1
Exhibit 10.23
Neither this Warrant, the shares of Convertible Preferred
Stock issuable upon exercise of this Warrant nor the
shares of Common Stock that can be purchased upon
exercise of the conversion privileges of the Convertible
Preferred Stock have been registered under the Securities
Act of 1933, and may not be sold or otherwise transferred
unless a compliance with the registration provisions of
such Act has been made or unless availability of an
exemption from such registration provisions has been
established, or unless sold pursuant to Rule 144 under
the Securities Act of 1933.
AMENDED
STANDBY OPTION AND WARRANT AGREEMENT
THIS AMENDED STANDBY OPTION AND WARRANT AGREEMENT (this "Agreement") is
made effective as of December 31, 1996, by and between Security Associates
International, Inc., a Delaware corporation ("SAI") and TJS Partners, L.P., a
New York limited partnership ("TJS") (collectively, the "Parties").
R E C I T A L S
WHEREAS, SAI and TJS concurrently herewith will enter into an Amendment
to the Common Stock Subscription and Purchase Agreement, dated September 5, 1996
(the "Amendment"); 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 Amendment,
which include the Reinstated Options as defined in the Amendment (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
Amendment, in the event that any of the Old Options or Warrants are exercised;
and
WHEREAS, each share of SAI's Convertible Preferred Stock, $10.00 par
value per share (the "Convertible Preferred Stock") to be issued to TJS pursuant
to the Amendment is convertible into 100 shares of SAI's common stock (the
"Common Stock") and entitles the holder thereof to voting rights equal to those
to which a holder of 100 shares of Common Stock is entitled.
WHEREAS, in order to induce TJS to execute the Amendment 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 with the same terms
and conditions as the Outstanding Options and Warrants, excepting only that the
options and warrants issued to TJS shall be exercisable for SAI's Convertible
Preferred Stock, all as is more specifically set forth below.
2
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 New Options and Warrants shall be exercisable for one share of
Convertible Preferred Stock for each 100 shares of Common Stock into which the
Old Options and Warrants are exercisable (at a purchase price per share of
Convertible Preferred Stock equal to one hundred times (100X) the purchase price
per share of Common Stock pursuant to the Old Options and Warrants) 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.
NUMBER OF EXPIRATION
SHARES OF DATE OF
CONVERTIBLE OLD
PREFERRED EXERCISE OPTIONS NEW OPTIONS OLD OPTIONS AND
STOCK PRICE AND AND WARRANTS WARRANTS
WARRANTS
220.88 $57.00 12/31/96 the "Xxxxx Equivalent Option" Xxx Xxxxx,
issued 01/01/91
125.00 $57.00 10/26/00 the "Xxxxxxxx Equivalent Option" Xxxxx Xxxxxxxx,
issued 08/21/92
125.00 $57.00 10/26/00 the "Xxxxxxxxx Equivalent Xxxx Xxxxxxxxx,
Option" issued 08/21/92
200.00 $100.00 06/21/99 the "Gallas Equivalent Option" Xxxxxx Xxxxxx,
issued 06/21/94
100.00 $100.00 06/21/99 the "Hagedal Equivalent Option" Xxx Xxxxxxx,
issued 06/21/94
100.00 $100.00 06/21/99 the "Xxxxxxxx Equivalent Option" Xxxxxx Xxxxxxxx,
issued 06/21/94
50.00 $100.00 06/21/99 the "Xxxxx Equivalent Option" Xxx Xxxxx,
issued 06/21/94
500.00 $53.00 04/01/00 the "Xxxxx 1 Equivalent Option" Xxxx Xxxxx,
issued 10/01/95
190.00 $53.00 04/01/00 the "Xxxxx 2 Equivalent Option" Xxxx Xxxxx,
issued 01/21/96
170.00 $53.00 04/01/00 the "Xxxxx 3 Equivalent Option: Xxxx Xxxxx
issued 08/1/96
125.00 $200.00 12/31/98 the "Sered Equivalent Option" Xxxxxxx &
Xxxxxx Xxxxx,
issued 08/09/94
125.00 $200.00 12/31/98 the "Metro Suburban Pediatrics Metro Suburban
2
3
Equivalent Option" Pediatrics,
issued 08/09/94
125.00 $200.00 12/31/98 the "Xxxxx 4 Equivalent Option" Xxxx Xxxxx,
issued 09/02/94
100.00 $200.00 12/31/98 the "Infinity Partnership II Infinity
Equivalent Option" Partnership II,
issued 05/22/95
125.00 $200.00 12/31/98 the "Xxxxxx Equivalent Option" Xxxxx Xxxxxx,
issued 06/07/95
250.00 $200.00 12/31/98 the "Xxxxxxx Equivalent Option" Xxxxxx Xxxxxxx,
issued 10/19/95
2,783.08 $57.00 10/26/00 the "Xxxxx Reinstatement Xxxxxx X. Xxxxx
Equivalent Option" issued 10/26/90
2,783.08 $57.00 10/26/00 the "Xxxxxxx Reinstatement Xxxxx X. Xxxxxxx
Equivalent Option" issued 10/26/90
1,855.39 $57.00 10/26/00 the "Xxxxx Reinstatement Xxxxxxx Xxxxx
Equivalent Option" issued 10/26/90
200.00 $44.20 09/05/97 the "Xxxxxx Equivalent Option" Xxxxxx Xxxxxx
issued 09/05/96
200.00 $44.20 09/05/97 the "Dalmar Equivalent Option" Xxxxx X. Xxxxxx
issued 09/05/96
500.00 $44.20 09/05/97 the "Xxxxxxxx Equivalent Option" Xxxxxx X.
Xxxxxxxx
issued 09/05/96
250.00 $44.20 09/05/97 the "Xxxxxxx Equivalent Option" Xxxxxx Xxxxxxx
issued 09/05/96
750.00 $44.20 09/05/97 the "Greinwald Equivalent Xxxxxxx X.
Option I" Greinwald
issued 09/05/96
250.00 $44.20 09/05/97 the "Xxxxx Equivalent Option" Xxxxxx Xxxxx
issued 09/05/96
20.00 $44.20 09/05/97 the "Greinwald Equivalent Xxxxxxx X.
Option II" Greinwald
issued 09/05/96
2.50 $44.20 09/05/97 the "Grolle Equivalent Option" Xxxxxx Xxxxxx
issued 09/05/96
2.50 $44.20 09/05/97 the "Small Equivalent Option" Xxxxxxxx Small
issued 09/05/96
1,200.00 $44.20 09/05/97 the "Xxxxxxxx Equivalent Option" Inversiones
Xxxxxxxx
issued 09/05/96
625.00 $44.20 09/05/97 the "Alanje Equivalent Option" Inversiones
Alanje
issued 09/05/96
1,000.00 $44.20 09/05/97 the "Erlanger Equivalent Option" Inversiones
Erlanger
issued 09/05/96
1,200.00 $100.00 12/31/99 the "Xxxxx Equivalent Warrant" Xxxxxx Xxxxx,
3
4
issued 12/01/93
400.00 $100.00 12/31/99 the "Xxxxx Equivalent Warrant" Xxxxxxx Xxxxx,
issued 12/01/93
400.00 $100.00 12/31/99 the "Xxxxx Equivalent Warrant" Xxxxxxx Xxxxx,
issued 12/01/93
250.00 $125.00 10/10/99 the "Buttonwood Buttonwood
Equivalent Option 1" Advisory Group, Inc.
Issued 10/10/96
250.00 $200.00 10/10/99 the "Buttonwood Buttonwood
Equivalent Option 2" Advisory Group,
Inc.issued
10/10/96
250.00 $300.00 10/10/99 the "Buttonwood Buttonwood
Equivalent Option 3" Advisory Group, Inc.
Issued 10/10/96
250.00 $100.00 10/01/00 The "Star Security Equivalent Star Security Systems,
Option" Inc. issued 8/95
250.00 $100.00 10/01/00 The "Metronet Equivalent Metronet Installations,
Options" Inc. issued 8/95
250.00 $100.00 10/01/00 The "Xxxxxxx Equivalent Options" Xxxx and Xxxxxxx Xxxxxxx
issued 8/95
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. TJS may exercise
any New Option or Warrant at any time after the relevant Old Option or Warrant
has been exercised prior to the expiration date set forth in the table in
Paragraph 1, in the same manner that such Old Option or Warrant has been
exercised, by delivering to SAI a written notice stating the number of shares of
Convertible Preferred Stock that TJS has elected to purchase together with
payment in full for the exercise price. 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. Within fifteen
(15) days of receipt of the exercise price by SAI, it shall issue the
corresponding shares of Convertible Preferred Stock to TJS. SAI shall not
declare a record date for any purpose during any period following the receipt of
such notice and payment and prior to the issuance of such shares of Convertible
Preferred Stock unless TJS shall be afforded all of TJS' rights as holder of
such shares of Convertible Preferred Stock.
(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 in SAI (the "Investment") to its partners .
(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
4
5
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. LIMITATION ON EXERCISE OF NEW OPTIONS AND WARRANTS. Notwithstanding
anything to the contrary contained in this Agreement, TJS agrees that if any
exercise of any New Option or Warrant would result in a significant dimunition
of the ability of SAI to advantageously utilize its net operating loss
carryforwards ("NOLS") for federal income tax purposes, in the judgment of SAI's
certified public accountants, its right to exercise any New Option or Warrant
will be limited to the right to purchase the maximum number of shares of Common
Stock that can be purchased without SAI losing its ability to utilize its NOLS.
SAI shall promptly notify TJS in writing of any determination by its certified
public accountants that all or any portion of the remaining New Options or
Warrants may be exercised without jeopardizing SAI's ability to use its NOLS.
The time period for the exercise of any New Option or Warrant (or any part
thereof) the exercise of which was previously prohibited pursuant to the
provisions of this Section shall be extended for a period of sixty (60) days
following the receipt of written notice from SAI that the conditions that gave
rise to the prohibition on exercise no longer apply.
5. MISCELLANEOUS PROVISIONS. This Agreement shall be governed by the
provisions of Section 11 of the Purchase Agreement, which is incorporated herein
by this reference.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first stated above.
SECURITY ASSOCIATES INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxx, President
TJS PARTNERS, L.P.
By: TJS Management, L.P., its General Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxxx, Managing
General Partner
5
