SERVICE AGREEMENT
WESTERN RESOURCES, INC.
and
PROTECTION ONE, INC.
THIS SERVICE AGREEMENT (together with one or more Exhibits which may be
incorporated into this agreement from time to time, the "Agreement") is made and
entered into as of this 1st day of April, 1999 by and between WESTERN RESOURCES,
INC., a Kansas corporation, ("Western") and PROTECTION ONE, INC., a Delaware
corporation ("Protection One").
WHEREAS, Protection One has requested that Western assist it by
providing to Protection One and certain of its subsidiaries and affiliates
identified in the respective individual Exhibits which may, from time to time be
attached hereto (each such entity a "Client Group Member", and collectively the
"Client Group") the services described in the Exhibits hereto (the "Services"),
and Western has agreed to provide such Services to Client Group Members, subject
to the terms and conditions of this Agreement.
NOW THEREFORE, for and in consideration of the mutual covenants set
forth herein, as well as other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Services. Protection One hereby retains Western to cause the
Services described in Section 1 of each Exhibit to this Agreement to be provided
to each Client Group Member (as defined in Section 3 of such respective
Exhibit), and Western agrees to cause such Services to be provided, subject to
the terms and conditions of this Agreement.
2. Payment for Services. In exchange for the Services, Protection One
shall cause Western to be paid in accordance with the terms set forth in Section
4 of each respective Exhibit to this Agreement. Protection One shall be solely
responsible, without right of reimbursement, for the satisfaction of any tax,
other than income tax, imposed by a state or local taxing authority with respect
to, or arising out of, the Services provided under this Agreement or payment
thereof ("Transaction Taxes").
3. Term and Termination. The term for which a particular Service shall
be provided shall be set forth in Section 2 of each respective Exhibit to this
Agreement.
4. Notices. All notices which are required or may be given pursuant to
the terms of this Agreement shall be in writing and shall be sufficient in all
respects if given in writing and delivered personally or by registered or
certified mail, return receipt requested, and such notice shall be deemed to be
given on the date hand-delivered or on the third day after the date deposited in
the United States mail, or other comparable commercial delivery system, with
postage or delivery charges thereon prepaid, addressed as follows:
If to Western: If to Protection One:
Rita A. Sharpe John E. Mack III
818 South Kansas 600 Corporate Pointe, 12th Floor
Topeka, Kansas 66612 Culver City, California 90230
with copy to: with copy to:
General Counsel
5. Governing Law. This Agreement shall be governed by and construed
according to the internal laws of, and without regard to conflicts of law
provisions, the State of Kansas.
6. Amendment. This Agreement may be amended only by a writing executed
with the same formality as this Agreement.
7. Contractual Arrangement. It is expressly acknowledged by the parties
hereto that Western is an independent contractor. Nothing contained herein is
intended or shall be construed to create an employer-employee relationship,
joint venture or partnership between Western and Protection One and/or any
Client Group Member. The parties acknowledge and agree that Protection One will
not withhold from the compensation payable to Western hereunder any sums for
income tax, employment insurance, workers compensation, Social Security, or any
other withholding pursuant to any state or federal law or requirement of any
governmental agency.
8. Limitations on Liability for Work Performed. Western agrees to
perform the work in a good and workmanlike manner consistent with the customs
and practices of the industry providing services substantially similar to the
Services. WESTERN EXPRESSLY EXCLUDES ALL OTHER GUARANTEES, WARRANTIES OR
REPRESENTATIONS OF ANY KIND WHATSOEVER. WESTERN WILL NOT BE RESPONSIBLE FOR ANY
INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL, OR OTHER DAMAGES WITH WESTERN'S SOLE
LIABILITY BEING LIMITED TO THE REPAIR AND REASONABLE COSTS OF CORRECTING ANY
ERRORS WHICH ARE ATTRIBUTABLE TO THE WORK OF WESTERN, NOT TO EXCEED IN THE
AGGREGATE THE AMOUNTS PAID TO WESTERN WITH RESPECT TO THE APPLICABLE EXHIBIT.
9. Indemnification. Protection One shall indemnify and hold Western,
its members, directors, officers, employees, parents, affiliates, subsidiaries
and independent contractors ("Indemnitees") harmless against any and all claims,
losses, costs, damages and expenses, including, but not limited to Transaction
Taxes and attorney fees, arising out of or in connection with the services
provided to each Client Group Member by Western hereunder or from any breach by
Western of any provision of this Agreement, or any act, omission or neglect by
Western, or any Indemnitee.
10. Confidential Information. Western and Protection One, on behalf of
itself and of each Client Group Member agree that any information received by
either in connection with this contract, which concerns the confidential
personal, financial or other affairs of the other will be treated in full
confidence and will not be revealed to any other persons, firms or organizations
except as may be required by judicial process, applicable law or regulation.
11. Entire Agreement. This Agreement contains the entire agreement and
understanding between Protection One and Western and supersedes all prior
agreements and understandings, if any, relating to the subject matter hereof.
Except for those set forth in this Agreement, the parties hereby agree that no
obligation or contractual commitment of any kind, other than as specifically set
out in this Agreement, (or definitive agreement(s) as may be entered into
between the parties, if any, including agreements with respect to Additional
Services), shall be deemed to exist between the parties, and with respect to
subject matter hereof, and none of Protection One, and any Client Group Member,
or Western shall be under any legal obligation of any kind whatsoever to enter
into any transaction or agreement by virtue of this Agreement.
12. Third Party Beneficiaries. There are no third party beneficiaries,
express or implied, intended or unintended, to this Agreement.
13. Binding Effect and Assignment. This Agreement and the rights and
obligations under this Agreement shall not be assignable or transferable by the
parties (including by operation of law in connection with a merger,
consolidation or sale of all or substantially all the assets of a party) without
the prior written consent of the other party hereto, except that Western may
assign and transfer all its rights and obligations under this Agreement to an
affiliate of Western without such written consent; provided any such assignment
or transfer shall not release Western Resources of its obligations hereunder.
Western will provide prompt notice to Protection One of any such assignment and
transfer. All the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, whether so expressed or not.
14. Prior Negotiations. This Agreement supersedes all prior
negotiations and agreements between the parties hereto relative to the
transaction contemplated by this Agreement, which contains the entire
understanding of the parties hereto.
15. Waiver of Breach. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any subsequent breach by any party.
16. Dispute Resolution. Each of Protection One, for itself and each
Client Group Member, and Western hereby agrees that (i) it shall, promptly upon
its dispute of a matter arising under this Agreement which may involve a
claim(s) against the other, or a Client Group member, as the case may be, of
more that $5,000 or injunctive relief, provide appropriate written notification
("Notice") of such dispute ("Dispute") to such other party(ies), (ii) it will
attempt in good faith to resolve the Dispute through meeting(s) and discussions
("Discussions") with the other party(ies) to the Dispute, such Discussions to be
held from time to time during the 30 calendar days immediately after the date of
the Notice, and (iii) it shall designate in the Notice appropriate senior
management to actively participate in the Discussions for the purpose of
resolving the Dispute, proposed alternative dates
and locations of such meetings, and the nature of the Dispute.
Protection One, for itself and each Client Group Member, and Western
each hereby agree that none of Protection One, Western, or any Client Group
Member, shall bring a legal action against any Client Group Member, Western, or
Protection One, as the case may be, without first having complied with the
provisions set forth in this Section 16.
17. Venue. Any dispute not resolved pursuant to paragraph 16 above, if
raised in litigation, shall be brought in state or federal court having situs in
Shawnee County, Kansas, as the parties agree that venue for all such disputes
shall be in Shawnee County, Kansas.
18. Invalid Provision. The invalidity or unenforceability of any
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first-above written.
WESTERN RESOURCES, INC. PROTECTION ONE, INC.
Signature: /s/ Signature: /s/
By: Rita A. Sharpe By: John E. Mack III
Its: Vice President Shared Services Its: Chief Financial Officer
Date: 5/3/99 Date: 5/3/99
EXHIBIT 3
This Exhibit 3 is incorporated as of October14, 1999 ("Exhibit 3
Effective Date") to that certain Service Agreement ("Service Agreement") made
and entered into as of the 3rd day of May 1999 ("Effective Date") by and between
WESTERN RESOURCES, INC., a Kansas corporation ("Western"), and PROTECTION ONE,
INC., a Delaware corporation ("Protection One"). For purposes of this Exhibit 3,
the term "Agreement" means, and is limited to, the Service Agreement together
with this Exhibit 3.
Section 1. SERVICES INCLUDED.
Western shall cause the Services described below to be provided upon
Protection One's reasonable request for itself, and for its more than 50% owned
subsidiaries that are identified in Section 3 (each a "Client Group Member",
and, collectively "Client Group").
Generally. Western will, as more specifically set forth in this Exhibit
3, provide, or cause to be provided, Services to one or more Client Group
Members. Unless expressly indicated otherwise, all references to Sections and
subsections in this Exhibit 3 are references to such respective Sections and
subsections in this Exhibit 3.
Certain Definitions.
"Accounting Services" means accounting oversight, tax compliance, cash
management, general leger financial reporting, and similar services.
"Facilities Services" means facility management services, project
services, duplication services, mail services, real estate services, facility
administration services, facility services, and other similar services.
"Human Resources Services" means employment administration, benefits
administration, training services, payroll services, and other similar services.
"Information Technology Services" means
(i) Help Desk Call Center Support including
1. single point of contact end user support on a 24 x 7 basis,
2. high quality, responsive support according to defined
service levels,
3. escalation of issues to Western Resources and third
party resources,
4. management of service levels provided by Western Resources and
third party resources,
5. performance and analysis reporting, 6. end user satisfaction
surveys performed by a third
party organization;
EXHIBIT 3
(ii) IT Asset Leasing including procurement, leased asset procurement
services, lease administration services and coordination of lease
expiration functions;
(iii)Budget/SLA Development and Management including development of
the annual budget and service level agreements, monthly budget
analysis and development of special budget reports;
(iv) Technical Support including technical services requested via the
Help Desk Call Center, the e-mail request system, and
IT-Request,
for the following products and services:
(a) PC, telephone and related peripherals adds/moves/changes, (b)
software and hardware installations and modifications, (c) provide
high quality, skilled technicians and electronic
workflow management;
(v) Internet services including access to the Internet through Western
Resources firewall;
(vi) Support and administration of Lotus Notes SmartSuite desktop
clients, and
(vii)telephone services including access to Company network, voice
mail, toll free dialing to all network locations and all other
ISDN features.
1. These services will be billed at the monthly rate of $5.00 per
phone number.
2. Phoneset hardware and PBX port charges will be billed
separately.
3. Actual long distance usage and calling card charges will be
billed on a monthly basis.
"Legal Services" means legal representation and counseling services,
and other similar services.
"Supply Chain Services" means accounts payable management services and
oversight, accounts payable transition activities, processing invoices, check
printing, invoice document services, credit card (travel and entertainment,
procurement and fleet) related activities, strategic sourcing management
services and oversight, procurement of goods and services related activities,
materials management services and oversight, supply chain related administrative
services (budget, SLAs, etc.) and similar services.
"Services" means one or more of services composing Accounting Services,
Facilities Services, Human Resources Services, Information Technology Services,
Legal Services, and Supply Chain Services.
EXHIBIT 3
ADDITIONAL SERVICES
Additional Services shall be provided only pursuant to a definitive
written agreement, if any, as may be entered into between Western Resources and
Protection One. For purposes of this Exhibit 3, the term "Additional Services"
means services constituted or represented by any material increase, expansion,
or broadening of Western's obligations hereunder, relative to the Services to
otherwise be provided hereunder by Western to Client Group.
Protection One, for itself, and for each Client Group Member, and
Western hereby agree, with respect to Additional Services, if any, that
Protection One and Western shall, from time to time, attempt to negotiate in
good faith a mutually agreeable definitive agreement for the performance of such
Additional Services by Western for Protection One and Client Group, as
contemplated by Section 1; provided, except as expressly set forth in this
Exhibit 3, nothing shall be deemed to create any legal obligation of any kind
whatsoever upon any party to enter into any agreement with respect to Additional
Services.
Section 2. TERM.
a. Unless terminated pursuant to Section 2(b), this Agreement
shall be effective from the Exhibit 3 Effective Date and shall
automatically terminate upon the earlier of (i) June 30, 2000,
unless thereafter extended by written mutual agreement on a
month to month basis or (ii) Closing, as defined in the merger
agreement dated March 18, 1998 between Western Resources, Inc.
and Kansas City Power & Light Company
("Merger Agreement"), of the Merger Agreement.
b. Termination. This Agreement may also terminate:
i. At any time by written mutual agreement of the
parties; or
iii. Upon sixty (60) calendar days prior written notice from
one party to the other stating that party's intent to
terminate this Agreement for "cause." For the purposes
of this Agreement, the term "cause" means, and is
limited to, a material breach of this Agreement by
either party which remains uncured more than 30 days
after written notice of such breach has been provided.
Section 3. CLIENT GROUP.
For purposes of providing the Services described in Section 1, the term
"Client Group" means, and is limited to:
EXHIBIT 3
Protection One Alarm Monitoring, Inc. Protection One, Inc.
Security Monitoring Services, Inc. Comsec Narragansett Security, Inc
Protection One International, Inc. Comsec Systems, Inc.
P-1 Merger Sub (Del) Network Multifamily Security
Corporation, Inc.
P-1 Merger Sub (Mass) Protection One Investments, Inc.
Protection One Canada, Inc. Canguard, Inc.
Protection One U.K., Inc. Compagnie Euorpeenne de
Telesecurete, S.A.
CET Benelux, S.A. CET Swisse
CET Technishe Sicherheirsdienste GmbH Eurocontact
Europ Telesecurite Grance Reseau Telesecurite
Actar Aldis
Servelance Electroreque de France Croese Larroch
E.S. Beveliging Protection One Acquisition Holding
Protection One Alarm Monitoring of Corporation, Inc.
Mass, Inc.
Section 4. CONSIDERATION.
(a) Subject to Sections 4(b), (c), (d), and (e) Protection One shall
cause to be paid in cash to Western, in exchange for the Services, an amount
equal to the sum of
(i) the aggregate of the mathematical products of the total
Chargeable Hours for such Services and the respective hourly
rate(s) set forth on Attachment A to this Exhibit 3;
(ii) Western's out-of-pocket costs including without limitation,
travel, lodging meals, long distance charges and overnight mail
as itemized on a statement; and
(iii) any other costs for services and/or products that are not
susceptible to hourly rate pricing which are directly provided
or contracted out by Western to be provided to Protection One.
Any amount due under Section 4 shall be paid by the 10th calendar day
of the month coinciding with or next following the date on which Protection One
receives from Western a statement itemizing such amounts due. For purposes of
this Exhibit 3, the term "Chargeable Hour" means an actual labor hour worked by
a person in the classification of personnel set forth on Attachment A.
(b) Each of the parties hereby agrees that, notwithstanding anything to
the contrary in this Agreement, if Western Resources determines during the term
of this Agreement that the aggregate amount paid or payable as of such
determination by Protection One under Section 4(a) is less than 90% (ninety
percent) of the actual costs incurred and as documented by Western in
EXHIBIT 3
providing the related Services, then the amount payable by Protection One for
Services provided after such determination shall be automatically increased as
described in Section 4(c).
(c) The amount payable by Protection One for Services shall be
increased, if at all, as contemplated by Section 4(b), such that the amount then
payable by Protection One for Services provided after any such determination is
at least 90% (ninety percent) of the actual costs incurred by Western in
providing Services under this Agreement after such determination.
(d) Any change in the organizational structure of either Western or
Protection One which also results in a change of Services contrary to this
Agreement, will result in negotiations to determine the proper payable amount in
light of those changes.
(e) Notwithstanding anything to the contrary in this Exhibit 3, in no
event shall the aggregate amount payable by Protection One under Section 4
exceed $3.5 million (three million five hundred thousand dollars).
Unless otherwise agreed to in writing all payments shall be made by
wire transfer to the account identified immediately below.
Bank of America, Dallas, Texas
Western Resources, Inc.
Acct # 375-095-4775
Routing No. 111000012
IN WITNESS WHEREOF, the parties have executed this Exhibit 3 on the day
and year first-above written.
WESTERN RESOURCES, INC. PROTECTION ONE, INC.
Signature:/s/ Rita A. Sharpe Signature:/s/ Annette Beck
By: Rita A. Sharpe By: Annette Beck
Title: Vice President Shared Services Title: President
Date: Date: October 29, 1999
Attachment A
to Exhibit 3
DESCRIPTION HOURLY RATE
Clerical $24
Staff $38
Senior Staff $55
Manager $66
Director $82
Executive Director $95
EXHIBIT 4
This Exhibit 4 is incorporated as of October 14, 1999 ("Exhibit 4 Effective
Date") to that certain Service Agreement ("Service Agreement") made and entered
into as of the 3rd day of May 1999 ("Effective Date") by and between WESTERN
RESOURCES, INC., a Kansas corporation ("Western"), and PROTECTION ONE, INC., a
Delaware corporation ("Protection One"). For purposes of this Exhibit 4, the
term "Agreement" means, and is limited to, the Service Agreement together with
this Exhibit 4.
Section 1. SERVICES.
Western will, as more specifically set forth in this Exhibit 4,
provide, or cause to be provided, SSMS to one or more Client Group Members.
Unless expressly indicated otherwise, all references to Sections and subsections
in this Exhibit 4 are references to such respective Sections and subsections in
this Exhibit 4.
Generally. Western shall cause the Shared Services Management Services
("SSMS") to be provided upon Protection One's reasonable request for itself, and
for its more than 50% owned subsidiaries that are identified in Section 3 (each
a "Client Group Member", and, collectively "Client Group").
Certain Definitions.
"Services" has the meaning ascribed to such term in Exhibit 3 to the
Service Agreement.
"Shared Services Management Services" means, and is limited to,
oversight and coordination of the provision of any one or more of the Services
and/or supervision of Protection One employees engaged in providing similar
services.
Additional Services. Additional Services shall be provided only
pursuant to a definitive written agreement, if any, as may be entered into
between Western and Protection One. For purposes of this Exhibit 4, the term
"Additional Services" means services constituted or represented by any material
increase, expansion, or broadening of Western's obligations hereunder, relative
to the SSMS to otherwise be provided hereunder by Western to Client Group.
Protection One, for itself, and for each Client Group Member, and
Western hereby agree, with respect to Additional Services, if any, that
Protection One and Western shall, from time to time, attempt to negotiate in
good faith a mutually agreeable definitive agreement for the performance of such
Additional Services by Western for Protection One and Client Group, as
contemplated by Section 1; provided, except as expressly set forth in this
Exhibit 4, nothing shall be deemed to create any legal obligation of any kind
whatsoever upon any party to enter into any agreement with respect to Additional
Services.
EXHIBIT 4
Section 2. TERM.
a.Unless terminated pursuant to Section 2(b), this Agreement shall be
effective from the Exhibit 4 Effective Date and shall automatically
terminate upon the earlier of (i) June 30, 2000, unless thereafter
extended by written mutual agreement on a month to month basis, or
(ii) Closing, as defined in the merger agreement dated March 18, 1998
between Western Resources, Inc. and Kansas City Power & Light Company
("Merger Agreement"), of the Merger Agreement.
b. Termination. This Agreement may also terminate
i. at any time by written mutual agreement of the parties; or
ii. upon sixty (60) calendar days prior written notice from one
party to the other stating that party's intent to terminate
this Agreement for "cause." For the purposes of this Agreement,
the term "cause" means, and is limited to, a material breach of
this Agreement by either party which remains uncured more than
30 days after written notice of such breach has been provided.
Section 3. CLIENT GROUP.
For purposes of providing the SSMS described in Section 1, the term
"Client Group" means, and is limited to:
Protection One Alarm Monitoring, Inc. Protection One, Inc.
Security Monitoring Services, Inc. Comsec Narragansett Security, Inc.
Protection One International, Inc. Comsec Sytems, Inc.
P-1 Merger Sub (Del) Network MultiFamily Security
Corporation, Inc.
P-1 Merger Sub (Mass) Protection One Investments, Inc.
Protection One Canada, Inc. Canguard, Inc.
Protection One U.K., Inc. Compagnie Euorpeenne de
Telesecurete, S.A.
CET Benelux, S.A. CET Swisse
CET Technishe Sicherheirsdienste GmbH Eurocontact
Europ Telesecurite Grance Reseau Telesecurite
Actar Aldis
Servelance Electoreque de France Croese Larroch
E.S. Beveliging Protection One Acquisition Holding
Protection One Alarm Monitoring of Corporation, Inc.
Mass, Inc.
EXHIBIT 4
Section 4. CONSIDERATION.
(a) Subject to Sections 4(b), (c), (d), and (e) Protection One shall cause
to be paid in cash to Western,
(i) in exchange for the SSMS, $54,000 (fifty-four thousand
dollars) per month in 1999 and $38,000 (thirty-eight
thousand dollars) per month in 2000 for each month this
Agreement is in effect. In the event this Agreement extends
past 2000, the amount due each month in exchange for SSMS
will be determined by mutual written agreement; and
(ii) Western's out-of-pocket costs including without limitation,
travel, lodging meals, long distance charges and overnight
mail as itemized on a statement.
Any amount due under Section 4 shall be paid by the 10th calendar day
of the month coinciding with or next following the date on which Protection One
receives from Western a statement itemizing such amounts due.
(b) Each of the parties hereby agrees that, notwithstanding anything to
the contrary in this Agreement, if Western determines during the term of this
Agreement that the aggregate amount paid or payable as of such determination by
Protection One under Section 4(a) is less than 90% (ninety percent) of the
actual costs incurred and as documented by Western in providing the related
SSMS, then the amount payable by Protection One for SSMS provided after such
determination shall be automatically increased as described in Section 4(c).
(c) The amount payable by Protection One for SSMS shall be increased,
if at all, as contemplated by Section 4(b), such that the amount then payable by
Protection One for SSMS provided after any such determination is at least 90%
(ninety percent) of the actual costs incurred by Western in providing SSMS under
this Agreement after such determination.
(d) Any change in the organizational structure of either Western or
Protection One which also results in a change of Services contrary to this
Agreement, will result in negotiations to determine the proper payable amount in
light of those changes.
(e) Notwithstanding anything to the contrary in this Exhibit 4, in no
event shall the aggregate amount payable by Protection One under Section 4
exceed $1.5 million (one million five hundred thousand dollars).
EXHIBIT 4
Unless otherwise agreed to in writing all payments shall be made by
wire transfer to the account identified immediately below.
Bank of America, Dallas, Texas
Western Resources, Inc.
Acct # 375-095-4775
Routing No. 111000012
IN WITNESS WHEREOF, the parties have executed this Exhibit 4 on the day
and year first above written.
WESTERN RESOURCES, INC. PROTECTION ONE, INC.
Signature:/s/ Rita A. Sharpe Signature:/s/ Annette Beck
By: Rita A. Sharpe By: Annette Beck
Title: Vice President Shared Services Title: President
Date: Date: October 29, 1999