Exhibit 10.4
Quadrangle Advisors LLC
375 Park Avenue
New York, New York 10152
April 18, 2005
Protection One, Inc.
1035 North 3rd Street, Suite 101
Lawrence, Kansas 66044
Ladies and Gentlemen:
THIS LETTER SERVES TO CONFIRM THE RETENTION BY PROTECTION ONE, INC. (THE
"COMPANY") OF QUADRANGLE ADVISORS LLC TO PROVIDE BUSINESS AND FINANCIAL ADVISORY
SERVICES TO THE COMPANY AND ITS DIVISIONS, SUBSIDIARIES AND AFFILIATES
(COLLECTIVELY, "PROTECTION ONE"), AS FOLLOWS:
1.
THE COMPANY HAS RETAINED US, AND WE
HEREBY AGREE TO ACCEPT SUCH RETENTION, TO ADVISE AND CONSULT WITH THE COMPANY'S
BOARD OF DIRECTORS AND SENIOR EXECUTIVE OFFICERS IN SUCH MANNER AND ON SUCH
BUSINESS AND FINANCIAL MATTERS AS MAY BE REASONABLY REQUESTED FROM TIME TO TIME
BY THE COMPANY'S BOARD OF DIRECTORS OR SENIOR EXECUTIVE OFFICERS, INCLUDING BUT
NOT LIMITED TO:
(I)
CORPORATE STRATEGY;
(II)
BUDGETING OF FUTURE CORPORATE INVESTMENTS;
(III)
ACQUISITION AND DIVESTITURE STRATEGIES;
(IV)
DEBT AND EQUITY FINANCINGS; AND
(V)
STRATEGIC ALLIANCES.
WITHOUT LIMITING THE FOREGOING, WE UNDERSTAND THAT THE COMPANY ANTICIPATES THAT
WE WILL GENERALLY BE REQUESTED TO CONSULT WITH THE COMPANY'S SENIOR EXECUTIVE
OFFICERS REGARDING BUSINESS AND FINANCIAL MATTERS:
(A)
AT LEAST WEEKLY, BY TELEPHONE;
(B)
MONTHLY, TELEPHONICALLY OR IN PERSON, IN
CONNECTION WITH THE REVIEW OF MONTHLY FINANCIAL PERFORMANCE; AND
(c)
telephonically or in person, prior to each
meeting of the Company's board of directors.
WE SHALL USE REASONABLE EFFORTS TO DEAL EFFECTIVELY WITH ALL MATTERS SUBMITTED
TO US HEREUNDER AND ENDEAVOR TO FURTHER, BY PERFORMANCE OF OUR SERVICES
HEREUNDER, THE POLICIES AND OBJECTIVES OF THE COMPANY.
THE COMPANY AGREES TO PAY US AN ANNUAL FEE OF AN AMOUNT EQUAL TO ONE MILLION
DOLLARS ($1,000,000)
(THE "ANNUAL FEE"), PAYABLE IN QUARTERLY INSTALLMENTS IN
ADVANCE AT THE BEGINNING OF EACH CALENDAR QUARTER.
ON APRIL 19, 2005, THE
COMPANY AGREES TO PAY US AN AMOUNT EQUAL TO (A) $140,000, REPRESENTING THE PRO
RATA PORTION OF THE ANNUAL FEE FROM FEBRUARY 8, 2005 THROUGH MARCH 31, 2005,
PLUS (B) $250,000, REPRESENTING THE ANNUAL FEE INSTALLMENT FOR THE SECOND
QUARTER OF 2005.
ON TERMINATION OF THIS AGREEMENT, ANY PORTION OF THE ANNUAL
FEE PAID BY THE COMPANY FOR A QUARTERLY PERIOD THAT INCLUDES THE DATE OF
TERMINATION SHALL BE PRORATED, AND WE SHALL PROMPTLY REIMBURSE THE COMPANY FOR
ANY PORTION OF THE ANNUAL FEE RECEIVED BY US TO THE EXTENT RELATING TO A
QUARTERLY PERIOD OR PORTION THEREOF AFTER THE DATE OF TERMINATION.
2.
IF WE, OR ANY OF OUR AFFILIATES, ADVISE
OR CONSULT WITH THE COMPANY'S BOARD OF DIRECTORS OR SENIOR EXECUTIVE OFFICERS
WITH RESPECT TO AN ACQUISITION BY THE COMPANY, DIVESTURE (IF THE COMPANY DOES
NOT ENGAGE A FINANCIAL ADVISOR WITH RESPECT TO SUCH DIVESTURE) OR FINANCING
TRANSACTION, WE MAY ALSO INVOICE THE COMPANY FOR, AND THE COMPANY AGREES TO PAY,
ADDITIONAL FEES IN CONNECTION WITH ANY SUCH TRANSACTION IN AN AMOUNT NOT TO
EXCEED 0.667% OF THE AGGREGATE VALUE OF SUCH TRANSACTION.
IN THE EVENT THAT WE,
OR ANY OF OUR AFFILIATES, ARE REQUESTED BY THE COMPANY TO PERFORM OTHER SERVICES
FOR PROTECTION ONE ABOVE