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 8, 2014
 
IMAGEWARE SYSTEMS, INC.
(Exact name of Registrant as specified in its Charter)
 
Delaware
001-15757
33-0224167
(State or other jurisdiction
of incorporation)
(Commission File No.)
(IRS Employer
Identification No.)
 
10815 Rancho Bernardo Road, Suite 310, San Diego, California 92127
 
(Address of principal executive offices)
 
   
(858) 673-8600
 
(Registrant’s Telephone Number)
 
   
Not Applicable
 
(Former name or address, if changed since last report)
 

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)
 
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
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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.
 
On December 8, 2014, ImageWare Systems, Inc. (the “ Company ”) and Neal I. Goldman, a director of the Company (the “ Holder ”), entered into the third amendment (the “ Amendment ”) to the convertible promissory note previously issued by the Company to the Holder on March 27, 2013 (the “ Note ”). The Amendment (i) increases the principal amount of the Note from $3.0 million to $5.0 million; (ii) modifies the definition of Qualified Financing to mean a debt or equity financing resulting in gross proceeds to the Company of at least $5.0 million; (iii) permits the Holder to convert up to $2.5 million outstanding principal, plus any accrued but unpaid interest under the Note (the “ Outstanding Balance ”), into shares of the Company’s common stock, par value $0.001 per share (“ Common Stock ”), for $0.95 per share, the next $500,000 of the Outstanding Balance into shares of Common Stock for $2.25 per share and any remaining Outstanding Balance thereafter into shares of Common Stock for $2.30 per share; and (iv) extend the maturity date of the Note from March 27, 2015 to March 27, 2017.
 
The foregoing description of the Amendment does not purport to be complete, and is qualified in its entirety by reference to the Amendment, attached hereto as Exhibit 10.1, and is incorporated by reference herein.
 
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.
 

   
IMAGEWARE SYSTEMS, INC.
       
Date: December 10, 2014
 
By:
/s/ Wayne Wetherell
     
Wayne Wetherell
     
Chief Financial Officer
       


 
 
 

EXHIBIT INDEX

Exhibit Number
 
Description
10.1
 
Amendment No. 3 to Convertible Promissory Note, dated December 8, 2014




Exhibit 10.1
 
AMENDMENT NO. 3
TO CONVERTIBLE PROMISSORY NOTE

This Amendment No. 3 to Convertible Promissory Note (the “ Amendment ”) is entered into as of December 8, 2014 by and between ImageWare Systems, Inc., a Delaware corporation (the “ Company ”), and Neal I. Goldman, or his registered assigns (“ Holder ”). Unless otherwise specified herein, all capitalized terms set forth in this Amendment shall have the meanings ascribed to them in the Note.

RECITALS

WHEREAS, On March 27, 2013, the Company issued to Holder a Convertible Promissory Note (the “ Note ”) in the principal amount of $2.5 million, which Note is currently set to mature on March 27, 2015. A copy of the Note is attached hereto as Exhibit A , which Note was amended pursuant to Amendment No. 1 to Convertible Promissory Note, dated March 12, 2014 (“ Amendment No. 1 ”), and Amendment No. 2 to Convertible Promissory Note dated April 23, 2014 (“ Amendment No. 2 ”);

WHEREAS , following the execution of Amendment No. 1 and Amendment No. 2, the principal amount of the Note was increased to $3.0 million, and, in the event the Company consummates a Qualified Financing resulting in gross proceeds of at least $3.5 million, the Outstanding Balance of the Note will become due and payable upon demand by the Holder;

WHEREAS, at any time prior to March 27, 2015, up to $2.5 million of the Outstanding Balance is convertible into that number of shares of the Company’s common stock, par value $0.001 per share (“ Common Stock ”), equal to the Outstanding Balance, divided by $0.95 with any remaining Outstanding Balance convertible into shares of Common Stock at $2.25 per share; and

WHEREAS, Holder and the Company now desire to amend the Note, as amended in Amendment No. 1 and Amendment No. 2, to: (i) increase the principal amount of the Note to $5.0 million; (ii) update the definition of Qualified Financing to a debt and/or equity financing resulting in gross proceeds to the Company of at least $5.0 million; (iii) in the event the Holder converts the first $2.5 million of the Outstanding Balance at $0.95 per share, permit the Holder to convert the next $500,000 of the Outstanding Balance at $2.25 per share and any remaining Outstanding Balance thereafter into shares of Common Stock for $2.30 per share; and (iv) to extend the Maturity Date (as such term is defined in the Note) to March 27, 2017.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned parties agree as follows:

     1.           The principal sum of the Note is hereby increased to Five Million Dollars ($5,000,000).  Any reference to a principal amount of $3,500,000, including but not limited to Sections 2(a) and 4(d), is hereby replaced with the principal amount of $5,000,000.
 
     2.      Section 2(c) of the Note is hereby amended and replaced in its entirety with the following.

(c)  This Line of Credit shall terminate, and no further advances shall be made, upon the earlier to occur of the Maturity Date or such date that the Company consummates a debt and/or equity financing resulting in net proceeds to the Company of at least $5.0 million (“ Qualified Financing ”).  In the event of consummation of a Qualified Financing, the Outstanding Balance under the terms of this Note shall be due and payable on demand.
 
     3.      Section 6 of the Note is hereby amended and replaced in its entirety with the following.
 
 
 

     6.            Conversion .  At any time prior to the Maturity Date, the Holder shall have the right and option to convert the Outstanding Balance into that number of fully paid and non-assessable shares of the Company’s Common Stock equal to the quotient obtained by dividing the Outstanding Balance by the conversion prices set forth below (each a “ Conversion Price ”)

Outstanding Balance
 
Conversion Price
Up to $2,500,000
 
$0.95
The following $500,000
 
$2.25
Any remaining Outstanding Balance
 
$2.30
   
     4.     The Maturity Date, as such term is defined in the Note, as amended, shall be March 27, 2017.

     5.      The provisions of the Note, as amended in Amendment No. 1 and Amendment No. 2, and modified in this Amendment, shall remain in full force and effect in accordance with their terms and are hereby ratified and confirmed.  In the event of any conflict between the terms and conditions of this Amendment and the terms and conditions set forth in the Note, as amended by Amendment No. 1 and Amendment No. 2, the terms and conditions set forth herein shall control.  This Amendment shall be governed by the laws of the State of California without regard to the conflict of laws provisions thereof.  

 
 
 

           IN WITNESS WHEREOF, each of the undersigned has caused this Amendment to be duly executed by its officers, thereunto duly authorized as of the date first above written.
 
       
 
T HE C OMPANY :
   
 
ImageWare Systems, I NC .,
   
     
 
By:
 
/s/ Wayne Wetherell
 
Name:
 
Wayne Wetherell
 
Title:
 
CFO
   
 
H OLDER :
   
   
     
 
By:
 
/s/ Neal I. Goldman
 
Name:
 
Neal I. Goldman