Amendment: SEC Form SC 13D/A filed by CompoSecure Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 2)*

COMPOSECURE, INC.

(Name of Issuer)

Class A Common Stock, $0.0001 par value per share

(Title of Class of Securities)

77584N101

(CUSIP Number)

Joshua Loftus

LLR Capital IV, LLC

2929 Arch Street, Suite 2700

Philadelphia, Pennsylvania 19104

Tel No: 215-717-2904

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

August 7, 2024

(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 that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-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).

(1)  Consists of Consists of 28,519,690 shares of Class B Common Stock, par value $0.0001 per share, which is unregistered (the “Class B Common Stock”) and a corresponding number of Class B Common Units, issued by CompoSecure Holdings, L.L.C., a subsidiary of the Issuer, which are also unregistered (the “Class B Common Units”), that are exchangeable for Class A Common Stock, par value $0.0001 per share (the “Class A Common Stock”) on a share-for-share basis, subject to adjustment, and a corresponding cancellation of the Class B Common Stock, held by LLR Equity Partners IV, L.P. (“Equity Partners IV LP”). LLR Capital IV, L.P. (“Capital IV LP”) serves as the general partner of Equity Partners IV LP. LLR Capital IV, LLC (“Capital IV LLC”) serves as the general partner of Capital IV LP. As a result, each of Capital IV LP and Capital IV LLC possesses shared voting and dispositive power over the securities held by Equity Partners IV LP.

(2)  Based upon (a) 28,682,837 shares of Class A Common Stock and (b) 51,908,422 shares of Class B Common Stock that were outstanding as of May 13, 2024, as disclosed in the Issuer’s prospectus supplement dated May 8, 2024 and filed with the Securities and Exchange Commission (the “SEC”) on May 9, 2024 (the “Prospectus Supplement”).

(1)  Consists of 1,254,568 shares of Class B Common Stock and a corresponding number of Class B Common Units that are exchangeable for Class A Common Stock on a share-for-share basis, subject to adjustment and a corresponding cancellation of the Class B Common Stock held by LLR Equity Partners Parallel IV L.P. (“Equity Partners Parallel IV LP”). Capital IV LP serves as the general partner of Equity Partners Parallel IV LP. Capital IV LLC serves as the general partner of Capital IV LP. As a result, each of Capital IV LP and Capital IV LLC possesses shared voting and dispositive power over the securities held by Equity Partners Parallel IV LP.

(2)  Based upon (a) 28,682,837 shares of Class A Common Stock and (b) 51,908,422 shares of Class B Common Stock that were outstanding as of May 13, 2024, as disclosed in the Prospectus Supplement.

(1)  Consists of (i) 28,519,690 shares of Class B Common Stock, and a corresponding number of Class B Common Units that are exchangeable for Class A Common Stock, on a share-for-share basis, subject to adjustment, and a corresponding cancellation of the Class B Common Stock, held by Equity Partners IV LP and (ii) 1,254,568 shares of Class B Common Stock and a corresponding number of Class B Common Units that are exchangeable for Class A Common Stock on a share-for-share basis, subject to adjustment and a corresponding cancellation of the Class B Common Stock held by Equity Partners Parallel IV LP. Capital IV LP serves as the general partner of each of Equity Partners IV LP and Equity Partners Parallel IV LP. Capital IV LLC serves as the general partner of Capital IV LP. As a result, each of Capital IV LP and Capital IV LLC possesses shared voting and dispositive power over the securities held by Equity Partners IV LP and Equity Partners Parallel IV LP.

(2)  Based upon (a) 28,682,837 shares of Class A Common Stock and (b) 51,908,422 shares of Class B Common Stock that were outstanding as of May 13, 2024, as disclosed in the Prospectus Supplement.

(1)  Consists of (i) 28,519,690 shares of Class B Common Stock, and a corresponding number of Class B Common Units that are exchangeable for Class A Common Stock, on a share-for-share basis, subject to adjustment, and a corresponding cancellation of the Class B Common Stock, held by Equity Partners IV LP and (ii) 1,254,568 shares of Class B Common Stock and a corresponding number of Class B Common Units that are exchangeable for Class A Common Stock on a share-for-share basis, subject to adjustment and a corresponding cancellation of the Class B Common Stock held by Equity Partners Parallel IV LP. Capital IV LP serves as the general partner of each of Equity Partners IV LP and Equity Partners Parallel IV LP. Capital IV LLC serves as the general partner of Capital IV LP. As a result, each of Capital IV LP and Capital IV LLC possesses shared voting and dispositive power over the shares of Class B Common Stock held by Equity Partners IV LP and Equity Partners Parallel IV LP.

(2)  Based upon (a) 28,682,837 shares of Class A Common Stock and (b) 51,908,422 shares of Class B Common Stock that were outstanding as of May 13, 2024, as disclosed in the Prospectus Supplement.

Item 1. Security and Issuer

This Amendment No. 2 (“Amendment No. 2”) amends the Statement on Schedule 13D filed with the SEC on December 29, 2021, as amended on May 14, 2024 (the “Original Statement”), which relates to the Class A Common Stock of CompoSecure, Inc., a Delaware corporation (the “Issuer”), whose principal executive offices are located at 309 Pierce Street, Somerset, NJ 08873. Information given in response to each item shall be deemed incorporated by reference in all other items, as applicable.

Except as otherwise described herein, the information contained in the Original Statement remains in effect. Capitalized terms used but not defined in this Amendment No. 2 shall have the respective meanings set forth with respect thereto in the Original Statement.

Item 2. Identity and Background

No changes.

Item 3. Source and Amount of Funds or Other Consideration

No changes.

Item 4. Purpose of Transaction

No changes, except as set forth below.

Stock Purchase Agreement. On August 7, 2024, Equity Partners IV LP and Equity Partners Parallel IV LP entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Tungsten 2024 LLC (“Tungsten”), pursuant to which Equity Partners IV LP and Equity Partners Parallel IV LP agreed to (i) exchange all of their Class B Common Units for shares of Class A Common Stock (with all of their shares of Class B Common Stock being automatically cancelled for no consideration upon such exchange by operation of the Issuer’s certificate of incorporation) (the “Exchange”), and (ii) sell to Tungsten an aggregate of 29,774,258 shares of Class A Common Stock to be owned by Equity Partners IV LP and Equity Partners Parallel IV LP immediately following the Exchange (representing all of the shares of Class A Common Stock to be issued to Equity Partners IV LP and Equity Partners Parallel IV LP in the Exchange) for a purchase price of $7.55 per share of Class A Common Stock.

Closing of the transactions contemplated by the Purchase Agreement (the “Closing”), including the Exchange and subsequent sale of the related shares of Class A Common Stock to Tungsten, is subject to the satisfaction or waiver of certain conditions, which include, among others: (i) the absence of laws, orders or judgments making illegal, prohibiting or otherwise preventing the consummation of such transactions; (ii) the expiration or termination of the applicable waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (iii) the operation of the Issuer in the ordinary course of business in all material respects between the date of the Purchase Agreement and the Closing; (iv) the acquisition of a majority of the outstanding Class A Common Stock of the Issuer by Tungsten pursuant to the Purchase Agreement and certain other stock purchase agreements entered into by Tungsten with holders of the Class B Common Units (collectively, the “Share Acquisition”) and no Class B Common Units outstanding as of the Closing; (v) the size of the Issuer’s Board of Directors being increased to eleven, including six directors to be designated by Tungsten, in accordance with that certain letter agreement, dated as of August 7, 2024, entered into between the Issuer and Tungsten in order to establish the terms of and ensure an orderly transition of governance of the Issuer; and (vi) the accuracy of certain representations and warranties, subject to certain customary materiality standards set forth in the Purchase Agreement, and compliance in all material respects with the other party’s obligations under the Purchase Agreement.

Prior to the Closing, Equity Partners IV LP and Equity Partners Parallel IV LP have agreed not to sell or otherwise transfer any of their Class B Common Units, or shares of their Class B Common Stock or Class A Common Stock acquired upon the Exchange, subject to certain limited exceptions.

The Purchase Agreement contains customary representations, warranties and covenants of Equity Partners IV LP and Equity Partners Parallel IV LP, on the one hand, and Tungsten, on the other hand. The Purchase Agreement also provides for certain termination rights, including the right of each party to terminate the Purchase Agreement if the Closing has not occurred before November 5, 2024.

Amendment to Tax Receivable Agreement

Concurrently with entering into the Purchase Agreement, Equity Partners IV LP, Equity Partners Parallel IV LP, certain other holders of Class B Common Units, the Issuer and Holdings entered into Amendment No. 1 to Tax Receivable Agreement (the “TRA Amendment”), pursuant to which, among other things, the TRA Parties (as defined therein) have agreed to forego the acceleration of certain payments that may have otherwise been payable to the TRA Parties by the Issuer as a result of the Share Acquisition. The TRA Amendment also provides for an increase in the discount rate applicable to any future early termination payments pursuant to the Tax Receivable Agreement, resulting in a decrease in the amount of any such potential payments that the TRA Parties would otherwise be entitled to receive. The TRA Amendment is contingent upon the Closing and will become effective subject to, and effective upon, the Closing.

Termination of Stockholders Agreement

Subject to and effective upon the Closing, the Stockholders Agreement by and among the Issuer, Equity Partners IV LP, Equity Partners Parallel IV LP, and certain other stockholders of the Issuer named therein, will terminate. Pursuant to the terms of the Stockholders Agreement, Equity Partners IV LP is entitled to designate one member (the “LLR Designee”) of the Issuer’s Board of Directors, who serves as Chair of the Board. Mitchell Hollin is the current LLR Designee. In connection with the transactions contemplated by the Purchase Agreement, Mr. Hollin submitted his resignation as a member of the Issuer’s Board of Directors and Chairman of the Board, which is contingent upon the Closing and will be effective immediately prior thereto.

The foregoing descriptions of the Purchase Agreement and the TRA Amendment are not complete, and are qualified in their entirety by the full text of the Purchase Agreement and the TRA Amendment which are attached hereto as Exhibit 9 and 10, respectively, and the terms of which are incorporated herein by reference.

Item 5. Interest in Securities of the Issuer

(a)-(b). No changes.

(c)  There have been no reportable transactions with respect to the Common Stock of the Issuer within the last 60 days, except as described in this Schedule 13D.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

No changes, except as set forth below.

The information set forth in Item 4 is incorporated by reference in its entirety into this Item 6.

Item 7. Material to be Filed as Exhibits

* Schedules have been omitted. The Reporting Persons hereby undertake to furnish supplemental copies of any of the omitted schedules upon request by the SEC; provided, however, that the Reporting Persons may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934 for any schedules so furnished.

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Date: August 9, 2024