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                                                                    EXHIBIT 10.3

                             STOCKHOLDERS AGREEMENT

         THIS STOCKHOLDERS AGREEMENT (this "AGREEMENT") is made as of the 3rd
day of October, 2001, by and among Security Associates International, Inc., a
Delaware corporation ("SAI"), EGI-Fund (01) Investors, L.L.C., a Delaware
limited liability company ("EGI"), and TJS Partners, L.P., a New York limited
partnership ("TJS"). EGI and TJS are herein referred to individually as a
"STOCKHOLDER" and collectively as the "STOCKHOLDERS". Unless otherwise provided
in this Agreement, capitalized terms used herein shall have the meanings set
forth in Section 3 hereof.

                                    RECITALS

         WHEREAS, pursuant to Stock Purchase Agreement of even date herewith (as
amended or otherwise modified from time to time, the "STOCK PURCHASE
AGREEMENT"), EGI has purchased from SAI 20,000 shares of Series B Preferred;

         WHEREAS, TJS holds 137,359 shares of Series A Preferred;

         WHEREAS, SAI and the Stockholders desire to enter into this Agreement
for the purposes, among others, of (i) establishing certain voting requirements
with respect to a Change in Control and (ii) establishing certain rights with
respect to a sale of shares by TJS; and

         WHEREAS, SAI and TJS have previously entered into that certain
Stockholders Agreement (the "SERIES A AGREEMENT") dated as of August 6, 2001, by
and among SAI, TJS and certain other holders of the Series A Preferred (the
"OTHER SERIES A HOLDERS") which, among other matters, establishes certain rights
for the Other Series A Holders with respect to a sales of shares by TJS.

         NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

                  1. Change in Control. Until such time as the EGI Group holds
less than fifty percent (50%) of the EGI Underlying Common and EGI Outstanding
Warrant Shares, if SAI shall be required to obtain stockholder approval for a
Change in Control in which the holders of SAI Common would not receive
consideration of at least $2.50 per share, then TJS hereby agrees that it will
not participate or vote or consent in favor of any such Change in Control
without the prior consent of members of the EGI Group holding at least fifty
percent (50%) of the EGI Underlying Common and EGI Outstanding Warrant Shares.

                  2. Tag-along Rights. If TJS determines to sell at least fifty
percent (50%) of its shares of Series A Preferred or Series A Underlying Common
(excluding shares which are registered as of the date hereof) ("SERIES A
SECURITIES") in a single transaction or in a series of related transactions
within a three month period ("TAG-ALONG SALE"), TJS shall deliver written notice
to EGI setting forth in reasonable detail the price and terms of the proposed
sale or sales of such Series A Securities (the "EGI SALE NOTICE") and the
maximum number of Series A Securities TJS will be permitted to sell in such
Tag-Along Sale after complying with the Tag-along Rights provided to the Other
Series A Holders under the Series A Agreement (the "TJS SALE NUMBER"). In such
event,



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TJS shall make no sale or transfer of such Series A Securities in a Tag-Along
Sale unless the EGI Group shall have the right (exercisable in the manner set
forth below), but not the obligation, to sell to the proposed transferee, on
terms and conditions at least as favorable to the EGI Group as the terms and
conditions set out in the EGI Sale Notice, a number of EGI Outstanding Shares
equal to the TJS Sale Number multiplied by a fraction, the numerator of which is
equal to the number of EGI Outstanding Shares held by the EGI Group, and the
denominator of which is equal to the sum of (a) the number of shares of Series A
Underlying Common held by TJS plus (b) the number of EGI Outstanding Shares held
by the EGI Group. The EGI Group shall have fifteen (15) days from the date of
delivery of the EGI Sale Notice to exercise its right to participate in such
sale by providing written notice to TJS of such exercise within such fifteen
(15) day period. The provisions of this Section 2 shall not apply to sales or
distributions of Series A Securities to one or more of the partners of TJS
(other than to Thomas Salvatore, individually, and his Affiliates); provided,
however, that this Section 2 shall apply in the event that such partners
subsequently determine to sell in concert Series A Securities in a transaction
or series of transactions to which this Section 2 would apply had TJS determined
to sell such shares of Series A Securities (i.e. such partners subsequently
determine to sell in concert a number of shares equal to at least fifty percent
(50%) of the Series A Securities).

                  3. Definitions.

                  "AFFILIATE" shall mean, with respect to any person, any other
person that directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with such first person. As used
in this definition, "control" (including, with correlative meanings, "controlled
by" and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management or
policies, whether through the ownership of securities or partnership or other
ownership interests, by contract or otherwise.

                  "CHANGE IN CONTROL" means (i) the merger or consolidation of
SAI into another corporation pursuant to which the holders of SAI capital stock
receive cash or other marketable securities in exchange for their shares of
capital stock; (ii) the sale of all or substantially all of SAI's assets
determined on a consolidated basis to one or more third parties; or (iii) the
liquidation of all or substantially all of SAI's assets determined on a
consolidated basis.

                  "EGI GROUP" means (i) EGI, (ii) any direct or indirect
Affiliate of EGI, under control of, or common control with, EGI, (iii) any
direct or indirect member of EGI or such Affiliate, and (iii) any direct or
indirect Affiliate of any member of EGI under control of, or common control
with, such member.

                  "EGI OUTSTANDING SHARES" means (i) shares of the EGI Preferred
(on an as-converted basis, if applicable), or, to the extent converted, shares
of EGI Underlying Common issued upon conversion, plus (ii) EGI Outstanding
Warrant Shares.

                  "EGI OUTSTANDING WARRANT SHARES" means shares of SAI Common
issued upon exercise of the EGI Warrant.

                  "EGI PREFERRED" means the 20,000 shares of Series B Preferred
issued by SAI to EGI pursuant to the terms of the Stock Purchase Agreement.



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                  "EGI UNDERLYING COMMON" means shares of SAI Common issuable
upon the conversion of the EGI Preferred.

                  "EGI WARRANT" means the warrant to purchase 2,500,000 shares
of SAI Common issued to EGI pursuant to the Stock Purchase Agreement.

                  "SAI COMMON" means SAI's Common Stock, par value $0.001 per
share.

                  "SERIES A PREFERRED" means SAI's Series A Convertible
Preferred Stock, par value $10.00 per share.

                  "SERIES A UNDERLYING COMMON" means shares of SAI Common
issuable upon the conversion of the Series A Preferred

                  "SERIES B PREFERRED" means SAI's Series B Convertible
Preferred Stock, par value $10.00 per share.

                  4. Amendment and Waiver. Except as otherwise provided herein,
no modification, amendment or waiver of any provision of this Agreement shall be
effective against any party unless such modification, amendment or waiver is
approved in writing by such party. The failure of any party to enforce any of
the provisions of this Agreement shall in no way be construed as a waiver of
such provisions and shall not affect the right of such party thereafter to
enforce each and every provision of this Agreement in accordance with its terms.

                  5. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.

                  6. Entire Agreement. Except as otherwise expressly set forth
herein, this Agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.

                  7. Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by SAI and its successors and assigns and the Stockholders and the respective
successors and permitted assigns (including (a) each member of the EGI Group and
(b) any partners of TJS with respect to Series A Securities acquired from TJS
pursuant to Section 2, but only in the event that such partners act in concert
such that Section 2 applies and then only Section 2 shall bind such partners) of
each of them, so long as they hold Series A Preferred, Series B Preferred, the
EGI Warrant, any shares of SAI Common issuable upon conversion of such Series A
Preferred or Series B Preferred or any EGI Outstanding Warrant Shares.



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                  8. Counterparts. This Agreement may be executed in two or more
counterparts (including by facsimile signature), any one of which need not
contain the signatures of more than one party, but all such counterparts taken
together shall constitute one and the same agreement.

                  9. Remedies. SAI and the Stockholders shall be entitled to
enforce their rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages would not be an adequate remedy for any breach of the
provisions of this Agreement and that SAI and any Stockholder may in its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief (without posting a bond or other
security) in order to enforce or prevent any violation of the provisions of this
Agreement.

                  10. Notices. Any notice provided for in this Agreement shall
be in writing and shall be either personally delivered, or mailed first class
mail (postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to SAI or the Stockholders at the address set forth below and to any
other recipient at the address indicated on SAI's books and records, or at such
address or to the attention of such other person as the recipient party has
specified by prior written notice to the sending party. Notices shall be deemed
to have been given hereunder when delivered personally, three days after deposit
in the U.S. mail and one day after deposit with a reputable overnight courier
service. SAI's address is:

                  If to SAI:

                           Security Associates International, Inc.
                           2101 S. Arlington Heights Rd.
                           Arlington Heights, IL 60005-4142

                  with copies to:

                           Sachnoff & Weaver, Ltd.
                           30 S. Wacker Drive, Suite 2900
                           Chicago, Illinois 60606
                           Attention:  Jeffrey A. Schumacher

                  If to EGI:

                           EGI-Fund (01) Investors, L.L.C.
                           Two N. Riverside Plaza, Suite 600
                           Chicago, IL  60606
                           Attention:  Mark Radzik
                           Fax: (312) 454-9678



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                  with copies to:

                           Equity Group Investments, LLC
                           Two N. Riverside Plaza, Suite 600
                           Chicago, IL  60606
                           Attention:  Joseph Paolucci, Esq.
                           Fax: (312) 454-0335

                  If to TJS:

                           TJS Partners, L.P.
                           115 East Putnam Avenue
                           Greenwich, CT 06830
                           Fax: (203) 629-9594

                  11. Governing Law; Jurisdiction. All issues and questions
concerning the construction, validity, interpretation and enforceability of this
Agreement and the exhibits and schedules hereto shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
The parties hereby consent to the exclusive jurisdiction and venue of the state
or federal courts located in Cook County, Illinois, for any dispute arising out
of or relating to this Agreement.

                  12. Business Days. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or legal
holiday in the state in which SAI's chief executive office is located, the time
period shall automatically be extended to the business day immediately following
such Saturday, Sunday or legal holiday.

                  13. Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

                  14. Termination. This Agreement shall automatically terminate
and cease to be of any further force or effect on December 31, 2003.


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                  IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders Agreement on the day and year first above written.

SECURITY ASSOCIATES INTERNATIONAL, INC.


By: /s/ Raymond A. Gross
   ----------------------------------------
Name: Raymond A. Gross
     --------------------------------------
Title: Chief Executive Officer
      -------------------------------------


EGI-FUND (01) INVESTORS, L.L.C.


By: /s/ Donald J. Liebentritt
   ----------------------------------------
Name: Donald J. Liebentritt
     --------------------------------------
Title: Vice President
      -------------------------------------


TJS PARTNERS, L.P.


By: /s/ Thomas J. Salvatore
   ----------------------------------------
Name: Thomas J. Salvatore
     --------------------------------------
Title: General Partner
      -------------------------------------