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): September 15, 2017
IMAGEWARE SYSTEMS, INC.
(Exact name of Registrant as specified in its Charter)
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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(Comission
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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Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
☐
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 8.01 below.
Item 3.02 Unregistered Sales of Equity Securities
See
Item 8.01 below.
Item 3.03 Material Modifications to Rights of Security
Holders
See
Item 8.01 below.
Item 5.02 Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain
Officers;
Compensatory Arrangements of Certain Officers
See
Item 5.03 below.
Item 5.03 Amendments to Articles of
Incorporation or Bylaws; Change in Fiscal Year
Creation of Series A Convertible Preferred Stock
On September 15, 2017, ImageWare Systems, Inc.
(the “Company”) filed the Certificate of Designations,
Preferences, and Rights of the Series A Convertible Preferred Stock
(“Certificate of
Designations”) with the
Delaware Division of Corporations, designating 31,021 shares of the
Company’s preferred stock, par value $0.01 per share, as
Series A Convertible Preferred Stock (“Series A
Preferred”). Shares of
Series A Preferred accrue dividends
annually at a rate of 8% if paid in cash, or 10% if paid by the
issuance of shares of the Company’s common stock, par value
$0.01 per share (“Common
Stock”)
(“Dividend
Shares”).
Shares of Series A Preferred rank
senior to the Company’s Common Stock, Series E Convertible
Preferred Stock (the “Series E
Preferred”), Series F
Convertible Preferred Stock (the “Series F
Preferred”), Series G
Convertible Preferred Stock (the “Series G
Preferred”), and junior
to the Company’s Series B Convertible Redeemable Preferred
Stock (the “Series B
Preferred”) and existing
indebtedness.
Each share of Series A Preferred has a liquidation
preference of $1,000 per share (“Liquidation
Preference”), and is
convertible into that number of shares of the Company’s
Common Stock equal to the Liquidation Preference, divided by $1.15
(the “Conversion
Shares”). Holders of
Series A Preferred may elect to convert shares of Series A
Preferred into Conversion Shares at any time. In the event the
volume-weighted average price (“VWAP”) of the Company’s Common Stock is at
least $2.15 per share for at least 20 consecutive trading days, the
Company may elect to convert one-half of the shares of Series A
Preferred issued and outstanding, on a pro-rata basis, into
Conversion Shares, or, if the VWAP of the Company’s Common
Stock is at least $2.15 for 80 consecutive trading days, the
Company may convert all issued and outstanding shares of Series A
Preferred into Conversion Shares. In addition, in the event of a
Change of Control (as such term is defined in the Certificate of
Designations), the Company will have the option to redeem all
issued and outstanding shares of Series A Preferred for 115% of the
Liquidation Preference per share.
Holders of Series A Preferred will have the right
to vote, on an as-converted basis, with the holders of the
Company’s Common Stock on any matter presented to the
Company’s stockholders for their action or consideration. In
addition, so long as at least 50% of the shares of Series A
Preferred issued on the Issuance Date (as such term is defined in
the Certificate of Designations) remain outstanding, holders of the
Series A Preferred will have the right to elect two directors to
the Company’s Board of Directors (the
“Series A
Directors”).
The foregoing description of the Series A
Preferred is qualified, in its entirety, by the full text of the
Certificate of Designations, a copy of which is attached to this
Current Report on Form 8-K as Exhibit 3.1, and is incorporated by reference
herein.
Appointment of the Series A Directors
On
September 15, 2017, Robert T. Clutterbuck and Charles Frischer were
appointed to serve as the Series A Directors, and will continue to
serve in such position until their respective successors are duly
elected and qualified by the holders of the Series A
Preferred.
Mr.
Clutterbuck is the Founder, and has served as the Managing Director
and Portfolio Manager at Clutterbuck Capital Management LLC, since
2006. Mr. Clutterbuck gained more than 30 years of experience at
McDonald & Company Investments, Inc., where he specialized in
advising affluent clients, professionals and corporate executives
on investment management, financial planning, estate preservation
and wealth transfer strategies. During his time at McDonald &
Company, Mr. Clutterbuck served as Chairman and Chief Executive
Partner of Key Capital Partners, and as Chief Executive Officer of
McDonald Investments Inc. from 2000 to 2002. Prior to 2000, Mr.
Clutterbuck served in several senior management positions within
McDonald Investments Inc., including as Chief Financial Officer and
Executive Managing Director of McDonald & Co. Securities, Inc.,
as Treasurer of McDonald & Co. Investments, Inc., and as
President and Chief Operating Officer of McDonald & Co.
Securities, Inc. Currently, Mr. Clutterbuck serves as an
Independent Director of Westmoreland Resources GP, LLC (NYSE:
WMLP), a position he has held since January 6, 2015. Mr. Clutterbuck holds a
B.A. from Ohio Wesleyan University and an M.B.A from the University
of Pennsylvania Wharton School of Business.
Mr. Frischer currently works as self-employed private investor, a
role he has occupied since 2009. Previously, Mr. Frischer served as
General Partner of LF Partners, LLC, from 2009 to 2015 and as a
Principal at Zephyr Management, L.P. from 2005 to 2008. Prior to
that, he served as a Principal at Capri Capital, where he directed
the firm’s real estate acquisitions program, from 1995 to
2000, and as Senior Vice President of Ericson Memorial Studios from
1993 to 1994. Mr. Frischer holds a B.A. from Cornell
University.
Except as disclosed in this Current Report on Form
8-K, there are no related party transactions between the Company
and Messrs. Clutterbuck and Frischer, or either of them, that would
require disclosure under Item 404(a) of Regulation S-K, nor are
there any further arrangements or understandings beyond the
Certificate of Designations in connection with the appointment of
Messrs. Clutterbuck and Frischer to the Company’s Board of
Directors (the “Board”).
Amendment to the Company’s Bylaws
On September 15, 2017, the Board, acting by unanimous written
consent, amended the Company’s Bylaws to increase the maximum
number of directors that may serve on the Board from eight (8) to
ten (10) directors to allow for the appointment of Messrs.
Clutterbuck and Frischer as the Series A Directors.
Item 8.01 Other Events
Series A Offering and Preferred Stock Exchange
On September 18, 2017, the Company accepted
subscription forms, in substantially the form attached hereto as
Exhibit 10.1 (the “Subscription
Form”), from certain
accredited investors (the “Investors”), pursuant to which the Company offered
and sold a total of 11,000 shares of Series A Preferred at a
purchase price of $1,000 per share (the “Series A
Offering”), which amount
includes an aggregate total of 875 shares issuable to Neal Goldman,
a member of the Board, and S. James Miller, the Company’s
Chief Executive Officer and member of the Board, in connection with
cash advances of $875,000 previously made to the Company. The net
proceeds to the Company from the Series A Offering, after deducting
the cash advances made by Messrs. Goldman and Miller and expected
offering expenses of $75,000, are expected to be $10.1 million.
Subject to certain conditions, the Company expects to deliver the
shares of Series A Preferred to the Investors participating in the
Series A Offering with five business days. Mr. Miller, Wayne
Wetherell, the Company’s Chief Financial Officer, and Series
A Director Robert T. Clutterbuck participated as Investors in the
Series A Offering. Messrs. Miller, Wetherell and Clutterbuck
submitted Subscription Forms to purchase $80,000, $25,000 and
$250,000 worth of Series A Preferred,
respectively.
The
Series A Offering is being made pursuant to the Company’s
effective shelf registration statement on Form S-3 (File No.
333-214124) filed with the Securities and Exchange Commission on
October 14, 2016, and declared effective on April 28, 2017,
including the base prospectus dated May 4, 2017 included therein
and the related prospectus supplement.
A
form of the Subscription Form has been attached to this Current
Report on Form 8-K only to provide investors and security holders
with information regarding the Series A Offering. It is not
intended to provide any other factual information about the
Company, and does not constitute an offer to sell or the
solicitation of an offer to buy the securities discussed herein,
nor shall there be any offer, solicitation, or sale of the
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction.
The
legal opinion of Disclosure Law Group, a Professional Corporation,
relating to the shares of Series A Preferred and the shares of
Common Stock issuable as Conversion Shares and Dividend Shares
under the shares of Series A Preferred issued during the Series A
Offering is filed as Exhibit 5.1 to this Current Report on
Form 8-K.
Concurrently with the Series A Offering, the
Company entered into Exchange Agreements, in substantially the form
attached hereto as Exhibit 10.2 (the “Exchange
Agreement”), with holders
(the “Holders”) of 9,850 outstanding shares of Series E
Preferred, all outstanding shares of Series F Preferred and all
outstanding shares of Series G Preferred pursuant to which the
Holders agreed to cancel their respective shares of preferred stock
in exchange for the same number of shares of Series A Preferred
(the “Preferred Stock
Exchange”). As Holders of
an aggregate total of 4,176 shares of Series E Preferred and Series
G Preferred, Messrs. Clutterbuck, Frischer and Goldman participated
in the Preferred Stock Exchange. As a result of the Preferred Stock
Exchange, the Company issued to the Holders an aggregate total of
17,871 shares of Series A Preferred.
A
copy of the Company’s press release announcing the Series A
Offering and the Preferred Stock Exchange is attached to this
Current Report on Form 8-K as Exhibit 99.1.
The foregoing descriptions of the Subscription
Form and Exchange Agreement do not purport to be complete, and are
qualified in their entirety by reference to the form of
Subscription Form and form of Exchange Agreement, attached hereto
as Exhibits 10.1 and 10.2,
respectively, each of which are incorporated by reference
herein.
Item 9.01 Financial Statements and Exhibits
(d)
Exhibits.
Exhibit Number
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Description
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Certificate of Designations, Preferences, and Rights of the Series
A Convertible Preferred Stock of ImageWare Systems, Inc., dated
September 15, 2017
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Opinion of Disclosure Law Group, a Professional
Corporation
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Form of Subscription Form
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Form of Exchange Agreement
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Consent of Disclosure Law Group, a Professional Corporation
(included in Exhibit 5.1)
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Press
release issued by ImageWare Systems, Inc., dated September 19,
2017
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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.
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IMAGEWARE SYSTEMS, INC.
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Date:
September 19, 2017
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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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Certificate of Designations, Preferences, and Rights of the Series
A Convertible Preferred Stock of ImageWare Systems, Inc., dated
September 15, 2017
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Opinion of Disclosure Law Group, a Professional
Corporation
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Form of Subscription Agreement
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Form of Exchange Agreement
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Consent of Disclosure Law Group, a Professional Corporation
(included in Exhibit 5.1)
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Press
release issued by ImageWare Systems, Inc., dated September 19,
2017
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