EXHIBIT 4.4
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO INTEGRATED SECURITY SYSTEMS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
SECURED CONVERTIBLE MINIMUM BORROWING NOTE
FOR VALUE RECEIVED, each of INTEGRATED SECURITY SYSTEMS, INC., a
Delaware corporation (the "Parent"), and the other companies listed on Exhibit A
attached hereto (such other companies together with the Parent, each a "Company"
and collectively, the "Companies"), jointly and severally, promises to pay to
LAURUS MASTER FUND, LTD., c/o M&C Corporate Services Limited, P.O. Box 309 GT,
Xxxxxx House, South Church Street, Xxxxxx Town, Grand Cayman, Cayman Islands,
Fax: 000-000-0000 (the "Holder") or its registered assigns or successors in
interest, the sum of One Million Dollars ($1,000,000), or, if different, the
aggregate principal amount of all Loans (as defined in the Security Agreement
referred to below), together with any accrued and unpaid interest hereon, on
July 29, 2008 (the "Maturity Date") if not sooner paid.
Capitalized terms used herein without definition shall have the
meanings ascribed to such terms in the Security Agreement among the Companies
and the Holder dated as of the date hereof (as amended, modified and/or
supplemented from time to time, the "Security Agreement").
The following terms shall apply to this Minimum Borrowing Note
(this "Note"):
ARTICLE I
CONTRACT RATE
1.1 Contract Rate. Subject to Sections 4.2 and 5.10, interest
payable on the outstanding principal amount of this Note (the "Principal
Amount") shall accrue at a rate per annum equal to the "prime rate" published in
The Wall Street Journal from time to time (the "Prime Rate"), plus one and one
half percent (1.50%) (the "Contract Rate"). The Contract Rate shall be increased
or decreased as the case may be for each increase or decrease in the Prime Rate
in an amount equal to such increase or decrease in the Prime Rate; each change
to be effective as of the day of the change in the Prime Rate. Subject to
Section 1.2, the Contract Rate shall not at any time be less than six percent
(6.0%). Interest shall be (i) calculated on the basis of a 360 day year, and
(ii) payable monthly, in arrears, commencing on August 1, 2005 on the first
business day of each consecutive calendar month thereafter through and including
the Maturity Date and on the Maturity Date, whether by acceleration or
otherwise.
1.2 Contract Rate Adjustments and Payments. The Contract Rate
shall be calculated on the last business day of each calendar month hereafter
(other than for increases or decreases in the Prime Rate which shall be
calculated and become effective in accordance with the terms of Section 1.1)
until the Maturity Date (each a "Determination Date") and shall be subject to
adjustment as set forth herein. If (i) the Parent shall have registered the
shares of the Common Stock underlying the conversion of each Minimum Borrowing
Note and each Warrant on a registration statement declared effective by the
Securities and Exchange Commission (the "SEC"), and (ii) the market price (the
"Market Price") of the Common Stock as reported by Bloomberg, L.P. on the
Principal Market for the five (5) trading days immediately preceding a
Determination Date exceeds the then applicable Fixed Conversion Price by at
least twenty-five percent (25%), the Contract Rate for the succeeding calendar
month shall automatically be reduced by 200 basis points (200 b.p.) (2%) for
each incremental twenty-five percent (25%) increase in the Market Price of the
Common Stock above the then applicable Fixed Conversion Price. Notwithstanding
the foregoing (and anything to the contrary contained herein), in no event shall
the Contract Rate at any time be less than zero percent (0%).
ARTICLE II
LOANS; PAYMENTS UNDER THIS NOTE
2.1 Loans. All Loans evidenced by this Note shall be made in
accordance with the terms and provisions of the Security Agreement.
2.2 No Effective Registration. Notwithstanding anything to
the contrary herein, the Holder shall not be required to accept shares of Common
Stock as payment following a conversion by the Holder if there fails to exist an
effective current Registration Statement (as defined in the Registration Rights
Agreement) covering the shares of Common Stock to be issued, or if an Event of
Default hereunder exists and is continuing, unless such requirement is otherwise
waived in writing by the Holder in whole or in part at the Holder's option.
2.3 Optional Redemption in Cash. The Companies will have the
option of prepaying this Note ("Optional Redemption") by paying to the Holder a
sum of money equal to one hundred thirty percent (130%) of the principal amount
of this Note, together with all accrued but unpaid interest thereon and any and
all other sums due, accrued or payable to the Holder arising under this Note,
the Security Agreement, or any other Ancillary Agreement (the "Redemption
Amount") outstanding on the Redemption Payment Date (as defined below). The
Company shall deliver to the Holder a written notice of redemption (the "Notice
of Redemption") specifying the date for such Optional Redemption (the
"Redemption Payment Date"), which date shall be ten (10) days after the date of
the Notice of Redemption (the "Redemption Period"). A Notice of Redemption shall
not be effective with respect to any portion of this Note for which the Holder
has previously delivered a Notice of Conversion (defined below) pursuant to
Section 3.1, or for conversions elected to be made by the Holder pursuant to
Section 3.1 during the Redemption Period. The Redemption Amount shall be
determined as if such Xxxxxx's conversion elections had been completed
immediately prior to the date of the Notice of Redemption. On the Redemption
Payment Date, the Redemption Amount (plus any additional interest and fees
accruing on the Notes during the Redemption Period) must be irrevocably paid in
full in immediately available funds to the Holder. In the event the Companies
fail to pay the Redemption Amount on the Redemption Payment Date, then such
Redemption Notice shall be null and void.
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ARTICLE III
CONVERSION RIGHTS AND FIXED CONVERSION PRICE
3.1 Optional Conversion. Subject to the terms of this Article
III, the Holder shall have the right, but not the obligation, at any time until
the Maturity Date, or during an Event of Default (as defined in Article IV),
and, subject to the limitations set forth in Section 3.2 hereof, to convert all
or any portion of the outstanding Principal Amount and/or accrued interest and
fees due and payable into fully paid and nonassessable shares of the Common
Stock at the Fixed Conversion Price. For purposes hereof, subject to Section 3.6
hereof, the initial "Fixed Conversion Price" means $0.25. The shares of Common
Stock to be issued upon such conversion are herein referred to as the
"Conversion Shares."
3.2 Conversion Limitation. Notwithstanding anything contained
herein to the contrary, the Holder shall not be entitled to convert pursuant to
the terms of this Note an amount that would be convertible into that number of
Conversion Shares which would exceed the difference between (i) 4.99% of the
outstanding shares of Common Stock and (ii) the number of shares of Common Stock
beneficially owned by the Holder. For purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and Regulation 13d-3 thereunder. The Conversion Shares
limitation described in this Section 3.2 shall automatically become null and
void following notice to any Company upon the occurrence and during the
continuance of an Event of Default, or upon 75 days prior notice to the Parent.
Notwithstanding anything contained herein to the contrary, the provisions of
this Section 3.2 are irrevocable and may not be waived by the Holder or any
Company.
3.3 Mechanics of Xxxxxx's Conversion. In the event that the
Holder elects to convert this Note into Common Stock, the Holder shall give
notice of such election by delivering an executed and completed notice of
conversion in substantially the form of Exhibit A hereto (appropriately
completed) ("Notice of Conversion") to the Parent and such Notice of Conversion
shall provide a breakdown in reasonable detail of the Principal Amount, accrued
interest and fees that are being converted. On each Conversion Date (as
hereinafter defined) and in accordance with its Notice of Conversion, the Holder
shall make the appropriate reduction to the Principal Amount, accrued interest
and fees as entered in its records and shall provide written notice thereof to
the Parent within two (2) Business Days after the Conversion Date. Each date on
which a Notice of Conversion is delivered or telecopied to the Parent in
accordance with the provisions hereof shall be deemed a Conversion Date (the
"Conversion Date"). Pursuant to the terms of the Notice of Conversion, the
Parent will issue instructions to the transfer agent accompanied by, to the
extent reasonably requested by the Holder, an opinion of counsel within one (1)
Business Day of the date of the delivery to the Parent of the Notice of
Conversion and shall cause the transfer agent to transmit the certificates
representing the Conversion Shares to the Holder by crediting the account of the
Holder's designated broker with the Depository Trust Corporation ("DTC") through
its Deposit Withdrawal Agent Commission ("DWAC") system within three (3)
Business Days after receipt by the Parent of the Notice of Conversion (the
"Delivery Date"). In the case of the exercise of the conversion rights set forth
herein the conversion privilege shall be deemed to have been exercised and the
Conversion Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Parent of the Notice of Conversion. The
Holder shall be treated for all purposes as the record holder of the Conversion
Shares, unless the Holder provides the Parent written instructions to the
contrary.
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3.4 Late Payments. Each Company understands that a delay in
the delivery of the Conversion Shares in the form required pursuant to this
Article beyond the Delivery Date could result in economic loss to the Holder. As
compensation to the Holder for such loss, in addition to all other rights and
remedies which the Holder may have under this Note, applicable law or otherwise,
the Companies shall, jointly and severally, pay late payments to the Holder for
any late issuance of Conversion Shares in the form required pursuant to this
Article III upon conversion of this Note, in the amount equal to $250 per
Business Day after the Delivery Date. The Companies shall, jointly and
severally, make any payments incurred under this Section in immediately
available funds upon demand.
3.5 Conversion Mechanics. The number of shares of Common
Stock to be issued upon each conversion of this Note shall be determined by
dividing that portion of the principal and interest and fees to be converted, if
any, by the then applicable Fixed Conversion Price.
3.6 Adjustment Provisions. The Fixed Conversion Price and
number and kind of shares or other securities to be issued upon conversion
determined pursuant to Section 3.1 shall be subject to adjustment from time to
time upon the occurrence of certain events during the period that this
conversion right remains outstanding, as follows:
(a) Reclassification. If the Parent at any time shall,
by reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
to evidence the right to purchase an adjusted number of such securities and kind
of securities as would have been issuable as the result of such change with
respect to the Common Stock (i) immediately prior to or (ii) immediately after
such reclassification or other change at the sole election of the Holder.
(b) Stock Splits, Combinations and Dividends. If the
shares of Common Stock are subdivided or combined into a greater or smaller
number of shares of Common Stock, or if a dividend is paid on the Common Stock
or any preferred stock issued by the Parent in shares of Common Stock, the Fixed
Conversion Price shall be proportionately reduced in case of subdivision of
shares or stock dividend or proportionately increased in the case of combination
of shares, in each such case by the ratio which the total number of shares of
Common Stock outstanding immediately after such event bears to the total number
of shares of Common Stock outstanding immediately prior to such event.
(c) Share Issuances. Subject to the provisions of this
Section 3.6, if the Parent shall at any time prior to the conversion or
repayment in full of the Principal Amount issue any shares of Common Stock or
securities convertible into Common Stock to a person other than the Holder
(except (i) pursuant to Sections 3.6(a) or (b) above; (ii) pursuant to options,
warrants, or other obligations to issue shares outstanding on the date hereof as
disclosed to the Holder in writing (including, without limitation, the options,
warrants or other obligations expressly set forth in the Disclosure Schedules to
the Security Agreement); or (iii) pursuant to options that may be issued under
any employee incentive stock option and/or any qualified stock option plan
adopted by the Parent) for a consideration per share (the "Offer Price") less
than the Fixed Conversion Price in effect at the time of such issuance, then the
Fixed Conversion Price shall be immediately reset pursuant to the formula below.
For purposes hereof, the issuance of any security of the Parent convertible into
or exercisable or exchangeable for Common Stock shall result in an adjustment to
the Fixed Conversion Price upon the issuance of such securities pursuant to the
formula below.
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If the Parent issues any additional shares of Common
Stock for a consideration per share less than the then-applicable Fixed
Conversion Price pursuant to this Section 3.6 then, and thereafter successively
upon each such issue, the Fixed Conversion Price shall be adjusted by
multiplying the then applicable Fixed Conversion Price by the following
fraction:
______________________________________
A + B
______________________________________
(A + B) + [((C - D) x B) / C]
______________________________________
A = Total amount of shares convertible pursuant to the Notes
B = Actual shares sold in the offering
C = Fixed Conversion Price
D = Offer Price
(d) Computation of Consideration. For purposes of any
computation respecting consideration received pursuant to Section 3.6(c) above,
the following shall apply:
(i) in the case of the issuance of shares of Common
Stock for cash, the consideration shall be the amount of such cash,
provided that in no case shall any deduction be made for any commissions,
discounts or other expenses incurred by the Parent for any underwriting of
the issue or otherwise in connection therewith;
(ii) in the case of the issuance of shares of Common
Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market value
thereof as determined in good faith by the Board of Directors of the Parent
(irrespective of the accounting treatment thereof); and
(iii) upon any such exercise, the aggregate consideration
received for such securities shall be deemed to be the consideration
received by the Parent for the issuance of such securities plus the
additional minimum consideration, if any, to be received by the Parent upon
the conversion or exchange thereof (the consideration in each case to be
determined in the same manner as provided in subsections (i) and (ii) of
this Section 3.6).
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3.7 Reservation of Shares. During the period the conversion
right exists, the Parent will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of Conversion
Shares upon the full conversion of this Note and the Warrant. The Parent
represents that upon issuance, the Conversion Shares will be duly and validly
issued, fully paid and non-assessable. The Parent agrees that its issuance of
this Note shall constitute full authority to its officers, agents, and transfer
agents who are charged with the duty of executing and issuing stock certificates
to execute and issue the necessary certificates for the Conversion Shares upon
the conversion of this Note.
3.8 Registration Rights. The Holder has been granted
registration rights with respect to the Conversion Shares as set forth in a
Registration Rights Agreement.
3.9 Issuance of New Note. Upon any partial conversion of this
Note, a new Note containing the same date and provisions of this Note shall, at
the request of the Holder, be issued by the Parent to the Holder for the
principal balance of this Note and interest which shall not have been converted
or paid. Subject to the provisions of Article IV of this Note, the Parent shall
not pay any costs, fees or any other consideration to the Holder for the
production and issuance of a new Note.
ARTICLE IV
EVENTS OF DEFAULT AND DEFAULT RELATED PROVISIONS
4.1 Events of Default. The occurrence of an Event of Default
under the Security Agreement shall constitute an event of default ("Event of
Default") hereunder.
4.2 Default Interest. Following the occurrence and during the
continuance of an Event of Default, the Companies shall, jointly and severally,
pay additional interest on the outstanding principal balance of this Note in an
amount equal to one percent (1%) per month, and all outstanding Obligations,
including unpaid interest, shall continue to accrue interest at such additional
interest rate from the date of such Event of Default until the date such Event
of Default is cured or waived.
4.3 Default Payment. Following the occurrence and during the
continuance of an Event of Default, the Holder, at its option, may elect, in
addition to all rights and remedies of the Holder under the Security Agreement
and the Ancillary Agreements and all obligations of each Company under the
Security Agreement and the Ancillary Agreements, to require the Companies,
jointly and severally, to make a Default Payment ("Default Payment"). The
Default Payment shall be one hundred twenty percent (120%) of the outstanding
principal amount of the Note, plus accrued but unpaid interest, all other fees
then remaining unpaid, and all other amounts payable hereunder. The Default
Payment shall be applied first to any fees due and payable to the Holder
pursuant to the Notes and/or the Ancillary Agreements, then to accrued and
unpaid interest due on the Notes, the Security Agreement and then to the
outstanding principal balance of the Notes. The Default Payment shall be due and
payable immediately on the date that the Holder has exercised its rights
pursuant to this Section 4.3.
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ARTICLE V
MISCELLANEOUS
5.1 Conversion Privileges. The conversion privileges set
forth in Article III shall remain in full force and effect immediately from the
date hereof until the date this Note is indefeasibly paid in full and
irrevocably terminated.
5.2 Cumulative Remedies. The remedies under this Note shall
be cumulative.
5.3 Failure or Indulgence Not Waiver. No failure or delay on
the part of the Holder hereof in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.
5.4 Notices. Any notice herein required or permitted to be
given shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party notified, (b) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient, if not, then on
the next business day, (c) five days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent
to the respective Company at the addresses provided for such Company in the
Security Agreement executed in connection herewith, and to the Holder at the
address provided in the Security Agreement for such Holder, with a copy to Xxxx
X. Xxxxxx, Esq., 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
xxxxxxxxx number (000) 000-0000, or at such other address as the respective
Company or the Holder may designate by ten days advance written notice to the
other parties hereto.
5.5 Amendment Provision. The term "Note" and all references
thereto, as used throughout this instrument, shall mean this instrument as
originally executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument as such successor instrument may be
amended or supplemented.
5.6 Assignability. This Note shall be binding upon each
Company and its successors and assigns, and shall inure to the benefit of the
Holder and its successors and assigns, and may be assigned by the Holder in
accordance with the requirements of the Security Agreement. No Company may
assign any of its obligations under this Note without the prior written consent
of the Holder, any such purported assignment without such consent being null and
void.
5.7 Cost of Collection. In case of any Event of Default under
this Note, the Companies shall, jointly and severally, pay the Holder's
reasonable costs of collection, including reasonable attorneys' fees.
5.8 Governing Law, Jurisdiction and Waiver of Jury Trial.
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(a) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
(b) EACH COMPANY HEREBY CONSENTS AND AGREES THAT THE
STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK
SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN ANY COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND,
PERTAINING TO THIS NOTE, THE SECURITY AGREEMENT OR ANY OF THE OTHER ANCILLARY
AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE, THE SECURITY
AGREEMENT OR ANY OF THE OTHER ANCILLARY AGREEMENTS; PROVIDED, THAT EACH COMPANY
ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER
PROVIDED, THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE
HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION
TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY
FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF
THE HOLDER. EACH COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH COMPANY
HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH COMPANY HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE COMPANY AT
THE ADDRESS SET FORTH IN THE SECURITY AGREEMENT AND THAT SERVICE SO MADE SHALL
BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY'S ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
(c) EACH COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED
BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST
COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, EACH
COMPANY HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR
OTHERWISE BETWEEN THE HOLDER, AND/OR ANY COMPANY ARISING OUT OF, CONNECTED WITH,
RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION
WITH THIS NOTE, THE SECURITY AGREEMENT, ANY OTHER ANCILLARY AGREEMENT OR THE
TRANSACTIONS RELATED HERETO OR THERETO.
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5.9 Severability. In the event that any provision of this
Note is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of this Note.
5.10 Maximum Payments. Nothing contained herein shall be
deemed to establish or require the payment of a rate of interest or other
charges in excess of the maximum permitted by applicable law. In the event that
the rate of interest required to be paid or other charges hereunder exceed the
maximum rate permitted by such law, any payments in excess of such maximum rate
shall be credited against amounts owed by the Companies to the Holder and thus
refunded to the Companies.
5.11 Security Interest. The Holder has been granted a security
interest (i) in certain assets of the Companies as more fully described in the
Security Agreement and (ii) pursuant to the Stock Pledge Agreement dated as of
the date hereof.
5.12 Construction. Each party acknowledges that its legal
counsel participated in the preparation of this Note and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Note to favor
any party against the other.
[Balance of page intentionally left blank; signature page follows]
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IN WITNESS WHEREOF, each Company has caused this Secured
Convertible Minimum Borrowing Note to be signed in its name effective as of this
29th day of July 2005.
INTEGRATED SECURITY SYSTEMS, INC.
By: /s/ C. A. Xxxxxxx, Xx.
__________________________________
Name: C. A. Xxxxxxx, Xx.
Title: Chairman and CEO
WITNESS:
_______________________________
B&B ARMR CORPORATION
By: /s/ Xxxxx Xxxxx
__________________________________
Name: Xxxxx Xxxxx
Title: Chairman and CEO:
WITNESS:
_______________________________
INTELLI-SITE, INC.
By: /s/ C. A. Xxxxxxx, Xx.
__________________________________
Name: C. A. Xxxxxxx, Xx.
Title: Chairman
WITNESS:
_______________________________
DOORTEK CORPORATION
By: /s/ C. A. Xxxxxxx, Xx.
__________________________________
Name: C. A. Xxxxxxx, Xx.
Title: Chairman and CEO
WITNESS:
_______________________________
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EXHIBIT A
OTHER COMPANIES
B&B ARMR Corporation, a Delaware corporation
Intelli-Site, Inc., a Texas corporation
DoorTek Corporation, a Texas corporation
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EXHIBIT B
NOTICE OF CONVERSION
(To be executed by the Holder in order to convert the
Secured Convertible Minimum Borrowing Note)
The undersigned hereby elects to convert $_________ of the
principal and $_________ of the interest due on the Secured Convertible Minimum
Borrowing Note dated as of July 29, 2005 (the "Note") issued by Integrated
Security Systems, Inc. (the "Parent") and the other Companies named and as
defined therein into shares of Common Stock of the Parent in accordance with the
terms and conditions set forth in the Note, as of the date written below.
Date of Conversion: ______________________________________________________
Conversion Price: ______________________________________________________
Shares To Be Delivered: ______________________________________________________
Signature: ______________________________________________________
Print Name: ______________________________________________________
Address: ______________________________________________________
Holder DWAC instructions ______________________________________________________
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