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EXHIBIT 10.1
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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, Xxxxxxxx and X. Xxxxx.
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.
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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 Xxxxxxx Xxxxx' 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.
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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
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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:
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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.
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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."
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(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
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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
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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
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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
000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, or at such other
address TJS shall have furnished to the Company in writing; or
(b) if to the Company, at 0000 Xxxxx Xxxxxxxxx Xxxxxxx Xxxx,
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000-0000, 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
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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.
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The foregoing Second Amendment is hereby executed as of the date first above
written.
SECURITY ASSOCIATES INTERNATIONAL, INC.
By: /s/ XXXXX X. XXXXXXX
---------------------------------------
Xxxxx X. Xxxxxxx, President
TJS PARTNERS, L. P.
By: /s/ XXXXXX X. XXXXXXXXX
---------------------------------------
Xxxxxx X. Xxxxxxxxx, General Partner
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