. Investors are cautioned that current
financial results may not be indicative of future results.
Contact:
Kleyton L. Parkhurst
SVP ([email protected])
Phone: 703-709-1924 or 703-675-0753
Website: WWW.EPLUS.COM
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Exhibit 99.2
AMENDMENT
THIS AMENDMENT (this "Amendment") to that certain Agreement (the
"Agreement"), dated as of February 25, 2000, by and between ePlus inc., formerly
MLC Holdings, Inc., a Delaware corporation (the "Company"), and TC Plus, LLC,
formerly TC Leasing, LLC, a Delaware limited liability company ("Thayer"), is
dated as of April 11, 2000 and is by and between the Company and Thayer.
Subject to Section 10 hereof, the parties hereto agree as follows:
Section 1. Amendment to the first sentence is Section 2 of the
Agreement. The first sentence of Section 2 of the Agreement is hereby amended
and restated in its entirety to read as follows:
Section 2. Consent to Cashless Exercise of Warrant.
Notwithstanding anything in the Warrant to the
contrary, to the extent that the Warrant has not
previously been exercised, the parties agree that the
Holder must exercise the Warrant in full immediately
prior to the consummation of the sale of Common Stock
pursuant to a Public Offering.
Section 2. Amendment to Section 3 of the Agreement. Section 3 of the
Agreement is hereby amended and restated in its entirety to read as follows:
Section 3. Exercise Price in connection with a
Cashless Exercise of Warrant. The exercise price per
share of Common Stock under the Warrant shall remain
$11.00 per share of Common Stock (subject to
adjustment from time to time pursuant to terms of the
Warrant).
Section 3. Amendment to Section 4 of the Agreement. Section 4 of the
Agreement is hereby amended and restated in its entirety to read as follows:
Section 4. Amended and Restated Stockholders
Agreement. Substantially simultaneously with the
execution of this Amendment, each of Thayer and the
Company shall execute the Amended and Restated
Stockholders Agreement in the form attached hereto as
Exhibit A. The Company agrees to cause the holders of
at least a majority of the then-outstanding
Management Shares (as defined in that certain
Stockholders Agreement, dated as of October 23, 1998,
among the Company, Thayer and the other stockholders
parties thereto (the "Stockholders Agreement")) to
promptly execute same.
Section 4. Deletion of Section 5 of the Agreement. Section 5 of the
Agreement is hereby amended and restated in its entirety to read as follows:
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Section 5. Omitted.
Section 5. Amendment to Section 14 of the Agreement. Section 14 of the
Agreement is hereby amended and restated in its entirety to read as follows:
Section 14. Effectiveness of Sections 4 and 6 hereof.
Notwithstanding anything in Section 4 or 6 hereof to the
contrary, Sections 4 and 6 hereof shall only be effective
upon and if a sale of Common Stock pursuant to a Public
Offering occurs. If such sale of Common Stock pursuant to a
Public Offering does not occur, Sections 4 and 6 hereof
shall be null and void and have no further force or effect.
Section 6. Successors and Assigns. This Amendment shall bind and inure to
the benefit of and be enforceable by the Company and Thayer and their respective
permitted successors and assigns.
Section 7. Counterparts. This Amendment 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 Amendment.
Section 8. Governing Law. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Amendment and the
exhibits hereto 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.
Section 9. No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Amendment. In the event an
ambiguity or question of intent or interpretation arises, this Amendment 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 Amendment.
Section 10. Effectiveness of this Amendment. Notwithstanding anything
herein to the contrary, this Amendment shall only be effective upon and if a
sale of Common Stock pursuant to a Public Offering occurs on or before May 15,
2000. If such sale of Common Stock pursuant to a Public Offering does not occur
on or before May 15, 2000, (a) this Amendment shall be null and void and have no
further force or effect, and (b) the Agreement shall remain in full force and
effect.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the date first written above.
EPLUS INC.
(FORMERLY MLC HOLDINGS, INC.)
By: /s/ Phillip G. Norton
Name: Phillip G. Norton
Title: President and Chief Executive
Officer
TC PLUS, LLC
(FORMERLY 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/ Daniel Raskas
Name: Daniel Raskas
Title: Vice President
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Exhibit A
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AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
Dated as of April 11, 2000
Among
EPLUS INC.
AND CERTAIN OF ITS STOCKHOLDERS
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TABLE OF CONTENTS
Page
Section 1.Definitions..........................................................4
Section 2. Voting Arrangements.............................................8
(a) Election Of Directors.................................................8
(b) Removal Of Directors..................................................8
(c) Vacancies.............................................................8
(d) Rights Unimpaired.....................................................9
(e) Committees............................................................9
(f) Stock Purchase Warrant................................................9
(g) Initial Thayer Directors..............................................9
(h) Fiduciary Duties Unchanged............................................9
(i) Election of Subsidiaries'Directors....................................9
Section 3. Legend..........................................................9
(a) 1933 Act Legend.......................................................9
(b) Removal Of Legends...................................................10
Section 4. Registration Rights............................................10
(a) Shelf Registration...................................................10
(b) Demand Registration..................................................10
(c) Incidental Registration..............................................11
(d) Holdback Agreements..................................................12
(e) Registration And Maintenance Procedures..............................12
(f) Registration Expenses................................................15
(g) Indemnification; Contribution........................................15
(h) Rule 144 Sales.......................................................18
(i) Underwritten Registrations...........................................19
(j) No Inconsistent Agreements...........................................19
(k) S-3 Demands..........................................................19
Section 5. Redemption.....................................................19
Section 6. Amendment And Waiver...........................................20
Section 7. Severability...................................................20
Section 8. Entire Agreement...............................................21
Section 9. Successors And Assigns.........................................21
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Section 10. Counterparts...................................................21
Section 11. Remedies.......................................................21
Section 12. Notices........................................................21
Section 13. Governing Law..................................................22
Section 14. Descriptive Headings...........................................22
Section 15. Survival; Termination..........................................22
Section 16. Other Registration Rights......................................23
Section 17. Effectiveness Of This Agreement................................23
Schedules and Exhibits:
Schedule I Other Management Stockholders
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AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
This AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Agreement") is
dated as of April 11, 2000 among (i) EPLUS INC., formerly MLC Holdings, Inc., a
Delaware corporation (the "Company"), (ii) TC Plus, LLC, formerly TC Leasing,
LLC, a Delaware limited liability company ("Thayer") and (iii) Phillip G. Norton
("Norton"), Bruce M. Bowen and the other Persons listed on Schedule I hereto
(collectively, the "Management Stockholders" and collectively with Thayer, the
"Stockholders").
Subject to Section 17 hereof, the parties hereto amend and restate the
initial stockholders agreement dated as of October 23, 1998 in its entirety and
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.
"Board" means the Company's Board of Directors.
"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.
"Common Stock Purchase Agreement" means the Common Stock Purchase
Agreement, dated as of October 23, 1998, by and between the Company and Thayer.
"Company" is defined in the preface.
"Co-Redemption Notice" is defined in Section 5.
"Demand Registration" is defined in Section 4(b)(i).
"Demand Right" is defined in Section 4(b)(i).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"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 4(c)(i).
"Incidental Registration Statement" is defined in Section 4(c)(i).
"Indemnified Company" is defined in Section 4(g)(ii).
"Indemnified Parties" is defined in Section 4(g)(ii).
"Indemnified Stockholder" is defined in Section 4(g)(i).
"Indemnifying Party" is defined in Section 4(g)(iii).
"Independent Directors" is defined in Section 2(a).
"Losses" is defined in Section 4(g)(i).
"Management Directors" is defined in Section 2(a).
"Management Shares" means Stockholder Shares held by the Management
Stockholders and their Affiliates.
"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.
"Norton" is defined in the preface.
"Options" means any options to purchase Common Stock granted by the
Company.
"Other Redeemers" is defined in Section 5.
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"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 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.
"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 4(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.
"Redeemable Shares" is defined in Section 5.
"Redemption Notice" is defined in Section 5.
"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 4(b)(i).
"Registration Request" is defined in Section 4(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 4(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 4(k)(i).
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"S-3 Registration Notice" is defined in Section 4(k)(i).
"S-3 Registration Request" is defined in Section 4(k)(i).
"S-3 Requesting Holders" is defined in Section 4(k)(i).
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf" is defined in Section 4(a).
"Stockholders" is defined in the preface.
"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 October 23, 1998, 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 October 23, 1998, 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 when Transferred in a Public Sale or to the
Company.
"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.
"Thayer" is defined in the preface.
"Thayer Directors" is defined in Section 2(a).
"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.
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"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. 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) 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) or 2(i) 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.
(c) 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) or 2(i), 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.
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(d) 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.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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(i).
Section 3. Legend
(a) 1933 Act Legend. The certificates representing Stockholder Shares shall
bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY
STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION THEREUNDER,
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or a similar legend indicating that such Stockholder Shares may not be
Transferred in violation of the Securities Act. Unless the above legend or a
similar legend in already on the certificate representing such Stockholder
Shares, then 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.
(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. The holders of Stockholder Shares
with a legend referencing that certain Stockholders Agreement, dated as of
October 23, 1998, among the Company and certain of its stockholders shall be
entitled to receive from the Company, without expense to the holder, a new
certificate not bearing such legend.
Section 4. 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.
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(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 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 4(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 4(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 4(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 4(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:
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(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 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 4 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 4(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 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;
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(vii) Upon the occurrence of any event contemplated by Section
4(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 4(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 4(g). The above shall be done at each closing under such underwriting
agreement, or as and to the extent required thereunder;
(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
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(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
4(e)(iii)(B), 4(e)(iii)(D) or 4(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 4(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 4 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 4(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 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
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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
4(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.
(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
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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 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
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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 4(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 4(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 4(g)(i) or 4(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 4(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 4(g)(iv).
Notwithstanding the provisions of this Section 4(g)(iv), an Indemnifying Party
that is a selling Stockholder shall not be 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 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
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(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 4 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
(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.
S-3 Demand Registrations shall 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 5. Redemption. 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
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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 5, 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 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 6. 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 7. 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.
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Section 8. 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 9. Successors and Assigns. Except as otherwise provided in this
Section 9, 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. Any assignee of a
Stockholder shall be deemed a "Stockholder" and entitled to all benefits of a
"Stockholder" for all purposes hereunder, except that no assignee of a
Stockholder other than an Affiliate of such Stockholder (a) shall be bound be
the provisions of Section 2 hereof or (b) shall be entitled to the benefits or
suffer the burdens of Section 5 hereof, unless in each case the assignor and
assignee explicitly agree otherwise.
Section 10. 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 11. 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 12. 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:
if to the Company:
ePlus 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.
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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: Terrance L. Bessey, 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 is deemed a Stockholder for any purpose hereunder:
at the address set forth in the Company's records
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. 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 14. Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
Section 15. 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 when Transferred in a Public Sale or to the Company. All rights and
obligations of the Stockholders and the Company shall terminate upon Thayer
Shares constituting less than 5% of the issued and outstanding Common Shares,
and all rights and obligations of the Stockholders and the Company 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 15.
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Section 16. 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.
Section 17. Effectiveness of this Agreement. Notwithstanding anything
herein to the contrary, this Agreement shall only be effective upon and if a
sale of Common Stock pursuant to a Public Offering occurs on or before May 15,
2000. If such sale of Common Stock pursuant to a Public Offering does not occur
on or before May 15, 2000, (a) this Agreement shall be null and void and have no
further force or effect, and (b) the initial stockholders agreement of the
Company and certain of its stockholders, dated as of October 23, 1998, shall
remain in full force and effect.
[END OF PAGE]
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties, which constitute the Company,
Thayer and the holders of a majority of the outstanding Management Shares, have
executed this Amended and Restated Stockholders Agreement as of the date first
above written.
THE COMPANY:
EPLUS INC. (formerly MLC Holdings, Inc.)
By: /s/ Philip G. Norton
Name: Philip G. Norton
Title:President and Chief Executive Officer
THAYER:
TC PLUS, LLC (formerly 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/ Daniel A. Raskas
Name: Daniel A. Raskas
Title:Vice President
HOLDERS OF A MAJORITY OF THE OUTSTANDING
MANAGEMENT SHARES:
/s/ Phillip G. Norton
PHILLIP G. NORTON
Address:
FAX:
/s/ BRUCE M. BOWEN
BRUCE M. BOWEN
Address:
FAX:
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JAP INVESTMENT GROUP, L.P.
By: J.A.P., Inc., its general partner
By: /s/ Phillip G. Norton
Name: Phillip G. Norton
Title:
/s/ KEVIN M. NORTON
KEVIN M. NORTON
Address:
FAX:
/s/ PATRICK J. NORTON, JR.
PATRICK J. NORTON, JR.
Address: 312 Hines Drive
Raleigh, NC 27619
FAX:
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SCHEDULE I
OTHER MANAGEMENT STOCKHOLDERS
JAP Investment Group, L.P.
Kevin M. Norton
Patrick J. Norton, Jr.
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