According to Protection One, Inc.’s Form 10-K for the fiscal year ended December 31, 2002, on August 20, 2002, the parties filed a Stipulation of Settlement which provides for, among other things, no finding of wrongdoing on the part of any of the defendants, or any other finding that the claims alleged had merit, and a $7.5 million payment to the plaintiffs, which was fully funded by the Company's existing insurance. On November 4, 2002, the District Court approved the settlement and entered an Order and Final Judgment. The court certified a class for settlement purposes consisting of all persons and entities who purchased or otherwise acquired the common stock of the Company during the time period beginning and including February 10, 1998 through February 2, 2001. The Order and Final Judgment provides for, among other things, dismissal with prejudice and release of all Class members' claims against the Company, Monitoring, and the present and former officers and directors of the Company.

The class action suit charges defendants POI and certain officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as Securities and Exchange Commission ("SEC") Rule 10b-5 promulgated thereunder, by originating a series of materially misleading statements and omissions concerning the Company's business prospects. Specifically, the complaint alleges that during the Class Period, defendants knowingly or recklessly understated the Company's expenses, and overstated the Company's operating income and net income. On April 1, 1999, the defendants announced that, due to an SEC inquiry, the Company would restate its financial results for 1997 and 1998, thereby reducing net income for 1998 by $13 million, causing the Company to report a net loss of $2.6 million for the year. Worse still, POI's April 1, 1999 press release indicated that the SEC is still conducting an inquiry concerning the Company's amortization of certain costs associated with the acquisition of subscribers. The market reacted with shock to this news, and POI's share price fell 36% on April 1, 1999.

Other defendants named in the complaint are Western Resources, its subsidiary Westar Industries, Inc. that owned 87 percent of its subsidiary Protection One, Inc.