SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
Amendment No. 4
Integrated Security Systems, Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
45812J101
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(CUSIP Number)
Russell Cleveland
Renaissance Capital Group, Inc.
8080 N. Central Expressway, Suite 210, LB-59
Dallas, Texas 75206-1857
(214) 891-8294
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(Name, Address, and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 27, 2001
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f), or 13d-1(g), check the following
box [ ].
(Continued on following pages)
CUSIP No. 45812J101 13D
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1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NUMBER
Renaissance Capital Growth & Income Fund III, Inc. 75-2533518
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
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7. SOLE VOTING POWER
23,458,221
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8. SHARED VOTING POWER
None
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9. SOLE DISPOSITIVE POWER
23,458,221
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10. SHARED DISPOSITIVE POWER
None
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
23,458,221
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
69.23%
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14. TYPE OF REPORTING PERSON
IV
CUSIP No. 45812J101 13D
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1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NUMBER
Renaissance US Growth & Income Trust PLC None - Foreign
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
England
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
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7. SOLE VOTING POWER
22,621,909
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8. SHARED VOTING POWER
None
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9. SOLE DISPOSITIVE POWER
22,621,909
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10. SHARED DISPOSITIVE POWER
None
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
22,621,909
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
68.45%
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14. TYPE OF REPORTING PERSON
IV
Item 1. Security and Issuer.
This statement relates to the Common Stock ("Common Shares") of Integrated
Security Systems, Inc. (the "Company"). The principal executive offices of the
Company are located at 8200 Springwood Drive, Irving, Texas 75063.
Item 2. Identity and Background.
(a) This Statement is filed by Renaissance Capital Growth & Income Fund
III, Inc. ("Renaissance III"), and Renaissance US Growth & Income Trust PLC
("Renaissance PLC"); Renaissance III and Renaissance PLC, collectively (the
"Reporting Persons").
Certain information concerning the directors and executive officers of the
Reporting Persons is set forth on Attachment 1 attached hereto and incorporated
herein by reference.
(b) Renaissance III is a business development company regulated under the
Investment Company Act of 1940, as amended, and organized under the laws of the
State of Texas, with its principal business and principal office at 8080 N.
Central Expressway, Suite 210, LB-59, Dallas, Texas 75206-1857.
Renaissance PLC is an investment trust organized under the laws of England
and Wales. Its address in the United States is c/o Renaissance Capital Group,
Inc., Investment Manager, 8080 N. Central Expressway, Suite 210, LB-59, Dallas,
Texas 75206-1857.
The business addresses of the directors and executive officers of the
Reporting Persons are set forth on Attachment 1 to this Statement and
incorporated herein by reference.
(c) Renaissance III and Renaissance PLC are engaged in the business of
investing principally in emerging or undervalued U.S. public companies.
(d) Neither any of the Reporting Persons nor, to the best knowledge of such
persons, any person named in Attachment 1 to this Statement, has been convicted
in a criminal proceeding in the past five years (excluding traffic violations or
similar misdemeanors).
(e) Neither any of the Reporting Persons nor, to the best knowledge of such
persons, any person named in Attachment 1 to this Statement, was during the last
five years a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person was or is subject to a
judgment, decree, or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(f) All persons named on Attachment 1 to this Statement are citizens of the
United States, except as otherwise indicated on such Attachment.
Item 3. Source and Amount of Funds or Other Consideration.
The total amount of funds required by Renaissance III to acquire the
securities reported in Item 5(a) was $4,779,589. The source of such funds was
capital of Renaissance III.
The total amount of funds required by Renaissance PLC to acquire the
securities reported in Item 5(a) was $4,613,463. The source of such funds was
capital of Renaissance PLC.
Item 4. Purpose of Transaction.
The Reporting Persons each acquired beneficial ownership of the Common
Stock reported in Item 5(a) both in the ordinary course of business for
investment purposes and upon exchange of indebtedness in connection with the
financial restructuring of the Company. The President and CEO of Renaissance
Capital Group, Inc., the investment advisor to Renaissance III and the
investment manager of Renaissance PLC, Russell Cleveland, has been appointed to
the board of directors of the Company.
The Reporting Persons may participate in discussions with management or
third parties in which the Reporting Person may suggest or take a position with
respect to potential changes in the operations, management, or capital structure
of such companies as a means of enhancing shareholder value. Such suggestions or
positions may relate to one or more of the transactions specified in clauses (a)
through (j) of Item 4 of the Schedule 13D form, including, without limitation,
such matters as disposing of one or more businesses, selling the Company,
merging with another Company or acquiring another company or business, changing
operating or marketing strategies, changes in management or marketing, or
restructuring the Company's capitalization.
Each Reporting Person continues to assess the Company's business, financial
condition, results of operations and prospects, general economic conditions, the
securities markets in general and those for the Company's securities in
particular, other developments and other investment opportunities, as well as
the Reporting Person's investment objectives. Depending on such assessments, one
or both of the Reporting Persons may acquire additional securities or may
determine to sell or otherwise dispose of some or all of its holding of
securities.
Other than as described above, neither of the Reporting Persons has any
present plans or proposals which relate to or would result in any transaction,
change, or event specified in clauses (a) through (j) of Item 4 of the Schedule
13D.
Item 5. Interest in Securities of the Issuer.
(a) Renaissance III beneficially owns 23,458,221 Common Shares, and
Renaissance PLC beneficially owns 22,621,909 Common Shares. The Reporting
Persons beneficially own 46,080,130 Common Shares. Based upon information filed
with the Securities and Exchange Commission and using SEC computation rules, the
Common Shares beneficially owned by Renaissance III, Renaissance PLC, and
together represent approximately 69.23%, 68.45%, and 82.12%, respectively,
of the outstanding Common Stock of the Company. Renaissance III and Renaissance
PLC disclaim that they are members of a group for purposes of Regulation 13D.
The Common Shares beneficially owned by Renaissance III are comprised of
406,722 shares of Common Stock; 1,814,299 shares of Common Stock issuable upon
the exercise of warrants; 187,500 shares of Common Stock issuable upon the
conversion of 7,500 shares of Series D Preferred Stock; 2,714,945 shares of
Common Stock issuable upon conversion of 21,720 shares of Series F Convertible
Preferred Stock ("Series F Preferred Stock"); and 18,334,755 shares of Common
Stock issuable upon conversion of 146,678 shares of Series G Convertible
Preferred Stock ("Series G Preferred Stock"). The board of directors of
Renaissance III exercises voting and investment control over the securities of
the Company owned by it.
Renaissance PLC is deemed the beneficial owner of Common Shares comprised
of 406,721 shares of Common Stock; 1,808,617 shares of Common Stock issuable
upon the exercise of warrants; 187,500 shares of Common Stock issuable upon the
conversion of 7,500 shares of Series D Preferred Stock; 2,714,945 shares of
Common Stock issuable upon conversion of 21,720 shares of Series F Preferred
Stock; and 17,504,125 shares of Common Stock issuable upon conversion of 140,033
shares of Series G Preferred Stock. The board of directors of Renaissance PLC
exercises voting and investment control over the securities of the Company owned
by it.
(b) Holders of Series D Preferred Stock are entitled to one vote for each
share of Common Stock into which such share of Series D Preferred Stock could
then be converted. Presently, the holder of each share of Series D Preferred
stock is entitled to 25 votes. Holders of Series F Preferred Stock are entitled
to vote with the holders of Common Stock, the Series D Preferred Stock, the
Series E Preferred Stock , and the Series G Preferred Stock as a single class on
all matters on which stockholders are entitled to vote, including the election
of directors, except as otherwise required by law. Holders of Series F Preferred
Stock are also entitled to vote with any other class of equity securities which
may vote with the holders of the Common Stock as a single class with respect to
any matter. Holders of Series F Preferred Stock are entitled to a number of
votes per share of Series F Preferred Stock equal to the number of shares of
Common Stock into which the shares of Series F Preferred Stock are convertible
on the record date of the determination of stockholders entitled to receive
notice of and to vote on such matter. In addition, the consent of holders of 80%
of the Series F Preferred Stock and the Series G Preferred Stock, voting
together as a single class, will be required to (a) authorize, create, or
increase the authorized amount of any class of senior stock or parity stock,
other than Preferred Stock of the same class or securities to evidence bank debt
or asset securitization or (b) authorize a merger, consolidation, or sale of
assets, other than in the ordinary course of business, of the Company, including
the capital stock of the Company's subsidiaries. The consent of holders of 80%
of the Series F Preferred Stock, voting as a single class, will be required to
approve any action to amend the Company's certificate of incorporation or bylaws
that would materially and adversely affect the rights of the Series F Preferred
Stock.
Holders of Series G Preferred Stock will be entitled to vote with the
holders of Common Stock, the Series D Preferred Stock, the Series E Preferred
Stock, and the Series F Preferred Stock as a single class on all matters on
which stockholders are entitled to vote, including the election of directors,
except as otherwise required by law. holders of Series G Preferred Stock are
also entitled to vote with any other class of equity securities which may
vote with the holders of the Common Stock as a single class with respect to any
matter. Holders of Series G Preferred Stock are entitled to a number of votes
per share of Series G Preferred Stock equal to the number of shares of Common
Stock into which the Shares of Series G Preferred Stock are convertible on the
record date of the determination of stockholders entitled to receive notice of
and to vote on such matter. In addition, the consent of holders of 80% of the
Series G Preferred Stock and the Series F Preferred Stock, voting together as a
single class, will be required (a) to authorize, create, or increase the
authorized amount of any class of senior stock or parity stock, other than
Preferred Stock of the same class or securities to evidence bank debt or
securitization or (b) authorize a merger, consolidation, or sale of assets,
other than in the ordinary course of business, of the Company, including the
capital stock of the Company's subsidiaries. The consent of holders of 80% of
the Series G Preferred Stock, voting as a single class, will be required to
approve any action to amend the Company's certificate of incorporation or bylaws
that would materially and adversely affect the rights of the Series G Preferred
Stock.
In addition to their right to vote with the holders of the Common Stock on
the election of directors, the Reporting Persons, as the holders of the Series G
Preferred Stock and the holders of the Series F Preferred Stock, voting together
as a single class, are entitled to elect two additional directors to the
Company's board of directors.
Each of the Reporting Persons has or will have upon the exercise of the
warrants issued to it by the Company the sole power to vote and dispose of all
of the Common Shares that it beneficially owns. None of the Reporting Persons
shares voting or disposition power with any person with respect to the Common
Shares.
(c) No transaction in the Common Shares was effected by a Reporting Person
during the past 60 days, except as follows: (1) the purchase on September 27,
2001, of a $75,000 non- convertible, 8%, 120 day promissory note and five- year
warrants to purchase 150,000 shares of Common Stock at $0.20 a share by
Renaissance III and the purchase of a $75,000 non-convertible, 8%, 120 day
promissory note and five-year warrants to purchase 150,000 shares of Common
Stock at $0.20 a share by Renaissance PLC; (2)the purchase on October 12, 2001,
of a $25,000 non- convertible, 8%, 120 day promissory note and five-year
warrants to purchase 125,000 shares of Common Stock at $0.20 a share by
Renaissance III and the purchase of a $75,000 non-convertible, 8%, 120 day
promissory note and five-year warrants to purchase 125,000 shares of Common
Stock at $0.20 by Renaissance PLC; (3) the purchase on October 26, 2001, of a
$25,000 non-convertible, 8%, 120 day promissory note and five-year warrants to
purchase 125,000 shares of Common Stock at $0.20 a share by Renaissance III and
the purchase of a $75,000 non-convertible, 8%, 120 day promissory note and
five-year warrants to purchase 125,000 shares of Common Stock at $0.20 by
Renaissance PLC; (4) the issuance as of September 27, 2001 of five-year warrants
to purchase 225,000 shares of Common Stock at $0.20 a share by each Renaissance
III and Renaissance PLC; (5) the purchase on November 9, 2001, of a $25,000
non-convertible, 8%, 120 day promissory note and five-year warrants to purchase
125,000 shares of Common Stock at $0.20 a share by each Renaissance III and
Renaissance PLC; (6) the purchase on November 16, 2001, of a $25,000 non-
convertible, 8%, 120 day promissory note and five-year warrants to purchase
125,000 shares of Common Stock at $0.20 a share by each Renaissance III and
Renaissance PLC; and the purchase on December 27, 2001, of a $25,000 non-
convertible, 8%, 120 day promissory note and five-year warrants to purchase
125,000 shares of Common Stock at $0.20 a share by each Renaissance III and
Renaissance PLC.
(d) No person other than the Reporting Persons has the right to receive or
the power to direct the receipt of dividends from, or the proceeds from the sale
of, the Common Shares beneficially owned by the Reporting Persons.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings, or Relationships With Respect
to Securities of the Issuer.
Not Applicable.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 Joint Filing Agreement Pursuant to Rule 13d-1(k)
Exhibit 2 September 27, 2001, Stock Purchase Warrant for Renaissance III
Exhibit 3 September 27, 2001, Stock Purchase Warrant for Renaissance PLC
Exhibit 4 October 12, 2001, Stock Purchase Warrant for Renaissance III
Exhibit 5 October 12, 2001, Stock Purchase Warrant for Renaissance PLC
Exhibit 6 October 26, 2001, Stock Purchase Warrant for Renaissance III
Exhibit 7 October 26, 2001, Stock Purchase Warrant for Renaissance PLC
Exhibit 8 November 9, 2001, Stock Purchase Warrant for Renaissance III
Exhibit 9 November 9, 2001, Stock Purchase Warrant for Renaissance PLC
Exhibit 10 November 16, 2001, Stock Purchase Warrant for Renaissance III
Exhibit 11 November 16, 2001, Stock Purchase Warrant for Renaissance PLC
Exhibit 12 December 27, 2001, Stock Purchase Warrant for Renaissance III
Exhibit 13 December 27, 2001, Stock Purchase Warrant for Renaissance PLC
SIGNATURES
After reasonable inquire and to the best of their individual knowledge and
belief, the signatories below certify that the information set forth in this
statement is true, complete, and correct as of this 10th day of October, 2001.
The persons whose signatures appear below agree that this statement on
Schedule 13D is filed on behalf of each of them.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
By: ______________________________
Name: Russell Cleveland
Title: President and Chief Executive Officer
RENAISSANCE US GROWTH & INCOME TRUST PLC
By: _______________________________
Name: Russell Cleveland
Title: Director
ATTACHMENT 1
The name. business address. and principal occupation of the directors and
executive officers of Renaissance III are as follows:
DIRECTORS
Principal
Name Business Address Occupation
Edward O. Boshell, Jr. c/o Renaissance Capital Group, Inc. Director
8080 North Central Expressway
Suite 210, LB-59
Dallas, TX 75206-1857
Russell Cleveland c/o Renaissance Capital Group, Inc. Director
8080 North Central Expressway
Suite 210, LB-59
Dallas, TX 75206-1857
Peter Collins c/o Renaissance Capital Group, Inc. Director
8080 North Central Expressway
Suite 210, LB-59
Dallas, TX 75206-1857
Ernest C. Hill c/o Renaissance Capital Group, Inc. Director
8080 North Central Expressway
Suite 210, LB-59
Dallas, TX 75206-1857
OFFICERS
Russell Cleveland c/o Renaissance Capital Group, Inc. President and
8080 North Central Expressway Chief Executive
Suite 210, LB-59 Officer
Dallas, TX 75206-1857
John A. Schmit c/o Renaissance Capital Group, Inc. Vice President
8080 North Central Expressway
Suite 210, LB-59
Dallas, TX 75206-1857
Robert C. Pearson c/o Renaissance Capital Group, Inc. Vice President
8080 North Central Expressway
Suite 210, LB-59
Dallas, TX 75206-1857
Barbara A. Butschek c/o Renaissance Capital Group, Inc. Secretary and
8080 North Central Expressway Treasurer
Suite 210, LB-59
Dallas, TX 75206-1857
The name, business address, and principal occupation of the directors and
executive officers of Renaissance PLC are as follows:
DIRECTORS
Principal
Name Business Address Occupation
Michael B. Cannan c/o Sinclair Henderson Limited Director
23 Cathedral Yard
Exeter EX11HB
Russell Cleveland c/o Sinclair Henderson Limited Director
23 Cathedral Yard
Exeter EX11HB
Ernest J. Fenton c/o Sinclair Henderson Limited Director
23 Cathedral Yard
Exeter EX11HB
Lord Mark Fitzalan Howard OBE c/o Sinclair Henderson Limited Director
23 Cathedral Yard
Exeter EX11HB
C. A. Rundell, Jr. c/o Sinclair Henderson Limited Director
23 Cathedral Yard
Exeter EX11HB
William W. Vanderfelt c/o Sinclair Henderson Limited Director
23 Cathedral Yard
Exeter EX11HB
OFFICERS
None
EXHIBIT 1
JOINT FILING AGREEMENT PURSUANT TO RULE 13d-1(k)
The undersigned acknowledge and agree that the foregoing statement on
Schedule 13D is filed on behalf of each of the undersigned and that all of each
of the undersigned without the necessity of filing additional joint filing
agreements. The undersigned acknowledge that each shall be responsible for the
timely filing of such amendments, and for the completeness and accuracy of the
information concerning it contained therein, but shall not be responsible for
the completeness and accuracy of the information concerning the others, except
to the extent it knows or has reason to believe that such information is
inaccurate. This Joint Filing Agreement may be executed in any number of
counterparts and all of such counterparts taken together shall constitute one
and the same instrument.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
By: ______________________________
Name: Russell Cleveland
Title: President and Chief Executive Officer
RENAISSANCE US GROWTH & INCOME TRUST PLC
By: _______________________________
Name: Russell Cleveland
Title: Director
EXHIBIT 2
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
STOCK PURCHASE WARRANT
This Stock Purchase Warrant (this "Warrant"), dated September 27, 2001, is
issued to Frost National Bank, Custodian, FBO Renaissance Capital Growth &
Income Fund III, Inc., a Texas corporation (the "Holder"), by Integrated
Security Systems, Inc., a Delaware corporation (the "Company").
1. Purchase of Shares. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the principal
office of the Company (or at such other place as the Company shall notify the
holder hereof in writing), to purchase from the Company 225,000 fully paid and
non-assessable shares of Common Stock, no par value (the "Common Stock"), of the
Company (as adjusted pursuant to Section 7 hereof, the "Shares") for the
purchase price specified in Section 2 below.
2. Purchase Price. The purchase price for the Shares is $0.20 per share.
Such price shall be subject to adjustment pursuant to Section 7 hereof (such
price, as adjusted from time to time, is herein referred to as the "Warrant
Price").
3. Exercise Period. This Warrant is exercisable in whole or in part at any
time from the date hereof through September 27, 2006.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) surrender of this Warrant, together with a duly executed copy of
the form of Exercise Notice attached hereto, to the Secretary of the
Company at its principal offices, and the payment to the Company of an
amount equal to the aggregate purchase price for the number of Shares being
purchased; or
(b) if the Company's Common Stock is publicly traded as of such date,
the instruction to retain that number of Shares having a value equal to the
aggregate exercise price of the Shares as to which this Warrant is being
exercised and to issue to the Holder the remainder of such Shares computed
using the following formula:
Y(A-B)
X = --------------
A
Where: X = the number of shares of Common Stock to be issued to the Holder.
Y = the number of shares of Common Stock as to which this Warrant is
being exercised.
A = the fair market value of one share of Common Stock.
B = the Warrant Price.
As used herein, the "fair market value of one share of Common Stock"
shall mean:
(1) Except in the circumstances described in clause (2) or (3)
hereof, the closing price of the Company's Common Stock, as reported
in the Wall Street Journal, on the trading day immediately prior to
the date of exercise;
(2) If such exercise is in conjunction with a merger, acquisition
or other consolidation pursuant to which the Company is not the
surviving entity, the value received by the holders of the Common
Stock pursuant to such transaction for each share; or
(3) If such exercise is in conjunction with the initial public
offering of the Company, the price at which the Common Stock is sold
to the public in such offering.
5. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice.
6. Reservation of Shares. The Company covenants that it will at all times
keep available such number of authorized shares of its Common Stock, free from
all preemptive rights with respect thereto, which will be sufficient to permit
the exercise of this Warrant for the full number of Shares specified herein. The
Company further covenants that such Shares, when issued pursuant to the exercise
of this Warrant, will be duly and validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issuance thereof.
7. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon exercise of this Warrant and the Warrant Price shall
be subject to adjustment from time to time as follows:
(a) Stock Dividends, Subdivisions, Combinations and Other Issuances.
If the Company shall at any time prior to the expiration of this Warrant
subdivide its Common Stock, by stock split or otherwise, combine its Common
Stock or issue additional shares of its Common Stock as a dividend with
respect to any shares of its Common Stock, the number of Shares issuable on
the exercise of this Warrant shall forthwith be proportionately increased
in the case of a subdivision or stock dividend and proportionately
decreased in the case of a combination. Appropriate adjustments shall also
be made to the purchase price payable per share, but the aggregate purchase
price payable for the total number of Shares purchasable under this Warrant
(as adjusted) shall remain the same. Any adjustment under this Section 7(a)
shall become effective at the close of business on the date the subdivision
or combination becomes effective or as of the record date of such dividend,
or, in the event that no record date is fixed, upon the making of such
dividend.
(b) Reclassification, Reorganization, Merger, Sale or Consolidation.
In the event of any reclassification, capital reorganization or other
change in the Common Stock of the Company (other than as a result of a
subdivision, combination or stock dividend provided for in Section 7(a)
above) or in the event of a consolidation or merger of the Company with or
into, or the sale of all or substantially all of the properties and assets
of the Company, to any person, and in connection therewith consideration is
payable to holders of Common Stock in cash, securities or other property,
then as a condition of such reclassification, reorganization or change,
consolidation, merger or sale, lawful provision shall be made, and duly
executed documents evidencing the same shall be delivered to the Holder, so
that the Holder shall have the right at any time prior to the expiration of
this Warrant to purchase, at a total price equal to that payable upon the
exercise of this Warrant immediately prior to such event, the kind and
amount of cash, securities or other property receivable in connection with
such reclassification, reorganization or change, consolidation, merger or
sale, by a holder of the same number of shares of Common Stock as were
exercisable by the Holder immediately prior to such reclassification,
reorganization or change, consolidation, merger or sale. In any such case,
appropriate provisions shall be made with respect to the rights and
interest of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any cash, securities or property deliverable
upon exercise hereof. Notwithstanding the foregoing, (i) if the Company
merges or consolidates with, or sells all or substantially all of its
property and assets to, any other person, and consideration is payable to
holders of Common Stock in exchange for their Common Stock in connection
with such merger, consolidation or sale which consists solely of cash, or
(ii) in the event of the dissolution, liquidation or winding up of the
Company, then the Holder shall be entitled to receive distributions on the
date of such event on an equal basis with holders of Common Stock as if
this Warrant had been exercised immediately prior to such event, less the
Warrant Price. Upon receipt of such payment, if any, the rights of the
Holder shall terminate and cease, and this Warrant shall expire. In case of
any such merger, consolidation or sale of assets, the surviving or
acquiring person and, in the event of any dissolution, liquidation or
winding up of the Company, the Company shall promptly, after receipt of
this surrendered Warrant, make payment by delivering a check in such amount
as is appropriate (or, in the case of consideration other than cash, such
other consideration as is appropriate) to such person as it may be directed
in writing by the Holder surrendering this Warrant.
(c) Certain Distributions. In case the Company shall fix a record date
for the making of a dividend or distribution of cash, securities or
property to all holders of Common Stock (excluding any dividends or
distributions referred to in Sections 7(a) or 7(b) above, the number of
Shares purchasable upon an exercise of this Warrant after such record date
shall be adjusted to equal the product obtained by multiplying the number
of Shares purchasable upon an exercise of this Warrant immediately prior to
such record date by a fraction, the numerator of which shall be the Warrant
Price immediately prior to such distribution, and the denominator of which
shall be the Warrant Price immediately prior to such distribution, less the
fair market value per Share, as determined by the Holder, of the cash,
securities or property so distributed. Such adjustment shall be made
successively whenever any such distribution is made and shall become
effective on the effective date of distribution.
8. Pre-Exercise Rights. Prior to exercise of this Warrant, the Holder shall
not be entitled to any rights of a shareholder with respect to the Shares,
including without limitation, the right to vote such Shares, receive preemptive
rights or be notified of shareholder meetings, and the Holder shall not be
entitled to any notice or other communication concerning the business or affairs
of the Company.
9. Restricted Securities. The Holder understands that this Warrant and the
Shares purchasable hereunder constitute "restricted securities" under the
federal securities laws inasmuch as they are being, or will be, acquired from
the Company in transactions not involving a public offering and accordingly may
not, under such laws and applicable regulations, be resold or transferred
without registration under the Securities Act of 1933, as amended, or an
applicable exemption from registration. In this connection, the Holder
acknowledges that Rule 144 of the Securities and Exchange Commission is not now,
and may not in the future be, available for resales of the Shares purchased
hereunder. The Holder further acknowledges that the Shares and any other
securities issued upon exercise of this Warrant shall bear a legend
substantially in the form of the legend appearing on the face hereof.
10. Certification of Investment Purpose. Unless a current registration
statement under the Securities Act of 1933, as amended, shall be in effect with
respect to the securities to be issued upon exercise of this Warrant, the Holder
hereof, by accepting this Warrant, covenants and agrees that, at the time of
exercise hereof, the Holder will deliver to the Company a written certification
that the securities acquired by the Holder are acquired for investments purposes
only and that such securities are not acquired with a view to, or for sale in
connection with, any distribution thereof.
11. Registration Rights. This Warrant and the Shares shall be subject to
the registration rights set forth in the Registration Rights Agreement of even
date herewith by and among the Holder and the Company, and the Holder shall be
entitled to all rights and benefits thereof.
12. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the Holder and
their respective successors and assigns.
13. Governing Law. This Warrant shall be governed by the laws of the State
of Texas, excluding the conflicts of laws provisions thereof.
INTEGRATED SECURITY SYSTEMS, INC.
By:
-------/S/----------------------------
C. A. Rundell, Jr.
Chairman and Chief Executive Officer
EXERCISE NOTICE
Dated _________, ____
The undersigned hereby irrevocably elects to exercise the Stock Purchase
Warrant, dated September 27, 2001, issued by Integrated Security Systems, Inc.,
a Delaware corporation (the "Company") to the undersigned to the extent of
purchasing ___________ shares of Common Stock and hereby makes payment of
$_________ in payment of the aggregate Warrant Price of such Shares.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
By:
------------------------------------------------
EXHIBIT 3
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
STOCK PURCHASE WARRANT
This Stock Purchase Warrant (this "Warrant"), dated September 27, 2001, is
issued to Frost National Bank, Custodian, FBO Renaissance US Growth & Income
Trust PLC, a public limited company registered in England and Wales (the
"Holder"), by Integrated Security Systems, Inc., a Delaware corporation (the
"Company").
1. Purchase of Shares. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the principal
office of the Company (or at such other place as the Company shall notify the
holder hereof in writing), to purchase from the Company 225,000 fully paid and
non-assessable shares of Common Stock, no par value (the "Common Stock"), of the
Company (as adjusted pursuant to Section 7 hereof, the "Shares") for the
purchase price specified in Section 2 below.
2. Purchase Price. The purchase price for the Shares is $0.20 per share.
Such price shall be subject to adjustment pursuant to Section 7 hereof (such
price, as adjusted from time to time, is herein referred to as the "Warrant
Price").
3. Exercise Period. This Warrant is exercisable in whole or in part at any
time from the date hereof through September 27, 2006.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) surrender of this Warrant, together with a duly executed copy of
the form of Exercise Notice attached hereto, to the Secretary of the
Company at its principal offices, and the payment to the Company of an
amount equal to the aggregate purchase price for the number of Shares being
purchased; or
(b) if the Company's Common Stock is publicly traded as of such date,
the instruction to retain that number of Shares having a value equal to the
aggregate exercise price of the Shares as to which this Warrant is being
exercised and to issue to the Holder the remainder of such Shares computed
using the following formula:
Y(A-B)
X = --------------
A
Where: X = the number of shares of Common Stock to be issued to the
Holder.
Y = the number of shares of Common Stock as to which this
Warrant is being exercised.
A = the fair market value of one share of Common Stock.
B = the Warrant Price.
As used herein, the "fair market value of one share of Common Stock"
shall mean:
(1) Except in the circumstances described in clause (2) or (3)
hereof, the closing price of the Company's Common Stock, as reported
in the Wall Street Journal, on the trading day immediately prior to
the date of exercise;
(2) If such exercise is in conjunction with a merger, acquisition
or other consolidation pursuant to which the Company is not the
surviving entity, the value received by the holders of the Common
Stock pursuant to such transaction for each share; or
(3) If such exercise is in conjunction with the initial public
offering of the Company, the price at which the Common Stock is sold
to the public in such offering.
5. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice.
6. Reservation of Shares. The Company covenants that it will at all times
keep available such number of authorized shares of its Common Stock, free from
all preemptive rights with respect thereto, which will be sufficient to permit
the exercise of this Warrant for the full number of Shares specified herein. The
Company further covenants that such Shares, when issued pursuant to the exercise
of this Warrant, will be duly and validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issuance thereof.
7. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon exercise of this Warrant and the Warrant Price shall
be subject to adjustment from time to time as follows:
(a) Stock Dividends, Subdivisions, Combinations and Other Issuances.
If the Company shall at any time prior to the expiration of this Warrant
subdivide its Common Stock, by stock split or otherwise, combine its Common
Stock or issue additional shares of its Common Stock as a dividend with
respect to any shares of its Common Stock, the number of Shares issuable on
the exercise of this Warrant shall forthwith be proportionately increased
in the case of a subdivision or stock dividend and proportionately
decreased in the case of a combination. Appropriate adjustments shall also
be made to the purchase price payable per share, but the aggregate purchase
price payable for the total number of Shares purchasable under this Warrant
(as adjusted) shall remain the same. Any adjustment under this Section 7(a)
shall become effective at the close of business on the date the subdivision
or combination becomes effective or as of the record date of such dividend,
or, in the event that no record date is fixed, upon the making of such
dividend.
(b) Reclassification, Reorganization, Merger, Sale or Consolidation.
In the event of any reclassification, capital reorganization or other
change in the Common Stock of the Company (other than as a result of a
subdivision, combination or stock dividend provided for in Section 7(a)
above) or in the event of a consolidation or merger of the Company with or
into, or the sale of all or substantially all of the properties and assets
of the Company, to any person, and in connection therewith consideration is
payable to holders of Common Stock in cash, securities or other property,
then as a condition of such reclassification, reorganization or change,
consolidation, merger or sale, lawful provision shall be made, and duly
executed documents evidencing the same shall be delivered to the Holder, so
that the Holder shall have the right at any time prior to the expiration of
this Warrant to purchase, at a total price equal to that payable upon the
exercise of this Warrant immediately prior to such event, the kind and
amount of cash, securities or other property receivable in connection with
such reclassification, reorganization or change, consolidation, merger or
sale, by a holder of the same number of shares of Common Stock as were
exercisable by the Holder immediately prior to such reclassification,
reorganization or change, consolidation, merger or sale. In any such case,
appropriate provisions shall be made with respect to the rights and
interest of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any cash, securities or property deliverable
upon exercise hereof. Notwithstanding the foregoing, (i) if the Company
merges or consolidates with, or sells all or substantially all of its
property and assets to, any other person, and consideration is payable to
holders of Common Stock in exchange for their Common Stock in connection
with such merger, consolidation or sale which consists solely of cash, or
(ii) in the event of the dissolution, liquidation or winding up of the
Company, then the Holder shall be entitled to receive distributions on the
date of such event on an equal basis with holders of Common Stock as if
this Warrant had been exercised immediately prior to such event, less the
Warrant Price. Upon receipt of such payment, if any, the rights of the
Holder shall terminate and cease, and this Warrant shall expire. In case of
any such merger, consolidation or sale of assets, the surviving or
acquiring person and, in the event of any dissolution, liquidation or
winding up of the Company, the Company shall promptly, after receipt of
this surrendered Warrant, make payment by delivering a check in such amount
as is appropriate (or, in the case of consideration other than cash, such
other consideration as is appropriate) to such person as it may be directed
in writing by the Holder surrendering this Warrant.
(c) Certain Distributions. In case the Company shall fix a record date
for the making of a dividend or distribution of cash, securities or
property to all holders of Common Stock (excluding any dividends or
distributions referred to in Sections 7(a) or 7(b) above, the number of
Shares purchasable upon an exercise of this Warrant after such record date
shall be adjusted to equal the product obtained by multiplying the number
of Shares purchasable upon an exercise of this Warrant immediately prior to
such record date by a fraction, the numerator of which shall be the Warrant
Price immediately prior to such distribution, and the denominator of which
shall be the Warrant Price immediately prior to such distribution, less the
fair market value per Share, as determined by the Holder, of the cash,
securities or property so distributed. Such adjustment shall be made
successively whenever any such distribution is made and shall become
effective on the effective date of distribution.
8. Pre-Exercise Rights. Prior to exercise of this Warrant, the Holder shall
not be entitled to any rights of a shareholder with respect to the Shares,
including without limitation, the right to vote such Shares, receive preemptive
rights or be notified of shareholder meetings, and the Holder shall not be
entitled to any notice or other communication concerning the business or affairs
of the Company.
9. Restricted Securities. The Holder understands that this Warrant and the
Shares purchasable hereunder constitute "restricted securities" under the
federal securities laws inasmuch as they are being, or will be, acquired from
the Company in transactions not involving a public offering and accordingly may
not, under such laws and applicable regulations, be resold or transferred
without registration under the Securities Act of 1933, as amended, or an
applicable exemption from registration. In this connection, the Holder
acknowledges that Rule 144 of the Securities and Exchange Commission is not now,
and may not in the future be, available for resales of the Shares purchased
hereunder. The Holder further acknowledges that the Shares and any other
securities issued upon exercise of this Warrant shall bear a legend
substantially in the form of the legend appearing on the face hereof.
10. Certification of Investment Purpose. Unless a current registration
statement under the Securities Act of 1933, as amended, shall be in effect with
respect to the securities to be issued upon exercise of this Warrant, the Holder
hereof, by accepting this Warrant, covenants and agrees that, at the time of
exercise hereof, the Holder will deliver to the Company a written certification
that the securities acquired by the Holder are acquired for investments purposes
only and that such securities are not acquired with a view to, or for sale in
connection with, any distribution thereof.
11. Registration Rights. This Warrant and the Shares shall be subject to
the registration rights set forth in the Registration Rights Agreement of even
date herewith by and among the Holder and the Company, and the Holder shall be
entitled to all rights and benefits thereof.
12. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the Holder and
their respective successors and assigns.
13. Governing Law. This Warrant shall be governed by the laws of the State
of Texas, excluding the conflicts of laws provisions thereof.
INTEGRATED SECURITY SYSTEMS, INC.
By:
--------------------------------------
C. A. Rundell, Jr.
Chairman and Chief Executive Officer
EXERCISE NOTICE
Dated _________, ____
The undersigned hereby irrevocably elects to exercise the Stock Purchase
Warrant, dated September 27, 2001, issued by Integrated Security Systems, Inc.,
a Delaware corporation (the "Company") to the undersigned to the extent of
purchasing ___________ shares of Common Stock and hereby makes payment of
$_________ in payment of the aggregate Warrant Price of such Shares.
RENAISSANCE US GROWTH & INCOME TRUST PLC
By:
----------------------------------------
EXHIBIT 4
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
STOCK PURCHASE WARRANT
This Stock Purchase Warrant (this "Warrant"), dated October 12, 2001, is
issued to Frost National Bank, Custodian, FBO Renaissance Capital Growth &
Income Fund III, Inc., a Texas corporation (the "Holder"), by Integrated
Security Systems, Inc., a Delaware corporation (the "Company").
1. Purchase of Shares. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the principal
office of the Company (or at such other place as the Company shall notify the
holder hereof in writing), to purchase from the Company 125,000 fully paid and
non-assessable shares of Common Stock, no par value (the "Common Stock"), of the
Company (as adjusted pursuant to Section 7 hereof, the "Shares") for the
purchase price specified in Section 2 below.
2. Purchase Price. The purchase price for the Shares is $0.20 per share.
Such price shall be subject to adjustment pursuant to Section 7 hereof (such
price, as adjusted from time to time, is herein referred to as the "Warrant
Price").
3. Exercise Period. This Warrant is exercisable in whole or in part at any
time from the date hereof through October 12, 2006.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) surrender of this Warrant, together with a duly executed copy of
the form of Exercise Notice attached hereto, to the Secretary of the
Company at its principal offices, and the payment to the Company of an
amount equal to the aggregate purchase price for the number of Shares being
purchased; or
(b) if the Company's Common Stock is publicly traded as of such date,
the instruction to retain that number of Shares having a value equal to the
aggregate exercise price of the Shares as to which this Warrant is being
exercised and to issue to the Holder the remainder of such Shares computed
using the following formula:
Y(A-B)
X = --------------
A
Where: X = the number of shares of Common Stock to be issued to the
Holder.
Y = the number of shares of Common Stock as to which this
Warrant is being exercised.
A = the fair market value of one share of Common Stock.
B = the Warrant Price.
As used herein, the "fair market value of one share of Common Stock"
shall mean:
(1) Except in the circumstances described in clause (2) or (3)
hereof, the closing price of the Company's Common Stock, as reported
in the Wall Street Journal, on the trading day immediately prior to
the date of exercise;
(2) If such exercise is in conjunction with a merger, acquisition
or other consolidation pursuant to which the Company is not the
surviving entity, the value received by the holders of the Common
Stock pursuant to such transaction for each share; or
(3) If such exercise is in conjunction with the initial public
offering of the Company, the price at which the Common Stock is sold
to the public in such offering.
5. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice.
6. Reservation of Shares. The Company covenants that it will at all times
keep available such number of authorized shares of its Common Stock, free from
all preemptive rights with respect thereto, which will be sufficient to permit
the exercise of this Warrant for the full number of Shares specified herein. The
Company further covenants that such Shares, when issued pursuant to the exercise
of this Warrant, will be duly and validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issuance thereof.
7. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon exercise of this Warrant and the Warrant Price shall
be subject to adjustment from time to time as follows:
(a) Stock Dividends, Subdivisions, Combinations and Other Issuances.
If the Company shall at any time prior to the expiration of this Warrant
subdivide its Common Stock, by stock split or otherwise, combine its Common
Stock or issue additional shares of its Common Stock as a dividend with
respect to any shares of its Common Stock, the number of Shares issuable on
the exercise of this Warrant shall forthwith be proportionately increased
in the case of a subdivision or stock dividend and proportionately
decreased in the case of a combination. Appropriate adjustments shall also
be made to the purchase price payable per share, but the aggregate purchase
price payable for the total number of Shares purchasable under this Warrant
(as adjusted) shall remain the same. Any adjustment under this Section 7(a)
shall become effective at the close of business on the date the subdivision
or combination becomes effective or as of the record date of such dividend,
or, in the event that no record date is fixed, upon the making of such
dividend.
(b) Reclassification, Reorganization, Merger, Sale or Consolidation.
In the event of any reclassification, capital reorganization or other
change in the Common Stock of the Company (other than as a result of a
subdivision, combination or stock dividend provided for in Section 7(a)
above) or in the event of a consolidation or merger of the Company with or
into, or the sale of all or substantially all of the properties and assets
of the Company, to any person, and in connection therewith consideration is
payable to holders of Common Stock in cash, securities or other property,
then as a condition of such reclassification, reorganization or change,
consolidation, merger or sale, lawful provision shall be made, and duly
executed documents evidencing the same shall be delivered to the Holder, so
that the Holder shall have the right at any time prior to the expiration of
this Warrant to purchase, at a total price equal to that payable upon the
exercise of this Warrant immediately prior to such event, the kind and
amount of cash, securities or other property receivable in connection with
such reclassification, reorganization or change, consolidation, merger or
sale, by a holder of the same number of shares of Common Stock as were
exercisable by the Holder immediately prior to such reclassification,
reorganization or change, consolidation, merger or sale. In any such case,
appropriate provisions shall be made with respect to the rights and
interest of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any cash, securities or property deliverable
upon exercise hereof. Notwithstanding the foregoing, (i) if the Company
merges or consolidates with, or sells all or substantially all of its
property and assets to, any other person, and consideration is payable to
holders of Common Stock in exchange for their Common Stock in connection
with such merger, consolidation or sale which consists solely of cash, or
(ii) in the event of the dissolution, liquidation or winding up of the
Company, then the Holder shall be entitled to receive distributions on the
date of such event on an equal basis with holders of Common Stock as if
this Warrant had been exercised immediately prior to such event, less the
Warrant Price. Upon receipt of such payment, if any, the rights of the
Holder shall terminate and cease, and this Warrant shall expire. In case of
any such merger, consolidation or sale of assets, the surviving or
acquiring person and, in the event of any dissolution, liquidation or
winding up of the Company, the Company shall promptly, after receipt of
this surrendered Warrant, make payment by delivering a check in such amount
as is appropriate (or, in the case of consideration other than cash, such
other consideration as is appropriate) to such person as it may be directed
in writing by the Holder surrendering this Warrant.
(c) Certain Distributions. In case the Company shall fix a record date
for the making of a dividend or distribution of cash, securities or
property to all holders of Common Stock (excluding any dividends or
distributions referred to in Sections 7(a) or 7(b) above, the number of
Shares purchasable upon an exercise of this Warrant after such record date
shall be adjusted to equal the product obtained by multiplying the number
of Shares purchasable upon an exercise of this Warrant immediately prior to
such record date by a fraction, the numerator of which shall be the Warrant
Price immediately prior to such distribution, and the denominator of which
shall be the Warrant Price immediately prior to such distribution, less the
fair market value per Share, as determined by the Holder, of the cash,
securities or property so distributed. Such adjustment shall be made
successively whenever any such distribution is made and shall become
effective on the effective date of distribution.
8. Pre-Exercise Rights. Prior to exercise of this Warrant, the Holder shall
not be entitled to any rights of a shareholder with respect to the Shares,
including without limitation, the right to vote such Shares, receive preemptive
rights or be notified of shareholder meetings, and the Holder shall not be
entitled to any notice or other communication concerning the business or affairs
of the Company.
9. Restricted Securities. The Holder understands that this Warrant and the
Shares purchasable hereunder constitute "restricted securities" under the
federal securities laws inasmuch as they are being, or will be, acquired from
the Company in transactions not involving a public offering and accordingly may
not, under such laws and applicable regulations, be resold or transferred
without registration under the Securities Act of 1933, as amended, or an
applicable exemption from registration. In this connection, the Holder
acknowledges that Rule 144 of the Securities and Exchange Commission is not now,
and may not in the future be, available for resales of the Shares purchased
hereunder. The Holder further acknowledges that the Shares and any other
securities issued upon exercise of this Warrant shall bear a legend
substantially in the form of the legend appearing on the face hereof.
10. Certification of Investment Purpose. Unless a current registration
statement under the Securities Act of 1933, as amended, shall be in effect with
respect to the securities to be issued upon exercise of this Warrant, the Holder
hereof, by accepting this Warrant, covenants and agrees that, at the time of
exercise hereof, the Holder will deliver to the Company a written certification
that the securities acquired by the Holder are acquired for investments purposes
only and that such securities are not acquired with a view to, or for sale in
connection with, any distribution thereof.
11. Registration Rights. This Warrant and the Shares shall be subject to
the registration rights set forth in the Registration Rights Agreement of even
date herewith by and among the Holder and the Company, and the Holder shall be
entitled to all rights and benefits thereof.
12. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the Holder and
their respective successors and assigns.
13. Governing Law. This Warrant shall be governed by the laws of the State
of Texas, excluding the conflicts of laws provisions thereof.
INTEGRATED SECURITY SYSTEMS, INC.
By: /S/
C. A. Rundell, Jr.
Chairman and Chief Executive Officer
EXERCISE NOTICE
Dated _________, ____
The undersigned hereby irrevocably elects to exercise the Stock Purchase
Warrant, dated October 12, 2001, issued by Integrated Security Systems, Inc., a
Delaware corporation (the "Company") to the undersigned to the extent of
purchasing ___________ shares of Common Stock and hereby makes payment of
$_________ in payment of the aggregate Warrant Price of such Shares.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
By:
------------------------------------------------
EXHIBIT 5
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
STOCK PURCHASE WARRANT
This Stock Purchase Warrant (this "Warrant"), dated October 12, 2001, is
issued to Frost National Bank, Custodian, FBO Renaissance US Growth & Income
Trust PLC, a public limited company registered in England and Wales (the
"Holder"), by Integrated Security Systems, Inc., a Delaware corporation (the
"Company").
1. Purchase of Shares. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the principal
office of the Company (or at such other place as the Company shall notify the
holder hereof in writing), to purchase from the Company 125,000 fully paid and
non-assessable shares of Common Stock, no par value (the "Common Stock"), of the
Company (as adjusted pursuant to Section 7 hereof, the "Shares") for the
purchase price specified in Section 2 below.
2. Purchase Price. The purchase price for the Shares is $0.20 per share.
Such price shall be subject to adjustment pursuant to Section 7 hereof (such
price, as adjusted from time to time, is herein referred to as the "Warrant
Price").
3. Exercise Period. This Warrant is exercisable in whole or in part at any
time from the date hereof through October 12, 2006.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) surrender of this Warrant, together with a duly executed copy of
the form of Exercise Notice attached hereto, to the Secretary of the
Company at its principal offices, and the payment to the Company of an
amount equal to the aggregate purchase price for the number of Shares being
purchased; or
(b) if the Company's Common Stock is publicly traded as of such date,
the instruction to retain that number of Shares having a value equal to the
aggregate exercise price of the Shares as to which this Warrant is being
exercised and to issue to the Holder the remainder of such Shares computed
using the following formula:
Y(A-B)
X = --------------
A
Where: X = the number of shares of Common Stock to be issued to the
Holder.
Y = the number of shares of Common Stock as to which this
Warrant is being exercised.
A = the fair market value of one share of Common Stock.
B = the Warrant Price.
As used herein, the "fair market value of one share of Common Stock"
shall mean:
(1) Except in the circumstances described in clause (2) or (3)
hereof, the closing price of the Company's Common Stock, as reported
in the Wall Street Journal, on the trading day immediately prior to
the date of exercise;
(2) If such exercise is in conjunction with a merger, acquisition
or other consolidation pursuant to which the Company is not the
surviving entity, the value received by the holders of the Common
Stock pursuant to such transaction for each share; or
(3) If such exercise is in conjunction with the initial public
offering of the Company, the price at which the Common Stock is sold
to the public in such offering.
5. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice.
6. Reservation of Shares. The Company covenants that it will at all times
keep available such number of authorized shares of its Common Stock, free from
all preemptive rights with respect thereto, which will be sufficient to permit
the exercise of this Warrant for the full number of Shares specified herein. The
Company further covenants that such Shares, when issued pursuant to the exercise
of this Warrant, will be duly and validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issuance thereof.
7. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon exercise of this Warrant and the Warrant Price shall
be subject to adjustment from time to time as follows:
(a) Stock Dividends, Subdivisions, Combinations and Other Issuances.
If the Company shall at any time prior to the expiration of this Warrant
subdivide its Common Stock, by stock split or otherwise, combine its Common
Stock or issue additional shares of its Common Stock as a dividend with
respect to any shares of its Common Stock, the number of Shares issuable on
the exercise of this Warrant shall forthwith be proportionately increased
in the case of a subdivision or stock dividend and proportionately
decreased in the case of a combination. Appropriate adjustments shall also
be made to the purchase price payable per share, but the aggregate purchase
price payable for the total number of Shares purchasable under this Warrant
(as adjusted) shall remain the same. Any adjustment under this Section 7(a)
shall become effective at the close of business on the date the subdivision
or combination becomes effective or as of the record date of such dividend,
or, in the event that no record date is fixed, upon the making of such
dividend.
(b) Reclassification, Reorganization, Merger, Sale or Consolidation.
In the event of any reclassification, capital reorganization or other
change in the Common Stock of the Company (other than as a result of a
subdivision, combination or stock dividend provided for in Section 7(a)
above) or in the event of a consolidation or merger of the Company with or
into, or the sale of all or substantially all of the properties and assets
of the Company, to any person, and in connection therewith consideration is
payable to holders of Common Stock in cash, securities or other property,
then as a condition of such reclassification, reorganization or change,
consolidation, merger or sale, lawful provision shall be made, and duly
executed documents evidencing the same shall be delivered to the Holder, so
that the Holder shall have the right at any time prior to the expiration of
this Warrant to purchase, at a total price equal to that payable upon the
exercise of this Warrant immediately prior to such event, the kind and
amount of cash, securities or other property receivable in connection with
such reclassification, reorganization or change, consolidation, merger or
sale, by a holder of the same number of shares of Common Stock as were
exercisable by the Holder immediately prior to such reclassification,
reorganization or change, consolidation, merger or sale. In any such case,
appropriate provisions shall be made with respect to the rights and
interest of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any cash, securities or property deliverable
upon exercise hereof. Notwithstanding the foregoing, (i) if the Company
merges or consolidates with, or sells all or substantially all of its
property and assets to, any other person, and consideration is payable to
holders of Common Stock in exchange for their Common Stock in connection
with such merger, consolidation or sale which consists solely of cash, or
(ii) in the event of the dissolution, liquidation or winding up of the
Company, then the Holder shall be entitled to receive distributions on the
date of such event on an equal basis with holders of Common Stock as if
this Warrant had been exercised immediately prior to such event, less the
Warrant Price. Upon receipt of such payment, if any, the rights of the
Holder shall terminate and cease, and this Warrant shall expire. In case of
any such merger, consolidation or sale of assets, the surviving or
acquiring person and, in the event of any dissolution, liquidation or
winding up of the Company, the Company shall promptly, after receipt of
this surrendered Warrant, make payment by delivering a check in such amount
as is appropriate (or, in the case of consideration other than cash, such
other consideration as is appropriate) to such person as it may be directed
in writing by the Holder surrendering this Warrant.
(c) Certain Distributions. In case the Company shall fix a record date
for the making of a dividend or distribution of cash, securities or
property to all holders of Common Stock (excluding any dividends or
distributions referred to in Sections 7(a) or 7(b) above, the number of
Shares purchasable upon an exercise of this Warrant after such record date
shall be adjusted to equal the product obtained by multiplying the number
of Shares purchasable upon an exercise of this Warrant immediately prior to
such record date by a fraction, the numerator of which shall be the Warrant
Price immediately prior to such distribution, and the denominator of which
shall be the Warrant Price immediately prior to such distribution, less the
fair market value per Share, as determined by the Holder, of the cash,
securities or property so distributed. Such adjustment shall be made
successively whenever any such distribution is made and shall become
effective on the effective date of distribution.
8. Pre-Exercise Rights. Prior to exercise of this Warrant, the Holder shall
not be entitled to any rights of a shareholder with respect to the Shares,
including without limitation, the right to vote such Shares, receive preemptive
rights or be notified of shareholder meetings, and the Holder shall not be
entitled to any notice or other communication concerning the business or affairs
of the Company.
9. Restricted Securities. The Holder understands that this Warrant and the
Shares purchasable hereunder constitute "restricted securities" under the
federal securities laws inasmuch as they are being, or will be, acquired from
the Company in transactions not involving a public offering and accordingly may
not, under such laws and applicable regulations, be resold or transferred
without registration under the Securities Act of 1933, as amended, or an
applicable exemption from registration. In this connection, the Holder
acknowledges that Rule 144 of the Securities and Exchange Commission is not now,
and may not in the future be, available for resales of the Shares purchased
hereunder. The Holder further acknowledges that the Shares and any other
securities issued upon exercise of this Warrant shall bear a legend
substantially in the form of the legend appearing on the face hereof.
10. Certification of Investment Purpose. Unless a current registration
statement under the Securities Act of 1933, as amended, shall be in effect with
respect to the securities to be issued upon exercise of this Warrant, the Holder
hereof, by accepting this Warrant, covenants and agrees that, at the time of
exercise hereof, the Holder will deliver to the Company a written certification
that the securities acquired by the Holder are acquired for investments purposes
only and that such securities are not acquired with a view to, or for sale in
connection with, any distribution thereof.
11. Registration Rights. This Warrant and the Shares shall be subject to
the registration rights set forth in the Registration Rights Agreement of even
date herewith by and among the Holder and the Company, and the Holder shall be
entitled to all rights and benefits thereof.
12. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the Holder and
their respective successors and assigns.
13. Governing Law. This Warrant shall be governed by the laws of the State
of Texas, excluding the conflicts of laws provisions thereof.
INTEGRATED SECURITY SYSTEMS, INC.
By: /S/
C. A. Rundell, Jr.
Chairman and Chief Executive Officer
EXERCISE NOTICE
Dated _________, ____
The undersigned hereby irrevocably elects to exercise the Stock Purchase
Warrant, dated October 12, 2001, issued by Integrated Security Systems, Inc., a
Delaware corporation (the "Company") to the undersigned to the extent of
purchasing ___________ shares of Common Stock and hereby makes payment of
$_________ in payment of the aggregate Warrant Price of such Shares.
RENAISSANCE US GROWTH & INCOME TRUST PLC
By:
----------------------------------------
EXHIBIT 6
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
STOCK PURCHASE WARRANT
This Stock Purchase Warrant (this "Warrant"), dated October 26, 2001, is
issued to Frost National Bank, Custodian, FBO Renaissance Capital Growth &
Income Fund III, Inc., a Texas corporation (the "Holder"), by Integrated
Security Systems, Inc., a Delaware corporation (the "Company").
1. Purchase of Shares. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the principal
office of the Company (or at such other place as the Company shall notify the
holder hereof in writing), to purchase from the Company 125,000 fully paid and
non-assessable shares of Common Stock, no par value (the "Common Stock"), of the
Company (as adjusted pursuant to Section 7 hereof, the "Shares") for the
purchase price specified in Section 2 below.
2. Purchase Price. The purchase price for the Shares is $0.20 per share.
Such price shall be subject to adjustment pursuant to Section 7 hereof (such
price, as adjusted from time to time, is herein referred to as the "Warrant
Price").
3. Exercise Period. This Warrant is exercisable in whole or in part at any
time from the date hereof through October 26, 2006.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) surrender of this Warrant, together with a duly executed copy of
the form of Exercise Notice attached hereto, to the Secretary of the
Company at its principal offices, and the payment to the Company of an
amount equal to the aggregate purchase price for the number of Shares being
purchased; or
(b) if the Company's Common Stock is publicly traded as of such date,
the instruction to retain that number of Shares having a value equal to the
aggregate exercise price of the Shares as to which this Warrant is being
exercised and to issue to the Holder the remainder of such Shares computed
using the following formula:
Y(A-B)
X = --------------
A
Where: X = the number of shares of Common Stock to be issued to the
Holder.
Y = the number of shares of Common Stock as to which this
Warrant is being exercised.
A = the fair market value of one share of Common Stock.
B = the Warrant Price.
As used herein, the "fair market value of one share of Common Stock"
shall mean:
(1) Except in the circumstances described in clause (2) or (3)
hereof, the closing price of the Company's Common Stock, as reported
in the Wall Street Journal, on the trading day immediately prior to
the date of exercise;
(2) If such exercise is in conjunction with a merger, acquisition
or other consolidation pursuant to which the Company is not the
surviving entity, the value received by the holders of the Common
Stock pursuant to such transaction for each share; or
(3) If such exercise is in conjunction with the initial public
offering of the Company, the price at which the Common Stock is sold
to the public in such offering.
5. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice.
6. Reservation of Shares. The Company covenants that it will at all times
keep available such number of authorized shares of its Common Stock, free from
all preemptive rights with respect thereto, which will be sufficient to permit
the exercise of this Warrant for the full number of Shares specified herein. The
Company further covenants that such Shares, when issued pursuant to the exercise
of this Warrant, will be duly and validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issuance thereof.
7. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon exercise of this Warrant and the Warrant Price shall
be subject to adjustment from time to time as follows:
(a) Stock Dividends, Subdivisions, Combinations and Other Issuances.
If the Company shall at any time prior to the expiration of this Warrant
subdivide its Common Stock, by stock split or otherwise, combine its Common
Stock or issue additional shares of its Common Stock as a dividend with
respect to any shares of its Common Stock, the number of Shares issuable on
the exercise of this Warrant shall forthwith be proportionately increased
in the case of a subdivision or stock dividend and proportionately
decreased in the case of a combination. Appropriate adjustments shall also
be made to the purchase price payable per share, but the aggregate purchase
price payable for the total number of Shares purchasable under this Warrant
(as adjusted) shall remain the same. Any adjustment under this Section 7(a)
shall become effective at the close of business on the date the subdivision
or combination becomes effective or as of the record date of such dividend,
or, in the event that no record date is fixed, upon the making of such
dividend.
(b) Reclassification, Reorganization, Merger, Sale or Consolidation.
In the event of any reclassification, capital reorganization or other
change in the Common Stock of the Company (other than as a result of a
subdivision, combination or stock dividend provided for in Section 7(a)
above) or in the event of a consolidation or merger of the Company with or
into, or the sale of all or substantially all of the properties and assets
of the Company, to any person, and in connection therewith consideration is
payable to holders of Common Stock in cash, securities or other property,
then as a condition of such reclassification, reorganization or change,
consolidation, merger or sale, lawful provision shall be made, and duly
executed documents evidencing the same shall be delivered to the Holder, so
that the Holder shall have the right at any time prior to the expiration of
this Warrant to purchase, at a total price equal to that payable upon the
exercise of this Warrant immediately prior to such event, the kind and
amount of cash, securities or other property receivable in connection with
such reclassification, reorganization or change, consolidation, merger or
sale, by a holder of the same number of shares of Common Stock as were
exercisable by the Holder immediately prior to such reclassification,
reorganization or change, consolidation, merger or sale. In any such case,
appropriate provisions shall be made with respect to the rights and
interest of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any cash, securities or property deliverable
upon exercise hereof. Notwithstanding the foregoing, (i) if the Company
merges or consolidates with, or sells all or substantially all of its
property and assets to, any other person, and consideration is payable to
holders of Common Stock in exchange for their Common Stock in connection
with such merger, consolidation or sale which consists solely of cash, or
(ii) in the event of the dissolution, liquidation or winding up of the
Company, then the Holder shall be entitled to receive distributions on the
date of such event on an equal basis with holders of Common Stock as if
this Warrant had been exercised immediately prior to such event, less the
Warrant Price. Upon receipt of such payment, if any, the rights of the
Holder shall terminate and cease, and this Warrant shall expire. In case of
any such merger, consolidation or sale of assets, the surviving or
acquiring person and, in the event of any dissolution, liquidation or
winding up of the Company, the Company shall promptly, after receipt of
this surrendered Warrant, make payment by delivering a check in such amount
as is appropriate (or, in the case of consideration other than cash, such
other consideration as is appropriate) to such person as it may be directed
in writing by the Holder surrendering this Warrant.
(c) Certain Distributions. In case the Company shall fix a record date
for the making of a dividend or distribution of cash, securities or
property to all holders of Common Stock (excluding any dividends or
distributions referred to in Sections 7(a) or 7(b) above, the number of
Shares purchasable upon an exercise of this Warrant after such record date
shall be adjusted to equal the product obtained by multiplying the number
of Shares purchasable upon an exercise of this Warrant immediately prior to
such record date by a fraction, the numerator of which shall be the Warrant
Price immediately prior to such distribution, and the denominator of which
shall be the Warrant Price immediately prior to such distribution, less the
fair market value per Share, as determined by the Holder, of the cash,
securities or property so distributed. Such adjustment shall be made
successively whenever any such distribution is made and shall become
effective on the effective date of distribution.
8. Pre-Exercise Rights. Prior to exercise of this Warrant, the Holder shall
not be entitled to any rights of a shareholder with respect to the Shares,
including without limitation, the right to vote such Shares, receive preemptive
rights or be notified of shareholder meetings, and the Holder shall not be
entitled to any notice or other communication concerning the business or affairs
of the Company.
9. Restricted Securities. The Holder understands that this Warrant and the
Shares purchasable hereunder constitute "restricted securities" under the
federal securities laws inasmuch as they are being, or will be, acquired from
the Company in transactions not involving a public offering and accordingly may
not, under such laws and applicable regulations, be resold or transferred
without registration under the Securities Act of 1933, as amended, or an
applicable exemption from registration. In this connection, the Holder
acknowledges that Rule 144 of the Securities and Exchange Commission is not now,
and may not in the future be, available for resales of the Shares purchased
hereunder. The Holder further acknowledges that the Shares and any other
securities issued upon exercise of this Warrant shall bear a legend
substantially in the form of the legend appearing on the face hereof.
10. Certification of Investment Purpose. Unless a current registration
statement under the Securities Act of 1933, as amended, shall be in effect with
respect to the securities to be issued upon exercise of this Warrant, the Holder
hereof, by accepting this Warrant, covenants and agrees that, at the time of
exercise hereof, the Holder will deliver to the Company a written certification
that the securities acquired by the Holder are acquired for investments purposes
only and that such securities are not acquired with a view to, or for sale in
connection with, any distribution thereof.
11. Registration Rights. This Warrant and the Shares shall be subject to
the registration rights set forth in the Registration Rights Agreement of even
date herewith by and among the Holder and the Company, and the Holder shall be
entitled to all rights and benefits thereof.
12. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the Holder and
their respective successors and assigns.
13. Governing Law. This Warrant shall be governed by the laws of the State
of Texas, excluding the conflicts of laws provisions thereof.
INTEGRATED SECURITY SYSTEMS, INC.
By: /S/
C. A. Rundell, Jr.
Chairman and Chief Executive Officer
EXERCISE NOTICE
Dated _________, ____
The undersigned hereby irrevocably elects to exercise the Stock Purchase
Warrant, dated October 26, 2001, issued by Integrated Security Systems, Inc., a
Delaware corporation (the "Company") to the undersigned to the extent of
purchasing ___________ shares of Common Stock and hereby makes payment of
$_________ in payment of the aggregate Warrant Price of such Shares.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
By:
-----------------------------------------------
EXHIBIT 7
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
STOCK PURCHASE WARRANT
This Stock Purchase Warrant (this "Warrant"), dated October 26, 2001, is
issued to Frost National Bank, Custodian, FBO Renaissance US Growth & Income
Trust PLC, a public limited company registered in England and Wales (the
"Holder"), by Integrated Security Systems, Inc., a Delaware corporation (the
"Company").
1. Purchase of Shares. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the principal
office of the Company (or at such other place as the Company shall notify the
holder hereof in writing), to purchase from the Company 125,000 fully paid and
non-assessable shares of Common Stock, no par value (the "Common Stock"), of the
Company (as adjusted pursuant to Section 7 hereof, the "Shares") for the
purchase price specified in Section 2 below.
2. Purchase Price. The purchase price for the Shares is $0.20 per share.
Such price shall be subject to adjustment pursuant to Section 7 hereof (such
price, as adjusted from time to time, is herein referred to as the "Warrant
Price").
3. Exercise Period. This Warrant is exercisable in whole or in part at any
time from the date hereof through October 26, 2006.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) surrender of this Warrant, together with a duly executed copy of
the form of Exercise Notice attached hereto, to the Secretary of the
Company at its principal offices, and the payment to the Company of an
amount equal to the aggregate purchase price for the number of Shares being
purchased; or
(b) if the Company's Common Stock is publicly traded as of such date,
the instruction to retain that number of Shares having a value equal to the
aggregate exercise price of the Shares as to which this Warrant is being
exercised and to issue to the Holder the remainder of such Shares computed
using the following formula:
Y(A-B)
X = --------------
A
Where: X = the number of shares of Common Stock to be issued to the
Holder.
Y = the number of shares of Common Stock as to which this
Warrant is being exercised.
A = the fair market value of one share of Common Stock.
B = the Warrant Price.
As used herein, the "fair market value of one share of Common Stock"
shall mean:
(1) Except in the circumstances described in clause (2) or (3)
hereof, the closing price of the Company's Common Stock, as reported
in the Wall Street Journal, on the trading day immediately prior to
the date of exercise;
(2) If such exercise is in conjunction with a merger, acquisition
or other consolidation pursuant to which the Company is not the
surviving entity, the value received by the holders of the Common
Stock pursuant to such transaction for each share; or
(3) If such exercise is in conjunction with the initial public
offering of the Company, the price at which the Common Stock is sold
to the public in such offering.
5. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice.
6. Reservation of Shares. The Company covenants that it will at all times
keep available such number of authorized shares of its Common Stock, free from
all preemptive rights with respect thereto, which will be sufficient to permit
the exercise of this Warrant for the full number of Shares specified herein. The
Company further covenants that such Shares, when issued pursuant to the exercise
of this Warrant, will be duly and validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issuance thereof.
7. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon exercise of this Warrant and the Warrant Price shall
be subject to adjustment from time to time as follows:
(a) Stock Dividends, Subdivisions, Combinations and Other Issuances.
If the Company shall at any time prior to the expiration of this Warrant
subdivide its Common Stock, by stock split or otherwise, combine its Common
Stock or issue additional shares of its Common Stock as a dividend with
respect to any shares of its Common Stock, the number of Shares issuable on
the exercise of this Warrant shall forthwith be proportionately increased
in the case of a subdivision or stock dividend and proportionately
decreased in the case of a combination. Appropriate adjustments shall also
be made to the purchase price payable per share, but the aggregate purchase
price payable for the total number of Shares purchasable under this Warrant
(as adjusted) shall remain the same. Any adjustment under this Section 7(a)
shall become effective at the close of business on the date the subdivision
or combination becomes effective or as of the record date of such dividend,
or, in the event that no record date is fixed, upon the making of such
dividend.
(b) Reclassification, Reorganization, Merger, Sale or Consolidation.
In the event of any reclassification, capital reorganization or other
change in the Common Stock of the Company (other than as a result of a
subdivision, combination or stock dividend provided for in Section 7(a)
above) or in the event of a consolidation or merger of the Company with or
into, or the sale of all or substantially all of the properties and assets
of the Company, to any person, and in connection therewith consideration is
payable to holders of Common Stock in cash, securities or other property,
then as a condition of such reclassification, reorganization or change,
consolidation, merger or sale, lawful provision shall be made, and duly
executed documents evidencing the same shall be delivered to the Holder, so
that the Holder shall have the right at any time prior to the expiration of
this Warrant to purchase, at a total price equal to that payable upon the
exercise of this Warrant immediately prior to such event, the kind and
amount of cash, securities or other property receivable in connection with
such reclassification, reorganization or change, consolidation, merger or
sale, by a holder of the same number of shares of Common Stock as were
exercisable by the Holder immediately prior to such reclassification,
reorganization or change, consolidation, merger or sale. In any such case,
appropriate provisions shall be made with respect to the rights and
interest of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any cash, securities or property deliverable
upon exercise hereof. Notwithstanding the foregoing, (i) if the Company
merges or consolidates with, or sells all or substantially all of its
property and assets to, any other person, and consideration is payable to
holders of Common Stock in exchange for their Common Stock in connection
with such merger, consolidation or sale which consists solely of cash, or
(ii) in the event of the dissolution, liquidation or winding up of the
Company, then the Holder shall be entitled to receive distributions on the
date of such event on an equal basis with holders of Common Stock as if
this Warrant had been exercised immediately prior to such event, less the
Warrant Price. Upon receipt of such payment, if any, the rights of the
Holder shall terminate and cease, and this Warrant shall expire. In case of
any such merger, consolidation or sale of assets, the surviving or
acquiring person and, in the event of any dissolution, liquidation or
winding up of the Company, the Company shall promptly, after receipt of
this surrendered Warrant, make payment by delivering a check in such amount
as is appropriate (or, in the case of consideration other than cash, such
other consideration as is appropriate) to such person as it may be directed
in writing by the Holder surrendering this Warrant.
(c) Certain Distributions. In case the Company shall fix a record date
for the making of a dividend or distribution of cash, securities or
property to all holders of Common Stock (excluding any dividends or
distributions referred to in Sections 7(a) or 7(b) above, the number of
Shares purchasable upon an exercise of this Warrant after such record date
shall be adjusted to equal the product obtained by multiplying the number
of Shares purchasable upon an exercise of this Warrant immediately prior to
such record date by a fraction, the numerator of which shall be the Warrant
Price immediately prior to such distribution, and the denominator of which
shall be the Warrant Price immediately prior to such distribution, less the
fair market value per Share, as determined by the Holder, of the cash,
securities or property so distributed. Such adjustment shall be made
successively whenever any such distribution is made and shall become
effective on the effective date of distribution.
8. Pre-Exercise Rights. Prior to exercise of this Warrant, the Holder shall
not be entitled to any rights of a shareholder with respect to the Shares,
including without limitation, the right to vote such Shares, receive preemptive
rights or be notified of shareholder meetings, and the Holder shall not be
entitled to any notice or other communication concerning the business or affairs
of the Company.
9. Restricted Securities. The Holder understands that this Warrant and the
Shares purchasable hereunder constitute "restricted securities" under the
federal securities laws inasmuch as they are being, or will be, acquired from
the Company in transactions not involving a public offering and accordingly may
not, under such laws and applicable regulations, be resold or transferred
without registration under the Securities Act of 1933, as amended, or an
applicable exemption from registration. In this connection, the Holder
acknowledges that Rule 144 of the Securities and Exchange Commission is not now,
and may not in the future be, available for resales of the Shares purchased
hereunder. The Holder further acknowledges that the Shares and any other
securities issued upon exercise of this Warrant shall bear a legend
substantially in the form of the legend appearing on the face hereof.
10. Certification of Investment Purpose. Unless a current registration
statement under the Securities Act of 1933, as amended, shall be in effect with
respect to the securities to be issued upon exercise of this Warrant, the Holder
hereof, by accepting this Warrant, covenants and agrees that, at the time of
exercise hereof, the Holder will deliver to the Company a written certification
that the securities acquired by the Holder are acquired for investments purposes
only and that such securities are not acquired with a view to, or for sale in
connection with, any distribution thereof.
11. Registration Rights. This Warrant and the Shares shall be subject to
the registration rights set forth in the Registration Rights Agreement of even
date herewith by and among the Holder and the Company, and the Holder shall be
entitled to all rights and benefits thereof.
12. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the Holder and
their respective successors and assigns.
13. Governing Law. This Warrant shall be governed by the laws of the State
of Texas, excluding the conflicts of laws provisions thereof.
INTEGRATED SECURITY SYSTEMS, INC.
By: /S/
C. A. Rundell, Jr.
Chairman and Chief Executive Officer
EXERCISE NOTICE
Dated _________, ____
The undersigned hereby irrevocably elects to exercise the Stock Purchase
Warrant, dated October 26, 2001, issued by Integrated Security Systems, Inc., a
Delaware corporation (the "Company") to the undersigned to the extent of
purchasing ___________ shares of Common Stock and hereby makes payment of
$_________ in payment of the aggregate Warrant Price of such Shares.
RENAISSANCE US GROWTH & INCOME TRUST PLC
By:
-----------------------------------------
EXHIBIT 8
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
STOCK PURCHASE WARRANT
This Stock Purchase Warrant (this "Warrant"), dated November 9, 2001, is
issued to Frost National Bank, Custodian, FBO Renaissance Capital Growth &
Income Fund III, Inc., a Texas corporation (the "Holder"), by Integrated
Security Systems, Inc., a Delaware corporation (the "Company").
1. Purchase of Shares. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the principal
office of the Company (or at such other place as the Company shall notify the
holder hereof in writing), to purchase from the Company 125,000 fully paid and
non-assessable shares of Common Stock, no par value (the "Common Stock"), of the
Company (as adjusted pursuant to Section 7 hereof, the "Shares") for the
purchase price specified in Section 2 below.
2. Purchase Price. The purchase price for the Shares is $0.20 per share.
Such price shall be subject to adjustment pursuant to Section 7 hereof (such
price, as adjusted from time to time, is herein referred to as the "Warrant
Price").
3. Exercise Period. This Warrant is exercisable in whole or in part at any
time from the date hereof through November 9, 2006.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) surrender of this Warrant, together with a duly executed copy of
the form of Exercise Notice attached hereto, to the Secretary of the
Company at its principal offices, and the payment to the Company of an
amount equal to the aggregate purchase price for the number of Shares being
purchased; or
(b) if the Company's Common Stock is publicly traded as of such date,
the instruction to retain that number of Shares having a value equal to the
aggregate exercise price of the Shares as to which this Warrant is being
exercised and to issue to the Holder the remainder of such Shares computed
using the following formula:
Y(A-B)
X = --------------
A
Where: X = the number of shares of Common Stock to be issued to the
Holder.
Y = the number of shares of Common Stock as to which this
Warrant is being exercised.
A = the fair market value of one share of Common Stock.
B = the Warrant Price.
As used herein, the "fair market value of one share of Common Stock"
shall mean:
(1) Except in the circumstances described in clause (2) or (3)
hereof, the closing price of the Company's Common Stock, as reported
in the Wall Street Journal, on the trading day immediately prior to
the date of exercise;
(2) If such exercise is in conjunction with a merger, acquisition
or other consolidation pursuant to which the Company is not the
surviving entity, the value received by the holders of the Common
Stock pursuant to such transaction for each share; or
(3) If such exercise is in conjunction with the initial public
offering of the Company, the price at which the Common Stock is sold
to the public in such offering.
5. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice.
6. Reservation of Shares. The Company covenants that it will at all times
keep available such number of authorized shares of its Common Stock, free from
all preemptive rights with respect thereto, which will be sufficient to permit
the exercise of this Warrant for the full number of Shares specified herein. The
Company further covenants that such Shares, when issued pursuant to the exercise
of this Warrant, will be duly and validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issuance thereof.
7. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon exercise of this Warrant and the Warrant Price shall
be subject to adjustment from time to time as follows:
(a) Stock Dividends, Subdivisions, Combinations and Other Issuances.
If the Company shall at any time prior to the expiration of this Warrant
subdivide its Common Stock, by stock split or otherwise, combine its Common
Stock or issue additional shares of its Common Stock as a dividend with
respect to any shares of its Common Stock, the number of Shares issuable on
the exercise of this Warrant shall forthwith be proportionately increased
in the case of a subdivision or stock dividend and proportionately
decreased in the case of a combination. Appropriate adjustments shall also
be made to the purchase price payable per share, but the aggregate purchase
price payable for the total number of Shares purchasable under this Warrant
(as adjusted) shall remain the same. Any adjustment under this Section 7(a)
shall become effective at the close of business on the date the subdivision
or combination becomes effective or as of the record date of such dividend,
or, in the event that no record date is fixed, upon the making of such
dividend.
(b) Reclassification, Reorganization, Merger, Sale or Consolidation.
In the event of any reclassification, capital reorganization or other
change in the Common Stock of the Company (other than as a result of a
subdivision, combination or stock dividend provided for in Section 7(a)
above) or in the event of a consolidation or merger of the Company with or
into, or the sale of all or substantially all of the properties and assets
of the Company, to any person, and in connection therewith consideration is
payable to holders of Common Stock in cash, securities or other property,
then as a condition of such reclassification, reorganization or change,
consolidation, merger or sale, lawful provision shall be made, and duly
executed documents evidencing the same shall be delivered to the Holder, so
that the Holder shall have the right at any time prior to the expiration of
this Warrant to purchase, at a total price equal to that payable upon the
exercise of this Warrant immediately prior to such event, the kind and
amount of cash, securities or other property receivable in connection with
such reclassification, reorganization or change, consolidation, merger or
sale, by a holder of the same number of shares of Common Stock as were
exercisable by the Holder immediately prior to such reclassification,
reorganization or change, consolidation, merger or sale. In any such case,
appropriate provisions shall be made with respect to the rights and
interest of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any cash, securities or property deliverable
upon exercise hereof. Notwithstanding the foregoing, (i) if the Company
merges or consolidates with, or sells all or substantially all of its
property and assets to, any other person, and consideration is payable to
holders of Common Stock in exchange for their Common Stock in connection
with such merger, consolidation or sale which consists solely of cash, or
(ii) in the event of the dissolution, liquidation or winding up of the
Company, then the Holder shall be entitled to receive distributions on the
date of such event on an equal basis with holders of Common Stock as if
this Warrant had been exercised immediately prior to such event, less the
Warrant Price. Upon receipt of such payment, if any, the rights of the
Holder shall terminate and cease, and this Warrant shall expire. In case of
any such merger, consolidation or sale of assets, the surviving or
acquiring person and, in the event of any dissolution, liquidation or
winding up of the Company, the Company shall promptly, after receipt of
this surrendered Warrant, make payment by delivering a check in such amount
as is appropriate (or, in the case of consideration other than cash, such
other consideration as is appropriate) to such person as it may be directed
in writing by the Holder surrendering this Warrant.
(c) Certain Distributions. In case the Company shall fix a record date
for the making of a dividend or distribution of cash, securities or
property to all holders of Common Stock (excluding any dividends or
distributions referred to in Sections 7(a) or 7(b) above, the number of
Shares purchasable upon an exercise of this Warrant after such record date
shall be adjusted to equal the product obtained by multiplying the number
of Shares purchasable upon an exercise of this Warrant immediately prior to
such record date by a fraction, the numerator of which shall be the Warrant
Price immediately prior to such distribution, and the denominator of which
shall be the Warrant Price immediately prior to such distribution, less the
fair market value per Share, as determined by the Holder, of the cash,
securities or property so distributed. Such adjustment shall be made
successively whenever any such distribution is made and shall become
effective on the effective date of distribution.
8. Pre-Exercise Rights. Prior to exercise of this Warrant, the Holder shall
not be entitled to any rights of a shareholder with respect to the Shares,
including without limitation, the right to vote such Shares, receive preemptive
rights or be notified of shareholder meetings, and the Holder shall not be
entitled to any notice or other communication concerning the business or affairs
of the Company.
9. Restricted Securities. The Holder understands that this Warrant and the
Shares purchasable hereunder constitute "restricted securities" under the
federal securities laws inasmuch as they are being, or will be, acquired from
the Company in transactions not involving a public offering and accordingly may
not, under such laws and applicable regulations, be resold or transferred
without registration under the Securities Act of 1933, as amended, or an
applicable exemption from registration. In this connection, the Holder
acknowledges that Rule 144 of the Securities and Exchange Commission is not now,
and may not in the future be, available for resales of the Shares purchased
hereunder. The Holder further acknowledges that the Shares and any other
securities issued upon exercise of this Warrant shall bear a legend
substantially in the form of the legend appearing on the face hereof.
10. Certification of Investment Purpose. Unless a current registration
statement under the Securities Act of 1933, as amended, shall be in effect with
respect to the securities to be issued upon exercise of this Warrant, the Holder
hereof, by accepting this Warrant, covenants and agrees that, at the time of
exercise hereof, the Holder will deliver to the Company a written certification
that the securities acquired by the Holder are acquired for investments purposes
only and that such securities are not acquired with a view to, or for sale in
connection with, any distribution thereof.
11. Registration Rights. This Warrant and the Shares shall be subject to
the registration rights set forth in the Registration Rights Agreement of even
date herewith by and among the Holder and the Company, and the Holder shall be
entitled to all rights and benefits thereof.
12. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the Holder and
their respective successors and assigns.
13. Governing Law. This Warrant shall be governed by the laws of the State
of Texas, excluding the conflicts of laws provisions thereof.
INTEGRATED SECURITY SYSTEMS, INC.
By: /S/
C. A. Rundell, Jr.
Chairman and Chief Executive Officer
EXERCISE NOTICE
Dated _________, ____
The undersigned hereby irrevocably elects to exercise the Stock Purchase
Warrant, dated November 9, 2001, issued by Integrated Security Systems, Inc., a
Delaware corporation (the "Company") to the undersigned to the extent of
purchasing ___________ shares of Common Stock and hereby makes payment of
$_________ in payment of the aggregate Warrant Price of such Shares.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
By:
-----------------------------------------------
EXHIBIT 9
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
STOCK PURCHASE WARRANT
This Stock Purchase Warrant (this "Warrant"), dated November 9, 2001, is
issued to Frost National Bank, Custodian, FBO Renaissance US Growth & Income
Trust PLC, a public limited company registered in England and Wales (the
"Holder"), by Integrated Security Systems, Inc., a Delaware corporation (the
"Company").
1. Purchase of Shares. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the principal
office of the Company (or at such other place as the Company shall notify the
holder hereof in writing), to purchase from the Company 125,000 fully paid and
non-assessable shares of Common Stock, no par value (the "Common Stock"), of the
Company (as adjusted pursuant to Section 7 hereof, the "Shares") for the
purchase price specified in Section 2 below.
2. Purchase Price. The purchase price for the Shares is $0.20 per share.
Such price shall be subject to adjustment pursuant to Section 7 hereof (such
price, as adjusted from time to time, is herein referred to as the "Warrant
Price").
3. Exercise Period. This Warrant is exercisable in whole or in part at any
time from the date hereof through November 9, 2006.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) surrender of this Warrant, together with a duly executed copy of
the form of Exercise Notice attached hereto, to the Secretary of the
Company at its principal offices, and the payment to the Company of an
amount equal to the aggregate purchase price for the number of Shares being
purchased; or
(b) if the Company's Common Stock is publicly traded as of such date,
the instruction to retain that number of Shares having a value equal to the
aggregate exercise price of the Shares as to which this Warrant is being
exercised and to issue to the Holder the remainder of such Shares computed
using the following formula:
Y(A-B)
X = --------------
A
Where: X = the number of shares of Common Stock to be issued to the
Holder.
Y = the number of shares of Common Stock as to which this
Warrant is being exercised.
A = the fair market value of one share of Common Stock.
B = the Warrant Price.
As used herein, the "fair market value of one share of Common Stock"
shall mean:
(1) Except in the circumstances described in clause (2) or (3)
hereof, the closing price of the Company's Common Stock, as reported
in the Wall Street Journal, on the trading day immediately prior to
the date of exercise;
(2) If such exercise is in conjunction with a merger, acquisition
or other consolidation pursuant to which the Company is not the
surviving entity, the value received by the holders of the Common
Stock pursuant to such transaction for each share; or
(3) If such exercise is in conjunction with the initial public
offering of the Company, the price at which the Common Stock is sold
to the public in such offering.
5. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice.
6. Reservation of Shares. The Company covenants that it will at all times
keep available such number of authorized shares of its Common Stock, free from
all preemptive rights with respect thereto, which will be sufficient to permit
the exercise of this Warrant for the full number of Shares specified herein. The
Company further covenants that such Shares, when issued pursuant to the exercise
of this Warrant, will be duly and validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issuance thereof.
7. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon exercise of this Warrant and the Warrant Price shall
be subject to adjustment from time to time as follows:
(a) Stock Dividends, Subdivisions, Combinations and Other Issuances.
If the Company shall at any time prior to the expiration of this Warrant
subdivide its Common Stock, by stock split or otherwise, combine its Common
Stock or issue additional shares of its Common Stock as a dividend with
respect to any shares of its Common Stock, the number of Shares issuable on
the exercise of this Warrant shall forthwith be proportionately increased
in the case of a subdivision or stock dividend and proportionately
decreased in the case of a combination. Appropriate adjustments shall also
be made to the purchase price payable per share, but the aggregate purchase
price payable for the total number of Shares purchasable under this Warrant
(as adjusted) shall remain the same. Any adjustment under this Section 7(a)
shall become effective at the close of business on the date the subdivision
or combination becomes effective or as of the record date of such dividend,
or, in the event that no record date is fixed, upon the making of such
dividend.
(b) Reclassification, Reorganization, Merger, Sale or Consolidation.
In the event of any reclassification, capital reorganization or other
change in the Common Stock of the Company (other than as a result of a
subdivision, combination or stock dividend provided for in Section 7(a)
above) or in the event of a consolidation or merger of the Company with or
into, or the sale of all or substantially all of the properties and assets
of the Company, to any person, and in connection therewith consideration is
payable to holders of Common Stock in cash, securities or other property,
then as a condition of such reclassification, reorganization or change,
consolidation, merger or sale, lawful provision shall be made, and duly
executed documents evidencing the same shall be delivered to the Holder, so
that the Holder shall have the right at any time prior to the expiration of
this Warrant to purchase, at a total price equal to that payable upon the
exercise of this Warrant immediately prior to such event, the kind and
amount of cash, securities or other property receivable in connection with
such reclassification, reorganization or change, consolidation, merger or
sale, by a holder of the same number of shares of Common Stock as were
exercisable by the Holder immediately prior to such reclassification,
reorganization or change, consolidation, merger or sale. In any such case,
appropriate provisions shall be made with respect to the rights and
interest of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any cash, securities or property deliverable
upon exercise hereof. Notwithstanding the foregoing, (i) if the Company
merges or consolidates with, or sells all or substantially all of its
property and assets to, any other person, and consideration is payable to
holders of Common Stock in exchange for their Common Stock in connection
with such merger, consolidation or sale which consists solely of cash, or
(ii) in the event of the dissolution, liquidation or winding up of the
Company, then the Holder shall be entitled to receive distributions on the
date of such event on an equal basis with holders of Common Stock as if
this Warrant had been exercised immediately prior to such event, less the
Warrant Price. Upon receipt of such payment, if any, the rights of the
Holder shall terminate and cease, and this Warrant shall expire. In case of
any such merger, consolidation or sale of assets, the surviving or
acquiring person and, in the event of any dissolution, liquidation or
winding up of the Company, the Company shall promptly, after receipt of
this surrendered Warrant, make payment by delivering a check in such amount
as is appropriate (or, in the case of consideration other than cash, such
other consideration as is appropriate) to such person as it may be directed
in writing by the Holder surrendering this Warrant.
(c) Certain Distributions. In case the Company shall fix a record date
for the making of a dividend or distribution of cash, securities or
property to all holders of Common Stock (excluding any dividends or
distributions referred to in Sections 7(a) or 7(b) above, the number of
Shares purchasable upon an exercise of this Warrant after such record date
shall be adjusted to equal the product obtained by multiplying the number
of Shares purchasable upon an exercise of this Warrant immediately prior to
such record date by a fraction, the numerator of which shall be the Warrant
Price immediately prior to such distribution, and the denominator of which
shall be the Warrant Price immediately prior to such distribution, less the
fair market value per Share, as determined by the Holder, of the cash,
securities or property so distributed. Such adjustment shall be made
successively whenever any such distribution is made and shall become
effective on the effective date of distribution.
8. Pre-Exercise Rights. Prior to exercise of this Warrant, the Holder shall
not be entitled to any rights of a shareholder with respect to the Shares,
including without limitation, the right to vote such Shares, receive preemptive
rights or be notified of shareholder meetings, and the Holder shall not be
entitled to any notice or other communication concerning the business or affairs
of the Company.
9. Restricted Securities. The Holder understands that this Warrant and the
Shares purchasable hereunder constitute "restricted securities" under the
federal securities laws inasmuch as they are being, or will be, acquired from
the Company in transactions not involving a public offering and accordingly may
not, under such laws and applicable regulations, be resold or transferred
without registration under the Securities Act of 1933, as amended, or an
applicable exemption from registration. In this connection, the Holder
acknowledges that Rule 144 of the Securities and Exchange Commission is not now,
and may not in the future be, available for resales of the Shares purchased
hereunder. The Holder further acknowledges that the Shares and any other
securities issued upon exercise of this Warrant shall bear a legend
substantially in the form of the legend appearing on the face hereof.
10. Certification of Investment Purpose. Unless a current registration
statement under the Securities Act of 1933, as amended, shall be in effect with
respect to the securities to be issued upon exercise of this Warrant, the Holder
hereof, by accepting this Warrant, covenants and agrees that, at the time of
exercise hereof, the Holder will deliver to the Company a written certification
that the securities acquired by the Holder are acquired for investments purposes
only and that such securities are not acquired with a view to, or for sale in
connection with, any distribution thereof.
11. Registration Rights. This Warrant and the Shares shall be subject to
the registration rights set forth in the Registration Rights Agreement of even
date herewith by and among the Holder and the Company, and the Holder shall be
entitled to all rights and benefits thereof.
12. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the Holder and
their respective successors and assigns.
13. Governing Law. This Warrant shall be governed by the laws of the State
of Texas, excluding the conflicts of laws provisions thereof.
INTEGRATED SECURITY SYSTEMS, INC.
By: /S/
C. A. Rundell, Jr.
Chairman and Chief Executive Officer
EXERCISE NOTICE
Dated _________, ____
The undersigned hereby irrevocably elects to exercise the Stock Purchase
Warrant, dated November 9, 2001, issued by Integrated Security Systems, Inc., a
Delaware corporation (the "Company") to the undersigned to the extent of
purchasing ___________ shares of Common Stock and hereby makes payment of
$_________ in payment of the aggregate Warrant Price of such Shares.
RENAISSANCE US GROWTH & INCOME TRUST PLC
By:
------------------------------------------
EXHIBIT 10
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
STOCK PURCHASE WARRANT
This Stock Purchase Warrant (this "Warrant"), dated November 16, 2001, is
issued to Frost National Bank, Custodian, FBO Renaissance Capital Growth &
Income Fund III, Inc., a Texas corporation (the "Holder"), by Integrated
Security Systems, Inc., a Delaware corporation (the "Company").
1. Purchase of Shares. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the principal
office of the Company (or at such other place as the Company shall notify the
holder hereof in writing), to purchase from the Company 125,000 fully paid and
non-assessable shares of Common Stock, no par value (the "Common Stock"), of the
Company (as adjusted pursuant to Section 7 hereof, the "Shares") for the
purchase price specified in Section 2 below.
2. Purchase Price. The purchase price for the Shares is $0.20 per share.
Such price shall be subject to adjustment pursuant to Section 7 hereof (such
price, as adjusted from time to time, is herein referred to as the "Warrant
Price").
3. Exercise Period. This Warrant is exercisable in whole or in part at any
time from the date hereof through November 16, 2006.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) surrender of this Warrant, together with a duly executed copy of
the form of Exercise Notice attached hereto, to the Secretary of the
Company at its principal offices, and the payment to the Company of an
amount equal to the aggregate purchase price for the number of Shares being
purchased; or
(b) if the Company's Common Stock is publicly traded as of such date,
the instruction to retain that number of Shares having a value equal to the
aggregate exercise price of the Shares as to which this Warrant is being
exercised and to issue to the Holder the remainder of such Shares computed
using the following formula:
Y(A-B)
X = --------------
A
Where: X = the number of shares of Common Stock to be issued to the
Holder.
Y = the number of shares of Common Stock as to which this
Warrant is being exercised.
A = the fair market value of one share of Common Stock.
B = the Warrant Price.
As used herein, the "fair market value of one share of Common Stock"
shall mean:
(1) Except in the circumstances described in clause (2) or (3)
hereof, the closing price of the Company's Common Stock, as reported
in the Wall Street Journal, on the trading day immediately prior to
the date of exercise;
(2) If such exercise is in conjunction with a merger, acquisition
or other consolidation pursuant to which the Company is not the
surviving entity, the value received by the holders of the Common
Stock pursuant to such transaction for each share; or
(3) If such exercise is in conjunction with the initial public
offering of the Company, the price at which the Common Stock is sold
to the public in such offering.
5. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice.
6. Reservation of Shares. The Company covenants that it will at all times
keep available such number of authorized shares of its Common Stock, free from
all preemptive rights with respect thereto, which will be sufficient to permit
the exercise of this Warrant for the full number of Shares specified herein. The
Company further covenants that such Shares, when issued pursuant to the exercise
of this Warrant, will be duly and validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issuance thereof.
7. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon exercise of this Warrant and the Warrant Price shall
be subject to adjustment from time to time as follows:
(a) Stock Dividends, Subdivisions, Combinations and Other Issuances.
If the Company shall at any time prior to the expiration of this Warrant
subdivide its Common Stock, by stock split or otherwise, combine its Common
Stock or issue additional shares of its Common Stock as a dividend with
respect to any shares of its Common Stock, the number of Shares issuable on
the exercise of this Warrant shall forthwith be proportionately increased
in the case of a subdivision or stock dividend and proportionately
decreased in the case of a combination. Appropriate adjustments shall also
be made to the purchase price payable per share, but the aggregate purchase
price payable for the total number of Shares purchasable under this Warrant
(as adjusted) shall remain the same. Any adjustment under this Section 7(a)
shall become effective at the close of business on the date the subdivision
or combination becomes effective or as of the record date of such dividend,
or, in the event that no record date is fixed, upon the making of such
dividend.
(b) Reclassification, Reorganization, Merger, Sale or Consolidation.
In the event of any reclassification, capital reorganization or other
change in the Common Stock of the Company (other than as a result of a
subdivision, combination or stock dividend provided for in Section 7(a)
above) or in the event of a consolidation or merger of the Company with or
into, or the sale of all or substantially all of the properties and assets
of the Company, to any person, and in connection therewith consideration is
payable to holders of Common Stock in cash, securities or other property,
then as a condition of such reclassification, reorganization or change,
consolidation, merger or sale, lawful provision shall be made, and duly
executed documents evidencing the same shall be delivered to the Holder, so
that the Holder shall have the right at any time prior to the expiration of
this Warrant to purchase, at a total price equal to that payable upon the
exercise of this Warrant immediately prior to such event, the kind and
amount of cash, securities or other property receivable in connection with
such reclassification, reorganization or change, consolidation, merger or
sale, by a holder of the same number of shares of Common Stock as were
exercisable by the Holder immediately prior to such reclassification,
reorganization or change, consolidation, merger or sale. In any such case,
appropriate provisions shall be made with respect to the rights and
interest of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any cash, securities or property deliverable
upon exercise hereof. Notwithstanding the foregoing, (i) if the Company
merges or consolidates with, or sells all or substantially all of its
property and assets to, any other person, and consideration is payable to
holders of Common Stock in exchange for their Common Stock in connection
with such merger, consolidation or sale which consists solely of cash, or
(ii) in the event of the dissolution, liquidation or winding up of the
Company, then the Holder shall be entitled to receive distributions on the
date of such event on an equal basis with holders of Common Stock as if
this Warrant had been exercised immediately prior to such event, less the
Warrant Price. Upon receipt of such payment, if any, the rights of the
Holder shall terminate and cease, and this Warrant shall expire. In case of
any such merger, consolidation or sale of assets, the surviving or
acquiring person and, in the event of any dissolution, liquidation or
winding up of the Company, the Company shall promptly, after receipt of
this surrendered Warrant, make payment by delivering a check in such amount
as is appropriate (or, in the case of consideration other than cash, such
other consideration as is appropriate) to such person as it may be directed
in writing by the Holder surrendering this Warrant.
(c) Certain Distributions. In case the Company shall fix a record date
for the making of a dividend or distribution of cash, securities or
property to all holders of Common Stock (excluding any dividends or
distributions referred to in Sections 7(a) or 7(b) above, the number of
Shares purchasable upon an exercise of this Warrant after such record date
shall be adjusted to equal the product obtained by multiplying the number
of Shares purchasable upon an exercise of this Warrant immediately prior to
such record date by a fraction, the numerator of which shall be the Warrant
Price immediately prior to such distribution, and the denominator of which
shall be the Warrant Price immediately prior to such distribution, less the
fair market value per Share, as determined by the Holder, of the cash,
securities or property so distributed. Such adjustment shall be made
successively whenever any such distribution is made and shall become
effective on the effective date of distribution.
8. Pre-Exercise Rights. Prior to exercise of this Warrant, the Holder shall
not be entitled to any rights of a shareholder with respect to the Shares,
including without limitation, the right to vote such Shares, receive preemptive
rights or be notified of shareholder meetings, and the Holder shall not be
entitled to any notice or other communication concerning the business or affairs
of the Company.
9. Restricted Securities. The Holder understands that this Warrant and the
Shares purchasable hereunder constitute "restricted securities" under the
federal securities laws inasmuch as they are being, or will be, acquired from
the Company in transactions not involving a public offering and accordingly may
not, under such laws and applicable regulations, be resold or transferred
without registration under the Securities Act of 1933, as amended, or an
applicable exemption from registration. In this connection, the Holder
acknowledges that Rule 144 of the Securities and Exchange Commission is not now,
and may not in the future be, available for resales of the Shares purchased
hereunder. The Holder further acknowledges that the Shares and any other
securities issued upon exercise of this Warrant shall bear a legend
substantially in the form of the legend appearing on the face hereof.
10. Certification of Investment Purpose. Unless a current registration
statement under the Securities Act of 1933, as amended, shall be in effect with
respect to the securities to be issued upon exercise of this Warrant, the Holder
hereof, by accepting this Warrant, covenants and agrees that, at the time of
exercise hereof, the Holder will deliver to the Company a written certification
that the securities acquired by the Holder are acquired for investments purposes
only and that such securities are not acquired with a view to, or for sale in
connection with, any distribution thereof.
11. Registration Rights. This Warrant and the Shares shall be subject to
the registration rights set forth in the Registration Rights Agreement of even
date herewith by and among the Holder and the Company, and the Holder shall be
entitled to all rights and benefits thereof.
12. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the Holder and
their respective successors and assigns.
13. Governing Law. This Warrant shall be governed by the laws of the State
of Texas, excluding the conflicts of laws provisions thereof.
INTEGRATED SECURITY SYSTEMS, INC.
By: /S/
C. A. Rundell, Jr.
Chairman and Chief Executive Officer
EXERCISE NOTICE
Dated _________, ____
The undersigned hereby irrevocably elects to exercise the Stock Purchase
Warrant, dated November 16, 2001, issued by Integrated Security Systems, Inc., a
Delaware corporation (the "Company") to the undersigned to the extent of
purchasing ___________ shares of Common Stock and hereby makes payment of
$_________ in payment of the aggregate Warrant Price of such Shares.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
By:
------------------------------------------------
EXHIBIT 11
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
STOCK PURCHASE WARRANT
This Stock Purchase Warrant (this "Warrant"), dated November 16, 2001, is
issued to Frost National Bank, Custodian, FBO Renaissance US Growth & Income
Trust PLC, a public limited company registered in England and Wales (the
"Holder"), by Integrated Security Systems, Inc., a Delaware corporation (the
"Company").
1. Purchase of Shares. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the principal
office of the Company (or at such other place as the Company shall notify the
holder hereof in writing), to purchase from the Company 125,000 fully paid and
non-assessable shares of Common Stock, no par value (the "Common Stock"), of the
Company (as adjusted pursuant to Section 7 hereof, the "Shares") for the
purchase price specified in Section 2 below.
2. Purchase Price. The purchase price for the Shares is $0.20 per share.
Such price shall be subject to adjustment pursuant to Section 7 hereof (such
price, as adjusted from time to time, is herein referred to as the "Warrant
Price").
3. Exercise Period. This Warrant is exercisable in whole or in part at any
time from the date hereof through November 16, 2006.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) surrender of this Warrant, together with a duly executed copy of
the form of Exercise Notice attached hereto, to the Secretary of the
Company at its principal offices, and the payment to the Company of an
amount equal to the aggregate purchase price for the number of Shares being
purchased; or
(b) if the Company's Common Stock is publicly traded as of such date,
the instruction to retain that number of Shares having a value equal to the
aggregate exercise price of the Shares as to which this Warrant is being
exercised and to issue to the Holder the remainder of such Shares computed
using the following formula:
Y(A-B)
X = --------------
A
Where: X = number of shares of Common Stock to be issued to the Holder.
Y = the number of shares of Common Stock as to which this
Warrant is being exercised.
A = the fair market value of one share of Common Stock.
B = the Warrant Price.
As used herein, the "fair market value of one share of Common Stock"
shall mean:
(1) Except in the circumstances described in clause (2) or (3)
hereof, the closing price of the Company's Common Stock, as reported
in the Wall Street Journal, on the trading day immediately prior to
the date of exercise;
(2) If such exercise is in conjunction with a merger, acquisition
or other consolidation pursuant to which the Company is not the
surviving entity, the value received by the holders of the Common
Stock pursuant to such transaction for each share; or
(3) If such exercise is in conjunction with the initial public
offering of the Company, the price at which the Common Stock is sold
to the public in such offering.
5. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice.
6. Reservation of Shares. The Company covenants that it will at all times
keep available such number of authorized shares of its Common Stock, free from
all preemptive rights with respect thereto, which will be sufficient to permit
the exercise of this Warrant for the full number of Shares specified herein. The
Company further covenants that such Shares, when issued pursuant to the exercise
of this Warrant, will be duly and validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issuance thereof.
7. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon exercise of this Warrant and the Warrant Price shall
be subject to adjustment from time to time as follows:
(a) Stock Dividends, Subdivisions, Combinations and Other Issuances.
If the Company shall at any time prior to the expiration of this Warrant
subdivide its Common Stock, by stock split or otherwise, combine its Common
Stock or issue additional shares of its Common Stock as a dividend with
respect to any shares of its Common Stock, the number of Shares issuable on
the exercise of this Warrant shall forthwith be proportionately increased
in the case of a subdivision or stock dividend and proportionately
decreased in the case of a combination. Appropriate adjustments shall also
be made to the purchase price payable per share, but the aggregate purchase
price payable for the total number of Shares purchasable under this Warrant
(as adjusted) shall remain the same. Any adjustment under this Section 7(a)
shall become effective at the close of business on the date the subdivision
or combination becomes effective or as of the record date of such dividend,
or, in the event that no record date is fixed, upon the making of such
dividend.
(b) Reclassification, Reorganization, Merger, Sale or Consolidation.
In the event of any reclassification, capital reorganization or other
change in the Common Stock of the Company (other than as a result of a
subdivision, combination or stock dividend provided for in Section 7(a)
above) or in the event of a consolidation or merger of the Company with or
into, or the sale of all or substantially all of the properties and assets
of the Company, to any person, and in connection therewith consideration is
payable to holders of Common Stock in cash, securities or other property,
then as a condition of such reclassification, reorganization or change,
consolidation, merger or sale, lawful provision shall be made, and duly
executed documents evidencing the same shall be delivered to the Holder, so
that the Holder shall have the right at any time prior to the expiration of
this Warrant to purchase, at a total price equal to that payable upon the
exercise of this Warrant immediately prior to such event, the kind and
amount of cash, securities or other property receivable in connection with
such reclassification, reorganization or change, consolidation, merger or
sale, by a holder of the same number of shares of Common Stock as were
exercisable by the Holder immediately prior to such reclassification,
reorganization or change, consolidation, merger or sale. In any such case,
appropriate provisions shall be made with respect to the rights and
interest of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any cash, securities or property deliverable
upon exercise hereof. Notwithstanding the foregoing, (i) if the Company
merges or consolidates with, or sells all or substantially all of its
property and assets to, any other person, and consideration is payable to
holders of Common Stock in exchange for their Common Stock in connection
with such merger, consolidation or sale which consists solely of cash, or
(ii) in the event of the dissolution, liquidation or winding up of the
Company, then the Holder shall be entitled to receive distributions on the
date of such event on an equal basis with holders of Common Stock as if
this Warrant had been exercised immediately prior to such event, less the
Warrant Price. Upon receipt of such payment, if any, the rights of the
Holder shall terminate and cease, and this Warrant shall expire. In case of
any such merger, consolidation or sale of assets, the surviving or
acquiring person and, in the event of any dissolution, liquidation or
winding up of the Company, the Company shall promptly, after receipt of
this surrendered Warrant, make payment by delivering a check in such amount
as is appropriate (or, in the case of consideration other than cash, such
other consideration as is appropriate) to such person as it may be directed
in writing by the Holder surrendering this Warrant.
(c) Certain Distributions. In case the Company shall fix a record date
for the making of a dividend or distribution of cash, securities or
property to all holders of Common Stock (excluding any dividends or
distributions referred to in Sections 7(a) or 7(b) above, the number of
Shares purchasable upon an exercise of this Warrant after such record date
shall be adjusted to equal the product obtained by multiplying the number
of Shares purchasable upon an exercise of this Warrant immediately prior to
such record date by a fraction, the numerator of which shall be the Warrant
Price immediately prior to such distribution, and the denominator of which
shall be the Warrant Price immediately prior to such distribution, less the
fair market value per Share, as determined by the Holder, of the cash,
securities or property so distributed. Such adjustment shall be made
successively whenever any such distribution is made and shall become
effective on the effective date of distribution.
8. Pre-Exercise Rights. Prior to exercise of this Warrant, the Holder shall
not be entitled to any rights of a shareholder with respect to the Shares,
including without limitation, the right to vote such Shares, receive preemptive
rights or be notified of shareholder meetings, and the Holder shall not be
entitled to any notice or other communication concerning the business or affairs
of the Company.
9. Restricted Securities. The Holder understands that this Warrant and the
Shares purchasable hereunder constitute "restricted securities" under the
federal securities laws inasmuch as they are being, or will be, acquired from
the Company in transactions not involving a public offering and accordingly may
not, under such laws and applicable regulations, be resold or transferred
without registration under the Securities Act of 1933, as amended, or an
applicable exemption from registration. In this connection, the Holder
acknowledges that Rule 144 of the Securities and Exchange Commission is not now,
and may not in the future be, available for resales of the Shares purchased
hereunder. The Holder further acknowledges that the Shares and any other
securities issued upon exercise of this Warrant shall bear a legend
substantially in the form of the legend appearing on the face hereof.
10. Certification of Investment Purpose. Unless a current registration
statement under the Securities Act of 1933, as amended, shall be in effect with
respect to the securities to be issued upon exercise of this Warrant, the Holder
hereof, by accepting this Warrant, covenants and agrees that, at the time of
exercise hereof, the Holder will deliver to the Company a written certification
that the securities acquired by the Holder are acquired for investments purposes
only and that such securities are not acquired with a view to, or for sale in
connection with, any distribution thereof.
11. Registration Rights. This Warrant and the Shares shall be subject to
the registration rights set forth in the Registration Rights Agreement of even
date herewith by and among the Holder and the Company, and the Holder shall be
entitled to all rights and benefits thereof.
12. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the Holder and
their respective successors and assigns.
13. Governing Law. This Warrant shall be governed by the laws of the State
of Texas, excluding the conflicts of laws provisions thereof.
INTEGRATED SECURITY SYSTEMS, INC.
By: /S/
C. A. Rundell, Jr.
Chairman and Chief Executive Officer
EXERCISE NOTICE
Dated _________, ____
The undersigned hereby irrevocably elects to exercise the Stock Purchase
Warrant, dated November 16, 2001, issued by Integrated Security Systems, Inc., a
Delaware corporation (the "Company") to the undersigned to the extent of
purchasing ___________ shares of Common Stock and hereby makes payment of
$_________ in payment of the aggregate Warrant Price of such Shares.
RENAISSANCE US GROWTH & INCOME
TRUST PLC
By: ------------------------------
EXHIBIT 12
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
STOCK PURCHASE WARRANT
This Stock Purchase Warrant (this "Warrant"), dated December 27, 2001, is
issued to Frost National Bank, Custodian, FBO Renaissance Capital Growth &
Income Fund III, Inc., a Texas corporation (the "Holder"), by Integrated
Security Systems, Inc., a Delaware corporation (the "Company").
1. Purchase of Shares. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the principal
office of the Company (or at such other place as the Company shall notify the
holder hereof in writing), to purchase from the Company 125,000 fully paid and
non-assessable shares of Common Stock, no par value (the "Common Stock"), of the
Company (as adjusted pursuant to Section 7 hereof, the "Shares") for the
purchase price specified in Section 2 below.
2. Purchase Price. The purchase price for the Shares is $0.20 per share.
Such price shall be subject to adjustment pursuant to Section 7 hereof (such
price, as adjusted from time to time, is herein referred to as the "Warrant
Price").
3. Exercise Period. This Warrant is exercisable in whole or in part at any
time from the date hereof through December 27, 2006.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) surrender of this Warrant, together with a duly executed copy of
the form of Exercise Notice attached hereto, to the Secretary of the
Company at its principal offices, and the payment to the Company of an
amount equal to the aggregate purchase price for the number of Shares being
purchased; or
(b) if the Company's Common Stock is publicly traded as of such date,
the instruction to retain that number of Shares having a value equal to the
aggregate exercise price of the Shares as to which this Warrant is being
exercised and to issue to the Holder the remainder of such Shares computed
using the following formula:
Y(A-B)
X = --------------
A
Where: X = the number of shares of Common Stock to be issued to the
Holder.
Y = the number of shares of Common Stock as to which this
Warrant is being exercised.
A = the fair market value of one share of Common Stock.
B = the Warrant Price.
As used herein, the "fair market value of one share of Common Stock"
shall mean:
(1) Except in the circumstances described in clause (2) or (3)
hereof, the closing price of the Company's Common Stock, as reported
in the Wall Street Journal, on the trading day immediately prior to
the date of exercise;
(2) If such exercise is in conjunction with a merger, acquisition
or other consolidation pursuant to which the Company is not the
surviving entity, the value received by the holders of the Common
Stock pursuant to such transaction for each share; or
(3) If such exercise is in conjunction with the initial public
offering of the Company, the price at which the Common Stock is sold
to the public in such offering.
5. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice.
6. Reservation of Shares. The Company covenants that it will at all times
keep available such number of authorized shares of its Common Stock, free from
all preemptive rights with respect thereto, which will be sufficient to permit
the exercise of this Warrant for the full number of Shares specified herein. The
Company further covenants that such Shares, when issued pursuant to the exercise
of this Warrant, will be duly and validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issuance thereof.
7. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon exercise of this Warrant and the Warrant Price shall
be subject to adjustment from time to time as follows:
(a) Stock Dividends, Subdivisions, Combinations and Other Issuances.
If the Company shall at any time prior to the expiration of this Warrant
subdivide its Common Stock, by stock split or otherwise, combine its Common
Stock or issue additional shares of its Common Stock as a dividend with
respect to any shares of its Common Stock, the number of Shares issuable on
the exercise of this Warrant shall forthwith be proportionately increased
in the case of a subdivision or stock dividend and proportionately
decreased in the case of a combination. Appropriate adjustments shall also
be made to the purchase price payable per share, but the aggregate purchase
price payable for the total number of Shares purchasable under this Warrant
(as adjusted) shall remain the same. Any adjustment under this Section 7(a)
shall become effective at the close of business on the date the subdivision
or combination becomes effective or as of the record date of such dividend,
or, in the event that no record date is fixed, upon the making of such
dividend.
(b) Reclassification, Reorganization, Merger, Sale or Consolidation.
In the event of any reclassification, capital reorganization or other
change in the Common Stock of the Company (other than as a result of a
subdivision, combination or stock dividend provided for in Section 7(a)
above) or in the event of a consolidation or merger of the Company with or
into, or the sale of all or substantially all of the properties and assets
of the Company, to any person, and in connection therewith consideration is
payable to holders of Common Stock in cash, securities or other property,
then as a condition of such reclassification, reorganization or change,
consolidation, merger or sale, lawful provision shall be made, and duly
executed documents evidencing the same shall be delivered to the Holder, so
that the Holder shall have the right at any time prior to the expiration of
this Warrant to purchase, at a total price equal to that payable upon the
exercise of this Warrant immediately prior to such event, the kind and
amount of cash, securities or other property receivable in connection with
such reclassification, reorganization or change, consolidation, merger or
sale, by a holder of the same number of shares of Common Stock as were
exercisable by the Holder immediately prior to such reclassification,
reorganization or change, consolidation, merger or sale. In any such case,
appropriate provisions shall be made with respect to the rights and
interest of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any cash, securities or property deliverable
upon exercise hereof. Notwithstanding the foregoing, (i) if the Company
merges or consolidates with, or sells all or substantially all of its
property and assets to, any other person, and consideration is payable to
holders of Common Stock in exchange for their Common Stock in connection
with such merger, consolidation or sale which consists solely of cash, or
(ii) in the event of the dissolution, liquidation or winding up of the
Company, then the Holder shall be entitled to receive distributions on the
date of such event on an equal basis with holders of Common Stock as if
this Warrant had been exercised immediately prior to such event, less the
Warrant Price. Upon receipt of such payment, if any, the rights of the
Holder shall terminate and cease, and this Warrant shall expire. In case of
any such merger, consolidation or sale of assets, the surviving or
acquiring person and, in the event of any dissolution, liquidation or
winding up of the Company, the Company shall promptly, after receipt of
this surrendered Warrant, make payment by delivering a check in such amount
as is appropriate (or, in the case of consideration other than cash, such
other consideration as is appropriate) to such person as it may be directed
in writing by the Holder surrendering this Warrant.
(c) Certain Distributions. In case the Company shall fix a record date
for the making of a dividend or distribution of cash, securities or
property to all holders of Common Stock (excluding any dividends or
distributions referred to in Sections 7(a) or 7(b) above, the number of
Shares purchasable upon an exercise of this Warrant after such record date
shall be adjusted to equal the product obtained by multiplying the number
of Shares purchasable upon an exercise of this Warrant immediately prior to
such record date by a fraction, the numerator of which shall be the Warrant
Price immediately prior to such distribution, and the denominator of which
shall be the Warrant Price immediately prior to such distribution, less the
fair market value per Share, as determined by the Holder, of the cash,
securities or property so distributed. Such adjustment shall be made
successively whenever any such distribution is made and shall become
effective on the effective date of distribution.
8. Pre-Exercise Rights. Prior to exercise of this Warrant, the Holder shall
not be entitled to any rights of a shareholder with respect to the Shares,
including without limitation, the right to vote such Shares, receive preemptive
rights or be notified of shareholder meetings, and the Holder shall not be
entitled to any notice or other communication concerning the business or affairs
of the Company.
9. Restricted Securities. The Holder understands that this Warrant and the
Shares purchasable hereunder constitute "restricted securities" under the
federal securities laws inasmuch as they are being, or will be, acquired from
the Company in transactions not involving a public offering and accordingly may
not, under such laws and applicable regulations, be resold or transferred
without registration under the Securities Act of 1933, as amended, or an
applicable exemption from registration. In this connection, the Holder
acknowledges that Rule 144 of the Securities and Exchange Commission is not now,
and may not in the future be, available for resales of the Shares purchased
hereunder. The Holder further acknowledges that the Shares and any other
securities issued upon exercise of this Warrant shall bear a legend
substantially in the form of the legend appearing on the face hereof.
10. Certification of Investment Purpose. Unless a current registration
statement under the Securities Act of 1933, as amended, shall be in effect with
respect to the securities to be issued upon exercise of this Warrant, the Holder
hereof, by accepting this Warrant, covenants and agrees that, at the time of
exercise hereof, the Holder will deliver to the Company a written certification
that the securities acquired by the Holder are acquired for investments purposes
only and that such securities are not acquired with a view to, or for sale in
connection with, any distribution thereof.
11. Registration Rights. This Warrant and the Shares shall be subject to
the registration rights set forth in the Registration Rights Agreement of even
date herewith by and among the Holder and the Company, and the Holder shall be
entitled to all rights and benefits thereof.
12. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the Holder and
their respective successors and assigns.
13. Governing Law. This Warrant shall be governed by the laws of the State
of Texas, excluding the conflicts of laws provisions thereof.
INTEGRATED SECURITY SYSTEMS, INC.
By: /S/
C. A. Rundell, Jr.
Chairman and Chief Executive Officer
EXERCISE NOTICE
Dated _________, ____
The undersigned hereby irrevocably elects to exercise the Stock Purchase
Warrant, dated December 27, 2001, issued by Integrated Security Systems, Inc., a
Delaware corporation (the "Company") to the undersigned to the extent of
purchasing ___________ shares of Common Stock and hereby makes payment of
$_________ in payment of the aggregate Warrant Price of such Shares.
RENAISSANCE CAPITAL GROWTH &
INCOME FUND III, INC.
By:
-----------------------
EXHIBIT 13
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
STOCK PURCHASE WARRANT
This Stock Purchase Warrant (this "Warrant"), dated December 27, 2001, is
issued to Frost National Bank, Custodian, FBO Renaissance US Growth & Income
Trust PLC, a public limited company registered in England and Wales (the
"Holder"), by Integrated Security Systems, Inc., a Delaware corporation (the
"Company").
1. Purchase of Shares. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the principal
office of the Company (or at such other place as the Company shall notify the
holder hereof in writing), to purchase from the Company 125,000 fully paid and
non-assessable shares of Common Stock, no par value (the "Common Stock"), of the
Company (as adjusted pursuant to Section 7 hereof, the "Shares") for the
purchase price specified in Section 2 below.
2. Purchase Price. The purchase price for the Shares is $0.20 per share.
Such price shall be subject to adjustment pursuant to Section 7 hereof (such
price, as adjusted from time to time, is herein referred to as the "Warrant
Price").
3. Exercise Period. This Warrant is exercisable in whole or in part at any
time from the date hereof through December 27, 2006.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) surrender of this Warrant, together with a duly executed copy of
the form of Exercise Notice attached hereto, to the Secretary of the
Company at its principal offices, and the payment to the Company of an
amount equal to the aggregate purchase price for the number of Shares being
purchased; or
(b) if the Company's Common Stock is publicly traded as of such date,
the instruction to retain that number of Shares having a value equal to the
aggregate exercise price of the Shares as to which this Warrant is being
exercised and to issue to the Holder the remainder of such Shares computed
using the following formula:
Y(A-B)
X = --------------
A
Where: X = the number of shares of Common Stock to be issued to the
Holder.
Y = the number of shares of Common Stock as to which this
Warrant is being exercised.
A = the fair market value of one share of Common Stock.
B = the Warrant Price.
As used herein, the "fair market value of one share of Common Stock"
shall mean:
(1) Except in the circumstances described in clause (2) or (3)
hereof, the closing price of the Company's Common Stock, as reported
in the Wall Street Journal, on the trading day immediately prior to
the date of exercise;
(2) If such exercise is in conjunction with a merger, acquisition
or other consolidation pursuant to which the Company is not the
surviving entity, the value received by the holders of the Common
Stock pursuant to such transaction for each share; or
(3) If such exercise is in conjunction with the initial public
offering of the Company, the price at which the Common Stock is sold
to the public in such offering.
5. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice.
6. Reservation of Shares. The Company covenants that it will at all times
keep available such number of authorized shares of its Common Stock, free from
all preemptive rights with respect thereto, which will be sufficient to permit
the exercise of this Warrant for the full number of Shares specified herein. The
Company further covenants that such Shares, when issued pursuant to the exercise
of this Warrant, will be duly and validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issuance thereof.
7. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon exercise of this Warrant and the Warrant Price shall
be subject to adjustment from time to time as follows:
(a) Stock Dividends, Subdivisions, Combinations and Other Issuances.
If the Company shall at any time prior to the expiration of this Warrant
subdivide its Common Stock, by stock split or otherwise, combine its Common
Stock or issue additional shares of its Common Stock as a dividend with
respect to any shares of its Common Stock, the number of Shares issuable on
the exercise of this Warrant shall forthwith be proportionately increased
in the case of a subdivision or stock dividend and proportionately
decreased in the case of a combination. Appropriate adjustments shall also
be made to the purchase price payable per share, but the aggregate purchase
price payable for the total number of Shares purchasable under this Warrant
(as adjusted) shall remain the same. Any adjustment under this Section 7(a)
shall become effective at the close of business on the date the subdivision
or combination becomes effective or as of the record date of such dividend,
or, in the event that no record date is fixed, upon the making of such
dividend.
(b) Reclassification, Reorganization, Merger, Sale or Consolidation.
In the event of any reclassification, capital reorganization or other
change in the Common Stock of the Company (other than as a result of a
subdivision, combination or stock dividend provided for in Section 7(a)
above) or in the event of a consolidation or merger of the Company with or
into, or the sale of all or substantially all of the properties and assets
of the Company, to any person, and in connection therewith consideration is
payable to holders of Common Stock in cash, securities or other property,
then as a condition of such reclassification, reorganization or change,
consolidation, merger or sale, lawful provision shall be made, and duly
executed documents evidencing the same shall be delivered to the Holder, so
that the Holder shall have the right at any time prior to the expiration of
this Warrant to purchase, at a total price equal to that payable upon the
exercise of this Warrant immediately prior to such event, the kind and
amount of cash, securities or other property receivable in connection with
such reclassification, reorganization or change, consolidation, merger or
sale, by a holder of the same number of shares of Common Stock as were
exercisable by the Holder immediately prior to such reclassification,
reorganization or change, consolidation, merger or sale. In any such case,
appropriate provisions shall be made with respect to the rights and
interest of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any cash, securities or property deliverable
upon exercise hereof. Notwithstanding the foregoing, (i) if the Company
merges or consolidates with, or sells all or substantially all of its
property and assets to, any other person, and consideration is payable to
holders of Common Stock in exchange for their Common Stock in connection
with such merger, consolidation or sale which consists solely of cash, or
(ii) in the event of the dissolution, liquidation or winding up of the
Company, then the Holder shall be entitled to receive distributions on the
date of such event on an equal basis with holders of Common Stock as if
this Warrant had been exercised immediately prior to such event, less the
Warrant Price. Upon receipt of such payment, if any, the rights of the
Holder shall terminate and cease, and this Warrant shall expire. In case of
any such merger, consolidation or sale of assets, the surviving or
acquiring person and, in the event of any dissolution, liquidation or
winding up of the Company, the Company shall promptly, after receipt of
this surrendered Warrant, make payment by delivering a check in such amount
as is appropriate (or, in the case of consideration other than cash, such
other consideration as is appropriate) to such person as it may be directed
in writing by the Holder surrendering this Warrant.
(c) Certain Distributions. In case the Company shall fix a record date
for the making of a dividend or distribution of cash, securities or
property to all holders of Common Stock (excluding any dividends or
distributions referred to in Sections 7(a) or 7(b) above, the number of
Shares purchasable upon an exercise of this Warrant after such record date
shall be adjusted to equal the product obtained by multiplying the number
of Shares purchasable upon an exercise of this Warrant immediately prior to
such record date by a fraction, the numerator of which shall be the Warrant
Price immediately prior to such distribution, and the denominator of which
shall be the Warrant Price immediately prior to such distribution, less the
fair market value per Share, as determined by the Holder, of the cash,
securities or property so distributed. Such adjustment shall be made
successively whenever any such distribution is made and shall become
effective on the effective date of distribution.
8. Pre-Exercise Rights. Prior to exercise of this Warrant, the Holder shall
not be entitled to any rights of a shareholder with respect to the Shares,
including without limitation, the right to vote such Shares, receive preemptive
rights or be notified of shareholder meetings, and the Holder shall not be
entitled to any notice or other communication concerning the business or affairs
of the Company.
9. Restricted Securities. The Holder understands that this Warrant and the
Shares purchasable hereunder constitute "restricted securities" under the
federal securities laws inasmuch as they are being, or will be, acquired from
the Company in transactions not involving a public offering and accordingly may
not, under such laws and applicable regulations, be resold or transferred
without registration under the Securities Act of 1933, as amended, or an
applicable exemption from registration. In this connection, the Holder
acknowledges that Rule 144 of the Securities and Exchange Commission is not now,
and may not in the future be, available for resales of the Shares purchased
hereunder. The Holder further acknowledges that the Shares and any other
securities issued upon exercise of this Warrant shall bear a legend
substantially in the form of the legend appearing on the face hereof.
10. Certification of Investment Purpose. Unless a current registration
statement under the Securities Act of 1933, as amended, shall be in effect with
respect to the securities to be issued upon exercise of this Warrant, the Holder
hereof, by accepting this Warrant, covenants and agrees that, at the time of
exercise hereof, the Holder will deliver to the Company a written certification
that the securities acquired by the Holder are acquired for investments purposes
only and that such securities are not acquired with a view to, or for sale in
connection with, any distribution thereof.
11. Registration Rights. This Warrant and the Shares shall be subject to
the registration rights set forth in the Registration Rights Agreement of even
date herewith by and among the Holder and the Company, and the Holder shall be
entitled to all rights and benefits thereof.
12. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the Holder and
their respective successors and assigns.
13. Governing Law. This Warrant shall be governed by the laws of the State
of Texas, excluding the conflicts of laws provisions thereof.
INTEGRATED SECURITY SYSTEMS, INC.
By: /S/
C. A. Rundell, Jr.
Chairman and Chief Executive Officer
EXERCISE NOTICE
Dated _________, ____
The undersigned hereby irrevocably elects to exercise the Stock Purchase
Warrant, dated December 27, 2001, issued by Integrated Security Systems, Inc., a
Delaware corporation (the "Company") to the undersigned to the extent of
purchasing ___________ shares of Common Stock and hereby makes payment of
$_________ in payment of the aggregate Warrant Price of such Shares.
RENAISSANCE US GROWTH & INCOME
TRUST PLC
By:
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