Document:

<PAGE>

                                                                   Exhibit 10.48

                            THIRD AMENDMENT OF LEASE

     This Third Amendment of Lease is entered into by and between MRP/VV, L.P. a
Delaware limited partnership (hereinafter referred to as "Landlord"), and
Monitronics International, Inc (hereinafter referred to as "Tenant").

     WHEREAS, MRP/VV, L.P., a Delaware limited partnership is the rightful owner
of Landlord's interest in that certain Commercial Lease Agreement dated December
4, 1991 by and between TDC Dallas Partners No. 2, Ltd. As (Original Landlord")
and My Alarm, Inc. (an "Original Tenant") and that certain "First Amendment of
Lease" dated February 17, 1997 by and between TDC Dallas Partners No. 2, Ltd.
(as "Original Landlord") and Monitronics International, Inc. (as "Tenant") and
that certain "Second Amendment of Lease" dated September 17, 1997 by and between
TDC Dallas Partners No. 2, Ltd. (as "Original Landlord") and Monitronics,
International, Inc. (as "Tenant") and,

     WHEREAS, Monitronics International, Inc. is the rightful Owner of Tenant's
interest in that certain Commercial Lease Agreement dated December 4, 1991 (the
"Lease"), by and between TDC Dallas Partners No. 2., Ltd. As ("Original
Landlord") and My Alarm, Inc. (as "Original Tenant") pursuant to that certain
Assignment, Assumption and Consent Agreement, dated October 21, 1994. and,

     WHEREAS, Original Landlord and Original Tenant entered into that certain
"Lease" dated December 4, 1991, pursuant to which the Original Landlord leased
to Original Tenant approximately 8,037 square feet of space located at 12801
Stemmons Freeway, Suite 821, Farmers Branch, Texas (the "Leased Premises") and
was amended by that certain "First Amendment of Lease" dated February 17, 1997
by and between Original Landlord and Tenant pursuant to which Original Landlord
and Tenant agreed to extend the term of the "Lease" by an additional eighty-four
(84) months. and,

     WHEREAS, Original Landlord and Tenant entered into that certain "Second
Amendment of Lease" dated September 17, 1997 pursuant to which Original Landlord
leased to Tenant approximately 1,936 square feet of additional space (the
"Expansion Space #1") also known as 12801 Stemmons Freeway, Suite #825 which
increased the "Leased Premises" to contain approximately 9,973 square feet and,

     WHEREAS, that certain Commercial Lease Agreement dated December 4, 1991 and
subsequent First Amendment of Lease dated February 17, 1997 and that subsequent
Second Amendment of Lease dated September 17, 1997 shall be collectively
referred to as the "Lease" in this Third Amendment of Lease and,

     WHEREAS, Tenant now desires to further expand the "Leased Premises" by an
approximate 4,550 square feet contained in 12801 Stemmons Freeway, Suite #815
(the "Expansion Space #2") shown on the attached Exhibit "A" 1 of 2 effective as
of August 1, 2001 and to further expand the "Leased Premises" by an approximate
6,043 square feet contained in 12801 Stemmons Freeway, Suite #829 ("Expansion
Space #3) shown on the attached Exhibit "A" 2 of 2 effective as of February 1,
2003 and,

     WHEREAS, Landlord and Tenant desire to extend the term of the Lease;

     NOW, THEREFORE, in consideration of the mutual covenants herein contained
and $10.00 and other good and valuable consideration, it is covenanted and
agreed between the parties that the Lease be modified and amended as follows:

     1.   Leased Premises:
          ----------------

     (A)  As of September 1, 2001 the Leased Premises shall be increased by the
          4,550 square feet contained in 12801 Stemmons Freeway, Suite #815
          ("Expansion Space #2) and shall reflect 14,523 square feet.
                                                  ------

     (B)  As of February 1, 2003 the Leased Premises shall be increased by the
          6,043 square feet

<PAGE>

          contained in 12801 Stemmons Freeway, Suite #829, ("Expansion Space #3)
          and shall then reflect 20,566 square feet.
                                 ------

     2.   Term: The Termination Date of the Lease shall now reflect December 31,
          -----
          2005.

     3.   Base Rent: Effective as of September 1, 2001 the Tenant's Monthly Base
          ----------
          Rent Schedule as referred to in the Lease shall be amended to reflect
          the following:

          Dates                                   Monthly Base Rent
          -----                                   -----------------
          September 1, 2001 - February 28, 2002       $10,061.50
          March 1, 2002 - January 31, 2003            $10,892.50
          February 1, 2003 - December 31, 2005        $15,172.96

     4.   Tenant Improvement: Landlord agrees to allow Tenant a "Construction
          -------------------
          Allowance" of up to $10.00 P.S.F. or $45,500.00 to be applied toward
          the remodel or retrofit of "Expansion Space #2" (Suite #815 containing
          4,550 S.F.) in accordance with the attached Exhibit "B" of this Third
          Amendment of Lease. The aforementioned Construction Allowance shall
          not be applied toward Tenants furniture, fixtures or equipment.

          Tenant agrees to lease "Expansion Space #3" (Suite #829 containing
          6,043 S.F.) in the "as-is" condition.

          Tenant also agrees to extend the term of the "Original Leased
          Premises" (Suite #821, containing 8,037 S.F.) and "Expansion Space #1
          (Suite #825 containing 1,936 S.F.) in the "as-is" condition.

     5.   Parking: Upon the occupancy of "Expansion Space #2 (Suite #815
          --------
          containing 4,550 S.F.), Tenant shall have the use of thirteen (13)
          reserved additional parking spaces within Valley View Tech Center III
          (The "Project"). These spaces are allocated pursuant to code at a
          1:350 ratio based on the additional 4,550 S.F. of space leased and
          identified as "Expansion Space #2".

     6.   Right of First Refusal to Lease Additional Space: On December 31, 1996
          -------------------------------------------------
          the provision titled "Right of First Refusal to Lease Additional
          Space" known as Exhibit "F" in the "Original "Lease" dated December 4,
          1991 expired, but was reinstated in Paragraph 4 of the "First
          Amendment of Lease" dated February 17, 1997. This reinstated option
          expires February 28, 2002. By execution of this "Third Amendment of
          Lease" by Landlord and Tenant, this option as originally stated in
          Exhibit "F" of the "Original Lease" and then reinstated in Paragraph 4
          of the "First Amendment of Lease," shall be deleted and replaced with
          the Right of First Refusal to Lease Additional Space as contained in
          the attached "Exhibit C" of this "Third Amendment of Lease".

     7.   Renewal Option: Upon the execution of this "Third Amendment of Lease"
          ---------------
          by Landlord and Tenant, the Renewal Option language as stated in
          Paragraph 5 of the "First Amendment of Lease" dated February 17, 1997
          shall be deleted and replaced by the following "Renewal Option"
          provision:

          Provided that at the end of this extended term as provided for in this
          "Third Amendment of Lease", Tenant not being in default of any term,
          condition or covenant contained in this Lease, Tenant (but not
          assignee or sublesee except through the purchase of all or
          substantially all of Tenant's assets, through foreclosure or
          otherwise) shall have the right and option to renew all of or a
          portion of the Leased Premises by written notice delivered to Landlord
          no later than one hundred eighty (180) days prior to the expiration of
          the primary term, for the additional term of sixty (60) months, under
          the same terms, conditions and covenants contained herein except:

          (i)  Tenant shall have no further renewal options unless expressly
               granted by Landlord in writing; and

          (ii) The Base Rental for the Renewal term shall be equal to
               ninety-five percent (95% of the then prevailing rental rates for
               properties of equivalent quality, size, utility and location.

<PAGE>

     8.   Option Space: Upon execution of this "Third Amendment of Lease" by
          -------------
          both Landlord and Tenant, the "Option Space" provision contained in
          Paragraph 6 of the "First Amendment of Lease" dated February 17, 1997
          shall be deleted.

     9.   Termination Provision: Upon execution of the "Third Amendment of
          ----------------------
          Lease" by both Landlord and Tenant, the Termination Provision
          contained in Paragraph 7 of the "First Amendment of Lease" dated
          February 17, 1997, shall be deleted.

     10.  Real Estate Commission: With regard to the transaction contemplated by
          -----------------------
          this "Third Amendment of Lease", Tenant represents and warrants that
          it has dealt with no broker, agent or other person in connection with
          this transaction and that no other broker, agent, or other person
          brought about this transaction other than The Weitzman Group as
                                                    ---------------------
          Tenant's agent and Wilcox Realty Group as Landlord's agents; and
          ------------------------------------------------------------
          Tenant agrees to indemnify and hold harmless from and against any
          claim by any other broker, agent, or other person claiming a
          commission or other form of compensation by virtue of having dealt
          with Tenant with regard to this leasing transaction. The provisions of
          this paragraph shall survive the termination of this Lease.

     11.  In the event of conflict between this Third Amendment of Lease and the
          Lease, First or Second Amendments of Lease, the terms of this Third
          Amendment of Lease shall prevail.

     12.  Except as modified herein, all other terms and conditions of the Lease
          between the parties described shall continue in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed the Third Amendment of
Lease as of the date last stated below.

LANDLORD:                                  TENANT:

MRP/VV, L.P. a Delaware Limited            Monitronics International, Inc.
Partnership By: MRP.GP, L.L.C.

By: Macfarlan Real Estate Services, L.P.
    Its authorized agent

By: /s/ Keith A. Waggoner                  By: /s/ STEPHEN M. HEDRICK
    ------------------------------------       ---------------------------------
    Keith A. Waggoner                          STEPHEN M. HEDRICK

Its: Chief Operating Officer               Its: C.E.O V.P. FINANCE

Date: 8-31-01                              Date: 8/27/01

<PAGE>

                                    EXHIBIT A
                                    ---------

                            THIRD AMENDMENT OF LEASE

                                     1 OF 2

                              "EXPANSION SPACE #2"

Valley View Tech Center III
12801 Stemmons Freeway
Suite 815
Farmers Branch, TX

+/- 4,550 S.F.

                                      [MAP]

<PAGE>

                                    EXHIBIT A
                                    ---------

                            THIRD AMENDMENT OF LEASE

                                     2 OF 2

                              "EXPANSION SPACE #3"

Valley View Tech Center III
12801 Stemmons Freeway
Suite 829
Farmers Branch, TX

+/- 6,043 S.F.

                                      [MAP]

<PAGE>
                                   EXHIBIT "B"

                            THIRD AMENDMENT OF LEASE

                             CONSTRUCTION AGREEMENT

                            FOR "EXPANSION SPACE #2"

Tenant: Monitronics International, Inc.

Landlord: MRP/VV, L.P., a Delaware limited partnership, By: MRP, G.P., L.L.C.

Third Amendment
Of Lease Agreement
Date:
                     ------------

Building:            Valley View Tech Center, 12801 Stemmons Freeway, Suite 815,
                     Farmers Branch, TX 75234
Net Rentable
Square Feet:         4,550 S.F.

     1.   Representatives. Landlord hereby appoints Kathy Umphrey of Macfarlan
          ---------------
          Real Estate Services ("Landlord's Representative") to act as
          Landlord's Representative in all matters covered by this Exhibit. The
          address of Landlord's Representative is 7929 Brookriver Drive, Suite
          145, Dallas, TX 75247. Tenant hereby appoints       Pierce ("Tenant's
                                                        ------------
          Representative") to act as Tenant's Representative in all matters
          covered by this Exhibit. The address of Tenant's Representative is
          12801 Stemmons            , Dallas, Tx      . All inquiries, requests,
          --------------------------------------------
          instructions, authorizations and other communications with respect to
          the matters covered by this Exhibit will be made to Landlord's
          Representative or Tenant's Representative, as the case may be. Either
          party may change its Representative under this Exhibit at any time by
          giving ten (10) days written notice to the other party.

     2.   Construction by Tenant: Tenant accepts Suite 815 containing 4,550 S.F.
          ----------------------
          "as is". Any finish-out construction or refurbishing work, including
          all utility connections, shall be performed by Tenant. At the
          completion of the construction to be done by Tenant, Landlord shall
          provide Tenant a "Construction Allowance" not to exceed Forty Five
          Thousand, Five Hundred Dollars ($45,500.00) as set forth below. This
          paragraph is subject to the following terms and conditions:

          a.   Plans & Specifications: Tenant shall submit plans and
               specifications for the finish-out work to Landlord. Tenant's
               plans and specifications must be approved by Landlord in writing
               prior to the commencement of construction. All work shall be
               performed in conformance with such approved plans and
               specifications in a good and workmanlike manner and in compliance
               with all applicable laws, rules, codes, ordinances and
               regulations. Tenant, at Tenant's sole cost and expense, shall
               obtain all permits required prior to commencement of
               construction.

          b.   Contractor Approval: Prior to commencement of Tenant's work,
               Tenant shall submit to Landlord for Landlord's approval a list of
               contractors and/or subcontractors who will perform Tenant's Work.
               Landlord reserves the right to reject any contractor or
               subcontractor. Tenant or Tenant's contractors or subcontractors
               shall be required to obtain from Landlord permission for using
               any area outside the Leased Premises for storage, handling or
               moving materials and equipment or for parking any vehicles. In
               addition, Tenant and its contractors and subcontractors shall
               comply with Landlord's building guidelines applicable to
               construction of Tenant's Work.

          c.   Insurance: Tenant and/or Tenant's contractors and subcontractors
               shall be required to provide, in addition to the insurance
               required to be maintained by Tenant pursuant to the Lease, the
               following types of insurance and the following minimum amounts,
               naming Landlord and any other persons having an interest in the
               building

<PAGE>

               as "additional insured" or "as their interests may appear",
               issued by companies and in form and substance approved by
               Landlord:

               (i)  General Liability coverage with limits of at least
                    $1,000,000 per each occurrence.

               (ii) Workman's Compensation coverage with limits of at least
                    $500,000.00 for the employer's liability coverage
                    thereunder.

               (iii) All Risk Builders Risk on 100% Completed Value, covering
                    damage to the construction and improvements to be made by
                    Tenant with 100% coinsurance protection.

               (iv) Automobile Liability coverage with bodily injury limits of
                    at least $1,000,000.00 per accident and $500,000.00 accident
                    for property damage.

               (v)  Other insurance reasonably required by Landlord.

               Original or duplicate policies (or at Landlord's option,
               certificates thereof) for all of the foregoing insurance shall be
               delivered to Landlord before Tenant" Work is started and before
               any contractor's or subcontractor's equipment is moved on to any
               part of the Leased Premises.

          d.   Liability During Construction. Tenant hereby assumes any and all
               -----------------------------
               liability arising out of or relating to Tenant's Work or to the
               Leased Premises after the date hereof, including any liability
               arising out of statutory or common law for any and all injuries
               to or death of any and all persons (including, without
               limitation, Tenant's contractors and subcontractors and their
               employees) and any liability for any and all damage to person or
               to property caused by, or resulting from, or arising out of or in
               connection with any act or omission on the part of the Tenant,
               Tenant's contractors and Tenant's or their subcontractors or
               employees in the performance of Tenant's Work, and Tenant further
               agrees to defend, indemnify and save harmless Landlord from an
               against all damages, claims, costs, liabilities, losses and/or
               expenses (including legal fees and expenses) arising out of or
               related to Tenant's Work, including without limitation, injuries,
               death and/or damage, even if caused by the sole or concurrent
               negligence of Landlord. Landlord shall have no responsibility or
               liability for any foreseen or unforeseen circumstances or
               conditions arising in connection with Tenant's Work on the
               Premises, and Tenant assumes and shall be responsible for all
               risks arising in connection therewith. Tenant agrees to insure
               the foregoing assumed contractual liability in its liability
               policies and the original or duplicate original of said policy
               that Tenant will deliver to Landlord shall expressly include said
               contractual liability coverage.

          e.   Removal During Construction. Contractors and/or subcontractors
               ---------------------------
               participating in the Tenant's Work shall be required to keep the
               Leased Premises and adjacent areas in a neat and clean condition
               and to remove and dispose of all debris and rubbish caused by, or
               resulting from the work and upon completion, to remove all
               temporary structures, surplus materials, debris and rubbish of
               whatever kind remaining on any part of the Leased Premises or in
               proximity thereto that was brought in or created by the
               performance of Tenant's Work.

          f.   Changes: All changes to the Final Drawings shall be subject to
               -------
               Landlord's prior written approval.

          g.   Affidavits: Tenant shall cause to be filed and/or recorded such
               ----------
               affidavits as Landlord requests regarding Tenant's Work,
               including without limitation an affidavit of commencement of
               Tenant's Work and an affidavit of completion of Tenant's Work on
               the dates required by law to give proper effect thereto, or if
               requested by Landlord, on the dates specified by Landlord.

          h.   Repair; Maintenance: Landlord shall have no responsibility for
               -------------------
               the repair and/or maintenance of any of Tenant's Work.

<PAGE>

          i.   Landlord Not Liable: Notwithstanding Landlord's approval of any
               -------------------
               plans, drawings, schedules or other items submitted by Tenant to
               Landlord under this Exhibit, including without limitation, any
               changes in the Final Plans, Landlord shall not be liable to
               Tenant or any other party for or in connection with Tenant's
               Work, any portion thereof or any changes therein, including
               without limitation, any defects in Tenant's Work, and Landlord
               shall not be responsible for the repair, maintenance, or
               replacement therefor.

          j.   Payment of Invoices: Tenant will pay all invoices for labor and
               -------------------
               materials as and when same become due.

     3.   Notices. Any notice, or other communication shall be in writing and
          -------
          shall be given in the manner required by the notice provisions of the
          Lease, with a copy to Landlord's Representative or Tenant's
          Representative (as applicable) at their address as set forth herein.

     4.   Commencement Date. Notwithstanding any provisions contained herein or
          -----------------
          in the Lease to the contrary, the Commencement Date of this Third
          Amendment of Lease shall be the specific date which is set forth in
          the Lease, and same shall not be delayed or extended as a result of
          the construction of the Tenant's Work.

     5.   Conflicts and Conformity With Lease. Any rights and obligations of
          -----------------------------------
          Landlord and Tenant relative to any matter not stated in this Exhibit
          shall be governed by the Lease. If there shall be any conflict between
          this Exhibit and the Lease, the provisions of this Exhibit shall
          prevail, to the extent related to Tenant's Work. As used herein, all
          capitalized items not defined herein shall have the same meaning as
          defined in the Lease.

     6.

          a.   Construction Allowance As stated above, all Tenant's Work shall
               ----------------------
               be done at Tenant's expense, including building permit fees,
               other fees, architectural and engineering expenses and other
               expenses relating to Tenant's Work. However, Landlord shall allow
               Tenant a finish-out allowance of up to Forty-Five Thousand, Five
               Hundred Dollars ($45,500.00). The Construction Allowance to be
               applied toward payment of costs which are incurred by Tenant in
               connection with the completion of Tenant's Work. Tenant
               understands that if the cost of Tenant's Work, including without
               limitation any changes in Tenant's Work, exceeds the Allowance,
               then Tenant shall be solely responsible for all such costs in
               excess of the Allowance. The Allowance shall be used only to pay
               actual construction costs which are paid by Tenant to third
               parties and shall be due and payable to Tenant or Tenant's
               contractor only after lien-free final completion of Tenant's Work
               in accordance with the Final Drawings, receipt by Tenant of all
               necessary approvals to operate its business at the Leased
               Premises, completion by Landlord of a final inspection and
               approval of Tenant's Work, and receipt by Landlord of: proof that
               all bills in connection with Tenant's Work have been paid in full
               and all persons or entities with the right to file a lien in
               connection therewith have finally waived and released their lien
               rights in connection therewith in a manner satisfactory to
               Landlord; a copy of Tenant's certificate of occupancy; an
               original Affidavit of Total Release and Bills Paid in form
               acceptable to Landlord signed by Tenant, the general contractor
               and all subcontractors and suppliers and accompanied by copies of
               the invoices referred to therein; a Start Date Addendum executed
               by Tenant; and a copy of "as-built" plans of finish-out.

          b.   If the actual construction costs are less than the Allowance,
               then Tenant shall not be entitled to any portion of the
               unexpended Allowance, which shall belong to Landlord.

          c.   In addition, and notwithstanding any provision contained herein
               to the contrary:

<PAGE>

               (i)  Landlord shall not be required to fund any provision
                    contained herein to the contrary:

               (ii) if Tenant defaults under the Lease, Landlord shall have no
                    further obligation to fund any portion of the Allowance to
                    Tenant.

     7.   Tenant's obligation for the payment of the Base Rent under this Third
          Amendment of Lease for the "Expansion Space #2" shall commence in
          accordance with Paragraph 4(A-D) of the Lease Agreement.

ACCEPTED AND AGREED TO THIS 27th DAY OF AUGUST, 2001
                            ----        ------

LANDLORD:                                      TENANT:

MRP/VV, L.P., a Delaware limited partnership   Monitronics International, Inc.

BY: MRP, GP, L.L.C.

BY: Macfarlan Real Estates Services, L.L.C.
    Its authorized agent

BY: /s/ Keith A. Waggoner                      BY: /s/ Stephen M. Hedrick
    -----------------------------                  -----------------------------
    Keith A. Waggoner                              Stephen M. Hedrick
                                                   V.P. Finance

<PAGE>

                                  EXHIBIT "B-1"

                            THIRD AMENDMENT OF LEASE

                                     1 OF 1

"Approved Plans and Specifications" as referred to in Exhibit "B" of this Third
Amendment of Lease, shall be attached and incorporated herein as "Exhibit B-1"
when approved by Landlord and Tenant.

<PAGE>

                            THIRD AMENDMENT OF LEASE

                                   EXHIBIT "C"

                RIGHT OF FIRST REFUSAL TO LEASE ADDITIONAL SPACE

Secondary to those existing rights of the current tenant who presently occupies
Suite 809 and provided that 1) Tenant is not in default under any of the terms
of this Lease nor has an event occurred which upon notice or lapse of time, or
both, would create a default, and 2) Tenant has not assigned this Lease nor
sublet the Premises in whole or in a part during the term of this Lease, the
Tenant is hereby granted the right of first refusal to lease the approximate
2,600 square feet of contiguous space contained in Suite #809 to the east of
"Expansion Space #2".

For purposes of this provision, a space shall be available if either 1) there is
no then existing lease, rental contract or extension thereof covering such
space, 2) Landlord has obtained possession of the space and the authority to
market the space for lease, whether or not a current lease exists covering such
space, or 3) the current tenant under a lease covering a space has vacated the
space and Landlord obtains the agreement of such current tenant to relet the
space subject to the termination of the existing lease.

When the Additional Space is available, and upon receipt by Landlord of a
bonafide offer to lease the Additional Space from a third party which Landlord
intends to accept, Tenant shall have the option to lease said space upon the
same terms and conditions as the third party offer. Landlord shall notify Tenant
in writing that it has received a bonafide offer to lease Additional Space and
requests Tenant to either accept or reject the option to lease the Additional
Space. Tenant shall have two (2) business days from receipt to respond in
writing to Landlord's written request to either accept or reject said option to
lease the Additional Space. Should Tenant reject said option to lease the
Additional Space or fail to respond in writing to Landlord's demand within the
time provided, Landlord shall have the right to lease such space to the third
party without any further notices to Tenant. In consideration for Landlord
granting such right of first refusal, Tenant agrees that should Tenant exercise
its rights to lease the Additional Space, Tenant shall execute a lease for the
Additional Space on Landlord's then current lease document used for the Project.<PAGE>

                                                                   Exhibit 10.49

                             1999 STOCK OPTION PLAN
                                       OF
                        MONITRONICS INTERNATIONAL, INC.

     1. Purpose. This plan (the "Plan") adopted effective as of               ,
                                                                ----------- --
1999, is designed to encourage key employees and consultants of MONITRONICS
INTERNATIONAL, INC. (the "Company"), as well as key employees and consultants of
any after-acquired subsidiary corporation, to acquire a proprietary interest in
the Company and thus share in the future success of the Company's business. This
Plan is intended as a means, not only of attracting and retaining outstanding
management personnel and consultants who are in a position to make important and
direct contributions to the success of the Company, but also of promoting a
closer identity of interests between the Company's employees and its
shareholders.

     2. Stock Options. Options granted under this Plan shall be Nonstatutory
Stock Options ("Options") under the Internal Revenue Code of 1986, as amended
(the "Code").

     3. Scope and Duration of the Plan. There will be reserved for       upon
                                                                   -----
the exercise of Options granted under this Plan One Hundred Fifty Thousand
(150,000) shares of the Company's authorised but unissued voting common stock.
If an Option expires or terminates for any reason without having been fully
exercised, the unpurchased shares will be available for other Options under the
Plan. Unless this Plan is terminated earlier pursuant to Section 15 hereof, it
shall terminate ten (10) years from its effective date and no Option shall be
granted after that date; provided, however, that termination of this Plan will
have no effect on the Options previously granted.

     4. Administration. The Plan shall be administered by the Board of Directors
of the Company. Directors shall be eligible for the grant of Options hereunder.

     The Board of Directors has the responsibility to adopt such rules and
regulations as it deems necessary or desirable for the proper administration of
this Plan. Any decision or action taken or to be taken by the Board of
Directors, arising out of or in connection with the construction,
interpretation, and administration of this Plan shall, to the extent permitted
by law, be within its absolute discretion, but subject to the express provisions
of this Plan. Decisions of the Board of Directors shall be conclusive and
binding upon all recipients of Options and any person claiming under or through
any recipient of an Option.

     5. Eligible Employees. Options may be granted to directors and key
employees of the Company and future subsidiary corporations who otherwise comply
with the requirements of this Plan. The Board of Directors has the authority,
subject to the terms of this Plan, to determine key employees to whom Options
shall be granted, the number of shares to be covered by each Option, form of
payment, the time or times at which Options shall be granted, and the terms and
provisions of the instruments evidencing Options. The term "key employee" shall
include officers, executives and supervisory personnel of the Company. In
determining the key employees and consultants to whom Options shall be granted
and the number of shares to be issued on the exercise

                                      -1-

<PAGE>

of an Option, the Committee shall take into account the duties of the key
employees and consultants, their present and potential contributions to the
success of the Company and its subsidiary corporations, and such other factors
as the Committee deems relevant to accomplish the purpose of this Plan.

     6. Exercise Price. Subject to the provisions of Section 5 above, the price
of the shares of common stock to be issued on exercise of Options shall be not
less than the fair market value of such shares on the date an Option is granted,
as determined by the Board of Directors in the exercise of its sole and
exclusive judgment, which shall be binding upon all parties. If the Company's
common stock shall become listed on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"), the fair market value shall be
deemed to be the closing sales price of the Company's common stock on NASDAQ on
the date the Option is granted, or if no sale of the Company's common stock
shall have been made on that date, on the next preceding day on which there was
a sale of such stock. If the Company's common stock shall become listed on an
established stock exchange, the fair market value shall be deemed to be the
closing sales price of the stock on such exchange on the date the Option is
granted, or if no sale of the Company's stock shall have been made on such day,
then on the next preceding day on which there was a sale of such stock. Subject
to the foregoing, the Board of Directors,          the Option price, shall have
                                          -- -----
full authority and discretion and their good faith judgment in establishing fair
market value and in establishing the purchase price shall be conclusive.

     7. Term of Options. The term of each Option shall be determined by the
Board of Directors, but shall not be for more than ten (10) years from the
date the Option is granted.

     8. Exercise of Options. An Option may vest and be exercised on such terms
and conditions as the Board of Directors shall determine, subject to the
requirements of this Plan. Unless otherwise determined by the Board of
Directors, the price of the shares purchased pursuant to an Option shall be paid
in full at the time of exercise in cash or in such other consideration as the
Board of Directors deems appropriate, including, without limitation, shares of
common stock of the Company valued at fair market value (in the manner
prescribed in Section 6 above) as of the date of exercise of the Option. No
Option may be exercised during the optionee's lifetime unless the optionee is
then an employee or consultant of the Company or a subsidiary corporation;
provided that, in the event the optionee's employment terminates for reasons
other than death or disability, the Option may be exercised during the three (3)
month period following the termination of employment. Thereafter, the Option
shall terminate and be at an end. In the case of disability or death, the Board
of Directors may extend the Option for up to one (1) year. Notwithstanding the
foregoing, Options granted to Directors may be exercisable for a period of up to
seven (7) years following the date such Director ceases to be a Director of the
Company.

     Whether an authorized leave of absence, disability, or temporary absence
from employment for any other reason constitutes termination of employment for
the purposes of this Plan shall be determined by the Board of Directors.

     8. Additional Restrictions Upon Exercise of Options. Options may be
exercisable either in whole or in part. No less than one hundred (100) shares
common stock may be purchased at any one time unless the number purchased is the
total number of shares at that time

                                       -2-

<PAGE>

purchasable under the Option. The Board of Directors may impose such other
restrictions upon the exercise of the Option or the transfer shares of common
stock acquired upon the exercise of the Option as the Committee deems necessary
to comply with federal and state securities law.

     10. Nontransferability of Options. During the lifetime of the optionee, the
Option shall be exercised only by the optionee. An Option granted under this
Plan is not transferable by the optionee by operation of law or otherwise,
except that in the event of death of the optionee while in the employ of the
Company or a subsidiary, an Option granted hereunder may be exercised (subject
to the time restrictions set forth in Section 7 hereof) at any time within one
(1) year after death, by the duly appointed personal representative of the
optionee, or by any person or persons who shall acquire such Option directly
from the optionee by bequest or inheritance.

     11. Adjustments for Changes in Capitalization. Notwithstanding any other
provision of this Plan, each instrument evidencing an Option may contain such
provision as the Board of Directors determines to be appropriate, if any, for
the adjustment of the number and class of shares of common stock covered by the
Option, the Option price, and the number of shares of common stock as to which
the Option shall be exercisable at any time, in the event of changes in the
outstanding shares of common stock of the Company by reason of stock dividends,
split-ups recapitalizations, mergers, consolidations, reorganizations, or
liquidations. In the event of any such change in the outstanding shares of
common stock of the Company, the aggregate number of shares available under this
Plan shall be appropriately adjusted.

     12. Events Accelerating Exercise of Options. If the shares of common stock
of the Company are changed into or exchanged for shares of stock of another
unrelated corporation or are converted to cash pursuant to a plan of merger,
partial or complete liquidation or dissolution, each Option then outstanding (to
the extent this Plan is not continued, as adjusted in the manner specified in
Section 11 by the successor entity) shall be exercisable, with respect to all
the shares of common stock covered thereby and without regard to the time the
Option has been outstanding, beginning with the date the Board of Directors
approves or authorizes such change or conversion, and ending two (2) days prior
to the effective date of such change or conversion.

     13. Loans to Holders of Options. The Company may, in the sole discretion of
the Board of Directors, directly or indirectly, lend money or credit to any
employee for the purpose of assisting an optionee in purchasing shares of common
stock to be issued upon the exercise of an Option granted under this Plan.

     14. Employment Rights; Noncompetition Covenants. Nothing in this Plan or
any instrument evidencing an Option shall confer upon any employee any right to
continue in the employment of the Company or a subsidiary corporation, nor be
construed to interfere in any way with the right otherwise available to the
Company or a subsidiary corporation to terminate the employee's employment at
any time for any reason. The Board of Directors may condition each grant of an
Option upon the recipient's agreement to execute and be bound by a
noncompetition covenant following termination of such recipient's employment by
the Company voluntarily by such recipient, or by the Company with or without
cause, as the Board of Directors may determine in each individual instance.

                                       -3-

<PAGE>

     15. Amendment/Termination. The Board of Directors may amend or terminate
this Plan from time to time in such respects as it may deem advisable; provided
that the following revisions or amendments shall require approval at a duly held
shareholders' meeting of the holders of a majority of the voting power of the
outstanding shares of the Company entitled to vote;

          (1) Any increase in the number of shares subject to the Plan, other
     than in connection with an adjustment under Section 12;

          (2) Any change in the designation of the class of employees or
     consultants eligible to be granted Options; or

          (3) Any material increase in the benefits accruing to participants in
     this Plan.

     16. Rights as a Shareholder. An optionee, or permitted transferee of an
Option upon the death of an optionee, shall have no rights as a stockholder with
respect to any shares of common stock covered by an Option until the date of the
issuance of a stock certificate to and for such shares. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities, or
other property) or distributions or other rights for which the record date is
prior to the date such stock certificate is issued, except as provided in
Section 12 above.

     17. Investment Purpose. Common stock acquired upon the exercise of an
Option granted under this Plan may only be resold in the event such stock is
registered under the Securities Act of 1938, as amended, or if, in the opinion
of responsible counsel for the Company, such stock can be resold without such
registration. Unless a registration statement with respect to such stock
covering the holder of such Option is then in effect, each certificate issued
pursuant to the exercise of such Option shall contain a legend to this effect.

     18. Other Provisions. The Option Agreements authorized under this Plan may
contain such other provisions, including without limitation, restrictions upon
the exercise of Options, as the Board of Directors shall deem advisable.

     19. Indemnification of Board. In addition to such other rights of
indemnification as they may have as Directors, the Board of Directors shall be
indemnified by the Company against the reasonable expenses, including attorneys'
fees actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with this Plan or any Option granted hereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by the Company), or paid by them in satisfaction of a judgment in
any such action, suit or proceeding, except in relation to matters as to which
it shall be adjudged in such action, suit, or proceeding that such Director is
liable for negligence or misconduct in the performance of his duties; provided
that within sixty (60) days after the institution of any such action, suit or
proceeding, the Director shall, in writing, offer the Company the opportunity,
at its own expense, to defend the same.

                                       -4-

<PAGE>

     This Plan is executed effective as of             , 1999.
                                          ---------- --

                                                 MONITRONICS INTERNATIONAL, INC.

                                                 By:
                                                    ----------------------------
                                                    James R. Hull, President and
                                                    Chief Executive Officer

                                      -5-

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