UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 23, 2008
Commission File Number: 000-21559
L-1 IDENTITY SOLUTIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 02-0807887
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION) NO.)
177 BROAD STREET
STAMFORD, CONNECTICUT 06901
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (203) 504-1100
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[X] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On March 23, 2008, L-1 Identity Solutions, Inc. ("L-1") entered into an
Agreement and Plan of Merger (the "Merger Agreement") with Dolomite Acquisition
Co., a wholly owned subsidiary of L-1 ("Merger Sub"), and Digimarc Corporation
("Digimarc"). Pursuant to the Merger Agreement, and subject to the terms and
conditions set forth therein, Merger Sub will be merged with and into Digimarc,
with Digimarc continuing as the surviving corporation and a wholly owned
subsidiary of L-1 (the "Merger"). As a result of the Merger, L-1 will own the
business, operations, assets and liabilities primarily related to Digimarc's
Secure ID Business. Prior to the closing of the Merger, Digimarc will form a
separate entity and spin off the business, operations, assets and liabilities of
its Digital Watermarking Business to its stockholders (the "Spin-Off"). After
the Spin-Off, the new company holding the Digital Watermarking Business and
certain other assets and liabilitites will bear the Digimarc name ("new
Digimarc").
Under the terms of the Merger Agreement, the stockholders of Digimarc will
receive aggregate consideration currently estimated at $245 million, of which
approximately $120 million will be paid in cash and the remainder will be paid
in shares of L-1 common stock. The number of shares of L-1 common stock issuable
in connection with the Merger will be based on the average trading price of L-1
common stock over the twenty (20) consecutive trading days ending on the fifth
trading day prior to the closing of the Merger. Assuming that the average
trading price of L-1 common stock will be between $11.00 and $14.00 per share,
L-1 will issue approximately 10,300,000 shares. If the average trading price is
greater than $14.00, the exchange ratio will be adjusted downward based on the
actual average trading price, and if the average trading price is less than
$11.00, L-1 will issue a maximum of 11,300,000 shares. In connection with the
Spin-Off, L-1 has also committed to purchase $5,000,000 of new Digimarc common
stock.
The Merger Agreement contains customary representations, warranties and
covenants of the parties. Digimarc has also agreed not to (i) solicit
alternative acquisition proposals or (ii) subject to certain exceptions, enter
into discussions or an agreement concerning, or provide confidential information
in connection with, any alternative acquisition proposal.
The Merger Agreement contains certain termination rights for both L-1 and
Digimarc. If the Merger Agreement is terminated by either L-1 or Digimarc under
specified circumstances, Digimarc will be required to pay L-1 a termination fee
equal to $7,500,000. In addition, if the Merger Agreement is terminated by
Digimarc under certain specified circumstances (including L-1's failure to
consummate the Merger if certain conditions precedent have been met), L-1 will
be required to pay Digimarc a termination fee equal to $7,500,000. Each of L-1
and Digimarc will be required to reimburse the other party's expenses in certain
circumstances in an amount not to exceed $3,000,000.
The Merger is subject to customary closing conditions, including the receipt of
all necessary regulatory approvals, the approval of Digimarc's stockholders and
consummation of the Spin-Off.
In connection with the Merger Agreement, Bruce Davis, Michael McConnell, Robert
Eckel, Robert Chamness, Reed Stager and Philip Monego, Sr. have entered into or
will enter into Support Agreements with L-1 pursuant to which each such
individual has agreed or will agree to vote all of his shares of Digimarc
common stock in favor of the adoption of the Merger Agreement and the approval
of the transactions contemplated thereby, including the Spin-Off. In the event
that the Merger Agreement terminates for any reason, the Support Agreements will
automatically terminate.
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The foregoing descriptions of the Merger Agreement and the Support Agreements
are qualified in their entirety by reference to the full text of the Merger
Agreement and the Form of Support Agreement, which are attached hereto as
Exhibits 2.1 and 10.1, respectively, and incorporated herein by reference. The
Merger Agreement has been attached to provide investors with information
regarding its terms. It is not intended to provide any other factual information
about L-1 or Digimarc. In particular, the assertions embodied in the
representations and warranties contained in the Merger Agreement are qualified
by information in confidential disclosure schedules provided by the parties in
connection with the signing of the Merger Agreement. The disclosure schedules
contain information that modifies, qualifies and creates exceptions to the
representations and warranties set forth in the Merger Agreement. Moreover,
certain representations and warranties in the Merger Agreement were used for the
purpose of allocating risk between L-1 and Digimarc rather than establishing
matters as facts. Accordingly, you should not rely on the representations and
warranties in the Merger Agreement as characterizations of the actual state of
facts about L-1 or Digimarc.
ITEM 8.01 OTHER EVENTS
On March 24, 2008, L-1 issued a press release announcing that it had entered
into the Merger Agreement. A copy of the press release is furnished as Exhibit
99.1 hereto.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
In connection with the proposed transactions, L-1 will file with the SEC a
Registration Statement on Form S-4 and Digimarc will file with the SEC a proxy
statement/prospectus. Investors are urged to read the Registration Statement and
proxy statement/prospectus carefully when they become available and any other
relevant documents filed with the SEC, as well as any amendments or supplements
thereto, because they will contain important information. Investors and other
interested parties will be able to obtain free copies of the Registration
Statement, proxy statement/prospectus and other documents filed with the SEC
(when available) from the SEC's website at www.sec.gov. In addition, investors
and other interested parties will be able to obtain free copies of the
Registration Statement and proxy statement/prospectus (when available) by
directing a request by mail or telephone to L-1, 177 Broad Street, Stamford,
Connecticut 06901, Attention: Investor Relations, telephone: (203) 504-1100, or
to Digimarc, 9405 SW Gemini Drive, Beaverton, Oregon 97008, Attention: Investor
Relations, telephone: (503) 469-4659.
L-1, Digimarc and their respective directors and executive officers may be
deemed to be participants in the solicitation of proxies from the stockholders
of Digimarc in connection with the transactions described herein. Information
regarding the special interests of these directors and executive officers will
be included in the Registration Statement and proxy statement/prospectus
described above. Additional information regarding L-1's directors and executive
officers is set forth in L-1's most recent proxy statement, which was filed with
the SEC on March 20, 2008. Additional information regarding Digimarc's directors
and executive officers is set forth in Digimarc's most recent proxy statement,
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which was filed with the SEC on March 12, 2008. These documents are available
free of charge from the SEC's web site at www.sec.gov and from L-1 and Digimarc
at their respective addresses set forth in the preceding paragraph.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits.
The following exhibits are furnished with this report on Form 8-K:
EXHIBIT
NUMBER DESCRIPTION
-------- ------------------------------------------------------------------
2.1 Agreement and Plan of Merger, dated as of March 23, 2008, by and
among L-1 Identity Solutions, Inc., Dolomite Acquisition Co. and
Digimarc Corporation
10.1 Form of Support Agreement
99.1 Press release of L-1 Identity Solutions, Inc., dated March 24,
2008
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SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
L-1 IDENTITY SOLUTIONS, INC.
Date: March 24, 2008 By: /s/ Mark S. Molina
----------------------------------
Mark S. Molina
Executive Vice President, Chief Legal
Officer and Secretary
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
-------- ------------------------------------------------------------------
2.1 Agreement and Plan of Merger, dated as of March 23, 2008, by and
among L-1 Identity Solutions, Inc., Dolomite Acquisition Co. and
Digimarc Corporation
10.1 Form of Support Agreement
99.1 Press release of L-1 Identity Solutions, Inc., dated March 24,
2008