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 28, 2020
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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13500
Evening Creek Drive N., Suite 550
San Diego, California 92128
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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))
Securities
registered pursuant to Section 12(b) of the Act:
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Title
of each class
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Trading
Symbol(s)
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Name
of exchange on which registered
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None
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IWSY
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N/A
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Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (17
CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934
(17 CFR 240.12b-2) ☐
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act ☐
Item
1.01
Entry
into a material definitive agreement.
Securities Purchase Agreement
On
September 28, 2020, the Company entered into a Securities Purchase
Agreement (the “Purchase
Agreement”) whereby the Company agreed to sell a
series of the Company’s Preferred Stock, to be designated
Series D Convertible Preferred Stock, par value $0.01 (the
“Series D
Preferred”), for a purchase price of $1,000 per share,
to certain accredited investors (collectively, the
“Investors”).
The Purchase Agreement provides for the issuance of Series D
Preferred Stock at closing (the “Closing”) resulting in gross
proceeds to the Company of approximately $10.9 million; however,
the Purchase Agreement permits the Company to issue additional
Series D Preferred at Closing resulting in aggregate gross proceeds
of up to $15.0 million (the “Series D Financing”). The
obligation of the Investors to purchase the Series D Preferred is
conditioned on, among other terms and conditions set forth in the
Purchase Agreement, (A) the filing with the Delaware Secretary of
State of (i) an Amended and Restated Certificate of Incorporation
(“Amended
Charter”); (ii) Amended and Restated Certificates of
Designation, Preferences and Rights of the Company’s Series A
Convertible Preferred Stock, par value $0.01 (“Series A Preferred”), Series A-1
Convertible Preferred Stock, par value $0.01 (“Series A-1 Preferred”), and
Series C Convertible Preferred Stock, par value $0.01
(“Series C
Preferred”) (together, the “New Organizational Documents”);
and (iii) the Certificate of Designation, Preferences and Rights of
the Series D Preferred; and (B) the distribution to the
Company’s shareholders of an Information Statement relating
to the written consent of shareholders approving the New
Organizational Documents, which Information Statement the Company
intends to file with the Securities and Exchange Commission
(“SEC”)
promptly following the filing of this Current Report on Form 8-K
with the SEC.
Concurrently with
the execution of the Purchase Agreement, the Company and the
Investors executed (i) a Registration Rights Agreement, pursuant to
which the Company agreed to file a registration statement with the
SEC within thirty days of Closing to register the shares of common
stock, par value $0.01 (“Common Stock”), issuable upon
conversion of the Series D Preferred to be issued at Closing; (ii)
a Series C Exchange Agreement, pursuant to which the Company and
certain holders of the Company’s Series C Preferred agreed to
exchange their Series C Preferred, with a liquidation preference of
approximately $10.0 million, for Series D Preferred at Closing; and
(iii) a Term Loan and Security Agreement (“Loan Agreement”), pursuant to
which each Investor signatory thereto agreed to make a term loan to
the Company, secured by all assets of the Company, in an amount
equal to 20% of such Investor’s purchase commitment as set
forth in the Purchase Agreement (“Bridge Loan”), which Bridge Loan,
plus accrued interest, will roll into, and be used to purchase,
Series D Preferred at Closing.
In anticipation of entering into the Purchase Agreement and the
Series D Financing, on September 23, 2020, the Company entered into
an Escrow Agreement with CitiBank, N.A., pursuant to which the
Investor signatories to the Loan Agreement would deposit their
pro-rata portion of the Bridge Loan into escrow, which amount was
later released to the Company on September 29,
2020 (the
“Bridge Loan
Closing”).
Under
the terms of the Purchase Agreement, at the Closing of the Series D
Financing, the holders of Series D Preferred will own approximately
50% of the voting securities of the Company on an as-converted
basis, with the holders of the Common Stock and remaining classes
of preferred stock, par value $0.01, including Series A Preferred,
Series A-1 Preferred, Series B Convertible Preferred Stock
(“Series B
Preferred”) and Series C Preferred, owning the
remaining approximate 50% on an as-converted basis. Additionally,
all current members of the Company’s Board of Directors will
resign at Closing, with the exception of Kristin Taylor, the
Company’s Chief Executive Officer, and the new members of the
Board of Directors shall be appointed as follows: (i) the holders
of Series D Preferred will appoint two directors (the
“Series D
Directors”); and (ii) Kristin Taylor and the two
Series D Directors will appoint two additional, independent
directors.
The
Purchase Agreement contains covenants, requiring the Company to,
among other things, file an application to list its Common Stock on
the NASDAQ Global Select Market, the NASDAQ Global Market or the
NASDAQ Capital Market on or before December 31, 2020.
The
Purchase Agreement, Registration Rights Agreement, Series C
Exchange Agreement, Escrow Agreement, and Loan Agreement contain
customary representations, warranties, agreements and conditions to
Closing, as well as indemnification rights and other obligations of
the parties.
The
foregoing descriptions of the Purchase Agreement, Registration
Rights Agreement, Series C Exchange Agreement, Escrow Agreement,
and Loan Agreement do not purport to be complete, and is qualified
in its entirety by reference to the same, copies of which are
attached to this Current Report in Form 8-K as Exhibits 10.1, 10.2,
10.3, 10.4, and 10.5, respectively, and are incorporated by
reference herein.
New Organizational Documents
Acting
by written consent, the holders of the Company’s Common
Stock, Series A Preferred, Series A-1 Preferred and Series C
Preferred approved the New Organizational Documents as more
particularly set forth below and in the Information Statement to be
filed with the SEC promptly following the filing of this Current
Report on Form 8-K with the SEC.
Amended Charter. The Amended
Charter provides for, among other things, (i) an increase in the
authorized shares of the Company’s Common Stock to 1.0
billion shares, (ii) the creation of the Series D Preferred, and
(iii) designates Delaware as the exclusive forum for adjudicating
corporate claims, including shareholder derivative claims. The
Amended Charter also consolidates all amendments to the
Company’s Certificate of Incorporation into one
document.
Series A Preferred and Series A-1
Preferred. The Amended and Restated Certificates of
Designation, Preferences and Rights of the Company’s Series A
Preferred and Series A-1 Preferred were amended and restated to,
among other things, provide for the automatic conversion of any
Series A Preferred and Series A-1 Preferred shares not otherwise
voluntarily converted into Common Stock by its terms, into shares
of Common Stock of the Company monthly in 10% installments
beginning November 1, 2020.
Series C Preferred. The Amended
and Restated Certificate of Designation, Preferences and Rights of
the Company’s Series C Preferred was amended and restated so
that the Series C Preferred ranks senior to the Company’s
Common Stock and Series A Preferred and junior to the
Company’s Series B Preferred and Series D Preferred. In
addition, at such time as more than 50% of the outstanding shares
of Series C Preferred (the “Initiating Shareholders”) desire
to effect an exchange of all of such Initiating Shareholders of
Series C Preferred for shares of Series D Preferred, the Initiating
Shareholders, in their sole discretion, may require that all
remaining shares of Series C Preferred be automatically exchanged
for Series D Preferred.
Each of
the New Organizational Documents are anticipated to be filed with
the Delaware Secretary of State on or promptly after twenty days
following the first mailing of the Information Statement to
shareholders.
Item
2.03
Creation
of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
Upon
consummation of the Bridge Loan Closing on September 29, 2020,
approximately $2.2 million was released to the Company from escrow.
The Bridge Loan bears interest at a fixed rate of 12% and is due
and payable in arrears on the earlier of the Loan Conversion Date,
as such term is defined in the Loan Agreement, or six months after
the disbursement of the Bridge Loan. All amounts due and payable
pursuant to the Bridge Loan are automatically convertible, without
further action by the Investors, into shares of Series D Preferred
at Closing at a purchase price of $1,000 for each share of Series D
Preferred. The repayment of all amounts due under the terms of the
Loan Agreement are secured by all assets of the
Company.
The
Company expects to use the proceeds from the Bridge Loan for
working capital requirements and general corporate
purposes.
Item
8.01
Other
Events
On
September 30, 2020, the Company issued a press release announcing
the Bridge Loan Closing and the Series D Financing. A copy of the
press release is attached hereto as Exhibit 99.1.
Item
9.01
Financial
Statements and Exhibits
See
Exhibit Index.
Exhibit Index
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Exhibit No.
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Description
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Form of
Securities Purchase Agreement, dated September 28, 2020, by and
between ImageWare Systems, Inc. and each of the purchasers set
forth on the signature page thereto.
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Form of
Registration Rights Agreement, dated September 28, 2020, by and
between ImageWare Systems, Inc., and the purchasers named in the
Securities Purchase Agreement dated September 28,
2020.
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Form of
Series C Exchange Agreement by and between ImageWare Systems, Inc.,
and those holders of Series C Preferred Convertible Stock set forth
on the signature page thereto
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Escrow
Agreement, dated September 23, 2020, by and between ImageWare
Systems, Inc. and CitiBank, N.A.
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Form of
Loan and Security Agreement, dated September 28, 2020, by and
between ImageWare Systems, Inc., and each of the lenders set forth
on the signature pages thereto.
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Press
Release dated September 30, 2020
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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 30, 2020
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By:
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/s/
Kristin Taylor
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Kristin
Taylor
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Chief
Executive Officer
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