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Exhibit 10.26

SECOND AMENDMENT
TO EMPLOYMENT AGREEMENT

        SECOND AMENDMENT, dated as of December 3, 2008 (this "Second Amendment")
to the Employment Agreement (the "Employment Agreement") between and among
Joseph R. Sanchez ("Executive"), Protection One, Inc., a Delaware corporation
(the "Company"), and Protection One Alarm Monitoring, Inc., a Delaware
corporation, dated as of July 23, 2004, as amended by the First Amendment to
Employment Agreement dated as of February 8, 2005 (the "First Amendment"). This
Second Amendment shall become effective upon the date of hereof (the "Effective
Date").

W I T N E S S E T H :

        WHEREAS, Section 22 of the Employment Agreement provides that any
modification of any provision of the Employment Agreement shall be valid only if
made in writing and signed by Executive and a duly authorized officer of the
Company; and

        WHEREAS, the parties hereto desire to amend certain provisions of the
Employment Agreement as more fully set forth herein.

        NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the
agreements herein, the parties hereto agree as follows:

        1.    Amendments.    

        (a)   Section 4(b) of the Employment Agreement is hereby amended by
adding to the end of such section: "Such bonus shall be paid, if earned, no
later than March 15 of the calendar year immediately following the calendar year
to which such bonus relates."

        (b)   Section 5(a)(A)(III) of the Employment Agreement is hereby removed
in its entirety.

        (c)   Section 5(a)(C) of the Employment Agreement is hereby amended and
restated in its entirety to read as follows:

        "(C) the Company shall continue, for a period of one (1) year (or two
(2) years in the event Executive is entitled to payments under
Sections 5(a)(B)(x) and (y)) following Executive's Date of Termination, to
provide Executive (and Executive's dependents, if applicable) with substantially
similar levels of medical, dental, and life insurance benefits upon
substantially similar terms and conditions as Executive would have been entitled
to receive if he had continued in employment; provided, that, if Executive
cannot continue to participate in the Company benefit plans providing such
benefits, the Company shall provide a monthly cash payment over the same one
(1) year period (or two (2) years in the event Executive is entitled to payments
under Sections 5(a)(B)(x) and (y)) to reimburse Executive for the cost of
premiums comparable to those that would be required to receive such benefits on
a substantially similar basis, plus the amount of any conversion fees required
to convert from group coverage to individual coverage under the Company's
existing benefit plans (the "Benefits Monthly Payments"). In the event Executive
cannot continue to participate in the Company benefit plans providing such
benefits, Executive shall present the Company with one or more benefit plans
that Executive has obtained or intends to obtain that provide benefits on a
substantially similar basis as the benefits provided to Executive prior to the
Date of Termination (and acknowledgment from the provider of such benefit plans
that such benefit plans have been or can be obtained by Executive on those
terms, including, without limitation, at least substantially similar scope of
coverage, substantially similar deductibles and

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substantially similar co-payments), then the Benefits Monthly Payment shall be
made based on the premiums plus any other administrative fees (except
co-payments) charged by the company offering such plans. If it is determined by
the Company that any portion of the Benefits Monthly Payment constitutes taxable
wages for federal income and/or employment tax purposes, the Company agrees to
pay Executive an additional amount (the "Benefits Gross-Up Payment") such that
the net amount retained by Executive from the Benefits Monthly Payment and the
Benefits Gross-Up Payment, after reduction for any federal, state and local
income and employment taxes on the Benefits Monthly Payment and the Benefits
Gross-Up Payment, shall equal the Benefits Monthly Payment. Notwithstanding the
foregoing, in the event Executive becomes reemployed with another employer and
becomes eligible to receive benefits from such employer, the benefits described
herein shall be secondary to such benefits during the period of Executive's
eligibility, but only to the extent that the Company reimburses Executive for
any increased cost and provides any additional benefits necessary to give
Executive the benefits provided hereunder; and"

        (d)   Section 5(a)(D) is hereby amended by adding to the end of such
section "; provided that in no circumstance shall such Award be exercisable
later than the earlier of the latest date such award could have expired by its
original terms under any circumstances or the 10th anniversary of the original
date of grant of such Award."

        (e)   New Section 5(c) is hereby added to read as follows:

        "(c)    Section 409A.    Notwithstanding the timing of any payments
pursuant to Section 5 of this Agreement, if the Employee is deemed on the date
of termination to be a "specified employee" within the meaning of that term
under Code Section 409A(a)(2)(B), then each of the following shall apply:

        (A)  With regard to any payment that is considered deferred compensation
under Code Section 409A payable on account of a "separation from service," such
payment shall be made on the date which is the earlier of (A) the expiration of
the six (6)-month period measured from the date of such "separation from
service" of the Employee, and (B) the date of the Employee's death (the "Delay
Period") to the extent required under Code Section 409A. Upon the expiration of
the Delay Period, all payments delayed pursuant to this Section (whether they
would have otherwise been payable in a single sum or in installments in the
absence of such delay) shall be paid to the Executive in a lump sum, and any
remaining payments and benefits due under this Agreement shall be paid or
provided in accordance with the normal payment dates specified for them herein;
and

        (B)  To the extent any benefits provided during the first six months
after Executive's termination are considered deferred compensation under Code
Section 409A provided on account of a "separation from service," and such
benefits are not otherwise exempt from Code Section 409A, Executive shall pay
the cost of such benefits during the first six months following termination and
shall be reimbursed, to the extent such costs would otherwise have been paid by
the Company or to the extent such benefits would otherwise have been provided by
the Company at no cost to the Executive, the cost of such coverage six months
after Executive's termination.

        (f)    New Section 26 is hereby added to read as follows:

        "26.    Section 409A.    Notwithstanding anything to the contrary in
this Agreement,

        (a)   to the extent Executive is entitled to the reimbursement of any
expenses or in-kind benefits under this Agreement that the Company determines
constitutes taxable income to the Executive, (X) the amount of expenses eligible
for reimbursement, or the in-kind benefits provided, during a calendar year may
not affect the expenses eligible for reimbursement, or

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in-kind benefits to be provided, in any other taxable year, (Y) such
reimbursement will be made on or before the last day of the calendar year
immediately following the calendar year in which such expense was incurred, and
(Z) the right to reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit.

        (b)   to the extent any provision of this Agreement provides Executive
with a tax gross-up payment for any taxes that Executive may incur as a result
of such benefits provided hereunder (a "Tax Gross-Up Payment"), such Tax
Gross-Up Payment will be made by the end of the calendar year next following the
calendar year in which the Executive remits the related taxes.

        (c)   the right to any additional Tax Gross-Up Payment that Executive
may be entitled to under this Agreement due to a tax audit or litigation
addressing the existence or amount of the tax liability underlying the Tax
Gross-Up Payment will be made by the end of the calendar year following the
calendar year in which the taxes that are the subject of the audit or litigation
are remitted to the taxing authority, or, where as a result of such audit or
litigation no taxes are remitted, the end of the calendar year following the
calendar year in which the audit is completed or there is a final and
nonappealable settlement or other resolution of the litigation.

        (d)   For purposes of Code Section 409A, the Employee's right to receive
any installment payments pursuant to this Agreement shall be treated as a right
to receive a series of separate and distinct payments.

        (e)   Whenever a payment under this Agreement specifies a payment period
with reference to a number of days (e.g., "payment shall be made within thirty
(60) days following the date of termination"), the actual date of payment within
the specified period shall be within the sole discretion of the Company.

        (f)    In no event shall any payments under this Agreement that
constitute "deferred compensation" for purposes of Code Section 409A be offset
by any other payment, pursuant to this Agreement or otherwise.

        2.    GOVERNING LAW; VALIDITY.    THE INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS FIRST AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT
REGARD TO THE PRINCIPLE OF CONFLICTS OF LAWS. THE INVALIDITY OR UNENFORCEABILITY
OF ANY PROVISION OF THIS FIRST AMENDMENT SHALL NOT AFFECT THE VALIDITY OR
ENFORCEABILITY OF ANY OTHER PROVISION OF THIS FIRST AMENDMENT, WHICH OTHER
PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT.

        3.    Full force and effect of Employment Agreement.    Except as
specifically modified herein, all other provisions of the Employment Agreement
shall remain in full force and effect in accordance with its terms. All
references in the Employment Agreement to "this Agreement" shall be deemed to
refer to the Employment Agreement as amended by this Second Amendment.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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        IN WITNESS WHEREOF, each of the Company and Protection One Alarm
Monitoring, Inc. has caused the Agreement to be executed by a duly authorized
representative of the Company and Protection One Alarm Monitoring, Inc. and
Executive has executed this Agreement as of the day and year first above
written.

  PROTECTION ONE, INC

 

By:

 

/s/ J. ERIC GRIFFIN

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      Name:   Eric Griffin

      Title:   Secretary

 

PROTECTION ONE ALARM MONITORING, INC.

 

By:

 

/s/ J. ERIC GRIFFIN

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      Name:   Eric Griffin

      Title:   Secretary

     

/s/ JOSEPH R. SANCHEZ

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Joseph R. Sanchez

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Exhibit 10.26

SECOND AMENDMENT TO EMPLOYMENT AGREEMENT