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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) October 26, 2000
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Dense-Pac Microsystems, Inc.
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(Exact name of registrant as specified in its charter)
California 0-14843 33-0033759
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
7321 Lincoln Way, Garden Grove, California 92641
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 898-0007
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Not Applicable
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(Former Name or former address, if changed, since last report)
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Item 2. Acquisition or Disposition of Assets
Acquisition of Productivity Enhancement Products, Inc.
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(a) On October 19, 2000, Dense-Pac Microsystems, Inc., a California
corporation (the "Registrant"), issued a news release which announced that the
Registrant would acquire Productivity Enhancement Products, Inc. ("PEP")., a
California corporation, and on October 26, 2000, the Registrant, PEP and PEP's
sole Shareholder (the "Shareholder") executed a share exchange agreement,
effective October 26, 2000 ("Share Exchange Agreement"). The Registrant's news
release concerning the acquisition is attached as Exhibit 99.1 hereto and
incorporated herein by this reference.
The Share Exchange Agreement was entered into among the parties as part of
a unified plan of, among other things, a redemption by PEP of a portion of its
outstanding stock from its Shareholder and finally the transfer of PEP stock by
the Shareholder to the Registrant in exchange for shares of the Registrant's
Common Stock. The Share Exchange Agreement is attached as Exhibit 2.1 hereto and
incorporated herein by this reference.
The Registrant acquired no interest in any shares of WatchGuard
Technologies, Inc.'s common stock that PEP had previously owned. The Shareholder
also assumed from PEP the $700,000 principal amount of all indebtedness and
related obligations due from PEP to Merrill Lynch & Co., Inc, thereby having PEP
released and relieved from all such obligations.
In anticipation of the Share Exchange Agreement, the Registrant furnished
PEP with funds to repay PEP's outstanding balance of loans from US Bank in the
aggregate amount of $214,139.84, in exchange for PEP entering into a security
agreement and secured promissory note with the Registrant. PEP also executed
secured promissory notes made payable to the Registrant under which PEP promised
to repay an aggregate of$584,139.84 in the manner and on the terms set forth
therein, which was borrowed to pay PEP expenses and liabilities and its
employees for all options vesting through September 30, 2001.
On October 26, 2000, the closing of the exchange of shares pursuant to
Share Exchange Agreement was consummated. In connection therewith, the
Registrant executed and tendered to the Shareholder a registration rights
agreement ("Registration Rights Agreement") for which Registrant agreed to
register the 884,167 shares received by the Shareholder on Form S-3 for a period
ending when those shares shall have been sold or could be resold by the
Shareholder immediately pursuant to Rule 144. And the Shareholder executed and
tendered to the Registrant and PEP a non-compete agreement ("Non-Compete
Agreement"). Registration Rights Agreement and Non-Compete Agreement are
attached hereto as Exhibit 2.2 and Exhibit 2.3, respectively, and incorporated
herein by this reference.
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The execution of the Share Exchange Agreement resulted in the Registrant
owning all of the outstanding shares of PEP, in exchange for 884,167 shares of
the Registrant's authorized and previously unissued common stock. Fifteen
percent (15%) of the Registrant's shares issued at the closing were deposited by
the Shareholder with the Secretary of the Registrant to secure indemnification
obligations of PEP and the Shareholder. Such indemnification shares are deemed
to be pledged by the Shareholder to the Secretary of the Registrant or any
successor thereto pursuant to the Share Exchange Agreement for a period ending
on the earlier of June 30, 2001 or 30 days after the Registrant files with the
Securities and Exchange Commission or publishes its fiscal year 2001 audited
consolidated financial statements.
(b) The Registrant intends to continue to operate the acquired business as
a stand-alone subsidiary, operating its property, plant and equipment in Orange
County, California. The Registrant's news release concerning the acquisition is
attached as Exhibit 99.1 hereto and incorporated herein by this reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired.
To be filed by amendment.
(b) Unaudited Pro Forma Financial Information.
To be filed by amendment.
(c) Exhibits.
2.1 Share Exchange Agreement dated October 26, 2000 among the
Registrant, PEP and the Shareholder (excluding disclosure
schedules).
2.2 Registration Rights Agreement dated October 26, 2000 between
the Registrant and the Shareholder.
2.3 Non-Compete Agreement dated October 26, 2000 between the
Registrant, PEP and the Shareholder.
99.1 News Release dated October 19, 2000 relating to the
acquisition of Productivity Enhancement Products, Inc.
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SIGNATURES
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 hereunto duly authorized.
DENSE-PAC MICROSYSTEMS, INC.
(Registrant)
Date: November 10, 2000 By: /s/ TED BRUCE
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Ted Bruce,
Chief Executive Officer
And President
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DENSE-PAC MICROSYSTEMS, INC.
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
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2.1 Share Exchange Agreement dated October 26, 2000 among the
Registrant, PEP and the Shareholder.
2.2 Registration Rights Agreement dated October 26, 2000 between the
Registrant and the Shareholder.
2.3 Non-Compete Agreement dated October 26, 2000 among the Registrant,
PEP and the Shareholder.
99.1 News Release dated October 19, 2000 relating to the acquisition of
Productivity Enhancement Products, Inc.
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EXHIBIT 2.1
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (the "Agreement") is made as of October 26,
2000, by and among Productivity Enhancement Products, Inc., a California
corporation ("PEP" or "PEP Corporation"), the sole shareholder of PEP
Corporation, Danny M. Beadle ("Dan" or the "Shareholder"), and Dense-Pac
Microsystems, Inc., a California corporation (the "Company").
RECITALS
A. The Shareholder is the holder of all of the issued and outstanding
capital stock of PEP Corporation (the "PEP Stock").
B. The Board of Directors of PEP has approved, and the sole Shareholder has
ratified, a dividend (the "Dividend") paid or payable in shares of WatchGuard
Technologies, Inc. ("WatchGuard") common stock (Nasdaq: WGRD) held of record by
PEP, in an amount and at a time determined by the Board of Directors of PEP.
C. The Shareholder has assumed or will assume (the "Assumption") from PEP
the principal amount of all indebtedness and related obligations due from PEP to
Merrill Lynch & Co., Inc. ("Merrill Lynch"), and PEP shall be released and
relieved from all such obligations.
D. PEP has effected or will effect prior to the Closing (as defined below)
a redemption (the "Redemption") of a portion of the shares of PEP Stock held by
the Shareholder. The Redemption price will be payable in the form of shares of
the WatchGuard common stock held of record by PEP. The Redemption will result in
a distribution to the Shareholder or his nominees or assigns of all of the
remaining WatchGuard shares then held by PEP and all of the rights, interests
and titles of PEP therein or related thereto. The Redemption price and time has
been or shall be determined by mutual agreement of PEP and the Shareholder.
E. Following the Redemption, the Company proposes to acquire all of the
then outstanding PEP Stock from the Shareholder, and the Shareholder proposes to
transfer his PEP Stock to the Company in exchange for shares of the Company's
Common Stock.
F. This Agreement is being entered into by the parties as part of a unified
plan of, among other things, (A) a redemption by PEP of a significant portion of
the presently outstanding PEP Stock held by Dan, which is intended by the
parties to qualify as a distribution "not substantially equivalent to a
dividend," and (B) the exchange of stock referred to in recital E. above that is
intended by the parties to qualify for non-recognition treatment under Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code").
G. The parties intend to treat the foregoing transaction as a "purchase"
for accounting purposes.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the
respective promises of the parties set forth herein, the parties hereto agree as
follows:
