<PAGE> 1
Registration No. 333-_____
As filed with the Securities and Exchange Commission on May 6, 1999
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
----------------------------------
SECURITY ASSOCIATES INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 87-0467198
(State or other Jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
2101 SOUTH ARLINGTON HEIGHTS ROAD (847) 956-8650
SUITE 100 (Telephone number, including
ARLINGTON HEIGHTS, ILLINOIS 60005 area code, of registrant's
(Address, including zip code, of principal executive offices)
registrant's principal executive offices)
SECURITY ASSOCIATES INTERNATIONAL, INC. SUPPLEMENTAL EMPLOYEES' RETIREMENT
PLAN, SECURITY ASSOCIATES INTERNATIONAL, INC. MANAGEMENT INCENTIVE
PROGRAM, AND SECURITY ASSOCIATES INTERNATIONAL, INC.
MISCELLANEOUS OPTION AND WARRANT AGREEMENTS
MR. JAMES S. BRANNEN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SECURITY ASSOCIATES INTERNATIONAL, INC.
2101 SOUTH ARLINGTON HEIGHTS ROAD
SUITE 100
ARLINGTON HEIGHTS, ILLINOIS 60005
(847) 956-8650
(Name, address, including zip code and telephone number,
including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Title of each Proposed maximum Proposed maximum
class of securities Amount to be offering price per aggregate offering Amount of
to be registered registered(1) share(2) price(2) registration fee(2)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.001 per share 484,681(3) $2.6875 $1302,580 $362
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) This Registration Statement includes any additional shares of the
registrant's Common Stock that may be issued pursuant to antidilution
provisions contained in the plans.
(2) Pursuant to Rule 457(h), the registration fee was computed on the basis of
the average of the high and low prices of the registrant's Common Stock on the
American Stock Exchange on May 4, 1999.
(3) The number of shares to be registered under the respective plans are as
follows: Supplemental Employees' Retirement Plan-316,958; Management Incentive
Program-50,000; and Miscellaneous Option and Warrant
Agreements-117,723.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which have heretofore been filed by Security
Associates International, Inc. (the "Company") with the Securities and Exchange
Commission (the "Commission"), are incorporated by reference in this
Registration Statement, except to the extent that any statement or information
therein is modified, superseded or replaced by a statement or information
contained in any other subsequently filed document incorporated herein by
reference:
i. the Company's Annual Report on Form 10-K for the year ended
December 31, 1998; and
ii. the description of the Company's Common Stock contained in
the Company's Registration Statement on Form S-1 filed on
April 10, 1998.
All documents filed by the Company or the plans pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date hereof, and prior to the
filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference herein and to be a part
hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Delaware General Corporation Law, the Company's
Amended and Restated Certificate of Incorporation provides that directors of
the Company shall not be personally liable for monetary damages to the Company
for certain breaches of their fiduciary duty as directors, unless they violated
their duty of loyalty to the Company or its stockholders, acted in bad faith,
knowingly or intentionally violated the law, authorized illegal dividends or
redemptions, or derived an improper personal benefit from their action as
directors. This provision would have no
2
<PAGE> 3
effect on the availability of equitable remedies or nonmonetary relief, such as
an injunction or rescission for breach of the duty of care. In addition, the
provision applies only to claims against a director arising out of his or her
role as a director and not in any other capacity (such as an officer or
employee of the Company). Further, liability of a director for violations of
the federal securities laws will not be limited by this provision. Directors
will, however, no longer be liable for monetary damages arising from decisions
involving violations of the duty of care which could be deemed grossly
negligent.
The Amended and Restated Certificate of Incorporation provides that
directors and officers of the Company shall be indemnified by the Company to
the fullest extent authorized by Delaware law, against all expenses and
liabilities reasonably incurred in connection with service for or on behalf of
the Company. The Amended and Restated Certificate of Incorporation also
authorizes the Company to enter into one or more agreements with any person
which provide for indemnification greater or different from that provided in
the Amended and Restated Certificate of Incorporation. Insofar as
indemnification for liabilities arising under the Securities Act of 1933, as
amended (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See Exhibit Index which is incorporated herein by reference.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
i. To include any prospectus required by
Section 10(a)(3) of the Securities Act;
ii. To reflect in the prospectus any facts or
events arising after the effective date of
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the
3
<PAGE> 4
aggregate, represent a fundamental change
in the information set forth in the
registration statement;
iii. To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the registration
statement is on Form S-3 or Form S-8, and the
information required to be included in a
post-effective amendment by those paragraphs is
contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered
therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to officers, directors, and
controlling persons of the registrant pursuant to the
registrant's certificate of incorporation or by-laws, or
otherwise, the registrant has been advised that in the
opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer, or controlling person in
connection with the securities being registered, the
registrant will, unless in the
4
<PAGE> 5
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
5
<PAGE> 6
SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Arlington Heights, State of Illinois,
on the 5th day of May, 1999.
Security Associates International, Inc.
By: /s/ James S. Brannen
------------------------------------
James S. Brannen, President and
Chief Executive Officer
6
<PAGE> 7
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature
appears below constitutes and appoints James S. Brannen and Howard S.
Schickler, and each of them singly, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities (including his capacity as a
director and/or officer of Security Associates International, Inc.) to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, the undersigned have executed this power of
attorney on the 5th day of May, 1999.
/s/ James S. Brannen /s/ Douglas Oberlander
- ------------------------------- --------------------------
James S. Brannen Douglas Oberlander
/s/ Ronald J. Davis /s/ Thomas J. Salvatore
- ------------------------------- --------------------------
Ronald J. Davis Thomas J. Salvatore
/s/ Michael B. Jones
- -------------------------------
Michael B. Jones
7
<PAGE> 8
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in their
respective capacities on this 5th day of May, 1999.
Signature Title
--------- -----
President, Chief Executive Officer and
/s/ James S. Brannen Director (Principal Executive Officer)
- ------------------------------
James S. Brannen
Senior Vice President, Treasurer and
Chief Financial Officer (Principal
/s/ Daniel S. Zittman Financial and Accounting Officer)
- ------------------------------
Daniel S. Zittman
/s/ Ronald J. Davis Director
- ------------------------------
Ronald J. Davis
/s/ Thomas J. Salvatore Director
- ------------------------------
Thomas J. Salvatore
/s/ Douglas Oberlander Director
- ------------------------------
Douglas Oberlander
/s/ Michael B. Jones Director
- ------------------------------
Michael B. Jones
8
<PAGE> 9
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------ ----------------------
4.1 Certificate of Incorporation of Security Associates
International, Inc. as amended to date(1)
4.2 By-Laws of Security Associates International, Inc., as
amended to date(1)
4.3 Security Associates International, Inc. Supplemental
Employees' Retirement Plan
4.4 Security Associates International, Inc. Management Incentive
Program
4.5 Form of Security Associates International, Inc. Option
Agreement(2)
4.6 Form of Security Associates International, Inc. Option
Agreement(3)
4.7 Form of Security Associates International, Inc. Warrant
Agreement
4.8 Form of Security Associates International, Inc. Warrant
Agreement
5 Opinion of Sachnoff & Weaver, Ltd.
23 Consent of Arthur Andersen, LLP
24 Powers of Attorney (contained on the signature page hereto)
- -------------------
(1) Incorporated by reference from the Company's Registration Statement on
Form S-1 filed April 10, 1998.
(2) The Company has issued two option grants in the form attached as
Exhibit 4.5. The two option agreements are identical in all material
respects other than the party to whom the option was granted and the
number of shares subject to the option.
(3) The Company has issued three option grants in the form attached as
Exhibit 4.6. The three option agreements are identical in all material
respects other than the party to whom the option was granted, the
number of shares subject to the option, the option exercise price and
the term of the option.
9
<PAGE> 1
Exhibit 4.3
SECURITY ASSOCIATES INTERNATIONAL, INC.
SUPPLEMENTAL EMPLOYEES' RETIREMENT PLAN
1. Purpose
The purpose of the Security Associates International, Inc.
Supplemental Employees' Retirement Plan (the "PLAN") is to enable a select
group of key management or highly compensated employees of Security Associates
International, Inc. (the "COMPANY") and its subsidiaries to receive
supplemental compensation on a deferred basis in accordance with the terms and
conditions set forth herein. The Plan is adopted effective May 1, 1997.
The Plan is designed to qualify under the Employee Retirement Income
Security Act of 1974, as amended, as an unfunded plan maintained by the Company
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees. If, for any reason, including,
but not limited to, the promulgation of regulations by the United States
Department of Labor, this Plan, either in form or in operation, shall fail to
so qualify, the Plan shall be revised, as necessary, and notwithstanding any
other limitations herein, to comply with the requirements for maintaining such
an unfunded plan.
2. Administration
(a) The Plan shall be administered by the Board of Directors of the
Company or by a committee of two (2) or more persons appointed by the Board
(the Board serving in such function, or such committee, shall hereinafter be
referred to as the "COMMITTEE").
(b) The Committee shall have full power and authority to administer
the Plan and otherwise to perform the duties and responsibilities specified
hereunder. Without limitation, and by way of specification, the Committee shall
have the following specific powers and duties:
(i) to determine the key management or highly compensated
employees who, from time to time, shall be eligible to participate in
the Plan in accordance with Section 4;
(ii) to interpret the provisions of the Plan and make any and
all determinations arising thereunder, such interpretations and
determinations to be final, conclusive and binding on all participants
and beneficiaries hereunder;
(iii) to maintain such records as it shall deem necessary or
appropriate for the proper administration of the Plan; and
(iv) to establish such rules and procedures not inconsistent
with the terms of the Plan as it shall deem necessary or appropriate
to effectuate the purpose of the Plan.
<PAGE> 2
3. Plan Year
The Plan Year shall be the calendar year.
4. Eligible Employees
The Committee shall determine from time to time the key management or
highly compensated employees who shall be eligible to participate in the Plan
for a Plan Year, and shall notify such key employees in writing at such time as
the Committee may determine.
5. Supplemental Compensation
Subject to such restrictions, limitations and the satisfaction of such
performance criteria as the Committee may from time to time establish, the
Company may contribute to the Plan an amount equal to the value of a specified
number of shares of Company common stock. Such number need not be identical for
each participant and shall not be based or earned in whole or in part by length
of service. The number, and the restrictions, limitations, and/or performance
criteria for each participant, shall be determined by the Committee in its sole
discretion, and shall be set forth in Exhibits to the Plan that are established
for each participant.
6. Deferred Compensation Account
(a) The Committee shall establish a memorandum account ("DEFERRED
COMPENSATION ACCOUNT") for each participant in the Plan. A participant's
Deferred Compensation Account shall be (i) credited with all amounts
contributed by the Company on his behalf under the Plan, and (ii) charged with
any distributions made with respect to the participant pursuant to Section 9.
Amounts credited to a participant's Deferred Compensation Account, and the
accounting for such Deferred Compensation Account, will be measured in shares
of the Company's common stock, such that the amount credited to a participant's
Deferred Compensation Account in any particular Plan Year will reflect the
number of shares of Company common stock contributed on behalf of the
participant; provided, however, that the number of shares of Company common
stock credited to the Deferred Compensation Account of a participant in any
Plan Year shall be earned, and the participant shall become entitled to all or
a portion of such shares, pro rata over a five (5) year period (provided the
participant satisfies in each Plan Year the performance criteria established
for him by the Committee). If a participant fails to satisfy such performance
criteria in a given Plan Year, he shall earn, and be entitled to, only such
portion of the pro rata amount as may have been earned in accordance with the
participant's Exhibit to the Plan. Any portion of such amount not earned in a
particular Plan Year shall be forfeited and the Deferred Compensation Account
shall be reduced accordingly.
(b) The value of the Deferred Compensation Account of each participant
shall be adjusted annually to reflect the then current fair market value of the
Company's common stock.
(c) The Company shall not be obligated to make any investments in the
Company's common stock, the purpose of such crediting being to establish a
method of adjusting each
2
<PAGE> 3
participant's Deferred Compensation Account in order to determine the amounts
that he may ultimately be entitled to receive upon distribution.
7. Vesting
Except as the Committee may otherwise determine, a participant shall
be one hundred percent (100%) vested in the earned portion of his Deferred
Compensation Account on the first to occur of the following events: (i) death;
(ii) total and permanent disability; (iii) a sales event; (iv) termination of
the Plan; (v) termination of employment by the Company (other than for "cause",
as defined in Section 8) after the participant has completed two (2) or more
years of Plan participation; or (vi) five (5) years of Plan participation. For
purposes of this Plan: (i) a participant shall be deemed to have incurred a
"total and permanent disability" if he is totally and permanently disabled in
accordance with Section 22(e)(3) of the Code; and (ii) a "sales event" shall be
deemed to have occurred upon the consummation of the merger or consolidation of
the Company with another corporation (other than an affiliate of the Company),
firm, or entity, or upon the transfer or sale of substantially all of the
Company's assets or common stock (other than to an affiliate of the Company)
or, if the Committee so elects, upon the first sale of the common stock of the
Company to underwriters for the account of the Company pursuant to a
registration statement under the Securities Act of 1933, as amended, filed with
and declared effective by the Securities and Exchange Commission.
Unless a participant's Deferred Compensation Account has previously
vested pursuant to the preceding paragraph, if a participant voluntarily
terminates his employment prior to the completion of five (5) years of Plan
participation, he will be vested in the percentage of the earned portion of his
Deferred Compensation Account set forth below:
<TABLE>
<CAPTION>
Completed Years of Vested
Participation Percentage
------------- ----------
<S> <C>
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 100%
</TABLE>
3
<PAGE> 4
8. Forfeitures
For purposes of this Section 8, all references herein to the "Company"
shall include the Company's subsidiaries. Notwithstanding any other provision
of this Plan, all rights to a participant's Deferred Compensation Account,
whether vested or unvested, earned or unearned, and to any payments hereunder
(or to the continuation of any payments hereunder) shall be discontinued,
canceled, and forfeited and the Company shall have no obligation hereunder to
the participant, and neither the participant nor his heirs, personal
representatives, or successors shall have any rights with respect thereto, if
any one of the following circumstances occur:
(a) the participant is discharged from employment with the Company for
"cause;"
(b) the participant violates the non-competition and non-disclosure
provisions set forth in this Section 8; or
(c) the participant performs acts of willful malfeasance or gross
negligence in a matter of material importance to the Company.
The Board of Directors shall have the sole discretion to apply the provisions
of this Section 8, and such exercise of discretion shall be conclusive and
binding upon the participant and all other persons.
For purposes of this Plan, the participant shall be deemed terminated
for "cause" if the Company terminates the participant, or the participant
terminates his employment, after the participant:
(a) shall have committed any felony, including, but not limited to, a
felony involving fraud, theft, misappropriation, dishonesty, or embezzlement;
(b) shall have committed acts that materially impair the goodwill or
business of the Company or cause material damage to its property, goodwill or
business;
(c) shall have refused to, or willfully failed to, perform his
material duties; or
(d) shall have performed any action that the Board of Directors, in
its sole discretion, may deem sufficiently injurious to the interests of the
Company to constitute substantial cause for termination.
For purposes of this Plan, the participant agrees that, during the
time of his employment and for a period of two (2) years after the termination
of the participant's employment for any reason whatsoever or for no reason,
whether voluntary or involuntary, the participant will not, except on behalf of
the Company:
(a) directly or indirectly, contact, solicit or direct any person,
firm, or corporation to contact or solicit, any of the Company's customers or
prospective customers (as hereinafter defined)
4
<PAGE> 5
for the purpose of selling or attempting to sell, any products and/or services
(including the making of loans to customers) that are the same as or similar to
the products and services provided by the Company to its customers (or for the
purpose of purchasing any assets that are the same as or similar to those
purchased by the Company from its customers). In addition, the participant will
not disclose the identity of any such customers or prospective customers to any
person, firm, corporation, association, or other entity for any reason or
purpose whatsoever; and
(b) directly or indirectly, whether as an investor (excluding
investments representing less than one percent (1%) of the common stock of a
public company), lender, owner, stockholder, officer, director, consultant,
employee, agent, salesperson or in any other capacity, whether part-time or
full-time, become associated with any business involved in the purchase of
assets or provision of services (including the making of loans) then
constituting ten percent (10%) or more of the annual sales of the Company; and
(c) solicit or accept if offered to him, with or without solicitation,
on his own behalf or on behalf of any other person, the services of any person
who is an employee of the Company, nor solicit any of the Company's employees
to terminate employment with the Company, nor agree to hire any employee of the
Company into employment with himself or any company, individual or other
entity; and
(d) act as a consultant, advisor, officer, manager, agent, director,
partner, independent contractor, owner, or employee for or on behalf of any of
the Company's competitors, prospective competitors, customers or prospective
customers (as hereinafter defined), with respect to or in any way with regard
to any aspect of the Company's business and/or any other business activities in
which the Company engages during the term hereof.
The participant further agrees that both during his employment and
thereafter the participant will not, for any reason whatsoever, use for himself
or disclose to any person not employed by the Company any "Confidential
Information" of the Company acquired by the participant during his relationship
with the Company. The participant agrees that "Confidential Information"
includes but is not limited to: (a) any financial, business, planning,
operations, services, potential services, products, potential products,
technical information and/or know-how, formulas, production, purchasing,
marketing, sales, personnel, customer, broker, supplier, or other information
of the Company; (b) any papers, data, records, processes, methods, techniques,
systems, models, samples, devices, equipment, compilations, invoices, customer
lists, or documents of the Company; (c) any confidential information or trade
secrets of any third party provided to the Company in confidence or subject to
other use or disclosure restrictions or limitations; and (d) any other
information, written, oral, or electronic, whether existing now or at some time
in the future, whether pertaining to current or future developments, and
whether previously accessed during the participant's tenure with the Company or
to be accessed during his future employment with the Company, which pertains to
the Company's affairs or interests or with whom or how the Company does
business.
For purposes of this Section 8: "customer" shall be defined as any
person, firm, or entity that sold any assets to the Company or purchased any
type of product and/or service from the Company or is or was doing business
with the Company or the participant within the twelve (12)
5
<PAGE> 6
month period immediately preceding termination of the participant's employment;
and "prospective customer" shall be defined as any person, firm, or entity
contacted or solicited by the Company or the participant (whether directly or
indirectly) or who contacted the Company or the participant (whether directly
or indirectly) within the twelve (12) month period immediately preceding
termination of the participant's employment for the purpose of having such
persons, firms, or entities become a customer of the Company.
9. Payment of Deferred Compensation
(a) Except as otherwise provided in paragraph (b) or (c) below, the
then current value of the earned and vested portion of the participant's
Deferred Compensation Account shall be paid to him, or his beneficiary, by the
Company, in its sole discretion, in either (i) one (1) single Company common
stock payment within one hundred twenty (120) days after the Settlement Date,
or (ii) five (5), ten (10), or fifteen (15) equal annual installments of
Company common stock with the first such installment to be paid one hundred
twenty (120) days after the Settlement Date and the remaining four (4), nine
(9), or fourteen (14) installments, whichever is applicable, to be paid on the
anniversary date of such first installment payment. The foregoing
notwithstanding, and subject to paragraph (c) below, the participant may elect,
at the time he first becomes a participant in the Plan, to have his Deferred
Compensation Account, if any, paid to him in five (5), ten (10) or fifteen (15)
equal annual installments, provided that, any such election shall be
irrevocable and neither the Company nor the participant may at any time
thereafter change the form of payment so elected. For purposes of this Section
9, "Settlement Date" means, with respect to any particular participant, the
first to occur of (i) the last day of the Plan Year that is coincident with or
next follows the date on which the participant completes five (5) years of Plan
participation; (ii) the date of a sales event (as defined in Section 7); (iii)
the date on which the participant's employment with the Company is terminated
by the Company other than for "cause" (as defined in Section 8); (iv) the date
the Company terminates the Plan; or (v) the second anniversary of the
participant's voluntary termination of employment (if such voluntary
termination occurs prior to any of the events set forth in (i) through (iv)).
For purposes of this Section 9, a participant's date of death or the date on
which the participant ceases work as a result of a total and permanent
disability (as defined in Section 8) shall be considered the date on which the
participant's employment terminates under clause (iii) hereunder.
(b) If it shall be determined by a final administrative decision of
the Internal Revenue Service (which is not appealed by the participant) or by a
final decision of a court of competent jurisdiction (which is not appealed by
the participant) that the value of all or any part of the participant's
Deferred Compensation Account is includable in the income of the participant
prior to the actual receipt of such amount, the Company shall make a special
payment to such participant, which shall, to that extent, discharge the
Company's obligations under this Plan, in an amount equal to such participant's
estimated federal, state and local income tax liabilities related to such
inclusion and to the inclusion in income of such special payment; provided,
that such special payment shall not exceed the then value of the participant's
Deferred Compensation Account. The participant shall have no obligation to
appeal any determination made by the Internal Revenue Service or the decision
of any such court.
6
<PAGE> 7
(c) Notwithstanding the foregoing, the Company shall have the right to
defer payments hereunder (i) if in any Plan Year the aggregate amounts payable
hereunder with respect to all participants shall exceed five percent (5%) of
the gross revenues of the Company as of the last day of the prior Plan Year or
(ii) if, in the reasonable judgment of the Company, making the payments would
impair the capital of the Company or otherwise would be imprudent in light of
the Company's estimated cash flow, estimated cash requirements, and such other
factors as the Company deems appropriate. If payments are deferred, the
payments actually made by the Company under the Plan shall be allocated as
nearly as practicable pro rata among the participants with respect to whom
payments would otherwise have been made. The exercise of the Company's right to
defer payment shall not impair its obligation to make payments at such times as
it is able to do so within the restrictions of this Section 9.
(d) Payment in common stock to be made by the Company hereunder shall
be made by the delivery to the participant of an appropriate certificate or
certificates for the shares of common stock. Mailing to a person entitled to
payment hereunder at the address of such person last furnished to the Company
shall be adequate delivery of such payment for all purposes. If the whereabouts
of a person entitled to payment under the Plan cannot be determined after
reasonable search by the Company and such person's whereabouts continue to be
unknown for a period of three (3) years, the Company may determine that such
person has died, and payment shall be made to such person's beneficiary or, if
after a reasonable search by the Company, no such beneficiary shall be located,
the participant's interest under the Plan shall be forfeited. Any determination
hereunder shall be final and binding on all persons under the Plan, and no
interest or penalty shall be payable with respect to any payment that cannot be
delivered because a person's whereabouts cannot be so determined or continue to
be unknown.
10. Designation of Beneficiary
A participant may designate a beneficiary or beneficiaries to receive
any amount due him hereunder after his death by executing a form prescribed by
the Committee and delivering it to the Committee at any time prior to his
death. A participant may revoke or change his beneficiary designation without
the beneficiary's consent by executing a new form and delivering it to the
Committee at any time and from time to time prior to his death. If a
participant shall have failed to designate a beneficiary, or if no such
beneficiary shall survive him, then such amounts shall be paid to his spouse,
if then living, or, if not, to his children, per stirpes (including legally
adopted children). If the participant fails to designate a beneficiary, and has
no spouse or children, his Deferred Compensation Account shall be forfeited and
neither his estate nor any other person shall have any right to any benefit
hereunder.
11. Other Employee Benefits
Any benefits paid under this Plan shall not be included in creditable
compensation in computing benefits under any employee benefit plans of the
Company, except to the extent provided for thereunder.
7
<PAGE> 8
12. No Right to Employment
Nothing contained herein shall be construed as conferring upon any
participant the right to continue in the employ of the Company. The Plan
relates to the payment of deferred compensation for the participant's services,
and is not intended to be an employment contract.
13. Deferred Compensation As An Unsecured Promise
(a) The Company shall not be required to segregate any funds
representing the Deferred Compensation Accounts of participants hereunder, and
nothing in this Plan shall be construed as providing for such segregation.
(b) The Company may create a grantor trust (within the meaning of
Section 671 of the Code) in connection with the adoption of this Plan to which
it may from time to time make contributions. Notwithstanding any creation of
such a trust, the benefits hereunder shall be a general obligation of the
Company. Payment of benefits from such trust shall, to that extent, discharge
the Company's obligations under this Plan. All payments provided for under this
Plan not so discharged shall be paid in Company common stock.
(c) Nothing in this Plan, and no action taken pursuant to its terms,
shall create or be construed to create a trust or escrow account of any kind,
or a fiduciary relationship between the Committee or the Company and any
participant or any other person. The participants shall rely solely on the
unsecured promise of the Company to make the payments required hereunder, but
shall have the right to enforce such a claim in the same manner as any
unsecured general creditor of the Company.
(d) In the event that, in its discretion, the Company purchases an
insurance policy or policies insuring the life of a participant to allow the
Company to recover the cost of providing benefits, in whole or in part,
hereunder, neither the participant nor his beneficiary shall have any rights
therein or in the proceeds therefrom. The Company shall be the sole owner and
beneficiary of any such insurance policy and shall possess and exercise all
incidents of ownership therein.
14. Claims Review
Any participant or beneficiary who believes that he is being denied a
benefit to which he is entitled under the Plan and who wishes to request review
of a claim for benefits, or who wishes an explanation of a benefit or its
denial, may direct to the Committee a written request for such review. The
Committee shall respond to the request by issuing a notice to the claimant as
soon as possible, but in no event later than ninety (90) days from the date of
the request. This notice furnished by the Committee shall be written in a
manner calculated to be understood by the claimant and shall include the
following:
(a) The specific reason or reasons for any denial of benefits;
(b) The specific Plan provisions on which any denial is based;
8
<PAGE> 9
(c) A description of any further material or information which is
necessary for the claimant to perfect his claim and an explanation of why the
material or information is needed; and
(d) An explanation of the Plan's claim appeals procedure.
If the claimant does not respond to the notice, posted by first-class
mail to the address of record of the Committee, within sixty (60) days from the
posting of the notice, the claimant shall be considered satisfied in all
respects. If the Committee fails to respond to the claimant's written request
for a review, the claimant shall be entitled to proceed to the claim appeals
procedure described in the next paragraph.
In the event that the claimant wishes to appeal the claim review
denial, the claimant or his duly authorized representative may submit to the
Committee, within sixty (60) days of the receipt of the notice, a written
notification of appeal of the claim denial. The notification of appeal of the
claim denial shall permit the claimant or his duly authorized representative to
utilize the following claim appeals procedures:
(a) To review pertinent documents; and
(b) To submit issues and comments in writing to which the Committee
shall respond.
The Committee shall furnish a written decision on the appeal no later
than sixty (60) days after receipt of the notification of appeal, unless
special circumstances require an extension of the time for processing the
appeal. In no event, however, shall the Committee respond later than one
hundred twenty (120) days after a request for an appeal. The decision on appeal
shall be in writing and shall include specific reasons for the decision, and
shall be written in a manner calculated to be understood by the claimant and
contain specific reference to the pertinent Plan provisions on which the
decision is based.
15. Withholding
The Company retains the right to deduct and withhold from any payments
made hereunder all sums which it then may be required to deduct or withhold
pursuant to any applicable tax, statute, law, regulation, or order of any
jurisdiction whatsoever.
16. No Assignment
No participant or beneficiary, or any other person claiming
entitlement to any payment hereunder, shall have the power to transfer, assign,
anticipate, mortgage or otherwise encumber any right to receive a payment in
advance of any such payment and any attempted transfer, assignment,
anticipation, mortgage or encumbrance shall be void. Except to the extent
required by law, no payment shall be subject to seizure for the payment of
public or private debts, judgments, alimony or separate maintenance, or be
transferable by operation of law in the event of bankruptcy, insolvency or
otherwise.
9
<PAGE> 10
17. Obligations to the Company
If a participant becomes entitled to a distribution of benefits under
the Plan, and if at such time the participant has outstanding any debt,
obligation, or other liability representing an amount owed to the Company, the
payment to the participant or his beneficiary shall be reduced by, or set off
against, the amount of such indebtedness or claim, and the participant, as a
condition of participation hereunder, consents to such set-off. In addition to
the foregoing, the payment to a participant or his beneficiary also shall be
reduced by the Company's costs and expenses, including reasonable attorneys'
and accountants' fees, incurred in defending any claim for benefits brought
against it by such participant or beneficiary.
18. Amendment and Termination
The Company reserves the absolute right to amend or terminate the
Plan, in whole or in part, at any time and from time to time; provided that no
such amendment or termination shall affect the right of any participant or
beneficiary hereunder to receive payment of any benefits earned hereunder prior
to the date of such amendment or termination in accordance with the previously
applicable provisions of the Plan.
19. No Third Party Rights
Nothing in this Plan or any trust established pursuant to Section 13
hereof shall be construed to create any rights hereunder in favor of the
beneficiary of any participant prior to the participant's death or in favor of
any other person (other than the Company and any participant) or to limit the
Company's right to amend or terminate the Plan.
20. Notice
Any notice required or permitted to be made under the Plan shall be
sufficient if in writing and hand delivered, or sent by registered or certified
mail, to (i) in the case of notice to the Company or the Committee, the
principal office of the Company, directed to the attention of the Committee,
and (ii) in the case of a participant or the participant's beneficiary, the
participant's (or beneficiary's) mailing address maintained in the Company's
personnel records. Such notice shall be deemed given as of the date of delivery
or, if delivery is made by mail, as of the date shown on the receipt for
registration or certification.
21. Validity
In the event any provision of this Plan is held invalid, void or
unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provision of this Plan.
10
<PAGE> 11
22. Statements
The Committee shall furnish each participant no less frequently than
annually a statement of the value of his Deferred Compensation Account.
23. Gender
Unless the context otherwise requires, any pronoun, wherever used herein, shall
include the corresponding masculine, feminine, or neuter pronouns, and the
plural shall include the singular, and vice versa.
24. Governing Law
Except to the extent preempted by the Employee Retirement Income
Security Act of 1974, as amended, the Plan shall be governed by and construed
in accordance with the laws of the State of Illinois.
Adopted on this 28th day of April, 1997.
SECURITY ASSOCIATES INTERNATIONAL, INC.
By: /s/ James S. Brannen
---------------------------------
Its: President
--------------------------------
11
<PAGE> 1
EXHIBIT 4.4
BONUS PLAN
SECURITY ASSOCIATES INTERNATIONAL, INC.
MANAGEMENT INCENTIVE PROGRAM
SCOPE
The Management Incentive Program is designed to supplement compensation for
Managers having direct P&L responsibilities. Awards are based on meeting (1)
individual objectives, (2) budget targets, and (3) corporate objectives.
Awards will be paid annually after the financial results are posted for the
calendar year. Incentive compensation will be distributed in company stock and
cash. All required taxes will be deducted as required by national and local tax
laws.
INCENTIVE POOL
A pool equal to fifteen percent of the combined salaries of the Managers
participating in the plan will be set up each year. Each Manager could qualify
for a bonus up to fifteen percent of their annual salary.
INCENTIVE PAY OUT
Incentive awards will be based on the individual meeting or exceeding the
predefined goals and objectives in each of three categories, individual
objectives, unit objectives and budgets and overall company performance. Each
of these categories carries different weighting. These factors, and their
weighting may vary each year based on the Company's goals and objectives.
This year's objectives are as follows:
Individual Objectives - 20%
Individual objectives include personal improvement. A set of objectives will be
established for the term qualifying for the bonus. These objectives will
include project plans, resource requirements and target completion dates.
Unit P&L - 60%
Budget and forecast growth are established for each unit. Managers are required
to control expenses and contribute to the growth of the Company with emphasis
on profitability (EBITDA).
Company performance - 20%
Unit plans are rolled up into the overall Company plans. Company performance
will be measured on objectives established annually by the Board of Directors.
<PAGE> 1
EXHIBIT 4.5
THE OPTIONS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THE OPTIONS MAY NOT BE
SOLD OR TRANSFERRED WITHOUT SUCH REGISTRATION, UNLESS THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL SATISFACTORY TO IT THAT A PROPOSED SALE OR TRANSFER DOES
NOT REQUIRE REGISTRATION UNDER APPLICABLE LAW.
OPTION VOID after 5:00 Chicago Time on December 31, 2002
OPTION TO PURCHASE
10,000 SHARES OF COMMON STOCK OF
SECURITY ASSOCIATES INTERNATIONAL, INC.
Date of Issuance: January 6, 1998
FOR VALUE RECEIVED, Security Associates International, Inc. (the
"Company") hereby grants to ________________ ("Optionee") or his registered
assigns, the right to purchase from the Company 10,000 shares of its common
stock ("Common Stock") at a price of $6.00 per share. This Option is subject to
the following provisions:
1. Option Term. The option granted hereby shall terminate at 5:00 p.m.
Chicago time on December 31, 2002.
2. Exercise Price. The option herein extended may be exercised at a price
of $6.00 per share ("Exercise Price").
3. Method of Exercise. The Optionee may exercise this option by
delivering to the Company a written notice stating the number of
shares that the Optionee has elected to purchase. The Exercise Price
shall be paid within thirty (30) days of the date of exercise as
determined between the Company and the Optionee. No share shall be
issued or transferred until full payment therefor has been made and
the Optionee shall have none of the rights of a shareholder with
respect to a share until such share has been issued to the Optionee.
4. Nontransferability. This Option may be exercised only by the Optionee,
and shall not be assignable to or transferable by the Optionee.
<PAGE> 2
5. Adjustment Provisions. If prior to the expiration of the Option herein
granted there shall be any change in the capital structure of the
Company, the shares covered by this Option and Exercise Price payable
therefor shall in each instance be adjusted as follows:
5.1. In the event that, after the date of grant of this Option and
prior to the delivery by the Company of all the shares in
respect of which this Option is granted, the Company shall
have declared and distributed any stock dividend or shall
have effected any readjustment or any other increase in such
proportion or and reduction in the number of its Common Stock
outstanding through stock splits or combination or exchanges
of shares, without receiving compensation therefor in money,
services, or property, the remaining number of shares still
subject to the option hereby granted shall be increased or
decreased to reflect proportionately such increase or
decrease in the number of shares outstanding and the Exercise
Price per share shall be decreased or increased, as the case
may be, in the same proportion.
5.2. If the Company grants to the holders of its Common Stock
rights to subscribe for additional shares or securities, such
rights shall not apply to the shares herein optioned except
to the extent that the Option has been exercised on or before
the date fixed for determining the shareholders entitled to
receive such rights.
5.3. If there is any capital reorganization or reclassification of
the Common Stock of the Company, or any consolidation or
merger of the Company with any other company or companies, or
any sale or distribution of all or substantially all of the
Company's property or assets, adequate provision shall be
made by the Company so that there shall remain and be
substituted under this Option the shares, securities or
assets which would have been issuable or payable in respect
of or in exchange for the shares then remaining under this
Option and not theretofore purchased and issued hereunder, as
if the Optionee had been the owner of such shares on the
applicable record date. Any Common Stock so substituted under
this Option shall be subject to adjustment as provided in
this Section 5 in the same manner and to the same effect as
are the shares covered by this Option.
6. Miscellaneous.
6.1. Investment Representation. The exercise of this Option shall
be contingent upon receipt by the Company from the Optionee
of a representation, in writing, that it is the Optionee's
intention to acquire the shares then being purchased for
investment and not for resale.
2
<PAGE> 3
6.2. Entire Agreement Amendment. This Option constitutes the full
and entire understanding and agreement between the parties
with regard to the subject matters hereof. Neither this
Option nor any term hereof may be amended, waived, discharged
or terminated other than by a written instrument signed by
the party against whom enforcement of any such amendment,
waiver, discharge or termination is sought.
6.3. Exclusive Jurisdiction of Illinois Courts. Each of the
parties hereto agrees to submit to the exclusive jurisdiction
of the federal or state courts in the State of Illinois and
consents to service of process with respect to all such
courts by registered mail to it at is address set forth
herein.
6.4. Waiver of Jury Trial. The parties hereby expressly waive any
right they may have to a jury trial in any suit, action or
proceeding existing under or relating to this Agreement or
any other related document.
6.5. Conflict of laws. This Agreement shall be governed by the
laws of the State of Illinois, without regard to any
principles regarding conflicts of laws.
SECURITY ASSOCIATES INTERNATIONAL, INC.
By: /s/ James S. Brannen
------------------------------------
James S. Brannen, President
3
<PAGE> 1
EXHIBIT 4.6
December 23, 1993
To:
-------------------------------
Re: Security Associates International, Inc. Stock Options
Dear :
----------
Please allow this letter to serve as evidence of the stock options granted to
you by Security Associates International, Inc. The following contains the terms
and conditions under which the stock options are granted and under which they
may be exercised.
1. Option Grant. Security Associates International, Inc., a Delaware
corporation (the "Corporation") grants to _____________, ("Optionee") the
option to purchase a total of 7,723 shares of the authorized but unissued or
reacquired Common Stock of the Corporation (the "Shares").
2. Option Term. The option herein granted shall be for a term
commencing on December 21, 1993 and terminating on December 31, 2003.
3. Exercise Price. The option herein granted may be exercised at a
price of $0.53 per share ("Exercise Price") .
4. Method of Exercise. The Optionee may exercise this option by
delivering to the Corporation a written notice stating the number of Shares
that the Optionee has elected to purchase. The Exercise Price shall be paid
within thirty (30) days of the date of exercise as determined between the
Corporation and the optionee. No Share shall be issued or transferred until
full payment therefor has been made and the Optionee shall have none of the
rights of a shareholder with respect to a Share until such Share has been
issued to the Optionee.
5. Nontransferability. This option shall be exercised only by the
Optionee, and shall not be assignable or transferable by the Optionee.
6. Adjustment Provisions. If prior to the expiration of the option
herein granted there shall be any change in the capital structure of the
Corporation, the Shares covered by this option and the Exercise Price payable
therefor shall in each instance be adjusted as follows:
<PAGE> 2
6.1. In the event that, after the date of grant of this option and
prior to the delivery by the Corporation of all the Shares in respect of which
this option is granted, the Corporation shall have declared and distributed any
stock dividend or shall have effected any readjustment or any other increase in
such proportion or any reduction in the number of its Common Stock outstanding
through stock splits or combination or exchanges of shares without receiving
compensation therefor in money, services, or property, the remaining number of
Shares still subject to the option hereby granted shall be increased or
decreased to reflect proportionately such increase or decrease in the number of
shares outstanding and the Exercise Price per Share shall be decreased or
increased, as the case may be, in the same proportion.
6.2. If the Corporation grants to the holders of its Common Stock
rights to subscribe for additional shares or securities, such rights shall not
apply to the Shares herein optioned except to the extent that the option has
been exercised on or before the date fixed for determining the shareholders
entitled to receive such rights.
6.3. If there is any capital reorganization or reclassification of the
Common Stock of the Corporation, or any consolidation or merger of the
Corporation with any other corporation or corporations, or any sale or
distribution of all or substantially all of the Corporation's property and
assets, adequate provision shall be made by the Corporation so that there shall
remain and be substituted under this option the shares, securities or assets
which would have been issuable or payable in respect of or in exchange for the
Shares then remaining under this option and not theretofore purchased and
issued hereunder, as if the Optionee had been the owner of such Shares on the
applicable record date. Any Common Stock so substituted under this option shall
be subject to adjustment as provided in this Section 6 in the same manner and
to the same effect as are the Shares covered by this option.
7. Investment Representation. The exercise of this option shall be
contingent upon receipt by the Corporation from the Optionee of a
representation, in writing that it is the Optionee's intention to acquire the
Shares then being purchased for investment and not for resale.
8. Compliance with State Securities Law. Notwithstanding anything to
the contrary herein contained, this option shall not be exercisable, in whole
or in part, unless the Shares of the Corporation to which the option relates
are at the time of such exercise exempt from registration under the applicable
state securities law, are the subject matter
2
<PAGE> 3
of an exempt transaction thereunder, are registered by description thereunder,
or at such time are the subject matter of a transaction which has been
registered thereunder. The Corporation agrees that if registration of any such
Shares under the applicable state securities law is required at the time of the
exercise of this option, such registration shall be effected.
9. Conflict of Laws. This Agreement shall be governed by the laws of
the State of Illinois.
Please sign below where indicated and return a copy of this signed Letter
Agreement to Security Associates, Inc. in the envelope provided. You should
retain the original of this Letter Agreement as evidence of the stock options
granted to you.
Very truly yours,
SECURITY ASSOCIATES INTERNATIONAL, INC.
/s/ James S. Brannen
- -----------------------------------------
James S. Brannen
President
JSB/kr
Acknowledged and Agreed to this
____ day of ___________, 199__
- ------------------------------
3
<PAGE> 1
EXHIBIT 4.7
MEMO
TO:
-----------------------
FROM: JAMES S. BRANNEN
RE: WARRANTS TO PURCHASE COMMON SHARES
This memorandum is to confirm that you have been issued as of December 1, 1993
warrants to purchase restricted common stock of Security Associates
International, Inc. as follows:
40,000 warrants to purchase one share each
-----------------
These warrants are issued pursuant to a Board of Directors resolution approved
October 15, 1993, a Termination of Commission Agreement executed between
Security Associates International, Inc. and SAI Partners, Inc. on December 1,
1993 and instructions for the above distribution of warrants received from
Ronald I. Davis on December 2, 1993.
Each warrant entitles you to purchase one (1) share of common stock of Security
Associates International, Inc. common stock for $1.00. The warrants expire on
December 31, 1999 and are redeemable by the Company at $0.01 per warrant any
time after January 1, 1996 so long as the average of the bid and offered price
per share of stock traded in the secondary market has exceeded $3.00 for the
previous calendar month. The Company must give you 30 days notice of its intent
to redeem, during which period you may exercise your warrants.
Dated: December 22, 1993
Signed:
SECURITY ASSOCIATES
INTERNATIONAL, INC.
Acknowledged:
By:
- ------------------------------- --------------------------------
James S. Brannen, President
<PAGE> 1
EXHIBIT 4.8
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF AN EMPLOYMENT AGREEMENT, A COPY OF WHICH IS ON FILE AT
THE OFFICES OF SECURITY ASSOCIATES INTERNATIONAL, INC., AND MAY
NOT BE EXERCISED, TRANSFERRED, PLEDGED OR HYPOTHECATED
EXCEPT IN COMPLIANCE WITH THE TERMS OF THAT AGREEMENT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED, UNLESS A COMPLIANCE WITH THE REGISTRATION PROVISIONS
OF SUCH ACT HAS BEEN MADE OR UNLESS AVAILABILITY OF AN EXEMPTION FROM
SUCH REGISTRATION PROVISIONS HAS BEEN ESTABLISHED, OR UNLESS
SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT OF 1933.
SECURITY ASSOCIATES INTERNATIONAL, INC.
COMMON STOCK PURCHASE WARRANT
EXPIRING NOVEMBER 25, 2003
Issued:
No. 1
WARRANTHOLDER:
NAME:
ADDRESS:
No. of Shares of Common Stock to be issued upon exercise in full: 15,000
For Value Received, Security Associates International, Inc., a
Delaware corporation (the "Corporation"), promises to issue to the holder of
this Warrant ("Warrantholder"), its nominees, successors or assigns, the
nonassessable shares (the "Shares") of the Common Stock (as hereinafter
defined), $.001 par value, of the Corporation at any time from ________ __,
1999 to ________ __, 20__ (the "Expiration Date") upon the payment by the
Warrantholder to the Corporation of the purchase price per share set forth in
Section 2.2 hereof (the "Purchase Price") and to deliver to the Warrantholder a
certificate or certificates representing the Shares purchased.
<PAGE> 2
The Warrants are initially exercisable at a price of $____ per share, payable
in cash or by check to the order of the Corporation, or any combination of cash
or checks, subject to adjustment as provided in Section 2.2 below. The
Warrantholder shall have the right to exercise this Warrant in whole or in part
at any time or times on or prior to the Expiration Date. Subject to the
conditions hereinafter set forth, the Warrantholder may sell, assign and
transfer this Warrant, in whole or in part, and, in the event of any such sale,
assignment and transfer, the Corporation agrees to reissue a Warrant or
Warrants of like tenor for the unexercised portion hereof. The number of Shares
purchasable upon exercise of this Warrant and the Purchase Price per Share
shall be subject to adjustment from time to time as set forth herein.
1. Covenants of the Corporation. The Corporation will at all times
reserve and keep available out of its authorized shares of Common Stock or its
treasury shares, solely for the purpose of issuance upon the exercise of this
Warrant as herein provided such number of shares of Common Stock as shall then
be issuable upon the exercise of this Warrant. The Corporation covenants that
all shares of Common Stock which shall be so issued shall be duly and validly
issued and fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof. The Corporation will take all
such action as may be necessary to assure that all such shares of Common Stock
may be so issued without violation of any applicable requirements of any
federal or state securities laws. The Corporation will not take any corporate
action which would result in any adjustment of the Purchase Price as provided
below if by virtue of such adjustment the total number of shares of Common
Stock issuable after such action upon exercise of this Warrant would exceed the
total number of shares of Common Stock then authorized by the Corporation's
Certificate of Incorporation. No corporate action may be taken which would have
the effect of terminating or restricting the exercise of this Warrant except
with the written consent of the holder of this Warrant.
2. Exercise of Warrant.
2.1. Dividends. No payment or adjustment shall be made upon
any exercise of this Warrant on account of any previous cash dividends.
2.2. Purchase Price. The Purchase Price shall be $____ per
share or, in case an adjustment of such price has taken place pursuant to the
provisions of this paragraph 2, then the Purchase Price shall be the price as
last adjusted and in effect at the date this Warrant (or any part hereof) is
surrendered for exercise.
2.3. Adjustment of Purchase Price. Upon each adjustment of
the Purchase Price, the Warrantholder shall thereafter be entitled to purchase
at the adjusted Purchase Price, the number of shares of Common Stock obtained
by multiplying the Purchase Price in effect immediately prior to such
adjustment by the number of shares of Common Stock purchasable immediately
prior to such adjustment and dividing the product by the Purchase Price as
adjusted. No adjustment of the Purchase Price shall be made in an amount less
than $.01 per share, but any
2
<PAGE> 3
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which together with any
adjustments so carried forward shall amount to $.01 per share or more.
2.4. Subdivision or Combination of Stock.
(a) In case the Corporation shall at any time subdivide
its outstanding shares of Common Stock into a greater number of shares or
declare a dividend or make any other distribution upon the Common Stock of the
Corporation payable in Common Stock, the Purchase Price in effect immediately
prior to such subdivision, dividend or distribution shall be proportionately
reduced, and conversely, in case the outstanding shares of Common Stock of the
Corporation shall be combined into a smaller number of shares, the Purchase
Price in effect immediately prior to such combination shall be proportionately
increased.
(b) Record Date. In case the Corporation shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or other distribution payable in Common Stock, then such
record date shall be deemed to be the date of the issue or sale of the shares
of Common Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution, as the case may be.
2.5. Reorganization, Reclassification, Consolidation, Merger
or Sale.
(a) Any capital reorganization, reclassification,
consolidation, merger or sale of all or substantially all of the Corporation's
assets to another person or entity which is effected in such a way that holders
of Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock is referred to herein as an "ORGANIC CHANGE." Prior to the
consummation of any Organic Change, the Corporation will make appropriate
provisions to insure that each holder of Warrants will thereafter have the
right to acquire and receive such shares of stock, securities or assets as such
holder would have received if such holder had exercised this Warrant
immediately prior to such Organic Change. In any such Organic Change, the
Corporation will make appropriate provisions to insure that the provisions of
this Section 2.5 will thereafter be applicable as nearly as may be to the
Warrants. The Corporation will not effect any consolidation, merger or sale,
unless prior to the consummation thereof, the successor corporation resulting
from consolidation or merger or the corporation purchasing such assets assumes
the obligation to deliver to such holder of Warrants such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to acquire.
(b) If a purchase, tender or exchange offer is made to
and accepted by the holders of more than 50% of the outstanding shares of
Common Stock of the Corporation and any other classes of capital stock that
vote together with the Common Stock as a single class, the Corporation shall
not effect any consolidation, merger or sale with the person having made such
3
<PAGE> 4
offer or with any affiliate of such person, unless prior to the consummation of
such consolidation, merger or sale the holder hereof shall have been given a
reasonable opportunity to then elect to receive, upon exercise of this Warrant
either the stock, securities or assets then issuable with respect to the Common
Stock of the Corporation or the stock, securities or assets, or the equivalent,
issued to previous holders of the Common Stock in accordance with such offer.
2.6. Notice of Adjustment. Upon any adjustment of the
Purchase Price, then and in each such case the Corporation shall give written
notice thereof to the Warrantholder, which notice shall state the Purchase
Price resulting from such adjustment, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based.
2.7. Other Notices. In case at any time:
(a) the Corporation shall offer for
subscription pro rata to the holders of its
Common Stock any additional shares of stock
of any class or other rights;
(b) the Corporation shall offer for
subscription pro rata to the holders of its
Common Stock any additional shares of stock
of any class or other rights;
(c) there shall be any capital reorganization,
or reclassification of the capital stock of
the Corporation, or consolidation or merger
of the Corporation with, or sale of all or
substantially all of its assets to, another
corporation; or
(d) there shall be a voluntary dissolution,
liquidation or winding up of the
Corporation; then, in any one or more of
said cases, the Corporation shall give to
the Warrantholder, (i) at least 20 days
prior written notice of the date on which
the books of the Corporation shall close or
a record shall be taken for such dividend,
distribution or subscription rights or for
determining rights to vote in respect of
any such reorganization, reclassification,
consolidation, merger, sale, dissolution,
liquidation or winding up, and (ii) in the
case of any such reorganization,
reclassification, consolidation, merger,
sale, dissolution, liquidation or winding
up at least 20 days prior written notice of
the date when the same shall take place.
Such notice in accordance with the
foregoing clause (i) shall also specify, in
the case of any such dividend, distribution
or subscription rights, the date on which
the holders of Common Stock shall be
entitled thereto, and such notice in
accordance with the foregoing clause
4
<PAGE> 5
(ii) shall also specify the date on which
the holders of Common Stock shall be
entitled to exchange their Common Stock for
securities or other property deliverable
upon such reorganization, reclassification,
consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may
be.
2.8. Redemption.
(a) The portion of the Warrants currently
exercisable may be redeemed, on not less
than thirty (30) days prior written notice,
at the option of the Corporation, given at
any time after one year from the date of
issuance of the Warrants, at a redemption
price of $. 10 per Share for which the
Warrant may be exercised (the "Redemption
Price"), provided that the Market Price of
the Common Stock equals or exceeds $9.00
per share (subject to adjustment for
subdivision or combination of Common Stock)
for a period of 15 out of 20 consecutive
trading days ending within 30 days of the
date on which the notice of redemption (the
"Redemption Notice") is given. For purposes
of this Section 2.8, Market Price shall
mean (i) the last reported sale price of
the Common Stock as reported by the primary
stock exchange on which the Common Stock is
traded if the Common Stock is traded on a
national stock exchange, or the NASDAQ
Stock Market, Inc. ("NASDAQ") if the Common
Stock is quoted on NASDAQ or (ii) if last
sales price information is not available,
the average closing bid price of the Common
Stock as reported by NASDAQ, or, if the
Common Stock is not traded on an exchange
or NASDAQ, as reported by the National
Quotation Bureau, Inc. All Warrants
currently exercisable must be redeemed if
any are redeemed.
(b) The Redemption Notice shall be mailed to
the Warrantholder and shall state: (i) the
date of redemption (the "Redemption Date");
(ii) the number of Shares subject to
purchase pursuant to the Warrants to be
redeemed from the holder to whom the notice
is addressed; and (iii) instructions for
surrender to the Corporation, in the manner
and at the place designated, a certificate
or certificates representing the number of
shares subject to purchase pursuant to the
Warrants to be redeemed from such holder.
(c) Upon receipt of the Redemption Notice, the
Warrantholder shall have the option, at its
sole election, to specify what portion of
its Warrants called for redemption in the
Redemption Notice shall be
5
<PAGE> 6
redeemed as provided in this paragraph 2.8
or exercised for the purchase of Common
Stock; provided that the Warrantholder pays
the Purchase Price to the Corporation on or
prior to the Redemption Date.
(d) On or before the Redemption Date, the
Warrantholder shall surrender the required
certificate or certificates representing
such Warrants to the Corporation, in the
manner and at the place designated in the
Redemption Notice, and upon the Redemption
Date the Redemption Price for such Warrants
shall be paid to the order of the person
whose name appears on such certificate or
certificates as the owner thereof, and each
surrendered certificate shall be canceled
and retired.
2.9. Definitions of Common Stock. As used in this Paragraph
2, the term "Common Stock" shall mean the Corporation's Common Stock, $.001 par
value, of any class as constituted on the effective date hereof, and shall also
include any capital stock of any class of the Corporation thereafter authorized
which shall not be limited to a fixed sum or percentage of par value in respect
of the rights of the holders thereof to participate in dividends or in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation.
2.10. Issue Tax. The issuance of certificates for shares of
Common Stock upon exercise of this Warrant shall be made without charge to the
holder hereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of this Warrant.
2.11. Closing of Books. The Corporation will not close its
books against the transfer of any shares of Common Stock issued or issuable
upon the exercise of this Warrant.
2.12. Notice. Any notice or other document required or
permitted to be given or delivered to the Warrantholder(s) and holder(s) of
shares issued upon exercise of this Warrant shall be sent by certified or
registered mail, return receipt requested, to the Warrantholder at the address
now shown on this Warrant or at such other address as the holder(s) shall
furnish to the Corporation in writing. Any notice or other document required or
permitted to be given or delivered to the Corporation at 2001 South Arlington
Heights Road, Arlington, Heights, Illinois 60005 or such other address as shall
have been furnished to the Warrantholder(s) and holder(s) of Shares by the
Corporation.
2.13. Exercise of Warrant. In order to exercise this Warrant,
the Warrantholder shall deliver to the Corporation (i) a written notice of such
holder's election to exercise this
6
<PAGE> 7
Warrant specifying the number of shares of Common Stock to be purchased, and
(ii) payment by cashier's or certified check of the per share Purchase Price
multiplied by the number of shares purchased. Upon receipt of written notice,
the Corporation shall within ten (10) business days execute or cause to be
executed and delivered to such holder a certificate or certificates
representing the aggregate number of Shares purchased. If this Warrant shall
have been exercised only in part, the Corporation shall also deliver a new
Warrant of like tenor evidencing the fights of such holder to purchase the
remaining Shares called for by this Warrant.
2.14. Limitation of Liability. No provisions hereof, in the
absence of affirmative action by the Warrantholder to purchase Shares
hereunder, and no mere enumeration herein of the rights or privileges of the
Warrantholder shall give rise to any liability of such holder for the Purchase
Price or as a shareholder of the Corporation (whether such liability is
asserted by the Corporation or creditors of the Corporation).
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be
executed by its President or a Vice President, thereunto duly authorized, the
execution hereof to be attested by its Secretary or an Assistant Secretary and
the affixing of its corporate seat effective as of the ____ day of ________,
____.
SECURITY ASSOCIATES INTERNATIONAL, INC.
ATTEST:
By: By:
------------------------- -------------------------------
Secretary President
7
<PAGE> 1
Exhibit 5
[LETTERHEAD OF SACHNOFF & WEAVER, LTD.]
May 5, 1999
Security Associates International, Inc.
2101 South Arlington Heights Road
Suite 100
Arlington Heights, IL 60005
RE: REGISTRATION STATEMENT ON FORM S-8
SECURITY ASSOCIATES INTERNATIONAL, INC. SUPPLEMENTAL
EMPLOYEES' RETIREMENT PLAN, SECURITY ASSOCIATES
INTERNATIONAL, INC. MANAGEMENT INCENTIVE PROGRAM AND
SECURITY ASSOCIATES INTERNATIONAL, INC. MISCELLANEOUS
OPTION AND WARRANT AGREEMENTS
Gentlemen:
We have acted as counsel for Security Associates International, Inc.
(the "COMPANY") in connection with the Registration Statement on Form S-8 filed
by the Company with the Securities and Exchange Commission to effect the
registration, pursuant to the Securities Act of 1933, of 484,681 shares of
common stock, $0.001 par value (the "COMMON STOCK"), which may be offered by
the Company under the above-referenced plans, option and warrant agreements
(collectively, such plans, option and warrant agreements are referred to herein
as the "PLANS").
In connection with this opinion, we have relied as to matters of fact,
without investigation, upon certificates of public officials and others and
upon affidavits, certificates and statements of directors, officers and
employees of, and the accountants for, the Company. We also have examined
originals or copies, certified or otherwise identified to our satisfaction, of
such corporate and other instruments, documents and records as we have deemed
relevant and necessary to examine for the purpose of this opinion, including
the Plans. In addition, we have reviewed such questions of law as we have
considered necessary and appropriate for the purposes of this opinion.
<PAGE> 2
Security Associates International, Inc.
May 5, 1999
Page 2
We have assumed the accuracy and completeness of all documents and records that
we have reviewed, the genuineness of all signatures, the due authority of the
parties signing such documents, the authenticity of all documents submitted to
us as originals, the conformity to original documents of all the documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such latter documents.
Based upon and subject to the foregoing, we advise you that, in our
opinion, the shares of Common Stock proposed to be offered by the Company as
set forth in the Registration Statement have been duly authorized for issuance
and, when issued and sold in accordance with the Security Associates
International, Inc. Supplemental Employees' Retirement Plan, Security
Associates International, Inc. Management Incentive Program and Security
Associates International, Inc. Miscellaneous Option and Warrant Agreements
referred to in the Registration Statement, such shares will be validly issued,
fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
above-referenced Registration Statement. In giving this consent, we do not
hereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933 or the rules and regulations of
the Securities and Exchange Commission.
We express no opinions as to matters under or involving any laws other
than the laws of the State of Illinois, the federal laws of the United States
of America, and the General Corporation Law of the State of Delaware.
Very truly yours,
/s/ SACHNOFF & WEAVER, LTD.
SACHNOFF & WEAVER, LTD.
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
January 28, 1999 included in Security Associates International, Inc. Annual
Report on Form 10-K for the year ended December 31, 1998 and to all references
to our firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
Chicago, Illinois
May 4, 1999
