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Registration No. 333-_____
As filed with the Securities and Exchange Commission on September 27, 1999
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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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.
STOCK OPTION PLAN AND SECURITY ASSOCIATES INTERNATIONAL, INC.
MISCELLANEOUS WARRANT AGREEMENT
MR. JAMES S. BRANNEN
PRESIDENT
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 Amount to be Proposed maximum Proposed maximum Amount of
class of securities registered(1) offering price per aggregate offering registration fee(2)
to be registered share(2) price(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value 1,825,000(3) $2.375 $4,334,375 $1,205
$.001 per share
- ------------------------------------------------------------------------------------------------------------------------------------
</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 plan.
(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 September 21, 1999.
(3) The number of shares to be registered under the respective plans are as
follows: Stock Option Plan - 1,800,000; and Miscellaneous Warrant Agreement
- 25,000.
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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;
ii. the Company's Quarterly Reports on Form 10-Q for the periods
ended March 31, 1999 and June 30, 1999; and
iii. the description of the Company's Common Stock contained in the
Company's Registration Statement on Form S-1 dated April 22,
1998, as amended and supplemented.
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 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
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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
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
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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
of 1933, 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 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.
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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 Village of Arlington Heights, State of Illinois, on the
23rd day of September, 1999.
Security Associates International, Inc.
By: /s/ James S. Brannen
---------------------------------------
James S. Brannen
Its: President and Chief Executive Officer
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 23rd day of September, 1999.
/s/ James S. Brannen /s/ Douglas Oberlander
- -------------------------------------- -------------------------------
James S. Brannen Douglas Oberlander
/s/ Ronald I. Davis /s/ Thomas J. Salvatore
- -------------------------------------- -------------------------------
Ronald I. Davis Thomas J. Salvatore
/s/ Michael B. Jones
- --------------------------------------
Michael B. Jones
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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 23rd day of September, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
President, Chief Executive Officer
/s/ James S. Brannen and Director (Principal Executive Officer)
- -----------------------------------
James S. Brannen
Senior Vice President and
Chief Financial Officer (Principal
/s/ Daniel S. Zittman Financial and Accounting Officer)
- -----------------------------------
Daniel S. Zittman
/s/ Ronald I. Davis Director
- -----------------------------------
Ronald I. Davis
/s/ Thomas J. Salvatore Director
- -----------------------------------
Thomas J. Salvatore
/s/ Douglas Oberlander Director
- -----------------------------------
Douglas Oberlander
/s/ Michael B. Jones Director
- -----------------------------------
Michael B. Jones
</TABLE>
<PAGE> 7
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
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4.1 Amended and Restated Certificate of Incorporation of
Security Associates International, Inc.(1)
4.2 By-Laws of Security Associates International, Inc., as
amended to date(1)
4.3 Security Associates International, Inc. Stock Option Plan
4.4 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)
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(1)Incorporated by reference from the Company's Registration Statement on Form
S-1 dated April 22, 1998, as amended and supplemented.
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EXHIBIT 4.3
SECURITY ASSOCIATES INTERNATIONAL, INC.
STOCK OPTION PLAN
I. PURPOSE AND DEFINITIONS
A. PURPOSE OF THE PLAN
The Plan is intended to encourage ownership of Shares by Key
Employees and Key Non-Employees in order to attract and retain
such Key Employees in the employ of the Company or an
Affiliate, or to attract such Key Non-Employees to provide
services to the Company or an Affiliate, and to provide
additional incentive for such persons to promote the success
of the Company or an Affiliate.
B. DEFINITIONS
Unless otherwise specified or unless the context otherwise
requires, the following terms, as used in this Plan, have the
following meanings:
1. AFFILIATE means a corporation which, for purposes of
Section 422 of the Code, is a parent or subsidiary of the
Company, direct or indirect.
2. BOARD means the Board of Directors of the Company.
3. CODE means the Internal Revenue Code of 1986, as amended.
4. COMMITTEE means the committee to which the Board
delegates the power to act under or pursuant to the
provisions of the Plan, or the Board if no committee is
selected. If the Board delegates powers to a committee,
then, such committee shall consist initially of not less
than two (2) members of the Board, each member of which
must be a "non-employee director," within the meaning of
the applicable rules promulgated pursuant to the Exchange
Act. In addition, no member of the Committee shall
receive any Option pursuant to the Plan or any similar
plan of the Company or any Affiliate while serving on the
Committee unless the Board determines that the grant of
such an Option satisfies the then current Rule 16b-3
requirements under the Exchange Act. Notwithstanding
anything herein to the contrary, and insofar as the Board
determines that it is necessary in order for compensation
recognized by Participants pursuant to the Plan to be
fully deductible to the Company for federal income tax
purposes, each member of the Committee also shall be an
"outside director" (as defined in regulations or other
guidance issued by the Internal Revenue Service under
Code Section 162(m)).
5. COMPANY means Security Associates International, Inc., a
Delaware corporation, and includes any successor or
assignee corporation or corporations into which the
Company may be merged, changed, or consolidated; any
corporation for whose securities the securities of the
Company shall be exchanged; and any assignee of or
successor to substantially all of the assets of the
Company.
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6. DISABILITY or DISABLED means permanent and total
disability as defined in Section 22(e)(3) of the Code.
7. EXCHANGE ACT means the Securities Exchange Act of 1934,
as amended from time to time, or any successor statute
thereto.
8. INCENTIVE OPTION means an Option which, when granted, is
intended to be an "incentive stock option," as defined in
Section 422 of the Code.
9. KEY EMPLOYEE means an employee of the Company or of an
Affiliate (including, without limitation, an employee who
also is serving as an officer or director of the Company
or of an Affiliate), designated by the Board or the
Committee as being eligible to be granted one or more
Options under the Plan.
10. KEY NON-EMPLOYEE means a non-employee director,
consultant, or independent contractor of the Company or
of an Affiliate who is designated by the Board or the
Committee as being eligible to be granted one or more
Options under the Plan.
11. NONSTATUTORY OPTION means an Option which, when granted,
is not intended to be an "incentive stock option," as
defined in Section 422 of the Code.
12. OPTION means a right or option granted under the Plan.
13. OPTION AGREEMENT means an agreement between the Company
and a Participant executed and delivered pursuant to the
Plan.
14. PARTICIPANT means a Key Employee to whom one or more
Incentive Options or Nonstatutory Options are granted
under the Plan, and a Key Non-Employee to whom one or
more Nonstatutory Options are granted under the Plan.
15. PLAN means this Stock Option Plan, as amended from time
to time.
16. SHARES means the following shares of the capital stock of
the Company as to which Options have been or may be
granted under the Plan: treasury shares or authorized but
unissued Common Stock, $.001 par value, or any shares of
capital stock into which the Shares are changed or for
which they are exchanged within the provisions of Article
VI of the Plan.
II. SHARES SUBJECT TO THE PLAN
The aggregate number of Shares as to which Options may be granted from
time to time shall be One Million Eight Hundred Thousand (1,800,000)
Shares (subject to adjustment for stock splits, stock dividends, and
other adjustments described in Article VI hereof); provided, however,
that, in accordance with Section 162(m) of the Code, the aggregate
number of Shares as to which Options may be granted in any calendar
year to any one Key Employee shall not exceed Four Hundred Thousand
(400,000) (subject to adjustment for stock splits, stock dividends, and
other adjustments described in Article VI hereof).
If an Option ceases to be "outstanding," in whole or in part, the
Shares which were subject to such Option, if the Option was not
exercised, shall be available for the granting of other Options. Any
Option shall be treated as "outstanding" until such Option is exercised
in full, terminates or expires
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under the provisions of the Plan or Option Agreement, or is canceled
by agreement of the Company and the Participant.
Subject to the provisions of Article VI, the aggregate number of Shares
as to which Incentive Options may be granted shall be subject to change
only by means of an amendment of the Plan duly adopted by the Company
and approved by the stockholders of the Company within one year before
or after the date of the adoption of any such amendment.
III. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. A majority of the
Committee shall constitute a quorum at any meeting thereof (including
by telephone conference) and the acts of a majority of the members
present, or acts approved in writing by a majority of the entire
Committee without a meeting, shall be the acts of the Committee for
purposes of this Plan. The Committee may authorize one or more of its
members or an officer of the Company to execute and deliver documents
on behalf of the Committee. A member of the Committee shall not
exercise any discretion respecting himself or herself under the Plan.
The Board shall have the authority to remove, replace or fill any
vacancy of any member of the Committee upon notice to the Committee and
the affected member. Any member of the Committee may resign upon notice
to the Board. The Committee may allocate among one or more of its
members, or may delegate to one or more of its agents, such duties and
responsibilities as it determines.
Subject to the provisions of the Plan, the Committee is authorized to:
A. interpret the provisions of the Plan or of any Option or
Option Agreement and to make all rules and determinations
which it deems necessary or advisable for the administration
of the Plan;
B. determine which employees of the Company or of an Affiliate
shall be designated as Key Employees and which of the Key
Employees shall be granted Options;
C. determine the Key Non-Employees to whom Nonstatutory Options
shall be granted;
D. determine whether the Option to be granted shall be an
Incentive Option or Nonstatutory Option;
E. determine the number of Shares for which an Option or Options
shall be granted;
F. provide for the acceleration of the right to exercise an
Option (or portion thereof); and
G. specify the terms and conditions upon which Options may be
granted;
provided, however, that with respect to Incentive Options, all such
interpretations, rules, determinations, terms, and conditions shall be
made and prescribed in the context of preserving the tax status of the
Incentive Options as incentive stock options within the meaning of
Section 422 of the Code.
All determinations of the Committee shall be reduced to writing and
signed by or on behalf of the Committee. No member of the Committee
shall be liable for any action or determination made in good faith with
respect to the Plan or any Option.
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IV. ELIGIBILITY FOR PARTICIPATION
The Committee may at any time and from time to time grant one or more
Options to one or more Key Employees or Key Non-Employees and may
designate the number of Shares to be subject to each Option so granted,
provided, however, that (i) each Participant receiving an Incentive
Option must be a Key Employee of the Company or of an Affiliate at the
time an Incentive Option is granted; (ii) no Incentive Options shall be
granted after the expiration of ten (10) years from the earlier of the
date of the adoption of the Plan by the Company or the approval of the
Plan by the stockholders of the Company; and (iii) the fair market
value of the Shares (determined at the time the Option is granted) as
to which Incentive Options are exercisable for the first time by any
Key Employee during any single calendar year (under the Plan and under
any other incentive option plan of the Company or an Affiliate) shall
not exceed $100,000.
Notwithstanding the foregoing, no individual who is a member of the
Committee shall be eligible to receive an Option, unless the Board
determines that the grant of the Option satisfies the then current Rule
16b-3 requirements under the Exchange Act. If, at any time, the Company
is no longer subject to Section 16 of the Exchange Act, then no
individual who is a member of the Committee shall be eligible to
receive an Option under the Plan unless the granting of such Option
shall be approved by the Committee, with all of the members voting
thereon being disinterested members. For the purpose of this Article
IV, a "disinterested member" shall be any member who shall not then be,
or at any time within the year prior thereto have been, granted an
Option under the Plan or any other plan of the Company or an Affiliate,
other than an Option granted under a formula plan established by the
Company or an Affiliate.
Notwithstanding any of the foregoing provisions, the Committee may
authorize the grant of an Option to a person not then in the employ of
or serving as a director, consultant, or independent contractor of the
Company or of an Affiliate, conditioned upon such person becoming
eligible to become a Participant at or prior to the execution of the
Option Agreement evidencing the actual grant of such Option.
V. TERMS AND CONDITIONS OF OPTIONS
Each Option shall be set forth in an Option Agreement, duly executed on
behalf of the Company and by the Participant to whom such Option is
granted. Except for the setting of the Option price under Paragraph A,
no Option shall be granted and no purported grant of any Option shall
be effective until such Option Agreement shall have been duly executed
on behalf of the Company and by the Participant. Each such Option
Agreement shall be subject to at least the following terms and
conditions:
A. OPTION PRICE
The exercise price of the Shares covered by each Option
granted under the Plan shall be determined by the Committee.
The Option price per share shall be such amount as may be
determined by the Committee in its sole discretion on the date
of the grant of the Option. In the case of an Incentive
Option, if the optionee owns directly or by reason of the
applicable attribution rules ten percent (10%) or less of the
total combined voting power of all classes of share capital of
the Company, the Option price (per share) of the Shares
covered by each Incentive Option shall be not less than the
"fair market value" of the Shares on the date of the grant of
the Incentive Option. In all other cases of Incentive Options,
the Option price shall be not less than one hundred ten
percent (110%) of the said fair market value on the date of
grant. If the Shares are listed on any national securities
exchange, the fair market
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value shall be the closing sales price, if any, on the largest
such exchange on the date of the grant of the Option, or, if
none, on the most recent trade date thirty (30) days or less
prior to the date of the grant of the Option. If the Shares
are not then listed on any such exchange, the fair market
value of such Shares shall be the closing sales price if such
is reported or otherwise the mean average of the closing "Bid"
and the closing "Ask" prices, if any, as reported on the
National Association of Securities Dealers Automated Quotation
System ("NASDAQ") for the date of the grant of the Option, or
if none, on the most recent trade date thirty (30) days or
less prior to the date of the grant of the Option for which
such quotations are reported. If the Shares are not then
either listed on any such exchange or quoted on NASDAQ, the
fair market value shall be the mean between the average of the
"Bid" and the average of the "Ask" prices, if any, as reported
in the National Daily Quotation Service for the date of the
grant of the Option, or, if none, for the most recent trade
date thirty (30) days or less prior to the date of the grant
of the Option for which such quotations are reported. If the
fair market value cannot be determined under the preceding
three sentences, it shall be determined in good faith by the
Committee.
B. NUMBER OF SHARES
Each Option shall state the number of Shares to which it
pertains.
C. TERM OF OPTION
Each Incentive Option shall terminate not more than ten (10)
years from the date of the grant thereof, or at such earlier
time as the Option Agreement may provide, and shall be subject
to earlier termination as herein provided, except that if the
Option price is required under Paragraph A of this Article V
to be at least one hundred ten percent (110%) of fair market
value, each such Incentive Option shall terminate not more
than five (5) years from the date of the grant thereof, and
shall be subject to earlier termination as herein provided.
D. DATE OF EXERCISE
Upon the authorization of the grant of an Option, or at any
time thereafter, the Committee may, subject to the provisions
of Paragraph C of this Article V, prescribe the date or dates
on which the Option becomes exercisable, and may provide that
the Option rights become exercisable in installments over a
period of years, or upon the attainment of stated goals.
E. MEDIUM OF PAYMENT
The Option price shall be paid on the date of purchase
specified in the notice of exercise, as set forth in Paragraph
I. It shall be paid in such form (permitted by Section 422 of
the Code in the case of Incentive Options) as the Committee
shall, either by rules promulgated pursuant to the provisions
of Article III of the Plan, or in the particular Option
Agreement, provide.
F. TERMINATION OF EMPLOYMENT
1. A Participant who ceases to be an employee or Key
Non-Employee of the Company or of an Affiliate for any
reason other than death, Disability, or termination
for cause, may exercise any Option granted to such
Participant, to the extent that the right to purchase
Shares thereunder has become exercisable on the date
of such termination, but only within three (3) months
after such date, or, if earlier, within the
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originally prescribed term of the Option, and subject
to the condition that no Option shall be exercisable
after the expiration of the term of the Option. A
Participant's employment shall not be deemed
terminated by reason of a transfer to another employer
which is the Company or an Affiliate.
2. A Participant who ceases to be an employee or Key
Non-Employee for cause shall, upon such termination,
cease to have any right to exercise any Option. For
purposes of this Plan, cause shall be deemed to
include (but shall not be limited to) wrongful
appropriation of funds of the Company or an Affiliate,
divulging confidential information about the Company
or an Affiliate to the public, the commission of a
gross misdemeanor or felony, or the performance of any
similar action that the Board or the Committee, in
their sole discretion, may deem to be sufficiently
injurious to the interests of the Company or an
Affiliate to constitute substantial cause for
termination. The determination of the Board or the
Committee as to the existence of cause shall be
conclusive and binding upon the Participant and the
Company.
3. A Participant who is absent from work with the Company
or an Affiliate because of temporary disability (any
disability other than a permanent and total Disability
as defined at Paragraph B(6) of Article I hereof), or
who is on leave of absence for any purpose permitted
by any authoritative interpretation (i.e., regulation,
ruling, case law, etc.) of Section 422 of the Code,
shall not, during the period of any such absence, be
deemed, by virtue of such absence alone, to have
terminated his employment or relationship with the
Company or with an Affiliate, except as the Committee
may otherwise expressly provide or determine.
4. Paragraph F(1) shall control and fix the rights of a
Participant who ceases to be an employee or Key
Non-Employee of the Company or of an Affiliate for any
reason other than death, Disability, or termination
for cause, and who subsequently becomes Disabled or
dies. Nothing in Paragraphs G and H of this Article V
shall be applicable in any such case except that, in
the event of such a subsequent Disability or death
within the three (3) month period after the
termination of employment or, if earlier, within the
originally prescribed term of the Option, the
Participant or the Participant's estate or personal
representative may exercise the Option permitted by
this Paragraph F, in the event of Disability, within
twelve (12) months after the date that the Participant
ceased to be an employee or Key Non-Employee of the
Company or of an Affiliate or, in the event of death,
within twelve (12) months after the date of death of
such Participant.
G. TOTAL AND PERMANENT DISABILITY
A Participant who ceases to be an employee or Key Non-Employee
of the Company or of an Affiliate by reason of Disability may
exercise any Option granted to such Participant (i) to the
extent that the right to purchase Shares thereunder has become
exercisable on or before the date such Participant becomes
Disabled as determined by the Committee, and (ii) if the
Option becomes exercisable periodically under Paragraph D, to
the extent of any additional rights that would have become
exercisable had the Participant not become so Disabled until
after the close of business on the next periodic exercise
date.
A Disabled Participant shall exercise such rights, if at all,
only within a period of not more than twelve (12) months after
the date that the Participant became Disabled as determined by
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the Committee (notwithstanding that the Participant might have
been able to exercise the Option as to some or all of the
Shares on a later date if the Participant had not become
Disabled) or, if earlier, within the originally prescribed
term of the Option.
H. DEATH
In the event that a Participant to whom an Option has been
granted ceases to be an employee or Key Non-Employee of the
Company or of an Affiliate by reason of such Participant's
death, such Option, to the extent that the right is
exercisable but not exercised on the date of death, may be
exercised by the Participant's estate or personal
representative within twelve (12) months after the date of
death of such Participant or, if earlier, within the
originally prescribed term of the Option, notwithstanding that
the decedent might have been able to exercise the Option as to
some or all of the Shares on a later date if the Participant
were alive and had continued to be an employee or Key
Non-Employee of the Company or of an Affiliate.
I. EXERCISE OF OPTION AND ISSUE OF STOCK
Options shall be exercised by giving written notice to the
Company. Such written notice shall: (l) be signed by the
person exercising the Option, (2) state the number of Shares
with respect to which the Option is being exercised, (3)
contain the warranty, if any, required by Paragraph M of this
Article V, and (4) specify a date (other than a Saturday,
Sunday or legal holiday) not less than five (5) nor more than
ten (10) days after the date of such written notice, as the
date on which the Shares will be purchased. Such tender and
conveyance shall take place at the principal office of the
Company during ordinary business hours, or at such other hour
and place agreed upon by the Company and the person or persons
exercising the Option. On the date specified in such written
notice (which date may be extended by the Company in order to
comply with any law or regulation which requires the Company
to take any action with respect to the Option Shares prior to
the issuance thereof, whether pursuant to the provisions of
Article VI or otherwise), the Company shall accept payment for
the Option Shares and shall deliver to the person or persons
exercising the Option in exchange therefor an appropriate
certificate or certificates for fully paid non-assessable
Shares. In the event of any failure to take up and pay for the
number of Shares specified in such written notice on the date
set forth therein (or on the extended date as above provided),
the right to exercise the Option shall terminate with respect
to such number of Shares, but shall continue with respect to
the remaining Shares covered by the Option and not yet
acquired pursuant thereto.
J. RIGHTS AS A STOCKHOLDER
No Participant to whom an Option has been granted shall have
rights as a stockholder with respect to any Shares covered by
such Option except as to such Shares as have been issued to or
registered in the Company's share register in the name of such
Participant upon the due exercise of the Option and tender of
the full Option price.
K. ASSIGNABILITY AND TRANSFERABILITY OF OPTION
Unless otherwise permitted by the Code and by Rule 16b-3 of
the Exchange Act, if applicable, and approved in advance by
the Committee, an Option granted to a Participant shall not be
transferable by the Participant and shall be exercisable,
during the Participant's lifetime, only by such Participant
or, in the event of the Participant's incapacity, his guardian
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or legal representative. Except as otherwise permitted herein,
such Option shall not be assigned, pledged or hypothecated in
any way (whether by operation of law or otherwise) and shall
not be subject to execution, attachment, or similar process.
Any attempted transfer, assignment, pledge, hypothecation or
other disposition of any Option or of any rights granted
thereunder contrary to the provisions of this Paragraph K, or
the levy of any attachment or similar process upon an Option
or such rights, shall be null and void.
L. OTHER PROVISIONS
The Option Agreement for an Incentive Option shall contain
such limitations and restrictions upon the exercise of the
Option as shall be necessary in order that such Option can be
an "incentive stock option" within the meaning of Section 422
of the Code. Further, the Option Agreements authorized under
the Plan shall be subject to such other terms and conditions
including, without limitation, restrictions upon the exercise
of the Option, as the Committee shall deem advisable and
which, in the case of Incentive Options, are not inconsistent
with the requirements of Section 422 of the Code.
M. PURCHASE FOR INVESTMENT
Unless the Shares to be issued upon the particular exercise of
an Option shall have been effectively registered under the
Securities Act of 1933, as now in force or hereafter amended,
the Company shall be under no obligation to issue the Shares
covered by such exercise unless and until the following
conditions have been fulfilled. In accordance with the
direction of the Committee, the persons who exercise such
Option shall warrant to the Company that, at the time of such
exercise, such persons are acquiring their Option Shares for
investment and not with a view to, or for sale in connection
with, the distribution of any such Shares, and shall make such
other representations, warranties, acknowledgments and
affirmations, if any, as the Committee may require. In such
event, the persons acquiring such Shares shall be bound by the
provisions of the following legend (or similar legend) which
shall be endorsed upon the certificate(s) evidencing their
Option Shares issued pursuant to such exercise.
"The shares represented by this certificate have been
acquired for investment and they may not be sold or
otherwise transferred by any person, including a
pledgee, in the absence of an effective registration
statement for the shares under the Securities Act of
1933 or an opinion of counsel satisfactory to the
Company that an exemption from registration is then
available."
Without limiting the generality of the foregoing, the Company
may delay issuance of the Shares until completion of any
action or obtaining any consent that the Company deems
necessary under any applicable law (including without
limitation state securities or "blue sky" laws).
VI. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; SALE OF COMPANY
In the event that the outstanding Shares of the Company are changed
into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation by reason of any
reorganization, merger, consolidation, recapitalization,
reclassification, change in par value, stock split-up, combination of
shares or dividend payable in capital stock, or the like, appropriate
adjustments to prevent dilution or enlargement of the rights granted
to, or available for, Participants shall be made in the manner and kind
of shares for the purchase of which Options may
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<PAGE> 9
be granted under the Plan, and, in addition, appropriate adjustment
shall be made in the number and kind of Shares and in the Option price
per share subject to outstanding Options. No such adjustment shall be
made which shall, within the meaning of Section 424 of the Code,
constitute such a modification, extension, or renewal of an Option as
to cause the adjustment to be considered as the grant of a new Option.
Notwithstanding anything herein to the contrary, the Company may, in
its sole discretion, accelerate the timing of the exercise provisions
of any Option in the event of a tender offer for the Company's Shares,
the adoption of a plan of merger or consolidation under which all the
Shares of the Company would be eliminated, or a sale of all or
substantially all of the Company's assets. Alternatively, the Company
may, in its sole discretion, cancel any or all Options upon any of the
foregoing events and provide for the payment to Participants in cash of
an amount equal to the difference between the Option price and the
price of a Share, as determined in good faith by the Committee, at the
close of business on the date of such event, multiplied by the number
of Shares subject to Option so canceled. The preceding two sentences of
this Article VI notwithstanding, the Company shall be required to
accelerate the timing of the exercise provisions of any Option if (i)
any such business combination is to be accounted for as a
pooling-of-interests under APB Opinion 16 and (ii) the timing of such
acceleration does not prevent such pooling-of-interests treatment.
Upon a business combination by the Company or any of its Affiliates
with any corporation or other entity through the adoption of a plan of
merger or consolidation or a share exchange or through the purchase of
all or substantially all of the capital stock or assets of such other
corporation or entity, the Board or the Committee may, in its sole
discretion, grant Options pursuant hereto to all or any persons who, on
the effective date of such transaction, hold outstanding options to
purchase securities of such other corporation or entity and who, on and
after the effective date of such transaction, will become employees or
directors of, or consultants to, the Company or its Affiliates. The
number of Shares subject to such substitute Options shall be determined
in accordance with the terms of the transaction by which the business
combination is effected. Notwithstanding the other provisions of this
Plan, the other terms of such substitute Options shall be substantially
the same as or economically equivalent to the terms of the options for
which such Options are substituted, all as determined by the Board or
by the Committee, as the case may be. Upon the grant of substitute
Options pursuant hereto, the options to purchase securities of such
other corporation or entity for which such Options are substituted
shall be canceled immediately.
VII. DISSOLUTION OR LIQUIDATION OF THE COMPANY
Upon the dissolution or liquidation of the Company other than in
connection with a transaction to which the preceding Article VI is
applicable, all Options granted hereunder shall terminate and become
null and void; provided, however, that if the rights of a Participant
under the applicable Options have not otherwise terminated and expired,
the Participant shall have the right immediately prior to such
dissolution or liquidation to exercise any Option granted hereunder to
the extent that the right to purchase shares thereunder has become
exercisable as of the date immediately prior to such dissolution or
liquidation.
VIII. TERMINATION OF THE PLAN
The Plan shall terminate (10) years from the earlier of the date of its
adoption or the date of its approval by the stockholders. The Plan may
be terminated at an earlier date by vote of the stockholders or the
Board; provided, however, that any such earlier termination shall not
affect any Options granted or Option Agreements executed prior to the
effective date of such termination. Except as may otherwise be provided
for under Articles VI and VII, and notwithstanding the
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termination of the Plan, any Options granted prior to the effective
date of the Plan's termination may be exercised until the earlier of
(i) the date set forth in the Option Agreement, or (ii) ten (10) years
from the date the Option is granted, and the provisions of the Plan
with respect to the full and final authority of the Committee under the
Plan shall continue to control.
IX. AMENDMENT OF THE PLAN
The Plan may be amended by the Board and such amendment shall become
effective upon adoption by the Board; provided, however, that any
amendment shall be subject to the approval of the stockholders of the
Company at or before the next annual meeting of the stockholders of the
Company if such stockholder approval is required by the Code, any
federal or state law or regulation, the rules of any stock exchange or
automated quotation system on which the Shares may be listed or quoted,
or if the Board, in its discretion, determines to submit such changes
to the Plan to its stockholders for approval.
X. EMPLOYMENT RELATIONSHIP
Nothing herein contained shall be deemed to prevent the Company or an
Affiliate from terminating the employment of a Participant, nor to
prevent a Participant from terminating the Participant's employment
with the Company or an Affiliate.
XI. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee
shall be indemnified by the Company against all reasonable expenses,
including attorneys' fees, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be
a party by reason of any action taken by them as members of the
Committee and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding
that the Committee member is liable for gross negligence or willful
misconduct in the performance of his or her duties. To receive such
indemnification, a Committee member must first offer in writing to the
Company the opportunity, at its own expense, to defend any such action,
suit or proceeding.
XII. SAVINGS CLAUSE
This Plan is intended to comply in all respects with applicable law and
regulations, including, (i) with respect to those Participants who are
officers or directors for purposes of Section 16 of the Exchange Act,
Rule 16b-3 of the Securities and Exchange Commission, if applicable,
and (ii) with respect to executive officers, Code Section 162(m). In
case any one or more provisions of this Plan shall be held invalid,
illegal, or unenforceable in any respect under applicable law and
regulation (including Rule 16b-3 and Code Section 162(m)), the
validity, legality, and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby and the invalid,
illegal, or unenforceable provision shall be deemed null and void;
however, to the extent permitted by law, any provision that could be
deemed null and void shall first be construed, interpreted, or revised
retroactively to permit this Plan to be construed in compliance with
all applicable law (including Rule 16b-3 and Code Section 162(m)) so as
to foster the intent of this Plan. Notwithstanding anything herein to
the contrary, with respect to Participants who are officers and
directors for purposes of Section 16 of the Exchange Act, no grant of
an Option to purchase Shares shall permit
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unrestricted ownership of Shares by the Participant for at least six
(6) months from the date of the grant of such Option, unless the Board
determines that the grant of such Option to purchase Shares otherwise
satisfies the then current Rule 16b-3 requirements.
XIII. WITHHOLDING
Except as otherwise provided by the Committee,
A. The Company shall have the power and right to deduct or
withhold, or require a Participant to remit to the Company, an
amount sufficient to satisfy federal, state, and local taxes
required by law to be withheld with respect to any grant,
exercise, or payment made under or as a result of this Plan;
and
B. In the case of any taxable event hereunder, a Participant may
elect, subject to the approval in advance by the Committee, to
satisfy the withholding requirement, if any, in whole or in
part, by having the Company withhold Shares of Common Stock
that would otherwise be transferred to the Participant having
a Fair Market Value, on the date the tax is to be determined,
equal to the minimum marginal tax that could be imposed on the
transaction. All elections shall be made in writing and signed
by the Participant.
XIV. EFFECTIVE DATE
This Plan shall become effective upon adoption by the Board, provided
that within one (1) year before or after such adoption by the Board (or
within such earlier time period as may be required by the Exchange Act,
if applicable) the Plan is approved by the stockholders of the Company.
If such approval is not obtained, then this Plan and all Options
granted hereunder shall be null and void ab initio.
XV. GOVERNING LAW
This Plan shall be governed by the laws of the State of Illinois and
construed in accordance therewith.
Adopted this 1st day of April, 1999.
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EXHIBIT 4.4
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF
AN EMPLOYMENT AGREEMENT, BY AND BETWEEN THE WARRANT HOLDER AND THE ISSUER, A
COPY OF WHICH IS ON FILE AT THE OFFICE OF SECURITY ASSOCIATES INTERNATIONAL,
INC., AND THE WARRANTS HEREUNDER 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 REGISRATION PROVISIONS OF SUCH ACT HAS
BEEN MADE OR UNLESS AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION
PROVISIONS HAS BEEN ESTABLISHED, OR UNLESS SOLD TO RULE 144 UNDER THE SECURITIES
ACT OF 1933.
SECURITY ASSOCIATES INTERNATIONAL, INC.
COMMON STOCK PURCHASE WARRANT
EXPIRING JUNE 17, 2004
Issued: June 17, 1998
No. 2
WARRANTHOLDER:
------------------
NAME:
----------------------------
ADDRESS:
------------------------
------------------------
No. of Shares of Common Stock to be issued upon exercise in full: 25,000
<PAGE> 2
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 June 17, 1998 to June 17, 2004 (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. The Warrants are initially exercisable at a price of $6.00 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,
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 numbers
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 Warrant on account of any previous cash dividends.
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2.2 Purchase Price. The Purchase Price shall be $6.00 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 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
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<PAGE> 4
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 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 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
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(d) there shall be a voluntary dissolution, liquidation or
winding up of the Corporation; then, in any one or more
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 hereto, and such notice in
accordance with the foregoing clause (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 with 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 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
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<PAGE> 6
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 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 cancelled 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
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<PAGE> 7
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 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 rights 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 seal effective as of the 30th day of June, 1999.
SECURITY ASSOCIATES INTERNATIONAL, INC.
ATTEST: /s/ James S. Brannen
-----------------------------------------
By: James S. Brannen
Its: President
/s/ J. P. Arndt
- ---------------------------------
By: J. P. Arndt
Its: Assistant Secretary
7
<PAGE> 1
EXHIBIT 5
[LETTERHEAD OF SACHNOFF & WEAVER, LTD.]
September 24, 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. STOCK OPTION PLAN AND
SECURITY ASSOCIATES INTERNATIONAL, INC. MISCELLANEOUS
WARRANT AGREEMENT
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 1,825,000 shares of
common stock, $0.001 par value (the "COMMON STOCK"), which may be offered by the
Company under the above-referenced plan and warrant agreement (collectively, the
plan and warrant agreement 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.
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. Stock Option Plan and Security Associates International, Inc. Miscellaneous
Warrant
<PAGE> 2
Security Associates International, Inc.
September 24, 1999
Page 2
Agreement 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 23.1
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
----------------------------
Arthur Andersen LLP
Chicago, Illinois
September 22, 1999
