-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PhPSTdOmpbxqeEu5czX/zZhtXXI1Lla4HdJLCdzMbMiBfmPJSudtcXRjvoTo8SA9 EV2rEN9ivRNukPFup82oVQ== 0000950133-98-004117.txt : 19981216 0000950133-98-004117.hdr.sgml : 19981216 ACCESSION NUMBER: 0000950133-98-004117 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19981215 GROUP MEMBERS: CARL J. RICKERTSEN GROUP MEMBERS: FREDERIC V. MALEK GROUP MEMBERS: PAUL G. STERN GROUP MEMBERS: TC EQUITY PARTNERS, L.L.C. GROUP MEMBERS: TC LEASING, LLC GROUP MEMBERS: THAYER EQUITY INVESTORS III LP SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MLC HOLDINGS INC CENTRAL INDEX KEY: 0001022408 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE LESSORS [6172] IRS NUMBER: 541817218 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-51049 FILM NUMBER: 98770054 BUSINESS ADDRESS: STREET 1: 11150 SUNSET HILLS ROAD STREET 2: SUITE 110 CITY: RESTON STATE: VA ZIP: 20190 BUSINESS PHONE: 7038345710 MAIL ADDRESS: STREET 1: 11150 SUNSET HILLS ROAD STREET 2: SUITE 110 CITY: RESTON STATE: VA ZIP: 20190 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: THAYER EQUITY INVESTORS III LP CENTRAL INDEX KEY: 0001050779 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 521935730 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 1455 PENNSYLVANIA AVENUE CITY: WASHINGTON STATE: DC ZIP: 20004 BUSINESS PHONE: 2023710150 MAIL ADDRESS: STREET 1: 1455 PENNSYLVANIA AVENUE CITY: WASHINGTON STATE: DC ZIP: 20004 SC 13D/A 1 AMENDED SCHEDULE 13D 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (Amendment No. 1) Under the Securities Exchange Act of 1934 MLC Holdings, Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, Par Value $.01 - -------------------------------------------------------------------------------- (Title of Class of Securities) 55305V107 - -------------------------------------------------------------------------------- (CUSIP NUMBER) Daniel A. Raskas, Esq.; Thayer Capital Partners, 1455 Pennsylvania Ave., N.W., Suite 350 Washington, D.C. 20004 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 23, 1998 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Check the following box if a fee is being paid with this statement [ ]. 2 SCHEDULE 13D (Cover Page -- Part II) CUSIP NO.55305V107 - -------------------------------------------------------------------------------- 1) Name of Reporting Person/S.S. or I.R.S. Identification No. of Above Person TC Leasing, LLC - -------------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3) SEC Use Only - -------------------------------------------------------------------------------- 4) Source of Funds: OO - -------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item 2(d) or 2(e) - -------------------------------------------------------------------------------- 6) Citizenship or Place of Organization: Delaware - -------------------------------------------------------------------------------- Number of Shares 7) Sole Voting Power: 2,202,020* Beneficially Owned By Each Reporting ------------------------------------------- Person With 8) Shared Voting Power: 0 ------------------------------------------- 9) Sole Dispositive Power:2,202,020* ------------------------------------------- 10) Shared Dispositive Power: 0 - -------------------------------------------------------------------------------- 11) Aggregate Amount Beneficially Owned by Each Reporting Person: 2,202,020* - -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares - -------------------------------------------------------------------------------- 13) Percent of Class Represented by Amount in Row (11): 25.8% - -------------------------------------------------------------------------------- 14) Type of Reporting Person: OO - -------------------------------------------------------------------------------- *Includes 1,090,909 shares obtainable upon the exercise of warrants with an aggregate purchase price of $11,999,999. 2 3 SCHEDULE 13D (Cover Page -- Part II) CUSIP NO.55305V107 - -------------------------------------------------------------------------------- 1) Name of Reporting Person/S.S. or I.R.S. Identification No. of Above Person Thayer Equity Investors III, L.P. - -------------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (a) (b) - -------------------------------------------------------------------------------- 3) SEC Use Only - -------------------------------------------------------------------------------- 4) Source of Funds: OO - -------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item 2(d) or 2(e) - -------------------------------------------------------------------------------- 6) Citizenship or Place of Organization: Delaware - -------------------------------------------------------------------------------- Number of Shares 7) Sole Voting Power: 2,202,020* Beneficially Owned By Each Reporting ------------------------------------------- Person With 8) Shared Voting Power: 0 ------------------------------------------- 9) Sole Dispositive Power: 2,202,020* ------------------------------------------- 10) Shared Dispositive Power: 0 - -------------------------------------------------------------------------------- 11) Aggregate Amount Beneficially Owned by Each Reporting Person: 2,202,020* - -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares - -------------------------------------------------------------------------------- 13) Percent of Class Represented by Amount in Row (11): 25.8% - -------------------------------------------------------------------------------- 14) Type of Reporting Person: PN - -------------------------------------------------------------------------------- *Includes 1,090,909 shares obtainable upon the exercise of warrants with an aggregate purchase price of $11,999,999. 3 4 SCHEDULE 13D (Cover Page -- Part II) CUSIP NO.55305V107 - -------------------------------------------------------------------------------- 1) Name of Reporting Person/S.S. or I.R.S. Identification No. of Above Person TC Equity Partners, L.L.C. - -------------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (a) (b) - -------------------------------------------------------------------------------- 3) SEC Use Only - -------------------------------------------------------------------------------- 4) Source of Funds: OO - -------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item 2(d) or 2(e) - -------------------------------------------------------------------------------- 6) Citizenship or Place of Organization: Delaware - -------------------------------------------------------------------------------- Number of Shares 7) Sole Voting Power: 2,202,020* Beneficially Owned By Each Reporting ------------------------------------------- Person With 8) Shared Voting Power: 0 ------------------------------------------- 9) Sole Dispositive Power: 2,202,020* ------------------------------------------- 10) Shared Dispositive Power: 0 - -------------------------------------------------------------------------------- 11) Aggregate Amount Beneficially Owned by Each Reporting Person: 2,202,020* - -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares - -------------------------------------------------------------------------------- 13) Percent of Class Represented by Amount in Row (11): 25.8% - -------------------------------------------------------------------------------- 14) Type of Reporting Person: OO - -------------------------------------------------------------------------------- *Includes 1,090,909 shares obtainable upon the exercise of warrants with an aggregate purchase price of $11,999,999. 4 5 SCHEDULE 13D (Cover Page -- Part II) CUSIP NO.55305V107 - -------------------------------------------------------------------------------- 1) Name of Reporting Person/S.S. or I.R.S. Identification No. of Above Person Frederic V. Malek - -------------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (a) (b) - -------------------------------------------------------------------------------- 3) SEC Use Only - -------------------------------------------------------------------------------- 4) Source of Funds: OO - -------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item 2(d) or 2(e) - -------------------------------------------------------------------------------- 6) Citizenship or Place of Organization: United States of America - -------------------------------------------------------------------------------- Number of Shares 7) Sole Voting Power: 0 Beneficially Owned By Each Reporting --------------------------------------------- Person With 8) Shared Voting Power: 2,202,020* --------------------------------------------- 9) Sole Dispositive Power: 0 --------------------------------------------- 10) Shared Dispositive Power: 2,202,020* - -------------------------------------------------------------------------------- 11) Aggregate Amount Beneficially Owned by Each Reporting Person: 2,202,020* - -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [X] Mr. Malek disclaims beneficial ownership of the shares disclosed in this Schedule 13D. - -------------------------------------------------------------------------------- 13) Percent of Class Represented by Amount in Row (11): 25.8% - -------------------------------------------------------------------------------- 14) Type of Reporting Person: IN - -------------------------------------------------------------------------------- *Includes 1,090,909 shares obtainable upon the exercise of warrants with an aggregate purchase price of $11,999,999. 5 6 SCHEDULE 13D (Cover Page -- Part II) CUSIP NO.55305V107 - -------------------------------------------------------------------------------- 1) Name of Reporting Person/S.S. or I.R.S. Identification No. of Above Person Carl J. Rickertsen - -------------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (a) (b) - -------------------------------------------------------------------------------- 3) SEC Use Only - -------------------------------------------------------------------------------- 4) Source of Funds: OO - -------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item 2(d) or 2(e) - -------------------------------------------------------------------------------- 6) Citizenship or Place of Organization: United States of America - -------------------------------------------------------------------------------- Number of Shares 7) Sole Voting Power: 20,000* Beneficially Owned By Each Reporting --------------------------------------------- Person With 8) Shared Voting Power: 2,202,020** ---------------------------------------------- 9) Sole Dispositive Power: 20,000* ---------------------------------------------- 10) Shared Dispositive Power: 2,202,020** - -------------------------------------------------------------------------------- 11) Aggregate Amount Beneficially Owned by Each Reporting Person: 2,222,020 - -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [X] Mr. Rickertsen disclaims beneficial ownership of the shares disclosed in this Schedule 13D. - -------------------------------------------------------------------------------- 13) Percent of Class Represented by Amount in Row (11): 25.9% - -------------------------------------------------------------------------------- 14) Type of Reporting Person: IN - -------------------------------------------------------------------------------- *Obtainable upon the exercise of options issued pursuant to the 1996 Outside Director Stock Option Plan (the "Directors Options"). **Includes 1,090,909 shares obtainable upon the exercise of warrants with an aggregate purchase price of $11,999,999. 6 7 SCHEDULE 13D (Cover Page -- Part II) CUSIP NO.55305V107 - -------------------------------------------------------------------------------- 1) Name of Reporting Person/S.S. or I.R.S. Identification No. of Above Person Paul G. Stern - -------------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (a) (b) - -------------------------------------------------------------------------------- 3) SEC Use Only - -------------------------------------------------------------------------------- 4) Source of Funds: OO - -------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item 2(d) or 2(e) - -------------------------------------------------------------------------------- 6) Citizenship or Place of Organization: United States of America - -------------------------------------------------------------------------------- Number of Shares 7) Sole Voting Power: 0 Beneficially Owned By Each Reporting Person With -------------------------------------------- 8) Shared Voting Power: 2,202,020* -------------------------------------------- 9) Sole Dispositive Power: 0 -------------------------------------------- 10) Shared Dispositive Power: 2,202,020* - -------------------------------------------------------------------------------- 11) Aggregate Amount Beneficially Owned by Each Reporting Person: 2,202,020* - -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [X] Dr. Stern disclaims beneficial ownership of the shares disclosed in this Schedule 13D. - -------------------------------------------------------------------------------- 13) Percent of Class Represented by Amount in Row (11): 25.8% - -------------------------------------------------------------------------------- 14) Type of Reporting Person: IN - -------------------------------------------------------------------------------- *Includes 1,090,909 shares obtainable upon the exercise of a warrant with an aggregate purchase price of $11,999,999. 7 8 ITEM 1. SECURITY AND ISSUER. This statement relates to shares of common stock, $.01 par value per share ("Common Stock"), of MLC Holdings, Inc., a Delaware corporation (the "Issuer"), which has its principal executive offices at 400 Herndon Parkway, Herndon, VA 20170. ITEM 2. IDENTITY AND BACKGROUND. (a)-(c) & (f). This statement is filed on behalf of each of the persons named in paragraphs (i) - (vi) below (together, the "Reporting Persons") pursuant to their written agreement to the joint filing of this statement. The following information is furnished with respect to each of the Reporting Persons: (i) TC Leasing, LLC TC Leasing, LLC ("Leasing") is a Delaware limited liability company whose principal office address is 1455 Pennsylvania Avenue, N.W., Suite 350, Washington, D.C. 20004. Leasing was formed to hold shares of Common Stock. (ii) Thayer Equity Investors III, L.P. Thayer Equity Investors III, L.P. ("Thayer") is a Delaware limited partnership whose principal office address is 1455 Pennsylvania Avenue, N.W., Suite 350, Washington, D.C. 20004. Thayer is the managing member of Leasing. Thayer is a private equity fund, and its principal business is making investments in the information technology and services, travel and leisure services, telecommunications and consumer products industries. Paragraph (iii) of this Item 2 contains information regarding the general partner of Thayer and paragraphs (iv) through (vi) of this Item 2 contain information regarding the persons controlling such general partner. (iii) TC Equity Partners, L.L.C. TC Equity Partners, L.L.C. ("TC Equity") is a Delaware limited liability company whose principal office address is 1455 Pennsylvania Avenue, N.W., Suite 350, Washington, D.C. 20004. TC Equity is the sole general partner of Thayer, and its principal business is making investments in the information technology and services, travel and leisure services, telecommunications and consumer products industries. Paragraphs (iv) through (vi) contain information regarding the principal members of TC Equity. (iv) Frederic V. Malek Mr. Malek, a United States citizen, is one of the members of TC Equity. His business address is 1455 Pennsylvania Avenue, N.W., Suite 350, Washington, D.C. 20004. 8 9 (v) Carl J. Rickertsen Mr. Rickertsen, a United States citizen, is one of the members of TC Equity. Mr. Rickertsen is a director of the Issuer. His business address is 1455 Pennsylvania Avenue, N.W., Suite 350, Washington, D.C. 20004. (vi) Paul G. Stern Dr. Stern, a United States citizen, is one of the members of TC Equity. Dr. Stern also is a director of the Issuer. His business address is 1455 Pennsylvania Avenue, N.W., Suite 350, Washington, D.C. 20004. (d)-(e). During the last five years, none of the Reporting Persons has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Pursuant to an agreement dated as of October 23, 1998 by and among the Issuer and Leasing (the "Agreement"), Thayer used investment capital contributed by TC Equity, as the general partner of Thayer, and by the limited partners of Thayer, and their respective members, as the case may be, to purchase shares of the Issuer's Common Stock at an aggregate purchase price of $10,000,000. Thayer anticipates using the same source of funds as it used to purchase shares of the Common Stock to purchase shares of Common Stock underlying the warrant (a copy of which is attached hereto as Exhibit 4) granting Leasing the right to purchase 1,090,909 shares of the Issuer's common stock at a price of $11.00 per share (the "Warrant"). ITEM 4. PURPOSE OF TRANSACTION. The Reporting Persons acquired their shares of Common Stock pursuant to the Agreement for the purpose of exerting influence over the Issuer. Dr. Stern and Mr. Rickertsen currently serve as directors of the Issuer. The Reporting Persons do not have any present plans or proposals which relate to or would result in any of the following actions: (a) the acquisition or disposition of securities of the Issuer, except for the acquisition of Common Stock pursuant to the Warrant; (b) any extraordinary corporate transactions involving the Issuer or any of its subsidiaries, such as a merger, reorganization or liquidation; (c) a sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; (d) any change in the present board of directors or management of the Issuer; (e) any material change in the Issuer's present capitalization or dividend policy; (f) any other material change in the Issuer's business or corporate structure; (g) changes in the Issuer's charter or bylaws or 9 10 any other actions which may impede the acquisition of control of the Issuer by any person; (h) causing the Common Stock to be delisted from the National Association of Securities Dealers Automated Quotations National Market System; (i) causing a class of the Issuer's equity securities to become eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended; or (j) any action similar to any of those enumerated above. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a)-(b). The aggregate number and percentage of outstanding shares of Common Stock beneficially owned by each of the Reporting Persons are set forth below. Each Reporting Person has the sole power (except as otherwise noted) to vote and to dispose of the shares of Common Stock listed opposite its name. Name of Number of Shares Percent of Outstanding Beneficial Owner Beneficially Owned (1) Shares Owned (2) ---------------- ------------------ ---------------- TC Leasing, LLC 2,202,020 25.8% Thayer Equity Investors III, L.P.(3) 2,202,020 25.8% TC Equity Partners, L.L.C. (4) 2,202,020 25.8% Frederic V. Malek(5) 2,202,020 25.8% Paul G. Stern(5) 2,202,020 25.8% Carl J. Rickertsen(5) 2,222,020(6) 25.9% ------------ (1) Except as otherwise noted, including 1,090,909 shares of Common Stock that Leasing has the right to acquire pursuant to the Warrant. (2) Based upon shares of Common Stock issued and outstanding on October 23, 1998, including shares underlying the Warrant. (3) Thayer is the managing member of Leasing. (4) TC Equity is the sole general partner of Thayer and has sole voting and investment power with respect to the shares of Common Stock held of record by Leasing. (5) Messrs. Malek and Rickertsen and Dr. Stern share power to vote and dispose of shares of Common Stock, except for the shares of Common Stock underlying the Directors Options over which Mr. Rickertsen has sole voting and dispositive power. (6) Including the Directors Options. (c) The Reporting Persons did not effect any transactions in Common Stock during the past sixty days other than as described above. (d)-(e) Not Applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Pursuant to the Agreement, the Issuer may not pay any dividends or make any other distributions on its Common Stock until October 23, 1999 without the prior written consent of Leasing. In addition to the Agreement, Leasing entered into a stockholders agreement, dated as of October 23, 1998 among the Issuer, Phillip G. Norton, Bruce M. Bowen, JAP Investment Group, L.P., Kevin M. Norton and Patrick J. Norton (the "Stockholders Agreement"). 10 11 According to the terms and conditions of the Stockholders Agreement, (a) certain transfer restrictions were imposed on, and disposition rights were granted with respect to, Common Stock owned by the parties to such agreement, (b) the stockholders agreed to take all action necessary to cause the Board of Directors of the Issuer to be comprised of six directors, with two designated by each of Leasing and management and two designated by a nominating committee comprised of one individual designated by management and one individual designated by Leasing, (c) each management stockholder agreed to appoint Mr. Rickertsen as his proxy and (d) Leasing obtained certain preemptive and registration rights. The Issuer granted Leasing the Warrant, exercisable at any time from October 23, 1998 until December 31, 2001, for the purchase from the Issuer of 1,090,909 shares of Common Stock at a price per share of $11.00. ITEM 7. MATERIALS TO BE FILED AS EXHIBITS. Exhibit 1 - Joint Filing Agreement dated November 2, 1998 among TC Leasing, LLC, Thayer Equity Investors III L.P. and TC Equity Partners, L.L.C. Exhibit 2 - Common Stock Purchase Agreement dated October 23, 1998 by and between MLC Holdings, Inc. and TC Leasing, LLC Exhibit 3 - Stockholders Agreement dated October 23, 1998 by and between MLC Holdings, Inc. and Certain of its Stockholders. Exhibit 4 - Stock Purchase Warrant. 11 12 SIGNATURES After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this statement is true, complete and correct. Dated: December 15, 1998 TC LEASING, LLC By: /s/ DOUGLAS H. GILBERT ------------------------- Name: Douglas H. Gilbert Authorized Representative THAYER EQUITY INVESTORS III, L.P. By: TC Equity Partners, L.L.C. its General Partner By: /s/ FREDERIC V. MALEK ---------------------- Frederic V. Malek Member TC EQUITY PARTNERS, L.L.C. By: /s/ FREDERIC V. MALEK ----------------------- Frederic V. Malek Member /s/ FREDERIC V. MALEK ------------------------- Frederic V. Malek /s/ CARL J. RICKERTSEN ------------------------- Carl J. Rickertsen /s/ PAUL G. STERN ------------------------- Paul G. Stern 12 EX-1 2 JOINT FILING AGREEMENT 1 EXHIBIT 1 JOINT FILING AGREEMENT This will confirm the agreement by and among all of the undersigned that Amendment No. 1 to Schedule 13D filed on or about this date with respect to the beneficial ownership by the undersigned of shares of the common stock, par value $.01 per share, of MLC Holdings, Inc. is being filed on behalf of each of the undersigned. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Dated: December 15, 1998 TC LEASING, LLC THAYER EQUITY INVESTORS III, L.P. By: /s/ DOUGLAS H. GILBERT By: TC Equity Partners, L.L.C. its --------------------------- General Partner Name: Douglas H. Gilbert Authorized Representative By: /s/ FREDERIC V. MALEK ---------------------- Frederic V. Malek Member /s/ PAUL G. STERN TC EQUITY PARTNERS, L.L.C. ----------------------- Paul G. Stern By: /s/ FREDERIC V. MALEK ---------------------- Frederic V. Malek /s/ CARL J. RICKERTSEN Member ----------------------- Carl J. Rickertsen /s/ FREDERIC V. MALEK ----------------------- Frederic V. Malek EX-2 3 COMMON STOCK PURCHASE AGREEMENT 1 EXHIBIT 2 ================================================================================ COMMON STOCK PURCHASE AGREEMENT BY AND BETWEEN MLC HOLDINGS, INC. AND TC LEASING, LLC OCTOBER 23, 1998 ================================================================================ 2 TABLE OF CONTENTS
PAGE ---- 1. Authorization and Closing.............................................................1 1A. Authorization of the Common Stock.......................................1 1B. Purchase and Sale of the Shares.........................................1 1C. The Closing.............................................................1 2. Deliveries at Closing.................................................................1 2A. The Company's Deliveries at Closing.....................................1 2B. Purchaser's Deliveries at the Closing...................................3 3. Definitions...........................................................................3 3A. Definitions.............................................................3 4. Covenants.............................................................................8 4A. Financial Statements and Other Information..............................8 4B. Restrictions...........................................................10 4C. Public Disclosures.....................................................10 4D. Use of Proceeds........................................................11 4E. Payment of Bonuses to Norton...........................................11 4F. Confidentiality........................................................11 4G. Filings................................................................11 4H. Mergers or Consolidations..............................................12 4I. Material Decisions.....................................................12 4J. Super Majority Board Approval..........................................12 4K. Compensation Committee.................................................13 4L. Determination Letter...................................................13 4M. Transfer Agent Restriction.............................................13 5. Representations and Warranties of the Company................................13 5A. Organization, Corporate Power and Licenses.............................13 5B. Capitalization and Related Matters.....................................14 5C. Subsidiaries...........................................................14 5D. Authorization; No Breach...............................................15 5E. SEC Documents and Financial Statements.................................15 5F. Reports with the SEC...................................................16 5G. Absence of Undisclosed Liabilities.....................................16 5H. Absence of Certain Developments........................................16 5I. Properties.............................................................17 5J. Assets.................................................................18 5K. Tax Matters............................................................18 5L. Brokerage..............................................................20
-i- 3 5M. Employees..............................................................20 5N. ERISA..................................................................20 5O. Compliance with Laws...................................................22 5P. Environmental, Health, and Safety Matters..............................22 5Q. Affiliated Transactions................................................23 5R. Contracts and Commitments..............................................23 5S. Intellectual Property..................................................25 5T. Litigation.............................................................25 5U. Year 2000..............................................................25 5V. Disclosure.............................................................26 6. Representations and Warranties of Purchaser..........................................26 6A. Organization and Power of Purchaser....................................26 6B. Authorization; No Breach...............................................26 6C. Brokerage..............................................................27 6D. Purchaser's Investment Representations.................................27 7. Termination..........................................................................27 7A. Termination............................................................27 8. Representations and Warranties.......................................................28 8A. Survival of Representations and Warranties.............................28 8B. Indemnification........................................................28 9. Miscellaneous........................................................................28 9A. Expenses...............................................................28 9B. Consent to Amendments..................................................28 9C. Successors and Assigns.................................................28 9D. Severability...........................................................28 9E. Counterparts...........................................................29 9F. Descriptive Headings; Interpretation...................................29 9G. Governing Law..........................................................29 9H. Notices................................................................29 9I. No Strict Construction.................................................30 9J. Entire Agreement.......................................................30
EXHIBITS: Exhibit 2A(ii) -- Amendment to By-Laws Exhibit 2A(iv) -- Form of Legal Opinion of Alston & Bird, L.L.P. Exhibit 2A(v) -- Form of Legal Opinion of Geltner & Associates, P.C. Exhibit 2A(vii) -- Amendment to the Company's 1998 Long-Term Incentive Plan Exhibit 2B(iv) -- Form of Legal Opinion of Kirkland & Ellis -ii- 4 COMMON STOCK PURCHASE AGREEMENT THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of October 23, 1998, by and between MLC Holdings, Inc., a Delaware corporation (the "Company"), and TC Leasing, LLC, a Delaware limited liability company (the "Purchaser"). Capitalized terms used herein are defined in Section 3A hereof. The parties hereto agree as follows: Section 1. Authorization and Closing. 1A. Authorization of the Common Stock. The Company has authorized the issuance and sale to Purchaser of 1,111,111 shares (the "Shares") of the Company's newly issued Common Stock, par value $.01 per share (the "Common Stock"). 1B. Purchase and Sale of the Shares. At the Closing, subject to the terms and conditions set forth herein, the Company shall sell to Purchaser and Purchaser shall purchase from the Company, the Shares, free of all Liens (other than transfer restrictions imposed by federal or state securities laws), for an aggregate price of $10,000,000 (the "Purchase Price"). 1C. The Closing. The closing of the purchase and sale of the Shares (the "Closing") shall take place at the offices of Kirkland & Ellis, 655 Fifteenth Street, N.W., Washington, D.C. 20005 contemporaneously with the execution and delivery of this Agreement and the execution of the Stockholders Agreement and the Stock Purchase Warrant. Each of this Agreement, the Stockholders Agreement and the Stock Purchase Warrant is conditioned upon, and shall only be effective upon, the consummation of the other agreements. Section 2. Deliveries at Closing. 2A. The Company's Deliveries at Closing. At or before the Closing, the Company shall deliver to Purchaser all of the following: (i) certified copies of the resolutions duly adopted by the board of directors (including all of the non-employee directors) of Company authorizing (a) the performance of this Agreement, the Stockholders Agreement and the Stock Purchase Warrant by the Company, and (b) the consummation of all transactions contemplated by this Agreement, the Stockholders Agreement and the Stock Purchase Warrant by the Company; (ii) a certified copy of the Certificate of Incorporation of the Company (the "Charter") as in effect at the Closing, a certified copy of the by-laws of the Company as in effect at the Closing (as amended as set forth in Exhibit 2A(ii) attached hereto, the 5 "By-Laws") and a certificate of good standing of the Company from each jurisdiction in which the Company is qualified to do business as a domestic or foreign corporation dated within 5 days of the Closing; (iii) a certified copy of the certificate of incorporation of each domestic Subsidiary as in effect at the Closing, a certified copy of the by-laws of each domestic subsidiary as in effect at the Closing and a certificate of good standing of each domestic Subsidiary from each jurisdiction in which such domestic Subsidiary is qualified to do business as a domestic corporation dated within 5 days of the Closing; (iv) a legal opinion from Alston & Bird, L.L.P. as to the matters set forth in Exhibit 2A(iv) attached hereto; (v) a legal opinion from Geltner & Associates, P.C. as to the matters set forth in Exhibit 2A(v) attached hereto with respect to J.A.P. Investment Group, Inc.; (vi) an executed copy of this Agreement and all other related agreements, documents or certificates to which the Company is a party; (vii) an executed copy of an amendment to the Company's 1998 Long-Term Incentive Plan in the form set forth in Exhibit 2A(vii) attached hereto; (viii) stock certificates for the Shares registered in Purchaser's name; (ix) certified copies of the resolutions duly adopted by the board of directors of Company electing Dr. Paul G. Stern as a "Class I" director of the Company and a member of the Compensation Committee of the board of directors of the Company; (x) certified copies of the resolutions duly adopted by the board of directors of the Company electing Carl J. Rickertsen a member of the Stock Incentive Committee of the board of directors of the Company; (xi) certified copies of the resolutions duly adopted by the board of directors or stockholders, as appropriate, of each domestic Subsidiary electing Carl J. Rickertsen to the board of directors of each such domestic Subsidiary; (xii) a certificate from First Union National Bank Corporate Trust, as transfer agent for the Company, stating the number of outstanding shares of Common Stock; and (xiii) a certificate from First Union National Bank Corporate Trust, as transfer agent for the Company, stating that (A) it shall place as of the date hereof a restriction on transfer on all Common Stock owned by any of Bruce M. Bowen, Kevin M. -2- 6 Norton or Patrick J. Norton, Jr. (including, without limitation, stock certificates numbered 12, 13, 90, 93, 95, 96, 187 and 190), and (B) it shall keep such restrictions in place until the legend set forth in the Stockholders Agreement is placed on such stock certificates. 2B. Purchaser's Deliveries at the Closing. At or before the Closing, Purchaser shall: (i) deliver to the Company certified copies of the resolutions duly adopted by the Purchaser authorizing (a) the performance of this Agreement, the Stockholders Agreement and the Stock Purchase Warrant by Purchaser, and (b) the consummation of all transactions contemplated by this Agreement, the Stockholders Agreement and the Stock Purchase Warrant by Purchaser; (ii) pay via wire transfer of immediately available funds to a bank account designated by the Company an amount equal to the Purchase Price; (iii) deliver to the Company an executed copy of this Agreement and all other related agreements, documents or certificates to which Purchaser is a party; and (iv) deliver to the Company a legal opinion from Kirkland & Ellis as to the matters set forth in Exhibit 2B(iv) attached hereto. Section 3. Definitions. 3A. Definitions. For the purposes of this Agreement, the following terms have the meanings set forth below: "Affiliate" of any particular Person means any other Person controlling, controlled by or under common control with such particular Person, where "control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise, and in the case of Purchaser shall include Thayer Equity Investors III, L.P. and any of its partners or Affiliates. "Affiliated Group" means an "affiliated group" as defined in Section 1504 of the Code, or any similar group defined under local, state or foreign Tax law for which the Company or any Subsidiary is or has been a member. "Agreement" has the meaning set forth in the preface hereof. "Approved Sale" has the meaning set forth in the Stockholders Agreement. "By-Laws" has the meaning set forth in Section 2A(ii) hereof. -3- 7 "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "Charter" has the meaning set forth in Section 2A(ii) hereof. "Closing" has the meaning set forth in Section 1C hereof. "COBRA" has the meaning set forth in Section 5N(i) hereof. "Code" means the Internal Revenue Code of 1986, as amended, and any reference to any particular Code section shall be interpreted to include any revision of or successor to that section regardless of how numbered or classified. "Common Stock" has the meaning set forth in Section 1A hereof. "Company" has the meaning set forth in the preface hereof. "Confidential Information" means any confidential or proprietary information regarding the Company and any Subsidiary, their Intellectual Property, their other assets or their operations. "Credit Agreement" means the Credit Agreement between MLC Group, Inc. and First Union National Bank, N.A. (successor by merger to CoreStates Bank, N.A.), dated as of June 5, 1997, as amended by Amendment No. 1, dated September 5, 1997, as further amended by Amendment No. 2, dated December 19, 1997, and as further amended by Amendment No. 3, dated June 30, 1998, and as further amended from time to time. "Disclosure Schedule" has the meaning set forth in Section 5B(i) hereof. "Environmental and Safety Requirements" means all federal, state, local and foreign statutes, regulations, ordinances and other provisions having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations and all common law concerning public health and safety, worker health and safety and pollution or protection of the environment, including without limitation all such standards of conduct and bases of obligations relating to the presence, use, production, generation, handling, transport, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or by-products, asbestos, polychlorinated biphenyls (or PCBs), noise or radiation, each as amended and as now or hereafter in effect. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. -4- 8 "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar federal law then in force. "GAAP" means United States generally accepted accounting principles. "Indebtedness" means at a particular time, without duplication, (i) any indebtedness for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money, (ii) any indebtedness evidenced by any note, bond, debenture or other debt security, (iii) any indebtedness for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise (other than trade payables and other current liabilities incurred in the Ordinary Course of Business), (iv) any commitment by which a Person assures a creditor against loss (including, without limitation, contingent reimbursement obligations with respect to letters of credit), (v) any indebtedness guaranteed in any manner by a Person (including, without limitation, guarantees in the form of an agreement to repurchase or reimburse), (vi) any obligations under capitalized leases with respect to which a Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or with respect to which obligations a Person assures a creditor against loss, (vii) any indebtedness secured by a Lien on a Person's assets, (viii) all obligations and liabilities under foreign-exchange or currency swap contracts or similar agreements designed to protect against fluctuations in currency values, (ix) all obligations and liabilities under or with respect to any interest rate swap, cap, collar, or similar agreement or arrangement designed to protect against fluctuations in interest rates, (x) all obligations under take or pay or, similar agreements or under commodities agreements, and (xi) any unsatisfied obligation for "withdrawal liability" to a "multiemployer plan" as such terms are defined under ERISA. "Intellectual Property" shall mean all of the following: (i) patents, patent applications, patent disclosures and inventions (whether or not patentable and whether or not reduced to practice); (ii) trademarks, service marks, trade dress, trade names, corporate names, logos, slogans and Internet domain names, together with all goodwill associated with each of the foregoing; (iii) copyrights and copyrightable works; (iv) registrations, applications and renewals for any of the foregoing; (v) trade secrets, confidential information and know-how (including but not limited to ideas, formulae, compositions, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, business and marketing plans, and customer and supplier lists and related information); and (vi) computer software (including but not limited to data, data bases and documentation). "IRS" means the United States Internal Revenue Service. "Knowledge" shall mean, with respect to the Company, the actual knowledge or awareness after reasonable inquiry of Norton, Bruce M. Bowen, Thomas B. Howard, Jr., Steven J. Mencarini or Kleyton L. Parkhurst. -5- 9 "Latest Balance Sheet" means the audited consolidated balance sheet as of March 31, 1998 for the Company and the Subsidiaries, which is contained in the Annual Report of the Company on Form 10-K as filed with the SEC for the Company's fiscal year ended March 31, 1998. "Lease" has the meaning set forth in Section 5I(a) hereof. "Liability" means any obligation or liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes. "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind other than (i) mechanic's, materialmen's, and similar liens not yet delinquent, (ii) liens for Taxes not yet due and payable, (iii) purchase money liens and liens securing rental payments under capital lease arrangements, and (iv) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money. "Loss" means, with respect to any Person, any diminution in value, consequential or other damage, liability, demand, claim, action, cause of action, cost, damage, deficiency, Tax, penalty, fine or other loss or expense, whether or not arising out of a third party claim, including all interest, penalties, reasonable attorneys' fees and expenses and all amounts paid or incurred in connection with any action, demand, proceeding, investigation or claim by any third party (including any governmental entity or any department, agency or political subdivision thereof) against or affecting such Person or which, if determined adversely to such Person, would give rise to, evidence the existence of, or relate to, any other Loss and the investigation, defense or settlement of any of the foregoing. "Material Adverse Effect" means any material adverse effect on the business, financial condition, operations, results of operations, employee relations, customer or supplier relations or assets of the Company and the Subsidiaries, taken as a whole; provided that any event, fact or circumstance which has had or has a reasonable likelihood in the future to have a material adverse effect on the business, financial condition, operations, results of operations, employee relations, customer or supplier relations or assets of the Company and the Subsidiaries, taken as a whole, shall also be deemed to have a Material Adverse Effect. "Most Recent Financial Statements" means the unaudited consolidated financial statements as of June 30, 1998 for the Company and the Subsidiaries, which is contained in the Quarterly Report of the Company on Form 10-Q as filed with the SEC for the Company's fiscal quarter ended June 30, 1998. "Norton" means Phillip G. Norton. -6- 10 "Operating Budget" has the meaning set forth in Section 4A(i)(c) and Section 4A(i)(d) hereof. "Ordinary Course of Business" means the ordinary course of the Company's and the Subsidiaries' businesses consistent with past practice (including, without limitation, with respect to collection of accounts receivable, purchases of inventory and supplies, repairs and maintenance, payment of accounts payable and accrued expenses, levels of capital expenditures and operation of cash management practices generally). "Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. "Purchase Price" has the meaning set forth in Section 1B hereof. "Purchaser" has the meaning set forth in the preface hereto. "Real Property" has the meaning set forth in Section 5I(a) hereof. "Securities Act" means the Securities Act of 1933, as amended, or any similar federal law then in force. "SEC" means the United States Securities and Exchange Commission and any governmental body or agency succeeding to the functions thereof. "SEC Reports" has the meaning set forth in Section 5E. "Shares" has the meaning set forth in Section 1A hereof. "Stock Purchase Warrant" means, collectively, the Stock Purchase Warrant, dated as of the date hereof, by the Company in favor of Purchaser, and any subsequent stock purchase warrant or stock purchase warrants in favor of Purchaser or any of its Affiliates issued pursuant to or in connection with the Stock Purchase Warrant, dated as of the date hereof, by the Company in favor of Purchaser. "Stockholders Agreement" means the Stockholders Agreement, dated as of the date hereof, among the Company and certain of its stockholders. "Subsidiary" means any Person with respect to which the Company (or a Subsidiary thereof) owns a majority of the common stock or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors or other governing body. -7- 11 "Tax" or "Taxes" means (i) any federal, state, local, or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, personal property, capital stock, social security, unemployment, disability, payroll, license, employee or other withholding, or other tax of any kind whatsoever, including any interest, penalties or additional amounts in respect of the foregoing and (ii) any Liability of the Company for the payment of any amounts of the type described in clause (i) as a result of any express or implied obligation to indemnify or otherwise assume of succeed to the liability of another Person. "Tax Returns" means returns, declarations, reports, claims for refund, information returns or other documents (including any related or supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection of Taxes of any party or the administration of any laws, regulations or administrative requirements relating to any Taxes. "Thayer Directors" has the meaning set forth in the Stockholders Agreement. "Thayer Shares" has the meaning set forth in the Stockholders Agreement. "Treasury Regulations" means the United States Treasury Regulations promulgated under the Code, and any reference to any particular Treasury Regulation section shall be interpreted to include any final or temporary revision of or successor to that section regardless of how numbered or classified. Section 4. Covenants. 4A. Financial Statements and Other Information. The Company shall deliver to Purchaser: (i) copies of all financial statements and other documents, notices and information (including any management discussion and analysis of such financial statements or information) which the Company is required to (or actually does) deliver under the Credit Agreement, and giving effect to any subsequent waivers, amendments, modifications and terminations which do not materially reduce the scope or detail of, or increase the timing for, such delivery requirements, at the time such materials are required to be delivered thereunder, whether or not any Indebtedness is outstanding; provided that in no event shall delivery of such financial statements be on a basis which is less frequent than quarterly; and provided further that, to the extent the following financial statements and other documents, notices and information are not included among the foregoing items, and whether or not such financial statements and other documents, notices and information are required to be delivered under the Credit Agreement: -8- 12 (a) promptly upon its availability, and in any event within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year, an unaudited consolidated balance sheet of the Company and the Subsidiaries as of the end of such quarter, an unaudited consolidated statement of cash flow of the Company and the Subsidiaries as of the end of such quarter and for the interim period, and an unaudited consolidated statement of income or loss of the Company and the Subsidiaries for the interim period; (b) promptly upon its availability, and in any event within ninety (90) days after the end of each fiscal year, an audited consolidated balance sheet of the Company and the Subsidiaries as of the end of such fiscal year, an audited consolidated statement of income or loss of the Company and the Subsidiaries for such fiscal year, and an audited consolidated statement of cash flow of the Company and the Subsidiaries as of the end of such fiscal year, all accompanied by an opinion thereon of the Company's certified independent accountants, such balance sheet, statement of income or loss and statement of cash flow to include a comparison of such fiscal year with the immediately preceding fiscal year; (c) promptly upon its availability, and in any event prior to December 31, 1998, an operating budget prepared on a monthly basis for the Company and the Subsidiaries for the five fiscal quarters ending March 31, 1998 and approved by the board of directors of the Company (the "Operating Budget"); (d) promptly upon its availability, and in any event at least 2 months prior to the beginning of each fiscal year (beginning with the fiscal year beginning on April 1, 1999), an annual operating budget prepared on a monthly basis for the Company and the Subsidiaries for such fiscal year and approved by the board of directors of the Company (also, the "Operating Budget"); (e) promptly upon its availability, and in any event no more than 10 days after the end of each calender month (beginning with the month ending April 30, 1999), an update of the then current Operating Budget which includes updated projections and forecasts. (ii) to the extent not provided under clause (i) above, promptly (but in any event within thirty business days) after the discovery or receipt of notice of any default under any agreement to which it or any Subsidiary is a party or any other event or circumstance affecting the Company or any Subsidiary (including without limitation the filing of any litigation against the Company or any Subsidiary or the existence of any dispute with any Person which involves a reasonable likelihood of such litigation being commenced), which default, event or circumstance would have a Material Adverse Effect, a certificate from the Company specifying the nature and period of existence -9- 13 thereof and what actions the Company has taken and proposes to take with respect thereto; (iii) to the extent not provided under clause (i) above, concurrently with the transmission or release thereof, copies of all press releases made available generally by the Company to the public concerning material developments in the Company's or any Subsidiary's business; (iv) within ten days after transmission thereof, copies of all registration statements, proxy statements and all regular, special or periodic reports which the Company files, or, to the Company's Knowledge, any of its officers or directors file with respect to the Company, with the SEC or with any securities exchange on which any of its securities are then listed; and (v) to the extent not provided under clause (i) above, with reasonable promptness, such other information and financial data concerning the Company as Purchaser may reasonably request. Each of the documents, notices and information referred to in this Section 4A (other than financial statements and the Operating Budget) shall be true and correct in all material respects and each of the financial statements referred to in this Section 4A shall be prepared in accordance with GAAP and shall present fairly the consolidated financial position, cash flows and results of operations of the Company and the Subsidiaries as of the dates and for the periods stated therein; provided, however, that the unaudited financial statements are subject to changes resulting from normal year-end audit adjustments (none of which would have a Material Adverse Effect) and may lack footnotes and other presentation items. 4B. Restrictions. Without the prior written consent of Purchaser, the Company shall not, and shall cause each Subsidiary not to: (i) until the first anniversary of the Closing, directly or indirectly declare or pay any dividends or make any distributions upon any of its capital stock or other equity securities; (ii) authorize, issue, sell or enter into any "anti-takeover" measure or agreement, including, without limitation, providing for the issuance or sale (contingent or otherwise) of securities or other rights which would have the effect of materially increasing the cost or difficulty of a Person of acquiring (via purchase, merger or otherwise) the securities or assets of the Company or any Subsidiary (i.e., a "poison pill"); or (iii) enter into any transaction with any of its officers, directors, employees or Affiliates or any individual related by blood or marriage to any such Person -10- 14 or any entity in which any such Person or individual owns a beneficial interest, except to the extent that (a) such transaction is at arms-length and on terms that are obtainable from unrelated third parties, (b) the Company notifies the Purchaser in writing at least 5 business days prior to entering into such transaction and (c) such transaction involves consideration or has a value of less than $150,000. 4C. Public Disclosures. Except, in each case, to the extent required by law or the rules of any relevant stock exchange, neither the parties hereto, nor the subsidiaries or Affiliates of any of them, shall make any public announcement after the Closing relating to the other party, this Agreement, the Stockholders Agreement, the Stock Purchase Warrant or the consummation of any of the transactions contemplated by this Agreement, the Stockholders Agreement or the Stock Purchase Warrant (including any exercise of a Stock Purchase Warrant) without the prior consent of the other party, which consent shall not be unreasonably withheld. The text of any such public announcement which any party proposes to make shall be submitted to the other party not less than three business days before the day on which the announcement is to be made. 4D. Use of Proceeds. The Company shall use the proceeds of the sale of the Shares to finance growth and acquisitions. 4E. Payment of Bonuses to Norton. The Company hereby agrees to withhold and not pay to Norton any bonus otherwise due to him under any employment, consulting or other similar agreement between the Company and any Subsidiary and him if the Company is at the time or had been within the preceding two years in default of its obligations under Section 4A(i)(c), 4A(i)(d) or 4A(i)(e) and such default in the case of Section 4A(i)(c) or 4A(i)(d) remains or remained uncured for 20 business days and in the case of Section 4A(i)(e) remains or remained uncured for 5 business days. 4F. Confidentiality. Purchaser will treat and hold as confidential all of the Confidential Information, refrain from using any of the Confidential Information except in connection with this Agreement, the Stock Purchase Agreement, the Stock Purchase Warrant, the Stockholders Agreement and the Purchaser's ownership of Common Stock hereunder and thereunder. In the event that Purchaser is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, Purchaser will notify the Company promptly of the request or requirement so that such Stockholder may seek an appropriate protective order or waive compliance with the provisions of this Section 4F. If, in the absence of a protective order or the receipt of a waiver hereunder, Purchaser is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt, Purchaser may disclose the Confidential Information to the tribunal; provided, however, that Purchaser shall use reasonable efforts to obtain, at the request and expense of the Company, an order or other assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as the Company. The -11- 15 foregoing provisions shall not apply to any Confidential Information that is generally available to the public immediately prior to the time of disclosure. Notwithstanding anything herein to the contrary, Purchaser may provide Confidential Information to any Person if Purchaser deems necessary or desirable in connection with any transfer or proposed transfer of Purchaser's Common Stock so long as such Persons have entered into appropriate confidentiality arrangements with Purchaser (which shall name the Company as an intended beneficiary). 4G. Filings. The Company and Purchaser shall make all filings required to be made with the SEC, any stock exchange in which the Common Stock is listed and all other governmental or quasi-governmental entities in connection with the consummation of the transactions contemplated hereby and under the Stockholders Agreement and the Stock Purchase Warrant. All such filings shall be in compliance with all applicable laws, regulations, rules and ordinances of all applicable stock exchanges and governmental and quasi-governmental entities in all material respects and shall not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they shall be made not misleading. 4H. Mergers or Consolidations. If the Thayer Directors do not vote in favor of an acquisition, merger, consolidation or other transaction involving any Person pursuant to Section 4J(ii), neither Purchaser nor its Affiliates shall acquire (via stock purchase, asset purchase, merger, recapitalization, share exchange, consolidation or other transaction) or make an investment in such Person within two years after the date on which the Board of Directors of the Company voted on such acquisition, merger, consolidation or other transaction. 4I. Material Decisions. The Company shall not make any material employment, termination or compensation decision regarding the chief executive officer, the president, the executive vice president, the chief financial officer or the chief operating officer of the Company or any Subsidiary without the prior consent of the board of directors of the Company or any Subsidiary, as applicable. 4J. Super Majority Board Approval. Without the prior consent of at least 65% of the members of the Board of Directors of the Company, the Company shall not, and shall cause each Subsidiary not to: (i) make any capital expenditures for purchases of property or equipment (other than capital expenditures for property or equipment to be leased or sold in the Ordinary Course of Business) which shall cause the Company's and the Subsidiaries' expenditures for any fiscal year to exceed by more than 10% the amount set forth for capital expenditures for purchases of property and equipment (other than capital expenditures for property and equipment to be leased or sold in the Ordinary Course of Business) in the applicable Operating Budget; -12- 16 (ii) acquire (via stock purchase, asset purchase, merger, recapitalization, share exchange, consolidation or other transaction) or make an investment in any Person or permit any Subsidiary to acquire (via stock purchase, asset purchase, merger, recapitalization, share exchange, consolidation or other transaction) or make an investment in any Person; provided that Company or any Subsidiary may acquire (via stock purchase, asset purchase, merger, recapitalization, share exchange, consolidation or other transaction) or make an investment in any Person without the consent of at least 65% of the members of the Board of Directors of the Company so long as such transaction involves consideration or has a value of less than $5,000,000; or (iii) except in the Ordinary Course of Business, sell, lease or otherwise dispose of, or permit any Subsidiary to sell, lease or otherwise dispose of, more than 20% of the consolidated assets of the Company and its Subsidiaries (computed on the basis of book value, determined in accordance with GAAP consistently applied, or fair market value, determined by the Board of Directors of the Company in its reasonable good faith judgment) in any transaction or series of related transactions. 4K. Compensation Committee. Without the prior consent of at least 51% of the members of the Compensation Committee of the Board of Directors of the Company, the Company shall not, and shall cause each Subsidiary not to: (i) grant any stock option, stock appreciation right, restricted stock or other stock based compensation to any officer, employee, director or consultant of the Company or any Subsidiary other than pursuant to the 1998 Long-Term Incentive Plan or the Employee Share Purchase Plan, each as in effect on the date of this Agreement; or (ii) accelerate the vesting of or remove any restrictions upon any stock option, stock appreciation right, restricted stock or other stock based compensation except as specifically required under the terms of such stock option, stock appreciation right, restricted stock or other stock based compensation. 4L. Determination Letter. As soon as possible following the Closing (but in no event later than two months thereafter), the Company shall cause to be submitted to the IRS an application for a determination that the MLC Group, Inc. 401(k) Plan is qualified under Section 401(a) of the Code, and shall take any and all actions as may be required by the IRS (including, but not limited to, entering into a closing agreement) in order to cause the IRS to issue such a determination. 4M. Transfer Agent Restriction. The Company shall cause First Union National Bank Corporate Trust, as transfer agent for the Company, to (i) place as of the date hereof a restriction on transfer on all Common Stock owned by any of Bruce M. Bowen, Kevin M. Norton or Patrick J. Norton, Jr. (including, without limitation, stock certificates numbered 12, -13- 17 13, 90, 93, 95, 96, 187 and 190), and (ii) keep such restrictions in place until the legend set forth in the Stockholders Agreement is placed on such stock certificates Section 5. Representations and Warranties of the Company. As a material inducement to Purchaser to enter into this Agreement and purchase the Shares hereunder, the Company hereby represents and warrants as of the date hereof as follows: 5A. Organization, Corporate Power and Licenses. The Company is a corporation duly organized, validly existing and in good standing under the laws of Delaware and is qualified to do business in every jurisdiction in which its ownership of property or conduct of business requires it to qualify, except where the failure to so qualify would not have a Material Adverse Effect. The Company possesses all requisite corporate power and authority and all material licenses, permits and authorizations necessary to own and operate its properties, to carry on its businesses as now conducted and as presently proposed to be conducted and to carry out the transactions contemplated by this Agreement, the Stockholders Agreement and the Stock Purchase Warrant. 5B. Capitalization and Related Matters. (i) As of immediately before the Closing, the authorized capital stock of the Company shall consist of: (x) 2,000,000 shares of Preferred Stock, $.01 per share par value, of which zero shares are issued and outstanding, and (y) 25,000,000 shares of Common Stock, $.01 per share par value, of which 6,348,603 shares are issued and outstanding. As of immediately before the Closing, neither the Company nor any Subsidiary shall have outstanding any capital stock, options, convertible securities, securities or rights containing any profit participation features, or any stock appreciation right or phantom stock plan, except as set forth on Section 5B of the Disclosure Schedule attached hereto (the "Disclosure Schedule"). Section 5B of the Disclosure Schedule accurately sets forth the following information with respect to all outstanding options and rights to acquire the Company's and the Subsidiaries' capital stock: the holder, the number of shares covered, the exercise price and the expiration date. As of immediately before the Closing, neither the Company nor any Subsidiary shall be subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock or any warrants, options or other rights to acquire its capital stock, except as set forth on Section 5B of the Disclosure Schedule. As of the Closing, all of the outstanding shares of the Company's capital stock shall be validly issued, fully paid and nonassessable. (ii) There are no statutory or, to the Company's Knowledge, contractual stockholders' preemptive rights or rights of refusal with respect to the issuance of the Shares. Assuming Purchaser's representations and warranties set forth in Section 6 are true and correct as of the date hereof, the Company has not violated any applicable federal or state securities laws in connection with the offer, sale or issuance of any of its capital stock, and the offer, sale and issuance of the Shares do not require registration under the Securities Act or any applicable state securities laws. To the Company's Knowledge, other than the Stockholders -14- 18 Agreement and the Stock Purchase Warrant, there are no agreements between the Company's shareholders with respect to the voting or transfer of the Company's capital stock or with respect to any other aspect of the Company's affairs. 5C. Subsidiaries. Section 5C of the Disclosure Schedule correctly sets forth the name of each Subsidiary, the jurisdiction of its incorporation or under which it was formed and the Persons owning the outstanding securities of such Subsidiary. Each Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction under which it was formed, possesses all requisite power and authority and all material licenses, permits and authorizations necessary to own its properties and to carry on its businesses as now being conducted and as presently proposed to be conducted in the future, and is qualified to do business in every jurisdiction in which its ownership of property or conduct of business requires it to qualify except where the failure to so qualify would not have a Material Adverse Effect. All of the outstanding securities of a Subsidiary which are owned by the Company or another Subsidiary are owned free and clear of any Lien and are not subject to any option or right to purchase any such shares. Except as set forth in Section 5C of the Disclosure Schedule, neither the Company nor any Subsidiary owns or holds the right to acquire any shares of stock or any other security or interest in any other Person. 5D. Authorization; No Breach. The execution, delivery and performance of this Agreement, the Stockholders Agreement and the Stock Purchase Warrant by the Company have been duly authorized by the Company. Each of this Agreement, the Stockholders Agreement and the Stock Purchase Warrant, when it is executed by the other parties thereto, will constitute a valid and binding obligation of the Company enforceable in accordance with its respective terms except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency or similar laws of general application relating to or affecting the enforcement of creditors' rights or by general principles of equity. Except as set forth in Section 5D of the Disclosure Schedule, the execution and delivery by the Company of this Agreement, the Stockholders Agreement and the Stock Purchase Warrant, the offering, sale and issuance of the Shares hereunder and the fulfillment of and compliance with the respective terms hereof and thereof by the Company do not and shall not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in the creation of any Lien upon the Company's or any Subsidiaries' securities or assets pursuant to, (iv) give any third party the right to modify, terminate or accelerate any obligation under, (v) result in a violation of, or (vi) require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any court or administrative or governmental body or agency pursuant to, (A) the Charter, the By-Laws or the constituting documents of any Subsidiary, (B) any law, statute, rule or regulation to which the Company or any Subsidiary is subject, or (C) any material agreement or instrument, or any order, judgment or decree to which the Company or any Subsidiary is subject, except in the case of (B) and (C) were such conflict, default or violation would not have a Material Adverse Effect. -15- 19 5E. SEC Documents and Financial Statements. The Company has heretofore delivered to Purchaser each of the following: (i) Annual Report of the Company on Form 10-K as filed with the SEC for the Company's fiscal year ended March 31, 1998; and (ii) Quarterly Report of the Company on Form 10-Q as filed with the SEC for the fiscal quarter of the Company ended June 30, 1998. Each of the foregoing documents (the "SEC Reports") did not at the time it was filed with the SEC, and except as set forth on Schedule 5E of the Disclosure Schedule or a subsequent SEC Report, do not as of the date hereof, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, or are now made, respectively, not misleading. All of the financial statements contained in the SEC Reports have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, fairly present in all material respects the financial position of the Company and the Subsidiaries as of such dates and the results of operations and cash flows of the Company and the Subsidiaries for such periods, and are consistent with the books and records of the Company and the Subsidiaries; provided, however, that the Most Recent Financial Statements are subject to normal year-end adjustments (none of which could, alone or in the aggregate, reasonably be expected to have a Material Adverse Effect) and lack footnotes and other presentation items. 5F. Reports with the SEC. The Company and the Subsidiaries have made all filing with the SEC which they are required to make (including without limitation all required filings under the Securities Act and the Exchange Act), and have not received any request from the SEC to file any amendment or supplement to any of the reports filed with the SEC. Section 5F of the Disclosure Schedule sets forth all substantive correspondence between the SEC and the Company concerning or relating to Securities Act or Exchange Act compliance. 5G. Absence of Undisclosed Liabilities. The Company and the Subsidiaries have no Liabilities except (i) obligations under executory contracts or commitments described in Section 5R of the Disclosure Schedule or under executory contracts and commitments which are not required to be disclosed thereon (but not Liabilities for breaches thereof), (ii) Liabilities reflected on the liabilities side of the Latest Balance Sheet and (iii) Liabilities which have arisen after the date of the Latest Balance Sheet in the Ordinary Course of Business or otherwise in accordance with the terms and conditions of this Agreement (none of which is a Liability resulting from, arising out of, or relating to any breach of contract, breach of warranty, tort, infringement or violation of law or environmental matter, including those arising under Environmental and Safety Requirements). 5H. Absence of Certain Developments. Except as set forth on Section 5H of the Disclosure Schedule or expressly contemplated by this Agreement, since the date of the Latest -16- 20 Balance Sheet, (i) neither the Company nor any Subsidiary has suffered an event which would have a Material Adverse Effect, (ii) the businesses of the Company and the Subsidiaries have been operated only in the Ordinary Course of Business, (iii) there has not been any material loss of, or material reduction in the amount of business done with, or any threat or such material loss or reduction by, any key customer of the Company or any Subsidiary, or any material loss or threatened loss of any source of supply for goods or services to the Company or any Subsidiary that is material to its business and (iv) neither the Company nor any Subsidiary has taken any of the following actions: (a) amended its certificate of incorporation or by-laws; (b) (w) split, combined or reclassified any of its respective capital stock, (x) declared, set aside or paid any dividend or other distribution payable in cash, stock or property with respect to its capital stock, (y) issued or sold any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, shares of its capital stock, or (z) redeemed, purchased or otherwise acquired directly or indirectly any capital stock; (c) (x) acquired, sold, licensed, leased or disposed of any property, including real property and Intellectual Property (except in the Ordinary Course of Business), or (y) entered into any commitment or transaction which individually or in the aggregate would be material to the Company or any of the Subsidiaries; (d) (w) incurred or assumed any Indebtedness in excess of $500,000 in the aggregate, (x) made any material loans, advances or capital contributions to, or investments in, any other Person, (y) pledged or otherwise encumbered shares of capital stock, or (z) mortgaged or pledged any of its material assets, or create any Liens with respect thereto; (e) (x) acquired (by merger, consolidation, acquisition of stock or assets, or otherwise) any Person or division thereof or any equity interest therein, (y) entered into any contract or agreement which would be material to the Company and the Subsidiaries, or (z) authorized any new capital expenditure or expenditures which, in the aggregate, are in excess of $500,000; (f) changed any of the accounting methods used unless required by GAAP; (g) adopted or amended in any material respect any collective bargaining agreement; -17- 21 (h) filed any amended Tax Return, surrendered any right to claim a refund of Taxes or take any similar action, or omitted to take any action relating to the filing of any Tax Return or the payment of any Tax, if such election, adoption, change, amendment, agreement, settlement, surrender, consent, or other action or omission would have the effect of increasing the present or future tax liability or decreasing any present or future Tax asset of the Company, Purchaser or any Affiliate of Purchaser; or (i) authorized or entered into an agreement, whether in writing or otherwise, to do any of the actions prohibited above. 5I. Properties. (a) Attached as Schedule 5I is a list of all leases, subleases and other occupancy agreements, including all amendments, extensions and other modifications (the "Leases") for real property (the "Real Property"). The Company has a good and valid leasehold interest in and to all of the Real Property, subject to no Liens. Each Lease is in full force and effect and is enforceable in accordance with its terms. There exists no default or condition which, with the giving of notice, the passage of time or both, would become a default under any Lease. Except as described on Schedule 5I, no consent, waiver, approval or authorization is required form any landlord under any Lease as a result of the execution of this Agreement, the Stockholders Agreement, the Stock Purchase Warrant or the consummation of the transactions contemplated hereby or thereby. (b) The Real Property constitutes all of the real property owned, lease, occupied or otherwise utilized in connection with the business of the Company and its Subsidiaries. Other than the Company and the Subsidiaries, there are no parties in possession or parties having any current or future right to occupy any of the Real Property. All improvements located on the Real Property have direct access to a public road adjoining such Real Property. No such improvements or accessways encroach on land not included in the Real Property and no such improvement is dependent for its access, operation or utility on any land, building or other improvement not included in the Real Property. (c) There are no proceedings in eminent domain or other similar proceedings pending or, to the Knowledge of the Company, threatened, affecting any portion of the material Real Property owned or leased by the Company or any Subsidiary. There exists no writ, injunction, decree, order or judgment outstanding, nor any litigation, pending or threatened, relating to the ownership, lease, use, occupancy or operation by any Person of any such Real Property. The current use of the Real Property does not violate in any material respect any instrument of record or agreement affecting such Real Property. There is no violation of any covenant, condition, restriction, easement, agreement or order of any governmental authority having jurisdiction over any of the Real Property that affects such Real Property or the use or occupancy thereof, except a violation which would not have a Material Adverse Effect. No -18- 22 damage or destruction has occurred with respect to any of the Real Property that, individually or in the aggregate, has had or will have a Material Adverse Effect. 5J. Assets. Except as set forth on Section 5J of the Disclosure Schedule, the Company and the Subsidiaries have good and marketable title to, or a valid leasehold interest in, the material Real Property and assets used by them, located on their premises or shown on the Latest Balance Sheet or acquired thereafter, free and clear of all Liens, except for sales of inventory in the Ordinary Course of Business since the date of the Latest Balance Sheet. Except as described on the Section 5J of the Disclosure Schedule, the assets are in good operating condition in all material respects, reasonable wear and tear excepted, and are fit for use in the Ordinary Course of Business. The Company and the Subsidiaries validly own or lease all buildings, machinery, equipment, and other tangible assets necessary for the conduct of their businesses as presently conducted. 5K. Tax Matters. Except as set forth on Section 5K of the Disclosure Schedule: (i) the Company, the Subsidiaries and each Affiliated Group have timely filed all material Tax Returns which are required to be filed, and all such Tax Returns are true, complete and accurate in all material respects and have been prepared in all material respects in compliance with applicable law; (ii) except for Taxes less than $25,000 in the aggregate which are being contested in good faith and by appropriate proceedings (with respect to which adequate reserves have been established and are being maintained in accordance with GAAP), all Taxes due and payable by the Company, the Subsidiaries and each Affiliated Group, whether or not shown on a Tax Return, have been paid by the Company, the Subsidiaries and each Affiliated Group, respectively, and no Taxes are delinquent; (iii) the amount accrued as a current liability for taxes on the Latest Balance Sheet shall be sufficient to pay in full all Taxes for taxable periods (or portions thereof) of the Company, Subsidiaries and each Affiliated Group ending on or before the date of the Latest Balance Sheet, whether or not such Taxes are due on or before such date and, since the date of the Latest Balance Sheet, the Company has not incurred any Liability for Taxes other than in the Ordinary Course of Business; (iv) there is no action, suit, taxing authority proceeding or audit now in progress, pending or, to the Knowledge of the Company, threatened against or with respect to the Company, any Subsidiary or any Affiliated Group and neither the Company, any Subsidiary, nor any Affiliated Group reasonably expect any taxing authority to claim or assess any additional Taxes in respect of the Company or any Subsidiary for any period, except in each case which, if adversely determined, would not have a Material Adverse Effect; -19- 23 (v) the Company and the Subsidiaries have not been members of an Affiliated Group, other than one in which the Company was the ultimate parent, and the Company and the Subsidiaries have no liability for Taxes of any Person other than under Treasury Regulations Section 1.1502-6 or any similar provision of local, state or foreign Tax law; (vi) the Company, the Subsidiaries and each Affiliated Group has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, creditor, independent contractor or other third party; (vii) the Company and the Subsidiaries have not consented to extend to a date later than the date hereof the time in which any Tax may be assessed or collected by any taxing authority; and no Affiliated Group has consented to extend to a date later than the date hereof the time in which any Tax may be assessed or collected by any taxing authority with respect to a taxable period during which the Company or any Subsidiary was a member of the Affiliated Group; (viii) the Company and the Subsidiaries are not a party to or bound by any Tax allocation or Tax sharing agreement and have no current or potential contractual obligation to indemnify any other Person with respect to Taxes; and (ix) the Company, each Subsidiary and each Affiliated Group have not made any payments, and are not and will not become obligated (under any contract entered into on or before the Closing) to make any payments, that will be non-deductible under Section 280G of the Code (or any corresponding provision of state, local or foreign income Tax law). 5L. Brokerage. Except as set forth in Section 5L of the Disclosure Schedule, there are no claims for brokerage commissions, finders' fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement binding upon the Company or any Subsidiary. The Company shall pay, and hold Purchaser harmless against, any Liability, Loss or expense (including, without limitation, reasonable attorneys' fees and out-of-pocket expenses) arising in connection with any such claim. 5M. Employees. Except as set forth on Section 5M of the Disclosure Schedule, to the Knowledge of the Company, no key executive employee and no group of employees or independent contractors of the Company or any Subsidiary has any plans to terminate his, her or its employment or relationship as an independent contractor with the Company or any Subsidiary. Except as set forth in Section 5M of the Disclosure Schedule, no organizational effort is presently being made or, to the Knowledge of the Company, threatened by or on behalf of any labor union with respect to any employees of the Company or any Subsidiary and none of their employees are represented by any labor union. Except as set forth in Section 5M of the -20- 24 Disclosure Schedule and, in each case, where the failure to comply would not have a Material Adverse Effect, the Company and the Subsidiaries are in compliance with all applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours, and are not engaged in any unfair labor practice and, to the Knowledge of the Company, there is no reasonable basis for any unfair labor practice complaint or claim to be asserted against the Company or any Subsidiary, and there is no labor strike, dispute, slowdown or stoppage actually pending or, to the Knowledge of the Company, threatened, against the Company or any Subsidiary. The Company and the Subsidiaries have no labor contracts with any representative of any of the Company's or any Subsidiary's employees. 5N. ERISA. (i) Except as set forth on Section 5N of the Disclosure Schedule, with respect to current or former employees of the Company or any Subsidiary, the Company and the Subsidiaries do not maintain or contribute to or have any actual or potential liability with respect to any (a) deferred compensation or bonus or retirement plans or arrangements, (b) qualified or nonqualified defined contribution or defined benefit plans or arrangements which are employee pension benefit plans (as defined in Section 3(2) of ERISA), or (c) employee welfare benefit plans, (as defined in Section 3(1) of ERISA), stock option or stock purchase plans, or material fringe benefit plans or programs whether in writing or oral and whether or not terminated. The Company has never contributed to any multiemployer pension plan (as defined in Section 3(37) of ERISA), and neither the Company nor any of its Subsidiaries has ever maintained or contributed to any defined benefit plan (as defined in Section 3(35) of ERISA). The plans, arrangements, programs and agreements referred to in the preceding two sentences are referred to collectively as the "Plans." The Company does not maintain or contribute to any Plan which provides health, accident or life insurance benefits to former employees, their spouses or dependents, or to any other Person, other than in accordance with Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code ("COBRA"). (ii) Except as set forth on Section 5N of the Disclosure Schedule attached hereto, the Plans (and related trusts and insurance contracts) set forth on Section 5N of the Disclosure Schedule comply in form and in operation with the requirements of applicable laws and regulations, including ERISA and the Code and the nondiscrimination rules thereof. All contributions, premiums or payments which are due on or before the Closing Date under each Plan have been paid. Each Plan which is intended to be qualified under Section 401(a) of the Code has received from the Internal Revenue Service a determination letter stating that such Plan is qualified under Section 401(a) of the Code, and nothing has occurred since the date of such determination that could adversely affect the qualification of such Plan. (iii) All required reports and descriptions (including Form 5500 annual reports, summary annual reports and summary plan descriptions) with respect to the Plans set forth on Section 5N of the Disclosure Schedule have been properly and timely filed with the -21- 25 appropriate government agency and distributed to participants as required. The Company has complied with the requirements of COBRA. (iv) With respect to each Plan set forth on Section 5N of the Disclosure Schedule attached hereto, (a) there have been no non-exempt prohibited transactions as defined in Section 406 of ERISA or Section 4975 of the Code, (b) no fiduciary (as defined in Section 3(21) of ERISA) has any liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of such Plans, and (c) no actions, investigations, suits or claims with respect to the Plans or assets thereof (other than routine claims for benefits) are pending or threatened, and the Company has no Knowledge of any facts which would give rise to or could reasonably be expected to give rise to any such actions, suits or claims. (v) With respect to each of the Plans listed on Section 5N of the Disclosure Schedule attached hereto, the Company has furnished to Purchaser true and complete copies of (a) the current plan documents, summary plan descriptions and summaries of material modifications and other material employee communications, (b) the Form 5500 annual report (including all schedules and other attachments) for the most recent three years, (c) all related trust agreements, insurance contracts or other funding agreements which implement such plans and (d) all contracts relating to each such plan, including, without limitation, service provider agreements, insurance contracts, investment management agreements and record keeping agreements. (vi) The Company has not incurred and has no Knowledge of any basis upon which it could reasonably incur any Liability to the Pension Benefit Guaranty Corporation (other than routine premium payments) or otherwise under Title IV of ERISA (including any withdrawal liability) or under the Code with respect to any employee pension benefit plan (as defined in Section 3(2) of ERISA) that the Company or any member of its "controlled group" (within the meaning of Code Section 414) maintains or ever has maintained or to which any of them contributes, ever has contributed, or ever has been required to contribute. 5O. Compliance with Laws. The Company and the Subsidiaries are, and at all times have been, in compliance with all applicable laws, regulations and ordinances of any governmental entity, and no claims have been filed against the Company or any Subsidiary alleging a violation of any such laws or regulations, and the Company and the Subsidiaries have not received notice of any such violations, except, in each case, where the failure to comply would not have a Material Adverse Effect. -22- 26 5P. Environmental, Health, and Safety Matters. Except as set forth in Section 5P of the Disclosure Schedule: (i) the Company, the Subsidiaries and their respective Affiliates have complied and are in compliance with all Environmental and Safety Requirements (including without limitation all permits and licenses required thereunder). (ii) the Company, the Subsidiaries and their respective Affiliates have not received any written or oral notice, report or other information regarding any actual or alleged violation of Environmental and Safety Requirements, or any Liabilities or potential Liabilities, including any investigatory, remedial or corrective obligations, relating to any of them or its facilities arising under Environmental and Safety Requirements; (iii) none of the following exists at any property or facility owned or operated by the Company or any Subsidiary or any of their respective Affiliates: (a) underground storage tanks, (b) asbestos-containing material in any form or condition, (c) materials or equipment containing polychlorinated biphenyls, or (d) landfills, surface impoundments, or disposal areas; (iv) neither the Company, any Subsidiary nor any of their predecessors or Affiliates has treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, or released any substance, including without limitation any hazardous substance, or owned or operated any property or facility (and no such property or facility is contaminated by any such substance) in a manner that has given or would give rise to Liabilities, including without limitation any Liability for response costs, corrective action costs, personal injury, property damage, natural resources damages or attorney fees, pursuant to the CERCLA, the Solid Waste Disposal Act, as amended or any other Environmental and Safety Requirements; (v) neither this Agreement nor the consummation of the transactions contemplated hereby will result in any obligations for site investigation or cleanup, or notification to or consent of government agencies or third parties, pursuant to any of the so-called "transaction-triggered" or "responsible property transfer" Environmental and Safety Requirements; (vi) the Company, the Subsidiaries and their Affiliates have not, either expressly or by operation of law, assumed, undertaken or otherwise become subject to any Liability, including without limitation any Liability for corrective or remedial action, of any other Person relating to Environmental and Safety Requirements; and (vii) no facts, events or conditions relating to the past or present facilities, properties or operations of the Company, any Subsidiary or any ot their -23- 27 predecessors of Affiliates will prevent, hinder or limit continued compliance with Environmental and Safety Requirements, give rise to any investigatory, remedial or corrective Liabilities pursuant to Environmental and Safety Requirements, or give rise to any other Liabilities pursuant to Environmental and Safety Requirements, including without limitation any Liability relating to onsite or offsite releases or threatened releases of hazardous materials, substances or wastes, personal injury, property damage or natural resources damage; except, in each case, where the failure to comply would not have a Material Adverse Effect. 5Q. Affiliated Transactions. Except for those agreements or transactions listed on Section 5Q of the Disclosure Schedule or contemplated by this Agreement, neither the Company nor any Subsidiary has (i) paid, loaned or advanced any amount to, (ii) sold, transferred or leased any properties or assets to or (iii) entered into or continued any agreement, arrangement or understanding (written or otherwise) with, any of its officers, directors, employees or Affiliates or any individual related by blood, marriage or adoption to any such Person or entity in which any such Person owns a beneficial interest. 5R. Contracts and Commitments. Section 5R of the Disclosure Schedule lists the following agreements to which the Company or any Subsidiary is a party or by which any of their assets are bound: (i) any indenture, mortgage, note, bond or other evidence of Indebtedness, any loan, security, credit, factoring or similar agreement under which the Company or any Subsidiary has borrowed or may borrow money or issued any note, bond, indenture or other evidence of Indebtedness for more than $10,000 individually or $25,000 in the aggregate or under which the Company or any Subsidiary has imposed (or may impose) a Lien on any of its respective assets, tangible or intangible (except for non- recourse notes relating to specific leases entered into by the Company or any Subsidiary in the Ordinary Course of Business, in which case, the Company has made available to Purchaser a sample of such notes); (ii) any confidentiality, non-solicitation or non-competition agreement or any agreement which restricts, limits or prohibits the Company or any Subsidiary from entering into any new, or expanding any existing, line of business or any agreement which contains geographic or other limitations, prohibitions or restrictions on the Company's or any Subsidiary's ability to conduct business activities; (iii) any agreement under which the Company or any Subsidiary could have Liabilities after the Closing with any current or former directors, officers, and employees in the nature of an employment agreement, a consulting agreement or a severance agreement; -24- 28 (iv) any agreement under which the Company or any Subsidiary could have Liabilities in the future relating to the acquisition or disposition of material assets or properties by way of merger, consolidation, purchase, sale or otherwise, or granting to any Person a right at such Person's option to purchase or acquire any material asset or property, of the Company or any Subsidiary or any interest therein (not including dispositions of inventory in the Ordinary Course of Business); (v) any agreement for the construction, acquisition or modification of any land, building, structure, improvement, fixture or other fixed asset, or for the incurrence of any other capital expenditure involving amounts in excess of $500,000 in the aggregate; (vi) any agreement with the Company or any Subsidiary, on the one hand, and any officer, director, employee or Affiliate of the Company or any Subsidiary, on the other hand; and (vii) any agreement not otherwise required to be disclosed pursuant to this Section 5R the consequences of a default or termination thereunder would have a Material Adverse Effect. The Company has made available to Purchaser a correct and complete copy of each written agreement listed in Section 5R of the Disclosure Schedule and a written summary setting forth the terms and conditions of each oral agreement listed in Section 5R of the Disclosure Schedule. Except as set forth in Section 5R of the Disclosure Schedule, all such agreements are valid, binding and enforceable obligations of the Company, as applicable, in accordance with their terms, except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency or similar laws of general application relating to or affecting the enforcement of creditors' rights or by general principles of equity. Neither the Company nor any Subsidiary is in default in the observance or the performance of any material term or obligation to be performed by it under any such agreement, and to the Knowledge of the Company, no other Person is in default in the observance or the performance of any material term or obligation to be performed by such Person under any such agreement, except where such default would not have a Material Adverse Effect. 5S. Intellectual Property. (i) Section 5S of the Disclosure Schedule contains a complete and accurate list of all (a) patented or registered Intellectual Property owned by the Company or any Subsidiary, (b) pending patent applications and applications for registrations of other Intellectual Property filed by the Company or any Subsidiary, (c) material unregistered trade names and corporate names owned or used by the Company or any Subsidiary and (d) material unregistered trademarks, service marks, copyrights, and computer software owned or used by the Company or any Subsidiary. Section 5S of the Disclosure Schedule also contains a complete and accurate list -25- 29 of all licenses and other rights granted by the Company or any Subsidiary to any third party with respect to any Intellectual Property and all material licenses and other rights granted by any third party to the Company or any Subsidiary with respect to any Intellectual Property, in each case identifying the subject Intellectual Property. All of the material licenses set forth in Section 5S of the Disclosure Schedule are valid and binding obligations of the Company or any Subsidiary, and to the Knowledge of the Company, the other parties thereto, and are enforceable against the Company or any Subsidiary, and to the Knowledge of the Company, the other parties thereto, in accordance with their respective terms, except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency or similar laws of general application relating to or affecting the enforcement of creditors' rights or by general principles of equity. (ii) Except as set forth in Section 5S the Disclosure Schedule, the Company or a Subsidiary owns and possesses all right, title and interest in and to, or has the right to use pursuant to a valid license, all Intellectual Property necessary for the operation of the businesses of the Company and the Subsidiaries as presently conducted. 5T. Litigation. Except as set forth in Section 5T of the Disclosure Schedule, there are no actions, suits, complaints, charges, proceedings, orders, investigations or claims (i) pending other than those filed but not yet served on the Company or any Subsidiary or, (ii) to the Company's Knowledge, threatened against the Company, any Subsidiary or any of their assets or properties which, if adversely determined, would have a Material Adverse Effect. 5U. Year 2000. To the Knowledge of the Company, (i) none of the computer software, computer firmware, computer hardware (whether general or special purpose) or other similar or related items of automated, computerized or software systems that are used or relied on by Company or by any of its Subsidiaries in the conduct of their respective businesses will malfunction, will cease to function, will generate incorrect data or will produce incorrect results when processing, providing or receiving (a) date-related data from, into and between the twentieth and twenty-first centuries or (b) date-related data in connection with any valid date in the twentieth and twenty-first centuries; (ii) none of the products and services sold, licensed, leased, rendered, or otherwise provided by the Company or by any of its Subsidiaries in the conduct of their respective businesses will malfunction, will cease to function, will generate incorrect data or will produce incorrect results when processing, providing or receiving (a) date-related data from, into and between the twentieth and twenty-first centuries or (b) date-related data in connection with any valid date in the twentieth and twenty-first centuries; and, accordingly, neither the Company nor any of its Subsidiaries is or will be subject to any claim, demand, action, suit, liability, damage, material loss, or material expense arising from, or related to, circumstances where such products and services malfunction, cease to function, generate incorrect data, or produce incorrect results when -26- 30 processing, providing or receiving (x) date-related data from, into and between the twentieth and twenty-first centuries or (y) date-related data in connection with any valid date in the twentieth and twenty-first centuries; and (iii) neither Company nor any of its Subsidiaries has made any other representations or warranties regarding the ability of any product or service sold, licensed, leased, rendered, or otherwise provided by Company or by any of its Subsidiaries in the conduct of their respective businesses to operate without malfunction, to operate without ceasing to function, to generate correct data or to produce correct results when processing, providing or receiving (a) date-related data from, into and between the twentieth and twenty-first centuries and (b) date-related data in connection with any valid date in the twentieth and twenty-first centuries. 5V. Disclosure. Neither this Agreement nor the Disclosure Schedule or any statements, documents, certificates or other items prepared or supplied to Purchaser by or on behalf of the Company or any Subsidiary as set forth in or required under this Agreement contain any untrue statement of a material fact or omit a material fact necessary to make each statement contained herein or therein not misleading. Section 6. Representations and Warranties of Purchaser. As a material inducement to the Company to enter into this Agreement and sell the Shares, Purchaser hereby represents and warrants as of the date hereof as follows: 6A. Organization and Power of Purchaser. Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and is qualified to do business in every jurisdiction in which its ownership of property or conduct of business requires it to qualify. 6B. Authorization; No Breach. The execution, delivery and performance of this Agreement, the Stockholders Agreement and the Stock Purchase Warrant by Purchaser have been duly authorized by Purchaser. Each of this Agreement, the Stockholders Agreement and the Stock Purchase Warrant, when it is executed by the other parties thereto, will constitute a valid and binding obligation of Purchaser enforceable in accordance with its respective terms except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency or similar laws of general application relating to or affecting the enforcement of creditors' rights or by general principles of equity. The execution and delivery by Purchaser of this Agreement, the Stockholders Agreement and the Stock Purchase Warrant, the purchase of the Shares hereunder and the fulfillment of and compliance with the respective terms hereof and thereof by Purchaser do not and shall not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in the creation of any Lien upon Purchaser's securities or assets pursuant to, (iv) give any third party the right to modify, terminate or accelerate any obligation under, (v) result in a violation of, or (vi) require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any -27- 31 court or administrative or governmental body or agency pursuant to, (A) the constituting documents of Purchaser, (B) any law, statute, rule or regulation to which Purchaser is subject, or (C) any material agreement or instrument, or any order, judgment or decree to which Purchaser is subject, except in the case of (B) and (C) were such conflict, default or violation would not have a material adverse effect on Purchaser. 6C. Brokerage. There are no claims for brokerage commissions, finders' fees or similar compensation in connection with the transactions contemplated by this Agreement, based on any arrangement or agreement binding upon Purchaser for which the Company or the Subsidiaries could become liable. Purchaser shall pay, and hold the Company harmless against, any Liability, Loss or expense (including, without limitation, reasonable attorneys' fees and out-of-pocket expenses) arising in connection with any such claim. 6D. Purchaser's Investment Representations. Purchaser hereby represents that it is acquiring the Shares purchased hereunder or acquired pursuant hereto for its own account with the present intention of holding such securities for purposes of investment, and that it has no intention of selling such securities in a public distribution in violation of the federal securities laws or any applicable state securities laws; provided that nothing contained herein shall prevent Purchaser and subsequent holders of Shares from transferring such securities in compliance with the applicable federal and state securities laws, subject to the provisions of the Stockholders Agreement. Section 7. Termination. 7A. Termination. All rights of Purchaser and obligations of the Company to the Purchaser under Section 4B shall terminate upon Thayer Shares constituting less than 5% of the issued and outstanding Common Stock, and such sections shall remain terminated even if Purchaser, its Affiliates and any holders of Thayer Shares later own in the aggregate 5% or more of the issued and outstanding Common Stock; provided that the limited partners of Thayer Equity Investors III, L.P. shall not be treated as Affiliates of Thayer or the holders of Thayer Shares for the purposes of this Section 7A. Except with respect to the representations and warranties contained herein, all other rights of Purchaser and obligations of the Company to Purchaser shall terminate upon the first to occur of (i) there being no Thayer Shares, and (ii) the consummation of an Approved Sale. Section 8. Representations and Warranties. 8A. Survival of Representations and Warranties. All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and continue in full force and effect until thirty days after the Company delivers to Purchaser audited financial statements of the Company and the Subsidiaries as set forth in Section 4A(i)(b) for the fiscal year ending March 31, 1999. -28- 32 8B. Indemnification. Notwithstanding anything herein to the contrary, the Company shall not be liable for any inaccuracy of any representation or warranty contained herein unless all such inaccuracies, in the aggregate, shall have a Material Adverse Effect, provided that for the purpose of determining any inaccuracy of a representation or warranty, any qualification as to materiality or Material Adverse Effect contained therein shall be ignored. Section 9. Miscellaneous. 9A. Expenses. The Company shall pay all out-of-pocket fees and expenses (including reasonable attorneys fees) of the Company and the Purchaser incurred in connection with this Agreement, the Stockholders Agreement, the Stock Purchase Warrant and the transactions contemplated hereby and thereby. 9B. Consent to Amendments. Except as otherwise expressly provided herein, the provisions of this Agreement may be amended or waived and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the prior written consent of Purchaser. No other course of dealing between the Company and Purchaser or any delay in exercising any rights hereunder or under the Stockholders Agreement or the Stock Purchase Warrant shall operate as a waiver of any rights of any such holders. 9C. Successors and Assigns. Except as otherwise expressly provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by the Company and Purchaser and their respective permitted successors and assigns, provided, however that Purchaser shall not assign this Agreement or any of the rights or interests hereunder (except any right or interest directly related to the ownership of the Shares) to any Person other than an Affiliate of Purchaser within two years of the date hereof. 9D. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. 9E. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same Agreement. 9F. Descriptive Headings; Interpretation. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a substantive part of this Agreement. The use of the word "including" in this Agreement shall be by way of example rather than by limitation. -29- 33 9G. Governing Law. All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the exhibits and schedules hereto (including the Disclosure Schedule) shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. 9H. Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (i) when delivered personally to the recipient, (ii) on the day following the date on which the same shall have been sent to the recipient by reputable overnight courier service (charges prepaid), (iii) when delivered via facsimile (with appropriate confirmation of receipt), or (iv) on the third day following the date on which the same shall have been mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid. Such notices, demands and other communications shall be sent to Purchaser and to the Company at the addresses indicated below: If to Purchaser: c/o Thayer Equity Investors III, L.P. 1455 Pennsylvania Avenue, Suite 350 Washington, DC 20004 FAX: 202-371-0391 Attention: Carl J. Rickertsen with a copy to: Kirkland & Ellis 655 Fifteenth Street, N.W., Suite 1200 Washington, DC 20005-5793 FAX: 202-879-5200 Attention: Jack M. Feder, Esq. If to the Company: MLC Holdings, Inc. 11150 Sunset Hills Road, Suite 110 Reston, VA 20190-5321 FAX: 703-834-5718 Attention: Phillip G. Norton -30- 34 with a copy to: Alston & Bird, LLP 601 Pennsylvania Avenue, N.W. North Building, 11th Floor Washington, DC 20004 FAX: 202-508-3333 Attention: Frank M. Conner, III, Esq. or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. 9I. No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. 9J. Entire Agreement. This Agreement (including the Disclosure Schedule and the exhibits attached hereto), the Stockholders Agreement and the Stock Purchase Warrant embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. [END OF PAGE] [SIGNATURE PAGE FOLLOWS] -31- 35 IN WITNESS WHEREOF, the parties hereto have executed this Common Stock Purchase Agreement on the date first written above. MLC HOLDINGS, INC. By: /s/ BRUCE M. BOWEN ------------------------------------ Name: Bruce M. Bowen Title: Executive Vice President TC LEASING, LLC By: THAYER EQUITY INVESTORS III, L.P., its managing member By: TC EQUITY PARTNERS, L.L.C., its general partner By: /s/ JEFFREY W. GOETTMAN ------------------------------------ Name: Jeffrey W. Goettman Title: Member EX-3 4 STOCKHOLDERS AGREEMENT 1 EXHIBIT 3 - -------------------------------------------------------------------------------- STOCKHOLDERS AGREEMENT Dated as of October 23, 1998 Among MLC HOLDINGS, INC. AND CERTAIN OF ITS STOCKHOLDERS - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS
PAGE Section 1. Definitions ........................................................ -1- Section 2. Voting Arrangements ................................................ -7- (a) ELECTION OF DIRECTORS .............................................. -7- (b) ADDITIONAL DIRECTORS ............................................... -7- (c) REMOVAL OF DIRECTORS ............................................... -8- (d) VACANCIES .......................................................... -8- (e) RIGHTS UNIMPAIRED .................................................. -8- (f) APPOINTMENT OF PROXY ............................................... -8- (g) COMMITTEES ......................................................... -9- (h) STOCK PURCHASE WARRANT ............................................. -9- (i) INITIAL THAYER DIRECTORS ........................................... -9- (j) FIDUCIARY DUTIES UNCHANGED ......................................... -9- (k) ELECTION OF SUBSIDIARIES' DIRECTORS ................................ -9- Section 3. Restrictions on Transfer ........................................... -9- (a) RESTRICTIONS ON TRANSFER ........................................... -9- (b) CERTAIN PERMITTED TRANSFERS ....................................... -10- (c) TAG-ALONG RIGHTS .................................................. -12- (d) PUBLIC THAYER OFFER ............................................... -14- (e) TRANSFERS IN VIOLATION OF THIS AGREEMENT .......................... -14- Section 4. Legends ........................................................... -14- (a) STOCKHOLDERS AGREEMENT LEGEND ..................................... -14- (b) REMOVAL OF LEGENDS ................................................ -15- Section 5. Preemptive Rights ................................................. -15- (a) RESTRICTIONS ...................................................... -15- (b) THAYER OFFER ...................................................... -15- (c) STOCK OFFER ....................................................... -15- (d) REFUSED SECURITIES ................................................ -16- (e) EXCLUSIONS ........................................................ -16- (f) EXCLUDED SECURITIES ............................................... -16- (g) 33.3% LIMITATION .................................................. -16- Section 6. Qualified Sale of the Company ..................................... -17- (a) APPROVED SALE ..................................................... -17- (b) MANAGEMENT OFFER .................................................. -17- Section 7. Registration Rights ............................................... -19- (a) SHELF REGISTRATION ................................................ -19-
-i- 3 (b) DEMAND REGISTRATION ............................................... -19- (c) INCIDENTAL REGISTRATION ........................................... -19- (d) HOLDBACK AGREEMENTS ............................................... -20- (e) REGISTRATION AND MAINTENANCE PROCEDURES ........................... -21- (f) REGISTRATION EXPENSES ............................................. -24- (g) INDEMNIFICATION; CONTRIBUTION ..................................... -25- (h) RULE 144 SALES .................................................... -28- (i) UNDERWRITTEN REGISTRATIONS ........................................ -28- (j) NO INCONSISTENT AGREEMENTS ........................................ -28- (k) S-3 DEMANDS ....................................................... -28- Section 8. Operating Budget .................................................. -29- Section 9. Redemption ........................................................ -29- Section 10. Rights of First Refusal or First Offer ............................ -30- (a) ASSIGNMENT ........................................................ -30- (b) IRREVOCABLE PROXY AND STOCK RIGHTS AGREEMENT ...................... -30- Section 11. Amendment and Waiver .............................................. -30- Section 12. Severability ...................................................... -31- Section 13. Entire Agreement .................................................. -31- Section 14. Successors and Assigns ............................................ -31- Section 15. Counterparts ...................................................... -31- Section 16. Remedies .......................................................... -31- Section 17. Notices ........................................................... -31- Section 18. Governing Law ..................................................... -32- Section 19. Descriptive Headings .............................................. -33- Section 20. Survival; Termination ............................................. -33- Section 21. Other Registration Rights ......................................... -33-
SCHEDULES AND EXHIBITS: Schedule I -- Other Management Stockholders -ii- 4 Exhibit A -- Form of Joinder Agreement to Stockholders Agreement -iii- 5 STOCKHOLDERS AGREEMENT This STOCKHOLDERS AGREEMENT (this "AGREEMENT") is dated as of October 23, 1998 among (i) MLC HOLDINGS, INC., a Delaware corporation (the "COMPANY"), (ii) TC Leasing, LLC, a Delaware limited liability company ("THAYER"), (iii) Phillip G. Norton ("NORTON"), Bruce M. Bowen and the other Persons listed on Schedule I hereto (collectively, the "MANAGEMENT STOCKHOLDERS") and (iv) each Person who hereafter executes a counterpart of this Agreement (or otherwise agrees to be bound by the provisions hereof). Thayer, the Management Stockholders and the other Persons that are or may become parties to this Agreement are sometimes referred to herein collectively as the "STOCKHOLDERS"). The parties hereby agree as follows: SECTION 1. DEFINITIONS. For purposes of this Agreement, the following terms have the indicated meanings: "AFFILIATE" of a Person means any other Person controlling, controlled by or under common control with such Person, whether by ownership of voting securities, by contract or otherwise, and in the case of Thayer shall include Thayer Equity Investors III, L.P. and any of its partners or Affiliates, and in the case of a natural Person shall include any member of such Person's Family Group. "AGREEMENT" is defined in the preface. "ALLOCABLE SHARES" is defined in Section 3(c)(ii). "APPROVED SALE" is defined in Section 6(a). "BLOCK OF SHARES" means Thayer Shares which constitute 5% or more of the Common Shares of the Company, and includes all Thayer Shares which are transferred pursuant to Section 3(b)(vi) or 3(b)(xiii) in a single transaction or in a series of related transactions. "BOARD" means the Company's Board of Directors. "BUYERS" is defined in Section 6(b). "COMMON SHARES" means shares of the Company's Common Stock. "COMMON STOCK" means, collectively, the Company's common stock, par value $.01 per share, and any other class or series of authorized capital stock of the Company which is not limited to a fixed sum or percentage of par or stated value in respect to the rights of the holders thereof to participate in dividends or in the distribution of assets upon any liquidation, dissolution or winding up of the Company. 6 "COMMON STOCK PURCHASE AGREEMENT" means the Common Stock Purchase Agreement, dated as of the date hereof, by and between the Company and Thayer. "COMPANY" is defined in the preface. "CO-REDEMPTION NOTICE" is defined in Section 9. "DEMAND REGISTRATION" is defined in Section 7(b)(i). "DEMAND RIGHT" is defined in Section 7(b)(i). "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXCLUDED SECURITIES" is defined in Section 5(f). "FAMILY GROUP" means such Person's spouse and lineal descendants (whether natural or adopted) and any trust formed and maintained solely for the benefit of such Person, such Person's spouse or such Person's lineal descendants. "INCIDENTAL REGISTRATION" is defined in Section 7(c)(i). "INCIDENTAL REGISTRATION STATEMENT" is defined in Section 7(c)(i). "INDEMNIFIED COMPANY" is defined in Section 7(g)(ii). "INDEMNIFIED PARTIES" is defined in Section 7(g)(ii). "INDEMNIFIED STOCKHOLDER" is defined in Section 7(g)(i). "INDEMNIFYING PARTY" is defined in Section 7(g)(iii). "INDEPENDENT DIRECTORS" is defined in Section 2(a). "IRREVOCABLE PROXY AND STOCK RIGHTS AGREEMENT" means the Irrevocable Proxy and Stock Rights Agreement, made as of September 1, 1996, among Norton, Kevin M. Norton, Patrick J. Norton, Jr. and J.A.P. Investment Group, Inc. "JOINDER AGREEMENT" is defined in Section 3(b)(i). "LOSSES" is defined in Section 7(g)(i). "MANAGEMENT DIRECTORS" is defined in Section 2(a). "MANAGEMENT OFFER NOTICE" is defined in Section 6(b). -2- 7 "MANAGEMENT REPLY" is defined in Section 6(b). "MANAGEMENT SHARES" means Stockholder Shares held by the Management Stockholders and their permitted transferees. Management Shares shall cease to be such when they cease to be Stockholder Shares. "MANAGEMENT STOCKHOLDERS" is defined in the preface. "MARKET VALUE" means, with respect to any security on any date, (x) if such security is quoted on NASDAQ or listed on a national securities exchange, the average daily closing sales price of such security on NASDAQ or a national securities exchange, as applicable, for the 20 trading days prior to such date, and (y) if such security is not quoted on NASDAQ or listed on a national securities exchange, the fair value per share determined jointly by the Company and Thayer, provided that if the Company and Thayer are unable to reach an agreement within a reasonable period of time, such fair value shall be determined by a recognized investment banking firm jointly selected by the Company and Thayer, whose determination shall be final and binding upon the Company and Thayer (and the fees and expenses of such recognized investment banking firm shall be paid by the Company). "NASDAQ" means National Association of Securities Dealers Automated Quotations National Market System. "NEW SECURITIES" is defined in Section 5(a). "NORTON" is defined in the preface. "NORTON FAMILY STOCKHOLDER" means each of J.A.P. Investment Group, Inc., Kevin M. Norton and Patrick J. Norton, Jr. "OFFERED SECURITIES" is defined in Section 3(c)(i). "OPTIONS" means any options to purchase Common Stock granted by the Company. "OTHER HOLDER" is defined in Section 3(c)(i). "OTHER REDEEMERS" is defined in Section 9. "OTHER STOCKHOLDERS" is defined in Section 6(a). "OWNERSHIP PERCENTAGE" means, with respect to any Stockholder, a percentage equal to the product of (a) a fraction, the numerator of which is the sum of (i) the number of Common Shares owned by such Stockholder, and (ii) the number of Common Shares issuable upon the exercise of any Stock Purchase Warrant or Option owned by such Stockholder, and the denominator of which is the sum of (x) the number of shares of the Company's outstanding Common -3- 8 Shares, and (y) the number of Common Shares issuable upon the exercise of all Stock Purchase Warrants or Options owned by any of the Stockholders, multiplied by (b) 100. "PERMITTED TRANSFERS" is defined in Section 3(b). "PERSON" means any individual, corporation, partnership, firm, joint venture, association, limited liability company, joint-stock company, trust, unincorporated organization, governmental or regulatory body or other legal entity. "PROCEEDING" is defined in Section 7(g)(iii). "PUBLIC OFFERING" means a sale of Common Stock to the public in an offering pursuant to an effective registration statement filed with the SEC pursuant to the Securities Act, as then in effect, provided that a Public Offering shall not include an offering made in connection with a business acquisition or combination or an employee benefit plan. "PUBLIC SALE" means a sale of Common Stock pursuant to a Public Offering or a Rule 144 Sale. "QUALIFIED SALE OF THE COMPANY" means a Sale of the Company pursuant to which the effective price per Common Share for the holders of Stockholder Shares would be as follows: (i) if the Sale of the Company occurs before the first anniversary of the date hereof, (x) 75% greater than the average daily closing sales price of the Common Shares on NASDAQ for the 3 months prior to the date of the public announcement of the proposed Sale of the Company and (y) greater than $20.00 (as such amount is proportionately adjusted for stock splits, stock combinations, stock dividends and recapitalizations affecting the Common Shares after the date hereof); (ii) if the Sale of the Company occurs on or after the first anniversary of the date hereof and before the second anniversary of the date hereof, (x) 60% greater than the average daily closing sales price of the Common Shares on NASDAQ for the 3 months prior to the date of the public announcement of the proposed Sale of the Company and (y) greater than $18.00 (as such amount is proportionately adjusted for stock splits, stock combinations, stock dividends and recapitalizations affecting the Common Shares after the date hereof); (iii) if the Sale of the Company occurs on or after the second anniversary of the date hereof and before the third anniversary of the date hereof, (x) 45% greater than the average daily closing sales price of the Common Shares on NASDAQ for the 3 months prior to the date of the public announcement of the proposed Sale of the Company and (y) greater than $16.00 (as such amount is proportionately adjusted for stock splits, stock combinations, stock dividends and recapitalizations affecting the Common Shares after the date hereof); and (iv) if the Sale of the Company occurs on or after the third anniversary of the date hereof, (x) 30% greater than the average daily closing sales price of the Common Shares on NASDAQ for the 3 months prior to the date of the public announcement of the proposed Sale of the Company and (y) greater than $14.00 (as such amount is proportionately adjusted for stock splits, stock combinations, stock dividends and recapitalizations affecting the Common Shares after the date hereof), provided that if the Common Shares are not then traded on NASDAQ, then the average price per Common Shares for the 3 months prior to the date of the public announcement of the proposed Sale of the Company as determined in good faith by the Board. -4- 9 "REDEEMABLE SHARES" is defined in Section 9. "REDEMPTION NOTICE" is defined in Section 9. "REFUSED SECURITIES" is defined in Section 5(d). "REGISTRABLE SECURITIES" means any Common Shares, except Common Shares which have been Transferred in a Public Sale. "REGISTRATION NOTICE" is defined in Section 7(b)(i). "REGISTRATION REQUEST" is defined in Section 7(b)(i). "REGISTRATION STATEMENT" means any registration statement of the Company under which any of the Registrable Securities are included therein pursuant to the provisions of this Agreement, including the prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. The Shelf shall be deemed a Registration Statement. "REQUESTING HOLDERS" is defined in Section 7(b)(i). "RULE 144 SALE" means a sale of Common Stock to the public through a broker, dealer or market-maker pursuant to the provisions of Rule 144 adopted under the Securities Act (or any successor rule or regulation). "S-3 DEMAND REGISTRATION" is defined in Section 7(k)(i). "S-3 REGISTRATION NOTICE" is defined in Section 7(k)(i). "S-3 REGISTRATION REQUEST" is defined in Section 7(k)(i). "S-3 REQUESTING HOLDERS" is defined in Section 7(k)(i). "SALE NOTICE" is defined in Section 3(c)(i). "SALE OF THE COMPANY" means, whether in a single transaction or in a series of related transactions, (i) a sale of all or substantially all of the assets of the Company and its Subsidiaries on a consolidated basis, or (ii) the Transfer or other disposition of more than 50% of the outstanding Common Stock or the outstanding common equity securities of any of the Company's Subsidiaries (in each case whether accomplished by stock purchase, asset purchase, merger, recapitalization, reorganization or other transaction). "SEC" means the United States Securities and Exchange Commission. -5- 10 "SECURITIES ACT" means the Securities Act of 1933, as amended. "SELLING HOLDER" is defined in Section 3(c)(i). "SHELF" is defined in Section 7(a). "STOCKHOLDERS" is defined in the preface. "STOCK NOTICE OF ACCEPTANCE" is defined in Section 5(c). "STOCK OFFER" is defined in Section 5(c). "STOCK OFFER PERIOD" is defined in Section 5(c). "STOCK OPTION PLANS" means the 1998 Long-Term Incentive Plan, the Employee Share Purchase Plan and any other plan of the Company pursuant to which the Company issues options, stock appreciation rights, restricted stock or other stock based compensation to officers, employees, directors or consultants of the Company or any of its Subsidiaries. "STOCK PURCHASE WARRANT" means, collectively, the Stock Purchase Warrant, dated as of the date hereof, by the Company in favor of Thayer, and any subsequent stock purchase warrant or stock purchase warrants in favor of Thayer or any of its Affiliates issued pursuant to or in connection with the Stock Purchase Warrant, dated as of the date hereof, by the Company in favor of Thayer. "STOCKHOLDER SHARES" means (i) all shares of Common Stock now owned or in the future acquired by the Stockholders, including all shares of Common Stock acquired pursuant to the exercise of Options or the Stock Purchase Warrant, and (ii) all shares of Common Stock or other securities issued or issuable directly or indirectly with respect to the securities referred to in clause (i) by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. Stockholder Shares shall cease to be such as provided in the last sentence of Section 3(b). "SUBSIDIARY" means, with respect to any Person, any other Person of which at least a majority of the outstanding shares or other equity interests having ordinary voting power for the election of directors or comparable managers of such Person are owned, directly or indirectly, by the first Person or one or more Subsidiaries of such first Person. "TAG-ALONG NOTICE" is defined in Section 3(c)(i). "THAYER" is defined in the preface. "THAYER DIRECTORS" is defined in Section 2(a) and 2(b). "THAYER NOTICE OF ACCEPTANCE" is defined in Section 5(b). -6- 11 "THAYER OFFER" is defined in Section 5(b). "THAYER OFFER PERIOD" is defined in Section 5(b). "THAYER SHARES" means Stockholder Shares held by the Thayer and its permitted transferees. Thayer Shares shall cease to be such when they cease to be Stockholder Shares. "TRANSFER" means, with respect to any Stockholder Shares, the gift, sale, assignment, transfer, pledge, hypothecation or other disposition (whether for or without consideration and whether voluntary, involuntary or by operation of law) of such Stockholder Shares or any interest therein. "WARRANT SHARES" means the Common Shares issued in connection with the exercise of the Stock Purchase Warrant, so long as such Common Shares continue to be Stockholder Shares. SECTION 2. VOTING ARRANGEMENTS. (a) ELECTION OF DIRECTORS. Except as set for in Section 2(b), each Stockholder agrees that such Person will vote, or cause to be voted, all voting securities of the Company over which such Person has the power to vote or direct the voting, and will take all other necessary or desirable action within such Person's control, and the Company will take all necessary and desirable actions within its control, to cause the authorized number of directors for the Company to be established at six directors, and to elect or cause to be elected to the Board and cause to be continued in such offices as follows: (i) two individuals designated by Thayer (the "THAYER DIRECTORS"), (ii) two individuals designated by the Management Stockholders (the "MANAGEMENT DIRECTORS") and (iii) two individuals who are not employees of the Company or its Subsidiaries or Affiliates, designated by a nominating committee comprised of one individual designated by the Management Stockholders and one individual designated by Thayer (the "INDEPENDENT DIRECTORS"); provided that for so long as the Board is divided into three classes, the "Class I" directors shall consist of one Thayer Director and one Independent Director, the "Class II" directors shall consist of one Thayer Director and one Independent Director and the "Class III" directors shall consist of two Management Directors. (b) ADDITIONAL DIRECTORS. Notwithstanding anything herein to the contrary, in the event that (x) the Board does not approve an Approved Sale and the Thayer Directors voted in favor of such Approved Sale or (y) the Board does not vote on whether to approve an Approved Sale within a reasonable period of time after Thayer requests the Board to approve an Approved Sale, each Stockholder agrees that such Person will vote, or cause to be voted, all voting securities of the Company over which such Person has the power to vote or direct the voting, and will take all other necessary or desirable action within such Person's control, and the Company will take all necessary and desirable actions within its control, to cause the authorized number of directors for the Company and each of its Subsidiaries to be increased from six directors to nine directors, and to elect or cause to be elected to the Board, and cause to be continued in such office (for so long as reasonably necessary for the Board to approve and the Company to consummate such Approved Sale), the three -7- 12 additional directors of the Board designated by Thayer (also, the "THAYER DIRECTORS"); provided, however, that if the Board is then divided into classes, each Stockholder agrees that such Person will vote, or cause to be voted, all voting securities of the Company over which such Person has the power to vote or direct the voting, and will take all other necessary or desirable action within such Person's control, and the Company will take all necessary and desirable actions within its control, including if necessary abolishing the three classes of directors and establishing only one class of directors, to cause the majority of the directors on the then current Board to consist of Thayer Directors. (c) REMOVAL OF DIRECTORS. If at any time Thayer shall notify the other Stockholders of its desire to remove, with or without cause, any individual designated by Thayer pursuant to Section 2(a), 2(b) or 2(k) from a directorship, or if at any time the Management Stockholders shall notify the other Stockholders of their desire to remove, with or without cause, any individual designated by the Management Stockholders pursuant to Section 2(a) above from a directorship, all such Persons so notified will vote, or cause to be voted, all voting securities of the Company or any Subsidiary of the Company, as applicable, over which they have the power to vote or direct the voting, and will take all other necessary or desirable action within such Person's control, and the Company will take all necessary and desirable actions within its control, to cause the removal of such director. (d) VACANCIES. If at any time any director ceases to serve on the board of directors of the Company or any Subsidiary of the Company (whether due to resignation, removal or otherwise), then Thayer or the Management Stockholders, as applicable, shall be entitled to designate a successor director to fill the vacancy created thereby on the terms and subject to the conditions of Section 2(a), 2(b) or 2(k), as applicable. Each Stockholder agrees that he, she or it will vote, or cause to be voted, all voting securities of the Company or any Subsidiary of the Company over which such Person has the power to vote or direct the voting, and shall take all such other actions promptly as shall be necessary or desirable to cause the successor designated by Thayer or the Management Stockholders, as applicable, to be elected to fill such vacancy. (e) RIGHTS UNIMPAIRED. Nothing in this Agreement shall be construed to impair any rights that the stockholders of the Company or any Subsidiary of the Company may have to remove any director for cause. No removal for cause of an individual designated pursuant to this Section 2 shall affect the right of Thayer or the Management Stockholders, as applicable, to designate a different individual pursuant to this Section 2 to fill the directorship from which such individual was removed. (f) APPOINTMENT OF PROXY. IN ORDER TO SECURE THE OBLIGATIONS OF EACH AND EVERY MANAGEMENT STOCKHOLDER TO VOTE ALL COMMON SHARES HELD BY SUCH MANAGEMENT STOCKHOLDER IN ACCORDANCE WITH ALL OF THE PROVISIONS OF SECTION 2(b) OF THIS AGREEMENT, EACH MANAGEMENT STOCKHOLDER HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS CARL J. RICKERTSEN AS SUCH MANAGEMENT STOCKHOLDER'S TRUE AND LAWFUL ATTORNEY, AGENT AND PROXY, WITH FULL POWER OF SUBSTITUTION, TO ATTEND MEETINGS OF STOCKHOLDERS OF THE COMPANY HELD FROM TIME TO -8- 13 TIME, AND TO VOTE ON SUCH MANAGEMENT STOCKHOLDER'S BEHALF AND IN SUCH STOCKHOLDER'S NAME, PLACE, AND STEAD, OR TO EXECUTE WRITTEN CONSENTS IN LIEU OF SUCH MEETINGS, THE NUMBER OF VOTES THAT SUCH MANAGEMENT STOCKHOLDER WOULD BE ENTITLED TO CAST IF ACTUALLY PRESENT OR WITH RESPECT TO WHICH SUCH MANAGEMENT STOCKHOLDER WOULD BE ENTITLED TO EXECUTE A WRITTEN CONSENT, IN CONNECTION WITH ANY ELECTION OF DIRECTORS (IN ACCORDANCE WITH SECTION 2(b)) OR ANY APPROVED SALE (IN ACCORDANCE WITH SECTION 6). THE POWERS GRANTED HEREIN WILL BE DEEMED TO BE COUPLED WITH AN INTEREST, WILL BE IRREVOCABLE AND WILL SURVIVE THE DEATH, INCOMPETENCY, DISABILITY OR DISSOLUTION OF ANY MANAGEMENT STOCKHOLDER. (g) COMMITTEES. The Compensation Committee of the Board shall at all times grant all awards under the Stock Option Plans. The Compensation Committee shall consist of four members, two of which shall be Independent Directors and two of which shall be Thayer Directors. All other committees of the Board shall at all times consist of at least one Thayer Director. (h) STOCK PURCHASE WARRANT. Each Stockholder agrees that such Person will vote, or cause to be voted, all voting securities of the Company over which such Person has the power to vote or direct the voting, and will take all other necessary or desirable action within such Person's control, and the Company will take all necessary and desirable actions within its control, so that Thayer (or any Person designated by Thayer) may exercise its rights under the Stock Purchase Warrant pursuant to the terms thereof. (i) INITIAL THAYER DIRECTORS. Thayer hereby designates Carl J. Rickertsen as the initial "Class II" Thayer Director and Dr. Paul G. Stern as the initial "Class I" Thayer Director. (j) FIDUCIARY DUTIES UNCHANGED. Nothing in this Agreement shall be construed to limit, change or eliminate any fiduciary duties a director of the Company or any Subsidiary of the Company may have to the stockholders of the Company or any Subsidiary of the Company under Delaware law. (k) ELECTION OF SUBSIDIARIES' DIRECTORS. The Company will take all necessary and desirable actions within its control to elect or cause to be elected to the respective boards of directors of each of the Company's domestic Subsidiaries, and cause to be continued in such offices, at least one Thayer Director. Thayer hereby designates Carl J. Rickertsen as the initial Thayer Director for the purposes of this Section 2(k). SECTION 3. RESTRICTIONS ON TRANSFER. (a) RESTRICTIONS ON TRANSFER. No holder of Stockholder Shares may Transfer such Stockholder Shares except in a Permitted Transfer. -9- 14 (b) CERTAIN PERMITTED TRANSFERS. Section 3(a) shall not apply to Transfers ("PERMITTED TRANSFERS") of Stockholder Shares: (i) to any Affiliate of the holder of such Stockholder Shares, provided that (x) such Transfers do not violate federal or state securities laws, and (y) the transferees (other than partners of Thayer Equity Investors III, L.P.) execute a Joinder Agreement substantially in the form attached hereto as Exhibit A (a "JOINDER AGREEMENT") and thereby become a party to this Agreement; (ii) from a Norton Family Stockholder to Norton pursuant to the Irrevocable Proxy and Stock Rights Agreement; (iii) to the Company, subject to the provisions of Section 9, provided that in no event shall such Transfers occur without the prior written consent of Thayer if such Transfers (after taking into account all Transfers in connection with related Co-Redemption Notices as provided in Section 9) would result in the Management Shares and Thayer Shares, collectively, constituting less than 51% of the outstanding Common Shares of the Company; (iv) to Thayer or any Affiliate thereof pursuant to Section 10(a), provided that in no event shall such Transfers occur without the prior written consent of the holders of at least a majority of the then outstanding Management Shares if such Transfers would result in the Thayer Shares and Common Shares issuable in connection with the exercise of a Stock Purchase Warrant in the aggregate constituting more than 33.3% of the Common Shares of the Company on a fully diluted basis, provided further that if such Transfers are to any Affiliate of Thayer, (x) such Transfers do not violate federal or state securities laws, and (y) such Affiliate executes a Joinder Agreement; (v) to Thayer or any Affiliate thereof pursuant to Section 10(b), provided that if such Transfers are to an Affiliate of Thayer, (x) such Transfers do not violate federal or state securities laws, and (y) such Affiliate executes a Joinder Agreement; (vi) pursuant to Section 6(b), provided that (x) such Transfers do not violate federal or state securities laws, and (y) the transferees execute a Joinder Agreement and thereby become a party to this Agreement (unless the applicable Block of Shares constituted 85% or more of the Common Shares then owned by Thayer and its Affiliates (provided that the limited partners of Thayer Equity Investors III, L.P. shall not be treated as Affiliates of Thayer for the purposes of this Section 3(b)(vi)) and Thayer elected in the applicable Management Offer Notice for the transferees not to execute a Joinder Agreement); (vii) in a Public Sale, subject to the provisions of Section 3(d), provided that in no event shall such Transfers occur without the prior written consent of Thayer if such Transfers would result in the Management Shares and Thayer Shares, collectively, constituting less than 51% of the outstanding Common Shares of the Company; -10- 15 (viii) in a Public Sale, subject to the provisions of Section 3(d), provided that in no event shall such Transfers occur without the prior written consent of Thayer if (w) such transferor is Bruce M. Bowen or any of his Affiliates, and such Transfers (combined with all other Transfers pursuant to this Section 3(b)(viii)(w)) are for more than 20,000 Common Shares in any 3 month period or for more than 80,000 Common Shares, (x) such transferor is JAP Investment Group, Inc. or any of its Affiliates, and such Transfers (combined with all other Transfers pursuant to this Section 3(b)(viii)(x)) are for more than 25,000 Common Shares in any 3 month period or for more than 100,000 Common Shares, (y) such transferor is Kevin M. Norton or any of his Affiliates, and such Transfers (combined with all other Transfers pursuant to this Section 3(b)(viii)(y)) are for more than 12,500 Common Shares in any 3 month period or for more than 50,000 Common Shares or (z) such transferor is Patrick J. Norton, Jr. or any of his Affiliates, and such Transfers (combined with all other Transfers pursuant to this Section 3(b)(viii)(z)) are for more than 12,500 Common Shares in any 3 month period or for more than 50,000 Common Shares; (ix) pursuant to an Approved Sale, subject to the provisions of Sections 3(c) and 6(b); (x) incidental to the exercise, conversion or exchange thereof in accordance with their terms, any combination of shares (including any reverse stock split) or any recapitalization, reorganization or reclassification of, or any merger or consolidation involving, the Company; (xi) from a Management Stockholder to Thayer, any Affiliate thereof or any Person designated by Thayer, provided that in no event shall such Transfers occur without the prior written consent of the holders of at least a majority of the then outstanding Management Shares if such Transfers would result in the Thayer Shares and Common Shares issuable in connection with the exercise of a Stock Purchase Warrant in the aggregate constituting more than 33.3% of the Common Shares of the Company on a fully diluted basis (except to the extent permitted under Section 3(d)), provided further that if such Transfers are to an Affiliate of Thayer or any Person designated by Thayer, (x) such Transfers do not violate federal or state securities laws, and (y) such Affiliate or any Person designated by Thayer, as applicable, executes a Joinder Agreement; (xii) pursuant to Section 3(c), provided that (x) such Transfers do not violate federal or state securities laws, and (y) if the transferees in the Transfers to which the tag-along right under Section 3(c) is related execute a Joinder Agreement, the transferees pursuant to the Transfer pursuant to this clause (xi) execute a Joinder Agreement and thereby become a party to this Agreement; and (xiii) to any Person other than pursuant to a Transfer described above, subject to the provisions of Sections 3(c) and 6(b), provided that (x) such Transfers do not violate federal or state securities laws, and (y) the transferees execute a Joinder Agreement and thereby become a party to this Agreement (unless such Transfers are by Thayer or any Affiliate thereof of 85% or more of the Common Shares then owned by Thayer and its -11- 16 Affiliates (provided that the limited partners of Thayer Equity Investors III, L.P. shall not be treated as Affiliates of Thayer for the purposes of this Section 3(b)(xiii)) Thayer Shares, in which case such transferees shall only execute a Joinder Agreement if Thayer so elects). Any Stockholder Shares transferred pursuant to clause (i), (ii), (iv), (v), (vi), (x), (xi) or (xiii) above shall continue to be Stockholder Shares for purposes of this Agreement, any Stockholder Shares transferred pursuant to clause (iii), (vii), (viii) or (ix) above shall no longer be Stockholder Shares and hence no longer subject to any of the restrictions set forth herein, and any Stockholder Shares transferred pursuant to clause (xii) above (x) shall continue to be Stockholder Shares if the Stockholder Shares transferred in the Transfer to which the tag-along right under Section 3(c) is related continue to be Stockholder Shares, and (y) shall no longer be Stockholder Shares if the Stockholder Shares transferred in the Transfer to which the tag-along right under Section 3(c) is related cease to be Stockholder Shares. (c) TAG-ALONG RIGHTS. (i) Prior to making any Transfer of Stockholder Shares pursuant to Section 3(b)(ix) or 3(b)(xiii), any holder of Stockholder Shares proposing to make such a Transfer (for purposes of this Section 3(c), a "SELLING HOLDER") shall give at least thirty (30) days prior written notice to each other holder of Stockholder Shares (for purposes of this Section 3(c) each, an "OTHER HOLDER") and the Company, which notice (for purposes of this Section 3(c), the "SALE NOTICE") shall identify the type and amount of Stockholder Shares to be sold (for purposes of this Section 3(c), the "OFFERED SECURITIES"), describe the terms and conditions of such proposed Transfer, and identify each prospective transferee. Any of the Other Holders may, within fifteen (15) days after the receipt of the Sale Notice, give written notice (each, a "TAG-ALONG NOTICE") to the Selling Holder that such Other Holder wishes to participate in such proposed Transfer upon the terms and conditions set forth in the Sale Notice, which Tag-Along Notice shall specify the Common Shares such Other Holder desires to include in such proposed Transfer; provided, however, that (1) each Other Holder shall be required, to the extent applicable, as a condition to being permitted to sell Common Shares pursuant to Section 3(b)(xiii) and this Section 3(c) in connection with a Transfer of Offered Securities, to elect to sell Common Shares of the same type and class and in the same relative proportions as the Common Shares which comprise the Offered Securities; and (2) to exercise such Person's tag-along rights hereunder, each Other Holder must agree to make to the transferee the same representations, warranties, covenants, indemnities and agreements as the Selling Holder agrees to make in connection with the Transfer of the Offered Securities (except that in the case of representations and warranties pertaining specifically to, or covenants made specifically by, the Selling Holder, the Other Holders shall make comparable representations and warranties pertaining specifically to (and, as applicable, covenants by) such Persons), and must agree to bear such Person's pro rata share (which may be joint and several but shall be based on the value of Common Shares that are Transferred) of all liabilities to the transferees arising out of representations, warranties and covenants (other than those representations, warranties and covenants that pertain specifically to a given Person, who shall bear all of the liability related thereto), indemnities or other agreements made in connection with the Transfer. Each Stockholder will bear (x) such Person's own costs of any sale of Common Shares pursuant to Section 3(b)(xiii) and this Section 3(c) and (y) such Person's pro rata share (based upon the relative amount of Common Shares -12- 17 sold) of the reasonable costs of any sale of Common Shares pursuant to Section 3(b)(xiii) and this Section 3(c) to the extent such costs are incurred for the benefit of all selling Stockholders and are not otherwise paid by the acquiring party. (ii) If none of the Other Holders gives the Selling Holder a timely Tag- Along Notice with respect to the Transfer proposed in the Sale Notice, then the Selling Holder may Transfer such Offered Securities on the terms and conditions set forth in the Sale Notice to or among any of the transferees identified (or Affiliates of transferees identified) in the Sale Notice at any time within ninety days after expiration of the fifteen-day period for giving Tag-Along Notices with respect to such Transfer. Any such Offered Securities not Transferred by the Selling Holder during such ninety-day period will again be subject to the provisions of this Section 3(c) upon a subsequent Transfer. If one or more Other Holders give the Selling Holder a timely Tag-Along Notice, then the Selling Holder shall use all reasonable efforts to obtain the agreement of the prospective transferee(s) to the participation of the Other Holders in any contemplated Transfer, on the same terms and conditions as are applicable to the Offered Securities, and no Selling Holder shall Transfer any of such Person's shares to any prospective transferee if such prospective transferee(s) declines to allow the participation of the Other Holders. If the prospective transferee(s) is unwilling or unable to acquire all of the Offered Securities and all of the Common Shares to be Transferred by the Other Holders specified in a timely Tag-Along Notice upon such terms, then the Selling Holder may elect either to cancel such proposed Transfer or to allocate the maximum number of each class of Common Shares that the prospective transferees are willing to purchase (the "ALLOCABLE SHARES") among the Selling Holder and the Other Holders giving timely Tag-Along Notices as follows (it being understood that the prospective transferees shall be required to purchase Common Shares of the same class on the same terms and conditions taking into account the provisions of clause (1) of Section 3(c)(i), and to consummate such Transfer on those terms and conditions): (x) each participating Stockholder (including the Selling Holder) shall be entitled to sell a number of shares of Common Shares (not to exceed, for any Other Holder, the number of shares of such Common Shares identified in such Other Holder's Tag-Along Notice) equal to the product of (A) the number of Allocable Shares of such class of Common Shares and (B) a fraction, the numerator of which is such Stockholder's Ownership Percentage of such class of Common Shares and the denominator of which is the aggregate Ownership Percentage for all participating Stockholders of such class of Common Shares; and (y) if after allocating the Allocable Shares of any class of Common Shares to such Stockholders in accordance with clause (x) above, there are any Allocable Shares of such class that remain unallocated, then they shall be allocated (in one or more successive allocations on the basis of the allocation method specified in clause (x) above) among the Selling Holder and each such Other Holder that has elected in its Tag-Along Notice to sell a greater number of shares of such class of Common Shares than previously has been allocated to such Person pursuant to clause (x) and this clause (y) (all of whom (but no others) shall, for purposes of clause (x) above, be deemed to be the participating Stockholders) until all such Allocable Shares have been allocated in accordance with this clause (y). -13- 18 (d) PUBLIC THAYER OFFER. Notwithstanding anything herein to the contrary, prior to any holder of Management Shares transferring such Management Shares pursuant to Section 3(b)(vii) or 3(b)(viii), such holder shall give at least three business days prior written notice to Thayer, which notice shall identify the type, amount and price per share of the Management Shares to be sold. Thayer may, within such three business day period, give written notice to such holder that Thayer and/or any Person designated by Thayer wishes to purchase all or a portion of such Management Shares at such price. If Thayer (or any Person designated by Thayer) elects to purchase all or a portion of such Management Shares by giving a timely notice to such holder, such Transfer to Thayer or any Person designated by Thayer, applicable, shall occur within 15 business days after the date the applicable notice was sent to Thayer pursuant to the terms and conditions set forth in Section 3(b)(xi), provided that if the holder of Management Shares sent the notice pursuant to Section 3(b)(viii), the 33.3% limitation regarding Thayer Shares and Common Shares issuable upon the exercise of a Stock Purchase Warrant shall be waived. If Thayer does not elect to purchase all of such Management Shares (or a Transfer of such Management Shares pursuant to Section 3(b)(xi) does not occur within the applicable 15 business day period despite the reasonable best efforts of such holder of Management Shares), then such holder of Management Shares may Transfer such remaining Management Shares at a price per share no less than 95% of the price per share set forth in the applicable notice at any time within ninety days after such holder sent the notice of such proposed Transfer to Thayer. Any Management Shares not transferred by such holder during such ninety-day period shall again be subject to the provisions of this Section 3(d) upon a subsequent Transfer pursuant to Section 3(b)(vii) or 3(b)(viii). (e) TRANSFERS IN VIOLATION OF THIS AGREEMENT. Any Transfer or attempted Transfer of any Stockholder Shares in violation of this Agreement shall be void, and the Company shall not be obligated to record such Transfer on its books or treat any purported transferee of such Common Shares as the owner of such Common Shares for any purpose. SECTION 4. LEGENDS. (a) STOCKHOLDERS AGREEMENT LEGEND. The certificates representing Stockholder Shares shall bear the following legend: THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS AGREEMENT DATED AS OF OCTOBER 23, 1998 AMONG MLC HOLDINGS, INC. AND CERTAIN OF ITS STOCKHOLDERS, A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY THE HOLDER HEREOF AT THE PRINCIPAL PLACE OF BUSINESS OF MLC HOLDINGS, INC. DISPOSITION OF THIS CERTIFICATE OR THE SECURITIES REPRESENTED HEREBY OR ANY RIGHTS OR INTERESTS THEREIN IN VIOLATION OF SUCH STOCKHOLDERS AGREEMENT SHALL BE NULL AND VOID. Each holder of Stockholder Shares shall provide the Company promptly after the date hereof (and in no event later than 14 days after the date hereof) with his or her certificates representing Stockholder Shares so that such legend can be placed thereon. -14- 19 (b) REMOVAL OF LEGENDS. Whenever the restrictions described above cease to be applicable to any Stockholder Shares, the holder thereof shall be entitled to receive from the Company, without expense to the holder, a new certificate not bearing a legend stating such restriction. SECTION 5. PREEMPTIVE RIGHTS. The Company may authorize, issue, sell or enter into any agreement providing for the issuance or sale (contingent or otherwise) of equity securities (including, without limitation, the Common Stock) only in accordance with the provisions of this Section 5. (a) RESTRICTIONS. On or prior to the six month anniversary of the date hereof, except in the case of Excluded Securities, without Thayer's prior written consent, the Company shall not issue, sell or exchange, agree to issue, sell or exchange, or reserve or set aside for issuance, sale or exchange, any (i) Common Shares, (ii) any debt security of the Company which by its terms is convertible into or exchangeable for any equity security of the Company or has an equity kicker or other participation rights, (iii) any security of the Company that is a combination of debt and equity or (iv) any option, warrant or other right to subscribe for, purchase or otherwise acquire any equity security or any such debt security of the Company (subsections (i) through (iv), collectively, the "NEW SECURITIES"). (b) THAYER OFFER. After the six month anniversary of the date hereof, but on or prior to the second anniversary of the date hereof, except in the case of Excluded Securities or as set forth in Section 5(g), without Thayer's prior written consent, the Company shall not issue, sell or exchange, agree to issue, sell or exchange, or reserve or set aside for issuance, sale or exchange, any New Securities unless in each case, the Company shall have first offered to sell all of such New Securities to Thayer, at a price and on such other terms as shall have been specified by the Company in writing delivered to Thayer at least 15 business days prior to the proposed consummation of the sale of the New Securities (the "THAYER Offer"), which Thayer Offer by its terms shall remain open and irrevocable for a period of 10 business days from the date it is delivered by the Company (the "THAYER OFFER PERIOD"). Notice of Thayer's intention to accept, in whole or in part, the Thayer Offer shall be in writing signed and delivered to the Company prior to the end of the Thayer Offer Period, setting forth such portion of the New Securities as Thayer elects to purchase (the "THAYER NOTICE OF ACCEPTANCE"). (c) STOCK OFFER. After the second anniversary of the date hereof, except in the case of Excluded Securities or as set forth in Section 5(g), without Thayer's prior written consent, the Company shall not issue, sell or exchange, agree to issue, sell or exchange, or reserve or set aside for issuance, sale or exchange, any New Securities unless in each case, the Company shall have first offered to sell to Thayer a portion of such New Securities equal to Thayer's Ownership Percentage, at a price and on such other terms as shall have been specified by the Company in writing delivered to Thayer at least 15 business days prior to the proposed consummation of the sale of the New Securities (the "STOCK OFFER"), which Stock Offer by its terms shall remain open and irrevocable for a period of 10 business days from the date it is delivered by the Company (the "STOCK OFFER PERIOD"). Notice of Thayer's intention to accept, in whole or in part, the Stock Offer shall be in -15- 20 writing and delivered to the Company prior to the end of the Stock Offer Period, setting forth such portion of the New Securities as Thayer elects to purchase (the "STOCK NOTICE OF ACCEPTANCE"). (d) REFUSED SECURITIES. The Company shall have three months from the expiration of the Thayer Offer Period or the Stock Offer Period, as applicable, to sell all or any of such New Securities which Thayer has not purchased pursuant to Section 5(b) or 5(c), as applicable (the "REFUSED SECURITIES"), to any other Person(s), but only at a price no less than 95% of the price per share set forth in the Thayer Offer or the Stock Offer, as applicable, and upon such other terms and conditions, which are no more favorable to such other Person(s) or less favorable to the Company than those set forth in the Thayer Offer or the Stock Offer, as applicable. Upon the closing, which shall include full payment to the Company, of the sale to such other Person(s) of all the Refused Securities, Thayer shall purchase from the Company, and the Company shall sell to Thayer, the New Securities in respect of which a Thayer Notice of Acceptance or Stock Notice of Acceptance, as applicable, was delivered to the Company by Thayer at the terms specified in the Thayer Offer or the Stock Offer, as applicable. (e) EXCLUSIONS. In each case, any New Securities not purchased by Thayer or any other Person(s) within three months after the expiration of the Thayer Offer Period or the Stock Offer Period, as applicable, in accordance with Section 5 may not be sold or otherwise disposed of until they are again offered to Thayer under the procedures specified in this Section 5. (f) EXCLUDED SECURITIES. The rights of Thayer under this Section 5 shall not apply to the following securities (the "EXCLUDED SECURITIES"): (i) Common Shares issued in connection with, or upon exercise of, Options or the Stock Purchase Warrant; and (ii) Common Shares issued incidental to the exercise, conversion or exchange thereof in accordance with their terms, any combination of shares (including any reverse stock split) or any recapitalization, reorganization or reclassification of, or any merger, acquisition or consolidation involving, the Company. (g) 33.3% LIMITATION. Notwithstanding anything herein to the contrary, without the prior written consent of the holders of at least a majority of the then outstanding Management Shares, Thayer shall not purchase from the Company pursuant to this Section 5 (and the Company need not sell or offer to sell to Thayer pursuant to this Section 5) any shares of New Securities which would result in the Thayer Shares and Common Shares issuable in connection with the exercise of a Stock Purchase Warrant in the aggregate constituting more than 33.3% of the Common Shares of the Company on a fully diluted basis; provided, however if both (x) the proposed sale, issuance or exchange of such New Securities shall occur before the first anniversary of the date hereof, and (y) the price per share of the New Securities in such proposed sale, issuance or exchange is equal to or less than $9.00 (as such amount is proportionately adjusted for stock splits, stock combinations, stock dividends and recapitalizations affecting the Common Stock after the date hereof), then Thayer -16- 21 shall retain all rights granted in this Section 5 as if this Section 5(g) were not included in this Agreement. SECTION 6. QUALIFIED SALE OF THE COMPANY. (a) APPROVED SALE. Subject to Section 6(b), if Thayer approves a Qualified Sale of the Company (an "APPROVED SALE"), Thayer may notify the Company and the Stockholders of Thayer's election to exercise its rights under this Section 6, and the other holders of Stockholder Shares (the "OTHER STOCKHOLDERS") shall consent to and raise no objections against such Approved Sale (and shall waive any rights of appraisal arising in connection therewith) and shall fully cooperate with and take all necessary and desirable actions in connection with the consummation of such Approved Sale, including without limitation (i) executing a purchase and sale agreement and any other agreement reasonably necessary to effectuate such Approved Sale in the form to be entered into by Thayer, (ii) amending the Company's or any of its Subsidiaries' Certificate of Incorporation or by-laws, (iii) merging, combining or consolidating the Company with any other Person, (iv) reorganizing or recapitalizing the Company, (v) exchanging or splitting stock of the Company, (vi) selling, leasing or exchanging all or substantially all of the property and assets of the Company and its Subsidiaries on a consolidated basis or (vii) if such Stockholder is not an "accredited investor" (within the meaning of Rule 501(a) of the Securities Act), at the request of Thayer, appoint a purchaser representative (as such term is defined in Rule 501 under the Securities Act) approved by Thayer. If the Approved Sale is structured as a sale of stock, the Other Stockholders shall agree to sell all of their shares of Common Stock and rights to acquire shares of Common Stock on the terms and conditions approved by Thayer. The obligations of the Other Stockholders with respect to any Approved Sale are subject to the conditions that (x) the Approved Sale is not to an Affiliate of Thayer, and (y) upon the consummation of such Approved Sale, each Stockholder shall receive the same form and amount of consideration per Common Share, or if any Stockholders are given an option as to the form and amount of consideration to be received, each Stockholder shall be given the same option; provided, however if Thayer then owns a Stock Purchase Warrant, Thayer shall elect, in its sole discretion, to either (A) exercise the Stock Purchase Warrant prior to the consummation of the Approved Sale and participate in such sale as a holder of such class of Common Stock, or (B) upon the consummation of the Approved Sale, receive in exchange for such Stock Warrant Purchase consideration equal to the amount determined by multiplying (1) the same amount of consideration per share of a class of Common Stock received by holders of such class of Common Stock in connection with the Approved Sale less the exercise price per share of such class of Common Stock of the Stock Purchase Warrant to acquire such class of Common Stock by (2) the number of shares of such class of Common Stock represented by the Stock Purchase Warrant. Notwithstanding anything herein to the contrary, no Approved Sale shall be consummated until the Company receives, at the Company's expense, a "fairness opinion" from an investment banking firm reasonably acceptable to the Company. (b) MANAGEMENT OFFER. Notwithstanding anything in Section 3(b)(ix), 3(b)(xiii) or 6(a) to the contrary, at least 20 days prior to Thayer transferring a Block of Shares pursuant to Section 3(b)(xiii) or approving a Qualified Sale of the Company, Thayer shall deliver a written notice (a "MANAGEMENT OFFER NOTICE") to all Management Stockholders. The Management Offer Notice shall disclose in reasonable detail the proposed Transfer of a Block of Shares pursuant to -17- 22 Section 3(b)(xiii) or Qualified Sale of the Company, as applicable, and the prospective transferee(s) (if known). The Management Stockholders, may elect for any of them and/or any other Person(s) (including the Company) chosen by the Management Stockholders in their sole discretion (collectively, the "BUYERS") to purchase all (but not less than all) of the Thayer Shares at the price and on the terms specified in the Management Offer Notice by delivering written notice of such election (a "MANAGEMENT REPLY") to Thayer as soon as practical but in any event within 20 days after delivery of the Management Offer Notice. The Management Reply shall be signed by each Management Stockholder (including those who elect not to purchase Thayer Shares), and shall include (x) evidence reasonably satisfactory to Thayer that the Buyers shall have within 60 days after the delivery of the Management Offer Notice sufficient funds to purchase such Thayer Shares, and (y) representations and warranties from each Management Stockholder that (X) the Buyers shall use reasonable best efforts to consummate such purchase within 60 days after the delivery of the Management Offer Notice, and (Y) the Buyers shall have within 60 days after the delivery of the Management Offer Notice sufficient funds to purchase such Thayer Shares. If the Management Stockholders elect to purchase the Thayer Shares, such purchase shall be consummated as soon as practical after the delivery of the Management Reply, but in any event within 60 days after the delivery of the Management Offer Notice. If either: (A) Thayer does receive a Management Reply signed by each Management Stockholder within 20 days after delivery of the Management Offer Notice; (B) Thayer is not reasonably satisfied within 20 days after delivery of the Management Offer Notice that the Buyers will have within 60 days after the delivery of the Management Offer Notice sufficient funds to purchase such Thayer Shares; (C) the purchase of the Thayer Shares pursuant to the Management Reply is not consummated within 60 days after the delivery of the Management Offer Notice; or (D) after 20 days after delivery of the Management Offer Notice but before 60 days after delivery of the Management Offer Notice, Thayer gives written notice to the Management Stockholders that Thayer reasonably believes that despite reasonable best efforts by Thayer to consummate the purchase the Buyers will not be unable to consummate the purchase within 60 days after the delivery of the Management Offer Notice and the Management Stockholders are unable to provide Thayer reasonable assurance to the contrary within 5 business days after receiving such notice by Thayer, then Thayer may, within 210 days after the delivery of the Management Offer Notice, Transfer such Block of Shares pursuant to Section 3(b)(xiii) or approve a Qualified Sale of the Company pursuant to Section 6(a), as applicable, at a price no less than 95% of the price per share specified in the Management Offer Notice and on other terms no more favorable to the transferees thereof than offered to the Management Stockholders in the Management Offer Notice. If such Transfer of such Block of Shares or Qualified Sale of the Company, as applicable, is not consummated within 210 days after the delivery of the Management Offer, Thayer shall have to deliver another Management Offer Notice under this Section 6(b) prior to any subsequent Transfer of a Block of Shares pursuant to Section 3(b)(xiii) or Qualified Sale of the Company, as applicable. The Management -18- 23 Stockholders shall be jointly and severally liable to Thayer for the breach of any representation or warranty set forth in the Management Reply. SECTION 7. REGISTRATION RIGHTS. (a) SHELF REGISTRATION. Thayer shall have the right at any time to demand that the Company include any and all Stockholder Shares owned by Thayer or its Affiliates in the Company's shelf registration statement in effect as of the date hereof (the "SHELF"). (b) DEMAND REGISTRATION. (i) So long as any Thayer Shares are not included in the Shelf and/or the Shelf is not then effective, Thayer shall have the right (the "DEMAND RIGHT") to request registration under the Securities Act of all or any portion of the Registrable Securities held by Thayer and its Affiliates (in each case, referred to herein as the "REQUESTING HOLDERS") by delivering a written notice to the Company, which notice identifies the Requesting Holders and specifies the number of Registrable Securities to be included in such registration (the "REGISTRATION REQUEST"). The Company will give prompt written notice of such Registration Request (the "REGISTRATION NOTICE") to all other Stockholders and will thereupon use its reasonable best efforts to effect the registration (a "DEMAND REGISTRATION") under the Securities Act on any form available to the Company of: (x) the Registrable Securities requested to be registered by the Requesting Holders; and (y) all other Registrable Securities which the Company has received a written request from another Stockholder to register within 30 days after the Registration Notice is given. The Company shall be obligated to effect three Demand Registrations. (ii) A registration undertaken by the Company at the request of the Requesting Holders will not count as a Demand Registration if, pursuant to the applicable Demand Right, the Requesting Holders fail to register and sell at least 50% of the Registrable Securities requested to be included in such registration by the Requesting Holders. (iii) If the sole or managing underwriter of a Demand Registration advises the Company in writing that in its opinion the number of Registrable Securities and other securities requested to be included exceeds the number of Registrable Securities and other securities which can be sold in such offering without adversely affecting the distribution of the securities being offered, the price that will be paid in such offering or the marketability thereof, the Company will include in such registration the greatest number of Registrable Securities proposed to be registered by the Stockholders which in the opinion of such underwriter can be sold in such offering without adversely affecting the distribution of the securities being offered, the price that will be paid in such offering or the marketability thereof, ratably among the Stockholders proposing to register based on each -19- 24 such Stockholder's Ownership Percentage; provided, however, that the Requesting Holders shall have the right to receive priority over all other Stockholders in the third Demand Registration. (c) INCIDENTAL REGISTRATION. (i) At any time the Company proposes to register any Common Shares under the Securities Act (other than pursuant to Section 7(b) or in connection with a business acquisition or combination or an employee benefit plan), whether in connection with a primary or secondary offering, the Company will give written notice to each Stockholder at least thirty (30) days prior to the initial filing of such Registration Statement with the SEC of its intent to file such Registration Statement and of such Stockholder's rights under this Section 7(c). Upon the written request of any Stockholder made within twenty (20) days after any such notice is given (which request shall specify the Registrable Securities intended to be disposed of by such Stockholder), the Company will use its reasonable best efforts to effect the registration (an "INCIDENTAL REGISTRATION") under the Securities Act of all Registrable Securities which the Company has been so requested to register by the holders thereof; provided, however, that if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the Registration Statement filed in connection with such Incidental Registration (each an "INCIDENTAL REGISTRATION STATEMENT"), the Company shall determine for any reason not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to each Stockholder and, thereupon, (x) in the case of a determination not to register, the Company shall be relieved of its obligation to register any Registrable Securities under this Section 7(c) in connection with such registration (but not from its obligation to pay the expenses incurred in connection therewith), and (y) in the case of a determination to delay registration, the Company shall be permitted to delay registering any Registrable Securities under this Section 7(c) during the period that the registration of such other securities is delayed. (ii) If the sole or managing underwriter of a registration advises the Company in writing that in its opinion the number of Registrable Securities and other securities requested to be included exceeds the number of Registrable Securities and other securities which can be sold in such offering without adversely affecting the distribution of the securities being offered, the price that will be paid in such offering or the marketability thereof, the Company will include in such registration the Registrable Securities and other securities of the Company in the following order of priority: (x) first, the greatest number of securities of the Company proposed to be included in such registration by the Company for its own account which in the opinion of such underwriter can be so sold; and (y) second, after all securities that the Company proposes to register for its own account have been included, the greatest amount of Registrable Securities requested to be registered by the Stockholders of which in the opinion of such underwriter can be sold in such offering without adversely affecting the distribution of the securities being offered, the price that will be paid in such offering -20- 25 or the marketability thereof, ratably among the Stockholders proposing to register based on each such Stockholder's Ownership Percentage. (d) HOLDBACK AGREEMENTS. (i) Each Stockholder agrees that if requested in connection with an underwritten offering made pursuant to this Section 7 by the managing underwriter or underwriters of such underwritten offering, such Stockholder will not effect any Public Sale or distribution of any of the securities being registered or any securities convertible or exchangeable or exercisable for such securities (except as part of such underwritten offering), during the period beginning 10 days prior to, and ending 180 days after, the closing date of each underwritten offering made pursuant to such Registration Statement (or for such shorter period as to which the managing underwriter or underwriters may agree). (ii) The Company agrees not to effect any Public Sale or distribution of its Common Stock, or any securities convertible into or exchangeable or exercisable for such Common Stock, during the seven days prior to and during the 180-day period beginning on the effective date of any underwritten Demand Registration (or for such shorter period as to which the managing underwriter or underwriters may agree), except as part of such Demand Registration or in connection with any employee benefit or similar plan, any dividend reinvestment plan, or a business acquisition or combination. (e) REGISTRATION AND MAINTENANCE PROCEDURES. In connection with the registration of any Registrable Securities and/or the maintenance of the Shelf and/or any other Registration Statement, the Company shall, to the extent applicable, at its own expense, as promptly as reasonably possible: (i) Prepare and file with the SEC a Registration Statement or Registration Statements on a form available for the sale of the Registrable Securities by the holders thereof in accordance with the intended method of distribution thereof, and use its reasonable best efforts to cause each such Registration Statement to become effective; (ii) Prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective for a period ending on the earlier of (x) 90 days from the effective date and (y) such time as all of such securities have been disposed of in accordance with the intended method of disposition thereof; and cause the related prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; and comply with the provisions of the Securities Act, the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to it with respect to the disposition of all securities covered by such Registration Statement as so amended or in such prospectus as so supplemented; -21- 26 (iii) Notify the selling Stockholders promptly (but in any event within two business days), and confirm such notice in writing, (A) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (B) of the issuance by the SEC of any stop order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of any preliminary prospectus, (C) if at any time when a prospectus is required by the Securities Act to be delivered in connection with sales of Registrable Securities the Company becomes aware that the representations and warranties of the Company contained in any agreement (including any underwriting agreement) contemplated by Section 7(e)(viii) cease to be true and correct in all material respects, (D) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of a Registration Statement or any of the Registrable Securities for offer or sale in any jurisdiction, (E) if the Company becomes aware of the happening of any event that makes any statement made in such Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in such Registration Statement, prospectus or documents so that, in the case of such Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (iv) Use its reasonable best efforts to prevent the issuance of any order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of a prospectus or suspending the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, and, if any such order is issued, to obtain the withdrawal of any such order at the earliest possible moment; (v) Deliver to each selling Stockholder and the underwriters, if any, without charge, as many copies of the prospectus or prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request; and, the Company hereby consents to the use of such prospectus and each amendment or supplement thereto by each of the selling Stockholders and the underwriters or agents, if any, in connection with the offering and sale of the Registrable Securities covered by such prospectus and any amendment or supplement thereto; (vi) Prior to any public offering of Registrable Securities, to use its reasonable best efforts to register or qualify, and cooperate with the selling Stockholders, the underwriters, if any, the sales agents and their respective counsel -22- 27 in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or "blue sky" laws of such jurisdictions within the United States as necessary; (vii) Upon the occurrence of any event contemplated by Section 7(e)(iii)(E), as promptly as practicable prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the related prospectus or any document incorporated or deemed to be incorporated therein by reference, or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (viii) Enter into an underwriting agreement in form, scope and substance as is customary in underwritten offerings and take all such other actions as are reasonably requested by the managing or sole underwriter in order to expedite or facilitate the registration or the disposition of such Registrable Securities, and in such connection, (A) make such representations and warranties to the underwriters, with respect to the business of the Company and its Subsidiaries, and the Registration Statement, prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings, and confirm the same if and when requested; (B) obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters), addressed to the underwriters covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by underwriters; (C) obtain "cold comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any Subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to each of the underwriters, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings; and (D) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures no less favorable to the Stockholders than those set forth in Section 7(g) (or such other provisions and procedures acceptable to holders of a majority of the Registrable Securities covered by such Registration Statement and the managing underwriters or agents) with respect to all parties to be indemnified pursuant to Section 7(g). The above shall be done at each closing under such underwriting agreement, or as and to the extent required thereunder; -23- 28 (ix) Comply with all applicable rules and regulations of the SEC and make generally available to its Stockholders earnings statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 45 days after the end of any 12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year) (x) commencing at the end of any fiscal quarter in which Registrable Securities are sold to underwriters in a firm commitment or best efforts underwritten offering and (y) if not sold to underwriters in such an offering, commencing on the first day of the first fiscal quarter of the Company after the effectiveness of a Registration Statement, which statements shall cover said 12- month periods; and (x) Use its reasonable best efforts to cause all such Registrable Securities covered by such Registration Statement to be designated as a NASDAQ "national market system security" within the meaning of Rule 11Aa2-1 or listed on the principal securities exchange on which Common Stock is then listed (if any). The Company may require each Stockholder as to which any registration is being effected to furnish to the Company such information regarding such Stockholder and the distribution of such Registrable Securities as the Company may, from time to time, reasonably request in writing; provided that such information shall be used only in connection with such registration. The Company may exclude from such registration the Registrable Securities of any Stockholder who unreasonably fails to furnish such information promptly after receiving such request. Each Stockholder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 7(e)(iii)(B), 7(e)(iii)(D) or 7(e)(iii)(E), such Stockholder will forthwith discontinue disposition of such Registrable Securities covered by such Registration Statement or prospectus until such Stockholder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 7(e), or until such Stockholder is advised in writing by the Company that the use of the applicable prospectus may be resumed, and has received copies of any amendments or supplements thereto. (f) REGISTRATION EXPENSES. All fees and expenses incident to the performance of or compliance the Company with the provisions of Section 7 shall be borne by the Company, whether or not any Registration Statement is filed or becomes effective, including, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses of compliance with state securities or "blue sky" laws), (ii) reasonable messenger, telephone and delivery expenses, (iii) fees and disbursements of counsel for the Company, (iv) fees and disbursements of all independent certified public accountants referred to in Section 7(e)(viii), (v) underwriters' fees and expenses (excluding discounts, commissions, or fees of underwriters, selling brokers, dealer managers or similar securities industry professionals relating to the distribution of the Registrable Securities, which shall be paid by the selling stockholders), (vi) Securities Act liability insurance, if the Company so desires such insurance, (vii) internal expenses of the Company, (viii) the expense of any annual audit, (ix) the fees and expenses incurred in connection with the listing of the securities to be registered on any securities exchange, and (x) the fees and expenses of any Person, including special experts, retained by the Company. In connection with any -24- 29 Demand Registration or Incidental Registration hereunder, the Company shall reimburse the holders of the Registrable Securities being registered in such registration for the reasonable fees and disbursements of not more than one counsel (together with appropriate local counsel) chosen by Thayer, if pursuant to a Demand Registration, or the Company, in all other cases, and other reasonable out-of-pocket expenses of the Stockholders incurred in connection with the registration of the Registrable Securities. (g) INDEMNIFICATION; CONTRIBUTION. (i) The Company shall, without limitation as to time, indemnify and hold harmless, to the full extent permitted by law, each Stockholder, the officers, directors, members, agents and employees of each of them, each Person who controls each such Person (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), the officers, directors, agents and employees of each such controlling person and any financial or investment adviser (each, an "INDEMNIFIED STOCKHOLDER"), to the fullest extent lawful, from and against any and all losses, claims, damages, liabilities, actions or proceedings (whether commenced or threatened) reasonable costs (including, without limitation, reasonable costs of preparation and reasonable attorneys' fees) and reasonable expenses (including reasonable expenses of investigation) (collectively, "LOSSES"), as incurred, arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, prospectus or form of prospectus or in any amendment or supplements thereto or in any preliminary prospectus, or arising out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except to the extent, but only to the extent, that such untrue or alleged untrue statement is contained in, or such omission or alleged omission is required to be contained in, any information so furnished in writing by the Company to such Stockholder expressly for use in such Registration Statement or prospectus and that such statement or omission was reasonably relied upon by such Stockholder in preparation of such Registration Statement, prospectus or form of prospectus; provided, however, that the Company shall not be liable in any such case to the extent that the Company has furnished in writing to such Stockholder within a reasonable period of time prior to the filing of any such Registration Statement or prospectus or amendment or supplement thereto information expressly for use in such Registration Statement or prospectus or any amendment or supplement thereto which corrected or made not misleading, information previously furnished to such Stockholder, and such Stockholder failed to include such information therein; provided, further, however, that the Company shall not be liable to any Person who participates as an underwriter in the offering or sale of Registrable Securities or any other Person, if any, who controls such underwriter(s) within the meaning of the Securities Act to the extent that any such Losses arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any preliminary prospectus if (A) such Person failed to send or deliver a copy of the prospectus with or prior to the delivery of written confirmation of the sale by such Person to the Person asserting the claim from which such Losses arise, (B) the prospectus would have corrected such untrue statement or alleged untrue statement or such omission or alleged omission, and (C) the Company has complied with its obligations under Section 7(e)(iii). Each indemnity and reimbursement of costs and expenses shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Stockholder. -25- 30 (ii) In connection with any Registration Statement in which a Stockholder is participating, such Stockholder, or an authorized officer of such Stockholder, shall furnish to the Company in writing such information as the Company reasonably requests for use in connection with any Registration Statement or prospectus and agrees, severally and not jointly, to indemnify, to the full extent permitted by law, the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling persons (each, an "INDEMNIFIED COMPANY", and together with the Indemnified Stockholders, the "INDEMNIFIED PARTIES"), from and against all Losses, as incurred, arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, prospectus or form of prospectus or in any amendment or supplements thereto or in any preliminary prospectus, or arising out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except to the extent, but only to the extent, that such untrue or alleged untrue statement is contained in, or such omission or alleged omission is required to be contained in, any information so furnished in writing by such Stockholder to the Company expressly for use in such Registration Statement or prospectus and that such statement or omission was reasonably relied upon by the Company in preparation of such Registration Statement, prospectus or form of prospectus; provided, however, that such Stockholder shall not be liable in any such case to the extent that such Stockholder has furnished in writing to the Company within a reasonable period of time prior to the filing of any such Registration Statement or prospectus or amendment or supplement thereto information expressly for use in such Registration Statement or prospectus or any amendment or supplement thereto which corrected or made not misleading, information previously furnished to the Company, and the Company failed to include such information therein. In no event shall the liability of any selling Stockholder hereunder be greater in amount than the after-tax dollar amount of the proceeds (net of payment of all expenses) received by such Stockholder upon the sale of the Registrable Securities giving rise to such indemnification obligation. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Company. (iii) Any Indemnified Party shall give prompt notice to the party or parties from which such indemnity is sought (the "INDEMNIFYING PARTIES") of the commencement of any action, suit, proceeding or investigation or written threat thereof (a "PROCEEDING") with respect to which such Indemnified Party seeks indemnification or contribution pursuant hereto; provided, however, that the failure to so notify the Indemnifying Parties shall not relieve the Indemnifying Parties from any obligation or liability except to the extent that the Indemnifying Parties have been prejudiced by such failure. The Indemnifying Parties shall have the right, exercisable by giving written notice to an Indemnified Party promptly after the receipt of written notice from such Indemnified Party of such Proceeding, to assume, at the Indemnifying Parties' expense, the defense of any such Proceeding, with counsel reasonably satisfactory to such Indemnified Party; provided, however, that an Indemnified Party or Indemnified Parties (if more than one such Indemnified Party is named in any Proceeding) shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Indemnified Parties unless: (x) the Indemnifying Parties agree to pay such fees and expenses; (y) the Indemnifying Parties fail promptly to assume the defense of such Proceeding or fail to employ counsel reasonably satisfactory to such Indemnified Party or -26- 31 Indemnified Parties; or (z) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party or Indemnified Parties and the Indemnifying Parties, and there may be one or more defenses available to such Indemnified Party or Indemnified Parties that are different from or additional to those available to the Indemnifying Parties, in which case, if such Indemnified Party or Indemnified Parties notifies the Indemnifying Parties in writing that it elects to employ separate counsel at the expense of the Indemnifying Parties, the Indemnifying Parties shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Parties, it being understood, however, that, unless there exists a conflict among Indemnified Parties, the Indemnifying Parties shall not, in connection with any one such Proceeding or separate but substantially similar or related Proceedings in the same jurisdiction, arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for such Indemnified Party or Indemnified Parties. Whether or not such defense is assumed by the Indemnifying Parties, such Indemnifying Parties or Indemnified Party or Indemnified Parties will not be subject to any liability for any settlement made without its or their consent (but such consent will not be unreasonably withheld). The Indemnifying Parties shall not consent to entry of any judgment or enter into any settlement which (A) provides for other than monetary damages without the consent of the Indemnified Party or Indemnified Parties (which consent shall not be unreasonably withheld or delayed) or (B) does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Parties of a release, in form and substance satisfactory to the Indemnified Party or Indemnified Parties, from all liability in respect of such Proceeding for which such Indemnified Party would be entitled to indemnification hereunder. (iv) If the indemnification provided for in this Section 7(g) is unavailable to an Indemnified Party or is insufficient to hold such Indemnified Party harmless for any Losses in respect of which this Section 7(g) would otherwise apply by its terms, then each applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall have a joint and several obligation to contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of and relative benefit to the Indemnifying Party, on the one hand, and such Indemnified Party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party, on the one hand, and Indemnified Party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been taken by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent any such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include any legal or other fees or expenses incurred by such party in connection with any Proceeding, to the extent such party would have been indemnified for such expenses if the indemnification provided for in Section 7(g)(i) or 7(g)(ii) was available to such party. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 7(g)(iv) were determined by pro-rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 7(g)(iv). Notwithstanding the provisions of this Section 7(g)(iv), an Indemnifying Party that is a selling Stockholder shall not be -27- 32 required to contribute any amount in excess of the amount by which the net after-tax proceeds received by such Indemnifying Party exceeds the amount of any damages that such Indemnifying Party has otherwise been required to pay by reasons of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. (h) RULE 144 SALES. The Company shall file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder, and will take such further action as any Stockholder may reasonably request, all to the extent required from time to time to enable such Stockholder to sell Registrable Securities (subject to Section 3(b)(vii) or 3(b)(viii)) without registration under the Securities Act within the limitation of the exemptions provided by Rule 144. Upon the request of any Stockholder, the Company shall deliver to such Stockholder a written statement as to whether it has complied with such requirements. (i) UNDERWRITTEN REGISTRATIONS. No Stockholder may participate in any underwritten registration hereunder unless such Stockholder (x) agrees to sell such Stockholder's Registrable Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (y) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements. (j) NO INCONSISTENT AGREEMENTS. The Company has not and will not, enter into any agreement with respect to the Company's securities that is inconsistent with the rights granted to the Stockholders in this Section 7 or otherwise conflicts with the provisions hereof. (k) S-3 DEMANDS. (i) So long as (A) any Thayer Shares are not included in the Shelf and/or the Shelf is not then effective and (B) the Company is permitted under Securities Act to register securities on Form S-3, Thayer shall have the right to request registration on Form S-3 of all or any portion of the Registrable Securities held by Thayer and its Affiliates (in each case, referred to herein as the "S-3 REQUESTING HOLDERS") by delivering a written notice to the Company, which notice identifies the S-3 Requesting Holders and specifies the number of Registrable Securities to be included in such registration (the "S-3 REGISTRATION REQUEST"). The Company will give prompt written notice of such S-3 Registration Request (the "S-3 REGISTRATION NOTICE") to all other Stockholders and will thereupon use its reasonable best efforts to effect the registration (a "S-3 DEMAND REGISTRATION") on Form S-3 of: (x) the Registrable Securities requested to be registered by the S-3 Requesting Holders; and -28- 33 (y) all other Registrable Securities which the Company has received a written request from another Stockholder to register within 30 days after the S-3 Registration Notice is given. The Company shall be obligated to effect an unlimited number of S-3 Demand Registrations. S-3 Demand Registrations shall not constitute Demand Registrations. (ii) If the sole or managing underwriter of a S-3 Demand Registration advises the Company in writing that in its opinion the number of Registrable Securities and other securities requested to be included exceeds the number of Registrable Securities and other securities which can be sold in such offering without adversely affecting the distribution of the securities being offered, the price that will be paid in such offering or the marketability thereof, the Company will include in such registration the greatest number of Registrable Securities proposed to be registered by the Stockholders which in the opinion of such underwriter can be sold in such offering without adversely affecting the distribution of the securities being offered, the price that will be paid in such offering or the marketability thereof, ratably among the Stockholders proposing to register based on each such Stockholder's Ownership Percentage. SECTION 8. OPERATING BUDGET. Norton hereby agrees that he shall not accept or attempt to collect from the Company or any of its Subsidiaries any bonus otherwise do to him under any employment, consulting or other similar agreement between the Company and any Subsidiary and him if the Company is at the time or had been within the preceding two years in default of its obligations under Section 4A(i)(c), 4A(i)(d) or 4A(i)(e) of the Common Stock Purchase Agreement and such default in the case of Section 4A(i)(c) or 4A(i)(d) of the Common Stock Purchase Agreement remains or remained uncured for 20 business days and in the case of Section 4A(i)(e) of the Common Stock Purchase Agreement remains or remained uncured for 5 business days. SECTION 9. REDEMPTION. Subject to the limitations on transferring Common Shares to the Company set forth in Section 3(b)(iii), prior to redeeming, purchasing or otherwise acquiring (contingent or otherwise), directly or indirectly, or entering into any agreement for the redemption, purchase or acquisition (contingent or otherwise), directly or indirectly, of any Common Shares from any holder of Management Shares, the Company shall give at least thirty (30) days prior written notice to Thayer, which notice (for purposes of this Section 9, the "REDEMPTION NOTICE") shall identify the type and amount of Common Shares to be redeemed, describe the terms and conditions of such proposed redemption, and identify each prospective transferor of the Common Shares to be redeemed (the "OTHER REDEEMERS"). Thayer or any of its Affiliates may, within fifteen (15) days after the receipt of the Redemption Notice, give written notice (each, a "CO-REDEMPTION NOTICE") to the Company that such Person wishes to participate in such proposed redemption upon the terms and conditions set forth in the Redemption Notice, which Co-Redemption Notice shall specify the type and amount of Common Shares such Person desires to redeem. If none of Thayer and its Affiliates give the Company a timely Co-Redemption Notice, then the Company may redeem such Common Shares on the terms and conditions set forth in the Redemption Notice of the Other Redeemers at any time within ninety days after expiration of the fifteen-day period for giving Co- Redemption Notices with respect to such redemption. Any such Common Shares not redeemed by the Company during such ninety-day period will again be subject to the provisions of this Section 9 -29- 34 upon a subsequent redemption. If Thayer and/or its Affiliates give the Company a timely Co- Redemption Notice, then the Company, at its option, shall (a) redeem all Common Shares which Thayer, its Affiliates and the Other Redeemers desire to redeem, or (b) allocate the maximum number of each class of Common Shares that the Company is willing to redeem (the "REDEEMABLE SHARES") among Thayer, its Affiliates and the Other Redeemers as follows: (i) each Stockholder holding Thayer Shares shall be entitled to redeem a number of Common Shares (not to exceed, for any such Stockholder, the number of shares of such Common Shares identified in such Stockholder's Co-Redemption Notice) equal to the product of (A) the number of Redeemable Shares of such class of Common Shares and (B) such Stockholder's Ownership Percentage of such class of Common Shares; and (ii) the Other Redeemers shall be entitled to redeem all Redeemable Shares remaining after taking into account clause (i) above (with the allocation among the Other Redeemers as decided by the Company in its sole discretion). SECTION 10. RIGHTS OF FIRST REFUSAL OR FIRST OFFER. (a) ASSIGNMENT. Except with respect to the Irrevocable Proxy and Stock Rights Agreement, each of the Management Stockholders hereby agrees to assign, or cause to be assigned, to Thayer or any Affiliate of Thayer designated by Thayer any right of first refusal or first offer or any preemptive right of any kind with respect to any Common Shares granted to or otherwise controlled by such Management Stockholder or any Affiliate of such Management Stockholder, including any such right hereafter created, under any agreement other than this Agreement, the Common Stock Purchase Agreement or the Stock Purchase Warrant; provided, however that (i) if such right is not assignable for any reason and (ii) there is no prohibition under such right or by law against the Transfer to Thayer or any Affiliate of Thayer designated by Thayer of the Common Shares underlying such right immediately after the exercise thereof, then at Thayer's request and expense, such Management Stockholder shall, or shall cause such Management Stockholder's Affiliate to, exercise such right and immediately thereafter Transfer to Thayer or any Affiliate of Thayer designated by Thayer the Common Shares purchased under such right. Each of the Management Stockholders hereby agrees to notify Thayer as soon as practical upon receiving notice from any Person or otherwise becoming aware that such Management Stockholder or any Affiliate of such Management Stockholder has any exercisable or soon to be exercisable right of first refusal or first offer or any preemptive right of any kind with respect to any Common Shares. (b) IRREVOCABLE PROXY AND STOCK RIGHTS AGREEMENT. Norton hereby agrees that if Norton elects not to exercise his "right to purchase" pursuant to Article 3 of the Irrevocable Proxy and Stock Rights Agreement, then Norton shall assign such right to purchase to Thayer or any Affiliate of Thayer designated by Thayer; provided, however that notwithstanding anything in the Irrevocable Proxy and Stock Rights Agreement to the contrary, the purchase price per share with respect to such assigned right to purchase shall be Market Value. Norton hereby agrees to notify Thayer as soon as practical upon receiving notice from any Person or otherwise becoming aware that Norton has any exercisable or soon to be exercisable right to purchase under the Irrevocable Proxy and Stock Rights Agreement. -30- 35 SECTION 11. AMENDMENT AND WAIVER. Except as otherwise provided herein, no amendment or waiver of any provision of this Agreement shall be effective against the Company or Stockholders unless such amendment or waiver is approved in writing by the Company, Thayer and the holders of at least a majority of the then-outstanding Management Shares. The failure of any party to enforce any provision of this Agreement shall not be construed as a waiver of such provision and shall not affect the right of such party thereafter to enforce each provision of this Agreement in accordance with its terms. SECTION 12. SEVERABILITY. If any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. SECTION 13. ENTIRE AGREEMENT. Except as otherwise expressly set forth herein, this document embodies the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. SECTION 14. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the benefit of and be enforceable by the Company and the Stockholders and their respective permitted successors and assigns so long as such Stockholders and their respective permitted successors and assigns hold Stockholder Shares, provided, however that Thayer shall not assign this Agreement or any of the rights or interests hereunder (except any right or interest directly related to the ownership of the Common Shares) to any Person other than an Affiliate of Purchaser within two years of the date hereof. SECTION 15. COUNTERPARTS. This Agreement may be executed in separate counterparts each of which shall be an original and all of which taken together shall constitute one and the same agreement. SECTION 16. REMEDIES. The Company and the Stockholders shall be entitled to enforce their rights under this Agreement specifically to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that the Company or any Stockholder may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief (without posting a bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement. SECTION 17. NOTICES. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, or sent via facsimile, or mailed first class mail (postage prepaid) or sent by reputable overnight courier service (charges prepaid) to such Person as follows: -31- 36 if to the Company: MLC Holdings, Inc. 11150 Sunset Hills Road, Suite 110 Reston, VA 20190-5321 FAX: 703-834-5718 Attention: Phillip G. Norton with a copy to: Alston & Bird, LLP 601 Pennsylvania Avenue, N.W. North Building, 11th Floor Washington, DC 20004 FAX: 202-508-3333 Attention: Frank M. Conner, III, Esq. if to Thayer: c/o Thayer Equity Investors III, L.P. 1455 Pennsylvania Avenue, Suite 350 Washington, DC 20004 FAX: 202-371-0391 Attention: Carl J. Rickertsen with a copy to: Kirkland & Ellis 655 Fifteenth Street, N.W., Suite 1200 Washington, DC 20005-5793 FAX: 202-879-5200 Attention: Jack M. Feder, Esq. if to a Management Stockholder: at the address set forth below such Management Stockholder's signature on the signature page hereto if to any Person who becomes a Party hereto after the date hereof: at the address set forth below such Person's signature on the signature page to such Person's Joinder Agreement; or at such address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder when -32- 37 delivered personally or sent via facsimile (against receipt therefor), five business days after deposit in the U.S. mail and one business day after deposit with a reputable overnight courier service. SECTION 18. GOVERNING LAW. The corporate law of Delaware shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity and interpretation of this Agreement shall be governed by the internal law, and not the law of conflicts, of Delaware. SECTION 19. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. SECTION 20. SURVIVAL; TERMINATION. Common Shares acquired by the Stockholders after the date hereof shall be Stockholder Shares and hence fully subject to the provisions of this Agreement. Stockholder Shares shall cease to be such as provided in the last sentence of Section 3(b). Sections 2, 5, 6, 7, 8 and 9 hereof shall terminate upon Thayer Shares constituting less than 5% of the issued and outstanding Common Shares, and such sections shall remain terminated even if Thayer, its Affiliates and any holders of Thayer Shares later own in the aggregate 5% or more of the issued and outstanding Common Shares; provided that the limited partners of Thayer Equity Investors III, L.P. shall not be treated as Affiliates of Thayer or the holders of Thayer Shares for the purposes of this Section 20. Any prohibition against Transfers without the prior written consent of Thayer if such Transfers would result in Management Shares and Thayer Shares, collectively, constituting less than 51% of the outstanding Common Shares of the Company shall terminate upon Management Shares and Thayer Shares, collectively, constituting less than 35% of the outstanding Common Shares of the Company. All rights and obligations of the Stockholders and the Company shall terminate upon the first to occur of (i) there being no Thayer Shares, and (ii) the consummation of an Approved Sale. SECTION 21. OTHER REGISTRATION RIGHTS. Each of the Management Stockholders hereby agrees to waive any right to demand that the Company register any Common Shares under the Securities Act or include any Common Shares in the Shelf or other registration statement and any other registration right of any kind granted by the Company to such Management Stockholder under any agreement other this Agreement. [END OF PAGE] [SIGNATURE PAGES FOLLOW] 38 IN WITNESS WHEREOF, the parties have executed this Stockholders Agreement as of the date first above written. MLC HOLDINGS, INC. By: /s/ PHILLIP G. NORTON --------------------------------- Name: Phillip G. Norton Title: President and Chief Executive Officer TC LEASING, LLC By: THAYER EQUITY INVESTORS III, L.P., its managing member By: TC EQUITY PARTNERS, L.L.C., its general partner By: /s/ JEFFREY W. GOETTMAN --------------------------------- Name: Jeffrey W. Goettman Title: Member /s/ PHILLIP G. NORTON --------------------------------------- PHILLIP G. NORTON Address: --------------------------- --------------------------- --------------------------- FAX: --------------------------- /s/ BRUCE M. BOWEN --------------------------------------- BRUCE M. BOWEN Address: --------------------------- --------------------------- --------------------------- FAX: --------------------------- S-1 39 JAP INVESTMENT GROUP, L.P. By: J.A.P., Inc., its general partner By: /s/ PHILLIP G. NORTON --------------------------------- Name: Phillip G. Norton Title: S-2 40 /s/ KEVIN M. NORTON --------------------------------------- KEVIN M. NORTON Address: --------------------------- --------------------------- --------------------------- FAX: --------------------------- /s/ PATRICK J. NORTON, JR. --------------------------------------- PATRICK J. NORTON, JR. Address: --------------------------- --------------------------- --------------------------- FAX: --------------------------- S-3 41 SCHEDULE I OTHER MANAGEMENT STOCKHOLDERS JAP Investment Group, L.P. Kevin M. Norton Patrick J. Norton, Jr. S-4 42 EXHIBIT A FORM OF JOINDER TO STOCKHOLDERS AGREEMENT This Joinder (this "Agreement") is made as of the date written below by the undersigned (the "Joining Party") in favor of and for the benefit of MLC Holdings, Inc., TC Leasing, LLC, the Management Stockholders and the other parties to the Stockholders Agreement, dated as of October 23, 1998 (the "Stockholders Agreement"). Capitalized terms used but not defined herein shall have the meanings given such terms in the Stockholders Agreement. The Joining Party hereby acknowledges, agrees and confirms that, by his or her execution of this Agreement, the Joining Party will be deemed to be a party to the Stockholders Agreement and shall have all of the obligations of a Stockholder thereunder as if he or she had executed the Stockholders Agreement. The Joining Party hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Stockholders Agreement. IN WITNESS WHEREOF, the undersigned has executed this Joinder as of the date written below. --------------------------------------------- Name: --------------------------------- Date: --------------------------------- Address: --------------------------------- --------------------------------- --------------------------------- FAX: --------------------------------- EX-4 5 STOCK PURCHASE WARRANT 1 EXHIBIT 4 THIS WARRANT, AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS OR "BLUE SKY" LAWS, AND MAY NOT BE TRANSFERRED UNLESS SO REGISTERED OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. MLC HOLDINGS, INC. STOCK PURCHASE WARRANT Date of Issuance: October 23, 1998 Certificate No. W-1 FOR VALUE RECEIVED, MLC Holdings, Inc., a Delaware corporation (the "Company"), hereby grants to TC Leasing, LLC or its registered assigns (the "Registered Holder") the right to purchase from the Company 1,090,909 shares of Warrant Stock at a price per share of $11.00 (as adjusted from time to time hereunder, the "Exercise Price"). The amount and kind of securities obtainable pursuant to the rights granted hereunder and the purchase price for such securities are subject to adjustment pursuant to the provisions contained in this Stock Purchase Warrant (this "Warrant"). This Warrant is subject to the following provisions: Section 1. Definitions. The following terms have meanings set forth below: "Affiliate" of any particular Person means any other Person controlling, controlled by or under common control with such particular Person, where "control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise. "Aggregate Exercise Price" has the meaning set forth in Section 2B(i)(d)(1) hereof. "Assignee" has the meaning set forth in Section 6A hereof. "Assignment" has the meaning set forth in Section 2B(i)(c) hereof. "Base Price" has the meaning set forth in Section 3A(i) hereof. "Common Stock" means, collectively, the Company's Common Stock, par value $.01 per share, and any capital stock of any class of the Company hereafter authorized which is not limited to a fixed sum or percentage of par or stated value in respect to the rights of the holders 2 thereof to participate in dividends or in the distribution of assets upon any liquidation, dissolution or winding up of the Company. "Common Stock Deemed Outstanding" means, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be outstanding pursuant to paragraphs 3B(i) and 3B(ii) hereof regardless of whether the Options or Convertible Securities are actually exercisable at such time. "Common Stock Purchase Agreement" means the Common Stock Purchase Agreement, dated as of the date hereof, by and between the Company and TC Leasing, LLC. "Company" has the meaning set forth in the preface hereof. "Convertible Securities" means any stock or securities (directly or indirectly) convertible into or exchangeable for Common Stock, except for any such stock or securities issued or granted pursuant to the Company's Master Stock Incentive Plan (including any of its component plans) or 1998 Long-Term Incentive Plan, each as in effect on the Date of Issuance. "Date of Issuance" means October 23, 1998. "Exercise Agreement" has the meaning set forth in Section 2C hereof. "Exercise Period" has the meaning set forth in Section 2A hereof. "Exercise Price" has the meaning set forth in the preamble hereto. "Exercise Time" has the meaning set forth in Section 2B hereof. "GAAP" means United States generally accepted accounting principles. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended from time to time. "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind. "Liquidating Dividend" has the meaning set forth in Section 4 hereof. "Market Price" means, with respect to any security on any date, (x) if such security is quoted on NASDAQ or listed on a national securities exchange, the closing sales price of such security on NASDAQ or a national securities exchange, as applicable, on the last trading day prior to such date, and (y) if such security is not quoted on NASDAQ or listed on a national securities exchange, the fair value per share determined jointly by the Company and the Registered Holder, 2 3 provided that if the Company and the Registered Holder are unable to reach an agreement within a reasonable period of time, such fair value shall be determined by a recognized investment banking firm jointly selected by the Company and the Registered Holder, whose determination shall be final and binding upon the Company and the Registered Holder (and the fees and expenses of such recognized investment banker shall be paid by the Company). "Material Adverse Effect" has the meaning set forth in the Common Stock Purchase Agreement. "NASDAQ" means National Association of Securities Dealers Automated Quotations National Market System. "Options" means any rights or options to subscribe for or purchase Common Stock or Convertible Securities, except for any rights or options to subscribe for or purchase Common Stock or Convertible Securities issued or granted pursuant to the Company's Master Stock Incentive Plan (including any of its component plans) or 1998 Long-Term Incentive Plan, each as in effect on the Date of Issuance. "Organic Change" has the meaning set forth in Section 3D hereof. "Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. "Public Offering" means a sale of Common Stock to the public in an offering pursuant to an effective registration statement filed with the SEC pursuant to the Securities Act, as then in effect, provided that a Public Offering shall not include an offering made in connection with a business acquisition or combination or an employee benefit plan. "Purchase Rights" has the meaning set forth in Section 5 hereof. "Purchaser" has the meaning set forth in Section 2B(i)(A) hereof. "Requirement Date" has the meaning set forth in Section 6B hereof. "Requirement Notice" has the meaning set forth in Section 6A hereof. "Sale of the Company" means, whether in a single transaction or in a series of related transactions, (i) a sale of all or substantially all of the assets of the Company and its Subsidiaries on a consolidated basis, or (ii) the transfer or other disposition of more than 50% of the outstanding Common Stock or the outstanding common equity securities of any of the Company's Subsidiaries (in each case whether accomplished by stock purchase, asset purchase, merger, recapitalization, reorganization or other transaction). 3 4 "Securities Act" means the Securities Act of 1933, as amended, or any similar federal law then in force. "SEC" means the United States Securities and Exchange Commission and any governmental body or agency succeeding to the functions thereof. "Stockholders Agreement" means the Stockholders Agreement, dated as of the date hereof, among the Company and certain of its stockholders. "Subsidiary" means any Person with respect to which the Company (or a Subsidiary thereof) owns a majority of the common stock or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors or other governing body. "Warrant" has the meaning set forth in the preamble hereto. "Warrant Stock" means the Company's Common Stock, par value $.01 per share; provided that if there is a change such that the securities issuable upon exercise of this Warrant are issued by an entity other than the Company or there is a change in the type or class of securities so issuable, then the term "Warrant Stock" shall mean one share of the security issuable upon exercise of the Warrant if such security is issuable in shares, or shall mean the smallest unit in which such security is issuable if such security is not issuable in shares. Section 2. Exercise of Warrant. 2A. Exercise Period. The Registered Holder may exercise, in whole or in part (but not as to a fractional share of Warrant Stock), the purchase rights represented by this Warrant at any time and from time to time after the Date of Issuance to and including December 31, 2001 (as may be extended pursuant to Section 2B(vi) hereof, the "Exercise Period"). 2B. Exercise Procedure. (i) This Warrant shall be deemed to have been exercised when the Company has received all of the following items (the "Exercise Time"): (a) a completed Exercise Agreement, executed by the Person exercising all or part of the purchase rights represented by this Warrant (the "Purchaser"); (b) this Warrant; (c) if this Warrant is not registered in the name of the Purchaser, an assignment (an "Assignment") in the form set forth in Exhibit II hereto evidencing 4 5 the assignment of this Warrant to the Purchaser, in which case the Registered Holder shall have complied with the provisions set forth in Section 7 hereof; and (d) either (1) a check or wire transfer payable to the Company in an amount equal to the product of the Exercise Price multiplied by the number of shares of Warrant Stock being purchased upon such exercise (the "Aggregate Exercise Price"), (2) with the prior approval of the Company, the surrender to the Company of debt or equity securities of the Company having a Market Price equal to the Aggregate Exercise Price of the Warrant Stock being purchased upon such exercise (provided that for purposes of this subsection, the Market Price of any note or other debt security or any preferred stock shall be deemed to be equal to the aggregate outstanding principal amount or liquidation value thereof plus all accrued and unpaid interest thereon or accrued or declared and unpaid dividends thereon) or (3) with the prior approval of the Company, a written notice to the Company that the Purchaser is exercising the Warrant (or a portion thereof) by authorizing the Company to withhold from issuance a number of shares of Warrant Stock issuable upon such exercise of the Warrant which when multiplied by the Market Price of the Warrant Stock is equal to the Aggregate Exercise Price (and such withheld shares shall no longer be issuable under this Warrant). (ii) Certificates for shares of Warrant Stock purchased upon exercise of this Warrant shall be delivered by the Company to the Purchaser within five business days after the date of the Exercise Time. Unless this Warrant has expired or all of the purchase rights represented hereby have been exercised, the Company shall prepare a new Warrant, substantially identical hereto, representing the rights formerly represented by this Warrant which have not expired or been exercised and shall, within such five-business day period, deliver such new Warrant to the Person designated for delivery in the Exercise Agreement. (iii) The Warrant Stock issuable upon the exercise of this Warrant shall be deemed to have been issued to the Purchaser at the Exercise Time, and the Purchaser shall be deemed for all purposes to have become the record holder of such Warrant Stock at the Exercise Time. (iv) The issuance of certificates for shares of Warrant Stock upon exercise of this Warrant shall be made without charge to the Registered Holder or the Purchaser for any issuance tax in respect thereof or other cost incurred by the Company in connection with such exercise and the related issuance of shares of Warrant Stock. Each share of Warrant Stock issuable upon exercise of this Warrant shall, upon payment of the Exercise Price therefor, be fully paid and nonassessable and free from all Liens with respect to the issuance thereof. (v) The Company shall not close its books against the transfer of this Warrant or of any share of Warrant Stock issued or issuable upon the exercise of this Warrant in any manner which interferes with the timely exercise of this Warrant. 5 6 (vi) The Company and the Registered Holder or Purchaser, as applicable, shall use their best efforts to make any filings with any governmental body, NASDAQ or any stock exchange in which the Warrant Stock is listed or obtain any approvals of any governmental body, NASDAQ, any stock exchange in which the Warrant Stock is listed or the stockholders of the Company (including those in connection with under the HSR Act) required prior to or in connection with any exercise of this Warrant within a reasonable period of time. The Exercise Period shall be extended to the extent necessary to allow such filings to be made and such approvals to be obtained. The costs and expenses (including reasonable attorneys fees) associated with any filing or approval required (including those in connection with the HSR Act) shall be paid by the Company. (vii) Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a Public Offering or the Sale of the Company, the exercise of any portion of this Warrant may, at the election of the holder hereof, be conditioned upon the consummation of the Public Offering or the Sale of the Company in which case such exercise shall not be deemed to be effective until the consummation of such transaction. (viii) The Company shall at all times reserve and keep available out of its authorized but unissued shares of Warrant Stock solely for the purpose of issuance upon the exercise of the Warrants, such number of shares of Warrant Stock issuable upon the exercise of all outstanding Warrants. The Company shall take all such actions as may be necessary to assure that all such shares of Warrant Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Warrant Stock may be listed (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance). The Company shall not take any action which would cause the number of authorized but unissued shares of Warrant Stock to be less than the number of such shares required to be reserved hereunder for issuance upon exercise of the Warrants. 2C. Exercise Agreement. Upon any exercise of this Warrant, the exercise agreement (the "Exercise Agreement") shall be substantially in the form set forth in Exhibit I hereto, except that if the shares of Warrant Stock are not to be issued in the name of the Person in whose name this Warrant is registered, the Exercise Agreement shall also state the name of the Person to whom the certificates for the shares of Warrant Stock are to be issued, and if the number of shares of Warrant Stock to be issued does not include all the shares of Warrant Stock purchasable here under, it shall also state the name of the Person to whom a new Warrant for the unexercised portion of the rights hereunder is to be delivered. Such Exercise Agreement shall be dated the actual date of execution thereof. Section 3. Adjustment of Exercise Price and Number of Shares. In order to prevent dilution of the rights granted under this Warrant, the Exercise Price shall be subject to adjustment from time to time as provided in this Section 3, and the number of shares of Warrant Stock obtainable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this Section 3. 6 7 3A. Adjustment of Exercise Price and Number of Shares upon Issuance of Common Stock. (i) Except as set forth in Section 3A(iii), if and whenever the Company issues or sells, or in accordance with Section 3B is deemed to have issued or sold, any shares of Common Stock for a gross consideration per share (not net of discounts and commissions to underwriters) less than either (A) $11.00 (as such amount is proportionately adjusted for stock splits, stock combinations, stock dividends and recapitalizations affecting the Common Stock after the Date of Issuance, the "Base Price") or (B) the Market Price of the Common Stock determined as of the date of such issue or sale, then immediately upon such issue or sale the Exercise Price shall be reduced to whichever of the following Exercise Prices is lower: (a) the Exercise Price determined by dividing (1) the sum of (x) the product derived by multiplying the Exercise Price in effect immediately prior to such issue or sale by the number of shares of Common Stock Deemed Outstanding immediately prior to such issue or sale, plus (y) the gross consideration (not net of discounts and commissions to underwriters), if any, received by the Company upon such issue or sale, by (2) the number of shares of Common Stock Deemed Outstanding immediately after such issue or sale; or (b) the Exercise Price determined by multiplying the Exercise Price in effect immediately prior to such issue or sale by a fraction, the numerator of which shall be the sum of (1) the number of shares of Common Stock Deemed Outstanding immediately prior to such issue or sale multiplied by the Market Price of the Common Stock determined as of the date of such issuance of sale, plus (2) the gross consideration (not net of discounts and commissions to underwriters), if any, received by the Company upon such issue or sale, and the denominator of which shall be the product derived by multiplying the Market Price of the Common Stock by the number of shares of Common Stock Deemed Outstanding immediately after such issue or sale. (ii) Upon each such adjustment of the Exercise Price hereunder, the number of shares of Warrant Stock acquirable upon exercise of this Warrant shall be adjusted to the number of shares determined by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of Warrant Stock acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. (ii) Notwithstanding the foregoing, there shall be no adjustment to the Exercise Price or the number of shares of Warrant Stock obtainable upon exercise of this Warrant with respect to (w) the issuance and sale of Common Stock, or the granting of any rights or options to subscribe for or purchase Common Stock or Convertible Securities, pursuant to an acquisition by the Company or any Subsidiary, (x) the granting of any rights or options to subscribe for or purchase 7 8 Common Stock or Convertible Securities pursuant to the Company's Master Stock Incentive Plan (including any of its component plans) or 1998 Long-Term Incentive Plan, each as in effect on the Date of Issuance, (y) the exercise of such rights and options or (z) the issuance and sale of Common Stock pursuant to the Employee Stock Purchase Plan, as in effect on the date hereof. 3B. Effect on Exercise Price of Certain Events. For purposes of determining the adjusted Exercise Price under Section 3A, the following shall be applicable: (i) Issuance of Rights or Options. If the Company in any manner grants or sells any Options and the price per share for which Common Stock is issuable upon the exercise of such Options, or upon conversion or exchange of any Convertible Securities issuable upon exercise of such Options, is less than either (a) the Base Price in effect immediately prior to the time of the granting or sale of such Options or (b) the Market Price determined as of such time, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options, or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options, shall be deemed to be outstanding and to have been issued and sold by the Company at such time for such price per share. For purposes of this Section 3B(i), the "price per share for which Common Stock is issuable upon exercise of such Options or upon conversion or exchange of such Convertible Securities" is determined by dividing (A) the total amount, if any, received or receivable by the Company as consideration for the granting or sale of such Options, plus the minimum aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, plus in the case of such Options which are exercisable into Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options. No further adjustment of the Exercise Price shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities. (ii) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the price per share for which Common Stock is issuable upon conversion or exchange thereof is less than either (a) the Base Price in effect immediately prior to the time of such issue or sale or (b) the Market Price determined as of such time, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For the purposes of this Section 3B(ii), the "price per share for which Common Stock is issuable upon conversion or exchange thereof" is determined by dividing (A) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus 8 9 the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment of the Exercise Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustments of the Exercise Price had been or are to be made pursuant to other provisions of this Section 3B, no further adjustment of the Exercise Price shall be made by reason of such issue or sale. (iii) Change in Option Price or Conversion Rate. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable for Common Stock changes at any time, the Exercise Price in effect at the time of such change shall be adjusted immediately to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold and the number of shares of Warrant Stock shall be correspondingly adjusted. For purposes of this Section 3B, if the terms of any Option or Convertible Security which was outstanding as of the date of issuance of this Warrant are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change; provided that no such change shall at any time cause the Exercise Price hereunder to be increased. (iv) Treatment of Expired Options and Unexercised Convertible Securities. Upon the expiration of any Option or the termination of any right to convert or exchange any Convertible Securities without the exercise of such Option or right, the Exercise Price then in effect and the number of shares of Warrant Stock acquirable hereunder shall be adjusted immediately to the Exercise Price and the number of shares which would have been in effect at the time of such expiration or termination had such Option or Convertible Securities, to the extent outstanding immediately prior to such expiration or termination, never been issued. For purposes of this Section 2B, the expiration or termination of any Option or Convertible Security which was outstanding as of the date of issuance of this Warrant shall not cause the Exercise Price hereunder to be adjusted unless, and only to the extent that, a change in the terms of such Option or Convertible Security caused it to be deemed to have been issued after the date of issuance of this Warrant. (v) Calculation of Consideration Received. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor shall be deemed to be the net amount received by the Company therefor. In case any Common Stock, Options or Convertible Securities are 9 10 issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company shall be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company shall be the Market Price thereof as of the date of receipt. In case any Common Stock, Options or Convertible Securities are issued to the owners of the non- surviving entity in connection with any merger in which the Company is the surviving entity the amount of consideration therefor shall be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities shall be determined jointly by the Company and the Registered Holder. If such parties are unable to reach agreement within a reasonable period of time, such fair value shall be determined by a recognized investment banking firm jointly selected by the Company and the Registered Holder. The determination of such recognized investment banker shall be final and binding on the Company and the Registered Holder of the Warrants, and the fees and expenses of such recognized investment banker shall be paid by the Company. (vi) Integrated Transactions. In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options shall be deemed to have been issued without consideration. (vii) Treasury Shares. The number of shares of Common Stock outstanding at any given time does not include shares owned or held by or for the account of the Company or any Subsidiary, and the disposition of any shares so owned or held shall be considered an issue or sale of Common Stock. (viii) Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. 3C. Subdivision or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced and the number of shares of Warrant Stock obtainable upon exercise of this Warrant shall be proportionately increased. If the Company at any time combines (by reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect 10 11 immediately prior to such combination shall be proportionately increased and the number of shares of Warrant Stock obtainable upon exercise of this Warrant shall be proportionately decreased. 3D. Reorganization, Reclassification, Consolidation, Merger or Sale. Except as provided in Section 9, any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets or other transaction, which in each case is effected in such a way that the holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as "Organic Change." Prior to the consummation of any Organic Change, the Company shall make appropriate provision (in form and substance satisfactory to the Registered Holder) to insure that the Registered Holder shall thereafter have the right to acquire and receive, in lieu of or addition to (as the case may be) the shares of Warrant Stock immediately theretofore acquirable and receivable upon the exercise of this Warrant, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for the number of shares of Warrant Stock immediately theretofore acquirable and receivable upon exercise of this Warrant had such Organic Change not taken place. In any such case, the Company shall make appropriate provision (in form and substance satisfactory to the Registered Holder) with respect to the Registered Holders' rights and interests to insure that the provisions of this Section 3 and Sections 4 and 5 hereof shall thereafter be applicable to the Warrants. The Company shall not effect any such consolidation, merger or sale, unless prior to the consummation thereof, the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes by written instrument (in form and substance satisfactory to the Registered Holder), the obligation to deliver to the Registered Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire. 3E. Certain Events. If any event occurs of the type contemplated by the provisions of this Section 3 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features (except in each case pursuant to the Company's Master Stock Incentive Plan (including any of its component plans) or 1998 Long-Term Incentive Plan, each as in effect on the Date of Issuance)), then the Company's board of directors shall make an appropriate adjustment in the Exercise Price and the number of shares of Warrant Stock obtainable upon exercise of this Warrant so as to protect the rights of the Registered Holder; provided that no such adjustment shall increase the Exercise Price or decrease the number of shares of Warrant Stock obtainable as otherwise determined pursuant to this Section 3. 3F. Notices. (i) Immediately upon any adjustment of the Exercise Price, the Company shall give written notice thereof to the Registered Holder, setting forth in reasonable detail and certifying the calculation of such adjustment. 11 12 (ii) The Company shall give written notice to the Registered Holder at least 20 days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change, Sale of the Company, dissolution or liquidation. (iii) The Company shall also give written notice to the Registered Holders at least 20 days prior to the date on which any Organic Change, dissolution or liquidation shall take place. Section 4. Liquidating Dividends. If the Company declares or pays a dividend upon the Common Stock payable otherwise than in cash out of earnings or earned surplus (determined in accordance with GAAP) except for a stock dividend payable in shares of Common Stock (a "Liquidating Dividend"), then the Company shall pay to the Registered Holder at the time of payment thereof the Liquidating Dividend which would have been paid to the Registered Holder on the Warrant Stock (after netting out the Aggregate Exercise Price) had this Warrant been fully exercised immediately prior to the date on which a record is taken for such Liquidating Dividend, or, if no record is taken, the date as of which the record holders of Common Stock entitled to such dividends are to be determined. Section 5. Purchase Rights. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "Purchase Rights"), then the Registered Holder shall be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such holder could have acquired if the Registered Holder had held the number of shares of Warrant Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights. Section 6. Company's Right to Require Exercise. 6A. Requirement Notice. Subject to Section 6B, if on any date during the Exercise Period the daily closing sales price of a share of Warrant Stock quoted on NASDAQ equals or exceeds $11.00 per share (as such amount is proportionately adjusted for stock splits, stock combinations, stock dividends and recapitalizations affecting the Warrant Stock after the Date of Issuance) for the 20 consecutive trading days immediately prior to such date, the Company may, by giving written notice (the "Requirement Notice") to the Registered Holder within three business days of such date, require the Registered Holder to exercise, in whole or in part (but not as to a fractional share of Warrant Stock), the purchase rights represented by this Warrant within 15 business days of receipt of the Requirement Notice; provided, however such 15 business day period shall be extended to the extent necessary for the Company and the Registered Holder to make any filings with any governmental body, NASDAQ or any stock exchange in which the Warrant Stock is listed or obtain 12 13 any approvals of any governmental body, NASDAQ, any stock exchange in which the Warrant Stock is listed or the stockholders of the Company (including those in connection with under the HSR Act) required prior to or in connection with any exercise of this Warrant. Except as explicitly set forth in this Section 6, the exercise of this Warrant shall follow the procedures set forth in Section 2B. Notwithstanding anything in this Section 6 to the contrary, the Registered Holder can satisfy its obligations under this Section 6 by assigning this Warrant pursuant to Section 8 to another Person (the "Assignee") within 10 business days of receipt of the Requirement Notice, so long as the Assignee exercises the assigned Warrant within 10 business days of such assignment; provided, however such 10 business day period shall be extended to the extent necessary for the Company and the Assignee to make any filings with any governmental body, NASDAQ or any stock exchange in which the Warrant Stock is listed or obtain any approvals of any governmental body, NASDAQ, any stock exchange in which the Warrant Stock is listed or the stockholders of the Company (including those in connection with under the HSR Act) required prior to or in connection with any exercise of the assigned Warrant. 6B. Conditional Precedent to Requirement Notice. Notwithstanding anything in Section 6A to the contrary, the obligations of the Registered Holder or the Assignee, as applicable, under Section 6A shall be subject to the Registered Holder or the Assignee, as applicable, having received on or before the date of the closing of the exercise of the Warrant pursuant to this Section 6 (the "Requirement Date") a certificate signed by the chief executive officer of the Company certifying that as of the Requirement Date, (x) the representations and warranties of the Company set forth in the Common Stock Purchase Agreement shall be true, correct and complete in all respects on and as of the Requirement Date to the same extent as though made on and as of such date, except to the extent such representations and warranties specifically related to an earlier date, in which case such representations and warranties shall have been true, correct and complete in all respects on and as of such earlier date (provided that the requirements of this clause (x) shall be deemed satisfied unless all inaccuracies of such representations and warranties in the aggregate have a Material Adverse Effect, ignoring any qualification as to materiality or Material Adverse Effect contained therein), (y) the Company shall have performed in all material respects all agreements which the Common Stock Purchase Agreement provides shall be performed by the Company and (z) the Company is not subject to any debt or credit agreement under which a default, an event of default, a right of acceleration or a right to bring an action against any property of the Company may be triggered if (A) Phillip G. Norton does not maintain effective control of the Company or MLC Group, Inc., or (B) any specified Person does not own any specified number or percentage of shares of Common Stock (provided, however, such agreement can provide a default, an event of default, a right of acceleration or a right to bring an action against any property of the Company may be triggered if (1) one or more of Phillip G. Norton, Patricia A. Norton, any of their lineal descendants or siblings and any trust formed and maintained solely for the benefit of any such Persons beneficially owns in the aggregate less than 1,600,000 shares of Common Stock, or (2) one or more of Phillip G. Norton, Bruce M. Bowen, Thomas B. Howard, Jr., Steven J. Mencarini, Kleyton L. Parkurst, any other employee of the Company, any of their lineal descendants, siblings or spouses and any trust formed and maintained solely for the benefit of any such Persons beneficially owns in the aggregate less than 2,000,000 shares of Common Stock). 13 14 6C. No Manipulation. Each of the parties hereto hereby agrees that neither it nor any of its Affiliates shall take any action or omit to take any action which increases or decreases the daily closing sales price of a share of Warrant Stock quoted on NASDAQ for the primary purpose of effecting whether or not the Company shall have the right to require the Registered Holder to exercise, in whole or in part, the purchase rights represented by this Warrant. Section 7. No Voting Rights; Limitations of Liability. Except as otherwise provided in the Stockholders Agreement, this Warrant shall not entitle the holder hereof to any voting rights or other rights as a stockholder of the Company. No provision hereof, in the absence of affirmative action by the Registered Holder to purchase Warrant Stock, and no enumeration herein of the rights or privileges of the Registered Holder shall give rise to any liability of such holder for the Exercise Price of Warrant Stock acquirable by exercise hereof or as a stockholder of the Company. Section 8. Warrant Transferable. Subject to federal and state securities laws, this Warrant and all rights hereunder are transferable, in whole or in part, without charge to the Registered Holder, upon surrender of this Warrant with a properly executed Assignment at the address of the Company set forth in Section 12. Section 9. Sale of the Company. Notwithstanding anything herein the contrary, prior to the consummation of a Sale of the Company, the Registered Holder shall be given the option, in its sole discretion, to either (x) exercise this Warrant prior to the consummation of the Sale of the Company and participate in such sale as a holder of such class of Common Stock, or (y) upon the consummation of the Sale of the Company, receive in exchange for this Warrant consideration equal to the amount determined by multiplying (1) the same amount of consideration per share of a class of Common Stock received by holders of such class of Common Stock in connection with the Approved Sale less the Exercise Price by (2) the number of shares of such class of Common Stock represented by this Warrant. Section 10. Warrant Exchangeable for Different Denominations. This Warrant is exchangeable, upon the surrender hereof by the Registered Holder at the address of the Company set forth in Section 12, for new Warrants of like tenor representing in the aggregate the purchase rights hereunder, and each of such new Warrants shall represent such portion of such rights as is designated by the Registered Holder at the time of such surrender. The date the Company initially issues this Warrant shall be deemed to be the "Date of Issuance" hereof regardless of the number of times new certificates representing the unexpired and unexercised rights formerly represented by this Warrant shall be issued. Each holder of a new Warrant shall have the rights and privileges of the Registered Holder of this Warrant as provided herein. Section 11. Replacement. Upon receipt of evidence reasonably satisfactory to the Company (an affidavit of the Registered Holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing this Warrant, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company (provided that if the Registered Holder is Thayer Equity Investors III, L.P. or any of its Affiliates, 14 15 then its own agreement shall be satisfactory), or, in the case of any such mutilation upon surrender of such certificate, the Company shall (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the same rights represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate. Section 12. Notices. Any notice provided for in this Warrant shall be in writing and shall be either personally delivered, or sent via facsimile, or mailed first class mail (postage prepaid) or sent by reputable overnight courier service (charges prepaid) to such Person as follows: if to the Company: MLC Holdings, Inc. 11150 Sunset Hills Road, Suite 110 Reston, VA 20190-5321 FAX: 703-834-5718 Attention: Phillip G. Norton with a copy to: Alston & Bird, LLP 601 Pennsylvania Avenue, N.W. North Building, 11th Floor Washington, DC 20004 FAX: 202-508-3333 Attention: Frank M. Conner, III, Esq. if to the Registered Holder: c/o Thayer Equity Investors III, L.P. 1455 Pennsylvania Avenue, Suite 350 Washington, DC 20004 FAX: 202-371-0391 Attention: Carl J. Rickertsen with a copy to: Kirkland & Ellis 655 Fifteenth Street, N.W., Suite 1200 Washington, DC 20005-5793 FAX: 202-879-5200 Attention: Jack M. Feder, Esq. 15 16 or at such address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder when delivered personally or sent via facsimile (against receipt therefor), five business days after deposit in the U.S. mail and one business day after deposit with a reputable overnight courier service. Section 13. Amendment and Waiver. Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Registered Holder. Section 14. Descriptive Headings; Governing Law. The descriptive headings of the several sections of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. The corporation laws of the State of Delaware shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by the internal law of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. * * * * 16 17 IN WITNESS WHEREOF, the Company has caused this Stock Purchase Warrant to be signed and attested by its duly authorized officers under its corporate seal and to be dated the Date of Issuance hereof. MLC HOLDINGS, INC. By: /s/ BRUCE M. BOWEN -------------------------------- Name: Bruce M. Bowen Title: Executive Vice President [Corporate Seal] Attest: /s/ KLEYTON L. PARKHURST --------------------------------------- Kleyton L. Parkhurst, Secretary ACKNOWLEDGED AND AGREED TO AS OF THE DATE OF ISSUANCE: TC LEASING, LLC By: THAYER EQUITY INVESTORS III, L.P., its managing member By: TC EQUITY PARTNERS, L.L.C., its general partner By: /s/ JEFFREY W. GOETTMAN --------------------------------- Name: Jeffrey W. Goettman Title: Member 18 EXHIBIT I EXERCISE AGREEMENT Dated: ------------- The undersigned, pursuant to the provisions set forth in the attached Stock Purchase Warrant (Certificate No. W-____), hereby agrees to subscribe for the purchase of ______ shares of the Warrant Stock covered by such Stock Purchase Warrant and makes payment herewith in full therefor at the price per share provided by such Stock Purchase Warrant. A certificate for such shares of Warrant Stock shall be made in the name of _______________, and shall be mailed to the following address:___________________________. [A new stock purchase warrant for the unexercised portion of the rights under the attached Stock Purchase Warrant shall be issued in the name of ______________, and shall be mailed to the following address: _____________________________.] Name of Registered Holder: ------------------------- Signature: ----------------------------------- Name: ----------------------------------- Title: ----------------------------------- 19 EXHIBIT II ASSIGNMENT Dated: -------------- FOR VALUE RECEIVED, _________________________________ hereby sells, assigns and transfers all of the rights of the undersigned under the attached Stock Purchase Warrant (Certificate No. W-_____) with respect to the number of shares of the Warrant Stock covered thereby set forth below, unto: Names of Assignee Address No. of Shares - ----------------- ------- ------------- Name of Assignor: ---------------------------------- Signature: --------------------------------------- Name: --------------------------------------- Title: ---------------------------------------
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