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EXHIBIT 10.22
STANDBY OPTION AND WARRANT AGREEMENT
THIS STANDBY OPTION AND WARRANT AGREEMENT (this "Agreement") is made as of
this 5th day of September, 1996, by and between Security Associates
International, Inc., a Delaware corporation ("SAI") and TJS Partners, Ltd., a
New York limited partnership ("TJS") (collectively, the "Parties").
R E C I T A L S
WHEREAS, SAI and TJS intend to enter into a Common Stock Subscription and
Purchase Agreement, of even date herewith (the "Purchase Agreement") pursuant
to which TJS will purchase common stock of SAI (the "Investment"); and
WHEREAS, SAI has previously issued options and warrants entitling the
holders thereof to acquire SAI common stock which will continue to remain
outstanding and subject to exercise following the consummation of the
Investment (the "Old Options and Warrants"); and
WHEREAS, the Parties have agreed that TJS shall have the opportunity to
maintain its proportionate ownership of SAI following consummation of the
Investment, in the event that any of the Outstanding Options or Warrants are
exercised; and
WHEREAS, in order to induce TJS to consummate the Investment and to
provide a mechanism for TJS to maintain its proportionate interest in SAI, the
Parties have agreed that SAI shall grant options and warrants to TJS in the
same amount and with the same terms and conditions as the Outstanding Options
and Warrants, all as is more specifically set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. OPTION/WARRANT GRANTS, TERMS, AND EXERCISE PRICES. SAI grants to TJS the
following options and warrants (the "New Options and Warrants"), provided,
however, that the New Options and Warrants shall be exercisable only if, and
to the extent that, the Old Options or Warrants are exercised and provided,
further, that the Expiration Date of any New Option or Warrant shall occur on
the 30th day after the Expiration Date of the corresponding Old Option or
Warrant.
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EXPIRATION DATE OF
NUMBER OF EXERCISE OLD OPTIONS AND NEW OPTIONS
SHARES PRICE WARRANTS AND WARRANTS OLD OPTIONS AND WARRANTS
CLASS 1
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OPTIONS
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22,088 $0.57 12/31/96 the "Xxxxx Equivalent Option" Xxx Xxxxx, issued
01/01/91
12,500 $0.57 10/26/00 the "Xxxxxxxx Equivalent Xxxxx Xxxxxxxx, issued
Option" 08/21/92
12,500 $0.57 10/26/00 the "Xxxxxxxxx Equivalent Xxxx Xxxxxxxxx, issued
Option" 08/21/92
20,000 $1.00 06/21/99 the "Gallas Equivalent Option" Xxxxxx Xxxxxx, issued
06/21/94
10,000 $1.00 06/21/99 the "Hagedal Equivalent Option" Xxx Xxxxxxx, issued
06/21/94
10,000 $1.00 06/21/99 the "Xxxxxxxx Equivalent Xxxxxx Xxxxxxxx, issued
Option" 06/21/94
5,000 $1.00 06/21/99 the "Xxxxx Equivalent Option" Xxx Xxxxx, issued
06/21/94
50,000 $0.53 04/01/00 the "Xxxxx 1 Equivalent Option" Xxxx Xxxxx, issued
10/01/95
19,000 $0.53 04/01/00 the "Xxxxx 2 Equivalent Option" Xxxx Xxxxx, issued
01/21/96
17,000 $0.53 04/01/00 the "Xxxxx 3 Equivalent Option: Xxxx Xxxxx issued 08/1/96
CLASS 2
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OPTIONS
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12,500 $2.00 12/31/98 the "Sered Equivalent Option" Xxxxxxx & Xxxxxx Xxxxx,
issued 08/09/94
12,500 $2.00 12/31/98 the "Metro Suburban Pediatrics Metro Suburban
Equivalent Option" Pediatrics, issued
08/09/94
12,500 $2.00 12/31/98 the "Xxxxx 4 Equivalent Option" Xxxx Xxxxx, issued
09/02/94
10,000 $2.00 12/31/98 the "Infinity Partnership II Infinity
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Equivalent Option" Partnership II,
issued 05/22/95
12,500 $2.00 12/31/98 the "Xxxxxx Equivalent Option" Xxxxx Xxxxxx, issued
06/07/95
25,000 $2.00 12/31/98 the "Xxxxxxx Equivalent Option" Xxxxxx Xxxxxxx, issued
10/19/95
NEW
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WARRANTS
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120,000 $1.00 12/31/99 the "Xxxxx Equivalent Warrant" Xxxxxx Xxxxx, issued
12/01/93
40,000 $1.00 12/31/99 the "Xxxxx Equivalent Warrant" Xxxxxxx Xxxxx, issued
12/01/93
40,000 $1.00 12/31/99 the "Xxxxx Equivalent Warrant" Xxxxxxx Xxxxx, issued
12/01/93
2. TERMS AND CONDITIONS OF NEW OPTIONS AND WARRANTS
(a) NOTICE OF EXERCISE OF OLD OPTIONS AND WARRANTS. SAI shall notify TJS
within five (5) days of the exercise of any of the Old Options or Warrants.
The notice shall identify the party exercising such Old Option or Warrant, the
Old Option or Warrant exercised, the number of shares of Common Stock purchased
pursuant thereto and the price per share paid.
(b) METHOD OF EXERCISING NEW OPTIONS OR WARRANTS.
(1) Class 1 Options. For the Xxxxx Equivalent Option, the Xxxxxxxx
Equivalent Option, the Xxxxxxxxx Equivalent Option, the Gallas Equivalent
Option, the Hagedal Equivalent Option, the Xxxxxxxx Equivalent Option, the
Xxxxx Equivalent Option, the Xxxxx 1 Equivalent Option, and the Xxxxx 2
Equivalent Option (collectively, the "Class 1 Options"), TJS may exercise such
Class 1 Options at any time not more than sixty (60) days after the relevant
Old Option has been exercised prior to the expiration date set forth in the
table in Paragraph 1, in the same manner that such Old Option has been
exercised, by delivering to SAI a written notice stating the number of shares
that TJS has elected to purchase together with payment in full for the exercise
price. Within fifteen (15) days of receipt of the exercise price by SAI, it
shall issue the corresponding shares to TJS. TJS shall have none of the rights
of a shareholder with respect to a share until payment therefor has been made
in accordance with the terms of the relevant New Option or Warrant.
(2) Class 2 Options. For the Sered Equivalent Option, the Metro
Suburban Pediatrics Equivalent Option, the Xxxxx 3 Equivalent Option, the
Infinity Partnership Equivalent Option, the Xxxxxx Equivalent Option, and the
Xxxxxxx Equivalent
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Option (collectively, the "Class 2 Options"), TJS may exercise such Class 2
Options at any time after the relevant Old Option has been exercised prior to
the expiration date set forth in the table in Paragraph 1, in the same manner
that such Old Option has been exercised by delivering to SAI a written notice
stating the number of shares that TJS has elected to purchase together with
payment in full for the exercise price. Within fifteen (15) days of receipt of
the exercise price by SAI, it shall issue the corresponding shares to TJS. TJS
shall have none of the rights of a shareholder with respect to a share until
payment therefor has been made in accordance with the terms of the relevant New
Option or Warrant.
(3) New Warrants. For the Xxxxx Equivalent Warrant, the Xxxxx Equivalent
Warrant and the Xxxxx Equivalent Warrant (collectively, the "New Warrants"),
TJS may exercise such New Warrants at any time after the relevant Old Warrant
has been exercised and prior to the expiration date set forth in the table in
Paragraph 1, to the same extent that such Old Warrant has been exercised by
delivering to SAI a written notice stating the number of shares that TJS has
elected to purchase together with payment in full for the exercise price.
Within fifteen (15) days of receipt of the exercise price by SAI, it shall
issue the corresponding shares to TJS. TJS shall have none of the rights of a
shareholder with respect to a share until such share has been issued to TJS.
(c) LIMITED TRANSFERABILITY. The New Options and Warrants shall not be
assignable or transferable by TJS, except in the event that TJS shall
distribute the Investment to its partners, in which event the New Options and
Warrants shall be distributed, as nearly as practicable, to TJS' partners, pro
rata, in the same proportions as the Investment is distributed.
(d) ADJUSTMENT PROVISIONS. The New Options and Warrants shall in each
case have identical adjustment provisions as the relevant Old Options and
Warrants. In each instance where there is an adjustment in the exercise price
or the number of shares for which the New Options and Warrants may be
exercised, SAI shall promptly notify TJS of such adjustment.
3. INVESTMENT REPRESENTATIONS. The exercise of the New Options and Warrants
shall be contingent upon receipt by SAI from TJS of a representation, in
writing, that it is TJS' intention to acquire the shares then being purchased
for investment and not for resale.
4. MISCELLANEOUS PROVISIONS. This Agreement shall be governed by the
provisions of Section 11 of the Purchase Agreement, which is incorporated
herein by this reference.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first stated above.
SECURITY ASSOCIATES INTERNATIONAL,
INC.
By: /s/ Xxxxx X. Xxxxxxx
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Its: /s/ President
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TJS PARTNERS, LTD.
By: /s/ Xxxxxx X. Xxxxxxxxx
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Its: Managing General Partner
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