Exhibit 10.1


 


EMPLOYMENT AGREEMENT


 


THIS EMPLOYMENT
AGREEMENT (the “Agreement”) is entered into as of the 23rd day of July, 2004 by
and between Protection One, Inc., a Delaware corporation, Protection One
Alarm Monitoring, Inc., a Delaware corporation, Security Monitoring
Services, Inc. (d/b/a CMS), a Florida corporation (“Company”) and Anthony
Wilson (“Executive”).


 


W I T N E S S E T
H :


 


WHEREAS,
Protection One Alarm Monitoring, Inc. and Executive agreed to employment
terms pursuant to a Change in Control Agreement dated December 13, 2000
and amended such agreement under an Amendment to Change in Control Agreement
dated June 20, 2003 and a retention bonus letter dated June 20, 2003
(such Change in Control Agreement, as amended, together with the retention bonus
letter, hereinafter referred to as the “Prior Employment Agreement”); and


 


WHEREAS, the Board
(as defined in Section 1) has determined that it is in the best interest
of the Company, its creditors and its stockholders to assure that the Company
will have the continued dedication of Executive during and after the period of
the Company’s, POAMI’s (as defined in Section 1) and POI’s (as defined in Section 1)
anticipated Restructuring (as such term is defined in Section 1) of their
indebtedness and capital stock notwithstanding the possibility or occurrence of
a Change in Control (as defined in Section 1), to provide Executive with
assurance of continued employment beyond the expiration of the Prior Employment
Agreement and to provide compensation and benefits arrangements which are
competitive with those of other comparable 
and similarly situated corporations; and


 


WHEREAS, the
Company is a direct and wholly owned subsidiary of POAMI, which is, in turn, a
direct and wholly owned subsidiary of POI, and each entity will receive
substantial direct or indirect value from Executive; and


 


WHEREAS, during
the period of anticipated Restructuring, Executive’s continued high performance
and retention is critical to ensure that each of the Company, POAMI, and POI
maintains its value; and


 


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WHEREAS, Executive
has agreed to enter into this Agreement because the Company has satisfied all
of its obligations under the Prior Employment Agreement, including without
limitation, the making of payments upon the change in control of POI on February 17,
2004; and


 


WHEREAS, each of
the board of directors of the Company, of POAMI, and of POI has authorized the
Company, POAMI, and POI respectively, to enter into this Agreement.


 


NOW, THEREFORE,
for and in consideration of the premises and the mutual covenants and
agreements herein contained, the Company, POAMI, POI and Executive hereby agree
as follows:


 


1.             Definitions.  As used in this Agreement, the following
terms shall have the respective meanings set forth below:


 


(a)           “Board” means the Board of Directors of POI, as the
case may be, whether prior to or after the Restructuring.


 


(b)           “Bonus Amount” means:


 


(A)  for a Date of
Termination occurring in fiscal year 2004, the average of the annual incentive
bonuses payable by the Company to or for the benefit of or deferred by
Executive for the 2002 and 2003 fiscal years of the Company; and


 


(B)   for a Date of
Termination occurring after fiscal year 2004, the average of the annual
incentive bonuses payable by the Company to or for the benefit of or deferred
by Executive for the last three (3) completed fiscal years of the Company
immediately preceding the Date of Termination or Change in Control.


 


(c)           “Cause” means:


 


(A)  the willful and
continued failure of Executive to perform substantially his duties with the
Company (other than any such failure resulting from Executive’s incapacity due
to physical or mental illness or any such failure subsequent to Executive being
delivered a Notice of Termination without Cause by the Company or Executive
delivering a Notice of Termination for Good Reason to the Company) that is not
remedied within 30 days after a written demand for substantial performance
is delivered to Executive by the Chairman of the Board, the Chairman of the
Compensation Committee of POI or the Chief Executive Officer of POI which
specifically identifies the manner in which Executive has not substantially
performed Executive’s duties and that such failure if not remedied constitutes “Cause”
under this Agreement, or


 


(B)     Executive’s
conviction by a court of law, Executive’s admission in a legal proceeding that
he is guilty or Executive’s plea of nolo
contendre, in each case, with respect to a felony.


 


For purposes of this subsection (c), no act or failure
to act by Executive shall be considered “willful” unless done or omitted to be
done by Executive in bad faith and without reasonable belief that Executive’s
action or omission was in, or not opposed to, the best interests of the
Company.


 


(d)           “Change in Control” means


 


(i)   the occurrence of any one of the following
events after the earlier of the date the Restructuring is consummated or December 31,
2005:


 


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(A)      individuals
who, as of the date the Restructuring is consummated, constitute the Board (or,
in the case no Restructuring is consummated by December 31, 2005, the
individuals who constitute the Board as of such date) (the “Incumbent Directors”)
cease for any reason to constitute at least a majority of the Board, provided
that any person becoming a director subsequent to the date the Restructuring is
consummated (or, in the case no Restructuring is consummated by December 31,
2005, December 31, 2005), whose election or nomination for election was
approved by a vote of at least two-thirds of the Incumbent Directors then on
the Board (either by a specific vote or by approval of the proxy statement of
POI in which such person is named as a nominee for director, without written
objection to such nomination) or, prior to the date that a Restructuring is
consummated, as elected at any time by Quadrangle Group shall be an Incumbent
Director.


 


(B)       any “person”
(as such term is defined in Section 3(a)(9) of the Securities
Exchange Act of 1934 (the “Exchange Act”) and as used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of POI representing more than thirty-three and one-third percent (331/3%) of the
combined voting power of POI’s then outstanding securities eligible to vote for
the election of the Board (the “POI Voting Securities”); provided, however, that the event
described in this paragraph (B) shall not be deemed to be a Change in
Control if such beneficial owner is any of the following or becomes a
beneficial owner as a result of any of the following:


 


I.              one
or more Current Debt Holder or a syndicate or group in which one or more
Current Debt Holders, collectively, beneficially own a majority of POI Voting
Securities beneficially owned by such syndicate or group;


 


II.            any
employee benefit plan (or related trust) sponsored or maintained by POI or any
of its Subsidiaries or one or more Current Debt Holder;


 


III.           any underwriter temporarily holding securities pursuant to
an offering of such securities;


 


IV.           a
person involved in a Non-Qualifying Transaction (as defined in
paragraph (C));


 


V.            an
entity (x) controlled by Executive or a group of persons consisting, at
the time of such acquisitions, of Executive and other employees of POI or any
of its Subsidiaries or (y) of which the majority of common equity
securities, at the time of such acquisitions, is owned by Executive or a group
of persons consisting of Executive and other employees of POI or any of its
Subsidiaries; or


 


VI.           any
event in which a Current Debt Holder continues to be directly or indirectly the
beneficial owner of a greater number of shares of POI than that held by any
other person as a result of the event described in this paragraph (B) or
has the right to direct the vote of a greater number of voting securities for
directors (or the equivalent) of POI than any other person as a result of the
event described in this paragraph (B);


 


(C)       the
consummation of a merger, consolidation, statutory share exchange, sale of all
or substantially all of the assets of the Company or POI, sale of all or
substantially all of the voting securities of the Company or similar form of
corporate transaction (whether in one transaction or a series of transactions)
involving the Company or POI (a “Business Combination”), unless immediately
following such Business Combination:


 


I.                more
than 50% of the total voting power of (x) the corporation that owns,
leases or controls all or substantially all of the assets of the Company or POI
resulting from such 


 


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Business Combination (the “Surviving Corporation”), or (y) if
applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of 100% of the voting securities eligible to elect
directors (or the equivalent) of the Surviving Corporation (the “Parent
Corporation”), is represented by POI Voting Securities that were outstanding
immediately prior to such Business Combination (or, if applicable, is
represented by shares into which such POI Voting Securities were converted
pursuant to such Business Combination);


 


II.              no
person (other than (a) one or more Current Debt Holder, (b) any
employee benefit plan (or related trust) sponsored or maintained by one or more
Current Debt Holder, the Surviving Corporation or the Parent Corporation or (c) a
syndicate or group in which one or more Current Debt Holders, collectively,
beneficially own a majority of the total voting power of the subject voting
securities beneficially owned by such syndicate or group) is or becomes the
beneficial owner, directly or indirectly, of more than thirty-three and
one-third percent (331/3%) of the total voting power of the outstanding voting
securities eligible to elect directors (or the equivalent) of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving Corporation);
and


 


III.             at least a majority of the members of the board of
directors of the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) following the consummation of the Business Combination
were Incumbent Directors at the time of the Board’s approval of the execution
of the initial agreement providing for such Business Combination (any Business
Combination which satisfies all of the criteria specified in (I), (II) and
(III) above shall be deemed to be a “Non-Qualifying Transaction”); or


 


(D)      POI or the
Company substantially completes a plan of complete liquidation or dissolution
whether in one transaction or a series of transactions;


 


(ii) 
in connection with the Restructuring, the occurrence of any one of the
following events:


 


(A)      on the date
the Restructuring is consummated, any “person” (as such term is defined in Section 3(a)(9) of
the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of
the Exchange Act) other than a Current Debt Holder (or a syndicate or group in
which one or more Current Debt Holders, collectively, beneficially own a
majority of the total voting power of POI Voting Securities beneficially owned
by such syndicate or group) is or becomes a “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of POI
representing more than thirty-three and one-third percent (331/3%) of POI
Voting Securities and is the largest holder of POI Voting Securities issued in
connection with the Restructuring;


 


(B)       the
consummation of a Business Combination, unless immediately following such
Business Combination:


 


I.                more
than 50% of the total voting power of (x) the corporation that owns,
leases or controls all or substantially all of the assets of the Surviving
Corporation, or (y) if applicable, the Parent Corporation, is represented
by POI Voting Securities that were outstanding immediately prior to such
Business Combination (or, if applicable, is represented by shares into which
such POI Voting Securities were converted pursuant to such Business
Combination);


 


II.              no
person (other than (a) one or more Current Debt Holder, (b) any
employee benefit plan (or related trust) sponsored or maintained by one or more
Current Debt Holder, the Surviving Corporation or the Parent Corporation or (c) a
syndicate or group in which one or more Current Debt Holders, collectively,
beneficially own a majority of the total voting power of the subject voting
securities beneficially owned by such syndicate or 


 


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group) is or becomes the beneficial owner, directly or
indirectly, of more than thirty-three and one-third percent (331/3%) of the
total voting power of the outstanding voting securities eligible to elect
directors (or the equivalent) of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation); and


 


III.               at least a majority of the members of the board of
directors of the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) following the consummation of the Business Combination
were Incumbent Directors at the time of the Board’s approval of the execution
of the initial agreement providing for such Business Combination; or


 


(C)     POI or the
Company substantially completes a plan of complete liquidation or dissolution
whether in one transaction or a series of transactions.


 


(iii) 
the occurrence of any one of the following events prior to the earlier of the
date the Restructuring is consummated or December 31, 2005:


 


(A)  individuals who,
as of the date hereof or as otherwise elected by Quadrangle Group, constitute
the Board (the “Incumbent Directors”) cease for any reason to constitute at
least a majority of the Board, provided that any person becoming a director
subsequent to the date hereof, whose election or nomination for election was
approved by a vote of at least two-thirds of the Incumbent Directors then on
the Board (either by a specific vote or by approval of the proxy statement of
POI in which such person is named as a nominee for director, without written
objection to such nomination) shall be an Incumbent Director.


 


(B)   any “person” (as
such term is defined in Section 3(a)(9) of the Exchange Act and as
used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act)
other than a Current Debt Holder (or a syndicate or group in which one or more
Current Debt Holders beneficially own a majority of the debt of POI and POAMI
beneficially owned by such syndicate or group) is or becomes a “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act as if such rule applied
to ownership of debt), directly or indirectly, of more than thirty-three and
one-third (331/3%) of the total debt of POI and POAMI;


 


(C)   any “person” (as
such term is defined in Section 3(a)(9) of the Exchange Act and as
used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act)
other than a Current Debt Holder (or a syndicate or group in which one or more
Current Debt Holders, collectively, beneficially own a majority of the total
voting power of the POI Voting Securities beneficially owned by such syndicate
or group) is or becomes a “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of POI
representing more than fifty percent (50%) of POI Voting Securities; or


 


(D)  the consummation
of a Business Combination, unless immediately following such Business Combination:


 


I.      more
than 50% of the total voting power of (x) the corporation that owns,
leases or controls all or substantially all of the assets of the Surviving
Corporation, or (y) if applicable, the Parent Corporation, is represented
by POI Voting Securities that were outstanding immediately prior to such
Business Combination (or, if applicable, is represented by shares into which
such POI Voting Securities were converted pursuant to such Business
Combination);


 


II.    no
person (other than one or more Current Debt Holder or any employee benefit plan
(or related trust) sponsored or maintained by one or more Current Debt Holder
(or a syndicate or group in which one or more of such persons, collectively,
beneficially own a majority of the total voting power of the subject voting
securities 


 


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beneficially owned by such syndicate or group), the
Surviving Corporation or the Parent Corporation) is or becomes the beneficial
owner, directly or indirectly, of more than thirty-three and one-third percent
(331/3%) of the
total voting power of the outstanding voting securities eligible to elect
directors (or the equivalent) of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation); and


 


III.   at least a majority of the members of the board of directors of
the Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) following the consummation of the Business Combination were
Incumbent Directors at the time of the Board’s approval of the execution of the
initial agreement providing for such Business Combination.


 


It is the intent of the parties that if an event that would constitute
a “Change in Control” under this Agreement occurs at POAMI, a “Change in
Control” shall have occurred for the purpose of this Agreement.  Upon the occurrence of an event described in
the preceding sentence, unless the context otherwise requires, for purposes of
this Agreement, POAMI shall be substituted for the defined term “POI” in the
definition of “Change in Control” together with appropriate changes to other
references in the definition of “Change in Control” to give effect to the
parties’ intent;


 


(e)             “Citicorp
Group” means Citibank International plc, any fund that is controlled by the
foregoing and, as applicable, their respective partners, members, subsidiaries
and affiliates (including without limitation, any other entities controlled by
or under common control with such entities), where the assets of each such
partner, member, subsidiary or affiliate primarily consist of POI Voting
Securities and/or debt of POI or POAMI.


 


(f)              “Current
Debt Holders” means Quadrangle Group, Citicorp Group and MacKay Shields
Group.


 


(g)                                       “Date of Termination” means:


 


(A)  if Executive’s
employment is to be terminated for Disability, 30 days after Notice of
Termination is given (provided that Executive shall not have returned to the
performance of Executive’s duties on a full-time basis during such 30 day
period);


 


(B)   if Executive’s
employment is to be terminated by the Company for Cause or by Executive for
Good Reason, the date specified in the Notice of Termination;


 


(C)   if Executive’s
employment is to be terminated by the Company for any reason other than Cause,
the date specified in the Notice of Termination, which shall be 90 days
after the Notice of Termination is given, unless an earlier date has been
expressly agreed to by Executive in writing;


 


(D)  if Executive’s
employment terminates by reason of death, the date of death of Executive; or


 


(E)   if Executive’s
employment is terminated by Executive in a Non-Qualifying Termination, the date
specified in Executive’s Notice of Termination, but not more than 30 days
after the Notice of Termination is given, unless expressly agreed to by the
Company in writing.


 


(h)             “Disability”
means termination of Executive’s employment by the Company due to Executive’s
absence from Executive’s duties with the Company on a full-time basis for at
least one-hundred-eighty (180) consecutive days as a result of Executive’s incapacity
due to physical or mental illness, unless within 30 days after Notice of
Termination is given to Executive following such absence Executive shall have
returned to the full-time performance of Executive’s duties.


 


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(i)              “Good
Reason” shall mean termination of Executive’s employment by Executive based
on any of the following events:


 


(A)          any
change in the duties or responsibilities (including reporting responsibilities)
of Executive that is inconsistent in any material and adverse respect (which
may be cumulative) with Executive’s position(s), duties, responsibilities or
status with the Company as described herein (including any adverse diminution
of such duties or responsibilities), provided,
however, that Good Reason shall not be deemed to occur upon a change
in duties or responsibilities (other than reporting responsibilities) that is
solely and directly due to POI no longer being a publicly traded entity;


 


(B)           the
failure to reappoint or reelect Executive to any position held by Executive
without Executive’s consent;


 


(C)           a
material breach of this Agreement by POI, POAMI or the Company including but
not limited to reduction in Executive’s Annual Base Salary (as defined in Section 4(a))
or other reduction in medical, dental, life or disability benefits (except to
the extent such reductions apply consistently to all other senior executives);
or


 


(D)          the
relocation by the Company of Executive’s principal workplace location more than
50 miles from the workplace location principally used by Executive as of the
date hereof.


 


Executive must provide Notice of Termination of employment
within one-hundred-eighty (180) days following Executive’s knowledge of an
event or facts constituting Good Reason (or the last of such events or facts if
cumulative) or such event or facts shall not constitute Good Reason under this
Agreement.


 


(j)              “MacKay
Group” means MacKay Shields, LLC and any fund that is controlled by the
foregoing and, as applicable, their respective partners, members, subsidiaries
and affiliates (including without limitation, any other entities controlled by
or under common control with such entities), where the assets of each such
partner, member, subsidiary or affiliate primarily consist of POI Voting Securities
and/or debt of POI or POAMI.


 


(k)             “Non-Qualifying
Termination” means a termination of Executive’s employment under any
circumstances not qualifying as a Qualifying Termination, including without
limitation any termination by the Company for Cause, any termination by
Executive without Good Reason or for no reason at all or any termination on
account of death, Disability or Retirement.


 


(l)              “Notice
of Termination” means a written notice of termination of employment given
by one party to the other party pursuant to Section 16(b).


 


(m)            “POAMI”
means Protection One Alarm Monitoring, Inc., a Delaware corporation, and
its successors and assignees.


 


(n)             “POI”
means Protection One, Inc., a Delaware corporation, and its successors and
assignees.


 


(o)             “Quadrangle
Group” means Quadrangle Group LLC, POI Acquisition I, Inc., POI
Acquisition, LLC, Quadrangle Master Funding Ltd., any fund that is controlled
by the foregoing and, as applicable, their respective partners, members,
subsidiaries and affiliates (including without limitation, any other entities
controlled by or under common control with such entities), where the assets of
each such partner, member, subsidiary or affiliate primarily consist of POI
Voting Securities and/or debt of POAMI, or POI.


 


(p)             “Qualifying
Termination” means a termination of Executive’s employment (i) by the
Company other than for Cause, including by the Company providing notice of
nonrenewal of this Agreement or


 


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(ii) by Executive for Good Reason. 
Termination of Executive’s employment on account of death, Disability or
Retirement shall not be treated as a Qualifying Termination.


 


(q)           “Restructuring”
means shall mean any transaction or series of transactions that effectuates any
reorganization, recapitalization, consolidation, business combination, merger,
or other similar transaction or any transaction that effectuates any material
amendment to, or other material change in, POAMI’s or POI’s obligations or
indebtedness for borrowed money as of the date hereof (including accrued or
accreted interest thereon) excluding changes in beneficial ownership of such
indebtedness, but including, without limitation, (i) any amendment or
modification to POI’s revolving credit facility, 7.375% Senior Unsecured Notes
due 2005 or 8.125% Senior Subordinated Notes due 2009 or that modifies any
material payment term or any material financial or operating covenant or that
provides for a forbearance of any material payment obligation or material
covenant, in each case, such that an amount that otherwise would be due and
payable (according to its terms, by put, upon default and acceleration or
otherwise) is delayed or otherwise extended for at least twelve months or that
converts a material amount of POI’s or POAMI’s obligations or indebtedness for
borrowed money as of the date hereof (including accrued or accreted interest
thereon) to equity and/or to a security junior to the claim’s existing priority
or is otherwise compromised, or any cash tender offer or any combination
thereof; or (ii) (A) any merger, consolidation, reorganization,
recapitalization, business combination or other transaction pursuant to which
POI is acquired by, or combined with, any person, group of persons,
partnership, corporation or other entity other than a Current Debt Holder (an “Acquiror”)
or (B) the acquisition, directly or indirectly by an Acquiror (or by one
or more persons acting together with an Acquiror pursuant to a written
agreement or otherwise), in a single transaction or a series of transactions,
of (x) all or a preponderance of the assets or operations of POI, or all
or any material portion of any operating division of POI or (y) all,
substantially all, or a majority of the outstanding or newly issued shares of
POI’s (or any of its Subsidiary’s) capital stock (or any securities convertible
into, or options, warrants or other rights to acquire such capital stock); in
each case, whether accomplished out-of-court or through the confirmation of any
plan of reorganization pursuant to Section 1129 of the United States
Bankruptcy Code, whether the requisite consents were obtained in-court or
out-of-court.


 


(r)            “Retirement”
means Executive’s termination of his employment on or after his attainment of
age 65.


 


(s)           “Subsidiary”
means any corporation or other entity in which POI has a direct or indirect
ownership interest of 50% or more of the total combined voting power of the
then outstanding securities or interests of such corporation or other entity
entitled to vote generally in the election of directors or in which POI has the
right to directly or indirectly receive 50% or more of the distribution of
profits or 50% or more of the assets upon liquidation or dissolution.


 


2.               Employment and Duties.


 


(a)   Term
of Employment.  The Company agrees to
employ Executive, and Executive agrees to enter into employment with the
Company, in accordance with the terms and provisions of this Agreement, for the
Term of this Agreement.  The execution of
this Agreement shall constitute acceptance by Executive and the Company that
Executive’s employment shall not terminate as a result of any Change in Control
prior to the date hereof.  Upon
termination of Executive’s employment (regardless of whether such termination
constitutes a Qualifying Termination or Non-Qualifying Termination), Executive
shall be relieved of any obligation to continue to perform the duties described
in Section 2(b) effective as of the Date of Termination.  The termination of the employment
relationship by either party for any reason or for no reason at all shall not
constitute a breach of this Agreement, but certain obligations and benefits
shall survive such termination of employment as set forth in Section 19.


 


(b)   Duties.  During the period of Executive’s employment
under this Agreement, Executive shall serve as President of the Company.  Executive shall devote Executive’s full
business time and attention to the affairs of the Company and his duties as
President of the Company.  Executive
shall have such duties as are appropriate to Executive’s position as President
of the Company, will be responsible for the financials, planning, organizing,
and directing the development of relationships with dealers providing them
state-of-the-art residential, commercial, audio, or video services, developing
management staff to oversee day to day operations and shall have such authority
as required to enable Executive to perform these duties.  Consistent with the foregoing, Executive


 


8

















 


shall comply with all reasonable instructions of the Chief Executive
Officer and boards of directors of the Company, POAMI and POI.  Executive shall report to the Chief Executive
Officer (or other officer who is a Senior Vice President or higher) of POI or
POAMI (or other parent company).  In
addition, during the period of Executive’s employment under this Agreement,
Executive may serve as an officer and/or director of a Subsidiary or
Subsidiaries if requested to do so by the Board.  Executive may resign from the board of directors
of any Subsidiaries at any time in his sole and absolute discretion.


 


3.     Term
of Agreement.  The Term of this
Agreement shall commence on the date of this Agreement and shall continue until
the earlier of (i) the first anniversary of the date of this Agreement or (ii) the
Date of Termination that results from a Qualifying Termination or
Non-Qualifying Termination.  If this
Agreement remains in effect through the first anniversary of the date of this
Agreement, it shall thereafter be automatically extended for an indefinite
number of one (1) year periods unless either party sends written notice to
the other party of its intention not to renew at least thirty (30) days prior
to expiration of said Term.  If the
election not to renew is made, this Agreement shall remain in full force and
effect for the remaining original term and any extension periods thereafter if
the original term has been renewed.  The
original term and any renewal periods thereafter are hereinafter collectively
referred to as the “Term.”  Certain
obligations and benefits shall survive the expiration of the Term as set forth
in Section 19.


 


4.               Base Salary and Benefits.


 


(a)   Base
Salary.  During the period of
Executive’s employment under this Agreement, the Company shall pay Executive an
annual base salary (“Annual Base Salary”) at an annual rate equal to not less
than One Hundred Forty Two Thousand and No/100 Dollars ($142,000.00), which
shall be reviewed annually by the Board or the Compensation Committee of the
Board.  Executive’s Annual Base Salary
shall be paid in accordance with the standard practices for other senior
corporate executives of the Company.


 


(b)   Bonuses.  Executive shall be eligible to receive
annually or otherwise any bonus awards, whether payable in cash, shares of common
stock of the Company or otherwise, which the Company, the Board, the
Compensation Committee of the Board or such other authorized committee of the
Board determines to award or grant; provided, however, that Executive shall
participate under a short-term incentive plan (subject to its terms which shall
be reasonably determined by the Board and based on targets that are reasonably
attainable) each year.


 


(c)   Benefit
Programs.  During the period of
Executive’s employment under this Agreement, Executive shall be eligible to
participate in all employee benefit plans and programs of the Company from time
to time in effect for the benefit of senior executives of the Company (subject
to meeting generally applicable participation requirements under the applicable
plan or program), including, but not limited to, retention plans, stock option
plans, restricted stock grants, 401(k) plans, group life insurance,
hospitalization and surgical and major medical coverages, sick leave, employee
stock purchase plans, car allowances, vacations and holidays, long-term
disability, and such other benefits as are or may be made available from time
to time to senior executives of the Company. 
For purposes of this Section 4(c), the term “the Company” shall
also include POAMI.   If there is a sale
in an underwritten public offering registered under the Securities Act of 1933,
as amended, of POI Voting Securities having an aggregate offering value of at
least $40 million, all of Executive’s Awards (as defined below) will fully
vest, all restrictions on such Awards shall lapse and the maximum level of
achievement of all performance criteria with respect to such Awards shall be
deemed fully satisfied.  In the case of
stock options or any other equity based Awards in the nature of a right that
may be exercised, such stock options and other equity based Awards shall remain
exercisable for three years after the Date of Termination.


 


(d)   Business
Expenses and Perquisites.  Executive
shall be reimbursed for all reasonable expenses incurred by Executive in
connection with the conduct of the business of the Company (including
reasonable travel expenses), provided Executive properly accounts therefor in
accordance with the Company’s policies. During the period of Executive’s
employment under this Agreement, Executive shall also be entitled to such other
perquisites as are customary for senior executives of the Company.


 


9

















 


(e)   Office
and Services Furnished.  During the
period of Executive’s employment under this Agreement, the Company shall make
available to Executive office space, secretarial assistance and such other
facilities and services as shall be suitable to Executive’s position and
adequate for the performance of Executive’s duties hereunder.


 


(f)    Retention
Bonus.  Executive will receive two
retention bonuses each in an amount equal to 50% of Executive’s Annual Base
Salary (with such Annual Base Salary to be determined as of the date such bonus
is paid) (“Retention Bonus”).  The first
retention bonus shall be payable if he remains continuously employed by the
Company from the date hereof through the earlier of the date of the
consummation of the Restructuring or December 31, 2004 or, if prior to the
consummation of the Restructuring or such date, as applicable, (i) he is
terminated by the Company other than for Cause, (ii) he resigns his
employment because of Good Reason or (iii) the Company does not renew the
Agreement upon expiration of the Term. 
The second retention bonus shall be payable if he remains continuously
employed by the Company from the date hereof through the earlier of the date of
the consummation of the Restructuring or December 31, 2005 or, if prior to
the consummation of the Restructuring or such date, as applicable, (i) he
is terminated by the Company other than for Cause, (ii) he resigns his
employment because of Good Reason or (iii) the Company does not renew the
Agreement upon expiration of the Term. 
Payment of any amount pursuant to this paragraph shall not reduce any
other payments or benefits to which Executive is entitled under this
Agreement.  Should the Chief Executive
Officer of POAMI and/or POI agree to forgo any portion of his Retention Bonus
for any reason at any time, Executive agrees to forgo the same percentage of
his Retention Bonus.


 


5.               Payments Upon Termination of Employment.


 


(a)   Qualifying
Termination.  If the employment of
Executive terminates pursuant to a Qualifying Termination, then:


 


(A)      within
five (5) business days following the Date of Termination, the Company
shall pay to Executive a lump-sum cash payment equal to the sum of


 


I.                 Executive’s Annual Base Salary payable through the
Date of Termination;


 


II.    bonus amounts payable to Executive for prior
fiscal years (to the extent not previously paid);


 


III.   bonus amounts not paid to Executive as a
result of Executive’s election to defer payment;


 


IV.   a pro rata portion of Executive’s annual
bonus for the fiscal year in which the Date of Termination occurs (to the
extent not previously paid) in an amount at least equal to (1) Executive’s
Bonus Amount multiplied by a fraction, the numerator of which is the number of
days in a fiscal year in which the Date of Termination occurs through the Date
of Termination and the denominator of which is three hundred sixty-five (365),
and reduced by (2) any amounts paid to Executive from the Company’s annual
incentive plan for the fiscal year in which the Date of Termination occurs; and


 


V.    the cash equivalent of any accrued Paid Time
Off; in each case to the extent not already paid.


 


(B)           within
five (5) business days following the Date of Termination, the Company
shall pay to Executive a cash lump-sum equal to Executive’s highest Annual Base
Salary during the 12-month period immediately prior to the Date of Termination,
plus Executive’s Bonus Amount;
provided, however, if a Notice of Termination is given by the Company or
Executive within four months prior to a Change in Control or one year following
a Change of Control, the Company shall pay Executive an additional lump-sum
cash payment equal to (x) .99 times Executive’s highest Annual Base Salary
during the 12-month period immediately prior to the Date of Termination plus (y) .99 times Executive’s Bonus
Amount;


 


10

















 


(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 otherwise provide, at the Company’s option, (i) such
benefits on a substantially similar basis as if continued participation had
been permitted through the Company’s benefit plans (the “Continued Benefit
Plans”) or (ii) a lump-sum cash payment based on 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 Lump-Sum Payment”).  If the Company elects to provide Executive
with Continued Benefit Plans, Executive shall cooperate with the Company and
each provider of any such Continued Benefit Plan in order for the Company to
obtain such Continued Benefit Plans for Executive, which cooperation shall
include but not be limited to providing copies of medical records and other
information required by any provider of such Continued Benefit Plan and
undergoing one or more physical examinations. 
If the Company elects to provide Executive with the Benefits Lump-Sum
Payment, the Company shall notify Executive of its intention to make this
election not later than 90 days prior to the date on which Executive’s
coverage under existing benefit plans will expire, and if, within 60 days
after Executive receives such notification from the Company, Executive presents
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 substantially similar co-payments), then the Benefits
Lump-Sum Payment shall be made based on the premiums plus any other
administrative fees (except co-payments) charged by the Company offering such
plans.  If the Company elects to provide
Executive with the Benefits Lump-Sum Payment and it is determined by the
Company that any portion of the Benefits Lump-Sum 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 Benefit Lump-Sum Payment and the
Benefits Gross-Up Payment, after reduction for any federal, state and local
income and employment taxes on the Benefits Lump-Sum Payment and the Benefits
Gross-Up Payment, shall equal the Benefits Lump-Sum 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)          all
outstanding stock options, restricted stock and other equity based awards
(collectively, “Awards”) shall fully vest, all restrictions on such Awards
shall lapse and the maximum level of achievement of all performance criteria
with respect to such Awards shall be deemed fully satisfied.  In the case of stock options or any other
equity based Awards in the nature of a right that may be exercised, such stock
options and other equity based Awards shall remain exercisable for three years
after the Date of Termination.


 


(b)   Non-Qualifying
Termination.  If the employment of
Executive terminates pursuant to a Non-Qualifying Termination, then the Company
shall pay to Executive within five (5) business days following the Date of
Termination, a lump-sum cash payment equal to the sum of (i) Executive’s
Annual Base Salary payable through the Date of Termination; (ii) bonus
amounts earned by Executive and declared and approved by the Board; and (iii) the
cash equivalent of any accrued Paid Time Off; in each case to the extent not
already paid.


 


11


















 


The Company may make such additional payments and provide
such additional benefits to Executive as the Company and Executive may agree in
writing.


 


6.               Excise Tax Gross Up.


 


(a)   Anything
in this Agreement to the contrary notwithstanding, in the event that it shall
be determined that the vesting of Awards, aggregate payments or distributions
by the Company or its affiliated companies to or for the benefit of Executive,
whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise but determined without regard to any additional
payments required under this Section 6 (a “Payment”), constitute “parachute
payments” (as such term is defined under Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”) or any successor provision, and
the regulations promulgated thereunder (collectively, “Section 280G”)) the
aggregate present value of which equals or exceeds three times Executive’s “base
amount” (as such term is defined under Section 280G) and are therefore
subject to the excise tax imposed by Section 4999 of the Code or any
successor provision (collectively, “Section 4999”) or any interest,
penalties or additions to tax with respect to such excise tax (the total excise
tax, together with any interest, penalties or additions to tax, are hereinafter
collectively referred to as the “Excise Tax”)), then Executive shall be
entitled to receive an additional payment (a “Gross-Up Payment”) in an amount
such that after payment by Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any Federal, state or local income and employment taxes and Excise Tax (and any
interest and penalties imposed with respect to any such taxes) imposed upon the
Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Payments. 
Notwithstanding the foregoing, Executive agrees to reduce the aggregate
amount of any Payments that constitute “parachute payments” to the extent
necessary so that such Payments do not equal or exceed three times Executive ‘
s “base amount”  (and therefore  are not 
subject to the excise tax imposed by Section 4999); provided,
however, that Executive shall not be required to make any such reduction if the
reduction necessary to cause such Payments not to equal or exceed three times
Executive’s “base amount” is more than $100,000.


 


(b)   Subject
to the provisions of Section 6(c) hereof, all determinations required
to be made under this Section 6, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by the Company’s
public accounting firm (the “Accounting Firm”) which shall provide detailed
supporting calculations both to the Company and Executive within fifteen (15)
business days of the receipt of notice from Executive that there has been a
Payment, or such earlier time as is requested by the Company.  In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the change in control, Executive may appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be deemed to be the Accounting Firm hereunder).  All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 6, shall be paid by the Company to Executive
within five (5) days of the receipt of the Accounting Firm’s determination
(it being understood, however, that the Gross Up Payment may, if permitted by
law, be paid directly to the applicable taxing authorities).  If the Accounting Firm determines that no
Excise Tax is payable by Executive, it shall furnish Executive with a written
opinion that failure to report the Excise Tax on Executive’s applicable federal
income tax return would not result in the imposition of a negligence or similar
penalty.  Any determination by the
Accounting Firm shall be binding upon the Company and Executive.  As a result of the uncertainty in the
application of Section 4999 at the time of the initial determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments which will
not have been made by the Company should have been made by the Company (“Underpayment”),
or that Gross-Up Payments will have been made by the Company which should not
have been made (“Overpayment”), consistent with the calculations required to be
made hereunder.  In either such event,
the Accounting Firm shall determine the amount of the Underpayment or
Overpayment that has occurred.  In the
event that the Company exhausts its remedies pursuant to Section 6(c) and
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of Executive.  In the
case of an Overpayment, Executive shall, at the direction and expense of the
Company, take such steps as are reasonably necessary (including, if reasonable,
the filing of returns and claims for refund), and otherwise reasonably
cooperate with the Company to correct such Overpayment; provided, however, that
(i) Executive shall not in any event be obligated to return to the Company
an amount greater than the net after-tax portion of the Overpayment that he has
retained or has recovered as a refund from the applicable taxing authorities 


 


12

















 


and (ii) this provision shall be interpreted in a
manner consistent with the intent of Section 6(a) hereof to make
Executive whole, on an after-tax basis, from the application of Section 4999.


 


(c)                                  Executive shall notify
the Company in writing of any claim by the Internal Revenue Service that, if
successful, would require a payment by the Company, or a change in the amount
of the payment by the Company of, the Gross-Up Payment.  Such notification shall be given as soon as
practicable after Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid; provided that the failure to give any notice
pursuant to this Section 6(c) shall not impair Executive’s rights
under this Section 6 except to the extent the Company is materially
prejudiced thereby.  Executive shall not
pay such claim prior to the expiration of the 30-day period following the date
on which Executive gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is
due).  If the Company notifies Executive
in writing prior to the expiration of such period that it desires to contest
such claim, Executive shall:


 


(i)            give the Company any information
reasonably requested by the Company relating to such claim,


 


(ii)           take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company,


 


(iii)          cooperate with the Company in good
faith in order effectively to contest such claim, and


 


(iv)          permit the Company to participate in
any proceedings relating to such claim; provided, however, that the Company
shall bear and pay directly all costs and expenses (including additional
interest, penalties or additions to tax) incurred in connection with such
contest and shall indemnify and hold Executive harmless, on an after-tax basis,
for any Excise Tax or income, employment or other tax (including interest,
penalties or additions to tax with respect thereto) imposed as a result of such
representation and payment of costs and expenses.  Without limitation on the foregoing
provisions of this Section 6(c) hereof, the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided further, that if the Company directs
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to Executive on an interest-free basis and shall
indemnify and hold Executive harmless, on an after-tax basis, from any Excise
Tax or income, employment or other tax (including interest, penalties or
additions to tax with respect to any such taxes) imposed with respect to such
advance or with respect to any imputed income with respect to such advance; and
provided further, that any extension of the statute of limitations relating to
payment of taxes for the taxable year of Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount.  Furthermore, the Company’s
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.


 


(d)           If, after the receipt by Executive of
an amount advanced by the Company pursuant to Section 6(c) hereof,
Executive becomes entitled to receive, and receives, any refund with respect to
such claim, Executive shall (subject to the Company’s complying with the
requirements of Section 6(c) hereof) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto).  If,
after the receipt by Executive of an amount advanced by the Company pursuant to
Section 6(c), a determination is made that Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify
Executive in writing of its intent to contest such denial of refund prior to
the expiration of thirty (30) days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.


 


13

















 


7.     Non-Competition.  Executive hereby acknowledges that the
services which he will perform for the Company are of a special and unique
nature, and that the Company would find it extremely difficult or impossible to
replace Executive.  Accordingly,
Executive agrees that, in consideration of this Agreement and the payments to
be received by him hereunder, from and after the date hereof through the period
during which Executive continues to be employed by the Company and following
termination of Executive’s employment for any reason until the first
anniversary (or the second anniversary in the event Executive is entitled to
payments under Sections 5(a)(B)(x) and (y)) of such termination of
employment (the “Non-Competition Period”), Executive shall not, directly or
indirectly, own, manage, operate, join, control or participate in the
ownership, management, operation or control of, or be connected as a director,
officer, employee, partner, lender, consultant or otherwise (“Participate” or a
“Participation”) with any Competitor (as hereinafter defined), except with the
Company’s prior written consent.  For
purposes of this Agreement, the term “Competitor” shall mean any entity engaged
in the business of providing property monitoring services with revenue in
excess of One Million Dollars ($1,000,000) during the most recent twelve (12)
month period for which financial statements are available.  Nothing in this section shall prohibit
Executive from owning for investment purposes an aggregate of up to 3% of the
publicly traded securities of any corporation listed on the New York Stock
Exchange or American Stock Exchange or whose securities are quoted on the
NASDAQ National Market.  Notwithstanding
anything which may be to the contrary herein, Executive shall not be required
to cease Participation in any business or organization which begins to compete
with the  Company subsequent to the time
Executive commences such Participation, provided
that such business or organization began to compete with the Company
through no action, assistance, or plan of Executive.


 


It is the desire
and intent of the parties that the provisions of this Section 7 shall be
enforced under the laws and public policies applied in each jurisdiction in
which enforcement is sought.  Accordingly,
if any particular provision of this Section 7 is adjudicated to be invalid
or unenforceable or shall for any reason be held to be excessively broad as to
duration, geographic scope, activity or subject, it shall be construed by
limiting and reducing it, so as to be enforceable to the extent compatible with
applicable law and such provision shall be deemed modified and amended to the
extent necessary to render such provision enforceable in such jurisdiction.


 


If Executive
challenges the enforceability of the provisions of this Section 7 in whole
or in part as to any Competitors, Executive shall, immediately upon such
challenge, forfeit any right to any payments and benefits under Section 5(a) or
5(b) that he has not already received.


 


8.               Confidential Information.  Executive acknowledges that:


 


(a)   the
business of the Company and its Subsidiaries and affiliates is intensely
competitive and that Executive’s engagement by the Company requires that
Executive have access to and knowledge of confidential information of the
Company and its Subsidiaries and affiliates, including, but not limited to, the
identity of customers, the identity of the representatives of customers with
whom the Company and its Subsidiaries and affiliates have dealt, the kinds of services
provided by the Company and its Subsidiaries and affiliates to customers and
offered to be performed for potential customers, the manner in which such
services are performed or offered to be performed, the service needs of actual
or prospective customers, pricing information, information concerning the
creation, acquisition or disposition of products and services, customer
maintenance listings, computer software applications and other programs,
personnel information and other trade secrets (the “Confidential Information”);


 


(b)   the
direct or indirect disclosure of such Confidential Information to existing or
potential competitors of the Company and its Subsidiaries  and affiliates would place the Company and
its Subsidiaries and affiliates at a competitive disadvantage and would do
damage, monetary or otherwise, to the business of the Company and its
Subsidiaries and affiliates; and


 


(c)   the
engaging by Executive in any of the activities prohibited by this Section 8
may constitute improper appropriation and/or use of such information and trade
secrets.


 


Notwithstanding
the foregoing, Confidential Information shall not include information which (x) is
or becomes part of the public domain through a source other than Executive, (y) is
or becomes available to Executive from a source independent of the Company and
its Subsidiaries and affiliates, or (z) constitutes general industry
knowledge possessed by Executive by virtue of Executive’s employment with the
Company.  Executive expressly
acknowledges the trade secret status of the Confidential Information and that
the Confidential Information 


 


14

















 


constitutes a protectable
business interest of the Company and its Subsidiaries and affiliates.  Accordingly, the Company and Executive agree
as follows:


 


(A)          During
the Non-Competition Period, Executive shall not, directly or indirectly,
whether individually, as a director, stockholder, owner, partner, employee,
principal or agent of any business, or in any other capacity, make known,
disclose, furnish, make available, or use any of the Confidential Information,
other than in the proper performance of the duties contemplated herein or
requested by the Company, or as required by law or by a court of competent
jurisdiction or other administrative or legislative body; provided, however, that prior to
disclosing any of the Confidential Information to a court or other
administrative or legislative body, Executive shall promptly notify the Company
so that the Company may seek a protective order or other appropriate remedy.


 


(B)           Executive
agrees to return all computer hardware and all Confidential Information,
including all photocopies, extracts and summaries thereof, and any such
information stored electronically on tapes, computer disks or in any other
manner to the Company at any time upon request of the Chairman of the Board or
the Chief Executive Officer of the Company and upon the termination of
Executive’s employment for any reason.


 


9.     Nonsolicitation.  During the Non-Competition Period, Executive
shall not, directly or indirectly, solicit, interfere with, hire, offer to hire
or induce any person who is an employee of the Company or any of its
Subsidiaries or affiliates and whose salary is in excess of $50,000 to discontinue
his or her relationship with the Company or any of its Subsidiaries or
affiliates and accept employment by, or enter into a business relationship
with, Executive or any other person or entity; provided,
however, that this provision shall not apply to solicitation by
general advertising.


 


10.         Antidisparagement.


 


(a)   Unless
otherwise required by a court of competent jurisdiction, pursuant to any
recognized subpoena power or by any applicable law, rule or regulation,
Executive agrees and promises that Executive shall not make any oral or written
statements or reveal any information to any person, company or agency which (i) is
materially negative, disparaging or damaging to the name, reputation or
business of the Company or any of its Subsidiaries or affiliates, or any of
their shareholders, directors, officers or employees, or (ii) has or would
have a materially negative financial impact, whether directly or indirectly, on
the Company or any of its Subsidiaries and affiliates, or any of their
shareholders, directors, officers or employees; provided that this subsection (ii) shall not be
deemed to have been violated by statements or releases of information by
Executive during the period of his employment under this Agreement which
Executive believes to be truthful and which are made in the performance of his
duties under this Agreement.


 


(b)   Unless
otherwise required by a court of competent jurisdiction, pursuant to any
recognized subpoena power or by any applicable law, rule or regulation,
the Company agrees and promises that neither it nor any of its Subsidiaries and
affiliates shall make any oral or written statements or reveal any information
to any person, company or agency which (i) is materially negative,
disparaging or damaging to the name, reputation or business of Executive or (ii) has
or would have a negative financial impact whether directly or indirectly, on
Executive.


 


11.         Injunctive Relief.


 


(a)   Executive
acknowledges that a breach of the undertakings in Sections 7, 8, 9 or 10(a) of
this Agreement would cause irreparable damage to the Company and its
Subsidiaries and affiliates, the exact amount of which shall be difficult to
ascertain, and that remedies at law for any such breach would be
inadequate.  Executive agrees that, if
Executive breaches or attempts or threatens to breach any of the undertakings
in Sections 7, 8, 9 or 10(a) of this Agreement, then the Company
shall be entitled to injunctive relief without posting bond or other security,
in addition to any other remedy or remedies available to the Company at law or
in equity.


 


(b)   The
Company acknowledges that a breach of the undertakings in Section 10(b) of
this Agreement would cause irreparable damage to Executive, the exact amount of
which shall be difficult to ascertain, and that


 


15

















 


remedies at law for any such breach would be
inadequate.  The Company agrees that, if
the Company or any of its Subsidiaries 
or affiliates breaches or attempts or threatens to breach any of the
undertakings in Section 10(b) of this Agreement, then Executive shall
be entitled to injunctive relief, without posting bond or other security, in
addition to any other remedy or remedies available to Executive at law or in
equity.


 


12.   Withholding
Taxes.  The Company may withhold from
all payments due to Executive (or his beneficiary or estate) hereunder all
taxes which, by applicable federal, state, local or other law, the Company is
required to withhold therefrom. 
Executive has represented that he is and will continue to be a resident
of the State of Texas for all purposes.


 


13.   Directors
and Officers Insurance; Indemnity. 
The Company, POAMI, and POI shall take all steps necessary to ensure
that Executive is covered under any directors and officers liability insurance
policy in effect from time to time for current and former directors and
officers of the Company, POAMI, and POI. 
In addition, the Company, POAMI, and POI shall hold harmless and
indemnify Executive against any and all expenses (including attorneys’ fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by Executive in connection with any threatened, pending, or completed
action, suit, or proceeding whether civil, criminal, administrative, or
investigative (including an action by or in the right of the corporation) to
which Executive is, was, or at any time becomes a party, or is threatened to be
made a party, by reason of the fact that Executive is, was, or at any time
becomes a director, officer, employee or agent of the Company, or is or was
serving, or at any time serves at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise; or otherwise to the fullest extent as may be provided
to Executive by the Company under the provisions of the Bylaws and the Articles
of Incorporation of the Company and Delaware law.


 


14.   Scope
of Agreement.  Nothing in this
Agreement shall be deemed to entitle Executive to continued employment with the
Company, POAMI, or POI or their Subsidiaries or shall require Executive to
continue the employment relationship against his wishes; provided, however, that any termination of
Executive’s employment during the Term of this Agreement shall be subject to
all of the provisions of this Agreement as provided in Section 19.


 


15.         Successors; Binding Agreement.


 


(a)   This
Agreement shall inure to the benefit of and be legally binding upon all
successors and assigns of the Company, POAMI, and POI.  The Company, POAMI, and POI will require a
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company and/or POAMI and/or POI, by agreement in form and substance satisfactory
to Executive, to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company, POAMI, and POI would be
required to perform it if no such succession had taken place.  For purposes of this Section 15(a), references
to Company, POI or POAMI shall mean the Company, POI or POAMI, respectively, as
defined above and all successors to its business or assets that execute and
deliver the agreement provided for in this Section 15(a) or that
otherwise become bound by the terms and provisions of this Agreement by
operation of law


 


(b)   This
Agreement shall inure to the benefit of and be enforceable by Executive’s
personal or legal representatives, executors, administrators, successors,
heirs, distributes, devisees and legatees. 
If Executive shall die while any amounts would be payable to Executive
hereunder had Executive continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement
to such person or persons appointed in writing by Executive to receive such
amounts or, if no person is so appointed, to Executive’s estate.


 


16

















 


16.         Notice.


 


(a)   For
purposes of this Agreement, all notices and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given when delivered or five (5) days after deposit in the United States
mail, certified and return receipt requested, postage prepaid, addressed as
follows:


 


	
  If to Executive:

  	
   

  	
  Anthony Wilson

  
	
   

  	
   

  	
  396 Caddie Drive

  
	
   

  	
   

  	
  Debary, FL 32713

  
	
   

  	
   

  	
   

  
	
  If to the
  Company:

  	
   

  	
  Protection
  One, Inc.

  
	
   

  	
   

  	
  818 S. Kansas
  Avenue

  
	
   

  	
   

  	
  Topeka, KS 66612

  
	
   

  	
   

  	
  Attention:
  General Counsel

  



 


or to such other address as either party may have furnished
to the other in writing in accordance herewith, except that notices of change
of address shall be effective only upon receipt.


 


(b)               A written notice of Executive’s Date of Termination by the
Company or Executive, as the case may be, to the other, shall (i) indicate
the specific termination provision in this Agreement relied upon, (ii) to
the extent applicable, set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive’s
employment under the provision so indicated, and (iii) specify the Date of
Termination.  The failure by Executive or
the Company to set forth in such notice any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
Executive or the Company hereunder or preclude Executive or the Company from
asserting such fact or circumstance in enforcing Executive’s or the Company’s
rights hereunder.


 


17.   Full
Settlement; Resolution of Disputes. 
The Company’s obligation to make any payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall be in lieu
and in full settlement of all other severance payments to Executive under any
other severance or employment agreement between Executive and the Company, and
any severance plan of the Company.  In no
event shall Executive be obligated to seek other employment or take other
action by way of mitigation of the amounts payable to Executive under any of
the provisions of this Agreement and except as otherwise provided in Section 5
(a)(iii), such amounts shall not be reduced whether or not Executive obtains
other employment. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Wilmington,
Delaware by three arbitrators in accordance with the rules of the American
Arbitration Association then in effect. 
Judgment may be entered on the arbitrators’ award  in any court having jurisdiction.  The arbitrators shall determine the
allocation of the costs and expenses arising in connection with any arbitration
proceeding pursuant to this section based on the arbitrator’s assessment of the
merits of the positions of the parties.


 


18.   Employment
with Subsidiaries.  Employment with
the Company for purposes of this Agreement shall include employment with any
Subsidiary.


 


19.   Survival.  The respective obligations and benefits
afforded to the Company and Executive as provided in Sections 1, 5, 6, 7, 8, 9,
10, 11, 12, 13, 15, 17, 19, 20, 22, 23, 24 and 25 shall survive the termination
of this Agreement.


 


20.   GOVERNING
LAW; VALIDITY.  THE INTERPRETATION,
CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT 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 AGREEMENT SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF
ANY OTHER PROVISION OF THIS AGREEMENT, WHICH OTHER PROVISIONS SHALL REMAIN IN
FULL FORCE AND EFFECT.


 


17

















 


21.   Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.


 


22.   Miscellaneous.  No provision of this Agreement may be
modified or waived unless such modification or waiver is agreed to in writing
and signed by Executive and by a duly authorized officer of the Company.  No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior to subsequent time. 
Failure by Executive or the Company to insist upon strict compliance
with any provision of this Agreement or to assert any right Executive or the
Company may have hereunder, including without limitation, the right of
Executive to terminate employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.  Except as otherwise
specifically provided herein, the rights of, and benefits payable to, Executive,
his estate or his beneficiaries pursuant to this Agreement are in addition to
any rights of, or benefits payable to, Executive, his estate or his
beneficiaries under any other employee benefit plan or compensation program of
the Company.


 


23.   No
Mitigation.  The amounts payable to
Executive upon any termination of his employment shall be considered severance
pay in consideration of past services rendered on behalf of the Company and his
continued service from the date hereof to the date he becomes entitled to such
payments and shall be the sole amount of severance pay to which Executive is
entitled from the Company and its affiliates upon termination of his
employment.  Executive shall have no duty
to mitigate his damages by seeking other employment and, should Executive
actually receive compensation from any such other employment, the payments
required hereunder shall not be reduced or offset by any such other
compensation.


 


24.   POAMI’s
and POI’s Obligations.  All of the
obligations of the Company hereunder shall also be direct obligations of POAMI
and POI without the need for Executive to seek or exhaust remedies against the
Company.


 


25.   Entire
Agreement.  This Agreement
constitutes the entire agreement of the parties with respect to its subject
matter and supersedes and replaces all previous verbal or written agreements
that the parties may have made, including the Prior Employment Agreement.


 


[Remainder
of page intentionally left blank. 
Signatures on next page.]


 


18

















 


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


 


	
   

  	
  PROTECTION
  ONE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Ginsburg

  
	
   

  	
  Its:

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PROTECTION
  ONE ALARM MONITORING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Ginsburg

  
	
   

  	
  Its:

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SECURITY
  MONITORING SERVICES

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Ginsburg

  
	
   

  	
  Its:

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anthony Wilson

  
	
   

  	
   

  	
  Anthony Wilson