UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ___)*
DIGIMARC CORPORATION
(Name of Issuer)
COMMON STOCK
(Title of Class of Securities)
253807101
(CUSIP Number)
L-1 IDENTITY SOLUTIONS, INC.
ATTN: MARK S. MOLINA
177 BROAD STREET
STAMFORD, CONNECTICUT 06901
(203) 504-1100
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
COPIES TO:
MARITA MAKINEN KYLE KRPATA
WEIL, GOTSHAL & MANGES LLP WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE 201 REDWOOD SHORES PARKWAY
NEW YORK, NEW YORK 10153 REDWOOD SHORES, CALIFORNIA 94065
(212) 310-8000 (650) 802-3000
MARCH 23, 2008
(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(e), 13d-1(f) or 13d-1(g)), check the
following box [ ].
Note. Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7 for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
(Page 1 of 6 Pages)
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CUSIP NO. 253807101 13D PAGE 2 OF 6 PAGES
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1 NAMES OF REPORTING PERSONS L-1 IDENTITY SOLUTIONS, INC.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
02-0807887
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e): [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
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7 SOLE VOTING POWER: 0
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
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8 SHARED VOTING POWER: 3,831,156*
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9 SOLE DISPOSITIVE POWER: 0
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10 SHARED DISPOSITIVE POWER: 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON: 3,831,156*
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 15.23%**
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14 TYPE OF REPORTING PERSON: CO
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* Beneficial ownership of the common stock, par value $0.001 per share ("Common
Stock"), of Digimarc Corporation, a Delaware corporation (the "Company"),
referred to herein is being reported hereunder solely because the reporting
person may be deemed to have beneficial ownership of such Common Stock as a
result of the Support Agreements described in Items 3 and 4 hereof. Neither the
filing of this Schedule 13D nor any of its contents shall be deemed to
constitute an admission by the reporting person that it is the beneficial owner
of any Common Stock referred to herein for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or for any
other purpose, and such beneficial ownership is expressly disclaimed. The
reported beneficial ownership is comprised of (i) 854,324 shares of Common Stock
(including restricted stock) that are subject to the Support Agreements and (ii)
stock options which, if 100% exercised, would entitle the holders thereof to
acquire 2,976,832 shares of Common Stock ("Option Shares") that are subject to
the Support Agreements. 1,682,250 of such Option Shares are the subject of stock
options that have exercise prices higher than the estimated consideration per
share to be paid in connection with the Merger ("Out of the Money Options
Shares"). 1,294,582 of such Option Shares are the subject of stock options that
have exercise prices lower than the estimated consideration per share to be paid
in connection with the Merger ("In the Money Options Shares"). The number of
shares of Common Stock (including restricted stock) subject to the Support
Agreements and the number of In the Money Option Shares subject to the Support
Agreements reflect, in the aggregate, approximately 8.54% of the beneficial
ownership of the Company.
** The calculation of the percentage is based on 22,177,235 shares of Common
Stock (including restricted stock) issued and outstanding as of March 21, 2008,
which number is based on the representations made by the Company in the Merger
Agreement described in Items 3 and 4 hereof, plus 2,976,832 Option Shares that
are subject to the Support Agreements.
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D (this "Statement") relates to the Common
Stock of the Company. The Company's principal executive offices are located at
9405 SW Gemini Drive, Beaverton, Oregon 97008.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (c) and (f)
This Statement is being filed by L-1 Identity Solutions, Inc., a
Delaware corporation ("L-1"). The principal business of L-1 is offering a
comprehensive set of products and solutions for protecting and securing personal
identities and assets. L-1's principal business and executive offices are
located at 177 Broad Street, Stamford, Connecticut 06901.
Schedule 1 attached to this Statement contains the following
information concerning each director and executive officer of L-1: (i) the name
and residence or business address, (ii) the present principal occupation or
employment and (iii) the name, principal business and address of any corporation
or other organization in which such employment is conducted. To the knowledge of
L-1, each of the persons named on Schedule 1 (the "Schedule 1 Persons") is a
United States citizen.
(d) and (e)
During the last five years, neither L-1, nor, to the knowledge of L-1,
any of the Schedule 1 Persons (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) 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.
In connection with the Merger Agreement described in Item 4, as a
condition to the willingness of L-1 and Merger Sub (as defined below) to enter
into the Merger Agreement, and as an inducement and in consideration therefor,
L-1 and Merger Sub entered into Support Agreements (each, a "Support Agreement,"
and collectively, the "Support Agreements") with each of Robert Chamness, Bruce
Davis, Robert Eckel, Michael McConnell, Philip Monego, Sr. and Reed Stager
(each, a "Stockholder," and collectively, the "Stockholders"). By reason of
L-1's entering into the Support Agreements with the Stockholders, and by reason
of the irrevocable proxy contained therein, L-1 may be deemed to have acquired
beneficial ownership of the shares of Common Stock that are the subject of the
Support Agreements. The transactions contemplated by the Support Agreements do
not require the expenditure of any funds. L-1 anticipates that it will fund the
transactions contemplated by the Merger Agreement through a combination of cash,
debt financing and shares of L-1 common stock. For a more detailed description
of the Support Agreements, see Item 4 below, which description is incorporated
herein by reference in response to this Item 3.
Page 3 of 6
ITEM 4. PURPOSE OF THE TRANSACTION.
Merger Agreement
On March 23, 2008, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with L-1 and Dolomite Acquisition Co., a
Delaware corporation and a wholly owned subsidiary of L-1 ("Merger Sub"), which
provides that, subject to certain conditions set forth therein, Merger Sub will
merge with and into the Company, with the Company continuing as the surviving
corporation and a wholly owned subsidiary of L-1 (the "Merger"). Prior to the
closing of the Merger, the Company will form a separate entity ("Newco") and
spin off the business, operations, assets and liabilities of its digital
watermarking business to the Company's stockholders (the "Spin-Off").
At the effective time and as a result of the Merger, each share of
Common Stock issued and outstanding immediately prior to the effective time of
the Merger will be cancelled and extinguished and automatically converted into
the right to receive a combination of cash and shares of L-1 common stock.
Immediately prior to the record date for the entitlement to a
distribution of Newco shares in connection with the Spin-Off, all outstanding
Company stock options will fully vest and become exercisable. Holders of Company
stock options will be given the opportunity to exercise such stock options, and
thereby to become stockholders of the Company, entitled to receive the
combination of cash and shares of L-1 common stock in connection with the Merger
and the distribution of Newco shares in connection with the Spin-Off. All
Company stock options that are outstanding immediately prior to the Spin-Off
that are not exercised will be cancelled and null and void as of the Spin-Off.
Upon consummation of the Merger, the directors and officers of Merger
Sub immediately prior to the effective time of the Merger will be the initial
directors and officers of the surviving corporation.
Following the consummation of the Merger, L-1 intends that the Common
Stock will be deregistered under the Exchange Act, and delisted from the NASDAQ
Global Market.
Support Agreements
As noted in Item 3 above, in connection with the Merger Agreement, as a
condition to the willingness of L-1 and Merger Sub to enter into the Merger
Agreement, and as an inducement and in consideration therefor, L-1 and Merger
Sub entered into the Support Agreements with the Stockholders. Pursuant to his
respective Support Agreement, each Stockholder has agreed at any meeting of the
stockholders of the Company, and at any adjournment thereof, and on every action
or approval by written consent of the stockholders of the Company, to vote all
shares of Common Stock beneficially owned by the Stockholder (or to cause them
to be voted) or (as appropriate) execute written consents in respect thereof:
(i) in favor of the adoption of the Merger Agreement and approval of the
transactions contemplated thereby, (ii) in favor of the Spin-Off and associated
restructuring (to the extent to be voted upon by the Company's stockholders),
(iii) against any agreement (including, without limitation, any amendment of any
agreement), amendment of the Company's organizational documents or other action
that is intended or could reasonably be expected to prevent, impede, interfere
with, materially delay, postpone or discourage the consummation of the Merger
and (iv) against any takeover proposal. The Support Agreements shall terminate
automatically on the first to occur of (i) the written consent of L-1, Merger
Sub and such Stockholder to terminate his respective Support Agreement, (ii) the
termination of the Merger Agreement in accordance with its terms and (iii) the
effective time of the Merger.
Pursuant to his respective Support Agreement, each Stockholder
irrevocably appointed each executive officer of L-1 as the Stockholder's
attorney-in-fact and proxy, with full power of substitution, to vote, express
consent or dissent or otherwise to exercise all voting and related rights with
Page 4 of 6
respect to such Stockholder's shares at every annual, special or adjourned
meeting of the stockholders of the Company, and in every written consent in lieu
of any such meeting, to the extent described above.
Other than as described above, L-1 has no plans or proposals which
relate to, or may result in, any of the matters described in subparagraphs (a)
through (j) of Item 4 of Schedule 13D.
The summaries of the Merger Agreement and the Support Agreements
contained in this Item 4 are qualified in their entirety by reference to the
Merger Agreement and the Support Agreements, each of which is incorporated
herein by reference. Copies of the Merger Agreement and Form of Support
Agreement were filed with the Securities and Exchange Commission on March 25,
2008, as Exhibits 2.1 and 10.1, respectively, to L-1's Current Report on Form
8-K.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Pursuant to the Support Agreements, L-1 may be deemed to
beneficially own 3,831,156 shares of Common Stock, which represents 15.23% of
the beneficial ownership of the Company, which is calculated based on a total of
22,177,235 shares of Common Stock issued and outstanding as of March 21, 2008,
which number of total outstanding shares is based on the representations made by
the Company in the Merger Agreement, plus 2,976,832 Option Shares that are
subject to the Support Agreements. The reported beneficial ownership is
comprised of (i) 854,324 shares of Common Stock (including restricted stock)
that are subject to the Support Agreements and (ii) 2,976,832 Option Shares that
are subject to the Support Agreements. 1,682,250 of such Option Shares are Out
of the Money Options Shares and 1,294,582 of such Option Shares are In the Money
Options Shares. The number of shares of Common Stock (including restricted
stock) subject to the Support Agreements and the number of In the Money Option
Shares subject to the Support Agreements reflect, in the aggregate,
approximately 8.54% of the beneficial ownership of the Company. Neither the
filing of this Statement nor any of its contents shall be deemed to constitute
an admission by L-1 that it is the beneficial owner of any Common Stock referred
to herein for purposes of the Exchange Act, or for any other purpose, and such
beneficial ownership is expressly disclaimed.
(b) Pursuant to the Support Agreements and the limited proxies granted
therein, L-1 may be deemed to have shared power to vote 3,831,156 shares of
Common Stock held beneficially by the Stockholders.
(c) Neither L-1 nor, to the knowledge of L-1, any of the Schedule 1
Persons, has effected any transaction in the Common Stock during the past 60
days.
(d) The Stockholders are the record owners of the shares of Common
Stock covered by the Support Agreements that L-1 may be deemed to beneficially
own. Each Stockholder has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the shares of
Common Stock covered by his respective Support Agreement.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Except for the arrangements described in Items 3, 4 or 5 of this
Statement, there are no contracts, arrangements, understandings or relationships
(legal or otherwise) between L-1 or, to the knowledge of L-1, any of the
Schedule 1 Persons and any other person, with respect to any securities of the
Company, including, but not limited to, transfer or voting of any of the
securities, finders' fees, joint ventures, loan or option arrangements, puts or
calls, guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
Page 5 of 6
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A 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 (incorporated by reference to Exhibit 2.1
to L-1's Current Report on Form 8-K, as filed with the
Securities and Exchange Commission on March 25, 2008)
Exhibit B Form of Support Agreement (incorporated by reference to Exhibit
10.1 to L-1's Current Report on Form 8-K, as filed with the
Securities and Exchange Commission on March 25, 2008)
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
Page 6 of 6
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement on Schedule 13D is
true, complete and correct.
Dated: April 2, 2008
L-1 IDENTITY SOLUTIONS, INC.
By: /s/ Robert V. LaPenta
-----------------------------------
Name: Robert V. LaPenta
Title: Chairman, President and
Chief Executive Officer
SCHEDULE 1
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Set forth below is the name, business address, present principal occupation or
employment and the name, principal business and address of any organization in
which such employment is conducted of each director and executive officer of
L-1. Unless otherwise indicated, the business address of each person listed
below is 177 Broad Street, Stamford, Connecticut 06901.
DIRECTORS
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
Robert V. LaPenta Chairman; President and Chief Executive Officer
of L-1
B.G. Beck Director; Member of the board of directors of
Cardinal Financial Corporation
Denis K. Berube Director; Executive Vice President and Chief
Operating Officer of Lau Technologies(1)
Milton E. Cooper Director; Retired
Robert S. Gelbard Director; Chairman of Washington Global
Partners, LLC(2)
Malcolm J. Gudis Director; Chancellor of the board of trustees of
The Episcopal School of Dallas
John E. Lawler Director; President of East/West Financial
Services, Inc.; Co-founder and Chief Executive
Officer of Sterling Wealth Management, Inc.(3)
James M. Loy Director; Senior Counselor at The Cohen Group(4)
Harriet Mouchly-Weiss Director; Founder and Managing Partner of
Strategy XXI, Ltd.(5)
Peter Nessen Director; President of Nessen Associates
Ltd.(6)
B. Boykin Rose Director; Appointee to South Carolina Education
Lottery Commission
George J. Tenet Director; Managing Director at Allen &
Company(7)
EXECUTIVE OFFICERS
(WHO ARE NOT DIRECTORS)
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
Joseph Atick Executive Vice President, Chief Strategy Officer
James A. DePalma Executive Vice President, Chief Financial
Officer and Treasurer
Doni L. Fordyce Executive Vice President, Corporate
Communications
Mark S. Molina Executive Vice President, Chief Legal Officer
and Secretary
Joseph Paresi Executive Vice President, Chief Marketing
Officer
Vincent A. D'Angelo Senior Vice President, Finance, and Chief
Accounting Officer
(1) Lau Technologies is engaged in the marketing and sale of defense
electronics and facial recognition technologies. The address of Lau
Technologies is 30 Porter Road, Littleton, Massachusetts 01460.
(2) Washington Global Partners is an international business consulting firm.
The address of Washington Global Partners, LLC is 815 Connecticut Avenue,
N.W., Suite 820, Washington, District of Columbia 20006.
(3) East/West Financial Services, Inc. is a diversified financial management
and business consulting firm. The address of East/West Financial Services,
Inc. is 1497 Chain Bridge Road, Suite 304, McLean, Virginia 22101.
(4) The Cohen Group is a firm providing global business consulting services.
The address of The Cohen Group is 500 Eighth St. NW, Suite 200, Washington,
District of Columbia 20004.
(5) Strategy XXI, Ltd. is an international communications and consulting firm.
The address of Strategy XXI, Ltd. is 515 Madison Avenue, 34th Floor, New
York, New York 10022.
(6) Nessen Associates Ltd. is a non-profit consulting company. The address of
Nessen Associates Ltd. is 1 Exeter Plaza, Boston, Massachusetts 02116.
(7) Allen & Company is an investment bank and financial advisory firm. The
address of Allen & Company is 711 5th Avenue, 9th Floor, New York, New York
10022.