Material Agreement Form 8 K

Background

As previously announced on a Current Report on Form 8-K, on August 7, 2024 the Class B stockholders of CompoSecure, Inc. (the "Company") entered into stock purchase agreements (each, a "stock purchase agreement") with Resolute Holdings I, LP and its affiliated vehicles ("Resolute"), an investment firm led by David Cote and Tom Knott, pursuant to which Resolute will acquire a majority interest in the Company in privately negotiated sales and eliminate the Company's dual-class structure (the "Transaction"). The Company is not party to the stock purchase agreements.

Pursuant to the terms of the stock purchase agreements, each Class B stockholder party thereto (the "Selling Holder") has agreed with Resolute to (i) exchange all of such Selling Holder's Class B Common Units of CompoSecure Holdings, L.L.C. ("Holdings"), a subsidiary of the Company, for shares of Class A Common Stock of the Company (with all of such Selling Holder's shares of Class B Common Stock being automatically cancelled for no consideration upon such exchange by operation of the Company's certificate of incorporation), and (ii) subsequently sell to Tungsten 2024 LLC ("Buyer"), an investment entity affiliated with Resolute, an agreed number of shares of Class A Common Stock of the Company to be owned by the Selling Holder immediately following such exchange. The Selling Holders shall initiate the exchange of their Class B Common Units pursuant to the terms of the existing Exchange Agreement, dated as of December 27, 2021, by and among the Company, Holdings and the holders of Class B Units from time to time party thereto (the "Exchange Agreement"), and shall sell all or a portion of such resulting shares of Class A Common Stock to Buyer in a series of privately negotiated sales.

The Selling Holders who have delivered stock purchase agreements to Resolute include but are not limited to: (a) LLR Equity Partners IV, L.P., a Delaware limited partnership, LLR Equity Partners Parallel IV, L.P., a Delaware limited partnership (such persons set forth in this clause (a), collectively, "LLR"), which are entities affiliated with or controlled by Mitchell Hollin, who is a member of our Company's board of directors (the "Board"), (b) Ephesians 3:16 Holdings LLC, a Delaware limited liability company, Carol D. Herslow Credit Shelter Trust B, and Michele D. Logan, who is a member of our Board (such persons set forth in this clause (b), collectively, ("Logan") and (c) CompoSecure Employee, L.L.C., an entity controlled by Jonathan C. Wilk, our Chief Executive Officer ("Wilk LLC"). It is anticipated that each of Ms. Logan and Mr. Wilk will retain an ownership interest in the Company's Class A Common Stock following the Transaction.

Following the closing of the transactions contemplated by the stock purchase agreements between each of the Selling Holders and Resolute (the "Closing"), Resolute will own a majority of the Company's Class A Common Stock. The Transaction is subject to the entry into certain agreements as more fully described below, other customary closing conditions and regulatory approval, including Hart-Scott-Rodino clearance. If the Transaction is completed, it is anticipated that such change in control will result in a "Fundamental Change" with respect to the Company's exchangeable notes issued pursuant to the Indenture, dated as of December 27, 2021.

In light of the personal interests in the Transaction of each of Mr. Hollin, Ms. Logan and Mr. Wilk, the Company formed a special committee of the Board comprised solely of independent and disinterested directors (the "Special Committee") to evaluate the impact of the Transaction to the Company and the minority stockholders of the Company. After receiving advice from the Special Committee's legal counsel and financial advisor, and after negotiations and discussions with the relevant parties to the Transaction, the Special Committee unanimously approved the proposed transactions to which the Company and Holdings (collectively, "CompoSecure") is a party. The Special Committee was advised by Potter Anderson & Corroon LLP (Wilmington, DE) and Houlihan Lokey Capital, Inc.

Although the Company is not party to the stock purchase agreements, in connection with the Transaction, upon authorization and approval by the Special Committee, the Company and certain of its affiliates have entered into a Letter Agreement and an Amendment to the Tax Receivable Agreement, each as defined below: