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Exhibit 10.3  

 
 

PROTECTION ONE, INC.
  1997 LONG-TERM INCENTIVE PLAN
  (as amended)    
    

        1.    Purposes.    The purposes of this 1997 Long-Term Incentive Plan (as from time to time amended, the
"Plan") are (i) to align the interests of the Company's stockholders and the recipients of awards under this Plan by increasing the proprietary interest of such recipients in the Company's
growth and success, (ii) to advance the interests of the Company by attracting and retaining for the Company and its Subsidiaries the services of directors, officers and other key employees,
consultants and agents, and (iii) to motivate such persons to act in the long-term best interests of the Company's stockholders. 

        2.    Definitions.    For purposes of the Plan, the following terms shall have the meanings set forth below unless a
different meaning is plainly required by the context: 

        (a)   "Affiliate"
means any entity other than the Company and its Subsidiaries (i) of which the Company directly or indirectly owns stock having at least 50% of the
combined voting power of all classes of stock of such entity or, if such entity does not have shares of stock outstanding, at least 50% of the ownership interests in such entity, and (ii) that
is designated by the Board or the Committee as a participating employer under the Plan. 

        (b)   "Award"
means any Option, SAR, Restricted Share, Restricted Share Unit, Performance Award, Dividend Equivalent or Other Share-Based Award granted to an Eligible Employee
or other eligible person under the Plan, or any combination of the foregoing. 

        (c)   "Award
Agreement" means the written agreement or evidencing an Award between the Company and the recipient of such Award. 

        (d)   "Beneficiary"
means as to any Participant the individual or individuals, or the trust or trusts, that have been designated by such Participant in his or her most recent
written beneficiary designation filed with the Company as to receive the benefits specified under the Plan upon the death of such Participant or, if there is no such designated individual or trust or
surviving designated individual or trust, then the individual or individuals, or the trust or trusts, entitled by will or the laws of descent and distribution to receive such benefits. 

        (e)   "Board"
means the Board of Directors of the Company. 

        (f)    "Code"
means the Internal Revenue Code of 1986, as amended from time to time. References to any provision of the Code shall be deemed to include successor provisions
thereto and regulations thereunder. 

        (g)   "Committee"
means the Compensation Committee of the Board, such other Board committee as may be designated by the Board to administer the Plan or the full Board if no
such designation has been made; provided that the Committee, at any time that it grants an Award to (or certifies that performance goals or other material terms have been satisfied with respect to)
any executive officer of the Company or person who in the Committee's judgment is likely to be a "covered employee" within the meaning of Section 162(m) of the Code, shall consist of two or
more directors of the Company, each of whom shall be a "disinterested person" within the meaning of Rule 16b-3 under the Exchange Act and an "outside director" within the meaning of
Section 162(m) of the Code. 

        (h)   "Common
Stock" means the common stock, par value $.01 per share, of the Company. 

        (i)    "Company"
means Protection One, Inc., a Delaware corporation. 

        (j)    "Director"
means a member of the Board. 

        (k)   "Dividend
Equivalent" means a right granted to a Participant under Section 5(g) to receive cash, shares of Common Stock or other property equal in value to
dividends paid with respect to a specified number of shares of Common Stock. Dividend Equivalents may be awarded on a free-standing basis or in connection with another Award, and may be
paid currently or on a deferred basis. 

        (l)    "Eligible
Employee" means an employee of the Company or any of its Subsidiaries or Affiliates, including any Director who is an employee. 

        (m)  "Exchange
Act" means the Securities Exchange Act of 1934, as amended from time to time. References to any provision of the Exchange Act shall be deemed to include
successor provisions thereto and regulations thereunder. 

        (n)   "Fair
Market Value" means, with respect to shares of Common Stock or other property, the fair market value of such shares or other property determined by such methods or
procedures as shall be established from time to time by the Committee. If the shares of Common Stock are quoted on the Nasdaq National Market System or any other national market system, unless
otherwise determined by the Committee in good faith, the Fair Market Value of the Common Stock on any date shall be the mean between the high and low selling prices of the Common Stock on such date
(or, if the Common Stock was not traded on that day, the next preceding day that shares of Common Stock were traded) through such national market system, as such prices are officially quoted by such
system. 

        (o)   "ISO"
means any Option intended to be and designated by the Committee as an "incentive stock option" within the meaning of Section 422 of the Code. 

        (p)   "Non-Employee
Director" means a director of the Company that is not an officers or employee of the Company or any of its Subsidiaries. 

        (q)   "NQSO"
means any Option that is not an ISO. 

        (r)   "Option"
means a right granted under Section 5(b) to purchase shares of Common Stock. 

        (s)   "Other
Share-Based Award" means a right granted under Section 5(h) that relates to or is valued by reference to shares of Common Stock. 

        (t)    "Participant"
means an Eligible Employee, a Non-Employee Director or a consultant or agent of the Company who has been granted an Award. 

        (u)   "Performance
Award" means a right, granted under Section 5(f) and contingent upon the attainment of specified performance criteria during a specified performance
period, to receive one share of
Common Stock (which may be a Restricted Share) or, in lieu thereof, the Fair Market Value of such Performance Share in cash. 

        (v)   "Performance
Criteria" means the criteria, established by the Committee, which shall be satisfied or met (i) as a condition to the exercisability of all or a
portion of an Option or SAR or (ii) during the applicable Restriction Period or Performance Period as a condition to the holder's receipt, in the case of an Award of Restricted Shares, of the
shares of Common Stock subject to such award, or, in the case of an Award of Restricted Share Units or a Performance Award, of payment with respect to such Award. Such criteria may include, but are
not limited to, revenues, EBITDA, cash flow, earnings per share, return on equity, market shares, customer satisfaction goals or performance against budget (whether applicable to the Company or any
relevant Subsidiary or business unit), comparisons with competitor companies or groups and with stock market indices, the attainment by a share of Common Stock or a specified Fair Market Value for a
specified period of time, or any combination thereof. Performance criteria may vary from Participant to Participant and between groups of Participants. 

        (w)  "Restricted
Shares" means a grant under Section 5(d) of shares of Common Stock the rights of ownership of which are subject to restrictions and/or to a risk of
forfeiture prescribed by the Committee. 

        (x)   "Restricted
Share Unit" means a grant under Section 5(e) of shares of Common Stock or cash at the end of a specified deferral period. 

        (y)   "Rule 16b-3"
means Rule 16b-3 adopted by the Securities and Exchange Commission under Section 16 of the Exchange Act, as
from time to time in effect and applicable to the Plan and Participants. 

        (z)   "SAR"
or "Share Appreciation Right" means a right granted under Section 5(c) that entitles the recipient to receive, upon exercise, the excess of (1) the
Fair Market value of one share of Common Stock on the date of exercise (or if the Committee shall so determine in the case of any such right, the Fair Market Value of one share of Common Stock at any
time during a specified period before or after the date of exercise) over (2) the exercise price of the SAR as determined by the Committee (which, in the case of an SAR granted in tandem with
an Option, shall be equal to the exercise price of the underlying option). 

        (aa) "Subsidiary"
means any corporation of which the Company owns, directly or indirectly, shares possessing at least 80% or more of the total combined voting power of all
classes of stock of such corporation. 

        3.    Administration.    

        (a)    Authority of the Committee.    The Plan shall be administered by the Committee, and the Committee shall have
full and final authority to take the following actions, in each case subject to and consistent with the provisions of the Plan: 

          (i)  to
designate Affiliates; 

         (ii)  to
select Eligible Employees, Non-Employee Directors, consultants and agents to whom Awards may be granted; 

        (iii)  to
determine the type or types of Awards to be granted; 

        (iv)  to
determine as to each Participant the form, amount and timing of each Award granted to such person and, if applicable, the number of shares of Common Stock, the
number of SARs and/or the number of Restricted Shares, Performance Shares and Dividend Equivalents subject to such Award, the applicable exercise price, grant price or purchase price and any basis for
adjusting the same, the time and conditions of exercise or settlement of the Award (including, if applicable, performance criteria, the restrictions or conditions, if any (and any schedule for lapse
of such restrictions or conditions) relating to exercisability, transferability or forfeiture of such Award, and the circumstance under which such restrictions, conditions or schedules may be
accelerated or waived), all other terms and conditions of such Award and all other matters to be determined in connection with an Award, based in each case on such considerations as the Committee
shall determine; 

         (v)  to
determine whether, to what extent and under what circumstances an Award may be settled, or the exercise price of an Award may be paid, in cash, shares of Common
Stock, other Awards or other property; 

        (vi)  to
prescribe the form of each Award Agreement, which need not be identical for each Participant; 

       (vii)  to
adopt, amend, waive, suspend and rescind such rules and regulations, and appoint such agents, as the Committee may deem necessary or advisable to administer the
Plan; 

      (viii)  to
correct any defect or supply any omission or reconcile any inconsistency in the Plan and to construe and interpret the Plan and any Award, Award Agreement or other
instrument or document hereunder, 

        (ix)  to
accelerate the exercisability or vesting of all or any portion of any Award or to extend the period during which an Award is exercisable; and 

         (x)  to
make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration
of the Plan. 

        (b)    Manner of Exercise of Committee Authority.    The Committee shall have sole discretion in exercising its
authority under the Plan. Action of the Committee with respect to the Plan shall be final, conclusive and binding on all persons, including the Company, its Subsidiaries and Affiliates, Eligible
Employees and other persons eligible to participate in the Plan, Participants, any person claiming any rights under the Plan from or through a Participant and stockholders of the Company. The express
grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting such or any other power or authority of the Committee. 

        The
Committee may delegate to officers or managers of the Company or any Subsidiary or Affiliate, subject to such terms as the Committee shall determine, the performance of the
administrative functions of the Committee hereunder. In addition, the Committee may delegate some or all of its power and authority hereunder to the Chief Executive Officer and President and/or such
other executive officer or officers of the Company as the Committee deems appropriate; provided, however, that the Committee may not delegate its power and authority with regard to (i) the
selection for participation in the Plan of (A) the Chief Executive Officer of the Company (or any employee who is acting in such capacity), one of the four most highly compensated officers of
the Company other than the Chief Executive Officer, or another person deemed to be a "covered employee" within the meaning of Section 162(m) of the Code or who, in the Committee's judgment, is
likely to be a covered employee at any time during the period an Award to such employee would be outstanding or (B) an officer or other person subject to Section 16 of the Exchange Act,
or (ii) decisions concerning the type, form, amount, pricing or timing of an Award to such an officer, employee or other person who is, or who in the Committee's judgment is likely to be, a
covered employee. 

        (c)    Limitation of Liability.    Each member of the Committee and each other person to whom the Committee delegates
any of its power and authority hereunder shall be entitled to rely or act, in good faith, upon any report or other information furnished to him or her by any officer or other employee of the Company
or any Subsidiary or Affiliate, the Company's independent certified public accountants or legal counsel, or other professional retained by the Company to assist in the administration of the Plan. No
member of the Committee, and no person acting on behalf of the Committee, shall be personally
liable for any action, determination or interpretation taken or made in good faith with respect to the Plan, and all members of the Committee and any person acting on behalf of the Committee shall, to
the maximum extent permitted by law, be fully indemnified, reimbursed and otherwise protected by the Company with respect to any such action, determination or interpretation or any claim, loss, damage
or expense (including, but not limited to, attorneys' fees) arising therefrom. 

        4.    Shares Subject to the Plan.    

        (a)   Subject
to adjustment as provided in Section 4(c) hereof and to the limitations set forth below, the total number of shares of Common Stock as to which Awards may
be granted shall be 4,200,000. Such number of shares shall be reduced by the sum of (i) the aggregate number of shares of Common Stock that are issued as Restricted Shares or as "bonus stock"
under Section 5(h), and (ii) the aggregate number of shares of Common Stock that become subject to outstanding Options, outstanding SARs not granted in tandem with an Option, and
outstanding Performance Awards. If and to the extent that shares of Common Stock subject to an outstanding Award are not issued or delivered by reason of the expiration, surrender, cancellation,
forfeiture or other termination of that Award, the settlement of such Award in cash or the delivery or withholding of shares of Common Stock to pay all or a portion of the exercise price of an Award
or to satisfy all or a portion of the tax withholding obligations relating to an Award, then such shares of Common Stock shall again be available for Awards under the Plan. 

        (b)   Shares
of Common Stock to be issued or delivered under this Plan shall be authorized and unissued shares, treasury shares or shares acquired by purchase in the open
market or in one or more private transactions. 

        (c)   If
and to the extent that the Committee shall determine that any share dividend, share split or reverse split, recapitalization, reorganization, merger, consolidation,
combination, separation (including a spin-off or other distribution of stock or property), repurchase or share exchange or other corporate transaction or event affects the outstanding
shares of Common Stock such that an adjustment in outstanding Awards is appropriate to reflect such change and to prevent dilution or enlargement of the rights of Participants under the Plan, then the
Committee shall make such equitable changes or adjustments in the Plan and outstanding Awards as the Committee deems appropriate, including, but not limited to, by adjusting any or all of
(i) the number and kind of shares that may thereafter be issued under the Plan, (ii) the number and kind of shares, other securities, cash or other consideration issued or issuable in
respect of outstanding Awards, and (iii) the exercise price, grant price or purchase price relating to any Award; provided, however, that, with respect to ISOs, such adjustment shall be made in
accordance with Section 424(h) of the Code unless the Committee determines otherwise. In addition, the Committee is authorized to make adjustments in the terms and conditions of (including, but
not limited to, the performance objectives included in) Awards in recognition of unusual or non-recurring events (including, without limitation, events described in the immediately
preceding sentence) affecting the Company or any Subsidiary or Affiliate or the financial statements of the Company or any Subsidiary or Affiliate, or in response to changes in
applicable laws, rules, regulations or accounting principles; provided, further, that if an Award Agreement specifically so provides, the Committee shall not have discretion to increase the amount of
compensation payable under the Award to the extent such an increase would cause the Award to lose its qualification as performance-based compensation for purposes of Section 162(m) of the Code. 

        5.     Specific Terms of Awards.

        (a)    General.    Awards may be granted on the terms and conditions set forth in this Section 5. In addition,
the Committee may impose on any Award or the exercise or settlement thereof, at the date of grant or thereafter (subject to Section 9(d)), such additional terms and conditions not inconsistent
with the provisions of the Plan as the Committee shall determine, including terms regarding forfeiture of Awards or continued exercisability of Awards in the event of termination of employment by the
Participant. 

        (b)    Options.    The Committee is authorized to grant Options, which may be NQSOs or ISOs, to Participants on the
following terms and conditions: 

          (i)  Number of Shares and Exercise Price. The number of shares of Common Stock subject to an Option and the exercise price
per share of Common Stock purchasable upon exercise of such Option shall be determined by the Committee, and the Committee may, without limitation, set an exercise price that is based upon achievement
of performance criteria if deemed appropriate by the Committee. 

         (ii)  Time and Method of Exercise; Other Terms. The Committee shall determine the time or times at which an Option may be
exercised in whole or in part (including, without limitation, upon achievement of performance criteria if deemed appropriate by the Committee), the method or methods by which such exercise price may
be paid or deemed to be paid (including, without limitation, broker-assisted exercise arrangements), the form of such payment (including, without limitation, cash, shares of Common Stock, notes or
other property), and the methods by which shares of Common Stock will be delivered or deemed to be delivered to holders of Options. 

        (iii)  ISOs. The terms and conditions of any ISO granted under the Plan shall comply in all respects with the provisions of
Section 422 of the Code, including but not limited to the requirements that (A) ISOs be granted only to Eligible Employees; (B) the exercise price of 

each
ISO not be less than 100% of the Fair Market Value of the Common Stock on the date the ISO is granted; provided further, that if an ISO shall be granted to any person who, at the time such option
is granted, owns capital stock possessing more than ten percent of the total combined voting power of all classes of capital stock of the Company (or of any parent or Subsidiary) (a "Ten Percent
Holder"), the purchase price per share of Common Stock shall be the price (currently 110% of Fair Market Value) required by the Code in order to constitute an ISO; (C) if an ISO shall be
granted to a Ten Percent Holder, such Option shall not be exercised later than five years after its date of grant; and (D) to the extent that the aggregate Fair Market Value (determined as of
the grant date) of the shares of Common Stock with respect to which ISOs granted to any Participant are exercisable for the first time during any calendar year (under the Plan and all other stock
option plans of the Company) exceeds $100,000, such excess portion shall be treated as a NQSO. 

        (c)    SARs.    The Committee is authorized to grant SARs to Participants on the following terms and conditions: 

          (i)  Number of Shares, Exercise Price and Nature. The Committee shall determine at the time an Award of SARs is granted,
(A) the number of SARs subject to the Award, (B) the exercise price of such SARs, (C) whether each such SAR entitles the holder thereof to receive, upon exercise, the excess of
(1) the Fair Market value of one share of Common Stock on the date of exercise or the Fair Market Value of one share of Common Stock at any time during a specified period before or after the
date of exercise over (2) the exercise price of the SAR, and (D) whether such SAR is free-standing or in tandem with an Option or other Award. 

         (ii)  Other Terms. The Committee shall determine, at the time of grant of an SAR or thereafter, the time or times at which the
SAR may be exercised in whole or in part (provided, however, that no SAR granted in tandem with an Option my be exercised later than the expiration, cancellation, forfeiture or other termination of
such Option), the method of exercise, the method of settlement, the form of consideration to be paid upon exercise (which may consist of cash, shares of Common Stock (which may, but need not be,
Restricted Shares) or other property), the method by which shares of Common Stock or other consideration will be delivered or deemed to be delivered to the holder the SAR, and all other terms and
conditions of the SAR. Unless the Committee determines otherwise, a SAR (a) granted in tandem with an NQSO may be granted at the time of grant of the related NQSO or at any time thereafter, and
(b) granted in tandem with an ISO may only be granted at the time of grant of the related ISO. 

        (d)    Restricted Shares.    The Committee is authorized to grant Restricted Shares to Participants on the following
terms and conditions: 

          (i)  Issuance and Restrictions. Restricted Shares shall be issued to a Participant upon payment of consideration by the
Participant if any, as the Committee shall determine at the date of grant, and during the restriction period established by the Committee (the "Restriction Period") shall be subject to such
restrictions on transferability and other restrictions, if any, as the Committee may impose, which restrictions may lapse separately or in combination at such times, under such circumstances
(including, without limitation, upon achievement of performance criteria if deemed appropriate by the Committee), in such installments or otherwise, as the Committee may determine. The performance
criteria may be of various types, may differ as to various Participants or classes or categories of Participants, and may include the attainment of certain performance criteria by the individual
Participants, the Company, a department or division of the Company and/or a group or class of Participants. 

         (ii)  Forfeiture. Except as otherwise determined by the Committee at the date of grant or thereafter, in the event a
Participant ceases employment during the Restriction Period or in the event performance criteria attributable to an Award of Restricted Shares, if any, are not achieved, Restricted Shares on such
shares shall be forfeited. 

        (iii)  Certificates for Shares. Restricted Shares granted under the Plan may be evidenced in such manner as the Committee
shall determine. Except to the extent otherwise set forth in the applicable Award Agreement, if certificates representing Restricted Shares are registered in the name of the Participant, such
certificates shall bear an appropriate legend referring to the restrictions and other terms and conditions applicable to such Restricted Shares, and the Company shall retain physical possession of the
certificate, together with a stock power or other instrument of assignment endorsed in blank, until the completion of the Restriction Period and the satisfaction of all performance criteria, if any. 

        (iv)  Stockholder Rights. Except to the extent otherwise set forth in the applicable Award Agreement, a Participant granted
Restricted Shares shall have all of the rights of a stockholder of the Company, including, without limitation, the right to vote the Restricted Shares and the right to receive dividends thereon. Not
without the foregoing, dividends or Dividend Equivalents paid on Restricted Shares shall be either paid at the dividend payment date or deferred for payment to such date as determined by the
Committee, in cash or in shares of Common Stock having a Fair Market Value equal to the amount of such dividend or Dividend Equivalents. Shares of Common Stock distributed in connection with a stock
split or stock dividend, and all other property distributed as a dividend or Dividend Equivalents, if any, shall, to the extent distributed with respect to Restricted Shares, be subject to
restrictions and risk of forfeiture to the same extent as the Restricted Shares with respect to which such Shares or other property has been distributed. 

        (e)    Restricted Share Units.    The Committee is authorized to grant Restricted Share Units to Participants, subject
to the following terms and conditions: 

          (i)  Award and Restrictions. Delivery of shares of Common Stock or cash, as the case may be, will occur upon expiration of
the deferral period specified for Restricted Share Units by the Committee (or, if permitted by the Committee, as elected by the Participant). In addition, Restricted Share Units shall be subject
during such deferral period to such restrictions on transfer and other restrictions as the Committee may impose, if any (including, without limitation, the achievement of performance criteria if
deemed appropriate by the Committee), which restrictions may lapse at such time, separately or in combination, in installments or otherwise, as the Committee may determine. 

         (ii)  Forfeiture. Except as otherwise determined by the Committee at the date of grant or thereafter, upon termination of
employment (as determined under criteria established by the Committee) during the applicable Restriction Period, or upon failure to satisfy any other condition precedent to the delivery of shares of
Common Stock or cash to which such Restricted Share Units relate, all Restricted Share Units that are at that time subject to restriction shall be forfeited. 

        (f)    Performance Awards.    The Committee is authorized to grant Performance Awards to Participants on the following
terms and conditions: 

          (i)  Number of Performance Shares, Performance Period and Performance Criteria. Upon grant of a Performance Award, the
Committee shall determine (a) the nature, length and starting date of the performance period for such Performance Award ("Performance Period"), (b) the performance criteria to be used in
valuing the Performance Award and determining the extent to which such Performance Award has been earned, and (c) the number of shares of Common Stock (which may, but need not, be Restricted
Shares), the range of dollar values or a combination thereof, to be received by the Participant at the end of the Performance Period if and to the extent that the relevant performance criteria for
such Performance Award are achieved. 

        Performance
Periods may overlap and Participants may participate simultaneously with respect to Performance Awards for which different Performance Periods are prescribed. 

         (ii)  Payment. The earned portion of a Performance Award may be paid currently or on a deferred basis with such interest or
earning equivalents as may determined by Committee. 

        (iii)  Significant Events. If during the course of a Performance Period there shall occur significant events as determined by
the Committee that the Committee expects to have a substantial effect on a performance objective during such period, the Committee may revise such objective; provided, however, that, if an Award
Agreement so provides, the Committee shall not have any discretion to increase the
amount of compensation payable under the Award to the extent such an increase would cause the Award to lose its qualification as performance-based compensation for purposes of
Section 162(m)(4)(C) of the Code and the regulations thereunder. 

        (iv)  Forfeiture. Except as otherwise determined by the Committee at the date of grant or thereafter, upon termination of
employment during the applicable Performance Period, a Performance Award shall be forfeited. 

        (g)    Dividend Equivalents.    The Committee is authorized to grant Dividend Equivalents to Participants on the
following terms and conditions: 

          (i)  The
Committee shall determine, at the time of the Award, the number of shares of Common Stock to which such Award relates. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award, and may be paid currently or on a deferred basis. 

         (ii)  The
Committee may provide, at the date of grant or thereafter, that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been
reinvested in additional shares of Common Stock, or other investment vehicles as the Committee may specify, provided that Dividend Equivalents (other than freestanding Dividend Equivalents) shall be
subject to all conditions and restrictions of the underlying Awards to which such Dividend Equivalents relate. 

        (h)    Other Share-Based Awards.    The Committee is authorized, subject to limitations under applicable law, to grant
to Participants such other Awards as may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, shares of Common Stock as deemed by the
Committee to be consistent with the purposes of the Plan, including, without limitation, shares of Common Stock awarded purely as a "bonus" that are not subject to any restriction period or
performance criteria, other rights convertible or exchangeable into shares of Common Stock, purchase rights for shares of Common Stock, Awards with a value and payment of which is contingent upon
performance of the Company or any other factor or factors designated by the Committee, and Awards valued by reference to the performance of specified Subsidiaries or Affiliates. The Committee shall
determine the terms and conditions of such Awards at date of grant or thereafter. Shares of Common Stock delivered pursuant to an Award in the nature of a purchase right granted under this
Section 5(h) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, shares of Common Stock, notes or other
property, as the Committee shall determine. Cash awards, as an element of or supplement to any other Award under the Plan, shall also be authorized pursuant to this Section 5(h). 

        6.    Certain Provisions Applicable to Awards.    

        (a)    Stand-Alone, Additional, Tandem and Substitute Awards.    Awards granted under the Plan may, in the discretion
of the Committee, be granted to Participants either alone or in addition to, in tandem with, or in exchange or substitution for, any other Award granted under the Plan or any award granted under any
other plan or agreement of the Company, any Subsidiary or Affiliate, or any business entity to be acquired by the Company or a Subsidiary or Affiliate, or any other right of a Participant to receive
payment from the Company or any Subsidiary or Affiliate. The per Share exercise price of any Option, the grant price of any SAR, or the purchase or settlement price of any other Award conferring a
right to purchase shares of Common Stock that is granted 

in
connection with the substitution of one or more awards granted under any other plan or agreement of the Company or any Subsidiary or Affiliate or any business entity to be acquired by the Company
or any Subsidiary or Affiliate shall be determined by the Committee, in its discretion. Upon the exercise of any Award granted in tandem with any other Award, such related Award shall be canceled to
the extent of the number of shares of Common Stock as to which the Award is exercised. 

        (b)    Form of Payment Under Awards.    Subject to the terms of the Plan and any applicable Award Agreement, payments
to be made by the Company or a Subsidiary or Affiliate upon the grant, exercise or settlement of an Award may be made in such forms as the Committee shall determine at the date of grant or thereafter,
including, without limitation, cash, shares of Common Stock, or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis. The Committee may make rules
relating to installment or deferred payments with respect to Awards, including the rate of interest to be credited with respect to such payments. 

        (c)    Non-transferability.    Unless otherwise set forth by the Committee in an Award Agreement, Awards
shall not be transferable by a Participant except by will or the laws of descent and distribution (except pursuant to a Beneficiary designation) and shall be exercisable during the lifetime of a
Participant only by such Participant or his or her guardian or legal representative. A Participant's rights under an Award and the Plan may not be pledged, mortgaged or otherwise encumbered, and shall
not be subject to claims of the Participant's creditors. 

        (d)    Agreement.    Each award under this Plan shall be evidenced by an Agreement setting forth the terms and
conditions applicable to such award. No award shall be valid until an Agreement is executed by the Company and the recipient of such award and, upon execution by each party and delivery of the
Agreement to the Company, such award shall be effective as of the effective date set forth in the Agreement. 

        7.     Change of Control Provisions.

        (a)    Acceleration of Exercisability and Lapse of Restrictions; Cash-Out of Awards.    In the event of a
Change of Control, the following acceleration and cash-out provisions shall apply unless otherwise provided by the Committee at the time of the Award grant: 

          (i)  All
outstanding Awards pursuant to which the Participant may have rights the exercise of which is restricted or limited, shall become fully exercisable; unless the
right to lapse of restrictions or other limitations is waived or deferred by a Participant prior to such lapse, all restrictions and other limitations (including risks of forfeiture and deferrals) on
outstanding Awards subject to restrictions or other limitations under the Plan shall lapse; and all performance criteria and other conditions to payment of Awards under which payments of cash, shares
of Common Stock or other property are subject to conditions shall be deemed to be achieved or fulfilled and shall be waived by the Company. 

         (ii)  For
a period of up to 60 days following a Change in Control, the Participant may elect to surrender any outstanding Award and to receive, in full satisfaction
therefor, a cash payment equal to the value of such Award calculated on the basis of the Change of Control Price of any shares of Common Stock or the Fair Market Value of any property other than
shares of Common Stock relating to such Award; provided, however, that in the case of an ISO, or a Stock Appreciation Right granted in tandem therewith, the cash payment shall be based upon the Fair
Market Value of shares of Common Stock on the date of exercise. In the event that an Award is granted in tandem with another Award such that the Participant's right to payment for such Award is an
alternative to payment of another Award, the Participant electing to surrender any such tandem Award shall surrender all alternative Awards related thereto and shall receive that payment for the Award
that produces the highest payment to the Participant. Except as provided in Section 8(a)(iii), in no event will an Award be surrendered or a Participant have the right to receive cash under
this Section 7(a)(ii) with respect to an Award if the Participant is subject to Section 16 of the Exchange Act and at 

least
six months shall not have elapsed from the date on which the Participant was granted the Award before the date of the Change of Control (unless this restriction is not at such time required to
cause the receipt of such cash to be exempt from the provision of Rule 16b-3). 

        (iii)  In
the event that any Award is subject to limitations under Section 8(a)(ii) at the time of a Change of Control, then solely for the purpose of
determining the rights of the Participant with respect to such Award, a Change of Control shall be deemed to occur at the close of business on the first business day following the date on which the
Award could be sold without liability under Section 16 of the Exchange Act. 

        (b)    Definitions of Certain Terms.    For purposes of this Section 7, the following definitions, in addition
to those set forth in Section 2, shall apply: 

          (i)  "Change
of Control" means, and a Change of Control shall be deemed to have occurred, if (i) there occurs any transaction or other event or circumstance that
results in less than 50% of the total Voting Securities of the Company outstanding immediately after such transaction being beneficially owned by Western Resources, Inc., a Kansas corporation
("Western Resources"), or an affiliate of Western Resources, or (ii) all or substantially all of the assets of the Company are sold and less than 50% of the total assets owned by the Company
immediately prior to such transaction are owned by a person other than Western Resources and its affiliates. 

         (ii)  "Change
of Control Price" means, with respect to a Share, the higher of (A) the highest reported sales price of shares of Common Stock on the Nasdaq National
Market during the 30 calendar days preceding a Change of Control, or (B) the highest price paid or offered in a transaction that either (1) results in a Change of Control, or
(2) would be consummated but for another transaction which results in a Change of Control and, if it were consummated, would result in a Change of Control. With respect to clause (B) of
the immediately preceding sentence, the "price paid or offered" will be equal to the sum of (i) the face amount of any portion of the consideration consisting of cash or cash equivalents and
(ii) the Fair Market Value of any portion of the consideration consisting of real or personal property other than cash or cash equivalents, as established by an independent appraiser selected
by the Committee. 

        (iii)  "Voting
Securities or Security" means any securities of the Company that carry the right to vote generally in the election of directors. 

        8.    General Provisions.    

        (a)    Compliance with Legal and Trading Requirements.    The Plan, the grant, exercise and settlement of Awards
thereunder, and the other obligations of the Company under the Plan and any Award Agreement shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by
any regulatory or governmental agency as may be required by applicable law. The Company, in its discretion, may postpone the issuance or delivery of shares of Common Stock under any Award until
completion of such stock exchange or market system listing or registration or qualification of such shares of Common Stock under applicable securities laws or other required action under any state or
federal law, rule or regulation as the Company may consider appropriate, and may require any Participant to make such representations and furnish such information as the Committee may consider
appropriate in connection with the issuance or delivery of shares of Common Stock in compliance with applicable laws, rules and regulations. No provisions of the Plan shall be interpreted or construed
to obligate the Company to register any shares of Common Stock under federal or state securities laws. 

        (b)    No Right to Continued Employment or Service.    Neither the Plan nor any action taken thereunder shall be
construed as giving any employee, officer, director or other person the right to be retained in the employ or service of the Company or any of its Subsidiaries or Affiliates, nor shall it interfere in
any way with the right of the Company or any of its Subsidiaries or Affiliates to terminate any such employment or service at any time. 

        (c)    Taxes.    The Company or any Subsidiary or Affiliate is authorized to withhold from any Award granted, any
payment relating to an Award under the Plan, including from a distribution of shares of Common Stock, or any payroll or other payment to a Participant, amounts of withholding and other taxes due in
connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company and Participants to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive shares of Common Stock or other property and to make cash payments in
respect thereof in satisfaction of a Participant's tax obligations. 

        (d)    Changes to the Plan and Awards.    The Board may amend or otherwise alter, suspend, discontinue or terminate
the Plan or the Committee's authority to grant Awards under the Plan as the Board deems advisable without the consent of stockholders of the Company or Participants except as may be otherwise required
by applicable law, rule or regulation, including Rule 16b-3 under the Exchange Act and Section 162(m)(4)(c) of the Code; provided, however, no such amendment or other
alteration, suspension, discontinuation or termination of the Plan may impair the rights of the holder of an outstanding Award without the consent of such holder. 

        (e)    No Rights to Awards; No Shareholder Rights.    No person shall have any right or claim to be granted any Award
under the Plan, and there is no obligation for uniformity of treatment of eligible persons and Participants. No Award shall confer on any Participant any of the rights of a stockholder of the Company. 

        (f)    Unfunded Status of Awards.    The Plan is intended to constitute an "unfunded" plan for incentive compensation.
With respect to any payment not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a
general creditor of the Company; provided, however, that the Committee may authorize the creation of trusts or make other arrangements to meet the Company's obligations under the Plan to deliver cash,
shares of Common Stock, other Awards or other property pursuant to any Award, which trusts or other arrangements shall be consistent with the "unfunded" status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant. 

        (g)    Non-exclusivity of the Plan.    Neither the adoption of the Plan by the Board nor its submission to
the stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Board to adopt such other incentive arrangements as the Board may deem desirable, including, without limitation, the granting of options and other awards otherwise than
under the Plan, and such arrangements may be either applicable generally or only in specific cases. 

        (h)    Not Compensation for Benefit Plans.    No Award payable under this Plan shall be deemed salary or compensation
for the purpose of computing benefits under any benefit plan or other arrangement of the Company for the benefit of its employees or directors unless the Company shall determine otherwise. 

        (i)    No Fractional Shares of Common Stock.    No fractional shares of Common Stock shall be issued or delivered
pursuant to the Plan or any Award. Cash shall be paid in lieu of such fractional shares. 

        (j)    Governing Law.    The validity, construction, and effect of the Plan any rules and regulations relating to the
Plan, and any Award Agreement shall be determined in accordance with the laws of Delaware without giving effect to principles of conflict of laws. 

        (k)    Effective Date; Time Limitation on Future Grants, Plan Termination.    The Plan shall become effective as of
October 24, 1997 (the "Effective Date"), the date on which the Plan was adopted by the Board subject to approval of the Plan by the Company's stockholders. No Award shall be granted under the
Plan after the 10th anniversary of the Effective Date. In the event that 

this
Plan is not approved by the stockholders of the Company, this Plan and any awards hereunder shall be void and of no force or effect. 

        (l)    Titles and Headings.    The titles and headings of the Sections and subsections in the Plan are for convenience
of reference only. In the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. 

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Exhibit 10.58  

 
 

EMPLOYMENT AGREEMENT    
    

        THIS EMPLOYMENT AGREEMENT (the "Agreement" is entered into as of the 23rd day of July, 2004 by and between Protection One, Inc., a Delaware corporation (the
"Company"), Protection One Alarm Monitoring, Inc., a Delaware corporation, and J. Eric Griffin ("Executive"). 

 
 

W I T N E S S E T H :    

        WHEREAS,
POAMI and Executive agreed to employment terms pursuant to a Change in Control Agreement dated November 20, 2002 and superseded such agreement with a Change in Control Agreement
dated June 20, 2003 and a retention bonus letter dated June 20, 2003 (such Change in Control Agreement, together with the retention bonus letter, hereinafter referred to as the "Prior Employment
Agreement"); and 

        WHEREAS,
the Board (as defined in Section 1) has determined that it is in the best interest of the Company, its creditors and its stockholders to assure that the Company will have
the continued dedication of Executive during and after the period of the Company's and POAMI's (as defined in Section 1) anticipated Restructuring (as defined in Section 1) of its
indebtedness and capital stock notwithstanding the possibility or occurrence of a Change in Control (as defined in Section 1), to provide Executive with assurance of continued employment beyond
the expiration of the Prior Employment Agreement and to provide compensation and benefits arrangements which are competitive with those of other comparable and similarly situated corporations; and 

        WHEREAS,
during the period of the Company's anticipated Restructuring, Executive's continued high performance and retention is critical to ensure that the Company maintains its value;
and 

        WHEREAS,
Executive has agreed to enter into this Agreement because the Company has satisfied all of its obligations under the Prior Employment Agreement; and 

        WHEREAS,
POAMI is a direct and wholly owned subsidiary of the Company and will receive substantial direct and indirect value from Executive; and 

        WHEREAS,
each of the board of directors of the Company and of POAMI has authorized the Company and POAMI, respectively, to enter into this Agreement. 

        NOW,
THEREFORE, for and in consideration of the premises and the mutual covenants and agreements herein contained, the Company, POAMI and Executive hereby agree as follows: 

        1.     Definitions. As used in this Agreement, the following terms shall have the respective meanings set forth below: 

        (a)   "Board" means the Board of Directors of the Company, as the case may be, whether prior to or after the Restructuring. 

        (b)   "Bonus Amount" means: 

        (A)  for
a Date of Termination occurring in fiscal year 2004, the average of the annual incentive bonuses payable by the Company to or for the benefit of or deferred by
Executive for the 2002 and 2003 fiscal years of the Company; and 

        (B)  for
a Date of Termination occurring after fiscal year 2004, the average of the annual incentive bonuses payable by the Company to or for the benefit of or deferred by
Executive for the last three (3) completed fiscal years of the Company immediately preceding the Date of Termination or Change in Control. 

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        (c)   "Cause" means: 

        (A)  the
willful and continued failure of Executive to perform substantially his duties with the Company (other than any such failure resulting from Executive's incapacity
due to physical or mental illness or any such failure subsequent to Executive being delivered a Notice of Termination without Cause by the Company or Executive delivering a Notice of Termination for
Good Reason to the Company) that is not remedied within 30 days after a written demand for substantial performance is delivered to Executive by the Chairman of the Board, the Chairman of the
Compensation Committee or the Chief Executive Officer which specifically identifies the manner in which Executive has not substantially performed Executive's duties and that such failure if not
remedied constitutes "Cause" under this Agreement, or 

        (B)  Executive's
conviction by a court of law, Executive's admission in a legal proceeding that he is guilty or Executive's plea of nolo
contendre, in each case, with respect to a felony. 

For
purposes of this subsection (c), no act or failure to act by Executive shall be considered "willful" unless done or omitted to be done by Executive in bad faith and without reasonable belief that
Executive's action or omission was in, or not opposed to, the best interests of the Company. 

        (d)   "Change in Control" means 

        (i)    the
occurrence of any one of the following events after the earlier of the date the Restructuring is consummated or December 31, 2005: 

        (A)  individuals
who, as of the date the Restructuring is consummated, constitute the Board (or, in the case no Restructuring is consummated by December 31, 2005, the
individuals who constitute the Board as of such date) (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director
subsequent to the date the Restructuring is consummated (or, in the case no Restructuring is consummated by December 31, 2005, December 31, 2005), whose election or nomination for election was
approved by a vote of at least two thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as
a nominee for director, without written objection to such nomination) or, prior to the date that a Restructuring is consummated, as elected at any time by Quadrangle Group shall be an Incumbent
Director. 

        (B)  any
"person" (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections 13(d)(3) and 14(d)(2)
of the Exchange Act) is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than
thirty-three and one-third percent (331/3%) of the combined voting power of the Company's then outstanding securities eligible to vote for the election of the Board (the "Company Voting Securities");  provided,
however, that the event
described in this paragraph (B) shall not be deemed to be a Change in Control if such beneficial owner is any of the following or becomes a beneficial owner as a result of any of the following: 

        (I)   one
or more Current Debt Holder or a syndicate or group in which one or more Current Debt Holders, collectively, beneficially own a majority of the Company Voting
Securities beneficially owned by such syndicate or group; 

        (II)  any
employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Subsidiaries or one or more Current Debt Holder; 

        (III) any
underwriter temporarily holding securities pursuant to an offering of such securities; 

2

 

        (IV) a
person involved in a Non Qualifying Transaction (as defined in paragraph (C)); 

        (V)  an
entity (x) controlled by Executive or a group of persons consisting, at the time of such acquisitions, of Executive and other employees of the Company or any
of its Subsidiaries or (y) of which the majority of common equity securities, at the time of such acquisitions, is owned by Executive or a group of persons consisting of Executive and other
employees of the Company or any of its Subsidiaries; or 

        (VI) any
event in which a Current Debt Holder continues to be directly or indirectly the beneficial owner of a greater number of shares of the Company than that held by any
other person as a result of the event described in this paragraph (B) or has the right to direct the vote of a greater number of voting securities for directors (or the equivalent) of the
Company than any other person as a result of the event described in this paragraph (B); 

        (C)  the
consummation of a merger, consolidation, statutory share exchange, sale of all or substantially all of the assets of the Company or similar form of corporate
transaction (whether in one transaction or a series of transactions) involving the Company (a "Business Combination"), unless immediately following such Business Combination: 

        (I)   more
than 50% of the total voting power of (x) the corporation that owns, leases or controls all or substantially all of the assets of the Company resulting from
such Business Combination (the "Surviving
Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors (or the
equivalent) of the Surviving Corporation (the "Parent Corporation"), is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if
applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination); 

        (II)  no
person (other than (a) one or more Current Debt Holder, (b) any employee benefit plan (or related trust) sponsored or maintained by one or more Current
Debt Holder, the Surviving Corporation or the Parent Corporation or (c) a syndicate or group in which one or more Current Debt Holders, collectively, beneficially own a majority of the total
voting power of the subject voting securities beneficially owned by such syndicate or group) is or becomes the beneficial owner, directly or indirectly, of more than thirty-three and one-third percent
(331/3%) of the total voting power of the outstanding voting securities eligible to elect directors (or the equivalent) of the Parent Corporation (or, if there is no Parent Corporation,
the Surviving Corporation); and 

        (III) at
least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the
consummation of the Business Combination were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination (any Business
Combination which satisfies all of the criteria specified in (I), (II) and (III) above shall be deemed to be a "Non Qualifying Transaction"); or 

        (D)  the
Company substantially completes a plan of complete liquidation or dissolution whether in one transaction or a series of transactions; 

        (ii)   in
connection with the Restructuring, the occurrence of any one of the following events: 

        (A)  on
the date the Restructuring is consummated, any "person" (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act) other than a Current Debt Holder (or a syndicate or group in which one or more Current Debt Holders, collectively, beneficially own a majority of the total voting power
of the 

3

 

Company
Voting Securities beneficially owned by such syndicate or group) is or becomes a "beneficial owner" (as defined in Rule 13d 3 under the Exchange Act), directly or indirectly, of securities of
the Company representing more than thirty-three and one-third percent (331/3%) of the Company Voting Securities and is the largest holder of Company Voting Securities issued in
connection with the Restructuring; 

        (B)  the
consummation of a Business Combination, unless immediately following such Business Combination: 

        (I)   more
than 50% of the total voting power of (x) the corporation that owns, leases or controls all or substantially all of the assets of the Surviving Corporation,
or (y) if applicable, the Parent Corporation, is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented
by shares into which such Company Voting Securities were converted pursuant to such Business Combination); 

        (II)  no
person (other than (a) one or more Current Debt Holder, (b) any employee benefit plan (or related trust) sponsored or maintained by one or more Current
Debt Holder, the Surviving Corporation or the Parent Corporation or (c) a syndicate or group in which one or more Current Debt Holders, collectively, beneficially own a majority of the total
voting power of the subject voting securities beneficially owned by such syndicate or group) is or becomes the beneficial owner, directly or indirectly, of more than thirty-three and one-third percent
(331/3%) of the total voting power of the outstanding voting securities eligible to elect directors (or the equivalent) of the Parent Corporation (or, if there is no Parent Corporation,
the Surviving Corporation); and 

        (III) at
least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the
consummation of the Business Combination were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination; or 

        (C)  the
Company substantially completes a plan of complete liquidation or dissolution whether in one transaction or a series of transactions. 

        (iii)  the
occurrence of any one of the following events prior to the earlier of the date the Restructuring is consummated or December 31, 2005: 

        (A)  individuals
who, as of the date hereof or as otherwise elected by Quadrangle Group, constitute the Board (the "Incumbent Directors") cease for any reason to constitute
at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof, whose election or nomination for election was approved by a vote of at least two-thirds of
the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written
objection to such nomination) shall be an Incumbent Director. 

        (B)  any
"person" (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other than a
Current Debt Holder (or a syndicate or group in which one or more Current Debt Holders beneficially own a majority of the debt of the Company and POAMI beneficially owned by such syndicate or group)
is or becomes a "beneficial owner" (as defined in Rule 13d 3 under the Exchange Act as if such rule applied to ownership of debt), directly or indirectly, of more than thirty-three and one-third
(331/3%) of the total debt of the Company and POAMI; 

4

 

        (C)  any
"person" (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other than a
Current Debt Holder (or a syndicate or group in which one or more Current Debt Holders, collectively, beneficially own a majority of the total voting power of the Company Voting Securities
beneficially owned by such syndicate or group) is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing
more than fifty percent (50%) of the Company Voting Securities; or 

        (D)  the
consummation of a Business Combination, unless immediately following such Business Combination: 

        (I)   more
than 50% of the total voting power of (x) the corporation that owns, leases or controls all or substantially all of the assets of the Surviving Corporation,
or (y) if applicable, the Parent Corporation, is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented
by shares into which such Company Voting Securities were converted pursuant to such Business Combination); 

        (II)  no
person (other than one or more Current Debt Holder or any employee benefit plan (or related trust) sponsored or maintained by one or more Current Debt Holder (or a
syndicate or group in which one or more of such persons, collectively, beneficially own a majority of the total voting power of the subject voting securities beneficially owned by such syndicate or
group), the Surviving Corporation or the Parent Corporation) is or becomes the beneficial owner, directly or indirectly, of more than thirty-three and one-third percent (331/3%) of the
total voting power of the outstanding voting securities eligible to elect directors (or the equivalent) of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation);
and 

        (III) at
least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the
consummation of the Business Combination were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination. 

It
is the intent of the parties that if an event that would constitute a "Change in Control" under this Agreement occurs at POAMI, a "Change in Control" shall have occurred for the purpose of this
Agreement. Upon the occurrence of an event described in the preceding sentence, unless the context otherwise requires, for purposes of this Agreement, POAMI shall be substituted for the defined term
"the Company" in the definition of "Change in Control" together with appropriate changes to other references in the definition of "Change in Control" to give effect to the parties' intent; 

        (e)   "Citicorp Group" means Citibank International plc, any fund that is controlled by the foregoing and, as applicable, their
respective partners, members, subsidiaries and affiliates (including without limitation, any other entities controlled by or under common control with such entities), where the assets of each such
partner, member, subsidiary or affiliate primarily consist of Company Voting Securities and/or debt of the Company or POAMI. 

        (f)    "Current Debt Holders" means Quadrangle Group, Citicorp Group and MacKay Shields Group. 

5

 

        (g)   "Date of Termination" means: 

        (A)  if
Executive's employment is to be terminated for Disability, 30 days after Notice of Termination is given (provided that Executive shall not have returned to the
performance of Executive's duties on a full time basis during such 30 day period); 

        (B)  if
Executive's employment is to be terminated by the Company for Cause or by Executive for Good Reason, the date specified in the Notice of Termination; 

        (C)  if
Executive's employment is to be terminated by the Company for any reason other than Cause, the date specified in the Notice of Termination, which shall be 90 days
after the Notice of Termination is given, unless an earlier date has been expressly agreed to by Executive in writing; 

        (D)  if
Executive's employment terminates by reason of death, the date of death of Executive; or 

        (E)  if
Executive's employment is terminated by Executive in a Non Qualifying Termination, the date specified in Executive's Notice of Termination, but not more than 30 days
after the Notice of Termination is given, unless expressly agreed to by the Company in writing. 

        (h)   "Disability" means termination of Executive's employment by the Company due to Executive's absence from Executive's
duties with the Company on a full time basis for at least one hundred eighty (180) consecutive days as a result of Executive's incapacity due to physical or mental illness, unless within 30 days after
Notice of Termination is given to Executive following such absence Executive shall have returned to the full time performance of Executive's duties. 

        (i)    "Good Reason" shall mean termination of Executive's employment by Executive based on any of the following events: 

        (A)  any
change in the duties or responsibilities (including reporting responsibilities) of Executive that is inconsistent in any material and adverse respect (which may be
cumulative) with Executive's position(s), duties, responsibilities or status with the Company (including any adverse diminution of such duties or responsibilities), provided,
however, that Good Reason shall not be deemed to occur upon a change in duties or responsibilities (other than reporting responsibilities) that is solely and directly due to
the Company no longer being a publicly traded entity; 

        (B)  the
failure to reappoint or reelect Executive to any position held by Executive without Executive's consent; 

        (C)  a
material breach of this Agreement by the Company or POAMI including but not limited to reduction in Executive's Annual Base Salary (as defined in Section 4(a))
or other reduction in medical, dental, life or disability benefits (except to the extent such reductions apply consistently to all other senior executives); or 

        (D)  the
relocation by the Company of Executive's principal workplace location more than 50 miles from the workplace location principally used by Executive as of the date
hereof. 

Executive
must provide Notice of Termination of employment within one hundred eighty (180) days following Executive's knowledge of an event or facts constituting Good Reason (or the last of such
events or facts if cumulative) or such event or facts shall not constitute Good Reason under this Agreement. 

        (j)    "MacKay Group" means MacKay Shields, LLC and any fund that is controlled by the foregoing and, as applicable, their
respective partners, members, subsidiaries and affiliates (including without limitation, any other entities controlled by or under common control with such entities), where the assets of each such
partner, member, subsidiary or affiliate primarily consist of Company Voting Securities and/or debt of the Company or POAMI. 

6

 

        (k)   "Non Qualifying Termination" means a termination of Executive's employment under any circumstances not qualifying as a
Qualifying Termination, including without limitation any termination by the Company for Cause, any termination by Executive without Good Reason or for no reason at all or any termination on account of
death, Disability or Retirement. 

        (l)    "Notice of Termination" means a written notice of termination of employment given by one party to the other party
pursuant to Section 16(b). 

        (m)  "POAMI" means Protection One Alarm Monitoring, Inc., a Delaware corporation, and its successors and assignees. 

        (n)   "Quadrangle Group" means Quadrangle Group LLC, POI Acquisition I, Inc., POI Acquisition, LLC, Quadrangle Master Funding
Ltd., any fund that is controlled by the foregoing and, as applicable, their respective partners, members, subsidiaries and affiliates (including without limitation, any other entities controlled by
or under common control with such entities), where the assets of each such partner, member, subsidiary or affiliate primarily consist of Company Voting Securities and/or debt of the Company or POAMI. 

        (o)   "Qualifying Termination" means a termination of Executive's employment (i) by the Company other than for Cause,
including by the Company providing notice of nonrenewal of this Agreement or (ii) by Executive for Good Reason. Termination of Executive's employment on account of death, Disability, Retirement
shall not be treated as a Qualifying Termination. 

        (p)   "Restructuring" means shall mean any transaction or series of transactions that effectuates any reorganization,
recapitalization, consolidation, business combination, merger, or other similar transaction or any transaction that effectuates any material amendment to, or other material change in, the Company's or
POAMI's obligations or indebtedness for borrowed money as of the date hereof (including accrued or accreted interest thereon) excluding changes in beneficial ownership of such indebtedness, but
including, without limitation, (i) any amendment or modification to the Company's revolving credit facility, 7.375% Senior Unsecured Notes due 2005 or 8.125% Senior Subordinated Notes due 2009
or that modifies any material payment term or any material financial or operating covenant or that provides for a forbearance of any material payment obligation or material covenant, in each case,
such that an amount that otherwise would be due and payable (according to its terms, by put, upon default and acceleration or otherwise) is delayed or otherwise extended for at least twelve months or
that converts a material amount of the Company's or POAMI's obligations or indebtedness for borrowed money as of the date hereof (including accrued or accreted interest thereon) to equity and/or to a
security junior to the claim's existing priority or is otherwise compromised, or any cash tender offer or any combination thereof; or (ii) (A) any merger, consolidation, reorganization,
recapitalization, business combination or other transaction pursuant to which the Company is acquired by, or combined with, any person, group of persons, partnership, corporation or other entity other
than a Current Debt Holder (an "Acquiror") or (B) the acquisition, directly or indirectly by an Acquiror (or by one or more persons acting together with an Acquiror pursuant to a written
agreement or otherwise), in a single transaction or a series of transactions, of (x) all or a preponderance of the assets or operations of the Company, or all or any material portion of any
operating division of the Company or (y) all, substantially all, or a majority of the outstanding or newly issued shares of the Company's (or any of its Subsidiary's) capital stock (or any
securities convertible into, or options, warrants or other rights to acquire such capital stock); in each case, whether accomplished out-of-court or through the confirmation of any plan of
reorganization pursuant to Section 1129 of the United States Bankruptcy Code, whether the requisite consents were obtained in-court or out-of-court. 

        (q)   "Retirement" means Executive's termination of his employment on or after his attainment of age 65. 

7

 

        (r)   "Subsidiary" means any corporation or other entity in which the Company has a direct or indirect ownership interest of
50% or more of the total combined voting power of the then outstanding securities or interests of such corporation or other entity entitled to vote generally in the election of directors or in which
the Company has the right to receive 50% or more of the distribution of profits or 50% or more of the assets upon liquidation or dissolution. 

        2.    Employment and Duties.    

        (a)    Term of Employment.    The Company agrees to employ Executive, and Executive agrees to enter into employment
with the Company, in accordance with the terms and provisions of this Agreement, for the Term of this Agreement. The execution of this Agreement shall constitute acceptance by Executive and
the Company that Executive's employment shall not terminate as a result of any Change in Control prior to the date hereof. Upon termination of Executive's employment (regardless of whether such
termination constitutes a Qualifying Termination or Non Qualifying Termination), Executive shall be relieved of any obligation to continue to perform the duties described in Section 2(b)
effective as of the Date of Termination. The termination of the employment relationship by either party for any reason or for no reason at all shall not constitute a breach of this Agreement, but
certain obligations and benefits shall survive such termination of employment as set forth in Section 19. 

        (b)    Duties.    During the period of Executive's employment under this Agreement, Executive shall serve as Vice
President, Secretary and General Counsel of the Company. Executive shall devote Executive's full business time and attention to the affairs of the Company and his duties as its Vice President,
Secretary and General Counsel. Executive shall have such duties as are appropriate to Executive's position as Vice President, Secretary and General Counsel, will be responsible for legal support in
the areas of general corporate documentation, contract drafting, review and compliance, leases, litigation, negotiations, legal research and managing and coordinating cases with outside counsel and
shall have such authority as required to enable Executive to perform these duties. Consistent with the foregoing, Executive shall comply with all reasonable instructions of the Chief Financial
Officer, Chief Executive Officer and Board of Directors of the Company. Executive shall report to the Chief Financial Officer. In addition, during the period of Executive's employment under this
Agreement, Executive may serve as an officer and/or director of a Subsidiary or Subsidiaries if requested to do so by the Board. Executive may resign from the board of directors of any Subsidiaries at
any time in his sole and absolute discretion. 

        3.    Term of Agreement.    The Term of this Agreement shall commence on the date of this Agreement and shall continue
until the earlier of (i) the first anniversary of the date of this Agreement or (ii) the Date of Termination that results from a Qualifying Termination or Non Qualifying Termination. If
this Agreement remains in effect through the first anniversary of the date of this Agreement, it shall thereafter be automatically extended for an indefinite number of one (1) year periods
unless either party sends written notice to the other party of its intention not to renew at least thirty (30) days prior to expiration of said Term. If the election not to renew is made, this
Agreement shall remain in full force and effect for the remaining original term and any extension periods thereafter if the original term has been renewed. The original term and any renewal periods
thereafter are hereinafter collectively referred to as the "Term." Certain obligations and benefits shall survive the expiration of the Term as set forth in Section 19. 

        4.    Base Salary and Benefits.    

        (a)    Base Salary.    During the period of Executive's employment under this Agreement, the Company shall pay
Executive an annual base salary ("Annual Base Salary") at an annual rate equal to not less than Two Hundred Thousand and No/100 Dollars ($200,000.00), which shall be reviewed annually by the Board or
the Compensation Committee of the Board. Executive's Annual Base Salary 

8

 

shall
be paid in accordance with the standard practices for other senior corporate executives of the Company. 

        (b)    Bonuses.    Executive shall be eligible to receive annually or otherwise any bonus awards, whether payable in
cash, shares of common stock of the Company or otherwise, which the Company, the Board, the Compensation Committee of the Board or such other authorized committee of the Board determines to award or
grant; provided, however, that Executive shall participate under a short-term incentive plan (subject to its terms which shall be reasonably determined by the Board and based on targets that are
reasonably attainable) each year. 

        (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. If there is a sale in an
underwritten public offering registered under the Securities Act of 1933, as amended, of Company Voting Securities having an aggregate offering value of at least $40 million, all of Executive's Awards
(as defined below) will fully vest, all restrictions on such Awards shall lapse and the maximum level of achievement of all performance criteria with respect to such Awards shall be deemed fully
satisfied. In the case of stock options or any other equity based Awards in the nature of a right that may be exercised, such stock options and other equity based Awards shall remain exercisable for
three years after the Date of Termination. 

        (d)    Business Expenses and Perquisites.    Executive shall be reimbursed for all reasonable expenses incurred by
Executive in connection with the conduct of the business of the Company (including reasonable travel expenses), provided Executive properly accounts therefor in accordance with the Company's policies.
During the period of Executive's employment under this Agreement, Executive shall also be entitled to such other perquisites as are customary for senior executives of the Company. 

        (e)    Office and Services Furnished.    During the period of Executive's employment under this Agreement, the Company
shall make available to Executive office space, secretarial assistance and such other facilities and services as shall be suitable to Executive's position and adequate for the performance of
Executive's duties hereunder. 

        (f)    Retention Bonus.    Executive will receive two retention bonuses each in an amount equal to 50% of Executive's
Annual Base Salary (with such Annual Base Salary to be determined as of the date such bonus is paid) ("Retention Bonus"). The first retention bonus shall be payable if he remains continuously employed
by the Company from the date hereof through the earlier of the date of the consummation of the Restructuring or December 31, 2004 or, if prior to the consummation of the Restructuring or such date, as
applicable, (i) he is terminated by the Company other than for Cause, (ii) he resigns his employment because of Good Reason or (iii) the Company does not renew the Agreement upon
expiration of the Term. The second retention bonus shall be payable if he remains continuously employed by the Company from the date hereof through the earlier of the date of the consummation of the
Restructuring or December 31, 2005 or, if prior to the consummation of the Restructuring or such date, as applicable, (i) he is terminated by the Company other than for Cause, (ii) he
resigns his employment because of Good Reason or (iii) the Company does not renew the Agreement upon expiration of the Term. Payment of any amount pursuant to this paragraph shall not reduce
any other payments or benefits to which Executive is entitled under this Agreement. Should the 

9

 

Chief
Executive Officer of the Company agree to forgo any portion of his Retention Bonus for any reason at any time, Executive agrees to forgo the same percentage of his Retention Bonus. 

        5.    Payments Upon Termination of Employment.    

        (a)    Qualifying Termination.    If the employment of Executive terminates pursuant to a Qualifying Termination,
then: 

        (A)  within
five (5) business days following the Date of Termination, the Company shall pay to Executive a lump sum cash payment equal to the sum of 

        (I)   Executive's
Annual Base Salary payable through the Date of Termination; 

        (II)  bonus
amounts payable to Executive for prior fiscal years (to the extent not previously paid); 

        (III) bonus
amounts not paid to Executive as a result of Executive's election to defer payment; 

        (IV) a
pro rata portion of Executive's annual bonus for the fiscal year in which the Date of Termination occurs (to the extent not previously paid) in an amount at least
equal to (1) Executive's Bonus Amount multiplied by a fraction, the numerator of which is the number of days in a fiscal year in which the Date of Termination occurs through the Date of
Termination and the denominator of which is three hundred sixty five (365), and reduced by (2) any amounts paid to Executive from the Company's annual incentive plan for the fiscal year in
which the Date of Termination occurs; and 

10

  

        (V)  the
cash equivalent of any accrued Paid Time Off; in each case to the extent not already paid. 

        (B)  within
five (5) business days following the Date of Termination, the Company shall pay to Executive a cash lump-sum equal to the sum of Executive's highest Annual
Base Salary during the 12 month period immediately prior to the Date of Termination, plus Executive's Bonus Amount; provided, however, if a Notice of
Termination is given by the Company or Executive within four months prior to a Change in Control or one year following a Change of Control, the Company shall pay Executive an additional lump sum cash
payment equal to (x) .99 times Executive's highest Annual Base Salary during the 12 month period immediately prior to the Date of Termination  plus (y) .99 times Executive's Bonus Amount;

        (C)  the
Company shall continue, for a period of one (1) year (or two (2) years in the event Executive is entitled to payments under Sections
5(a)(B)(x) and (y)) following Executive's Date of Termination, to provide Executive (and Executive's dependents, if applicable) with substantially similar levels of medical, dental, and life
insurance benefits upon substantially similar terms and conditions as Executive would have been entitled to receive if he had continued in employment; provided,
that, if Executive cannot continue to participate in the Company benefit plans providing such benefits, the Company shall otherwise provide, at the Company's option,
(i) such benefits on a substantially similar basis as if continued participation had been permitted through the Company's benefit plans (the "Continued Benefit Plans") or (ii) a lump-sum
cash payment based on the cost of premiums comparable to those that would be required to receive such benefits on a substantially similar basis plus the amount of any conversion fees required to
convert from group coverage to individual coverage under the Company's existing benefit plans (the "Benefits Lump-Sum Payment"). If the Company elects to provide Executive with Continued Benefit
Plans, Executive shall cooperate with the Company and each provider of any such Continued Benefit Plan in order for the Company to obtain such Continued Benefit Plans for Executive, which cooperation
shall include but not be limited to providing copies of medical records and other information required by any provider of such Continued Benefit Plan and undergoing one or more physical examinations.
If the Company elects to provide Executive with the Benefits Lump Sum Payment, the Company shall notify Executive of its intention to make this election not later than 90 days prior to the date on
which Executive's coverage under existing benefit plans will expire, and if, within 60 days after Executive receives such notification from the Company, Executive presents the Company with one or more
benefit plans that Executive has obtained or intends to obtain that provide benefits on a substantially similar basis as the benefits provided to Executive prior to the Date of Termination (and
acknowledgment from the provider of such benefit plans that such benefit plans have been or can be obtained by Executive on those terms, including, without limitation, at least substantially similar
scope of coverage, substantially similar deductibles and substantially similar co payments), then the Benefits Lump Sum Payment shall be made based on the premiums plus any other administrative fees
(except co payments) charged by the Company offering such plans. If the Company elects to provide Executive with the Benefits Lump Sum Payment and it is determined by the Company that any portion of
the Benefits Lump Sum Payment constitutes taxable wages for federal income and/or employment tax purposes, the Company agrees to pay Executive an additional amount (the "Benefits Gross Up Payment")
such that the net amount retained by Executive from the Benefit Lump Sum Payment and the Benefits Gross Up Payment, after reduction for any federal, state and local income and employment taxes on the
Benefits Lump Sum Payment and the Benefits Gross Up Payment, shall equal the Benefits Lump Sum Payment. Notwithstanding the foregoing, in the event Executive becomes reemployed with another employer
and becomes eligible to receive benefits from such employer, the benefits described herein shall be secondary to such benefits during the period of Executive's eligibility, but only to the extent that
the Company reimburses Executive for any increased cost and provides any additional benefits necessary to give Executive the benefits provided hereunder; and 

11

 

        (D)  all
outstanding stock options, restricted stock and other equity based awards (collectively, "Awards") shall fully vest, all restrictions on such Awards shall lapse and
the maximum level of achievement of all performance criteria with respect to such Awards shall be deemed fully satisfied. In the case of stock options or any other equity based Awards in the nature of
a right that may be exercised, such stock options and other equity based Awards shall remain exercisable for three years after the Date of Termination. 

        (b)    Non Qualifying Termination.    If the employment of Executive terminates pursuant to a Non Qualifying
Termination, then the Company shall pay to Executive within five (5) business days following the Date of Termination, a lump sum cash payment equal to the sum of (i) Executive's Annual
Base Salary payable through the Date of Termination; (ii) bonus amounts earned by Executive and declared and approved by the Board; and (iii) the cash equivalent of any accrued Paid Time
Off; in each case to the extent not already paid. The Company may make such additional payments and provide such additional benefits to Executive as the Company and Executive may agree in writing. 

        6.    Excise Tax Gross Up.    

        (a)   Anything
in this Agreement to the contrary notwithstanding, in the event that it shall be determined that the vesting of Awards, aggregate payments or distributions by
the Company or its affiliated companies to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise but determined
without regard to any additional payments required under this Section 6 (a "Payment"), constitute "parachute payments" (as such term is defined under Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code") or any successor provision, and the regulations promulgated thereunder (collectively, "Section 280G")) the aggregate present value of which equals or
exceeds three times Executive's "base amount" (as such term is defined under Section 280G) and are therefore subject to the excise tax imposed by Section 4999 of the Code or any
successor provision (collectively, "Section 4999") or any interest, penalties or additions to tax with respect to such excise tax (the total excise tax, together with any interest, penalties or
additions to tax, are hereinafter collectively referred to as the "Excise Tax")), then Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after
payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any Federal, state or local income and employment taxes and
Excise Tax (and any interest and penalties imposed with respect to any such taxes) imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. Notwithstanding the foregoing, Executive agrees to reduce the aggregate amount of any Payments that constitute "parachute payments" to the extent necessary so that such
Payments do not equal or exceed three times Executive's "base amount" (and therefore are not subject to the excise tax imposed by Section 4999); provided, however, that Executive shall not be
required to make any such reduction if the reduction necessary to cause such Payments not to equal or exceed three times Executive's "base amount" is more than $100,000. 

        (b)   Subject
to the provisions of Section 6(c) hereof, all determinations required to be made under this Section 6, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Company's public accounting firm (the "Accounting
Firm") which shall provide detailed supporting calculations both to the Company and Executive within fifteen (15) business days of the receipt of notice from Executive that there has been a Payment,
or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the change in control,
Executive may appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be deemed to be the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 6, shall be paid by the Company to
Executive within five (5) days of the 

12

 

receipt
of the Accounting Firm's determination (it being understood, however, that the Gross Up Payment may, if permitted by law, be paid directly to the applicable taxing authorities). If the
Accounting Firm determines that no Excise Tax is payable by Executive, it shall furnish Executive with a written opinion that failure to report the Excise Tax on Executive's applicable federal income
tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the
uncertainty in the application of Section 4999 at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by
the Company should have been made by the Company ("Underpayment"), or that Gross-Up Payments will have been made by the Company which should not have been made ("Overpayment"), consistent with the
calculations required to be made hereunder. In either such event, the Accounting Firm shall determine the amount of the Underpayment or Overpayment that has occurred. In the event that the Company
exhausts its remedies pursuant to Section 6(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive. In the case of an Overpayment, Executive shall, at the direction and expense of the
Company, take such steps as are reasonably necessary (including, if reasonable, the filing of returns and claims for refund), and otherwise reasonably cooperate with the Company to correct such
Overpayment; provided, however, that (i) Executive shall not in any event be obligated to return to the Company an amount greater than the net after-tax portion of the Overpayment that he has
retained or has recovered as a refund from the applicable taxing authorities and (ii) this provision shall be interpreted in a manner consistent with the intent of Section 6(a) hereof to
make Executive whole, on an after-tax basis, from the application of Section 4999. 

        (c)   Executive
shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require a payment by the Company, or a change in
the amount of the payment by the Company of, the Gross-Up Payment. Such notification shall be given as soon as practicable after Executive is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is requested to be paid; provided that the failure to give any notice pursuant to this Section 6(c) shall not impair
Executive's rights under this Section 6 except to the extent the Company is materially prejudiced thereby. Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies
Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall: 

        (i)    give
the Company any information reasonably requested by the Company relating to such claim, 

        (ii)   take
such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably selected by the Company, 

        (iii)  cooperate
with the Company in good faith in order effectively to contest such claim, and 

        (iv)  permit
the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses
(including additional interest, penalties or additions to tax) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or
income, employment or other tax (including interest, penalties or additions to tax with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 6(c) hereof, the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo
any and all administrative 

13

 

appeals,
proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided further, that if the Company directs Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment
to Executive on an interest-free basis and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income, employment or other tax (including interest, penalties or
additions to tax with respect to any such taxes) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and provided further, that any extension of
the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. 

        (d)   If,
after the receipt by Executive of an amount advanced by the Company pursuant to Section 6(c) hereof, Executive becomes entitled to receive, and receives, any
refund with respect to such claim, Executive shall (subject to the Company's complying with the requirements of Section 6(c) hereof) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 6(c), a
determination is made that Executive shall not be entitled to any refund with respect to such claim and the Company does not notify Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid. 

        7.    Non Competition.    Executive hereby acknowledges that the services which he will perform for the Company are of
a special and unique nature, and that the Company would find it extremely difficult or impossible to replace Executive. Accordingly, Executive agrees that, in consideration of this Agreement and the
payments to be received by him hereunder, from and after the date hereof through the period during which Executive continues to be employed by the Company and following termination of Executive's
employment for any reason until the first anniversary (or the second anniversary in the event Executive is entitled to payments under Sections 5(a)(B)(x) and (y)) of such termination of employment
(the "Non Competition Period"), Executive shall not, directly or indirectly, own, manage, operate, join, control or participate in the ownership, management, operation or control of, or be connected
as a director, officer, employee, partner, lender, consultant or otherwise ("Participate" or a "Participation") with any Competitor (as hereinafter defined), except with the Company's prior written
consent. For purposes of this Agreement, the term "Competitor" shall mean any entity engaged in the business of providing property monitoring services with revenue in excess of One Hundred Sixty
Million Dollars ($160,000,000) during the most recent twelve (12) month period for which financial statements are available, including without limitation, ADT Security Services, Brink's Home Security,
Inc., Honeywell Security Monitoring, Inc. and their respective subsidiaries, affiliates and successors. Nothing in this section shall prohibit Executive from owning for investment purposes an
aggregate of up to 3% of the publicly traded securities of any corporation listed on the New York Stock Exchange or American Stock Exchange or whose securities are quoted on the NASDAQ National
Market. Notwithstanding anything which may be to the contrary herein, Executive shall not be required to cease Participation in any business or organization which begins to compete with the Company
subsequent to the time Executive commences such Participation, provided that such business 

14

 

or
organization began to compete with the Company through no action, assistance, or plan of Executive. 

        It
is the desire and intent of the parties that the provisions of this Section 7 shall be enforced under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision of this Section 7 is adjudicated to be invalid or unenforceable or shall for any reason be held to be excessively broad as to
duration, geographic scope, activity or subject, it shall be construed by limiting and reducing it, so as to be enforceable to the extent compatible with applicable law and such provision shall be
deemed modified and amended to the extent necessary to render such provision enforceable in such jurisdiction. 

        If
Executive challenges the enforceability of the provisions of this Section 7 in whole or in part as to any Competitors, Executive shall, immediately upon such challenge, forfeit
any right to any payments and benefits under Section 5(a) or 5(b) that he has not already received. 

        8.    Confidential Information.    Executive acknowledges that: 

        (a)   the
business of the Company and its Subsidiaries and affiliates is intensely competitive and that Executive's engagement by the Company requires that Executive have
access to and knowledge of confidential information of the Company and its Subsidiaries and affiliates, including, but not limited to, the identity of customers, the identity of the representatives of
customers with whom the Company and its Subsidiaries and affiliates have dealt, the kinds of services provided by the Company and its Subsidiaries and affiliates to customers and offered to be
performed for potential customers, the manner in which such services are performed or offered to be performed, the service needs of actual or prospective customers, pricing information, information
concerning the creation, acquisition or disposition of products and services, customer maintenance listings, computer software applications and other programs, personnel information and other trade
secrets (the "Confidential Information"); 

        (b)   the
direct or indirect disclosure of such Confidential Information to existing or potential competitors of the Company and its Subsidiaries and affiliates would place
the Company and its Subsidiaries and affiliates at a competitive disadvantage and would do damage, monetary or otherwise, to the business of the Company and its Subsidiaries and affiliates; and 

        (c)   the
engaging by Executive in any of the activities prohibited by this Section 8 may constitute improper appropriation and/or use of such information and trade
secrets. 

        Notwithstanding
the foregoing, Confidential Information shall not include information which (x) is or becomes part of the public domain through a source other than Executive,
(y) is or becomes available to Executive from a source independent of the Company and its Subsidiaries and affiliates, or (z) constitutes general industry knowledge possessed by
Executive by virtue of Executive's employment with the Company. Executive expressly acknowledges the trade secret status of the Confidential Information and that the Confidential Information
constitutes a protectable business interest of the Company and its Subsidiaries and affiliates. Accordingly, the Company and Executive agree as follows: 

        (A)  During
the Non Competition Period, Executive shall not, directly or indirectly, whether individually, as a director, stockholder, owner, partner, employee, principal or
agent of any business, or in any other capacity, make known, disclose, furnish, make available, or use any of the Confidential Information, other than in the proper performance of the duties
contemplated herein or requested by the Company, or as required by law or by a court of competent jurisdiction or other administrative or legislative body; provided,
however, that prior to disclosing any of the Confidential Information to a court or other administrative or legislative body, Executive shall promptly notify the Company so
that the Company may seek a protective order or other appropriate remedy. 

15

 

        (B)  Executive
agrees to return all computer hardware and all Confidential Information, including all photocopies, extracts and summaries thereof, and any such information
stored electronically on tapes, computer disks or in any other manner to the Company at any time upon request of the Chairman of the Board or the Chief Executive Officer of the Company and upon the
termination of Executive's employment for any reason. 

        9.    Nonsolicitation.    During the Non Competition Period, Executive shall not, directly or indirectly, solicit,
interfere with, hire, offer to hire or induce any person who is an employee of the Company or any of its Subsidiaries or affiliates and whose salary is in excess of $50,000 to discontinue his or her
relationship with the Company or any of its Subsidiaries or affiliates and accept employment by, or enter into a business relationship with, Executive or any other person or entity;  provided, however,
that this provision shall not apply to solicitation by general advertising. 

        10.    Antidisparagement.    

        (a)   Unless
otherwise required by a court of competent jurisdiction, pursuant to any recognized subpoena power or by any applicable law, rule or regulation, Executive agrees
and promises that Executive shall not make any oral or written statements or reveal any information to any person, company or agency which (i) is materially negative, disparaging or damaging to
the name, reputation or business of the Company or any of its Subsidiaries or affiliates, or any of their shareholders, directors, officers or employees, or (ii) has or would have a materially
negative financial impact, whether directly or indirectly, on the Company or any of its Subsidiaries and affiliates, or any of their shareholders, directors, officers or employees;  provided that this
subsection (ii) shall not be deemed to have been violated by statements or releases of information by Executive during the
period of his employment under this Agreement which Executive believes to be truthful and which are made in the performance of his duties under this Agreement. 

        (b)   Unless
otherwise required by a court of competent jurisdiction, pursuant to any recognized subpoena power or by any applicable law, rule or regulation, the Company
agrees and promises that neither it nor any of its Subsidiaries and affiliates shall make any oral or written statements or reveal any information to any person, company or agency which (i) is
materially negative, disparaging or damaging to the name, reputation or business of Executive or (ii) has or would have a negative financial impact whether directly or indirectly, on Executive. 

        11.    Injunctive Relief.    

        (a)   Executive
acknowledges that a breach of the undertakings in Sections 7, 8, 9 or 10(a) of this Agreement would cause irreparable damage to the Company and its
Subsidiaries and affiliates, the exact amount of which shall be difficult to ascertain, and that remedies at law for any such breach would be inadequate. Executive agrees that, if Executive breaches
or attempts or threatens to breach any of the undertakings in Sections 7, 8, 9 or 10(a) of this Agreement, then the Company shall be entitled to injunctive relief without posting bond or other
security, in addition to any other remedy or remedies available to the Company at law or in equity. 

        (b)   The
Company acknowledges that a breach of the undertakings in Section 10(b) of this Agreement would cause irreparable damage to Executive, the exact amount of
which shall be difficult to ascertain, and that remedies at law for any such breach would be inadequate. The Company agrees that, if the Company or any of its Subsidiaries or affiliates breaches or
attempts or threatens to breach any of the undertakings in Section 10(b) of this Agreement, then Executive shall be entitled to injunctive relief, without posting bond or other security, in
addition to any other remedy or remedies available to Executive at law or in equity. 

        12.    Withholding Taxes.    The Company may withhold from all payments due to Executive (or his beneficiary or
estate) hereunder all taxes which, by applicable federal, state, local or other law, the 

16

 

Company
is required to withhold therefrom. Executive has represented that he is and will continue to be a resident of the State of Texas for all purposes. 

        13.    Directors and Officers Insurance; Indemnity.    The Company shall take all steps necessary to ensure that
Executive is covered under any directors and officers liability insurance policy in effect from time to time for current and former directors and officers of the Company and any employee professional
liability insurance policy in effect from time to time for employed professionals of the Company. In addition, the Company shall hold harmless and indemnify Executive against any and all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by Executive in connection with any threatened, pending, or completed action, suit, or
proceeding whether civil, criminal, administrative, or investigative (including an action by or in the right of the corporation) to which Executive is, was, or at any time becomes a party, or is
threatened to be
made a party, by reason of the fact that Executive is, was, or at any time becomes a director, officer, employee or agent of the Company, or is or was serving, or at any time serves at the request of
the Company as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise; or otherwise to the fullest extent as may be provided to
Executive by the Company under the provisions of the Bylaws and the Articles of Incorporation of the Company and Delaware law. 

        14.    Scope of Agreement.    Nothing in this Agreement shall be deemed to entitle Executive to continued employment
with the Company or its Subsidiaries or shall require Executive to continue the employment relationship against his wishes; provided, however, that any
termination of Executive's employment during the Term of this Agreement shall be subject to all of the provisions of this Agreement as provided in Section 19. 

        15.    Successors; Binding Agreement.    

        (a)   This
Agreement shall inure to the benefit of and be legally binding upon all successors and assigns of the Company and POAMI. The Company and POAMI will require a
successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company and/or POAMI, by agreement in form and
substance satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company and POAMI would be required to perform it if no
such succession had taken place. For purposes of this Section 15(a), "Company" shall mean the Company as defined above and all successors to its business or assets that execute and deliver the
agreement provided for in this Section 15(a) or that otherwise become bound by the terms and provisions of this Agreement by operation of law. For purposes of this Section 15(a), "POAMI"
shall mean POAMI as defined above and all successors to its business or assets that execute and deliver the agreement provided for in this Section 15(a) or that otherwise become bound by the
terms and provisions of this Agreement by operation of law 

        (b)   This
Agreement shall inure to the benefit of and be enforceable by Executive's personal or legal representatives, executors, administrators, successors, heirs,
distributes, devisees and legatees. If Executive shall die while any amounts would be payable to Executive hereunder had Executive continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to such person or persons appointed in writing by Executive to receive such amounts or, if no person is so appointed, to
Executive's estate. 

        16.    Notice.    

        (a)   For
purposes of this Agreement, all notices and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given when
delivered or five (5) 

17

 

days
after deposit in the United States mail, certified and return receipt requested, postage prepaid, addressed as follows: 

	 	 	If to Executive:	J. Eric Griffin

7242 Tophill Lane

Dallas, TX 75248
	

 	
 	

If to the Company:	

Protection One, Inc.

818 S. Kansas Avenue

Topeka, KS 66612

Attention: Chief Financial Officer

or
to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 

        (b)   A
written notice of Executive's Date of Termination by the Company or Executive, as the case may be, to the other, shall (i) indicate the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated, and (iii) specify the Date of Termination. The failure by Executive or the Company to set forth in such notice any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of Executive or the Company hereunder or preclude Executive or the Company from asserting such fact or circumstance in
enforcing Executive's or the Company's rights hereunder. 

        17.    Full Settlement; Resolution of Disputes.    The Company's obligation to make any payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall be in lieu and in full settlement of all other severance payments to Executive under any other severance or employment agreement
between Executive and the Company, and any severance plan of the Company. In no event
shall Executive be obligated to seek other employment or take other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and except as
otherwise provided in Section 5 (a)(iii), such amounts shall not be reduced whether or not Executive obtains other employment. Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration in Wilmington, Delaware by three arbitrators in accordance with the rules of the American Arbitration Association then in effect. Judgment
may be entered on the arbitrators' award in any court having jurisdiction. The arbitrators shall determine the allocation of the costs and expenses arising in connection with any arbitration
proceeding pursuant to this section based on the arbitrator's assessment of the merits of the positions of the parties. 

        18.    Employment with Subsidiaries.    Employment with the Company for purposes of this Agreement shall include
employment with any Subsidiary. 

        19.    Survival.    The respective obligations and benefits afforded to the Company and Executive as provided in
Sections 1, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15, 17, 19, 20, 22, 23, 24 and 25 shall survive the termination of this Agreement. 

        20.    GOVERNING LAW; VALIDITY.    THE INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT 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 AGREEMENT SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS AGREEMENT, WHICH OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT. 

18

 

        21.    Counterparts.    This Agreement may be executed in counterparts, each of which shall be deemed to be an
original and all of which together shall constitute one and the same instrument. 

        22.    Miscellaneous.    No provision of this Agreement may be modified or waived unless such modification or waiver
is agreed to in writing and signed by Executive and by a duly authorized officer of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior to
subsequent time. Failure by Executive or the Company to insist upon strict compliance with any provision of this Agreement or to assert any right Executive or the Company may have hereunder, including
without limitation, the right of Executive to terminate employment for Good Reason, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
Except as otherwise specifically provided herein, the rights of, and benefits payable to,
Executive, his estate or his beneficiaries pursuant to this Agreement are in addition to any rights of, or benefits payable to, Executive, his estate or his beneficiaries under any other employee
benefit plan or compensation program of the Company. 

        23.    No Mitigation.    The amounts payable to Executive upon any termination of his employment shall be considered
severance pay in consideration of past services rendered on behalf of the Company and his continued service from the date hereof to the date he becomes entitled to such payments and shall be the sole
amount of severance pay to which Executive is entitled from the Company and its affiliates upon termination of his employment. Executive shall have no duty to mitigate his damages by seeking other
employment and, should Executive actually receive compensation from any such other employment, the payments required hereunder shall not be reduced or offset by any such other compensation. 

        24.    POAMI's Obligations.    All of the obligations of the Company hereunder shall also be direct obligations of
POAMI without the need for Executive to seek or exhaust remedies against the Company. 

        25.    Entire Agreement.    This Agreement constitutes the entire agreement of the parties with respect to its subject
matter and supersedes and replaces all previous verbal or written agreements that the parties may have made, including the Prior Employment Agreement. 

*
* * * * 

        [Remainder of page intentionally left blank. Signatures on next page.]  

19

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

	

 	
 	
PROTECTION ONE, INC.
	

 	
 	

By:	

 
	 	 	 	

	 	 	Its:	 
	 	 	 	

	

 	
 	
PROTECTION ONE ALARM

MONITORING, INC.
	

 	
 	

By:	

 
	 	 	 	

	 	 	Its:	 
	 	 	 	

	

 	
 	

By:	

 
	 	 	 	
 J. Eric Griffin

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