<PAGE> 1
INTEGRATED SECURITY SYSTEMS, INC.
8200 SPRINGWOOD DRIVE, SUITE 230
IRVING, TEXAS 75063
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 12, 1997
To the Holders of Common Stock of
INTEGRATED SECURITY SYSTEMS, INC.:
Notice is hereby given that the 1997 Annual Meeting of Stockholders of
Integrated Security Systems, Inc., a Delaware corporation (the "Company"), will
be held at the Company's executive offices, 8200 Springwood Drive, Suite 230,
Irving, Texas 75063, on Friday December 12, 1997 at 10:00 A.M., Dallas, Texas
time, for the following purposes:
(1) To elect five persons to serve as directors until the
Company's 1998 Annual Meeting of Stockholders or until their
successors are duly elected and qualified;
(2) To transact any other business properly brought before the
meeting or any adjournments or postponements thereof.
The Board of Directors has fixed Monday, October 13, 1997, at the
close of business, as the record date for the determination of stockholders
entitled to notice of, and to vote at, the meeting and any adjournments or
postponements thereof. Only holders of record of the Company's common stock on
that date are entitled to vote on matters coming before the meeting and any
adjournments or postponements thereof. A complete list of stockholders
entitled to vote at the meeting will be maintained in the Company's offices at
8200 Springwood Drive, Suite 230, Irving, Texas 75063, for the ten days prior
to the meeting.
Please advise the Company's transfer agent, American Stock Transfer,
6201 15th Avenue, Third Floor, Brooklyn, NY 11218, of any change in your
address.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED
STATES. IF YOU RECEIVE MORE THAN ONE PROXY CARD BECAUSE YOUR SHARES ARE
REGISTERED IN DIFFERENT NAMES OR AT DIFFERENT ADDRESSES, EACH SUCH PROXY CARD
SHOULD BE SIGNED AND RETURNED TO ENSURE THAT ALL OF YOUR SHARES WILL BE VOTED.
THE PROXY CARD SHOULD BE SIGNED BY ALL REGISTERED HOLDERS IN THE EXACT NAMES AS
THE SHARES ARE SO REGISTERED. ANY PERSON GIVING A PROXY HAS THE POWER TO
REVOKE IT AT ANY TIME PRIOR TO ITS EXERCISE AND, IF PRESENT AT THE ANNUAL
MEETING, MAY WITHDRAW IT AND VOTE IN PERSON.
By Order of the Board of Directors,
Gerald K. Beckmann
Chairman, President and
Chief Executive Officer
Irving, Texas
October 28, 1997
<PAGE> 2
INTEGRATED SECURITY SYSTEMS, INC.
8200 Springwood Drive, Suite 230
Irving, Texas 75063
------------------------------------
PROXY STATEMENT
------------------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 12, 1997
The accompanying proxy, mailed with this Proxy Statement to
stockholders on or about October 28, 1997, is solicited by Integrated Security
Systems, Inc. (the "Company"), in connection with the Annual Meeting of
Stockholders to be held on December 12, 1997 (the "Annual Meeting").
As stated in the Notice to which this Proxy Statement is attached,
matters to be acted upon at the Annual Meeting include (i) election to the
Board of Directors of five directors to serve as directors until the Company's
1998 Annual Meeting of Stockholders or until their successors are duly elected
and qualified, and (ii) to transact any other proper business brought before
the Annual Meeting or any adjournments or postponements thereof.
All holders of record of shares of common stock at the close of
business on October 13, 1997 (the "Record Date") are entitled to notice of and
to vote at the Annual Meeting. On the Record Date, the Company had outstanding
8,152,379 shares of common stock. Each share of common stock is entitled to
one vote. The presence, in person or by proxy, of holders of a majority of the
outstanding shares of common stock entitled to vote as of the Record Date is
necessary to constitute a quorum at the Annual Meeting.
With regard to the election of directors, votes may be cast in favor
or withheld; votes that are withheld will be excluded entirely from the vote
and will have no effect. Brokers who hold shares in street name for customers
and do not receive voting instructions from such customers are entitled to vote
on the election of directors. Under applicable Delaware law, a broker non-vote
resulting from the failure to deliver voting instructions to a broker will have
no effect on the outcome of the election of directors.
Each stockholder has the unconditional right to revoke his or her
proxy at any time before it is voted. Any proxy given may be revoked either by
a written notice duly signed and delivered to the Secretary of the Company
prior to the exercise of the proxy, by execution of a subsequent proxy or by
voting in person at the Annual Meeting (although attending the Annual Meeting
without executing a ballot or executing a subsequent proxy will not constitute
revocation of a proxy). All properly executed, unrevoked proxies received
before the Annual Meeting will be voted in accordance with the directions
contained therein. When no direction has been given by a stockholder returning
a proxy, the proxy will be voted FOR the election as directors of the nominees
named in this Proxy Statement.
<PAGE> 3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of outstanding shares
of Common Stock beneficially owned as of October 15, 1997, by (i) each director
and named executive officer of the Company, (ii) all officers and directors of
the Company as a group, and (iii) all persons who are known by the Company to
be beneficial owners of 5% or more of the Company's outstanding Common Stock.
Unless otherwise noted, each of the persons listed below has sole voting and
investment power with respect to the shares indicated as beneficially owned by
such person.
<TABLE>
Number of Shares
Name and Address of Beneficial Owner Beneficially Owned(1) Percent
<S> <C> <C>
Philip R. Thomas(4)(13) 1,633,126 20.1%
Lehman Brothers(11) 1,033,000 12.7%
Gerald K. Beckmann(2)(3)(5) 872,548 10.7%
ProFutures Bridge Capital Fund LP(12) 475,000 5.8%
James W. Casey(2)(3)(6) 121,907 1.5%
Frank R. Marlow(2)(3)(7) 62,875 0.8%
Richard P. Shortz(2)(3)(9) 53,201 0.7%
Tony C. Lisotta(2)(3)(8) 52,553 0.6%
Holly J. Burlage(2)(3)(10) 22,077 0.3%
Robert M. Galecke(2)(3) 0 0.0%
James E. Jack(2)(3) 0 0.0%
All current directors and executive officers as a group (8 persons) 1,185,161 14.6%
- ---------------
</TABLE>
(1) Pursuant to the rules of the Securities and Exchange Commission, shares
of Common Stock which an individual or group has a right to acquire
within 60 days pursuant to the exercise of options or warrants are deemed
to be outstanding for the purpose of computing the percentage ownership
of such individual or group, but are not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person shown
in the table.
(2) The address for this person is 8200 Springwood Drive, Suite 230, Irving,
Texas 75063.
(3) Mr. Beckmann is a Director, the Chairman of the Board of Directors, the
President and the Chief Executive Officer of the Company. Mr. Casey is a
Director and Vice President of the Company. Mr. Marlow, Mr. Galecke and
Mr. Jack are Directors of the Company. Mr. Shortz is Senior Vice
President of the Company. Ms. Burlage is Vice President and Secretary of
the Company. Mr. Lisotta is Vice President of the Company.
(4) Includes 146,850 shares of Common Stock owned by Thomas Group Holding
Company, a company owned by Mr. Thomas and 61,801 shares of Common Stock
issuable upon the exercise of warrants within 60 days.
(5) Includes 180,855 shares of Common Stock issuable upon the exercise of
outstanding options exercisable within 60 days; 105,000 shares of Common
Stock issuable upon the conversion of preferred stock; and 146,021 shares
of Common Stock issuable upon the exercise of warrants within 60 days.
(6) Includes 80,215 shares of Common Stock issuable upon the exercise of
outstanding options exercisable within 60 days and 6,746 shares of Common
Stock issuable upon the exercise of warrants within 60 days.
(7) Includes 54,411 shares of Common Stock issuable upon the exercise of
outstanding options exercisable within 60 days and 1,000 shares of Common
Stock issuable upon the exercise of warrants within 60 days.
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(8) Includes 51,239 shares of Common Stock issuable upon the exercise of
outstanding options exercisable within 60 days and 1,314 shares of Common
Stock issuable upon the exercise of warrants within 60 days.
(9) Includes 21,720 shares of Common Stock issuable upon the exercise of
outstanding options exercisable within 60 days and 3,720 shares of Common
Stock issuable upon the exercise of warrants within 60 days.
(10) Includes 11,583 shares of Common Stock issuable upon the exercise of
outstanding options exercisable within 60 days and 1,240 shares of Common
Stock issuable upon the exercise of warrants within 60 days.
(11) The address for this company is 3 World Financial Center, New York, NY
10285.
(12) The address for this company is 1720 South Bellaire Street, Suite 500,
Denver, CO 80222.
(13) The address for this individual is 5215 N O'Connor Boulevard, Suite 2500,
Irving, TX 75039-3714.
ELECTION OF DIRECTORS
The nominees for director listed below will stand for election at this
Annual Meeting for a one-year term of office expiring at the 1998 Annual
Meeting of Stockholders or until their successors are duly elected and
qualified. All nominees are currently members of the Board of Directors.
The following table sets forth certain information as to the nominees
for director of the Company:
<TABLE>
<CAPTION>
Name and Age Positions and Offices With the Company Director Since
------------ -------------------------------------- --------------
<S> <C> <C>
Gerald K. Beckmann, 54 Director, Chairman of the Board, President and 1991
Chief Executive Officer
James W. Casey, 56 Director and Vice President 1995
Robert M. Galecke, 55 Director 1996
James E. Jack, 55 Director 1997
Frank R. Marlow, 57 Director 1995
</TABLE>
While it is not anticipated that any of the nominees will be unable to
serve, if any nominee should decline or become unable to serve as a director
for any reason, votes will be cast instead for a substitute nominee designated
by the Board of Directors or, if none is so designated, will be cast according
to the judgment of the person or persons voting the proxy.
DIRECTORS AND EXECUTIVE OFFICERS
GERALD K. BECKMANN, 54, Director, Chairman, President and Chief
Executive Officer, has served as a director of the Company since its inception
in 1991. Mr. Beckmann was Chief Technical Officer of the Company from 1991 to
May 1995 and Chairman of the Board of Directors since February 1993. On May 1,
1995, Mr. Beckmann became President and Chief Executive Officer of the Company.
From 1991 to 1994 Mr. Beckmann was President and Chief Operating Officer of
Thomas Group Holding Company, a private investment company. In 1985, Mr.
Beckmann joined Thomas Group, Inc., a publicly-held management consulting firm.
Mr. Beckmann also serves as a director on the board of CTC Holdings, an
electronic funds transfer systems supplier. Mr. Beckmann is also a manager in
Celerity Partners, L.L.C., the general partner of Celerity Partners I, L.P., an
acquisition limited partnership. Mr. Beckmann holds a B.S.E.E. from Virginia
Polytechnic Institute and University.
HOLLY J. BURLAGE, 34, Vice President, Secretary and Treasurer, joined
the Company in February 1994 as Accounting Manager, became Controller in 1995,
and became Vice President, Secretary and Treasurer in May
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1997. Prior to joining the Company, Ms. Burlage was Controller of Signature
Home Care Group, Inc., a home health care company, from 1993 to 1994, and
Controller and Chief Accounting Officer of National Heritage, Inc., a
publicly-traded long-term care company, from 1989 to 1993. Ms. Burlage holds a
B.B.A. from Baylor University.
JAMES W. CASEY, 56, Director, Vice President, is currently President
of Golston Company, and Chairman and CEO of B&B Electromatic, Inc. Golston
Company and B&B Electromatic are wholly-owned subsidiaries of the Company. Mr.
Casey served as General Manager of B&B, the Company's manufacturing subsidiary,
from April 1994 to May 1995, and became Director and Vice President of the
Company on May 1, 1995. From May 1995 to May 1997 Mr. Casey also served as the
Company's Chief Financial Officer. Prior to joining the Company, Mr. Casey was
President and Chief Executive Officer of PROTECH, Inc., a publicly-held
automatic test equipment manufacturer from 1990 to 1993 and President and Chief
Operating Officer of CJC Holdings, Inc., a custom jewelry manufacturer from
1989 to 1990. Mr. Casey holds a B.B.A. from Iona College and an M.S. from the
State University of New York.
ROBERT M. GALECKE, 55, Director, is Vice President for Finance and
Administration for the University of Dallas. Prior to that he was a principal
in the corporate consulting firm of Pate, Winters & Stone, Inc. from 1993 to
May 1996. He also served as Executive Vice President, Chief Operating Officer
and Chief Financial Officer of Southmark Corporation, a financial services
insurance and real estate holding company, from 1986 to 1992. From 1989 to
1995, Mr. Galecke served as Chairman of the Board, President and Chief
Executive Officer of National Heritage, Inc. Mr. Galecke received a graduate
degree from the School of Banking at the University of Wisconsin, Madison, and
a BS in Economics from the University of Wisconsin Stevens Point.
JAMES E. JACK, 55, Director, is currently retired. From 1991 to 1996
Mr. Jack was Director, Senior Executive Vice President and Chief Financial
Officer of Associates First Capital Corporation, a publicly traded consumer and
commercial finance organization. Prior to that, Mr. Jack was Director,
Executive Vice President and Chief Financial Officer from 1981 to 1993 of the
same company. Mr. Jack received a graduate degree from the Southern Methodist
University School of Business and a B.B.A. from the University of Notre Dame.
TONY C. LISOTTA, 55, Vice President, Sales and Marketing, IST, a
subsidiary of the Company, joined the Company in October 1993. Mr. Lisotta has
over 14 years of sales and management experience with IBM. Mr. Lisotta
previously served as Senior Vice President for Fults Associates, Inc., a
commercial real estate firm from 1988 to 1992, and Executive Vice President for
The Consolidated Companies, a surety bond company from 1992 to 1993. Mr.
Lisotta holds a B.B.A. from Lamar University.
FRANK R. MARLOW, 57, Director, has been a director of the Company
since May 1995. Mr. Marlow served as Vice President, Sales and Marketing for
the Company from October 1993 to February 1995. Mr. Marlow has been a vice
president of Hogan Systems, a publicly-traded company, since March of 1995.
Previously, Mr. Marlow was with IBM, Docutel Corporation, UCCEL Corporation and
Syntelligence Corporation in executive sales and training positions.
RICHARD P. SHORTZ, 42, Senior Vice President, Engineering, IST, joined
the Company in May 1994 and is responsible for Intelli-Site software
development. Prior to IST, Mr. Shortz was a Software Developer for Thomas
Group, Inc. from 1988 to 1994. Mr. Shortz holds a B.S.C.S. from the University
of Maryland.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has established two committees: a Compensation
and Stock Option Committee, and an Audit Committee. The Company's Board of
Directors acts as the nominating committee to nominate persons for election to
the Board of Directors.
The Compensation and Stock Option Committee is currently composed of
Messrs. Jack and Marlow. The Compensation and Stock Option Committee met two
times during the six-month fiscal year ended June 30, 1997. The Compensation
and Stock Option Committee determines the amount and form of compensation and
benefits payable to all officers and employees, and advises and consults with
management regarding the benefit plans and compensation policies of the
Company. The Compensation and Stock Option Committee also reviews and approves
stock option grants to directors, executive officers and employees of the
Company.
4
<PAGE> 6
The Audit Committee is currently composed of Messrs. Galecke, Jack and
Marlow. The Audit Committee met four times during the six-month fiscal year
ended June 30, 1997. This committee recommends to the Board of Directors the
appointment of independent auditors, reviews the plan and scope of audits,
reviews the Company's significant accounting policies and internal controls,
and has general responsibility for related matters. Prior to the mailing of
this Proxy Statement to the stockholders of the Company, this committee met
with the Company's independent auditors to review the six-month fiscal 1997
audit and the significant accounting policies and internal controls.
The Board of Directors held three meetings during the six-month fiscal
year ended June 30, 1997. None of the directors attended fewer than 90% of the
meetings of the Board of Directors and its committees on which they served.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) LONG-TERM COMPENSATION AWARDS
---------------------- -----------------------------
Other Annual Restricted Stock Option/
Name and Principal Position Year Salary Bonus Compensation Awards SARS
- --------------------------- ---- ------ ----- ------------ ------ ----
<S> <C> <C> <C> <C> <C> <C>
Gerald K. Beckmann 1997 $143,169 $125,000 -- -- --
Chairman, CEO & President 1996 $281,875 -- -- -- --
1995 $114,583 -- -- $ 68,750(3) $14,473
1994 -- -- -- -- --
James W. Casey 1997 $ 73,552 $ 75,000 -- -- --
Vice President & CFO 1996 $ 94,163 $ 6,812 -- -- $50,000
1995 $115,145 $ 7,750 -- $ 33,333(3) $23,395
1994 $ 94,125 $ 17,125 -- -- $34,333
Ferdinand A. Hauslein, Jr. 1997 -- -- -- -- --
former CEO & President 1996 $228,471 -- -- -- --
1995 $233,333 -- $32,845(2) $20,000
1994 $154,167 $56,250 -- $ 4,284 $16,271
Tony C. Lisotta 1997 $ 78,017 -- -- -- --
Vice President, IST 1996 $120,892 -- -- -- --
1995 $116,000 $ 2,850 -- $ 3,550(3) $10,150
1994 $111,500 $16,900 -- -- $ 8,627
Richard P. Shortz 1997 $ 59,605 $21,875 -- -- --
Senior Vice President, IST 1996 $123,166 $ 8,400 -- -- $15,120
1995 $ 96,000 $ 3,000 -- $ 18,600(3) $ 2,880
1994 $ 64,000 -- -- -- $12,000
- ---------------
</TABLE>
(1) Fiscal year 1997 pertains to the six months ended June 30, 1997.
(2) Outplacement services.
(3) Convertible preferred stock issued for forgiveness of deferred salary
amounts.
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No other executive officer's salary and bonus exceed $100,000 annually.
No other executive had any form of long-term incentive plan compensation
arrangement with the Company during any of the indicated periods.
STOCK OPTION GRANTS
The following table provides information concerning the grant of stock
options during the year ended December 31, 1996 and the six months ended June
30, 1997 to the named executive officers:
<TABLE>
<CAPTION>
Number of Securities % of Total Options
Underlying Options Granted to Employees Exercise Expiration
Granted(1) in Fiscal Year Price Date
---------------------- ---------------------- ---------- ------------
<S> <C> <C> <C> <C>
For the twelve months ended 12/31/96
------------------------------------
Gerald K. Beckmann -- -- -- --
James W. Casey 50,000 27% $ .81 3/4/06
Tony C. Lisotta -- -- -- --
Richard P. Shortz 15,120 8% $ 1.96 8/1/06
For the six months ended 6/30/97
--------------------------------
Gerald K. Beckmann -- -- -- --
James W. Casey -- -- -- --
Tony C. Lisotta -- -- -- --
Richard P. Shortz 14,583 19% $ 1.406 6/2/07
</TABLE>
- --------------------
(1) The options for all listed vest with respect to 25% of the shares
issuable thereunder six months after the date of grant and with
respect to cumulative increments of 25% of the shares issuable
thereunder on each anniversary of the date of grant.
OPTION EXERCISES AND HOLDINGS
The following table provides information related to the number of
shares received upon exercise of options, the aggregate dollar value realized
upon exercise, and the number and value of options held by the named executive
officers of the Company at December 31, 1996 and June 30, 1997.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised In-The-Money
Options/SARS at Fiscal Year End Options/SARS at Fiscal Year End
------------------------------- ---------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
For the twelve months ended 12/30/96
- ------------------------------------
Gerald K. Beckmann 177,237 7,237 $200,296 $ 9,046
James W. Casey 63,281 44,448 135,903 121,141
Ferdinand A. Hauslein, Jr. 184,212 -- 230,890 --
Tony C. Lisotta 46,545 7,232 69,509 12,626
Richard P. Shortz 10,440 19,560 19,845 34,383
For the six months ended 6/30/97
- --------------------------------
Gerald K. Beckmann 180,855 3,951 $ 0 $ 0
James W. Casey 80,215 27,513 15,700 15,700
Ferdinand A. Hauslein, Jr. 184,212 -- 0 --
Tony C. Lisotta 51,239 2,538 0 0
Richard P. Shortz 21,720 22,863 0 403
</TABLE>
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<PAGE> 8
DIRECTOR COMPENSATION
Currently, directors are compensated annually $7,500 for serving on the
Board in addition to $1,250 for each Committee on which they serve. All
directors are reimbursed for their out-of-pocket expenses incurred in
connection with their attendance at Board meetings.
The Company has entered into two-year employment agreements with Mr.
Gerald K. Beckmann and Mr. James W. Casey that provide for minimum annual base
salaries of $283,250 and $120,000, respectively. If either Mr. Beckmann or Mr.
Casey is terminated by the Company, each of them is entitled to receive a
severance payment of six months' base salary upon termination.
CERTAIN TRANSACTIONS
During 1995, Mr. Philip R. Thomas, the Company's founder and principal
stockholder, loaned the Company $40,000 which was secured by certain
receivables. On December 29, 1995, Mr. Thomas converted this loan into 2,000
Series B $20 Convertible Preferred Stock. Also on December 29, 1995, Mr.
Beckmann, Mr. James W. Casey (a director and executive officer of the Company),
Mr. Tony C. Lisotta (Vice President of IST), Mr. Richard P. Shortz (Vice
President of IST), Ms. Holly J. Burlage (Vice President of the Company), and
Mr. Frank R. Marlow (a director of the Company), converted unpaid compensation
totaling $138,451 into 6,922 Series B $20 Convertible Preferred Stock.
During 1995 and 1996, Mr. Beckmann loaned the Company approximately
$400,000. These amounts were converted into Series B $20 Preferred Stock
convertible to 395,672 shares of Common Stock and Warrants to purchase 53,021
Shares of Common Stock at $.67 per share. On March 11, 1996, Mr. Beckmann
loaned the Company $100,000 as part of a $250,000 bridge loan. These bridge
loans were converted in June 1996 into $20 Series C Preferred Stock convertible
to 30 shares of Common Stock and Warrants to purchase 15 shares of Common Stock
at $1.00 per share. These warrants expire five years from date of issue.
During the second and third quarters of 1996, Mr. Beckmann loaned the Company
$90,000 and Mr. Casey loaned the Company $75,000. Both of these loans have
been repaid. In 1996, Mr. Beckmann guaranteed loans to the Company in the
aggregate amount of $1,050,000.
The Company believes that the terms of the foregoing transactions were
on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors, executive officers and persons who own more
than ten percent of the Company's common stock, to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the
Company. Such persons are required by SEC regulations to furnish the Company
with copies of all Section 16(a) reports they file. Based solely upon a review
of Forms 3, 4 and 5 and amendments thereto provided to the Company pursuant to
Rule 16a-3(e), all individuals filed on a timely basis reports required by
Section 16(a) of the 1934 Act during the period from January 1, 1997 to June
30, 1997.
INDEPENDENT ACCOUNTANTS
The Board of Directors, upon recommendation of the Audit Committee,
has appointed Price Waterhouse LLP as the independent accountants of the
Company for the fiscal year ending June 30, 1998.
Representatives of Price Waterhouse are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do so
and to be available to respond to appropriate questions.
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<PAGE> 9
BOARD OF DIRECTORS' RECOMMENDATIONS; VOTE REQUIRED
The Board of Directors unanimously recommends a vote FOR the election
as director of each of the nominees named in the proxy.
STOCKHOLDER PROPOSALS
In order for stockholder proposals to receive consideration for
inclusion in the Proxy Statement for the Company's 1998 Annual Meeting of the
Stockholders, such proposals must be received by October 1, 1998, at the
Company's offices at 8200 Springwood Drive, Suite 230, Irving, Texas 75063,
Attention: Secretary.
The Company's by-laws contain a provision which requires that a
stockholder may nominate a person for election as a director only if written
notice of such stockholder's intention to make such nomination has been given
to the Secretary of the Company not earlier than 60 days nor later than 30 days
prior to a meeting of stockholders. However, in the event that notice or
public disclosure of a meeting of stockholders is first given or made to the
stockholders less than 40 days prior to such meeting, then notice of a
stockholder's intention to nominate a person for election as a director will be
timely if given in writing to the Secretary before the close of business on the
tenth day following the date on which the notice of the meeting was mailed or
the public disclosure of the meeting was made. The by-laws also require that
the notice set forth, among other things, a description of all arrangements or
understandings between the nominating stockholder and the nominee pursuant to
which the nomination is to be made or the nominee is to be elected and such
other information regarding the nominee as would be required to be included in
a proxy statement filed pursuant to the proxy rules of the Securities and
Exchange Commission had the nominee been nominated by the Company's Board.
This provision is intended to give the Company the opportunity to obtain all
relevant information regarding persons nominated for director. The Board may
disqualify any nominee who fails to provide the Company with complete and
accurate information as required by this provision.
SOLICITATION OF PROXIES
The Company will pay the expenses of this proxy solicitation. In
addition to solicitation by mail, some of the officers and regular employees of
the Company may solicit proxies personally or by telephone, if deemed
necessary. The Company will request brokers and other fiduciaries to forward
proxy soliciting material to the beneficial owners of shares which are held of
record by the brokers and fiduciaries, and the Company may reimburse them for
reasonable out-of-pocket expenses incurred by them in connection therewith.
OTHER MATTERS
The Board is not aware of any matter, other than the matters described
above, to be presented for action at the Annual Meeting. However, if any other
proper items of business should come before the Annual Meeting, it is the
intention of the person or persons acting under the enclosed form of proxy to
vote in accordance with their best judgment on such matters.
The Annual Report on Form 10-KSB for the six-month fiscal year ended
June 30, 1997 is enclosed herewith.
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<PAGE> 10
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED POSTAGE PAID RETURN ENVELOPE. A PROMPT RETURN OF
YOUR PROXY CARD WILL BE APPRECIATED, AS IT WILL SAVE THE EXPENSE OF FURTHER
MAILINGS.
By Order of the Board of Directors,
Gerald K. Beckmann
Chairman, President and
Chief Executive Officer
Irving, Texas
October 28, 1997
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<PAGE> 11
[INTEGRATED SECURITY SYSTEMS, INC. LETTERHEAD]
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Gerald K. Beckmann and Holly J. Burlage, as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them, to represent and vote, as designated on the reverse, all shares of Common
Stock of Integrated Security Systems, Inc. (the "Company") held of record by
the undersigned on October 13, 1997, at the Annual Meeting of Stockholders to
be held on December 12, 1997 or any adjournment thereof.
IMPORTANT: SIGNATURE REQUIRED ON REVERSE SIDE
<PAGE> 12
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
A [X] Please mark your [ ]
votes as in this
example.
FOR all nominees WITHHOLD Authority
listed to right (Except as to vote for
marked to the contrary) nominees listed
1.Election
of [ ] [ ]
Directors
For, except votes withheld from the following nominees:
- ---------------------------------------------
NOMINEES: Gerald K. Beckmann
James W. Casey
Robert M. Galecke
James E. Jack
Frank R. Marlow
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS
WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE LISTED NOMINEES
AS DIRECTORS.
PLEASE CHECK HERE IF YOU PLAN TO
ATTEND THE ANNUAL MEETING OF STOCK- [ ]
HOLDERS ON DECEMBER 12, 1997.
SIGNATURE DATE
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SIGNATURE DATE
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Signature of third party
NOTE: Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administator,
trustee, or guardian please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
