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Exhibit 10.59  

 
 

FIRST AMENDMENT
  TO EMPLOYMENT AGREEMENT    
    

        FIRST AMENDMENT, dated as of February 8, 2005 (this "First Amendment") to the Employment Agreement (the
"Employment Agreement") by and among J. Eric Griffin ("Executive"), Protection One, Inc., a Delaware
corporation (the "Company"), and Protection One Alarm Monitoring, Inc., a Delaware corporation, dated as of July 23, 2004. This First Amendment to the
Employment Agreement shall become effective upon the "Closing Date" (as defined in the Exchange Agreement); provided, that this First Amendment shall be null and void ab
initio upon any termination of the Exchange Agreement in accordance with its terms. 

 
 

W I T N E S S E T H:    

        WHEREAS,
Section 22 of the Employment Agreement provides that any modification of any provision of the Employment Agreement shall be valid only if made in writing and signed by Executive
and a duly authorized officer of the Company; and 

        WHEREAS,
the parties hereto desire to amend certain provisions of the Employment Agreement as more fully set forth herein. 

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

        1.    Defined Terms.    

        (a)   Unless
otherwise stated herein, all capitalized terms have the meanings ascribed to them in the Employment Agreement. 

        (b)   For
purposes of this Agreement, "Exchange Agreement" means that certain Exchange Agreement, dated as of November 12, 2004, to which the Company is a party. 

        2.    Amendments.    

        (a)   Section
4(c) of the Employment Agreement is hereby amended and restated in its entirety to read as follows: 

        "(c) Benefit
Programs. During the period of Executive's employment under this Agreement, Executive shall be eligible to participate in all employee benefit plans and
programs of the Company from time to time in effect for the benefit of senior executives of the Company (subject to meeting generally applicable participation requirements under the applicable plan or
program), including, but not limited to, retention plans, stock option plans, restricted stock grants, 401(k) plans, group life insurance, hospitalization and surgical and major medical coverages,
sick leave, employee stock purchase plans, car allowances, vacations and holidays, long-term disability, and such other benefits as are or may be made available from time to time to senior executives
of the Company. For purposes of this Section 4(c), the term "the Company" shall also include POAMI." 

        (b)   Section
5(a)(D) of the Employment Agreement is hereby amended and restated in its entirety to read as follows: 

        "(D) Executive's
rights with respect to all outstanding stock options, stock appreciation rights and other equity based awards ("Awards") in connection with any termination
of employment, including a Qualifying Termination, shall be governed exclusively by the terms of the Protection One, Inc. 2004 Stock Option Plan, the Protection One, Inc. Stock Appreciation Rights
Plan and the grant and option agreements provided thereunder (provided, for the avoidance of doubt, that this Section 5(a)(D) shall not be construed to affect or modify the application of Section 6 of
this Agreement)." 

        3.    GOVERNING LAW; VALIDITY.    THE INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS FIRST AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE PRINCIPLE OF CONFLICTS OF LAWS. THE INVALIDITY OR UNENFORCEABILITY OF ANY
PROVISION OF THIS FIRST AMENDMENT SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY
OTHER PROVISION OF THIS FIRST AMENDMENT, WHICH OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT. 

        4.    Full force and effect of Employment Agreement.    Except as specifically modified herein, all other provisions
of the Employment Agreement shall remain in full force and effect in accordance with its terms. All references in the Employment Agreement to "this Agreement" shall be deemed to refer to the
Employment Agreement as amended by this First Amendment. 

        [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK] 

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

	

 	
 	

PROTECTION ONE, INC.
	

 	
 	

By:	

 
	 	 	 	
 Name: Richard Ginsburg

Title: President and CEO
	

 	
 	

PROTECTION ONE ALARM MONITORING, INC.
	

 	
 	

By:	

 
	 	 	 	
 Name: Richard Ginsburg

Title: President and CEO
	

 	
 	

 	

 J. Eric Griffin

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Exhibit 10.60  

 
 

PROTECTION ONE, INC.
  SENIOR MANAGEMENT
  SHORT-TERM INCENTIVE PLAN    
    

Effective
January 1, 2005 

        The
Protection One, Inc. Senior Management Short-Term Incentive Plan ("Plan") is intended to motivate officers and other members of senior management of the Company
and certain of its designated subsidiaries to achieve the highest level of performance and to further the achievement of Protection One's goals, objectives, and strategies. The Plan is designed to
reward exceptional performance using financial incentives to supplement base compensation. Also, the Plan is intended to enhance Protection One's ability to attract and retain talented employees.
Finally, the Plan is intended to benefit Protection One in the pursuit of its goals and objectives by stimulating and motivating the participants, which will in turn enhance productivity. 

        1.    Definitions.    As used herein, the following words and phrases shall have the following meanings unless the
context clearly indicates otherwise: 

        (a)    Award:    The total incentive award made to a Participant under the terms of the Plan. 

        (b)    Award Criteria:    The Financial and Discretionary criteria described in Section 4, and as approved by
the Board from time to time, and as same may be amended from time to time in accordance with the terms hereof. 

        (c)    Base Compensation:    Annualized salary paid to an employee, excluding overtime, bonuses, commissions, or any
pay element other than the base rate of compensation. 

        (d)    Board:    The Board of Directors of the Company. 

        (e)    CMS:    Security Monitoring Services, Inc., a Florida corporation (d/b/a Computerized Monitoring
Services, Inc., or CMS), and its successors and assigns. 

        (f)    CMS Senior Management:    The individual employed by CMS who holds the title of President of CMS. 

        (g)    Company:    Protection One, Inc., a Delaware corporation, and its successors and assigns. 

        (h)    Designated Subsidiaries:    CMS, POAMI and NMF. 

        (i)    "Discretionary Criteria:    Criteria which are based on financial or non-financial criteria or
both, applied in the discretion of the appropriate managerial decision-maker to evaluate the performance of Participants, in accordance with pay grade and management level as set forth in
Section 2. 

        (j)    "Executive Officers:    Those individuals which hold the following officer positions:
(i) President/Chief Executive Officer ("CEO"); (ii) any Executive Vice President ("EVP") of the Company or POAMI, including without limitation the Executive Vice President and Chief
Financial Officer ("CFO"), and the Executive Vice President of Field Operations. 

        (k)    "Incentive Period:    The twelve month period measured in the final publication of the year-end
consolidated Financial Statements of the Company. 

        (l)    "NMF:    Network Multi-Family Security Corporation, a Delaware corporation, and its successors and assigns. 

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        (m)    "NMF Senior Management:    Those individuals employed by NMF who hold the titles of President, Senior Vice
President, Vice President-Finance, Director-IT or Director-Customer Service. 

        (n)    "Officers:    Those individuals employed by the Company or POAMI which hold the following officer positions:
(i) Vice President, Treasurer and Controller, (ii) Vice President, General Counsel and Secretary, and (iii) Senior Vice President of Customer Operations. 

        (o)    "Participant:    Each Executive Officer, Officer and member of Senior Management, as those terms are defined
herein, and those employees who are designated for participation in the Plan by the Board or the CEO pursuant to Section 3. 

        (p)    "Plan:    The Plan herein set forth, and as from time to time amended. 

        (q)    "POAMI:    Protection One Alarm Monitoring, Inc., a Delaware corporation, and its successors and
assigns. 

        (r)    "POAMI Senior Management:    Those individuals who are either: (i) employed by POAMI in pay grades A, B
or C of the POAMI's wage and salary administration plan, and (ii) those individuals, employed by POAMI not in pay grades A, B or C but designated as a Senior Manager by the CEO. 

        (s)    "Senior Management:    The POAMI Senior Management, NMF Senior Management and CMS Senior Management. 

        (t)    "Target Award Percentage:    That percentage of a Participant's Base Compensation which the Board (or the CEO
pursuant to Section 3) shall from time to time determine to be available to a Participant under the Plan, or which is specified in any employment agreement with Participant, which employment
agreement is approved by the Board. As an example, a Senior Manager may be targeted to earn up to 25% of his/her Base Compensation as an Award if all applicable criteria are achieved. The Target Award
may apply to a class of employees or to individual employees, at the discretion of the Board (or the CEO pursuant to Section 3). 

        2.    "Administration.    The Board shall be responsible for establishing the overall Plan, administering the Plan,
determining whether actual individual compensation awards will be paid, and approving the amount of the actual individual compensation awards. The Board may delegate any or all of such
responsibilities with respect to the Plan to a committee of the Board or with respect to decisions or
determinations affecting Plan Participants other than the CEO or CFO, to the CEO or CFO of the Company. 

        The
members of the Board and all agents, officer, fiduciaries, and employees of the Company shall not be liable for any act, omission, interpretation, construction, or determination made
in good faith in connection with their responsibilities with respect to the Plan; and the Company hereby agrees to indemnify the members of the Board and all agents, officers, fiduciaries, and
employees of the Company in respect to any claim, loss, damage, or expense (including counsel fees) arising from any such act, omission, interpretation, construction, or determination to the full
extent permitted by law. 

        The
day-to-day administration of the Plan with regard to specific classes of Participants shall be as follows: 

        (a)    "Executive Officers:    The Board is responsible for the day-to-day supervision of the
Plan, including designation of the Executive Officers' goals, determination of the achievement of such goals, determination of the award size relating to the Executive Officers' goals, and the
determination of the amount of the discretionary award. 

        (b)    "Officers:    The Board is responsible for the day-to-day supervision of the Plan
including the designation of the Officers' goals, determination of the achievement of such goals, 

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determination
of the award size relating to the goals, and the determination of the amount of the discretionary award. 

        (c)    "NMF Senior Management:    The Board is responsible for the day-to-day supervision of
the Plan including the designation of goals, determination of the achievement of such goals, determination of the award size relating to the goals, and the determination of the amount of the
discretionary award. 

        (d)    "POAMI Senior Management:    The Executive Officers are responsible for the day-to-day
supervision of the Plan, including the designation of goals, determination of the achievement of such goals, determination of the award size relating to the goals, and the determination of the amount
of the discretionary award. 

        3.    "Eligibility to Participate.    Only employees who are Executive Officers, Officers or members of Senior
Management (as defined herein), that are not otherwise participants in a separate non-equity incentive plan (other than retention programs) are Participants in the Plan. The CEO shall
determine, from time-to-time, whether the Plan should be extended to other individuals or groups of employees of the Company or its Designated Subsidiaries; provided, however,
that the CEO shall not have authority to extend the Plan to additional executive officers. 

        4.    "Award Criteria.    Awards under the Plan shall be calculated utilizing the following two criteria for each
Participant: (i) the Financial Criterion, from which 70% of the Award is derived, and (ii) the Discretionary Criterion, from which 30% of the Award is derived. These criteria are further
described below. 

        (a)    "Financial Criterion:    The purpose of this measure is to foster a team orientation and to directly tie a
Participant's incentive to the steady state net operating cash flow ("SSNOCF") of the Company and the Designated Subsidiaries, which the Company believes is a key operating metric and directly affects
shareholder value. 

SSNOCF
shall be calculated in a manner consistent with the method used in the Company's annual financial plan and approved by the Board. SSNOCF will be calculated both on a consolidated basis for the
Company and also calculated separately for each Designated Subsidiary. The Financial Criterion shall be applied to Participant as follows: 

	•
	For
Executive Officers, Officers and certain other key corporate employees (as designated by the CEO), the applicable Financial Criterion shall be based one hundred percent
(100%) on the consolidated SSNOCF of the Company.

	•
	For
CMS Senior Management, the applicable Financial Criterion shall be based eighty percent (80%) on the SSNOCF of CMS and twenty percent (20%) on the consolidated SSNOCF of
the Company.

	•
	For
NMF Senior Management, the applicable Financial Criterion shall be based eighty percent (80%) on the SSNOCF of NMF and twenty percent (20%) on the consolidated SSNOCF of
the Company.

	•
	For
POAMI Senior Management, the applicable Financial Criterion shall be based eighty percent (80%) on the SSNOCF of POAMI (excluding CMS) and twenty percent (20%) on the
consolidated SSNOCF of the Company. 

Expenses
related to (i) the sale of the Company, (ii) debt restructuring, (iii) the impact of any tax sharing agreements and unbudgeted legal settlements arising from claims that
preceded the tenure of current management (i.e., prior to April 2001) (iv) non-recurring maintenance capital expenditures and (v) changes in working capital are
excluded from these calculations. 

3

 

The
calculation of Participants' financial component will include a multiplier of 0% to 200% (the "Financial Multiplier") that will depend on performance against plan. 

The
formula for calculating the Financial Multiplier is as follows: 

(Actual SSNOCF—(90%) (Budgeted SSNOCF)) divided by ((10%) (Budgeted SSNOCF)) = Multiplier

The
calculation for determining the Financial Criterion component of the Award under the plan is as follows: 

"Financial Multiplier X Target Award Percentage X Financial Criterion Percentage (70%).

For
example, for an Executive Officer with the maximum Multiplier, the calculation would be 200% (Multiplier) × 60% (Target Award Percentage) × 70%
(Financial Criterion Percentage) = 84% of Base Compensation. 

For
all Participants, the portion of Awards derived from the Financial Criterion is capped at 200% of 70% of Target Award Percentage of Base Compensation (e.g., 84% of base salary for CEO, 56% of Base
Compensation for Officer, etc.). 

        (b)    "Discretionary Criterion:    This criterion is based on individual achievement and is intended (i) to
provide a judgmental rating of a Participant's managerial effectiveness, and (ii) to recognize the importance of intangible qualities of corporate performance. The rating (determined in
accordance with Section 2) is based on an assessment of qualitative issues such as: 

	(i)
	providing
strategic direction

	(ii)
	providing
leadership

	(iii)
	proactively
managing change

	(iv)
	organizing
developing, and utilizing the management team

	(v)
	creating
an appropriate organizational environment

	(vi)
	providing
effective external representation

	(vii)
	monitoring
and evaluating performance and taking corrective actions. 

Depending
on individual achievement of these factors, the discretionary component of Participants' Awards may range from 0% to 30% ("Discretionary Criterion Percentage") of the Target Award
Percentage. For example, for an Executive Officer awarded a Discretionary Criterion Percentage of 30%, the calculation would be: 60% (Target Award Percentage) × 30%
(Discretionary Criterion Percentage) = 18% of Base Compensation. 

        5.    Payment of Awards.    

        (a)    "Generally:    Awards under the Plan are payable annually. Payment of Awards shall be made within two and
one-half months of the end of the fiscal year for which such Awards are attributable; provided, however, that if all or any portion of Awards are paid prior to completion of the Company's
audited financial statements for the Incentive Period, Participants will be required to repay the Company the amount received in excess of what would have been paid based on the Company's audited
results. 

        (b)    "Termination of Employment:    Except as may be provided in a written employment agreement between a
Participant and the Company or a Designated Subsidiary, a Participant who ceases to be continually employed by the Company or a Designated Subsidiary during the Incentive Period shall not be eligible
for and shall forfeit all rights to an Award for such Incentive Period. 

4

 

        6.    "Withholding for Taxes.    Awards under the Plan are subject the withholding for applicable taxes and other
charges. 

        7.    "No Rights to Corporate Assets.    Nothing contained herein create any equity, property, lien, security or other
interest of any kind in any assets of the Company or its subsidiaries, or create a trust or fiduciary relationship of any kind between the Company and its subsidiaries, or the Board or any member
thereof, and any Plan Participant. Any claims for unpaid amounts under the Plan, are and shall be unsecured. 

        8.    "No Right to Acceleration or Deferral of Awards.    It is the intent of the Board that the Plan meet the
requirements of Section 409A of the Internal Revenue Code, be operated in accordance with such requirements, and that amounts payable pursuant to the Plan not be included in the wages or income
of a Participant until such time as the Award is actually paid to the Participant. Accordingly, Participants have no right to elect to accelerate or to defer, nor shall any amounts payable pursuant to
the Plan be accelerated or deferred, except as permitted under Section 409A of the Internal Revenue Code. 

        9.    "Non-Assignability.    Participants' rights and interests under the Plan may not be transferred,
assigned, mortgaged, or otherwise encumbered (an "assignment"); nor shall such rights and interests be subject to seizure for the payment of a Participant's debts, judgments, alimony, or separate
maintenance or be transferable by operation of law in the event of a Participant's bankruptcy or insolvency. Any purported assignment by Participant of Participant's rights and interests under the
Plan shall be void. 

        10.    "Amendment and Termination.    Other than with respect to the 2005 Plan year, the Board may from time to time
and at any time alter, amend, suspend, discontinue, or terminate the Plan. Amendments to the Plan will not operate retroactively unless the amendment expressly so provides and is expressly agreed to
by the CEO. 

        11.    "No Right of Employment.    Nothing contained in the Plan shall be construed as conferring upon a Participant
the right to continued employment with the Company. 

        12.    "Governing Law.    All rights and obligations under the Plan shall be governed by, and the Plan shall be
construed in accordance with the laws of the State of Delaware. 

        13.    "Titles and Headings.    Titles and headings to sections herein are for purposes of reference only and shall in
no way limit, define, or otherwise affect the meaning or interpretation of any provisions of the Plan. 

        14.    "Effective Date.    This Plan is made effective as of January 1, 2005 and supersedes all other existing
short-term incentive plans of the Company and its Designated Subsidiaries. 

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PROTECTION ONE, INC. SENIOR MANAGEMENT SHORT-TERM INCENTIVE PLAN

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