Exhibit 10.1


EXECUTION


FIRST AMENDMENT

DATED AS OF MARCH
13, 2007


This FIRST AMENDMENT (this “Amendment”) is
entered into among PROTECTION ONE, INC., a Delaware corporation (“Holdings”),
PROTECTION ONE ALARM MONITORING, INC., a Delaware corporation (the “Borrower”),
the lenders party hereto and BEAR STEARNS CORPORATE LENDING INC., as
administrative agent (in such capacity, the “Administrative Agent”).


PRELIMINARY STATEMENTS


1.             Reference is made to the Amended and Restated
Credit Agreement dated as of April 26, 2006 (the “Credit Agreement”),
among Holdings, the Borrower, the lenders party thereto, the Lead Arranger, the
Initial Lead Arrangers, the Syndication Agent, the Initial Syndication Agent,
the Co-Documentation Agents and the Administrative Agent.  Capitalized terms used but not otherwise
defined herein are used with the meanings given in the Credit Agreement as
amended hereby.


2.             Holdings and the Borrower have requested that
the Credit Agreement be amended as herein set forth to provide for: (a) the consummation
of the acquisition by Holdings of all the issued and outstanding capital
stock of Integrated Alarm Services Group Inc., a Delaware corporation (“IASG”),
(b) the issuance by the Borrower of 12% Senior Secured Notes due 2011 (the “Second
Lien Notes”) pursuant to an indenture (the “Second Lien Indenture”)
among Holdings, the Borrower,
the Subsidiary Guarantors party thereto and Wells Fargo Bank, N.A., as trustee,
and the granting of second priority security interests in favor of the holders
thereof, in exchange for IASG’s outstanding 12% Senior Secured Notes due 2011
(the “IASG Notes”), (c)
the guarantee by IASG and its Subsidiaries of the Borrower’s obligations under
the Credit Agreement, (d) the guarantee and granting of second priority
security interests by Holdings and the Subsidiary Guarantors to the holders of
the Second Lien Notes subject to the Intercreditor Agreement, (e) adjustment of
financial covenants and (f) amendment of negative covenants in order to reflect
the increased size of the Loan Parties and activities of IASG.


3.             To the extent the Repricing Effective Date
(as defined below) occurs, each existing Lender with a Term Commitment or with
outstanding Term Loans (an “Existing Term Lender”) that executes and
delivers a signature page to this Amendment specifically in the capacity of a “Continuing
Lender” (a “Continuing Lender”) will be deemed upon the Repricing
Effective Date to have agreed to the terms of this Amendment and to have made a
commitment to make Tranche B Term Loans in an aggregate principal amount up to,
but not in excess of, the aggregate principal amount of such Existing Term
Lender’s outstanding Term Loans immediately prior to the Repricing Effective
Date (“Existing Term Loans”). 
Each Existing Term Lender that executes and delivers this Amendment
solely in the capacity as an Existing Term Lender and not specifically as a
Continuing Lender shall be deemed to have agreed to this Amendment, but will
not be deemed by virtue of such execution and delivery to have undertaken any
commitment to make Tranche B Term Loans.


4.             To the extent the Repricing Effective Date
(as defined below) occurs, each Person (other than a Continuing Lender in its
capacity as such) that agrees to make Tranche B Term Loans (an “Additional
Lender”) will, on the Repricing Effective Date, make such Tranche B Term
Loans to the Borrower in the manner contemplated by Section 3.  The cash proceeds to the Borrower of any such
Tranche B Term Loans will be used solely to repay in full the outstanding
principal amount of Existing Term Loans of Existing Term Lenders (other than
any such Existing Term Loans refinanced pursuant to an exchange thereof for
Tranche B Term Loans as provided herein) and to pay fees and expenses in
connection with such prepayments and with this Amendment.













5.             Each of the Required Lenders party hereto and
the Administrative Agent are willing to enter into the amendments set forth
herein, and the Continuing Lenders and the Additional Lenders are willing to
make Tranche B Term Loans as contemplated hereby, in each case on the terms and
subject to the conditions of this Amendment.


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


SECTION 1.           Repricing
Amendments.  Subject to the satisfaction of the conditions
set forth in Section 2 hereof, the Credit Agreement is amended as follows:


(a)           The following new definitions are hereby added to Section 1.1 of the
Credit Agreement in the appropriate alphabetical order:


“Additional Lender”:  as
defined in the First Amendment.


“First Amendment”:  that certain First Amendment, dated as of
March 13, 2007, by and among Holdings, the Borrower, the lenders party thereto
and the Administrative Agent.


“Loan Documents”:  this Agreement, the First Amendment, the
Security Documents, the Reaffirmation Agreement and the Notes.


“Repricing Effective Date”:  as defined in the First Amendment


“Repricing Transaction” means (i) the
incurrence by the Borrower or any of its Subsidiaries of a new tranche of
replacement term loans under this Agreement (including by way of conversion of
Tranche B Term Loans into any such new tranche of replacement term loans) (x)
having an effective interest rate margin for the respective Type of Loan that
is less than the Applicable Margin for Tranche B Term Loans of the respective
Type of Loan and (y) the proceeds of which are used to repay, in whole or in
part, principal of outstanding Tranche B Term Loans (it being understood that a
conversion of Tranche B Term Loans into any such new tranche of replacement
term loans shall constitute a repayment of principal of outstanding Tranche B
Term Loans), and/or (ii) any amendment, waiver or other modification to this
Agreement which would have the effect of reducing the Applicable Margin for
Tranche B Term Loans.


“Tranche B Term Commitment”: 
as defined in the First Amendment.


“Tranche B Term Lenders”: 
as defined in the First Amendment.


“Tranche B Term Loans” :  as defined in the First Amendment.


(b)           The
following definitions contained in Section 1.1 of the Credit Agreement are
hereby amended and restated as follows:


“Applicable Margin”:  for each Type of Loan, the rate per annum set
forth under the relevant column heading below:


	
   

  	
   

  	
  Eurodollar Loans

  	
   

  	
  Base Rate Loans

  	
   

  
	
  Term Loans

  	
   

  	
  2.25

  	
  %

  	
  1.25

  	
  %

  



 



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The Applicable Margin with
respect to Revolving Loans and Swingline Loans will be determined pursuant to
the Pricing Grid.


“Continuing Lenders”:  as defined in the First Amendment.


(c)           Section
2.1 of the Credit Agreement is hereby deleted in its entirety and replaced with
the following:


2.1        Term Commitments.             (a) Each Lender having a Tranche B Term
Commitment severally agrees, pursuant to the First Amendment, to make a Tranche
B Term Loan or Tranche B Term Loans on the Repricing Effective Date to the
Borrower in Dollars, which Tranche B Term Loans shall not exceed for any such
Lender the Tranche B Term Commitment of such Lender as of the Repricing
Effective Date, provided that each Continuing Lender having a Tranche B
Term Commitment shall make Tranche B Term Loans on the Repricing Effective Date
by exchanging its existing term loans designated as “Term Loans” under the
Credit Agreement immediately prior to the Repricing Effective Date for Tranche
B Term Loans in the manner contemplated by Section 3 of the First
Amendment.  On and after the Repricing
Effective Date, all references to “Term Loans”, Term Commitments” and “Term
Lenders” shall be references to the Tranche B Term Loans, Tranche B Term
Commitments and Tranche B Term Lenders, respectively.


(d)           Section
4.1 of the Credit Agreement is hereby amended by inserting (i) “(a)” after the
Section heading “Optional Prepayments.” and (ii) the following new
clause (b) at the end of such Section:


(b)           Term Loan Call Protection. 
After the Repricing Effective Date until the one-year anniversary
thereof, Company agrees to pay to Administrative Agent, for the ratable account
of each Lender with outstanding Term Loans (including each Lender that
withholds its consent to such Repricing Transaction and is replaced or is
removed as a Lender under Section 4.13), a fee in an amount equal to 1.0% of
the aggregate principal amount of all Term Loans held by such Lender and outstanding
on such date immediately prior to the effectiveness of such Repricing
Transaction.  Such fee shall be due and
payable upon the date of the effectiveness of such Repricing Transaction.


SECTION 2.           Conditions to Repricing Effective Date.  The
amendments contained in Section 1 shall not be effective unless each of the
following conditions precedent is satisfied (the date on which all such
conditions have been satisfied being referred to herein as the “Repricing
Effective Date”):


(a)           the Administrative Agent shall have received: (i) counterparts of this
Amendment executed by the Administrative Agent, Holdings and the Borrower and
(ii) counterparts of the Consent appended hereto as Annex D (the “Consent”)
executed by each of the Grantors, as defined in the Guarantee and Collateral
Agreement (the “Grantors”);


(b)           the Administrative Agent shall have received signatures approving such
amendments of (i) the Required Lenders, (ii) each of the Continuing Lenders and
(iii) each of the Additional Lenders;


(c)           the Administrative Agent shall have received a certificate of each Loan
Party, dated the Repricing Effective Date, substantially in the form of Exhibit
B to the Credit Agreement, with appropriate insertions and attachments
including the certificate of incorporation of each Loan Party that is a
corporation certified by the relevant authority of the jurisdiction of
organization of such Loan Party and a long form good standing certificate for
each Loan Party from its jurisdiction of organization;



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provided that in lieu of delivering certificates of
incorporation for each Loan Party, Borrower may deliver a certificate of a duly
authorized officer certifying that there have been no material amendments to
those certificates of incorporation previously delivered to BSCL, as the
Administrative Agent, in connection with Original Credit Agreement or the
Restatement Effective Date;


(d)           the Administrative Agent shall have received the following executed
legal opinions:  the legal opinion of
Kirkland & Ellis LLP, counsel to Holdings, the Borrower and its
Subsidiaries, in form reasonably satisfactory to the Administrative Agent; such
legal opinion shall cover such other matters incident to the transactions
contemplated by this Amendment as the Administrative Agent may reasonably require;


(e)           the Administrative Agent shall have received evidence satisfactory to
it that the Borrower has made the payment referred to in Section 3(d) below or
is making such payment on the Repricing Effective Date with the cash proceeds
of the Tranche B Term Loans and such other funds of the Borrower as may be
required;


(f)            the Administrative Agent shall have received
payment in immediately available funds of all reasonable and documented
expenses incurred by the Administrative Agent (including, without limitation,
reasonable and documented legal fees) then reimbursable under the Credit
Agreement (including in connection with this Amendment and the documents and
transactions related hereto) and for which invoices have been presented on or
before the Repricing Effective Date; and


(g)           each of the representations and warranties in Section 6 below shall be
true and correct in all material respects.


SECTION 3.           Lending of Tranche B Term Loans. 
Subject to the satisfaction of the conditions set forth in Section 2 hereof,
the parties hereto agree as follows:


(a)           Subject to the terms and conditions set forth herein, each Continuing
Lender and each Additional Lender (collectively, the “Tranche B Term Lenders”)
agrees to make Term Loans (the “Tranche B Term Loans”) to the Borrower
on the Repricing Effective Date in amounts equal to its Tranche B Term
Commitment (as defined below). 
Notwithstanding anything herein or in the Credit Agreement to the
contrary, the aggregate principal amount of the Tranche B Term Loans shall not
exceed the aggregate principal amount of the Existing Term Loans immediately
prior to the Repricing Effective Date. 
For purposes hereof, a Person shall become an Additional Lender and a
party to the Credit Agreement by executing and delivering to the Administrative
Agent, on or prior to the Repricing Effective Date, a signature page to this
Amendment specifically in the capacity of an “Additional Lender” setting forth
the amounts of Tranche B Term Loans such Person commits to make on the
Repricing Effective Date.  The “Tranche
B Term Commitment” for any Tranche B Term Loans of (i) any Continuing
Lender shall be the principal amount of its Existing Term Loans or such lesser
amount as is determined by the Administrative Agent and notified to such Lender
prior to the Repricing Effective Date and (ii) any Additional Lender shall be
the amount of such commitment set forth on its signature page hereto or such
lesser amount as is allocated to it by the Administrative Agent and notified to
it prior to the Repricing Effective Date. 
The aggregate amount of Tranche B Term Commitments shall equal the
aggregate principal amount of the Existing Term Loans.


(b)           Each Continuing Lender and each Additional Lender shall make Tranche B
Term Loans on the Repricing Effective Date by (i) exchanging its Existing Term
Loans, if any, for Tranche B Term Loans in an equal principal amount (to the
extent the amounts of such Existing Term Loans, if any, do not exceed the
Tranche B Term Commitment of such Lender) and (ii) transferring to the
Administrative Agent, in the manner contemplated by the Credit Agreement, an
amount equal to the excess, if any, of its



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Tranche B Term Commitment
over the principal amount of Existing Term Loans, if any, exchanged by it
pursuant to clause (i) above.  The
Borrower hereby irrevocably directs the Administrative Agent to apply all
proceeds of the Tranche B Term Loans received hereunder immediately upon the
receipt thereof to prepay outstanding Existing Term Loans.  The commitments of the Additional Lenders and
the exchange undertakings of the Continuing Lenders are several and no such
Lender shall be responsible for any other Lender’s failure to make or acquire
by exchange any Tranche B Term Loans.


(c)           All borrowings of Tranche B Term Loans made on the Repricing Effective
Date will have initial Interest Periods ending on the same dates as the
Interest Periods applicable at such time to the Existing Term Loans, and the
Eurodollar Rate applicable to such Tranche B Term Loans during such initial
Interest Periods will be the same as that applicable at such time to the
Existing Term Loans being refinanced. 
The Borrower will not be required to make any payments to Existing Term
Lenders under Section 4.11 of the Credit Agreement in respect of the repayment
of Existing Term Loans on the Repricing Effective Date pursuant to their
exchange for Tranche B Term Loans.


(d)           On the Repricing Effective Date, the Borrower shall apply the cash
proceeds of the Tranche B Term Loans and such other amounts as may be necessary
to (i) prepay in full all Existing Term Loans (other than those that are
exchanged for Tranche B Term Loans as provided herein), (ii) pay all accrued
and unpaid interest and fees, if any, on all Existing Term Loans, (iii) pay to
each Existing Term Lender all amounts payable pursuant to Section 4.11 of the
Credit Agreement as a result of the prepayment of such Lender’s Existing Term
Loans (other than any portion thereof that is exchanged for Tranche B Term
Loans as provided herein) on the Repricing Effective Date and (iv) pay all
other Obligations then due and owing to the Existing Term Lenders, in their
capacity as such, under the Credit Agreement.


(e)           The Required Lenders hereby waive the requirements of Section 4.1 of
the Credit Agreement solely to the extent that such Section requires any notice
of prepayment to be given in respect of the Existing Term Loans to be prepaid
on the Repricing Effective Date. 
Notwithstanding that the Tranche B Term Loans shall be refinanced in
full on the Repricing Effective Date, the provisions of the Credit Agreement
with respect to indemnification, reimbursement of costs and expenses, increased
costs and break funding payments (other than as set forth in Section 3(d)
above) will continue in full force and effect with respect to, and for the
benefit of, each Existing Term Lender in respect of such Lender’s Existing Term
Loans existing under the Credit Agreement prior to the Repricing Effective
Date.


SECTION 4.           Other Amendments to Credit Agreement. 
Subject to the satisfaction of the conditions set forth in Section 5
hereof, the Credit Agreement is amended as follows:


(a)           Exhibit N is hereby deleted in its entirety and replaced with a new
Exhibit N substantially in the form of Annex A hereto.


(b)           The Schedules to the Credit Agreement are hereby amended to include
items listed on the schedule modifications pursuant to the First Amendment.


(c)           The following new definitions are hereby added to Section 1.1 of the
Credit Agreement in the appropriate alphabetical order:


“Acquisition”:  the merger of Tara Acquisition Corp. with and
into IASG, resulting in the acquisition by Holdings of all the issued and
outstanding Capital Stock of IASG as set forth in the Acquisition Agreement.



 5
 









“Acquisition Agreement”:  the Agreement and Plan of Merger, dated as of
December 20, 2006, among Holdings, Tara Acquisition Corp., a Delaware
corporation and a direct wholly owned subsidiary of Holdings, and IASG as
amended, modified or supplemented from time to time other than any such
amendment, modification or supplement that is material to the Lenders and
entered into without the consent of the Administrative Agent.


“Amendment Effective Date”:  as defined in the First Amendment.


“IASG”:  Integrated Alarm
Services Group Inc., a Delaware corporation.


“IASG Notes”:  the 12%
Senior Notes of IASG.


“Increased Amount Date”: 
as defined in Section 2.4.


“Joinder Agreement”:  an
agreement substantially in the form of Exhibit N.


“New Term Commitments”: 
as defined in Section 2.4.


“New Term Lender”:  as
defined in Section 2.4.


“New Term Loan”:  as
defined in Section 2.4.


“Second Lien Notes”:  the 12% Senior Secured Notes due 2011 of the
Borrower, to be issued pursuant to an Indenture substantially in the form of Annex
B hereto, among the Borrower, Holdings, the subsidiary guarantors party
thereto and the Second Lien Notes Trustee and any notes issued pursuant to a
refinancing thereof permitted under Section 8.2(q).


“Second Lien Notes
Trustee”:  Wells Fargo Bank, N.A., as
trustee, or any person serving in the role of Trustee for the Second Lien
Notes.


(d)           The following definitions contained in Section 1.1 of the Credit
Agreement are hereby amended and restated as follows:


“Consolidated EBITDA”:  for any period, Consolidated Net Income for
such period


plus, without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period (except in the case
of (i) below), the sum of:


(a) income tax expense (including, without
duplication, franchise and foreign withholding taxes and any state single
business unitary or similar tax, to the extent classified as income tax expense
on the consolidated income statement of Holdings and its Subsidiaries in
accordance with GAAP),


(b) interest expense, amortization or write-off of
debt discount and debt issuance costs and commissions, discounts and other fees
and charges associated with Indebtedness (including the Loans),


(c)  depreciation and amortization expense,


(d) amortization of
intangibles (including, but not limited to, goodwill), deferred customer
acquisition costs and organization costs,



 6
 









(e) any extraordinary
charges, expenses or losses determined in accordance with GAAP,


(f) non-cash compensation
expenses arising from the issuance, vesting or exercise of stock, options to
purchase stock, stock appreciation rights and other equity awards to the
management, directors, officers, consultants and other employees of Holdings or
any of its Subsidiaries,


(g) any other noncash
charges, noncash expenses or noncash losses of the Borrower or any other
Subsidiaries of Holdings for such period (excluding any such charge, expense or
loss incurred in the ordinary course of business that constitutes an accrual of
or a reserve for cash charges for any future period); provided, however,
that cash payments made in such period or in any future period in respect of
such noncash charges, expenses or losses incurred after the Closing Date
(excluding any such charge, expense or loss incurred in the ordinary course of
business that constitutes an accrual of or a reserve for cash charges for any
future period) shall be subtracted from Consolidated Net Income in calculating
Consolidated EBITDA in the period when such payments are made,


(h) all reasonable one-time
costs, fees, expenses and charges related to this refinancing and/or the First
Amendment and the dividend to stockholders contemplated by Section 5.16 hereof,
any permitted Investment, Permitted Acquisition, issuance of equity,
recapitalization, reorganization or asset disposition,


(i) cash proceeds of
business interruption insurance,


(j) management and
transaction fees and related expenses paid under the Management Agreement
substantially in the form most recently delivered to the Administrative Agent
prior to the Closing Date, and without further modification thereto as to
amounts payable thereunder,


(k) any non-recurring
charges, expenses or losses not exceeding, together with expenses under clause
(l), $1.75 million in each of calendar years 2005 and 2006, $15.0 million in
calendar year 2007, $3 million in calendar year 2008 and $2.0 million in each
calendar year thereafter,


(l) expenses incurred in
work force reductions such as severance, key employee retention plans, and
unfavorable lease payments or accruals for such payments not exceeding,
together with amounts under clause (k), $1.75 million in each of calendar years
2005 and 2006, $15.0 million in calendar year 2007, $3 million in calendar year
2008 and $2.0 million in each calendar year thereafter,


(m) bonuses paid to members
of management of the Borrower, Holdings or any Subsidiaries of Holdings
pursuant to Section 8.6(e), and


(n) interest income
generated from loans made to dealers in the ordinary course of business,


minus, to the extent included in the statement of such Consolidated Net
Income for such period, the sum of:


(i) interest income other
than income included pursuant to clause (n),


(ii) any extraordinary
income or gains determined in accordance with GAAP, and



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(iii) any other non-cash
income (excluding (x) any items that represent the reversal of any accrual of,
or cash reserve for, anticipated cash charges in any prior period that are
described in the parenthetical to clause (g) above and (y) items representing
ordinary course accruals of cash to be received in future periods), all as
determined on a consolidated basis.


For the purposes of
calculating Consolidated EBITDA for any period of four consecutive fiscal
quarters (each, a “Reference Period”) pursuant to any determination of
the Consolidated Leverage Ratio, (i) if at any time during such Reference
Period the Borrower or any Subsidiary shall have made any Material Disposition,
the Consolidated EBITDA for such Reference Period shall be reduced by an amount
equal to the Consolidated EBITDA (if positive) attributable to the property
that is the subject of such Material Disposition for such Reference Period or
increased by an amount equal to the Consolidated EBITDA (if negative)
attributable thereto for such Reference Period and (ii) if during such
Reference Period the Holdings or any of its Subsidiaries shall have made a
Material Acquisition, Consolidated EBITDA for such Reference Period shall be
calculated after giving pro  forma effect thereto as if such
Material Acquisition occurred on the first day of such Reference Period.  As used in this definition, “Material
Acquisition” means any acquisition of property or series of related
acquisitions of property that (a) constitutes assets comprising all or
substantially all of an operating unit of a business or constitutes all or
substantially all of the common stock of a Person and (b) involves the payment
of consideration by Holdings and any of its Subsidiaries in excess of
$5,000,000; and “Material Disposition” means any Disposition of property or
series of related Dispositions of property that yields gross proceeds to
Holdings or any of its Subsidiaries in excess of $5,000,000.


“Intercreditor Agreement”:  that certain Intercreditor Agreement entered
into pursuant to the First Amendment by the Administrative Agent and the Second
Lien Notes Trustee, as amended, supplemented, modified or replaced from time to
time in accordance with the Loan Documents (including, but not limited to, any
similar agreement entered into in connection with a refinancing of the Second
Lien Notes).


“Interest Period”:  as to any Eurodollar Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two, three or six or (if
available to all Lenders under the relevant Facility) nine or twelve months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six or (if
available to all Lenders under the relevant Facility) nine or twelve months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent no later than 2:00 P.M., New York City time, on the date
that is three Business Days prior to the last day of the then current Interest
Period with respect thereto; provided that, all of the foregoing
provisions relating to Interest Periods are subject to the following:


(i)            if any Interest Period would otherwise end on
a day that is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;



 8
 









 (ii)          the
Borrower may not select an Interest Period under a particular Facility that
would extend beyond the Revolving Termination Date or beyond the date final payment
is due on the Term Loans;


 (iii)         any
Interest Period that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day of a
calendar month; and


 (iv)         the
Borrower shall select Interest Periods so as not to require a payment or
prepayment of any Eurodollar Loan during an Interest Period for such Loan.


Notwithstanding the foregoing, with respect to the Borrowings of New
Term Loans made on any Increased Amount Date, if any, the initial Interest
Periods shall be the periods commencing on (and including) such Increased
Amount Date, and ending on (and including) the last day of the Interest Periods
applicable to the Term Loans outstanding immediately prior to such Increased
Amount Date with the aggregate principal of amount of New Term Loans to which
such Interest Period applies being in the same proportions as the aggregate
principal amounts of the outstanding Term Loans to which the corresponding
Interest Periods apply.


“Permitted Acquisitions”: 
(i) the Acquisition and (ii) any other acquisition by any Subsidiary of
Holdings of all or substantially all of the assets of a Person or line of
business of such Person, or all of the Capital Stock of a Person (in each case
referred to herein as the “Acquired Entity”); provided that, in
the case of clause (ii), (a) the Acquired Entity shall be a going concern
and shall be in a related line of business as that of any subsidiary of
Holdings as conducted during the current and most recently concluded calendar
year; (b) all of the assets of the Acquired Entity shall be located in the
United States (provided that such acquisition may involve assets located
outside the United States so long as the sum of the aggregate value of such
foreign assets acquired shall be deemed to be an Investment for purposes of
clause (p) of Section 8.8 and shall be permissible under such clause of such
Section); (c) such acquisition shall be consensual and shall have been approved
by the Acquired Entity’s board of directors (or other applicable governing
body); (d) either (i) the consideration paid in connection with such
acquisition shall be funded solely with the Net Cash Proceeds from an Allotted
Disposition with respect to which a Reinvestment Notice shall have been
delivered hereunder or (ii) the cash consideration (net of any Net Cash
Proceeds received from equity issuances by Holdings or issuances of
subordinated Indebtedness by Holdings to the Sponsor pursuant to Section
8.2(o), in each case, to the extent such proceeds are substantially
simultaneously applied to fund such Permitted Acquisition) paid in connection
with such acquisition and any other acquisitions under this definition that is
not funded as described in clause (i) above shall not in the aggregate exceed
$60,000,000 in the aggregate during the term of this Agreement (it being
understood that in no event shall consideration in the form of Capital Stock of
Holdings paid in connection with any acquisition under this definition be
included in the dollar limitations imposed by this clause (ii)); (e) at the
time of such transaction (i) both before and after giving effect thereto, no
Event of Default or Default shall have occurred and be continuing; and (ii) the
Borrower would be in compliance with the covenants set forth in Section 8.1, in
each case, as of the most recently completed period ending prior to such
transaction for which the financial statements and certificates required by Section 7.1(a)
or 7.1(b) and Section 7.2 were required to be delivered after giving pro
forma effect to such transaction and to any other event occurring after
such period as to which pro forma recalculation is appropriate
(including any other transaction described in this definition occurring after
such period) as if such transaction (and the occurrence, refinancing or
assumption of any Indebtedness in connection therewith) had



 9
 









occurred
as of the first day of such period; (f) at least five Business Days prior to
the proposed date of the consummation of such acquisition, the Borrower shall
have delivered to the Administrative Agent a Compliance Certificate
demonstrating compliance with the requirements of clause (e)(ii) above (which
shall have attached thereto reasonably detailed backup data and calculations
showing such compliance); (g) Holdings and its Subsidiaries shall not incur or
assume any Indebtedness in connection with such acquisition, except as
permitted by Section 8.2; and (h) Holdings and its Subsidiaries shall
comply, and shall cause the Acquired Entity to comply, with the applicable
provisions of Sections 7.10 and 7.11 and the Security Documents.


“Permitted Refinancing”:  the refinancing of 100% of the Senior
Subordinated Notes with the proceeds of Indebtedness of the Borrower or
Holdings issued pursuant to documentation (a) containing terms that provide for
(i) a final maturity at least six months after the Term Loan Maturity Date,
(ii) a fixed interest rate consistent with then prevailing market conditions,
or a floating interest rate (provided that if such Indebtedness is
incurred prior to the two-year anniversary of the Restatement Date, the
Borrower shall have obtained interest rate hedging contracts, on terms which
are reasonably satisfactory to the Administrative Agent, that effectively fix
the interest rate on such Indebtedness to the extent necessary to provide that
at least 50% of the Borrower’s outstanding Indebtedness is subject to either a
fixed interest rate or interest rate protection until such two-year
anniversary), (iii) no amortization of the principal amount of such
Indebtedness prior to the date that is six months after the Term Loan Maturity
Date, and (iv) Indebtedness that is either unsecured or secured by a Lien on
all assets, and only such assets, that constitute Collateral, provided
that, if such debt is so secured, the Liens on such Collateral granted in favor
of the lenders of such Indebtedness are second (or lower) in priority to the
Liens granted to the Lenders under this Agreement, and to the extent such debt
is so secured, the trustee, administrative agent or other representative of
such lenders, as applicable, has delivered an executed joinder to the
Intercreditor Agreement or another intercreditor agreement reasonably acceptable
to the Administrative Agent, or (b) on terms otherwise acceptable to the
Administrative Agent.


“Subsidiary Guarantor”:  each Domestic Subsidiary of Holdings, other
than the Borrower.


“Term Commitment”:  as to any Lender, the obligation of such Lender,
if any, to make a Term Loan to the Borrower hereunder in a principal amount not
to exceed the amount set forth under the heading “Term Commitment” under such
Lender’s name on such Lender’s Addendum or Joinder Agreement, as
applicable.  The aggregate amount of the
Term Commitments as of the Restatement Date is $300,000,000.


“Term Loan”: a term
loan made by a Lender to the Borrower pursuant to Section 2.1 and/or Section
2.4.


(e)           The
following definitions contained in Section 1.1 of the Credit Agreement are
hereby amended to replace the words “the Borrower” as set forth below in each
instance they appear therein with the word “Holdings”:  (i) “Consolidated Net Income”, (ii) “Domestic
Subsidiary”, (iii) “Foreign Subsidiary”, (iv) “Material Adverse Effect”, (v) “Specified
Hedge Agreement” (only in clause (a) thereof), and (vi) “Wholly Owned
Subsidiary Guarantor”.


(f)            The
definition of “Excess Cash Flow” contained in Section 1.1 of the Credit
Agreement is hereby amended to (i) delete the word “and” at the end of clause
(b)(xi) thereof; (ii) replace the “.” at the end of clause (b)(xii) thereof
with “, and”; and (iii) insert the following new clause (b)(xiii) at the end
thereof:



 10
 









(xiii)         all reasonable one-time fees, expenses and prepayment penalties or
premiums paid in connection with a Permitted Refinancing, or any refinancing of
the Second Lien Notes permitted hereunder.


(g)           Section
2.1 of the Credit Agreement is hereby amended to replace the words “term loan
(a “Term Loan”)” in clause (a) thereof with the words “Term Loan”.


(h)           The
following is hereby added as new Section 2.4 to the Credit Agreement:


2.4           Additional Term Loans.  The
Borrower may, by written notice to the Administrative Agent, elect to request
the establishment of one or more new term loan commitments (the “New Term Commitments”),
in an amount not in excess of $50,000,000 in the aggregate and not less than
$10,000,000 individually (or such lesser amount which shall be approved by the
Administrative Agent), and integral multiples of $1,000,000 in excess of that
amount.  Each such notice shall specify
(A) the date (each an “Increased
Amount Date”) on which the Borrower proposes that the New Term
Commitments shall be effective, which shall be a date not less than 10 Business
Days after the date on which such notice is delivered to the Administrative
Agent (and, if proceeds will be used to defease or repay any IASG Notes, which
Increased Amount Date shall be the Amendment Effective Date) and (B) the
identity of each Lender or other Person that is an Eligible Assignee (each, a “New Term Lender”) to whom the
Borrower proposes any portion of such New Term Commitments be allocated and the
amounts of such allocations; provided that the Administrative Agent may
elect or decline to arrange such New Term Commitments in its sole discretion
and any Lender approached to provide all or a portion of the New Term
Commitments may elect or decline, in its sole discretion, to provide a New Term
Commitment.  Such New Term Commitments
shall become effective, as of such Increased Amount Date; provided that,
(1) no Default or Event of Default shall exist on such Increased Amount Date
before or after giving effect to such New Term Commitments; (2) both before and
after giving effect to the making of any New Term Loans, each of the conditions
set forth in Section 6.2 of the Credit Agreement shall be satisfied; (3)
Holdings shall be in pro forma compliance with each of the covenants set forth
in Section 8.1 of the Credit Agreement as of the last day of the most recently
ended fiscal quarter after giving effect to such New Term Commitments;
(4) the New Term Commitments shall be effected pursuant to one or more
Joinder Agreements dated as of the applicable Increased Amount Date and
executed and delivered by the Borrower, each New Term Lender and the
Administrative Agent, and each of which shall be recorded in the Register, and
each New Term Lender shall be subject to the requirements set forth in Section
4.10(e) of the Credit Agreement; and (5) the Borrower shall deliver or cause to
be delivered any legal opinions or other documents reasonably requested by the
Administrative Agent in connection with any such transaction.


On
any Increased Amount Date, subject to the satisfaction of the foregoing terms
and conditions (i) each New Term Lender shall make a Loan to the Borrower (a “New Term Loan”) in an amount equal
to its New Term Commitment, (ii) each New Term Commitment shall be deemed for
all purposes a Term Commitment and each New Term Loan made thereunder shall be
deemed for all purposes a Term Loan, (iii) each New Term Lender shall become a
Lender hereunder with respect to the New Term Commitment and the New Term Loans
made pursuant thereto and (iv) each installment of principal due on the Term
Loans (other than the final installment) shall be increased by 0.25% of the
aggregate principal amount of such New Term Loans and the remaining aggregate
principal amount of all such New Term Loans shall be due and payable on the
Term Loan Maturity Date.



 11















The Administrative Agent shall notify Lenders promptly upon receipt of
the Borrower’s notice of each Increased Amount Date and, in respect thereof,
the New Term Commitments and the New Term Lenders, subject to the assignments
contemplated by this Section.  The terms
and provisions of the New Term Loans shall be identical to the terms and
provisions of the Term Loans.


(i)            Section
4.2 of the Credit Agreement is hereby amended to (i) replace the words “the
Borrower or any of its Subsidiaries” in clause (c) thereof with the words “any
Subsidiary of Holdings” and (ii) replace the date “December 31, 2007” in clause
(d) thereof with “December 31, 2008”.


(j)            Section
5.16 of the Credit Agreement is hereby deleted in its entirety and replaced
with the following:


5.6           Use of Proceeds.  The
proceeds of the Term Loans (other than New Term Loans) shall be used to repay
in full the Refinanced Indebtedness and to pay related fees and expenses.  The proceeds of the Revolving Loans shall be
used, together with the proceeds of the Swingline Loans and the Letters of
Credit, for general corporate purposes. 
The proceeds of any New Term Loans may be used to repay any IASG Notes
not exchanged for Second Lien Notes and to pay related premiums required in
connection therewith and related fees and expenses, or to make Permitted
Acquisitions.


(k)           Sections
5.5, 5.19, 7.11 and 8.12 of the Credit Agreement are hereby amended to replace
the words “the Borrower or any of its Subsidiaries” and “the Borrower or any
Subsidiary” in each place they appear therein with the words “any Subsidiary of
Holdings”.


(l)            Section
5.10 of the Credit Agreement is hereby amended to replace the words “Holdings,
the Borrower or its Subsidiaries” therein with the words “Holdings or its
Subsidiaries”.


(m)          Sections
7.2 and 8.16 of the Credit Agreement are hereby amended to replace the words “the
Borrower and its Subsidiaries” in each place they appear therein with the words
“the Subsidiaries of Holdings”.


(n)           Section
8.1 of the Credit Agreement is hereby deleted in its entirety and replaced with
the following:


(a)           Consolidated
Leverage Ratio.  Permit the Consolidated Leverage Ratio as at
the last day of any period of four consecutive fiscal quarters of Holdings
ending with any fiscal quarter set forth below to exceed the ratio set forth
below opposite such fiscal quarter:


	
  Fiscal Quarter

  	
   

  	
  Consolidated

  Leverage Ratio

  	
   

  
	
  Q1 2007

  	
   

  	
  6.00x

  	
   

  
	
  Q2 2007

  	
   

  	
  6.00x

  	
   

  
	
  Q3 2007

  	
   

  	
  6.00x

  	
   

  
	
  Q4 2007

  	
   

  	
  6.00x

  	
   

  
	
  Q1 2008

  	
   

  	
  6.00x

  	
   

  
	
  Q2 2008

  	
   

  	
  6.00x

  	
   

  
	
  Q3 2008

  	
   

  	
  6.00x

  	
   

  
	
  Q4 2008

  	
   

  	
  5.75x

  	
   

  
	
  Q1 2009

  	
   

  	
  5.75x

  	
   

  
	
  Q2 2009

  	
   

  	
  5.75x

  	
   

  



 



 12
 









 


	
  Fiscal Quarter

  	
   

  	
  Consolidated

  Leverage Ratio

  	
   

  
	
  Q3 2009

  	
   

  	
  5.75x

  	
   

  
	
  Q4 2009

  	
   

  	
  5.50x

  	
   

  
	
  Q1 2010

  	
   

  	
  5.50x

  	
   

  
	
  Q2 2010

  	
   

  	
  5.50x

  	
   

  
	
  Q3 2010

  	
   

  	
  5.50x

  	
   

  
	
  Q4 2010

  	
   

  	
  5.25x

  	
   

  
	
  Q1 2011

  	
   

  	
  5.25x

  	
   

  
	
  Q2 2011

  	
   

  	
  5.25x

  	
   

  
	
  Q3 2011

  	
   

  	
  5.25x

  	
   

  
	
  Q4 2011 and thereafter

  	
   

  	
  5.00x

  	
   

  



 


(b)           Consolidated
Interest Coverage Ratio.  Permit the Consolidated Interest Coverage
Ratio for any period of four consecutive fiscal quarters of Holdings ending
with any fiscal quarter set forth below to be less than the ratio set forth
below opposite such fiscal quarter:


	
  Fiscal Quarter

  	
   

  	
  Consolidated

  Interest Coverage Ratio

  	
   

  
	
  Q1 2007

  	
   

  	
  1.75x

  	
   

  
	
  Q2 2007

  	
   

  	
  1.75x

  	
   

  
	
  Q3 2007

  	
   

  	
  1.75x

  	
   

  
	
  Q4 2007

  	
   

  	
  1.75x

  	
   

  
	
  Q1 2008

  	
   

  	
  1.75x

  	
   

  
	
  Q2 2008

  	
   

  	
  1.75x

  	
   

  
	
  Q3 2008

  	
   

  	
  1.75x

  	
   

  
	
  Q4 2008

  	
   

  	
  2.00x

  	
   

  
	
  Q1 2009

  	
   

  	
  2.00x

  	
   

  
	
  Q2 2009

  	
   

  	
  2.00x

  	
   

  
	
  Q3 2009

  	
   

  	
  2.00x

  	
   

  
	
  Q4 2009

  	
   

  	
  2.00x

  	
   

  
	
  Q1 2010

  	
   

  	
  2.00x

  	
   

  
	
  Q2 2010

  	
   

  	
  2.00x

  	
   

  
	
  Q3 2010

  	
   

  	
  2.00x

  	
   

  
	
  Q4 2010

  	
   

  	
  2.05x

  	
   

  
	
  Q1 2011

  	
   

  	
  2.05x

  	
   

  
	
  Q2 2011

  	
   

  	
  2.05x

  	
   

  
	
  Q3 2011

  	
   

  	
  2.05x

  	
   

  
	
  Q4 2011 and thereafter

  	
   

  	
  2.15x

  	
   

  



 


(o)           Section
8.2 of the Credit Agreement is hereby amended to:  (i) replace “$10,000,000” in clause (e)
thereof with “$15,000,000”; (ii) replace the words “the Borrower or any of its
Subsidiaries” in clause (c) thereof with the words “any Subsidiary of Holdings”;
(iii) replace the words “Subsidiary of the Borrower” in each place they appear
in clause (g) thereof with the words “Subsidiary of Holdings”; (iv) delete the
word “and” at the end of clause (o) thereof; (v) replace the “.” at the end of
clause (p) thereof with “; and”; and (vi) insert the following new clauses (q)
and (r) at the end thereof:


(q)           Indebtedness of up to $125,000,000 in respect of the Second Lien Notes
(or any refinancing thereof permitted by the terms of the Intercreditor Agreement),
plus the amount of any accrued interest or premium required to be paid in
connection with any refinancing thereof, by the Borrower and the guarantees
thereof by the Guarantors; and



 13
 









(r)            Indebtedness of up to $18,155,000 in respect
of the IASG Notes; provided that an amount sufficient to defease such
IASG Notes in full has been irrevocably deposited with the trustee therefore on
or prior to the Amendment Effective Date.


(p)           Section
8.3 of the Credit Agreement is hereby amended to:  (i) replace the words “the Borrower or its
Subsidiaries, as the case may be,” in clause (a) thereof with the words “the
Subsidiaries of Holdings”; (ii) replace the words “the Borrower or any of its
Subsidiaries” in clause (e) thereof with the words “any Subsidiary of Holdings”;
(iii) delete the word “and” at the end of clause (u) thereof; (iv) replace the “.”
at the end of clause (v) thereof with “; and”; (v) replace the words “in
accordance with the Intercreditor Agreement” in clause (v) thereof with the
words “shall constitute Second Lien Obligations in accordance with an
intercreditor agreement reasonably satisfactory to the Administrative Agent”;
and (v) insert the following new clause (w) at the end thereof:


(w)          Liens in favor of the holders of the Second Lien Notes subject to the
terms of the Intercreditor Agreement.


(q)           Section
8.4 of the Credit Agreement is hereby amended to:  (i) replace the words “Subsidiary of the
Borrower” in each place they appear therein with the words “Subsidiary of
Holdings (other than the Borrower)”; (ii) delete the word “and” at the end of
clause (b) thereof; (iii) replace the “.” at the end of clause (c) thereof with
“; and”; and (iv) insert the following new clause (d) at the end thereof:


(d)           the Acquisition may be consummated on the terms substantially as set
forth in the Acquisition Agreement; provided that IASG and each of its
Subsidiaries shall have become Subsidiary Guarantors hereunder.


(r)            Section
8.6 of the Credit Agreement is hereby deleted in its entirety and replaced with
the following:


8.6           Restricted Payments. 
Declare or pay any dividend (other than dividends payable solely in
common stock of the Person making such dividend) on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, defeasance, retirement or other acquisition of, any
Capital Stock of any Group Member, whether now or hereafter outstanding, or
make any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of Holdings, the Borrower or any
Subsidiary (collectively, “Restricted Payments”), except that:


(a)           any Subsidiary may make Restricted Payments to the Borrower or any
Subsidiary Guarantor;


(b)           so long as no Default or Event of Default shall have occurred and be
continuing or would result therefrom, the Borrower and IASG may pay dividends
to Holdings to permit Holdings to (i) purchase Holdings’ common stock or common
stock options from present or former officers, directors, consultants or employees
of any Group Member (or the respective estates, spouses or family members) upon
the death, disability or termination of employment of such officer or employee
to repay Indebtedness previously issued to such Person, provided, that
the aggregate amount of cash payments under this clause (i) after the date
hereof (net of any proceeds received by Holdings and contributed to the
Borrower and IASG after the date hereof in connection with (a) resales of any
common stock or common stock options so purchased or (b) equity issuances by
Holdings (to the extent not required to be otherwise applied pursuant to



 14
 









Section 4.2(a)) shall not
exceed $2,000,000 in any calendar year or $5,000,000 in the aggregate and (ii)
pay fees expressly permitted by Section 8.10(e); and


(c)           the Borrower and IASG may pay dividends to Holdings to permit Holdings
to (i) pay corporate overhead expenses incurred in the ordinary course of
business, (ii) pay any taxes that are due and payable by Holdings as the parent
of a consolidated or combined group that includes the Borrower and IASG, in an
amount not to exceed the lesser of (x) the relevant amount of any taxes
(including any penalties and interest) that the Borrower and IASG would owe if
the Borrower or IASG, respectively, were filing a separate tax return (or a
separate consolidated or combined return with their respective Subsidiaries
that are members of the consolidated or combined group), taking into account
any carryovers or carrybacks of tax attributes (such as operating losses) of
the Borrower and IASG and such Subsidiaries from other taxable years and (y)
the net amount of the relevant tax that Holdings actually owes to the
appropriate taxing authority; provided that any such payment in respect
of taxes received by Holdings shall be paid over to the appropriate taxing
authority within 30 days of Holdings’ receipt of such payments or shall be
refunded to the Borrower and IASG, as applicable, (iii) pay expense
reimbursements pursuant to the Management Agreement substantially in the form
most recently delivered to the Administrative Agent prior to the Closing Date,
and without further modification thereto as to amounts payable thereunder, and
(iv) so long as no Default or Event of Default has occurred and is continuing,
pay amounts due and owing on preferred equity of Holdings issued to refinance
the Senior Subordinated Notes provided that the coupon on such preferred
equity shall be no higher than the rate of interest on the Senior Subordinated
Notes.


(s)           Section
8.7 of the Credit Agreement is hereby amended to (i) replace the words “$12,500,000
for the 2006 fiscal year” in clause (a)(i)(A) thereof with the words “$15,000,000
for the 2007 fiscal year” and (ii) replace clause (b) thereof with the
following:


(b) Incur any Net Cash Investment Costs, except (i)
Net Cash Investment Costs of the Borrower and its Subsidiaries in the ordinary
course of business not exceeding for any fiscal year the following amount with
respect to such fiscal year:


 


	
  Fiscal Year

  	
   

  	
  Net Cash Investment Costs

  	
   

  
	
  2007

  	
   

  	
  $

  	
  95,000,000

  	
   

  
	
  2008

  	
   

  	
  $

  	
  105,000,000

  	
   

  
	
  2009

  	
   

  	
  $

  	
  115,000,000

  	
   

  
	
  2010

  	
   

  	
  $

  	
  120,000,000

  	
   

  
	
  2011 and each fiscal year thereafter

  	
   

  	
  $

  	
  130,000,000

  	
   

  



 


provided that
(A) up to 50% of any such amount referred to above (but in no event more than $10,000,000
in any fiscal year), if not so expended in the fiscal year for which it is
permitted, may be carried over for expenditure in the next succeeding fiscal
year, and (B) Net Cash Investment Costs incurred pursuant to this clause (i)
during any fiscal year shall be deemed made, first,
in respect of amounts carried over from the prior fiscal year pursuant to
subclause (A) above, and second, to
amounts permitted for such fiscal year as provided above; (ii) Net Cash
Investment Costs made with the proceeds of any Reinvestment Deferred Amount;
and (iii) Net Cash Investment Costs in any fiscal year up to the amount of
capital contributions from the Sponsor and its Control Investment Affiliates or
any other Person within such fiscal year, other than proceeds received in
respect of underwritten public offerings of Holdings, the Borrower or any of
its Subsidiaries, and proceeds applied to either (x) fund Permitted
Acquisitions or (y) prepay Term Loans and/or reduce Revolving Commitments in
accordance with Section 4.2.



 15
 









 (t)           Section 8.8 to the Credit Agreement is hereby amended to:  (i) replace the words “the Borrower and its
Subsidiaries made by the Borrower or any of its Subsidiaries” in clause (e)
thereof with the words “the Borrower and each other Subsidiary of Holdings made
by the Borrower or any other Subsidiary of Holdings”; (ii) replace the words “the
Borrower or any of its Subsidiaries” in clauses (o) and (p) thereof in each
place they appear therein with the words “the Borrower or any other Subsidiary
of Holdings”; (iii) replace the “.” at the end of clause (q) thereof with “;
and” and (iv) insert the following new clause (r) at the end thereof:


(r) the Borrower or any
other Subsidiary of Holdings may make loans to wholesale dealers not to exceed
$30,000,000 at any time outstanding.


(u)           Section
8.9 of the Credit Agreement is hereby deleted in its entirety and replaced with
the following:


8.9           Optional Payments and Modifications of
Certain Debt Instruments.  (a) Make any optional or voluntary payment,
prepayment, repurchase or redemption of or otherwise optionally or voluntarily
defease or segregate funds with respect to the Second Lien Notes (or any
refinancing thereof) and any Indebtedness the payment of principal and interest
of which and other obligations of Holdings or any of its Subsidiaries in
respect of which are subordinated to the prior payment in full of the
obligations hereunder (other than the Senior Subordinated Notes, which may be
refinanced with the proceeds of a Permitted Refinancing or an equity issuance
of Holdings pursuant to the terms hereof, the Second Lien Notes, which may be
refinanced pursuant to the terms of the Intercreditor Agreement, and any IASG
Notes and related premiums required in connection with the refinancing thereof,
which may be repaid or defeased with the proceeds of New Term Loans hereunder
and cash on hand on the Amendment Effective Date); (b) amend, modify, waive or
otherwise change, or consent or agree to any amendment, modification, waiver or
other change to, any of the terms of any Indebtedness described in clause (a)
(including the Senior Subordinated Notes and the Second Lien Notes) (other than
any such amendment, modification, waiver or other change that (i) would extend
the maturity or reduce the amount of any payment of principal thereof or reduce
the rate or extend any date for payment of interest thereon, (ii) could not
reasonably be expected to increase the obligations of the obligor or confer
additional rights on the holder of such subordinated Indebtedness, in each
case, in a manner reasonably expected to be materially adverse to the interests
of the Lenders or (iii) in the case of the Second Lien Notes, is permitted by
the Intercreditor Agreement); or (c) designate any Indebtedness (other than
obligations of the Loan Parties pursuant to the Loan Documents) as “Designated
Senior Indebtedness” (or any other defined term having a similar purpose) for
the purposes of the indenture governing the Senior Subordinated Notes or any
Permitted Refinancing thereof.


(v)           Section
8.10 of the Credit Agreement is hereby amended to:  (i) delete the word “and” at the end of
clause (i) thereof; (ii) insert the following new clause (ii) at the end
thereof:  “(ii) the Acquisition may be
consummated as set forth in Section 8.4(d),”; and (iii) re-number existing
clause (ii) to become clause (iii) and replace the words “the Borrower and its
Subsidiaries” therein with the words “the Borrower and each other Subsidiary of
Holdings.”


(w)          Section
8.14 of the Credit Agreement is hereby amended to add in clause (c) thereof
after the words “Senior Subordinated Notes and any Permitted Refinancing
thereof” the words “, the Second Lien Notes and any refinancing thereof
permitted under Section 8.2(q)”.


(x)            Section
8.15 of the Credit Agreement is hereby amended to (i) replace the words “Subsidiary
of the Borrower” in each place they appear therein with the words “Subsidiary
of Holdings



 16
 









(other than the Borrower)”; and (ii) add in clause
(c)(iii) thereof after the words “Senior Subordinated Notes and any Permitted
Refinancing thereof” the words “, the Second Lien Notes and any refinancing
thereof permitted under Section 8.2(q)”.


(y)           Section
8.16 of the Credit Agreement is hereby amended to replace the words “the
Borrower and its Subsidiaries” therein with the words “the Subsidiaries of
Holdings”.


(z)            Section
8.17 of the Credit Agreement is hereby amended to add the words “and IASG”
after the words “the Borrower” in clauses (a) and (c) thereof in each instance
they appear therein.


(aa)         Section
11.5 of the Credit Agreement is hereby amended to replace the words “the
Borrower agrees not to assert and to cause its Subsidiaries not to assert, and
hereby waives and agrees to cause its Subsidiaries” with the words “each of
Borrower and Holdings agrees not to assert and to cause its respective
Subsidiaries not to assert, and hereby waives and agrees to cause its
respective Subsidiaries”.


(bb)         Section
11.17 of the Credit Agreement is hereby deleted in its entirety and replaced
with the following:


11.17.      Delivery of Addenda and Joinder Agreements.  Each
Lender, by delivering to the Administrative Agent an Addendum or Joinder
Agreement duly executed by such Lender and funding its Term Loans and/or
Revolving Loans on the Closing Date or the Repricing Effective Date or by
funding any New Term Loans on any Increased Amount Date, shall be deemed to
have acknowledged receipt of, and consented to and approved, each Loan Document
and each other document required to be approved by any Agent, Required Lenders
or Lenders, as applicable, on the Closing Date or the Repricing Effective Date
or as of such Increased Amount Date.


SECTION
5.           Conditions to Amendment Effective Date.  The
amendment contained in Section 4 shall not be effective unless each of the
conditions precedent set forth in Section 2 and each of the following
conditions precedent is satisfied (the date on which all such conditions have
been satisfied being referred to herein as the “Amendment Effective Date”):


(a)           the
Administrative Agent shall have received (i) counterparts of the Intercreditor
Agreement (substantially in the form of Annex C hereto) executed by the
Administrative Agent, the Second Lien Agent (as defined therein), Holdings and
the Borrower and (ii) an Assumption Agreement (as defined in the Guarantee and
Collateral Agreement), executed by IASG and each of its Subsidiaries, joining
the Guarantee and Collateral Agreement as an Additional Grantor (as defined in
the Guarantee and Collateral Agreement), together with updated schedules
thereto as applicable;


(b)           the
Administrative Agent shall have received signed authorization to execute this
Amendment from the Required Lenders and the Majority Facility Lenders with
respect to each Facility;


(c)           the
Acquisition and related transactions shall have been consummated simultaneously
with the effectiveness of this Amendment, and the Acquisition Agreement and all
other related documentation shall be reasonably satisfactory to the
Administrative Agent; IASG shall have received the consent of the requisite
holders of the IASG Notes to the exchange of such IASG Notes for Second Lien
Notes and to remove all restrictive covenants required therein, and an amount sufficient to defease in
full all IASG Notes not so exchanged for Second Lien Notes shall have been
irrevocably deposited with the trustee for the holders of such IASG Notes
concurrently with the consummation of the



 17
 









Acquisition; and the Second Lien Indenture and all
other related documentation shall be reasonably satisfactory to the
Administrative Agent;


(d)           no
indebtedness of IASG, other than indebtedness permitted to exist pursuant to
the Credit Agreement as amended hereby, shall exist upon the consummation of
the Acquisition;


(e)           all governmental and material third party approvals (i) required in the
Acquisition Agreement, and (ii) necessary in connection with this Amendment
(including stockholder approvals, if any) shall have been obtained and be in
full force and effect or (in the case of clause (i)) waived in accordance with
the Acquisition Agreement; provided no such waiver that would be
materially adverse to the Lenders shall be permitted without the prior written
consent of the Administrative Agent, not to be unreasonably withheld;


(f)            the Administrative Agent shall have received
the results of a recent lien search in each of the jurisdictions where IASG and
its Subsidiaries are organized and where assets of IASG and its Subsidiaries
are located, and such search shall reveal no liens on any of the assets of the
Loan Parties except for Liens permitted by Section 8.3 of the Credit Agreement
or discharged on or prior to the Amendment Effective Date pursuant to
documentation reasonably satisfactory to the Administrative Agent;


(g)           the
Administrative Agent shall have received all fees required to be paid, and all
expenses for which invoices have been presented (including the reasonable fees
and expenses of legal counsel), on or before the Amendment Effective Date;


(h)           the
Administrative Agent shall have received a certificate of each Loan Party,
dated the Amendment Effective Date, substantially in the form of Exhibit B to
the Credit Agreement, with appropriate insertions and attachments including the
certificate of incorporation of each Loan Party that is a corporation certified
by the relevant authority of the jurisdiction of organization of such Loan
Party and a long form good standing certificate for each Loan Party from its
jurisdiction of organization; provided that in lieu of delivering
certificates of incorporation for each Loan Party, Borrower may deliver a
certificate of a duly authorized officer certifying that there have been no
material amendments to those certificates of incorporation previously delivered
to BSCL, as the Administrative Agent, in connection with Original Credit
Agreement or the Restatement Effective Date;


(i)            the Lead Arranger shall have received the
following executed legal opinions:  the
legal opinion of Kirkland & Ellis LLP, counsel to Holdings and its
Subsidiaries, in form reasonably satisfactory to the Administrative Agent; and,
if requested by the Administrative Agent, legal opinions of local counsel in
each jurisdiction where Mortgaged Property is located, in each case in form
reasonably satisfactory to the Administrative Agent.  Each such legal opinion shall cover such
other matters incident to the transactions contemplated by this Amendment as
the Administrative Agent may reasonably require;


(j)            the
Administrative Agent shall have received (i) the certificates representing the
shares of Capital Stock of IASG and its Subsidiaries pledged pursuant to the
Guarantee and Collateral Agreement, together with an undated stock power for
each such certificate executed in blank by a duly authorized officer of the
pledgor thereof and (ii) each promissory note (if any) of IASG and its
Subsidiaries pledged to the Administrative Agent pursuant to the Guarantee and
Collateral Agreement endorsed (without recourse) in blank (or accompanied by an
executed transfer form in blank) by the pledgor thereof;



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(k)           each
document (including any Uniform Commercial Code financing
statement) required by the Security Documents or under law or reasonably
requested by the Administrative Agent to be filed, registered or recorded in
order to create in favor of the Administrative Agent, for the benefit of the
Lenders, a perfected Lien on the Collateral described therein, prior and
superior in right to any other Person (other than with respect to Liens
expressly permitted by Section 8.3 of the Credit Agreement), shall be in proper
form for filing, registration or recordation;


(l)            (i)  the Administrative Agent shall have received
Mortgages with respect to each Mortgaged Property listed on the modification to
Schedule 1.1(c), executed and delivered by a duly authorized officer of each
party thereto in recordable form in the applicable state in which such
Mortgaged Property is located;


(ii)  if requested by the Administrative Agent, the
Administrative Agent shall have received, and the title insurance company
issuing the policy referred to in clause (iii) below (the “Title Insurance Company”)
shall have received, maps or plats of an as-built survey of the sites of such
owned Mortgaged Properties (it being understood that no surveys shall be
required for any of the leased Mortgaged Properties listed on the modification
to Schedule 1.1(c)) certified to the Administrative Agent and the Title
Insurance Company in a manner reasonably satisfactory to them, dated a date
reasonably satisfactory to the Administrative Agent and the Title Insurance
Company by an independent professional licensed land surveyor reasonably
satisfactory to the Administrative Agent and the Title Insurance Company, which
maps or plats and the surveys on which they are based shall be made in
accordance with the Minimum Standard Detail Requirements for Land Title Surveys
jointly established and adopted by the American Land Title Association and the
American Congress on Surveying and Mapping in 1992, and, without limiting the
generality of the foregoing, there shall be surveyed and shown on such maps,
plats or surveys the following: (A) the locations on such sites of all the
buildings, structures and other improvements and the established building
setback lines; (B) all exceptions set forth on Schedule B of the title
insurance policies delivered in clause (iii) below; (C) the lines of streets
abutting the sites and width thereof; (D) all access and other easements
appurtenant to the sites; (E) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances affecting
the site, whether recorded, apparent from a physical inspection of the sites or
otherwise known to the surveyor; (F) any encroachments on any adjoining
property by the building structures and improvements on the sites; (G) if the
site is described as being on a filed map, a legend relating the survey to said
map; and (H) the flood zone designations, if any, in which the Mortgaged
Properties are located;


(iii)  the Administrative Agent shall have received
in respect of each owned Mortgaged Property listed on the modification to
Schedule 1.1(c) (it being understood that no endorsements to mortgagee title
insurance policies shall be required for any of the leased Mortgaged Properties
listed on the modification to Schedule 1.1(c)) endorsements to mortgagee title
insurance policies or marked up unconditional commitment or pro forma for such
insurance delivered in connection with the Original Credit Agreement or the
Restatement Effective Date.  Each such
endorsement shall (A) be in an amount reasonably satisfactory to the Administrative
Agent; (B) be issued at ordinary rates; (C) insure that the Mortgage insured
thereby creates a valid first Lien on such Mortgaged Property free and clear of
all defects and encumbrances, except as disclosed therein and as reasonably
acceptable to the Administrative Agent; (D) name the Administrative Agent for
the benefit of the Lenders as the insured thereunder; (E) be in the form of
ALTA Loan Policy - 1970 (Amended 10/17/70 and 10/17/84) (or equivalent
policies); (F) contain such endorsements and affirmative coverage as the
Administrative Agent may reasonably request and (G) be issued by title
companies reasonably satisfactory to the Administrative Agent (including any
such title companies acting as co-insurers or reinsurers, at the option of the Administrative



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Agent).  The
Administrative Agent shall have received evidence reasonably satisfactory to it
that all premiums in respect of each such endorsement to any such policy, all
charges for Mortgage recording tax, and all related expenses, if any, have been
paid;


(iv)  The Administrative Agent shall have received
(A) a policy of flood insurance that (1) covers any parcel of improved owned
real property owned by IASG or any of its Subsidiaries located in a federally
recognized flood zone that is encumbered by any Mortgage, (2) is written in an
amount not less than the outstanding principal amount of the indebtedness
secured by such Mortgage that is reasonably allocable to such owned real
property or the maximum limit of coverage made available with respect to the
particular type of property under the National Flood Insurance Act
of 1968, whichever is less, and (3) has a term ending not later than the
maturity of the Indebtedness secured by such Mortgage and (B) confirmation that
the Borrower has received the notice required pursuant to Section 208(e)(3) of
Regulation H of the Board; and


(v)  the Administrative Agent shall have received
a copy of all recorded documents referred to, or listed as exceptions to title
in, the title policy or policies referred to in clause (iii) above and a copy
of all other material documents affecting the Mortgaged Properties owned by
IASG or any of its Subsidiaries;


(m)          the
Lead Arranger shall have received and shall be reasonably satisfied with a
solvency certificate of the chief financial officer of Holdings substantially
in the form of Exhibit K to the Credit Agreement, which shall document the
solvency of the Loan Parties after giving effect to the Acquisition and other
transactions contemplated hereby;


(n)           the
Administrative Agent shall have received such other documents and instruments
as it may reasonably request;


(o)           the
Administrative Agent shall have received modifications to the Schedules to the
Credit Agreement after giving effect to the Acquisition, and the representations
and warranties made in each Loan Document, after giving effect to such schedule
modifications, will be true and correct in all material respects when this
Amendment becomes effective, except to the extent that such representations and
warranties refer to an earlier date (in which case they are true and correct in
all material respects as of such earlier date); and


(p)           no
Default shall have occurred and be continuing.


SECTION 6.           Representations and Warranties.


Holdings and Borrower jointly and severally
represent and warrant that:


(a)           Authority.  Each of Holdings and the
Borrower has the requisite power and authority to execute, deliver and perform
its obligations under this Amendment. 
Each Grantor has the requisite power and authority to execute, deliver
and perform its obligations under the Consent and the Loan Documents, as
amended hereby.  The execution, delivery
and performance by Holdings and the Borrower of this Amendment and by the
Grantors of the Consent, and the performance by each Loan Party of each Loan
Document (as amended hereby) to which it is a party have been duly approved by
all necessary organizational action of such Loan Party.


(b)           Enforceability.  This
Amendment has been duly executed and delivered by Holdings and the Borrower and
the Consent has been duly executed and delivered by each Grantor.  On the Amendment Effective Date or Repricing
Effective Date, as the case may be, each of this Amendment, 



 20
 









the
Consent and each Loan Document (as amended hereby) is the legal, valid and binding
obligation of each Loan Party party thereto, enforceable against such Loan
Party in accordance with its terms except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and by general
equitable principles (whether enforcement is sought in proceedings in equity or
at law).


(c)           Status of Debt.  The
incurrence of Indebtedness on the Amendment Effective Date or Repricing
Effective Date, as the case may be, and at any time thereafter, under the
Credit Agreement is permitted under the indentures governing the Senior
Subordinated Notes and the Second Lien Notes (if then existing), and the debt
so incurred will constitute Senior Debt and Designated Senior Debt under and as
defined in such indenture governing the Senior Subordinated Notes.


(d)           Representations and Warranties.  The
representations and warranties made by each Loan Party in the Loan Documents
are true and correct in all material respects on the Amendment Effective Date
or Repricing Effective Date, as the case may be.


SECTION
7.           Reference to and Effect on the Loan Documents.


(a)           If and when all or any portion of this Amendment becomes effective,
each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”
or words of like import referring to the Credit Agreement, and each reference
in the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof”
or words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as amended hereby.


(b)           The Credit Agreement, as amended hereby, and the other Loan Documents
are and shall continue to be in full force and effect and are hereby in all
respects ratified and confirmed.  Without
limiting the generality of the foregoing, the Security Documents and all of the
Collateral described therein do and shall continue to secure the payment of all
Obligations (including the Tranche B Term Loans) under and as defined in the
Credit Agreement, as amended hereby.


(c)           The execution, delivery and effectiveness of this Amendment shall not
operate as a waiver of any right, power or remedy of any Lender or Agent under
any of the Loan Documents or constitute, except as expressly set forth herein,
a waiver or amendment of any provision of any of the Loan Documents.


(d)           This Amendment is a Loan Document. 
The provisions of Sections 11.12 and 11.16 of the Credit Agreement shall
apply with like effect to this Amendment.


SECTION
8.           Counterparts.  This Amendment and the Consent may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.  Delivery of
an executed counterpart of a signature page to this Amendment (or any
authorization to execute this Amendment) or the Consent by facsimile shall be
effective as delivery of a manually executed counterpart thereof.


SECTION
9.           Governing Law.  This Amendment shall be governed
by, and construed in accordance with, the laws of the State of New York.


[signature pages follow]



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IN WITNESS
WHEREOF, the parties hereto have caused this Amendment to be executed by their
respective officers thereunto duly authorized, as of the date first written
above.


 


	
  

  	
  PROTECTION ONE,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric A.
  Devin

  	
   

  
	
   

  	
  Name:  Eric A. Devin

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PROTECTION ONE
  ALARM MONITORING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Eric A.
  Devin

  	
   

  
	
   

  	
  Name:  Eric A. Devin

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BEAR STEARNS
  CORPORATE LENDING INC.,

  
	
   

  	
     as
  Administrative Agent and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Victor
  Bulzacchelli

  	
   

  
	
   

  	
  Name:  Victor Bulzacchelli

  
	
   

  	
  Title: Vice President

  
							



 



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