Protection One and IASG to Merge

Creates leading security monitoring services company with a diversified portfolio of security assets


LAWRENCE, Kan. and ALBANY, N.Y., Dec. 20, 2006 -- Protection One, Inc. and Integrated Alarm Services Group, Inc. announced on Dec. 20 they have executed a definitive merger agreement. The combined company will be named Protection One, Inc., and Richard Ginsburg will continue to lead the organization as its President and CEO. On a combined basis, Protection One and IASG had revenues and adjusted EBITDA of $363.8 million and $104.4 million, respectively, for the 12-month period ended September 30, 2006 (with adjusted EBITDA being measured prior to the realization of any operating synergies). As of September 30, 2006, Protection One and IASG on a combined basis had recurring monthly revenue ("RMR"), a well known valuation metric used for monitoring services companies, of $26.8 million. The merged company will be a market leader in each of the businesses in which it operates: retail (residential and commercial), wholesale and multifamily.

Under the terms of the merger agreement, which has been approved unanimously by the Boards of both companies, each share of IASG will be exchanged for 0.29 shares of Protection One common stock. Subsequent to the transaction, there will be approximately 25.3 million shares of Protection One common stock outstanding, of which IASG and Protection One shareholders will own approximately 28% and 72%, respectively. It is expected the merged company will be traded on the NASDAQ Stock Market. Contrarian Capital Management, LLC, which is currently IASG's largest beneficial shareholder and whose representative holds a seat on IASG's Board, has expressed support for the transaction. In addition, holders of approximately 85% of IASG's senior secured notes have agreed to support the merger transaction as proposed and to tender their notes in an exchange offer for new bonds to be issued by a Protection One subsidiary. After the transaction is consummated, Protection One's expanded nine member board of directors will include four independent directors, two of which will be IASG designees.

The Protection One created by the merger will be one of the nation's largest providers of security alarm monitoring services to residential, commercial and national account customers operating under one of America's most recognized alarm brand names, Protection One(R); the nation's No. 1 provider of wholesale alarm dealer services operating under the names of Criticom International(R) and CMS; and the nation's No. 1 provider of services to the multifamily market operating under the name of Network Multifamily(R). The merged company will have 73 branches across the country, six state-of-the-art monitoring response centers, and a dedicated disaster recovery center.

The management teams of both companies believe the combination will result in cost savings based upon scale efficiencies, the elimination of redundancies and greater purchasing power. Management believes that the combination will generate net savings of $11 million to $13 million annualized within 12 months of the closing of the transaction.

Richard Ginsburg, President and CEO of Protection One, commented, "This transaction is a transforming event for Protection One. Building on our previous successes, we believe combining with IASG positions the new company for improved operating margins and accelerated cash flow growth. We are pleased to expand our shareholder base and believe that this merger will create value for both IASG and Protection One shareholders. We will continue to have strong product and service offerings for the residential, commercial, national account and multifamily markets and an unmatched network of central stations to serve the monitoring needs of customers and independent alarm companies."

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