Attached files
Exhibit 3.2
AMENDMENT NO. 1
TO THE
CERTIFICATE OF DESIGNATIONS,
PREFERENCES, AND RIGHTS
OF THE SERIES E CONVERTIBLE PREFERRED STOCK
OF
IMAGEWARE SYSTEMS, INC.,
A Delaware corporation
Pursuant to Section 228(a) of the
Delaware General Corporation Law
On behalf of ImageWare Systems, Inc., a Delaware
corporation (the “Company”), in accordance with the
provisions of the Delaware General Corporation Law (the
“DGCL”),
the Company's Board of Directors and the holders of 79 % of the
issued and outstanding shares of Company’s Series E
Convertible Preferred Stock (the “Series
E Preferred”) have duly
approved and adopted the following resolution amending the
Certificate of Designations, Preferences and Rights of the Series E
Convertible Preferred Stock (the “Certificate
of Designation”):
RESOLVED, that, pursuant to the authority granted to and
vested in the Board by the provisions of the Certificate of
Incorporation of the Company, as amended (the
“Certificate of
Incorporation”):
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1.
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Section
2(a)(i) of the Certificate of Designation shall be deleted in its
entirety and replaced with the following:
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(i) The
holders of record of shares of Series E Preferred shall be entitled
to receive, out of any assets at the time legally available
therefore, cumulative dividends at the rate of eight percent (8%)
of the stated Liquidation Preference Amount (as defined in Section
4 hereof) per share per annum, commencing on the Issuance Date and
payable quarterly in arrears on each of March 31, June 30,
September 30 and December 31 (each, a “Dividend Payment
Date”), at the option of
the Company in cash or through the issuance of shares of Common
Stock; provided, however,
that the Company may only pay
dividends in cash received by the Company from positive cash flows
resulting from operations. In the event that the Company elects to
pay dividends in shares of Common Stock, the number of shares of
Common Stock to be issued to each applicable holder shall be
determined by dividing the total dividend then being paid to such
holder in shares of Common Stock by the Price Per Share (as defined
below) as of the applicable Dividend Payment Date, and rounding up
to the nearest whole share. As used herein,
“Price Per
Share” means, with
respect to a share of Common Stock, (a) if such Common Stock is
listed on a national securities exchange in the United States, the
three (3) consecutive trading day average of the daily average of
the high and low sale prices per share of the Common Stock on such
national securities exchange in the United States immediately
preceding the relevant date, as published by
the Wall Street
Journal or other reliable
publication, (b) if a public market exists for such shares of
Common Stock but such shares are not listed on a national
securities exchange in the United States, the three (3) consecutive
trading day average of the daily mean between the closing bid and
asked quotations in the over-the-counter market for a share of such
Common Stock in the United States immediately preceding the
relevant Dividend Payment Date, or (c) if such Common Stock is
not then listed on a national securities exchange and not traded in
the over-the-counter market, the price per share of Common Stock
determined in good faith by the Board of Directors of the Company
in consultation with the holders of Series E Preferred (the
“Dividend
Shares”);
provided, however, that in the event the Company elects to pay any
dividend payable on any such Dividend Payment Date in Dividend
Shares, the cumulative dividend rate shall be ten percent (10%) of
the stated Liquidation Preference Amount per
annum.
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2.
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Section
2(a)(iii) of the Certificate of Designation shall be deleted in its
entirety and replaced with the following:
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(iii)
Beginning on July 1, 2017, in the event the Company has paid
dividends hereunder in Dividend Shares for four or more consecutive
prior quarterly periods, holders of more than fifty percent (50%)
of the issued and outstanding shares of Series E Preferred shall
have the right to immediately appoint two (2) directors (the
“Purchaser
Designees”) to the Company’s Board of Directors,
subject to approval by the Company’s Board of Directors,
which approval shall not be unreasonably withheld or delayed. The
Company shall use its best efforts to ensure that the Purchaser
Designees continue to be elected to the Board of Directors for so
long as the holders exercising the right under this Section
2(a)(iii) beneficially own at least fifty percent (50%) of the
Company’s issued and outstanding shares of Series E
Preferred, calculated as of the Issuance Date. In no event will the
payment of dividends in Dividend Shares accrued for the quarterly
periods ending December 31, 2016 and March 31, 2017 entitle the
appointment of the Purchaser Designees to the Company’s Board
of Directors.
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2.
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The
defined term “Permitted Indebtedness”, defined in
Section 9 of the Certificate of Designation, shall be deleted in
its entirety and replaced with the following:
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“Permitted
Indebtedness” means (x)
all indebtedness of the Company now or hereafter outstanding that
does not constitute Indebtedness for purposes of this Section 9;
(y) any commercial bank loan entered into by the Company after the
Issuance Date hereof in an amount not to exceed $2.0 million; and
(z) monies borrowed under credit lines of the Company existing on
the Issuance Date in an amount not to exceed $6.0
million.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS
WHEREOF, the undersigned have
duly signed this Amendment No. 1 to the Certificate of Designation
as of this 29th day of December 2016.
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ImageWare
Systems, Inc
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/s/ S. James
Miller
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By:
S.
James Miller
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Title:
Chief Executive
Officer and Director
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