SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934*
Security Associates International, Inc.
(Name of Issuer)
Common Stock, $0.001 Par Value
(Title of Class of Securities)
813764305
(CUSIP Number)
Mark A. Rosenbaum, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
(212) 806-5400
---------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 30, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check the
following box [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 9 Pages
<PAGE>
SCHEDULE 13D
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CUSIP No. 813764305 Page 2 of 9
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
TJS Partners, L.P.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- -------------------------------------------------------------------------------
NUMBER OF
SHARES 7 SOLE VOTING POWER 13,570,900
BENEFICIALLY ------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 0
EACH ------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER 13,570,900
PERSON WITH ------------------------------------------------------
10 SHARED DISPOSITIVE POWER 0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,570,900
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
66.3%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
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<PAGE>
SCHEDULE 13D
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CUSIP No. 813764305 Page 3 of 9
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
TJS Management, L.P.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- -------------------------------------------------------------------------------
NUMBER OF
SHARES 7 SOLE VOTING POWER 0
BENEFICIALLY ------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 13,570,900
EACH ------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER 0
PERSON WITH ------------------------------------------------------
10 SHARED DISPOSITIVE POWER 13,570,900
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,570,900
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
66.3%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
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<PAGE>
SCHEDULE 13D
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CUSIP No. 813764305 Page 4 of 9
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
TJS Corporation
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- -------------------------------------------------------------------------------
NUMBER OF
SHARES 7 SOLE VOTING POWER 0
BENEFICIALLY ------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 13,570,900
EACH ------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER 0
PERSON WITH ------------------------------------------------------
10 SHARED DISPOSITIVE POWER 13,570,900
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,570,900
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
66.3%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
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<PAGE>
SCHEDULE 13D
- -------------------------------------------------------------------------------
CUSIP No. 813764305 Page 5 of 9
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Thomas J. Salvatore
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- -------------------------------------------------------------------------------
NUMBER OF
SHARES 7 SOLE VOTING POWER 0
BENEFICIALLY ------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 13,570,900
EACH ------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER 0
PERSON WITH ------------------------------------------------------
10 SHARED DISPOSITIVE POWER 13,570,900
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,570,900
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
66.3%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- -------------------------------------------------------------------------------
<PAGE>
Page 6 of 9
This Statement on Schedule 13D ("Schedule 13D"), dated September 30,
1999, is filed on behalf of TJS Partners, L.P., TJS Management, L.P., TJS
Corporation and Thomas J. Salvatore, with regard to their respective beneficial
ownership of shares of Common Stock, $0.001 par value (the "Shares"), of
Securities Associates International, Inc., a Delaware corporation (the
"Company").
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D relates to the Shares of the Company.
The address of the Company's principal executive offices is 2101 South
Arlington Heights Road, Suite 100, Arlington Heights, Illinois 60005-4142.
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is being filed on behalf of TJS Partners, L.P., TJS
Management, L.P., TJS Corporation, and Thomas J. Salvatore (collectively, the
"Filing Persons").
Set forth below is certain information with respect to each of the
Filing Persons and each of the persons enumerated in General Instruction C to
Schedule 13D.
(1) TJS PARTNERS, L.P. TJS Partners, L.P. is a New York limited
partnership. Its principal business is investment, and the address of its
principal business and principal office is 115 East Putnam Avenue, Greenwich,
Connecticut 06830. The general partners of TJS Partners, L.P. are TJS
Management, L.P. and Thomas J. Salvatore (see paragraphs (2) and (4) below). TJS
Partners, L.P. hereinafter shall be referred to as the "Partnership."
(2) TJS MANAGEMENT, L.P. TJS Management, L.P.'s principal business is
investment, and the address of its principal business and principal office is
115 East Putnam Avenue, Greenwich, Connecticut 06830. The general partners of
TJS Management, L.P. are TJS Corporation and Mr. Salvatore (see paragraphs (3)
and (4) below).
(3) TJS CORPORATION. TJS Corporation is a Delaware corporation. Its
principal business is investment, and the address of its principal business and
principal office is 115 East Putnam Avenue, Greenwich, Connecticut 06830. TJS
Corporation's controlling stockholder is Mr. Salvatore. TJS Corporation's sole
director and executive officer is Mr. Salvatore who is its President (see
paragraph (4) below).
(4) THOMAS J. SALVATORE. Mr. Salvatore is a citizen of the United
States of America, and his business address is 115 East Putnam Avenue,
Greenwich, Connecticut 06830. His present principal employment is as an
investor. Mr. Salvatore is President of TJS Corporation.
During the last five years, none of the Filing Persons and no director
or executive officer of TJS Corporation, (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors), or (ii) has
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which he, she or it was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, Federal or State securities laws, or finding
any violation with respect to such laws.
<PAGE>
Page 7 of 9
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On September 30, 1999, pursuant to an agreement ("Agreement") with the
Company, the Partnership acquired an aggregate of 135,709 shares of Series A
Convertible Preferred Stock in exchange for (i) redemption of an outstanding
subordinated note of $10,000,000 and all accrued interest thereon, (ii)
66,909.44 shares of Convertible Preferred Stock, and (iii) the redemption of
500,000 shares of Redeemable Preferred Stock, and payment of all accrued
dividends and interest thereon. Each share of the Series A Convertible Preferred
Stock is convertible into 100 shares of Common Stock and has a liquidation
preference of $350.00 per share. Assuming a future conversion of all 135,709
shares of Series A Convertible Preferred Stock, the Partnership would have
13,570,900 shares of Common Stock. The source of funds for the purchase of these
shares of Series A Convertible Preferred Stock was the working capital of the
Partnership.
ITEM 4. PURPOSE OF TRANSACTION.
The Partnership's intention for acquiring the Shares and its present
intention for holding the Shares is for investment purposes. The Partnership
may, depending upon market conditions and other factors, acquire additional
Shares in the future or effect other transactions which would result in any of
the actions specified in clauses (a) through (j) of Item 4 of the Instructions
to Schedule 13D.
Except as set forth above, none of the Filing Persons has formulated
any plans or proposals as a result of ownership which relate to or would result
in any of the actions specified in clauses (a) through (j) of Item 4 of the
Instructions to Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of the date of this Statement, the Partnership is the direct
beneficial owner of 135,709 shares of Series A Convertible Preferred Stock.
Based on the conversion ratio of 100 shares of Common Stock for each share of
Series A Convertible Preferred Stock and assuming conversion of all its Series A
Convertible Preferred Stock, the Partnership is the direct beneficial owner of
13,570,900, or 66.3% of the Common Stock outstanding on September 30, 1999.
Pursuant to the Agreement, the voting power of the Series A Convertible
Preferred Stock, while held by the Partnership or any Partnership affiliate, is
limited to no more than 45% of the Company's total shares of voting stock.
(b) TJS Management, L.P. and Thomas J. Salvatore, in their respective
capacities as general partners of the Partnership, and each of TJS Corporation
and Mr. Salvatore, in their respective capacities as general partners of TJS
Management, L.P., may be deemed to own beneficially (as defined in Rule 13d-3
promulgated under the Securities Act of 1933, as amended) the Shares owned by
the Partnership. Each of such persons disclaims beneficial ownership of such
Shares except to the extent of its or his pecuniary interest in therein. In
addition, each of such persons may be deemed to share with the Partnership the
power to vote or direct the vote and to dispose or to direct the disposition of
the Shares owned beneficially by the Partnership.
(c) None, except as set forth in Item 3.
(d) Except as set forth herein, neither the Partnership nor any of the
other Filing Persons beneficially owns or has a right to acquire any equity
interest of the Company or effected any transaction in the equity securities of
the Company during the past 60 days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SECURITIES OF THE ISSUER.
Except as described in Item 3 and Item 5(a) hereof with respect to the
Agreement (attached as an exhibit hereto), there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the Filing Persons
and between such persons and any person with respect to any securities of the
Company, including but not limited to transfer or voting of any of the
securities of the Company, finders' fees, joint ventures, loan or option
agreements, puts or calls, guarantees of profits, divisions of profits or loss,
or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Second Amendment, dated September 30, 1999, to Security Associates
International, Inc. Common Stock Subscription and Purchase Agreement, between
TJS Partners, L.P., and Security Associates International, Inc.
<PAGE>
Page 8 of 9
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 30, 1999
TJS PARTNERS, L.P.
By: TJS MANAGEMENT, L.P., as
General Partner
By: /S/ THOMAS J. SALVATORE
------------------------------
Thomas J. Salvatore, as
General Partner
TJS MANAGEMENT, L.P.
By: /S/ THOMAS J. SALVATORE
------------------------------
Thomas J. Salvatore, as
General Partner
TJS CORPORATION
By: /S/ THOMAS J. SALVATORE
------------------------------
Thomas J. Salvatore
President
/S/ THOMAS J. SALVATORE
------------------------------
Thomas J. Salvatore
<PAGE>
Exhibit A
SECOND AMENDMENT
TO
SECURITY ASSOCIATES INTERNATIONAL, INC.
COMMON STOCK SUBSCRIPTION AND PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 5, 1996
This amendment (the "Second Amendment") to that certain Common Stock
Subscription and Purchase Agreement between Security Associates International,
Inc., a Delaware corporation (the "Company"), and TJS Partners, L.P., a New York
limited partnership ("TJS"), dated as of September 5, 1996 (the "Original
Agreement"), and first amended as of December 31, 1996, is made and entered into
effective as of September 28, 1999 (the "Effective Date"). All capitalized terms
not otherwise defined herein shall have the meanings assigned to them in the
Original Agreement.
RECITALS
A. The Company and TJS (the "Parties") entered into the Original Agreement, as
of September 5, 1996.
B. Pursuant to the Original Agreement, the Company: (i) issued 3,525,682
shares of its Common Stock (the "New Shares") to TJS for an aggregate
purchase price of One Million Five Hundred Fifty-Eight Thousand Three
Hundred Fifty-One Dollars ($1,558,351.00); the Company Borrowed Three
Million Four Hundred Forty-One Thousand Six Hundred and Forty-Nine Dollars
($3,441,649.00) from TJS pursuant to the Promissory Note; and the Company
and TJS entered into the Standby Option and Warrant Agreement.
C. On December 31, 1996, the Company and TJS entered into an Amendment to the
Original Agreement (hereinafter referred to as the "First Amendment"),
which amended the Original Agreement by: (i) canceling the New Shares and
the Promissory Note and issuing to TJS in lieu thereof, (a) 35,257 of the
Company's Convertible Preferred Stock having the designations, rights,
preferences and limitations set forth in Exhibit "A" thereto (the
"Convertible Preferred Stock"), (b) 344,165 shares of the Company's 12%
Redeemable Preferred Stock having the designations, rights, preferences and
limitations set forth in Exhibit "B" thereto (the "Redeemable Preferred
Stock"), (c) a Warrant to purchase 15,000 shares of Convertible Preferred
Stock in the form of Exhibit "C" thereto (the "Warrant"); (ii) amending the
Standby Option and Warrant Agreement such that TJS' purchase rights were
for Convertible Preferred Stock rather than Common Stock, as set forth in
Exhibit "D" thereto (the "Amended Standby Option and Warrant Agreement");
(iii) by TJS, providing the Company with a Five Million Dollar
($5,000,000.) line of credit pursuant to a loan agreement in the form of
Exhibit "E" thereto (the "Subordinated Loan Agreement"); and (iv) such
other amendments to the Original Agreement as were set forth in the First
Amendment Exhibits A through E are exhibits to the First Amendment and are
incorporated herein by reference.
D. On November 12, 1997, TJS exercised its Warrant to purchase 15,000 shares
of Convertible Preferred Stock, and it has subsequently, in addition,
exercised Standby Options to purchase 16,652.44 shares of Convertible
Preferred Stock. Thus, TJS now owns a total of 66,909.44 shares of
Convertible Preferred Stock. 250 shares were issued to TJS in July 1999
upon exercise of mirror options for Hagedal, Burgwald and B. Davis.
E. On May 19, 1998, the Company authorized an additional 500,000 shares of
Preferred Stock, $10.00 par value per share, and designated an additional
155,835 of these shares as Redeemable Preferred Stock, all of which TJS has
purchased. Thus, TJS now owns 500,000 shares of Redeemable Preferred Stock.
F. On May 19, 1998, the Company and TJS entered into a First Amendment to
Subordinated Loan Agreement, attached hereto as Exhibit F, wherein TJS
agreed to increase the "new equity threshold" that triggers TJS' right to
receive Mandatory Prepayment of all of the Corporation's obligations under
the line of credit, from $15,000,000 to $30,000,000. On November 13, 1998,
the Parties entered into a Second Amendment to Subordinated Loan Agreement,
attached hereto as Exhibit G, wherein TJS agreed to increase the line of
credit specified therein to $8,000,000. On June 1, 1999, the Parties
entered into a Third Amendment to Subordinated Loan Agreement, attached
hereto as Exhibit H, wherein TJS agreed to increase the line of credit to
$10,000,000. As of the date hereof, the Company has utilized the entire
$10,000,000 line of credit, and has executed Allonges to the original Note
to evidence $10,000,000 in subordinated debt ("Subordinated Debt") to TJS.
On June 1, 1999 the Company and TJS entered into a Second Amendment to
Standby Option and Warrant Agreement to include Beverly Davis' option to
purchase 7,723 shares of the Company's Common Stock which was
unintentionally omitted from the original Standby Option and Warrant
Agreement.
G. The Company owes TJS accrued dividends on the Redeemable Preferred Stock
("Accrued Dividends") plus accrued interest on the Accrued Dividends and
Subordinated Debt under the Subordinated Loan Agreement ("Accrued Dividends
and Interest"), totaling approximately $3,583,665.68.
H. The Parties have agreed to enter into this Second Amendment to the Original
Agreement, in order to accomplish the following:
1) To designate 137,686 shares of the 431,190 authorized but
undesignated shares of the Company's Preferred Stock, $10.00 par value
per share, as "Series A Convertible Preferred Stock."
2) To redeem all outstanding Subordinated Debt and Interest thereon,
all Redeemable Preferred Stock, and all Accrued Dividends and Interest
thereon (having a total value on the date hereof of approximately
$3,583,665.68), in exchange for 68,800 shares of Series A Convertible
Preferred Stock. Each share of Series A Convertible Preferred Stock
would be convertible into Common Stock at a ratio of 1 to 100, and
would have a liquidation preference of $350.00 per share.
3) To exchange 66,909 shares of Series A Convertible Preferred Stock
for TJS's 66,909.44 shares of Convertible Preferred Stock.
4) To limit the voting power of Series A Convertible Preferred
Stock, while it is held by TJS or any affiliate of TJS, to no more
than 45% of the Company's total shares of voting stock. When used
herein, the term "affiliate" shall mean in respect of any person or
entity any other person or entity that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under
common control with such first person or entity.
I. Except as expressly amended hereby the Company and TJS wish the Original
Agreement and the First Amendment thereto to remain in full force and
effect.
NOW THEREFORE, in consideration of the premises recited above, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. AUTHORIZATION. The Company will authorize all of the transactions
contemplated by this Second Amendment, including, but not limited to, the
transactions set forth in Recital "H" above, and shall have filed with the
Secretary of State of Delaware, the Certificate of Designations,
Preferences, Rights and Limitations of Series A Convertible Preferred Stock
(the "Series A Certificate of Designations") in the form of Exhibit "I"
hereto.
2. CLOSING; CONSUMMATION OF TRANSACTIONS. The Closing of the transaction
contemplated by this Second Amendment (the "Closing") shall occur prior to
September 30, 1999 and concurrently with the refinancing of the Company's
line of credit with FINOVA Capital Corporation (the "Closing Date"). All of
the transactions shall be deemed to have occurred as of the Effective Date,
except as otherwise stated herein. On the Closing Date, subject to the
terms and conditions hereof:
2.1. ISSUANCE OF SECURITIES. The Company will issue to TJS: a certificate
for 135,709 shares of Series A Convertible Preferred Stock.
2.2. CANCELLATION OF PREVIOUSLY ISSUED SECURITIES. TJS will deliver to the
Company for cancellation the stock certificates representing 500,000
Shares of Redeemable Preferred Stock and 66,909.44 Shares of
Convertible Preferred Stock;
2.3. SUBORDINATED LOAN AGREEMENT. The Company and TJS will execute and
deliver a written agreement terminating the Subordinated Loan
Agreement;
2.4. CANCELLATION OF NOTE. TJS will deliver the Note evidencing the
Subordinated Debt and all Allonges thereto to the Company for
cancellation; and
2.5. OTHER AMENDMENTS AND TRANSACTIONS. All other amendments and
transactions contemplated by this Second Amendment will be deemed to
have been consummated.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants, except as may be effected by the transactions contemplated by
this Second Amendment:
3.1. ORGANIZATION AND STANDING; CERTIFICATE OF INCORPORATION AND BY-LAWS.
The Company is a corporation duly organized and validly existing
under, and by virtue of, the laws of the State of Delaware and is in
good standing under such laws. The Company has requisite corporate
power and authority to own and operate its properties and assets, and
to carry on its business as presently conducted and as proposed to be
conducted. The Company is duly qualified or licensed and in good
standing as a foreign corporation in each jurisdiction wherein the
character of its properties or the nature of the activities conducted
by it makes such qualification or licensing necessary, except where
the failure to be so qualified or licensed would not have a material
adverse effect on the Company or its property or business.
3.2. CORPORATE POWER. The Company will have at the Closing Date all
requisite legal and corporate power and authority to execute and
deliver this Second Amendment, to issue the Series A Convertible
Preferred Stock hereunder, and to carry out and perform its
obligations under the terms of this Second Amendment.
3.3. CAPITALIZATION. The authorized capital stock of the Company will
consist, immediately prior to the Closing Date, of 50,000,000 shares
of common stock, $.001 par value per share (the "Common Stock"), of
which 6,940,325 of such shares (as of September 7, 1999) are issued
and outstanding and 1,000,000 shares of preferred stock, $10.00 par
value per share ("Preferred Stock"), of which 500,000 shares have been
designated Redeemable Preferred Stock (500, 000 of which are issued
and outstanding and which will be redeemed pursuant to this Second
Amendment) and 68,810 of which have been designated Convertible
Preferred Stock (66,909.44 of which are issued and outstanding and
will be redeemed pursuant to this Second Amendment). All outstanding
shares of Common Stock and Preferred Stock (collectively, "Capital
Stock") have been duly authorized and validly issued, and are fully
paid and nonassessable. Options and warrants to purchase 1,973,827
shares of Common Stock are issued and outstanding excluding 197,723
contingent options exercisable by TJS pursuant to the Standby Option
and Warrant Agreement, to purchase 1,977.23 shares of Convertible
Preferred Stock, contingent upon exercise of options to purchase up to
197,723 shares of Common Stock held by other stockholders. All
outstanding securities of the Company were issued in compliance with
applicable Federal and state securities laws. Except as set forth
above or pursuant to this Second Amendment, there are no options,
warrants or other rights to purchase any of the Company's authorized
and unissued Capital Stock.
3.4. ONLY VOTING STOCK OUTSTANDING. The only issued and outstanding shares
of capital stock of the Company at Closing will be common voting
shares possessing identical rights and privileges and the Series A
Convertible Preferred Stock issued pursuant to this Second Amendment.
3.5. AUTHORIZATION. All corporate action on the part of the Company, its
directors and stockholders necessary for the authorization, execution,
delivery and performance of this Second Amendment by the Company, the
authorization, sale, issuance and delivery of the Series A Convertible
Preferred Stock, for the cancellation of the certificates of
Redeemable Preferred Stock and Convertible Preferred Stock and the
Note and all Allonges thereto, and the termination of the Subordinated
Loan Agreement and the performance of all of the Company's obligations
hereunder has been taken or will be taken prior to the Closing. This
Second Amendment, when executed and delivered by the Company, shall
constitute a valid and binding obligation of the Company, enforceable
in accordance with its terms. The Series A Convertible Preferred
Stock, when issued in compliance with the provisions of this Second
Amendment, will be validly issued, fully paid and nonassessable and
will have the rights set forth in the Certificate of Incorporation and
the By-laws, attached as Exhibits "J" and "K" hereto. No further
approval or authorization of the stockholders or the directors of the
Company or of any governmental authority or agency will be required
for the issuance and sale of the Series A Convertible Preferred Stock,
or the cancellation of the Redeemable and Convertible Preferred Stock,
as contemplated by this Second Amendment. Except for the rights of
first refusal granted to TJS pursuant to the Original Agreement, no
stockholder of the Company or any other person is entitled to any
preemptive rights with respect to the purchase or sale of any
securities by the Company. The Company does not require any consent,
approval, authorization or order of, or declaration, filing or
registration with, any court or governmental or regulatory agency or
board, or any other third party in connection with the execution and
delivery of this Second Amendment and the consummation of the
transactions contemplated hereby, other than the consent of FINOVA
Capital Corporation, which the Company will obtain prior to Closing.
4. REPRESENTATIONS AND WARRANTIES OF TJS. TJS represents and warrants that
each of the following statements shall be true as of the Closing Date:
4.1. INVESTMENT INTENT. It is acquiring the Series A Convertible Preferred
Stock for its own account, not as a nominee or agent, and not with the
view to, or for resale in connection with, any distribution thereof.
It understands that the Series A Convertible Preferred Stock has not
been, nor will it be, registered under the Securities Act of 1933, as
amended (the "Securities Act"), or the securities laws and regulations
of any state by reason of specific exemption(s) from the registration
provisions of the Securities Act and such state laws and regulations,
the availability of which depends upon, among other things, the bona
fide nature of the investment intent and the accuracy of TJS'
representations as expressed herein and in the Suitability
Questionnaire accompanying the Original Agreement.
4.2. LEGEND. TJS acknowledges that the certificates representing the Series
A Convertible Preferred Stock will bear a legend of substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT
BE SOLD OR TRANSFERRED WITHOUT SUCH REGISTRATION,
UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO IT THAT A PROPOSED SALE OR
TRANSFER DOES NOT REQUIRE REGISTRATION UNDER APPLICABLE
LAW.
4.3. RULE 144. TJS acknowledges that the Series A Convertible Preferred
Stock must be held indefinitely unless subsequently registered under
the Securities Act and applicable state securities laws and
regulations or unless an exemption from such registration is
available. TJS is aware of the provisions of Rule 144 promulgated
under the Securities Act, which permit limited resale of securities
purchased in a private placement subject to the satisfaction of
certain conditions.
4.4. PUBLIC MARKET. TJS understands that while the Company's Common Stock
is listed on the American Stock Exchange - NASDAQ, there is a very
limited public market for the Common Stock of the Company and none for
the Series A Convertible Preferred Stock, that the trading in the
Common Stock is extremely limited and that the Company has made no
assurances that any significant public demand will ever exist for the
Company's securities. TJS acknowledges that because the Series A
Convertible Preferred Stock acquired hereby will not be registered
under the Securities Act, TJS will not be able to participate in any
public market for the Common Stock until such time as the shares
acquired by TJS are registered under the Securities Act and applicable
state laws and regulations or exemptions from such registration is
available.
4.5. AUTHORIZATION. This Second Amendment, when executed and delivered by
TJS, will constitute a valid and legally binding obligation of TJS,
enforceable in accordance with its terms.
4.6. ORGANIZATION AND STANDING. TJS is a limited partnership duly formed
and existing under, and by virtue of, the laws of the State of New
York and is in good standing under such laws. TJS has requisite
corporate power and authority to own and operate its properties and
assets, and to carry on its business as presently conducted and as
proposed to be conducted. TJS has furnished the Company with a copy of
its Articles of Partnership, as amended. Said copy is true, correct
and complete and contains all amendments through the Closing Date.
4.7. POWER AND AUTHORITY. TJS will have at the Closing Date all requisite
power and authority to execute, deliver and perform its obligations
under this Second Amendment, and to subscribe for and purchase the
Series A Convertible Preferred Stock subscribed for hereby.
4.8 AUTHORIZATION. All action on the part of TJS necessary for the
authorization, execution, delivery and performance of this Second Amendment by
TJS, the subscription and purchase of the Series A Convertible Preferred Stock
and the performance of all of TJS' obligations hereunder has been taken or will
be taken prior to the Closing. This Second Amendment, when executed and
delivered by the TJS, shall constitute a valid and binding obligation of TJS,
enforceable in accordance with its terms.
5. ADDITIONAL AMENDMENTS AND AGREEMENTS. The parties hereto agree to the
following additional amendments to the Original Agreement and the First
Amendment thereto and to the following additional agreements. All such
additional amendments and agreements shall be effective as of the Effective
Date unless otherwise stated herein.
5.1 SECTION 7 OF THE ORIGINAL AGREEMENT. (a) The introductory sentence of
Section 7.2 of the Original Agreement is hereby amended by deleting
the words "for so long as, and at any time when, Purchaser is the
holder of the Promissory Note or a holder of at least fifteen percent
(15%) of the issued and outstanding Common Stock of the Company" and
replacing such words with the following words: "for so long as the
Purchaser owns beneficially not less than fifteen percent (15%) of the
Common Stock of the Company issued and outstanding on a fully diluted
basis (assuming the exercise, exchange or other conversion of all
securities exercisable, exchangeable or otherwise convertible into
Common Stock)."
(b) The introductory clause of Section 7.3 of the Original
Agreement is hereby amended by deleting the words "as long as
Purchaser is the holder of the Promissory Note or, at any time when
Purchaser is a holder of at least fifteen percent (15%) of the total
issued and outstanding Common Stock of the Company" and replacing such
words with the following words: "for so long as the Purchaser owns
beneficially not less than fifteen percent (15%) of the Common Stock
of the Company issued and outstanding on a fully diluted basis
(assuming the exercise, exchange or other conversion of all securities
exercisable, exchangeable or otherwise convertible into Common
Stock)."
(c) Section 7.5 of the Original Agreement is hereby amended by
deleting the words "Section 7" and replacing such words with the
following words: "Sections 7.2 and 7.3."
(d) Section 7.9 of the Original Agreement as previously amended
by the First Amendment is hereby further amended and restated to read
in its entirety as follows:
"NOMINATION OF DIRECTORS. For so long as the Purchaser owns
beneficially not less than fifteen percent (15%) of the Common Stock
of the Company issued and outstanding on a fully diluted basis
(assuming the exercise, exchange or other conversion of all securities
exercisable, exchangeable or otherwise convertible into Common Stock),
the Company covenants that: (a) the Company's Board of Directors shall
consist of five (5) directors and the Company's by-laws will contain
provisions indemnifying its directors to the fullest extent permitted
under applicable law; (b) the Purchaser shall be entitled to nominate
two (2) directors for election as a member of the Board of Directors
of the Company at the annual meeting of stockholders or any other
meeting at which (or as part of any other action by which) directors
are elected, and the Company shall include such nominees in the slate
of nominee directors recommended for election by the incumbent
directors and management, consistent with Delaware law; and (c) if
elected to the Board of Directors, at least one of the Purchaser's
designees shall be appointed to each of the committees established or
maintained by the Board of Directors, to the extent permissible by
applicable law."
(e) Section 7.20 of the Original Agreement is hereby amended by
deleting the words "the New Shares, the Promissory Note or any other
agreements attached as exhibits hereto, including, but not limited to,
registration rights relating to the New Shares" and replacing such
words with the following words: "any amendment hereto, any agreements
attached hereto or thereto, or the Company's Series A Convertible
Preferred Stock, including, but not limited to, registration rights
relating to the Common Stock underlying the Series A Convertible
Preferred Stock."
(f) As previously and hereby amended, Section 7 of the Original
Agreement shall remain in full force and effect.
5.2 SECTION 8 OF THE ORIGINAL AGREEMENT. (a) The introductory clause to
Section 8 of the Original Agreement is hereby amended and restated to
read in its entirety as follows:
"The Company covenants and agrees with the Purchaser that, for so long
as the Purchaser owns beneficially not less than fifteen percent (15%)
of the Common Stock of the Company issued and outstanding on a fully
diluted basis (assuming the exercise, exchange or other conversion of
all securities exercisable, exchangeable or otherwise convertible into
Common Stock), without the consent of (x) the Purchaser, which shall
not be unreasonably withheld or (y) in the case of Sections 8.5 and
8.7 below, all directors nominated by the Purchaser pursuant to
Section 7.9 above and, in fact, elected to the Board of Directors of
the Company (such elected directors, if any, the "TJS Directors"), it
being understood that, if no such directors are elected, the consent
of the Purchaser shall be required in respect of such Sections 8.5 and
8.7 as aforesaid."
(b) Section 8.1 of the Original Agreement is hereby amended by
deleting the words "unless such transaction is approved by 2/3 of the
minority stockholders of the Company (excluding shares held directly
or indirectly by Purchaser and the officers and directors of the
Company)."
(c) Section 8.5 of the Original Agreement is hereby amended and
restated to read in its entirety as follows:
"INDEBTEDNESS. After September 28, 1999, the Company will not create,
incur, assume, refinance or otherwise become liable with respect to
any new or additional indebtedness, including the Company's effecting
any extension of time that it remains liable for any existing
indebtedness; PROVIDED, HOWEVER, that the Company may become
obligated, without the express consent of the Purchaser, for trade
payables incurred by the Company in the ordinary course of business
and consistent with past practice.
(d) Section 8.7 of the Original Agreement is hereby amended by
deleting the words "25% of owned accounts or 25% of third party
maintained accounts if it is a single transaction acquisition" and
replacing such words with the following words: "three million dollars
($3,000,000)."
(e) As previously and hereby amended, Section 8 of the Original
Agreement shall remain in full force and effect.
5.3 SECTION 9 OF THE ORIGINAL AGREEMENT. Section 9.1(f) of the Original
Agreement is hereby amended by deleting the words "as to Purchaser, if
Purchaser no longer holds at least fifteen percent (15%) of the
outstanding capital stock of the Company" and replacing such words
with the following words: "as to the Purchaser, if the Purchaser no
longer owns beneficially at least fifteen percent (15%) of the Common
Stock of the Company issued and outstanding on a fully diluted basis
(assuming the exercise, exchange or other conversion of all securities
exercisable, exchangeable or otherwise convertible into Common
Stock)." As previously and hereby amended, Section 9 of the Original
Agreement shall remain in full force and effect.
5.4 SECTION 10 OF THE ORIGINAL AGREEMENT. The definition of "Registrable
Securities" in Section 10.11 of the Original Agreement as previously
amended by the First Amendment is hereby further amended by deleting
the words "The Convertible Preferred Stock" from clause (i) and
replacing such words with the following words: "The Company's Series A
Convertible Preferred Stock." As previously and hereby amended,
Section 10 of the Original Agreement shall remain in full force and
effect.
5.5 NOTICE OF CERTAIN CORPORATE ACTIONS. The Company covenants and agrees
with TJS that, for so long as TJS owns beneficially not less than
fifteen percent (15%) of the Common Stock of the Company issued and
outstanding on a fully diluted basis (assuming the exercise, exchange
or other conversion of all securities exercisable, exchangeable or
otherwise convertible into Common Stock), the Company shall provide
TJS with no less than 15 business days' prior notice of (a) any
meeting of the Board of Directors of the Company and the action to be
taken at such meeting, (b) any action to be taken by the Board of
Directors by written consent, (c) any record date to be established in
respect of stockholders of the Company and the reason(s) for the
establishment of such record date, including, without limitation, in
respect of any meeting of such stockholders, the action to be taken at
such meeting, (d) any meeting of the stockholders of the Company for
which no record date is to be established and the action to be taken
at such meeting and (e) any action known of by the Company to be taken
by the stockholders of the Company by written consent; provided,
however, that the requirement for such notice shall be deemed waived
in the case of (x) any action taken by the Board of Directors of the
Company if the TJS Directors shall have voted in favor of, or
consented to, such action and (y) any stockholder action if TJS shall
have cast all votes held by it as a stockholder of the Company in
favor of such stockholder action.
5.6 REQUISITE VOTE. The Company covenants and agrees with TJS that prior
to the Closing the Company shall have effected amendments of its
by-laws and other applicable governing documents to provide that any
matter submitted to the vote of holders of Common Stock of the Company
shall require the affirmative vote in support of such matter of more
than sixty (60) percent in voting interest of the stockholders of the
Company entitled to vote on such matter for such matter to be duly
authorized by the stockholders. The Company further covenants and
agrees with TJS that, unless otherwise agreed in writing by TJS and
for so long as TJS owns beneficially not less than thirty percent
(30%) of the Common Stock of the Company issued and outstanding on a
fully diluted basis (assuming the exercise, exchange or other
conversion of all securities exercisable, exchangeable or otherwise
convertible into Common Stock), the Company shall cause the provisions
set forth in the immediately preceding sentence to remain in effect.
5.7 RETIREMENT OF STOCK. The Company covenants and agrees with TJS that
immediately after the consummation of the Closing, the Company (a)
shall retire, by resolution of its Board of Directors in accordance
with Section 243 of the Delaware General Corporation Law, all of its
issued but then not outstanding shares of (i) Convertible Preferred
Stock and (ii) the Redeemable Preferred Stock; and (b) shall effect a
reduction to zero of the number of the authorized shares of such
classes of capital stock and shall take such actions as are necessary
under Delaware law to completely eliminate such classes of capital
stock; provided, however, that the Company shall not effect a
corresponding reduction in the aggregate number of shares of preferred
stock it is authorized to issue.
5.8 AFFILIATES. The parties hereto agree that for purposes of the
definition of "affiliate" in Recital "H" to this Second Amendment and
in Section 2(b) of the Series A Certificate of Designations, the
limited partners of TJS, of its general partner and of any affiliate
of its general partner or of the managing general partner of its
general partner shall not, by virtue of being such limited partners be
"affiliates" of TJS.
5.9 ORIGINAL AGREEMENT, FIRST AMENDMENT, STANDBY OPTION AND WARRANT
AGREEMENT. Except as expressly amended in this Second Amendment, the
provisions of the Original Agreement and First Amendment thereto shall
continue to have full force and effect, except as otherwise provided
therein. The Standby Option and Warrant Agreement, as previously
amended, is hereby further amended to provide that TJS' purchase
rights shall be for Series A Convertible Preferred Stock rather than
for Convertible Preferred Stock or Common Stock, as set forth in
Exhibit "D."
6. MISCELLANEOUS.
6.1 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
ILLINOIS WITHOUT GIVING ANY EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS.
The Company agrees that it will not assert against any partner of TJS
(or against any partner, officer, director, employee or agent of TJS
or any of its Affiliates) any claim it may have under this Second
Amendment by reason of any failure or alleged failure by TJS to meet
its obligations hereunder. The parties hereto agree and intend that
the proper and exclusive forum for the litigation of any disputes or
controversies arising out of, or related to, this Second Amendment
shall be the courts of the State of Illinois and of any Federal Court
located in such state. The Company agrees that it will not commence or
move to transfer any action or proceeding, arising out of or relating
to this Second Amendment, in or to any court other than one located in
the State of Illinois. The Company irrevocably consents to the service
of process of any of the aforesaid courts in any such action or
proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to the Company at the address provided herein,
such service to become effective 30 days after such mailing. Nothing
contained in this Section shall affect the right of TJS to serve
process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against the Company in any other
jurisdiction. In the event the Company should commence or maintain any
action arising out of or related to this Second Amendment in a forum
other than the courts located in the State of Illinois, TJS shall be
entitled to request the dismissal of such action, and the Company
stipulates that such action shall be dismissed.
6.2 SURVIVAL. The representations and warranties, covenants and agreements
made herein shall survive any investigation made by any party and the
closing of the transactions contemplated hereby.
6.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon,
the successors, assigns, heirs, executors and administrators of the
parties hereto. TJS may not assign any part of its rights and
obligations hereunder without the prior written consent of the
Company, which shall not be unreasonably withheld, other than as part
of a distribution of its interests under this Second Amendment
including, without limitation, a transfer of any shares issued to it
hereunder to its partners, to the partners of its general partner, to
any of its affiliates, or to the partners of any of its affiliates.
Notwithstanding anything to the contrary contained in this Second
Amendment, no right of TJS contingent on a specified percentage
ownership interest of capital stock of the Company (e.g. supermajority
voting provisions) shall be assignable without the Company's express
written consent, except to another person or entity controlled by TJS,
by its general partner or by the managing general partner of such
general partner for which assignment no such consent shall be
required. A person to whom all or a part of TJS' rights are assigned
shall become a party to this Second Amendment, entitled to all the
rights and benefits and subject to all of the duties and obligations
of TJS hereunder. Whenever reference is made to TJS in this Second
Amendment, such reference shall include any assignees of TJS' rights
hereunder.
6.4 ENTIRE AGREEMENT; AMENDMENT. The Original Agreement, the First
Amendment thereto, this Second Amendment thereto and the other
documents delivered pursuant hereto at the Closing constitute the full
and entire understanding and agreement between the parties with regard
to the subjects hereof and thereof, and no party shall be liable or
bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein
or therein. Except as expressly provided herein, neither this Second
Amendment 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.
6.5 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by
registered or certified mail, postage prepaid, or otherwise delivered
by hand or by messenger, addressed (a) if to TJS, at 115 East Putnam
Avenue, Greenwich, CT 06830, or at such other address TJS shall have
furnished to the Company in writing; or (b) if to the Company, at 2101
South Arlington Heights Road, Arlington Heights, Illinois 60005-4142,
addressed to the President of the Company, or at such other address
the Company shall have furnished to TJS in writing.
Each such notice or other communication shall for all purposes of this
Second Amendment be treated as effective or having been given when
delivered if delivered personally, or, if sent by mail, at the earlier
of its receipt or seventy-two (72) hours after the same has been
deposited in a regularly maintained receptacle for the deposit of the
United States mail, addressed and mailed as aforesaid.
6.6 DELAYS OR OMISSIONS. Except as expressly provided herein, no delay or
omission to exercise any right, power or remedy accruing to any holder
of Series A Convertible Preferred Stock, upon any breach or default of
the Company under the Original Agreement, the First Amendment thereto,
or this Second Amendment, shall impair any such right, power or remedy
of such holder nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar
breach or default theretofore or thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the part of
any holder of any breach or default under the Original Agreement, the
First Amendment thereto, or this Second Amendment, or any waiver on
the part of any holder of any provisions or conditions of the Original
Agreement, the First Amendment thereto, or this Second Amendment, must
be in writing and shall be effective only to the extent specifically
set forth in such writing. All remedies, either under the Original
Agreement, the First Amendment thereto, or this Second Amendment or by
law or otherwise afforded to any holder, shall be cumulative and not
alternative.
6.7 EXPENSES. The Company and TJS shall each bear its own legal and other
expenses incurred on its behalf with respect to the preparation of
this Second Amendment, any related documents and the transactions
contemplated hereby.
6.8 COUNTERPARTS. This Second Amendment may be executed in any number of
counterparts, each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall
constitute one instrument.
6.9 SEVERABILITY. In the event that any provision of this Second Amendment
becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Second Amendment shall continue
in full force and effect without said provision; provided that no such
severability shall be effective if it materially changes the economic
benefit of this Second Amendment to any party.
6.10 TITLES AND SUBTITLES. The titles and subtitles used herein are used
for convenience only and are not considered in construing or
interpreting this Second Amendment.
6.11 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 the Original Agreement, the First
Amendment thereto, or this Second Amendment, any stock, promissory
notes or other securities issued by the Company pursuant to the
Original Agreement, the First Amendment thereto, or this Second
Amendment or any of the other documents executed and delivered in
connection with this Second Amendment.
<PAGE>
The foregoing Second Amendment is hereby executed as of the date first above
written.
SECURITY ASSOCIATES INTERNATIONAL, INC.
By:
------------------------------------
James S. Brannen, President
TJS PARTNERS, L. P.
By:
-----------------------------------
Thomas J. Salvatore, General Partner
