Exhibit
10.2


LOCK UP AND CONSENT AGREEMENT


This Lock Up and Consent Agreement (the “Agreement”),
dated as of December 18, 2006, is entered into and made by and among Protection
One Alarm Monitoring, Inc. (“POAMI”), Integrated Alarm Services Group,
Inc. (“IASG”) and each of the undersigned holders (each, a “Consenting
Holder” and, together, the “Consenting Holders”) of the Old Notes
(as defined below).


WHEREAS, IASG has issued $125,000,000 aggregate
principal amount of 12% Senior Secured Notes due 2011 (the “Old Notes”),
pursuant to an Indenture (the “Old Note Indenture”), dated as of
November 16, 2004, by and among IASG, the guarantors named therein and Wells
Fargo Bank, N.A., as trustee (the “Trustee”);


WHEREAS, IASG, POAMI and Protection One, Inc. (“POI”)
are contemplating a merger transaction (the “Merger”) pursuant to which
IASG would be merged with and into a new subsidiary of POI or POAMI;


WHEREAS, POAMI, IASG and the Consenting Holders are
contemplating an offer to exchange the Old Notes for a new series of 12% Senior
Secured Notes due 2011 of POAMI (the “New Notes”) (such offer to be
known herein as the “Exchange Offer”);


WHEREAS, as part of the Exchange Offer, IASG will
solicit consents to the terms of the Old Notes set forth in the Old Note
Indenture to remove many of the restrictive covenants and events of default
contained therein, among other modifications (the “Amendments”) and
obtain the waiver of the holders of the Old Notes with respect to any existing
defaults under the Old Notes and all related documents (the “Waiver,”
and together with the Amendments, the “Consent Solicitation”);


WHEREAS, POAMI and the Consenting Holders have engaged
in good faith negotiations with the objective of reaching an agreement with
regard to the Exchange Offer and Consent Solicitation, the material terms of
which are set forth on the term sheet annexed hereto as Exhibit A (the “Term
Sheet”);


WHEREAS, to implement the
transactions contemplated by the Term Sheet, POAMI and IASG intend to prepare
and deliver an Offering Memorandum and Consent Solicitation Statement (the “Offering
Memorandum”) with respect to the Exchange Offer and Consent Solicitation;


WHEREAS, each Consenting Holder is the beneficial
owner and/or the investment adviser or manager for the beneficial owner (with
the power to vote and dispose on behalf of such beneficial owner) of the
aggregate principal amount of Old Notes (for each such party, the “Relevant
Ownership”), in each case as set forth below each such Consenting Holder’s
signature attached hereto;


WHEREAS, in connection with the Exchange Offer and
Consent Solicitation, each Consenting Holder intends to exchange its Old Notes
for New Notes pursuant to the Exchange Offer and consent to the Amendments and
Waiver pursuant to the Consent










 



Solicitation, and POAMI and IASG desire to obtain the
agreement of the Consenting Holders to participate in the Exchange Offer and
Consent Solicitation.


NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, POAMI, IASG and the
Consenting Holders agree as follows:


Section 1.               Voting.  Each Consenting Holder represents and
warrants that, as of the date hereof, it is the legal owner, beneficial owner
and/or the investment adviser or manager for the beneficial owner (with the
power to vote and dispose on behalf of such beneficial owner) of such legal or
beneficial owner’s Relevant Ownership and that there are no Old Notes of which
it is the legal owner, beneficial owner and/or investment advisor or manager
for such legal or beneficial owner which are not part of its Relevant
Ownership.  Subject to the consummation
of the Merger pursuant to terms and conditions that are substantially similar
to that certain draft Agreement and Plan of Merger dated December 18, 2006,
each Consenting Holder agrees for itself that it shall, in connection with the
(i) Exchange Offer, tender its Old Notes in exchange for the New Notes, and (ii)
Consent Solicitation, timely vote its Relevant Ownership and any other claims
or interests that it holds to consent to the Amendments and the Waiver,
subject, in each case, to the terms and conditions of the Exchange Offer, New
Notes and Consent Solicitation being consistent with the Term Sheet in all
respects.


Section 2.               Transmittal.  Each Consenting Holder agrees that it shall
deliver to the depositary for the Exchange Offer and Consent Solicitation, no
later than the fifth (5th) business day following the commencement of the
Exchange Offer and Consent Solicitation, the form of consent and letter of
transmittal to be provided by POAMI in connection with the Exchange Offer and
Consent Solicitation together with any and all certificates representing the
Old Notes owned by it.  Each Consenting
Holder hereby agrees that POAMI has the right to publish and disclose in the
Offering Memorandum to be delivered to holders of the Old Notes and any press
releases issued in connection with the Exchange Offer and Consent Solicitation
the identity of such Consenting Holder and the nature of its agreements,
commitments, arrangements and understandings under this Agreement.


Section 3.               Restrictions on Transfer.  Each of the Consenting Holders hereby agrees
that, for so long as this Agreement shall remain in effect, it shall not sell,
transfer or assign all or any of its Relevant Ownerships or any option thereon
or any right, interest (voting or otherwise) therein, unless the transferee
agrees in writing to be bound by the terms of this Agreement by executing a
counterpart signature page to this Agreement and the transferor promptly
provides POAMI with a copy thereof.  Each
of the Consenting Holders further agrees that it will not grant any proxies or
powers of attorney with respect to the Old Notes, other than to the holder of
record with respect to the matters contemplated hereby, deposit any Old Notes
into a voting trust or enter into a voting agreement with respect to any Old
Notes.


Section 4.               Further Acquisition of Old Notes.  This Agreement shall in no way be construed
to preclude the Consenting Holders or any of their respective subsidiaries or
affiliates from acquiring additional Old Notes. 
However, any such additional Old Notes acquired by a Consenting Holder
or any of their respective subsidiaries or affiliates shall



 2
 






 



automatically be deemed
to be Relevant Ownerships and subject to the terms of this Agreement.  Upon the request of POAMI, each Consenting
Holder shall provide an accurate and current written list of the Relevant
Ownerships held by such Consenting Holder, and in any event shall provide such
written list of the Relevant Ownerships on the second business day prior to the
expected commencement of the Exchange Offer and Consent Solicitation.


Section 5.               Representations and Warranties.  Each of the Consenting Holders and POAMI
represents and warrants to one another that the following statements are true,
correct and complete as of the date hereof:


(a)           Power and
Authority.  It has all requisite
power and authority (including, but not limited to corporate, partnership or
limited liability company power and authority) to enter into this Agreement, to
carry out the transactions contemplated hereby and to perform its obligations
hereunder.


(b)           Authorization.  The execution and delivery of this Agreement
and the performance of its obligations hereunder have been duly authorized by
all necessary corporate, partnership or limited liability company action on its
part.


(c)           No Conflicts.  The execution, delivery and performance of
this Agreement does not and shall not: (i) violate any provision of law, rule
or regulation applicable to it or any of its subsidiaries, (ii) violate its
certificate or articles of incorporation, bylaws or other organizational
documents or those of any of its subsidiaries; or (iii) conflict with, result
in a breach of or constitute (with due notice or lapse of time or both) a
default under any material contractual obligation to which it or any of its
subsidiaries is a party.


(d)           Governmental
Consents.  The execution, delivery
and performance by it of this Agreement do not and shall not require any
registration or filing with, consent or approval of, or notice to, or other
action to, with or by, any federal, state or other governmental authority or regulatory
body.


(e)           Binding
Obligation.  This Agreement is a
legally valid and binding obligation, enforceable in accordance with its terms.


Section 6.               Accredited Investors.  Each of the Consenting Holders understands
and acknowledges that the New Notes have not been registered under the
Securities Act of 1933 (the “Securities Act”) or any other applicable
securities law, the New Notes are being offered for exchange in transactions
not requiring registration under the Securities Act or any other securities laws,
and none of the New Notes may be offered, sold or otherwise transferred except
in compliance with the registration requirements of the Securities Act or any
other applicable securities law, pursuant to an exemption therefrom or in a
transaction not subject thereto.  Each of
the Consenting Holders hereby further represents, warrants and acknowledges
that (i) it is an “accredited investor” as such term is defined in Regulation D
of the Securities Act, (ii) it has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
the Exchange Offer and the Consent Solicitation and (iii) it has received all
information regarding POAMI, IASG, the terms of the contemplated merger
transaction and



 3
 






 



the terms of the New Notes as such Consenting Holder
deems necessary in order to evaluate the merits and risks of the Exchange Offer
and the Consent Solicitation.


Section 7.               Brokers and Intermediaries.  No broker, investment banker, financial
adviser or other person is entitled to any broker’s, finder’s, financial
advisor’s or other similar fee or commission in connection with the Exchange
Offer or Consent Solicitation contemplated hereby based upon arrangements made
by or on behalf of such Consenting Holders.


Section 8.               Complete Agreement;
Modification of Agreement.  This
Agreement and the other agreements referenced herein constitute the complete
agreement between the parties with respect to the subject matter hereof.  This Agreement may not be modified, altered,
amended or supplemented except by an agreement in writing signed by POAMI and
each of the Consenting Holders which are a signatory hereto.


Section 9.               Good Faith Negotiation of
Documents.  Each party hereby further
covenants and agrees to negotiate the documentation implementing the Exchange
Offer and Consent Solicitation and any definitive documents relating thereto
(including, but not limited to, the New Notes and a New Notes indenture) in
good faith and, in any event, in all respects consistent with the Term Sheet.


Section 10.             Specific Performance.  It is understood and agreed by the parties
that money damages would not be a sufficient remedy for any breach of this
Agreement by any party and each non-breaching party shall be entitled to
the remedy of specific performance and injunctive or other equitable relief,
including attorneys’ fees and costs, as a remedy of any such breach, and each
party agrees to waive any requirement for the securing or posting of a bond in
connection with such remedy.


Section 11.             Assignment.  Except as set forth in Section 3, no rights
or obligations of any party under this Agreement may be assigned or transferred
to any other person or entity.


Section 12.             Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE.  By its execution and delivery of this
Agreement, each of the parties hereto hereby irrevocably and unconditionally
agrees for itself that any legal action, suit or proceeding against it with
respect to any matter under or arising out of or in connection with this
Agreement or for recognition or enforcement of any judgment rendered in any
such action, suit or proceeding, may be brought in any court in the State of
New York.  By execution and delivery of
this Agreement, each of the parties hereto hereby irrevocably accepts and
submits itself to the nonexclusive jurisdiction of each such court, generally
and unconditionally, with respect to any such action, suit or proceeding.


Section
13.             Representation by
Counsel.  Each party hereto
acknowledges that it has been represented by counsel in connection with this
Agreement and the transactions contemplated by this Agreement.  Accordingly, any rule of law or any legal
decision that would



 4
 






 



provide any party hereto
with a defense to the enforcement of the terms of this Agreement against such
party based upon lack of legal counsel shall have no application and is
expressly waived.


Section 14.             Independent Due Diligence and
Decision-Making.  Each of the
Consenting Holders hereby confirms that its decision to execute this Agreement
has been based upon its independent investigation of the operations,
businesses, financial and other conditions and prospects of POAMI.  To the extent any materials or information
have been furnished to it by POAMI or IASG, the undersigned hereby acknowledges
that they have been provided for informational purposes only, without any
representation or warranty.


Section 15.             Consideration.  It is hereby acknowledged by POAMI, IASG and
each of the Consenting Holders that no cash consideration shall be due or paid
to the Consenting Holders for their agreement to participate in the Exchange
Offer and vote for the Amendments and Waiver in accordance with the terms and
conditions of this Agreement and the Term Sheet.


Section 16.             Further Assurances.  From time to time, at POAMI’s or IASG’s
request and without further consideration, each Consenting Holder shall execute
and deliver such additional documents and take all such further action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement.


Section 17.             Headings.  The headings of the sections, paragraphs and
subsections of this Agreement are inserted for convenience only and shall not
affect the interpretation hereof.


Section 18.             Prior Negotiations.  This Agreement and the Term Sheet supersede all
prior negotiations with respect to the subject matter hereof.


Section 19.             No Third Party Beneficiaries.  This Agreement shall be solely for the
benefit of the parties hereto, including their permitted assigns, and no other
person or entity shall be a third party beneficiary hereof.  Nothing in this Agreement, express or
implied, shall give to any party or entity other than the parties any benefit
or any legal or equitable right, remedy or claim under this Agreement.


Section 20.             Successors and Assigns.  This Agreement is intended to bind and inure
to the benefit of the parties hereto and their respective successors, permitted
assigns, heirs, executors, administrators and representatives.


Section 21.             Notices.


(a)           All notices
hereunder to be served to POAMI shall be deemed given if in writing and
delivered or sent by telecopy, courier or by registered or certified mail
(return receipt requested) to the following addresses or telecopier numbers (or
at such other addresses or telecopier numbers as shall be specified by like
notice):


Protection One
Alarm Monitoring, Inc.

1035 N. 3rd Street





 5
 






 



Lawrence, KS 66044

Attn: Darius G. Nevin

Fax: (785) 856-9700


 


with copies to:



Protection One, Inc.

4221 W. John Carpenter Frwy.

Irving, TX 75063

Attn: J. Eric Griffin, Esq.

Fax: (972) 916-6195


 


and


 


Kirkland & Ellis LLP

200 E. Randolph Drive

Chicago, IL 60601

Attn: R. Scott Falk, P.C.

Fax: (312) 861-2200


 


and


 


Mayer, Brown, Rowe &
Maw LLP

71 South Wacker Drive

Chicago, Illinois  60606

Attn: Edward S. Best

Fax: (312) 701-7711


 


(b)           All notices
hereunder to be served to a Consenting Holder shall be deemed given if in
writing and delivered or sent by courier or by registered or certified mail
(return receipt requested) to the address for such Consenting Holder set forth
below its signature hereto (or at such other addresses as shall be specified by
like notice) and:


Willkie Farr &
Gallagher LLP

787 Seventh Avenue

New York, NY 10019

Attn: Cristopher Greer

Fax: (212) 728-8111


Section 22.             Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall, collectively and separately, constitute
one and the same agreement.


Section 23.             Termination.  This Agreement shall terminate in all
respects on the earlier to occur of May 31, 2007, and the date of consummation
or abandonment of the Merger or termination of the Merger Agreement (the “Termination
Date”), and shall have no further force or effect after the Termination
Date; provided, however, that such Termination Date may



 6
 






 



be extended upon the written agreement of POAMI, IASG
and Consenting Holders of 66% of the aggregate principal amount of the Old
Notes, and all Consenting Holders shall be bound by this Agreement as so
extended.


*     *    
*     *     *



 7














 


IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.


	
  

  	
  PROTECTION ONE ALARM MONITORING, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Darius G. Nevin

  
	
   

  	
  Its:

  	
  Executive VP and CFO

  
	
   

  	
   

  
	
   

  	
  INTEGRATED ALARM SERVICES GROUP, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles T. May

  
	
   

  	
  Its:

  	
  Chief Executive Officer

  



 









 



 


	
  

  	
  HOLDERS OF RELEVANT OWNERSHIP:

  
	
   

  	
   

  
	
   

  	
  GREYWOLF HIGH YIELD MASTERS FUND

  
	
   

  	
  GREYWOLF CAPITAL PARTNERS II LP

  
	
   

  	
  GREYWOLF CAPITAL PARTNERS LP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  GREYWOLF CAPITAL MANAGEMENT LP, as Investment
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michelle Lynd

  
	
   

  	
   

  	
  Name:

  	
  Michelle Lynd

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
  Aggregate Principal Amount

  of Old Notes: $37,925,000

  
	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
  87 Graham Street, Suite
  140

  San Francisco, CA 94129-1722

  



 









 



 


	
  

  	
  GLENVIEW CAPITAL PARTNERS,
  LP

  GLENVIEW INSTITUTIONAL PARTNERS, LP

  GLENVIEW CAPITAL MASTER FUND, LTD

  GCM LITTLE ARBOR PARTNERS, LP

  GCM LITTLE ARBOR INSTITUTIONAL PARTNERS, LP

  GCM LITTLE ARBOR MASTER FUND, LTD

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry Robbins

  
	
   

  	
   

  	
  Name: 

  	
  Larry Robbins

  
	
   

  	
   

  	
  Title: 

  	
  CEO, Glenview Capital 

  
	
   

  	
   

  	
   

  	
  Management, LLC

  
	
   

  	
   

  
	
   

  	
  Aggregate Principal Amount

  of Old Notes: $29,500,000

  
	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
  767 Fifth Avenue, 44th
  Floor

  New York, NY 10153

  



 









 



 


	
  

  	
  CASPIAN CAPITAL PARTNERS, L.P.

  MARINER OPPORTUNITIES FUND, LP

  MARINER LDC

  MARINER VOYAGER MASTER FUND, LTD

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  MARINER INVESTMENT GROUP,
  INC., as Investment Advisor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Adam S. Cohen

  
	
   

  	
   

  	
  Name:

  	
  Adam S. Cohen

  
	
   

  	
   

  	
  Title:

  	
  Principal

  
	
   

  	
   

  
	
   

  	
  Aggregate Principal Amount

  of Old Notes of All Entities Listed on this Page: $18,500,000

  
	
   

  	
   

  
	
   

  	
  Address for Notices of All
  Entities Listed on this Page:

  
	
   

  	
   

  
	
   

  	
  500 Mamaroneck Avenue,
  Suite 101

  Harrison, NY 10528

  



 









 



 


	
  

  	
  RIVA RIDGE MASTER FUND,
  LTD.

  MARINER LDC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  RIVA RIDGE CAPITAL
  MANAGEMENT LP, as Investment Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  RIVA RIDGE GP LLC, GP to
  the Investment Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen Golden

  
	
   

  	
   

  	
  Name:

  	
  Stephen Golden

  
	
   

  	
   

  	
  Title:

  	
  Managing Member

  
	
   

  	
   

  
	
   

  	
  Aggregate Principal Amount

  of Old Notes: $12,920,000

  
	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
  55 Fifth Avenue, 18th Floor

  New York, NY  10003

  



 









 



 


	
  

  	
  REDWOOD MASTER FUND, LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan Kolatch

  
	
   

  	
   

  	
  Name:

  	
  Jonathan Kolatch

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
  Aggregate Principal Amount

  of Old Notes: $8,000,000

  
	
   

  	
   

  
	
   

  	
  Address for Notices

  
	
   

  	
   

  
	
   

  	
  910 Sylvan Avenue

  Englewood Cliffs, NJ 07632

  



 
















EXHIBIT A


PROTECTION ONE, INC.

INTEGRATED ALARM SERVICES GROUP, INC.


EXCHANGE OFFER TERM SHEET FOR IASG 12% SENIOR
SECURED NOTES


This term sheet is a
confidential proposal made to certain holders of the 12% Senior Secured Notes
of Integrated Alarm Services Group, Inc. (“IASG”) listed on Schedule A
hereto, acting in their capacity as bondholders, that describes the principal
terms and conditions of a proposed exchange offer for such existing 12% Senior
Secured Notes.  The terms and conditions
outlined in this term sheet are not intended to be all-inclusive, but
rather set forth a general framework from which a mutually satisfactory
exchange offer may be structured.  The
actual terms and conditions are subject to, among other things, requisite
approvals and satisfactory preparation and review of documentation.  This term sheet supersedes any prior oral or
written agreements, proposals or understandings with respect to the matters
described herein.  The parties agree that
the actual indenture may require customary changes to the terms thereof in
addition to those set forth below, provided that no such changes shall affect
the covenants, related definitions or other economic terms without the consent
of the bondholders.


*              *              *              *


I.                 Comparison of
Terms of Existing Notes and New Notes


	
   

  	
  Existing
  Indenture

  	
  Proposed
  Indenture

  
	
  Issuer:

  	
  Integrated Alarm
  Services Group, Inc.

  	
  Protection One
  Alarm Monitoring, Inc. (“POAMI”)

  
	
  Issue:

  	
  Senior Secured
  Notes (the “Existing Notes”)

  	
  New Senior
  Secured Notes (the “New Notes”)

  
	
  Principal
  Amount:

  	
  $125 million

  	
  Based upon
  principal amount exchanged (on a par-for-par basis)

  
	
  Maturity
  Date:

  	
  November 15,
  2011

  	
  Same

  
	
  Interest
  Rate:

  	
  12% per annum
  (currently 13% due to non-registration), payable semi-annually in cash
  on May 15 and November 15

  	
  Initially 13%
  per annum due to non-registration, subject to reduction to 12% upon
  consummation of an exchange of the New Notes as described below under “Registration
  Rights”

  



 









 



 


	
  Ranking:

  	
  The Existing
  Notes are senior secured obligations of IASG.

  	
  The New Notes
  will be pari passu in right of
  payment to POI/POAMI’s senior secured term loan and revolving credit facility
  and senior to POAMI’s 8-1/8% subordinated notes (the “8-1/8% Notes”).  The New Notes will be secured by a second
  priority lien on POAMI’s assets, subject to an intercreditor agreement
  reasonably acceptable to all parties. 
  The intercreditor provisions in such agreement shall provide, among
  other things, that (i) the lenders (the “Senior Lienholders”) under the
  POI/POAMI senior secured term loan and revolving credit facility (the “Bank
  Debt”) will have an absolute block on the ability of the holders of the New
  Notes (the “Second-Lien Lenders”) to exercise lien-related remedies during a
  period of 180 days following notice to the agent for the Senior Lienholders,
  (ii) the Second-Lien Lenders will not object to the Senior Lienholders’
  liens, (iii) the Second-Lien Lenders will not object to a “debtor-in-possession”
  financing below $50mm, which preserves the priority of the Second-Lien
  Lenders in the collateral securing the New Notes relative to the Senior
  Lienholders and (iv) the Second-Lien Lenders will not object to the Senior
  Lienholders’ adequate protection, subject to customary protections granted to
  the Second-Lien Lenders.

   

  In the event
  that the exchange offer described under “Registration Rights” below has
  occurred and Rule 3-10 or Rule 3-16 of Regulation S-X would require the
  filing with the SEC of separate financial statements of any subsidiary due to
  such subsidiary’s capital stock being pledged as collateral for the New Notes
  as so exchanged, such capital stock shall be automatically deemed to not be
  part of the collateral (but only to the extent necessary to not be subject to
  such requirement), it being understood that, upon any change to the assets of
  POAMI or such subsidiary, or any change in such rules that results in such
  separate financial statements not being required to be filed, such capital
  stock (or any portion thereof) shall be included as part of the collateral,
  to the extent such inclusion would not trigger such reporting requirement.

  



 









 



 


	
   

  	
   

  	
   

  
	
  Redemption:

  	
  Optional
  redemption by IASG pursuant to the redemption schedule contained in the
  Existing Notes.

  	
  Same redemption
  schedule, including make-whole provision.

  
	
  Registration
  Rights:

  	
  Registration
  rights pursuant to the Registration Rights Agreement, dated as of November
  16, 2004, by and among IASG, the guarantors named therein, and Morgan Joseph
  & Co. Inc. and Wells Fargo Securities, LLC, as representatives of the
  several purchasers named therein.

  	
  POAMI will use
  its reasonable best efforts to register the New Notes, it being understood
  that the consequence of not registering the New Notes is that the interest
  rate shall not be reduced to 12% during the period of non-registration.

  
	
  Guarantors:

  	
  Subsidiaries of
  IASG identified in the Existing Notes.

  	
  Subsidiaries of
  POAMI that guarantee the Bank Debt or the 8-1/8% Notes; Protection One, Inc.
  (“POI”) and IASG.

  
	
  Covenants:

  	
  The Existing
  Notes contain certain covenants typically found in high yield note
  obligations, including, but not limited to, a change of control put, optional
  redemption, limitations on indebtedness, mergers, transactions with
  affiliates and restricted payments.

  	
  The New Notes
  will contain certain covenants found in the Existing Notes and certain
  revised covenants detailed below. 
  Covenants will apply to a restricted group consisting of POI and all
  of its subsidiaries, including POAMI and IASG, and will generally permit
  transactions within this restricted group. 
  Covenants to be included in the New Notes shall include, without
  limitation:

   

  —Section 4.01
  (Payment of Notes).  Same.

   

  —Section 4.02
  (Maintenance of Office or Agency). 
  Same.

   

  —Revised Section
  4.03 (Commission Reports).   For so
  long as POI is reporting consolidated financials with the SEC that are
  compliant with the Exchange Act, no separate reporting shall be required for
  POI’s subsidiaries.  The covenant shall
  also require POI/POAMI to timely file reports with the SEC and deliver the
  same to their bondholders/trustee.

   

  —Section 4.04
  (Compliance Certificate).  Same.

   

  —Section 4.05
  (Taxes). Same.

   

  —Section 4.06 (Stay, Extension and Usury Laws).  Same.

  

  —Revised Section 4.07 (Limitation on Indebtedness).  Interest coverage ratio to be 

   

  



 









 



 


	
   

  	
   

  	
  reduced to
  2.25:1.0 and related definitions (e.g.,
  coverage ratio, EBITDA and interest expense; provided, however, that EBITDA
  shall not include nonrecurring, unusual and extraordinary items and gains and
  losses on asset sales, and the coverage ratio calculation shall limit pro
  forma calculations to that which is permitted under Regulation S-X; and
  provided, further, that interest expense shall exclude any amortization of
  debt discounts created through purchase accounting adjustments in respect of
  existing discounted debt) to be conformed to those found in indenture for
  8-1/8% Notes.  Senior credit facility
  basket to be $375mm, plus an amount 
  (not to exceed $15mm) sufficient to repurchase all outstanding
  Existing Notes not tendered in the exchange offer, and other permitted
  indebtedness exceptions to be conformed to those found in indenture for
  8-1/8% Notes (e.g., $75mm
  unsecured hell or high water basket, $25mm capital expenditures basket (of
  which up to $15mm may be secured), refinancing indebtedness basket, etc.).

   

  —Revised Section
  4.08 (Restricted Payments).  Covenant
  and related definitions to be conformed to those found in indenture for
  8-1/8% Notes.  The restricted payment
  basket will grow beginning with the first full quarter ended after the
  consummation of the exchange offer, plus $5mm (provided that such $5mm shall
  not be available to pay dividends). 
  Refinancing the 8-1/8% Notes with unsecured senior or subordinated
  indebtedness shall be carved out from the restricted payment covenant.

   

  —Section 4.09
  (Limitation on Liens).  Revised covenant
  to include additional carevouts for (i) any interest or title of a lessor,
  licensor or sublicensor under any lease, license or sublicense entered into
  by POI/POAMI/IASG in the ordinary course of business, (ii) liens securing
  indebtedness in an amount of not more than $5mm and (iii) first priority
  liens under the POI/POAMI senior secured term loan and revolving credit
  facility.

   

  —Section 4.10
  (Repurchase Offer Following 

  



 









 



 


	
   

  	
   

  	
  Excess Retail Attrition).  Shall be deleted.

   

  —Revised Section 4.11 (Limitation on Asset
  Sales).  Covenant and related
  definitions to be conformed to those found in indenture for 8-1/8% Notes (75%
  cash consideration for asset sales; mandatory offer to repurchase if excess
  proceeds at least $10mm).  Revised
  covenant shall also permit transfers of assets among POI, IASG, POAMI and
  their subsidiaries.

   

  —Revised Section 4.12 (Limitation on Restrictions on
  Distributions from Restricted Subsidiaries). 
  Same.

   

  —Revised Section 4.13 (Limitation on Transactions
  with Affiliates).  Covenant to be
  revised to require (i) Board approval if affiliate transaction in excess of
  $5mm (vs. $2mm in Existing Notes indenture) and (ii) Board approval and
  fairness opinion if affiliate transaction in excess of $15mm (vs. $5mm in
  Existing Notes indenture).  There shall
  also be a carveout for transactions among POI, POAMI, IASG and their
  subsidiaries.

   

  —Section 4.14 (Limitation on Purchases of Retail
  Alarm Monitoring Contracts Following Certain Events).  Shall be deleted.

   

  —Section 4.15 (Limitation on Issuances and Sales of
  Equity Interests in Restricted Subsidiaries). 
  Same.

   

  —Section 4.16 (Additional Subsidiary
  Guarantees).  Same.

   

  —Section 4.17 (Business Activities).  Same.

   

  —Section 4.18 (Payments for Consent).  Same.

   

  —Revised Section 4.19 (Repurchase at the Option of
  Holders Upon a Change of Control). Covenant and related definitions to be
  conformed to those found in the indenture for 8-1/8% Notes.

   

  —Revised Section
  5.01 (Merger, Consolidation or Sale of Assets).  Covenant to be revised to delete the Consolidated
  Net Worth Test.

  



 









 



 


	
   

  	
   

  	
  Remaining terms to stay the same.

  





*              *              *              *









 



Schedule A


	
  Name of Bondholder

  	
  Aggregate Principal Amount of

  Old Notes Held

  
	
  GREYWOLF HIGH YIELD MASTER FUND

  	
  $37,925,000

  
	
  GREYWOLF CAPITAL
  PARTNERS II LP

  
	
  GREYWOLF CAPITAL OVERSEAS FUND

  
	
  GLENVIEW CAPITAL
  PARTNERS LP

  	
  $29,500,000

  
	
  GLENVIEW INSTITUTIONAL
  PARTNERS LP

  
	
  GLENVIEW CAPITAL MASTER
  FUND LTD

  
	
  GCM LITTLE ARBOR
  PARTNERS LP

  
	
  GCM LITTLE ARBOR
  INSTITUTIONAL PARTNERS LP

  
	
  GCM LITTLE ARBOR MASTER
  FUND LTD

  
	
  CASPIAN CAPITAL PARTNERS, L.P.

  	
  $18,500,000

  
	
  MARINER LDC

  
	
  MARINER OPPORTUNITIES FUND, LP

  
	
  MARINER VOYAGER MASTER FUND, LTD

  
	
  RIVA RIDGE MASTER FUND, LTD.

  	
  $12,920,000

  
	
  REDWOOD MASTER FUND, LTD.

  	
  $8,000,000

  
	
  TOTAL

  	
  $106,845,000.00