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
Preferenc
e”), 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.