December 18, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) December 18, 1998
MLC Holdings, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-28926 54-1817218
(Commission File Number) (I.R.S. Employer Identification No.)
400 Herndon Parkway, Herndon, VA 20170
(Address of Principal Executive Offices) (Zip Code)
(703) 834-5710
(Registrant's Telephone Number, Including Area Code)
ITEM 5. OTHER EVENTS.
On December 18, 1998, MLC Holdings, Inc., a Delaware corporation, with its two
wholly-owned subsidiaries, MLC Group, Inc., a Virginia corporation, and MLC
Federal, Inc., a Virginia corporation (collectively, "MLC"), as co-borrowers
finalized and executed documents establishing a $50,000,000 committed recourse
line of credit (the "First Union Credit Facility"), with First Union National
Bank, a national banking association, as agent. Under the terms of the First
Union Credit Facility, a maximum amount of ($50,000,000) is available to MLC,
though each draw is subject to the availability of sufficient collateral in the
borrowing base. The First Union Credit Facility is evidenced by a credit
agreement, dated as of December 31, 1998 (the "Credit Agreement", security
agreement, dated as of December 31, 1998 (the "Security Agreement") and a pledge
agreement dated as of December 18, 1998 (the "Pledge Agreement"). The First
Union Credit Facility replaces MLC's $35,000,000 committed recourse line of
credit with First Union National Bank, N.A., successor by merger on April 28,
1998 to CoreStates Bank, N.A., which expired on December 19, 1998.
Purpose and Use of the First Union Credit Facility
MLC intends to use the First Union Credit Facility primarily for the short term
financing of inventory, receivables, and equipment prior to sale or permanent
financing provided by non-recourse loans to be obtained from third party
lenders. As of December 18, 1998, there was $12,000,000 outstanding under the
facility.
Principal Terms of the First Union Credit Facility
Borrowings under the First Union Credit Facility will bear interest at LIBOR +
150 basis points, or, at the Company's option, prime minus one-half percent. As
of December 18, 1998, the balance on the First Union Credit Facility was $12.0
million. The Credit Facility is secured by certain of the three company's assets
such as chattel paper (including leases), receivables, inventory, and equipment.
In addition, MLC Holdings, Inc. has entered into pledge agreements to pledge the
common stock of each of its subsidiaries. The availability of the line is
subject to a borrowing base, which consists of inventory, receivables, purchased
assets, and leases. Availability under the revolving lines of credit may be
limited by the asset value of equipment purchased by MLC and may be further
limited by certain covenants and terms and conditions of the facilities. In the
event that MLC is unable to sell the equipment or unable to finance the
equipment on a permanent basis within a certain period of time, the availability
of credit under the lines could be diminished or eliminated. Furthermore, in the
event that receivables collateralizing the line are uncollectible, MLC would be
responsible for repayment of the lines of credit. The First Union Credit
Facility contains a number of covenants binding on MLC requiring, among other
things, minimum tangible net worth, cash flow coverage ratios, maximum debt to
equity ratio, maximum amount of guarantees of subsidiary obligations, mergers,
acquisitions, and asset sales. The Credit Facility is a full recourse facility,
secured by first-priority blanket liens on all of MLC's assets.
The First Union Credit Facility expires on December 18, 1999. Other participants
in the First Union Credit Facility, each for $7,000,000, are: Riggs Bank, N.A.,
Key Bank, N.A., Summit Bank, N.A., Bank Leumi USA, and Wachovia Bank., N.A.
1
Incorporation of Exhibits
The foregoing is only a summary of certain terms of the First Union Credit
Facility and the LRP Facility, and is subject to, and supplemented and qualified
by, the copy of the text of the Credit Agreement, the Security Agreement, and
the Pledge Agreement, attached hereto as Exhibits "5.1" "5.2" and "5.3"
respectively, and incorporated herein by this reference.
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 hereunto duly authorized.
MLC Holdings, Inc.
(Registrant)
Date: December 31, 1998 By:_______________________
Philip G. Norton, Chairman
2
EXHIBIT INDEX
The following exhibits are filed as part of this report:
Exhibit
No. Item
5.1 Text of Credit Agreement dated December 18, 1998 between MLC
Holdings, Inc., MLC Group, Inc., and MLC Federal, Inc. and
Certain Banking Institutions with First Union National Bank As
Agent
5.2 Text of Security Agreement dated December 18, 1998
between MLC Holdings, Inc., MLC Group, Inc., and MLC Federal,
Inc. and Certain Banking Institutions with First Union National
Bank As Agent
5.3 Text of Pledge Agreement dated December 18, 1998 between MLC
Holdings, Inc., MLC Group, Inc., and MLC Federal, Inc. and
Certain Banking Institutions with First Union National Bank As
Agent
5.3 Text of Notes by and between MLC Holdings, Inc., MLC Group, Inc.,
MLC Federal, Inc., and First Union National Bank, Bank Leumi USA,
Riggs Bank N.A., Wachovia Bank, Summit Bank, and Key Bank
National Association, respectively.
3