Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): December 27, 2016
IMAGEWARE
SYSTEMS, INC.
(Exact name of Registrant as specified in its Charter)
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Delaware
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001-15757
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33-0224167
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(State
or other jurisdiction
of
incorporation)
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(Commission
File No.)
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(IRS
Employer
Identification
No.)
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10815 Rancho
Bernardo Road, Suite 310, San Diego, California
92127
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(Address
of principal executive offices)
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(858)
673-8600
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(Registrant’s
Telephone Number)
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Not
Applicable
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(Former
name or address, if changed since last report)
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☐
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
240.14a-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 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
See
Item 3.02 and Item 5.02 below.
Item 3.02 Unregistered Sales of Equity Securities.
Creation of Series G Convertible Preferred Stock
On December 27, 2016, ImageWare Systems, Inc. (the
“Company”) filed the Certificate of Designations,
Preferences, and Rights of the Series G Convertible Preferred Stock
(“Certificate of
Designations”) with the
Delaware Division of Corporations, designating 6,120 shares of the
Company’s preferred stock, par value $0.01 per share, as
Series G Convertible Preferred Stock (“Series G
Preferred”). Shares of
Series G Preferred rank junior to the Company’s Series B
Convertible Redeemable Preferred Stock, Series E Convertible
Preferred Stock, Series F Convertible Preferred Stock as well as
the Company’s existing indebtedness, and accrue dividends at
a rate of 10% per annum, payable on a quarterly basis in shares of
the Company’s common stock, par value $0.01 per share
(“Common
Stock”). Each share of
Series G Preferred has a liquidation preference of $1,000 per share
(“Liquidation
Preference”), and is
convertible, at the option of the holder, into that number of
shares of the Company’s Common Stock equal to the Liquidation
Preference, divided by $1.50 (the “Conversion
Shares”).
Amendment of Series E Preferred Certificate of
Designations
On
December 29, 2016, the Company filed Amendment No. 1 to the
Certificate of Designations, Preferences and Rights of the Series E
Convertible Preferred Stock (the “Series E Amendment”) with the
Delaware Division of Corporations. The Series E Amendment made the
following changes to the Certificate of Designations, Preferences
and Rights of the Series E Convertible Preferred Stock: (i) the
Company may only make dividend payments in cash received from
positive cash flow from operations; (ii) beginning on July 1, 2017,
in the event the Company pays accrued dividend payments in shares
of Common Stock for more than four consecutive quarterly periods,
holders of shares of Series E Preferred will have the right to
immediately appoint two designees to the Company’s Board of
Directors (the “Director
Appointment Provision”); (iii) dividend payments
incurred on December 31, 2016 and March 31, 2017 may be paid in
shares of Common Stock, without triggering the Director Appointment
Provision; and (iv) the term Permitted Indebtedness (as defined in
the Series E Certificate of Designations) was revised to cover
permitted borrowings of up to $6.0 million.
Amendment of Line of Credit
On
December 27, 2016, the Company and Neal Goldman, a member of the
Company’s Board of Directors (the “Holder”), agreed to enter
into the
fifth amendment (the “Line
of Credit Amendment”) to the
convertible promissory note previously issued by the Company to the
Holder on March 27, 2013 (the “Goldman
Line of Credit”), to provide
the Company with the ability to borrow up to $5.5 million under the
terms of the Goldman Line of Credit, bringing the total amount the
Company may borrow under its existing lines of credit to $6.0
million. A copy of the Line of Credit Amendment will be attached as
an exhibit to the Company’s next periodic report filed under
the Securities Exchange Act of 1934, as
amended.
Series G Financing
On December 29, 2016, the Company accepted
subscription forms (the “Subscription
Form”) from certain
accredited investors (the “Investors”) to purchase a total of 1,625 shares of
Series G Preferred for $1,000 per share (the
“Series G
Financing”). In addition,
the Company also received executed Exchange Agreements (the
“Exchange
Agreement”) from the
Investors pursuant to which the Company exchanged an aggregate
total of approximately 3.3 million shares of Common Stock held by
the Investors for an aggregate total of approximately 4,400 shares
of Series G Preferred.
The
shares of Series G Preferred were offered and sold in transactions
exempt from registration under the Securities Act in reliance on
Sections 3(a)(9) and/or 4(2) thereof and Rule 506 of Regulation D
thereunder. The Investors each represented that it was an
“accredited investor” as defined in Regulation D, and
is not subject to the “Bad Actor” disqualifications
described in Rule 506(d). The issuance of the shares of Series G
Preferred pursuant to the Subscription Forms resulted in gross
proceeds to the Company of $1.625 million. The Company expects to
use these proceeds for general working capital
purposes.
The
foregoing descriptions of the Certificate of Designations, Series E
Amendment, Subscription Form and Exchange Agreement do not purport
to be complete, and are qualified in their entirety by reference to
the full text of the Certificate of Designations, Series E
Amendment, form of Subscription Form and form of Exchange
Agreement, attached hereto as Exhibits 3.1, 3.2, 10.1 and 10.2,
respectively, each of which are incorporated by reference
herein.
Item 5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
On December 28, 2016, the Company entered
into amendments to the employment agreements (the
“Employment Amendments”) for Messrs. S. James Miller, Jr., Wayne
Wetherell and David Harding, the Company's Chairman of the Board of
Directors and Chief Executive Officer, Chief Financial Officer, and
Chief Technical Officer, respectively. Effective October 20, 2016,
the term of each executive officer's employment agreement was
extended until December 31, 2017. A copy of each of the Amendments
is attached to this Current Report on Form 8-K as Exhibits 10.3,
10.4 and 10.5, and are incorporated by reference
herein.
Item 5.03 Amendments to Articles of
Incorporation or Bylaws; Change in Fiscal Year.
See
Item 3.02 above.
Item 9.01 Financial Statements and Exhibits.
See
Exhibit Index.
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.
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IMAGEWARE SYSTEMS, INC.
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Date:
December 30, 2016
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By:
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/s/ Wayne
Wetherell
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Wayne
Wetherell
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Chief
Financial Officer
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EXHIBIT INDEX
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Exhibit
Number
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Description
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3.1
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Certificate of Designations, Preferences, and Rights of the Series
G Convertible Preferred Stock, dated December 27, 2016
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3.2
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Amendment
No. 1 to the Certificate of
Designations, Preferences, and Rights of the Series E Convertible
Preferred Stock, dated December 29, 2016
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10.1
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Form of
Subscription Form
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10.2
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Form of
Exchange Agreement
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10.3
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Ninth
Amendment to Employment Agreement, by and between S. James Miller,
Jr. and ImageWare Systems, Inc., effective October 20,
2016
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10.4
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Fourth Amendment to Employment Agreement, by and between Wayne
Wetherell and ImageWare Systems, Inc., effective October 20,
2016
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10.5
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Fourth
Amendment to Employment Agreement, by and between David E. Harding
and ImageWare Systems, Inc., effective October 20,
2016
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