UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report - August 6, 2007
(Date of earliest event reported)
COMPUDYNE CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 0-29798 23-1408659
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
2530 Riva Road, Suite 201, Annapolis, Maryland 21401
(Address of principal executive offices) (Zip Code)
(410) 224-4415
(Registrant's telephone number, including area code)
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 to Form 8-K):
[_] 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
24.14a-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 40.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
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On August 6, 2007, CompuDyne Corporation, a Nevada corporation (
"CompuDyne") entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Gores Patriot Holdings, Inc., a Delaware corporation
("Purchaser") and Patriot Acquisition Corp., a Nevada corporation ("Merger
Sub").
Pursuant to the Merger Agreement, and subject to its terms and conditions,
Merger Sub will commence a tender offer (the "Offer") to purchase and acquire
all of the outstanding shares of common stock, par value $.75 per share, of
CompuDyne. In the Offer, each CompuDyne stockholder will receive for each share
of CompuDyne common stock validly tendered and not withdrawn $7.00 in cash,
subject to any applicable withholding for taxes, without interest. Subject to
certain terms and conditions set forth in the Merger Agreement, CompuDyne also
gave Purchaser the option to purchase, following its acceptance for payment of
shares tendered in the Offer, up to the lesser of (i) 15% of CompuDyne's common
stock outstanding (assuming issuance of shares subject to the option) and (ii)
the lowest number of shares of common stock that, when added to the number of
shares of common stock owned by Purchaser and Merger Sub, shall constitute at
least 90% of CompuDyne's common stock outstanding.
Purchaser is controlled by an investor group consisting of affiliates of
The Gores Group, LLC ("Gores") and industry executive Stuart Mackiernan. The
Clearlake Capital Group, L.P. has committed to provide up to $62,000,000 of debt
and equity financing to Purchaser and certain affiliates of Gores have committed
to provide up to $55,000,000 in equity financing to Purchaser. In addition
certain affiliates of Gores have delivered to CompuDyne a limited guaranty of
Purchaser's obligation to pay certain amounts under the Merger Agreement
(including the termination fee), up to a maximum amount equal to $3.5 million.
Pursuant to the Merger Agreement, as soon as practicable after the
consummation of the Offer and subject to the satisfaction or waiver of certain
conditions set forth in the Merger Agreement, Merger Sub shall be merged with
and into CompuDyne (the "Merger") and CompuDyne will continue as the surviving
corporation and a wholly-owned subsidiary of Purchaser. In the Merger, the
remaining stockholders of CompuDyne will also receive $7.00 for each outstanding
share of CompuDyne common stock. Shares held by Purchaser, Merger Sub, or
CompuDyne shall be cancelled in the Merger. All other shares held by
stockholders shall automatically be converted into the right to receive the
merger consideration, payable, without interest, upon the surrender of each such
share.
The obligation of Purchaser to accept for payment and pay for the shares
tendered in the Offer is subject to the satisfaction or waiver of a number of
conditions set forth in the Merger Agreement, including that at least 53% of the
outstanding shares of CompuDyne common stock on a fully diluted basis shall have
been validly tendered in accordance with the terms of the Offer and not properly
withdrawn (the "Minimum Condition") and no event having a material adverse
effect on CompuDyne or its business shall have occurred. The Minimum Condition
may not be waived by Purchaser without the prior written consent of CompuDyne.
Consummation of the Offer is expected to constitute a change in control
under CompuDyne's equity incentive plans and convertible note indenture.
Pursuant to the terms of CompuDyne's equity incentive plans, outstanding
unvested stock options will accelerate upon a change in control. Holders of
CompuDyne's convertible notes will continue to hold such notes following the
consummation of the Offer and the Merger subject to terms of the indenture for
the notes, which provides note holders with certain rights upon a change in
control.
The closing of the Merger is subject to customary closing conditions, and,
depending on the number of shares held by Purchaser after its acceptance of the
shares properly tendered in connection with the Offer, approval of the Merger by
holders of the outstanding shares of CompuDyne common stock remaining after the
completion of the Offer.
The Merger Agreement includes customary representations, warranties and
covenants of CompuDyne, Purchaser and Merger Sub. CompuDyne has agreed to
operate its business in the ordinary course until the Merger is consummated.
CompuDyne has also agreed not to solicit or initiate discussions with third
parties regarding other proposals to acquire CompuDyne and to certain
restrictions on its ability to respond to any such proposal. The Merger
Agreement also includes customary termination provisions for both CompuDyne and
Purchaser and provides that, in connection with the termination of the Merger
Agreement under specified circumstances, CompuDyne will also be required to pay
Purchaser, or Purchaser will be required to pay CompuDyne, a termination fee
including termination expenses, equal in the aggregate to $3,500,000.
The representations and warranties in the Merger Agreement have been
negotiated with the principal purpose of establishing the circumstances in which
a party may have the right not to close the Offer if the representation and
warranties of the other party prove to be untrue due to a change in circumstance
or otherwise, and allocate risk between the parties, rather than establishing
matters as facts. The representations and warranties may also be subject to a
contractual standard of materiality different from those generally applicable
under the securities laws.
A copy of the Agreement and Plan of Merger is attached as Exhibit 2.1 to
this Current Report on Form 8-K and is incorporated herein by reference. The
foregoing description of the Merger Agreement does not purport to be complete
and is qualified in its entirety by reference to the Merger Agreement.
Additional Information about the Tender Offer and Where to Find it.
The tender offer for the outstanding common stock of CompuDyne referred to
in this Current Report on Form 8-K has not yet commenced. This report is neither
an offer to purchase nor a solicitation of an offer to sell common stock of
CompuDyne. The solicitation and the offer to buy shares of CompuDyne common
stock will be made pursuant to an offer to purchase and related materials that
Purchaser intends to file with the U.S. Securities and Exchange Commission. At
the time the tender offer is commenced, Purchaser, an affiliate of The Gores
Group, LLC, and Merger Sub, a wholly-owned subsidiary of Purchaser, intend to
file a Tender Offer Statement on Schedule TO containing an offer to purchase,
forms of letters of transmittal and other documents relating to the tender
offer, and CompuDyne intends to file a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the tender offer. Purchaser, Merger Sub, and
CompuDyne intend to mail these documents to the stockholders of CompuDyne. These
documents will contain important information about the tender offer and
stockholders of CompuDyne are urged to read them carefully when they become
available. Investors and stockholders of CompuDyne will be able to obtain a free
copy of these documents (when they become available) and other documents filed
by CompuDyne or Purchaser with the SEC at the website maintained by the SEC at
www.sec.gov. The tender offer statement and related materials may be obtained
for free by directing such requests to MacKenzie Partners Inc., attention Bob
Marese, at (212) 929-5500. In addition, investors and stockholders may obtain a
free copy of the solicitation/recommendation statement and such other documents
(when they become available) from CompuDyne by directing requests to CompuDyne
at 2530 Riva Road, Suite 201, Annapolis, Maryland 21401.
Forward-Looking Statements.
This Current Report on Form 8-K contains "forward-looking statements."
These forward-looking statements, which may include, but are not limited to,
statements concerning the financial condition, results of operations and
businesses of CompuDyne and the benefits expected to result from the
contemplated transaction are based on management's current expectations and
estimates and involve risks and uncertainties that could cause actual results or
outcomes to differ materially from those contemplated by the forward-looking
statements.
Factors that could cause actual results to differ from expectations
include, among others, the occurrence of any event, change or other circumstance
that could give rise to the termination of the Merger Agreement with the
investor group, the risk that the conditions relating to the required minimum
tender of CompuDyne shares or any required regulatory clearance might not be
satisfied in a timely manner or at all, the failure to satisfy other conditions
to completion of the merger, risks that the proposed transaction disrupts
current plans and operations and the potential difficulties in key employee
retention as a result of the transaction, capital spending patterns of the
security market and the demand for CompuDyne's products, competitive factors and
pricing pressures, changes in legislation, regulatory requirements, government
budget problems, CompuDyne's ability to secure new contracts, the ability to
successfully grow CompuDyne by completing acquisitions, the ability to remain in
compliance with its bank covenants, delays in government procurement processes,
ability to obtain bid, payment and performance bonds on various of CompuDyne's
projects, technological change or difficulties, the ability to refinance debt
when it becomes due, product development risks, commercialization difficulties,
adverse results in litigation, the level of product returns, the amount of
remedial work needed to be performed, costs of compliance with Sarbanes-Oxley
requirements and the impact of the failure to comply with such requirements,
risks associated with internal control weaknesses identified in complying with
Section 404 of Sarbanes-Oxley, and general economic conditions.
Item 8.01 Other Events.
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A copy of the press release, issued August 7, 2007, announcing the
execution of the Merger Agreement, is attached as Exhibit 99.1 to this Current
Report on Form 8-K and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
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(d) Exhibits.
Exhibit No. Description
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2.1 Agreement and Plan of Merger, dated August 6, 2007,
by and among CompuDyne Corporation, Gores Patriot
Holdings, Inc. and Patriot Acquisition Corp.
99.1 Press Release, issued August 7, 2007, relating to the
execution of the Agreement and Plan of Merger by
CompuDyne Corporation, Gores Patriot Holdings, Inc.
and Patriot Acquisition Corp.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: August 7, 2007 CompuDyne Corporation
(Registrant)
By: /s/ Geoffrey F. Feidelberg
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Geoffrey F. Feidelberg
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
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2.1 Agreement and Plan of Merger, dated August 6, 2007, by and
among CompuDyne Corporation, GoresPatriot Holdings, Inc. and
Patriot Acquisition Corp.
99.1 Press Release, issued August 7, 2007, relating to the
execution of the Agreement and Plan of Merger by CompuDyne
Corporation, Gores Patriot Holdings, Inc. and Patriot
Acquisition Corp.