Exhibit 10.5


 


2008 PROTECTION ONE, INC. LONG TERM INCENTIVE PLAN


 


RESTRICTED SHARES AWARD AGREEMENT


 


	
   

  	
  Grantee:

  
	
   

  	
   

  
	
   

  	
  Number
  of Shares:

  
	
   

  	
   

  
	
   

  	
  Date
  of Grant:

  



 


1.             Award of Restricted Shares.
Protection One, Inc. (the “Company”), hereby awards to
                
(“Grantee”), under its 2008 Protection One, Inc. Long Term Incentive Plan
(the “Plan”),
             shares
(“Restricted Stock”) of its Common Stock (“Common Stock”), par value $.01 per
share, to be held as Restricted Stock under the terms of the Plan and this
Restricted Shares Award Agreement (“Agreement”).  The Plan is incorporated herein by reference
and made a part of this Agreement.


 


2.             Definitions.  Capitalized terms not defined herein shall
have the respective meanings set forth in the Plan.  The following words and phrases shall have
the following meanings:


 


“Cause”
shall have the meaning provided in the Amended and Restated Employment
Agreement dated as of the date hereof by and between the Company and Grantee
(the “Employment Agreement”).


 


“Change
of Control” shall have the meaning provided in the Plan that occurs in
connection with or following a Qualified Sale (as defined in the Employment
Agreement).


 


“Change
of Control Price” shall have the meaning provided in the Plan.


 


“Disability”
means the permanent and total disability of a person within the meaning of Section 22(e)(3) of
the Code.


 


“Good
Reason” shall have the meaning provided in the Employment Agreement.


 


“Qualifying
Termination” shall have the meaning provided in the Employment Agreement.


 


“Restricted Period” means the period of time during which all or part
of the Restricted Stock awarded under this Agreement to the Grantee would be
forfeited under Section 4 of this Agreement.  The Restricted Period shall end on the date
the Grantee becomes 100% vested in the Restricted Stock.


 


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


 


“Vested Portion” shall be determined by multiplying the number of
shares of Common Stock awarded as Restricted Stock to the Grantee by the
applicable vesting percentage contained in Section 3 below.


 


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3.             Vesting of Restricted Stock.


 


(a)           Subject to acceleration of vesting
pursuant to Section 3(b), one-half (1/2), or fifty percent (50%), of the
Restricted Stock shall vest on the second anniversary of the Date of Grant and
the remaining one-half (1/2), or fifty percent (50%), of the Restricted Stock
shall vest on the third anniversary of the Date of Grant (each such date, a “Vesting
Date”).


 


(b)           Notwithstanding the foregoing or any
other provision hereof to the contrary (except as provided in this Section 4),
upon the occurrence of a Change of Control all of the outstanding unvested
Restricted Stock shall vest, and the Company shall make a payment of cash to
Grantee on the date of the Change of Control that is equal to the Change of
Control Price times the number of shares of unvested Restricted Stock
outstanding immediately prior to the Change of Control, less any withholding
taxes in accordance with Section 10(b), and such Restricted Stock shall
thereby be repurchased and shall automatically, without further action, be
cancelled and shall no longer be issued and outstanding.


 


4.             Risk of Forfeiture.


 


Unvested
Restricted Stock shall be subject to forfeiture due to termination of Grantee’s
employment with the Company, its Subsidiaries or Affiliates (collectively, the “Employer”)
as provided below.


 


(a)           Voluntary
Termination of Employment. If Grantee voluntarily terminates employment
with the Employer other than for Good Reason: (1) all vesting with respect
to the Restricted Stock shall cease and (2) any unvested Restricted Stock
shall be forfeited by Grantee as of the date of such termination, and such
forfeited shares shall automatically, without further action, be cancelled and
shall no longer be issued and outstanding.


 


(b)           Qualifying
Termination.  If Grantee’s
termination of employment is a Qualifying Termination: (1) all vesting of
the Restricted Stock shall cease; provided that any unvested Restricted Stock
shall remain subject to the vesting upon a Change in Control and to the
repurchase provisions of Section 3(b) until the earlier of (x) 90
days after the date of such termination (or the date of such termination, if such
date is after the second anniversary of the Date of Grant) or (y) the
second anniversary of the Date of Grant, and (2) any unvested Restricted
Stock shall be forfeited by Grantee upon the earlier of (x) 90 days after
the date of such termination (or the date of such termination, if such date is
after the second anniversary of the Date of Grant) or (y) the second
anniversary of the Date of Grant, and such forfeited shares shall
automatically, without further action, be cancelled and shall no longer be issued
and outstanding.


 


(c)           Termination of
Employment — Death, Disability or Retirement. If Grantee’s employment with
the Company terminates by reason of Grantee’s death, Disability or Retirement, (1) all
vesting with respect to the Restricted Stock shall cease and (2) any
unvested Restricted Stock shall be forfeited by Grantee as of the date of such
termination,


 


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and
such forfeited shares shall automatically, without further action, be cancelled
and shall no longer be issued and outstanding.


 


(d)           Termination for
Cause. If Grantee’s employment with the Company is terminated by the
Company for Cause, the unvested Restricted Stock shall be forfeited by Grantee
as of the date of such termination, and such forfeited shares shall
automatically, without further action, be cancelled and shall no longer be
issued and outstanding.


 


5.             Retention of Restricted Stock.  For purposes of facilitating the enforcement
of the provisions of this Agreement, the shares of Restricted Stock may, at the
election of the Company, be held in book entry form by the Company’s transfer
agent.  If the Company elects to issue
certificate(s) representing the shares of Restricted Stock, such
certificate(s) shall be held in custody by the Company until such shares
have vested in accordance with Section 3. 
Certificate(s) representing unvested shares of Restricted Stock
shall contain a legend that indicates that such shares are restricted by and
otherwise subject to this Agreement.  The
Company may take all such actions as are necessary, including by providing
instructions that the Company deems appropriate to the transfer agent, to
insure that all transfers and/or releases are made in accordance with the terms
of the Plan and this Agreement.  The
Common Stock shall not be delivered to Grantee so long as the shares of
Restricted Stock are not vested.  Grantee
also agrees to deliver a stock power in the form attached to this Agreement as Exhibit A
executed by Grantee in blank, to the Company (to the attention of the Secretary
of the Company, or the Secretary’s designee), to hold such Stock Power and to
take all such actions and to effectuate all such transfers and/or releases as
are required in accordance with the terms of this Agreement. Grantee agrees
that the Company shall not be required to deliver a certificate for the Common
Stock until the shares of Restricted Stock become vested.


 


6.             Release of Shares.  Stock certificates representing outstanding
shares of Restricted Stock that have vested in accordance with Section 3(a) will
be delivered by the Company reasonably promptly upon request by the Grantee.


 


7.             Stop-Transfer Orders.  Grantee
agrees that, in order to ensure compliance with the restrictions referred to
herein, the Company may issue appropriate “stop transfer” instructions to its
transfer agent, if any, and that, if the Company transfers its own securities,
it may make appropriate notations to the same effect in its own records.


 


8.             Restrictions on Transfer of
Non-Vested Shares.  Prior to vesting,
the Restricted Stock awarded under the Plan, and any right or interest of the
Grantee therein, including the right to vote such non-vested shares and to
receive dividends thereon, may not be sold, assigned, transferred, exchanged,
pledged, hypothecated, or otherwise encumbered during the Restricted Period to
or in favor of any party other than the Company or a Subsidiary, and no such
sale, assignment, transfer, exchange, pledge, hypothecation, or encumbrance,
whether made or created by voluntary act of the Grantee or of any agent of such
Grantee or by operation of law, shall be recognized by, or be binding upon, or
shall in any manner affect the rights of, the Company during the Restricted
Period.  The Company shall not be
required (i) to transfer on its books any unvested Restricted Stock that
has been sold or otherwise transferred in violation of any of the provisions of
this Agreement, or (ii) to treat as owner of such unvested shares or to
accord the right to vote or pay dividends to any


 


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purchaser
or other transferee to whom such unvested shares shall have been so
transferred. These restrictions shall not apply to the Vested Portion of the
Grantee’s Restricted Stock.


 


9.             Rights of Grantee During
Restricted Period.  Except as
otherwise provided in this Agreement, the Plan, or in any applicable
shareholder agreement, the Grantee shall, during the Restricted Period, have
all of the other rights of a stockholder with respect to outstanding shares of
unvested Restricted Stock awarded to the Grantee including, but not limited to,
the right to receive such cash dividends, if any, as may be declared on such
shares from time to time, and the right to vote (in person or by proxy) such
shares at any meeting of stockholders of the Company.  Any stock dividends declared with respect to
unvested Restricted Stock shall be subject to the same terms and conditions as
the unvested Restricted Stock with respect to which such stock dividends are
issued.


 


10.           Withholding of Taxes.


 


(a)           Participant
Election.  Grantee may elect in a
writing delivered to the Employer prior to the applicable Vesting Date to have
the Company withhold shares of Common Stock deliverable upon vesting of the
Restricted Stock to satisfy, in whole or in part, the amount, if any, the
Employer is required to withhold for taxes in connection with the award of the
Restricted Stock or other securities pursuant to this Agreement; provided,
however, the amount of shares of Common Stock shall have a Fair Market Value as
of the applicable Vesting Date not to exceed the amount determined by the
Company to be the applicable minimum statutory withholding rates.  Such election must be made on or before the
date the amount of tax to be withheld is determined.  Once made, the election shall be
irrevocable.  The fair market value of
the shares to be withheld or delivered will be the Fair Market Value as of the
date the amount of tax to be withheld is determined.


 


(b)           Company
Requirement.  The Employer, to the
extent permitted or required by law, shall have the right to deduct from any
payment of any kind otherwise due to Grantee (including shares of Common Stock
deliverable upon vesting of the Restricted Stock), an amount equal to any
federal, state or local taxes of any kind required by law to be withheld in
connection with the award or the vesting thereof of the Restricted Stock or
other securities pursuant to this Agreement not to exceed the amount determined
by the Company to be the applicable minimum statutory withholding rates.  Notwithstanding anything to the contrary in
this Agreement, the Employer will deduct from any cash payment made pursuant to
Section 3(b) of this Agreement, an amount equal to any federal, state
or local taxes of any kind required by law to be withheld in connection with
the cash payment not to exceed the amount determined by the Company to be the
applicable minimum statutory withholding rates.


 


11.           Stock Power.  By election or otherwise, should the Company
withhold any of Grantee’s Restricted Stock to satisfy the Grantee’s withholding
tax obligation pursuant to Section 10 of this Agreement, the Grantee does
hereby irrevocably constitute and appoint the Company as Grantee’s
Attorney-in-Fact to effectuate such transfer and record the same on the books
and records of the Company.


 


12.           Rights
of Participants.  Nothing in this
Agreement shall in any way confer upon


 

















 


Grantee any right to continue as an employee of, or
in the performance of other services for, the Employer for any period of time,
or to continue Grantee’s present (or any other) rate of compensation or level
of responsibility.  Nothing in this
Agreement shall confer upon Grantee any right to be selected again as a
Participant.


 


13.          Conformity with Plan.  The Restricted Stock is intended to conform
in all respects with, and are subject to all applicable provisions of, the Plan
(which is incorporated herein by reference). 
Inconsistencies between this Agreement and the Plan shall be resolved in
accordance with the terms of the Plan.  By executing and returning the enclosed copy
of this Agreement, Grantee acknowledge Grantee’s receipt of this Agreement and
the Plan and agree to be bound by all of the terms of this Agreement and the
Plan.


 


14.           Amendment or Substitution of
Restricted Stock.  The terms of the
Restricted Stock may be amended from time to time by the Committee in its
discretion in any manner that it deems appropriate; provided  that,
no such amendment shall adversely affect in a material manner any of Grantee’s
rights under the Agreement without Grantee’s written consent.


 


15.           Successors.  This Agreement shall be binding upon any
successor of the Company, in accordance with the terms of this Agreement and
the Plan.


 


16.           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 prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.


 


17.           Counterparts.  This Agreement may be executed simultaneously
in two or more counterparts, each of which shall constitute an original, but
all of which taken together shall constitute one and the same Agreement.


 


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


 


19.           Governing
Law. THE VALIDITY, CONSTRUCTION, INTERPRETATION, ADMINISTRATION AND EFFECT
OF THE PLAN, AND OF ITS RULES AND REGULATIONS, AND RIGHTS RELATING TO THE PLAN
AND TO THIS AGREEMENT, SHALL BE GOVERNED BY THE SUBSTANTIVE LAWS, BUT NOT THE
CHOICE OF LAW RULES, OF THE STATE OF DELAWARE.


 


20.           Notices.  All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when (i) delivered
personally, (ii) mailed by certified or registered mail, return receipt
requested and postage prepaid, (iii) sent by facsimile or (iv) sent
by reputable overnight courier, to the recipient.  Such notices, demands and other
communications shall be sent to Grantee at the address specified in this
Agreement and to the Company at 4221 West John Carpenter Freeway, Irving, Texas
76053, Attn: General Counsel, or to such other address or to


 

















 


the
attention of such other person as the recipient party has specified by prior
written notice to the sending party.


 


21.           Entire
Agreement.  This Agreement and the
terms of the Plan constitute the entire understanding between Grantee and the
Company, and supersede all other agreements, whether written or oral, with
respect to Grantee’s grant of the Restricted Stock.


 


22.           Relation to Other Benefits.  Any economic or other benefit to Grantee
under this Plan shall not be taken into account in determining any benefits to
which Grantee may be entitled under any retirement or other benefit or
compensation plan maintained by the Company or any other Employer.  Provided, however, for the avoidance of
doubt, that this section  shall not be
construed to affect or modify the application of Section 6 of the
Employment Agreement.


 


*         *         *         *         *


 

















 


Signature
Page to Restricted Shares Award Agreement


 


Please
execute the extra copy of this Agreement in the space below and return it to
the Company to confirm your understanding and acceptance of the agreements
contained in this Agreement.


 


	
   

  	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PROTECTION
  ONE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Enclosures:

  	
  1.

  	
  Extra
  copy of this Agreement

  
	
   

  	
  2.

  	
  Copy
  of the Plan attached hereto as Exhibit B

  
					



 


The
undersigned hereby acknowledges having read this Agreement and the Plan and
hereby agrees to be bound by all provisions set forth herein and in the Plan.


 


 


	
  Dated
  as of:

  	
   

  	
  GRANTEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  



 

















 


EXHIBIT A


 


STOCK POWER


 


FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
the unvested shares of Restricted Stock granted to me pursuant to the
Restricted Shares Award Agreement between Protection One, Inc. (the “Company”)
and me dated as of
              ,
2010 (“Restricted Shares Award Agreement”), to
                            
and does hereby irrevocably constitute and appoint the Company as the
undersigned’s attorney to transfer the unvested shares of Restricted Stock with
full power of substitution in the premises.


 


This Stock Power may be used in accordance with the terms of the
Restricted Shares Award Agreement.


 


Date:
                  ,           


	
   

  	
  Signature: