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): October 23, 1998
MLC HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 000-2896 54-1817218
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
11150 Sunset Hills Road, Suite 110, Reston, Virginia 20190
(Address, including zip code, of principal executive office)
(703) 834-5710
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(Registrant's telephone number, including area code)
Item 5. Other Events.
On October 23, 1998, TC Leasing, LLC, a Delaware limited liability company,
purchased 1,111,1111 shares of common stock, $0.0l par value per share, of MLC
Holdings, Inc. ("MLC" or the "Company") for a price of $9.00 per share or
$10,000,000 in aggregate. In addition to the shares, the Company, pursuant to a
Stock Purchase Warrant dated as of October 23, 1998, granted TC Leasing, LLC the
right to purchase an additional 1,090,909 shares of MLC common stock at a price
of $11.00 per share, subject to certain anti-dilution adjustments. The warrant
is exercisable through December 31, 2001, unless it is extended pursuant to the
terms of the warrant.
The shares issued to TC Leasing, LLC were not registered under the
Securities Act of 1933, as amended, and the shares were issued pursuant to an
exemption from the registration requirements of the Securities Act of 1933, as
amended .
The managing member of TC Leasing, LLC is Thayer Equity Investors III,
L.P., a Delaware limited partnership. The general partner of Thayer Equity
Investors III, L.P., is TC Equity Partners, L.L.C., a Delaware limited liability
company. Three individuals, Frederic V. Malek, Carl J. Rickertsen, and Paul G.
Stern, are the only founding members of TC Equity Partners III, L.L.C. and,
accordingly, control TC Leasing, LLC, which purchased the shares of MLC common
stock. Mr. Rickertsen has served as a Director of the Company since November
1996.
TC Leasing, LLC purchased the shares of common stock pursuant to a Common
Stock Purchase Agreement, dated as of October 23, 1998. Under the terms of the
Common Stock Purchase Agreement, MLC has agreed to certain continuing
obligations. In particular, MLC is required to: (i) deliver to TC Leasing, LLC
certain financial statements, operating budgets, press releases and regulatory
filings relating to MLC; (ii) provide prompt notice to TC Leasing, LLC of any
defaults under any agreements of the company or any of its subsidiaries which
are likely to have a material adverse effect on the Company; and (iii) refrain
from engaging in any transaction with any officer, director, employee or
affiliate of MLC (or certain family members thereof) unless such transaction was
negotiated at arms length in good faith and has a value of less than $150,000 or
is approved by TC Leasing, LLC. Significantly, the Company may not pay any
dividends or make any other distributions on MLC common stock until October 23,
1999, without the prior written consent of TC Leasing, LLC.
As a condition to entering into the Common Stock Purchase Agreement, TC
Leasing, LLC entered into a Stockholders Agreement, dated as of October 23,
1998, with the Company, Phillip G. Norton, the Chairman of the Board and Chief
Executive Officer of the Company, Bruce M. Bowen, a Director and the Executive
Vice President of the Company, J.A.P. Investment Group, L.P., a Delaware limited
partnership, Kevin M. Norton, and Patrick J. Norton, Jr. (the "Management
Stockholders").
Pursuant to the Stockholders Agreement, MLC agreed to expand the Board of
Directors to six persons. The Stockholders Agreement gave TC Leasing, LLC, the
right to name two of the directors. One of such directors, Mr. Rickertsen,
already serves on the Board of Directors of MLC. TC Leasing, LLC has named and
the Board of Directors has elected Mr. Stern to serve as the other director
representing TC Leasing, LLC. The Management Stockholders are permitted to name
two of the remaining four directors. Mr. Phillip Norton and Mr. Bowen, both of
whom are already serving on the Board of Directors of MLC, will serve as
representatives of the Management Stockholders. Under the terms of the
Stockholders Agreement, the last two positions, the independent directors, are
to be chosen by a nominating committee consisting of one representative of TC
Leasing, LLC and one representative of the Management Stockholders. To satisfy
this last provision, TC Leasing, LLC and the Management Stockholders have agreed
that C. Thomas Faulders, III and Terrence O'Donnell, both of whom currently
serve on the Board of Directors of MLC will continue to serve as directors of
MLC.
The Stockholders Agreement also grants TC Leasing, LLC preemptive rights
restricts the ability of the Management Stockholders and TC Leasing, LLC to
transfer their shares of MLC common stock and permits TC Leasing, LLC to force
the sale of the entire Company under certain limited circumstances. Until April
23, 1999, the Company may not issue, without the prior written consent of TC
Leasing, LLC, any shares of MLC common stock, any convertible debt securities,
any security which is a combination of a debt and equity security or any option
warrant or other right to subscribe for such a security. Until October 23, 1999,
the Company may not issue any such securities without first offering to sell
them to TC Leasing, LLC. Finally, until October 23, 2000, the Company may not
sell any such securities without first giving TC Leasing, LLC the opportunity to
purchase enough of such securities to maintain their percentage ownership
position in the Company. However, except for a few instances set forth in the
Stockholders Agreement, regardless of the other rights set forth in the
Stockholders Agreement, without the prior written consent of holders of a
majority of the shares held by the Management Stockholders, TC Leasing, LLC may
not beneficially own more than 33.3% of the issued and outstanding shares of MLC
common stock on a fully diluted basis.
TC Leasing, LLC and the Management Stockholders may transfer their shares
of MLC common stock to their respective affiliates subject to certain
restrictions. In particular, such transferee must join in the Stockholders
Agreement. The limitations on transferability also prevent TC Leasing, LLC from
controlling more than 33.3 percent of the shares of MLC common stock outstanding
on a fully diluted basis without the prior consent of the Management
Stockholders, except for a few instances set forth in the Stockholders
Agreement. The limitataions also prevent TC Leasing, LLC and the Management
Stockholders from transferring shares if such transfer would result in TC
Leasing, LLC and the Management Stockholders controlling less than 51 percent of
the outstanding shares of MLC common stock. The Management Stockholders may in
certain circumstances sell their shares for value to the public subject to TC
Leasing, LLC having a right of first refusal and "tag-along" rights in certain
circumstances. TC Leasing, LLC may only sell a block of shares, i.e., shares
constituting more than 5 percent of the total outstanding shares of MLC common
stock, if TC Leasing, LLC first offers the shares to the Management
Stockholders. Certain other restrictions on the transfer of MLC common stock by
the parties to the Stockholders Agreement are set forth in the agreement.
Under the Stockholders Agreement, TC Leasing, LLC can force a sale of the
Company unless the Management Stockholders agree to purchase TC Leasing, LLC's
shares for the same value as would be paid in the sale transaction. Such a
forced sale may only occur if the consideration to be paid to stockholders of
the Company in the transaction meets certain threshhold levels set forth in the
Stockholders Agreement.
The Stockholders Agreement also gives TC Leasing, LLC certain demand, shelf
and piggy-back registration rights in connection with the shares TC Leasing, LLC
purchased or has the option to purchase pursuant to the Stock Purchase Warrant.
For additional information regarding the Common Stock Purchase Agreement,
the Stockholders Agreement, and the Stock Purchase Warrant, please refer to the
copies of those documents which are incorporated herein by reference and
included as Exhibits to this Current Report on Form 8-K. The foregoing
discussion is qualified in its entirety by reference to such documents.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
MLC HOLDINGS, INC.
(Registrant)
By: /S/ PHILLIP G. NORTON
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By: Phillip G. Norton, Chairman of
the Board, President and Chief
Executive Officer
Date: November 13, 1998
INDEX TO EXHIBITS
SEQUESTERED
EXHIBIT NO. ITEM PAGE NO
2.1 Stock Purchase Agreement, dated
as of October 23, 1998 by and between
MLC Holdings Inc., and TC Leasing, LLC
2.2 Stockholders Agreement dated as of
October 23, 1998, by and among
MLC Holdings, Inc. TC Leasing, LLC,
Phillip G. Norton, Bruce M. Bowen,
J.A.P. Investment Group, L.P.,
Kevin M. Norton, and Patrick J. Norton, Jr.
2.3 Stock Purchase Warrant, dated as of
October 23, 1998, by and between MLC
Holdings, Inc. and TC Leasing, LLC
99.1 Text of press release, dated October 23,
1998, issued by MLC Holdings, Inc.