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EXHIBIT 10.16(c)
FORM OF CHANGE OF CONTROL
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CHANGE OF CONTROL AGREEMENT
Dear __________:
In order to allay your concerns, our Board of Directors has decided to
modify the Change of Control Agreement dated December 1, 1995, between you and
Rural/Metro Corporation ("Rural/Metro") (the "1995 Agreement"). Rather than
preparing an amendment to the 1995 Agreement, Rural/Metro has decided to replace
the 1995 Agreement in its entirety with this Change of Control Agreement (the
"Agreement").
This new Agreement completely replaces the 1995 Agreement, and it is
effective as of the date of execution by you and Rural Metro.
Please bear in mind that Change of Control benefits are being offered
only to a few, selected employees and that this Agreement extends protections to
you that are presently available to only one other employee. We accordingly ask
that you refrain from discussing this special program with others. Also, please
note that the special benefits package described below will only be effective if
you sign the extra copy of this Agreement which is enclosed and return it to me
on or before ________________.
In this Agreement, Rural/Metro and its subsidiaries are collectively
referred to as the "Company".
1. TERM OF AGREEMENT.
This Agreement is effective immediately and will continue in effect as
long as you are actively employed by the Company, unless you and Rural/Metro
agree in writing to its termination.
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2. SEVERANCE PAYMENT.
If your employment with the Company is terminated without "Cause" (as
defined in Section 7) within two years following a Change of Control, you will
receive the "Severance Payment" described below. The Severance Payment also will
be payable if you elect to terminate your employment for any or no reason within
two years following a Change of Control.
The "Severance Payment" is a lump sum payment equal to the sum of: (a)
200% of your annualized base salary as of the day on which the Change of Control
occurs; plus (b) 200% of an amount equal to the incentive compensation paid or
payable to you pursuant to our Management Incentive Program on account of
performance during the fiscal year immediately preceding the fiscal year in
which the Change of Control occurs plus any other bonuses or incentive
compensation paid or payable to you for such year; less (c) the full amount of
any payments to which you may be entitled due to your termination pursuant to
the terms of your "Employment Agreement" (as defined in Section 19), any
applicable law, or otherwise.
The Severance Payment will be paid in one lump sum within five days
following your termination of employment.
The Severance Payment will not be payable if your employment is
terminated for Cause, or if your employment is terminated by reason of your
"Disability" (as defined in Section 9(d)) or your death. In addition, the
Severance Payment will not be payable if your employment is terminated by you or
the Company for any or no reason before a Change of Control occurs or more than
two years after a Change of Control has occurred.
In order to receive the Severance Payment, you must execute any release
reasonably requested by Rural/Metro of claims that you may have pursuant to this
Agreement (but not any other claims).
The Severance Payment will be payable without regard to whether you
look for or obtain alternative employment following your termination of
employment with the Company.
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3. ACCELERATION OF OR PAYMENT FOR OPTIONS.
Except as otherwise noted below, if an agreement is entered into that
will result in a Change of Control, before the Change of Control occurs the
"Senior Committee" will accelerate the exercisability of any options you hold to
acquire Company stock pursuant to the Rural/Metro Corporation 1992 Stock Option
Plan (the "1992 Plan") that, pursuant to their terms, are not yet exercisable
(the "Existing Options"). For this purpose, the "Senior Committee" is the
"Senior Committee" established pursuant to the 1992 Plan.
The Senior Committee will not be obligated to accelerate the
exercisability of Existing Options (although it may if it so chooses) if any
party to the agreement expressly indicates, in a writing addressed to the Senior
Committee, that it intends to use pooling of interest accounting for all or any
part of the transaction and the Senior Committee, based on the advice of its
advisors, concludes (a) that pooling of interests accounting is available to
such party for all or any portion of the transaction, and (b) that the
availability of pooling of interests accounting will be jeopardized if the
Senior Committee accelerates the exercisability of the Existing Options.
If you are employed by the Company on the day on which a Change of
Control occurs and at that time you hold any Existing Options that are not
accelerated pursuant to the preceding paragraphs, you may be entitled to receive
a special "Option Payment".
The Option Payment will only be payable if all of the following
conditions are met: (a) you are employed by the Company on the day on which the
Change of Control occurs; (b) the exercisability of the Existing Options is not
accelerated by action of the Senior Committee or otherwise on a basis that
allows you to exercise your options prior to the Change of Control; (c) the
Existing Options are not replaced by other options on the stock of the acquirer
(the "Replacement Options"), which the Senior Committee, as constituted
immediately prior to the Change of Control, in its discretion, determines to be
comparable; and (d) Rural/Metro does not continue as a publicly held corporation
required to be registered pursuant to the provisions of the Securities Exchange
Act of 1934 following the Change of Control, or if Rural/Metro does continue as
a registered publicly held corporation, the Senior Committee, as constituted
immediately prior to the Change of Control, determines, in its discretion, that
Rural/Metro has undergone a fundamental change such that the value of the
Existing Options after the Change of Control is less than 75% of the value of
the Existing Options prior to the Change of Control.
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While the Senior Committee has the discretion to determine whether
Replacement Options are "comparable" to Existing Options for purposes of clause
(c) of the preceding paragraph, it may not consider Replacement Options to be
comparable to Existing Options unless, at a minimum, the Replacement Options are
exercisable as rapidly as the Existing Options and the Replacement Options are
structured to preserve the aggregate positive spread between the aggregate
exercise price for the Existing Options and the aggregate "Deal Value" of the
Rural/Metro stock subject to the Existing Options.
For purposes of this Section, the "Deal Value" of the Rural/Metro stock
is the value placed on the Rural/Metro stock by the parties for purposes of the
transaction that results in the Change of Control. If no single transaction
results in the Change of Control, or if the parties to such transaction do not
expressly agree to a value to be assigned to the Rural/Metro stock for purposes
of such transaction, the Deal Value of the Rural/Metro stock shall be the value
that the Senior Committee determines to be the inherent value of the Rural/Metro
stock as of the date on which the Change of Control occurs.
For purposes of clause (d) of the fourth paragraph of this Section, the
Senior Committee may use any option pricing model it chooses to compare the
value of the Existing Options before and after the Change of Control.
The Option Payment for each share of stock subject to an Existing
Option will be an amount equal to the Deal Value of the Rural/Metro stock less
the option price for such share as designated in the relevant option agreement.
The Option Payment for all shares subject to an Existing Option shall
be paid in one lump sum within 30 days following the occurrence of the last
event that entitles you to receive the Option Payment. Any option for which an
Option Payment is made will be automatically cancelled upon payment of the
Option Payment.
The Option Payment will only be made for "Existing Options". As a
result, no Option Payment will be made with respect to an option that is
exercisable prior to the day on which the Change of Control occurs, since the
term "Existing Option" does not include exercisable options.
Any determinations made in good faith by the Senior Committee for
purposes of this Agreement shall be final and binding on all parties.
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4. BENEFITS CONTINUATION.
If your employment is terminated by the Company without Cause, or if
you elect to terminate your employment with the Company for any or no reason,
within two years following a Change of Control, you will continue to receive
life, disability, accident and group health insurance benefits substantially
similar to those which you were receiving immediately prior to your termination
of employment for a period of twenty-four (24) months following your termination
of employment. Such benefits shall be provided on substantially the same terms
and conditions as they were provided prior to the Change of Control.
The Company does not intend to provide duplicative benefits. As a
result, benefits otherwise receivable pursuant to this Section shall be reduced
or eliminated if and to the extent that you receive such benefits pursuant to
your Employment Agreement.
Benefits otherwise receivable pursuant to this Section also shall be
reduced or eliminated if and to the extent that you receive comparable benefits
from any other source (for example, another employer).
5. INCENTIVE COMPENSATION.
If you are employed by the Company on the day on which a Change of
Control occurs, the incentive compensation to which you will be entitled under
the Management Incentive Program for the calendar year in which the Change of
Control occurs will equal at least the "Minimum Incentive Compensation Amount".
The "Minimum Incentive Compensation Amount" will equal the incentive
compensation to which you would have been entitled if the year were to end on
the day on which the Change of Control occurs, based upon performance up to that
date. In measuring financial performance, financial results through the date of
the Change of Control will be annualized.
6. CHANGE OF CONTROL DEFINED.
For purposes of this Agreement, the term Change of Control shall mean
and include any one or more of the following transactions or situations:
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(a) A sale, transfer, or other disposition by Rural/Metro
through a single transaction or a series of transactions of securities of
Rural/Metro representing 30% or more of the combined voting power of
Rural/Metro's then outstanding securities to any "Unrelated Person" or
"Unrelated Persons" acting in concert with one another. For purposes of this
Section, the term "Person" shall mean and include any individual, partnership,
joint venture, association, trust, corporation, or other entity (including a
"group" as referred to in Section 13(d)(3) of the Securities Exchange Act of
1934 (the "Act")). For purposes of this Section, the term "Unrelated Person"
shall mean and include any Person other than: Rural/Metro, a wholly-owned
subsidiary of Rural/Metro, or an employee benefit plan of Rural/Metro.
(b) A sale, transfer, or other disposition through a
single transaction or a series of transactions of all or substantially all of
the assets of Rural/Metro to an Unrelated Person or Unrelated Persons acting in
concert with one another.
(c) A change in the ownership of Rural/Metro through a
single transaction or a series of transactions such that any Unrelated Person or
Unrelated Persons acting in concert with one another become the "Beneficial
Owner", directly or indirectly, of securities of Rural/Metro representing at
least 30% of the combined voting power of Rural/Metro's then outstanding
securities. For purposes of this Section, the term "Beneficial Owner" shall have
the same meaning as given to that term in Rule 13d-3 promulgated under the Act,
provided that any pledgee of voting securities shall not be deemed to be the
Beneficial Owner thereof prior to its acquisition of voting rights with respect
to such securities.
(d) Any consolidation or merger of Rural/Metro with or
into an Unrelated Person, unless immediately after the consolidation or merger
the holders of the common stock of Rural/Metro immediately prior to the
consolidation or merger are the Beneficial Owners of securities of the surviving
corporation representing at least 50% of the combined voting power of the
surviving corporation's then outstanding securities.
(e) During any period of two (2) years, individuals who,
at the beginning of such period, constituted the Board of Directors of
Rural/Metro cease, for any reason, to constitute at least a majority thereof,
unless the election or nomination for election of each new director was approved
by the vote of at least two-thirds (2/3rds) of the directors then still in
office who were directors at the beginning of such period.
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(f) A change in control of Rural/Metro of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Act, or any successor regulation of similar
import, regardless of whether Rural/Metro is subject to such reporting
requirement.
Notwithstanding any provision herein to the contrary, the filing of a
proceeding for the reorganization of Rural/Metro under Chapter 11 of the Federal
Bankruptcy Code or any successor or other statute of similar import shall not be
deemed to be a Change of Control for purpose of this Agreement.
7. CAUSE DEFINED.
For purposes of this Agreement, the term "Cause" shall be given the
meaning ascribed to such term in your Employment Agreement, as it may be amended
from time to time. If no written Employment Agreement is in effect at the time
of your termination of employment, "Cause" shall be given the meaning ascribed
to it in the last written Employment Agreement that was in effect between you
and the Company that included a definition of "Cause".
8. CEILING ON BENEFITS.
The Internal Revenue Code (the "Code") places significant tax burdens
on you and the Company if the total payments made to you due to a Change of
Control exceed prescribed limits. For example, if your limit is $300,000 and the
total payments exceed the limit by even $1.00, you are subject to an excise tax
under Section 4999 of the Code of 20% of all amounts paid to you in excess of
$100,000. If your limit is $300,000, you will not be subject to an excise tax if
you receive exactly $300,000. If you receive $301,000, you will be subject to an
excise tax of $40,000 (20% of $201,000).
In order to avoid this excise tax and the related adverse tax
consequences for the Company, by signing this Agreement, you will be agreeing
that the present value of your "Total Payments" (as defined below) will not
exceed an amount equal to two and ninety-nine hundredths (2.99) times your "Base
Period Income" (as defined below). This is the maximum amount which you may
receive without becoming subject to the excise tax imposed by Section 4999 of
the Code or which the Company may pay without loss of deduction under Section
280G of the Code.
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"Base Period Income" is an amount equal to your "annualized includable
compensation" for the "base period" as defined in Sections 280G(d)(1) and (2) of
the Code and the regulations adopted thereunder. Generally, your "annualized
includable compensation" is the average of your annual taxable income from the
Company for the "base period", which is the five calendar years prior to the
year in which the Change of Control occurs. These concepts are complicated and
technical and all of the rules set forth in the applicable regulations apply for
purposes of this Agreement.
Your "Total Payments" include the sum of the Severance Payment and any
other "payments in the nature of compensation" (as defined in Section 280G of
the Code and the regulations adopted thereunder), including the Option Payment,
to or for your benefit, the receipt of which is contingent on a Change of
Control and to which Section 280G of the Code applies.
If Rural/Metro believes that these rules will result in a reduction of
the payments to which you are entitled under this Agreement, it will so notify
you within 60 days following delivery of the "Notice of Termination" described
in Section 9. You and Rural/Metro will then, at Rural/Metro's expense, retain
legal counsel, certified public accountants, and/or a firm of recognized
executive compensation consultants to provide an opinion or opinions concerning
whether your Total Payments exceed the limit discussed above.
Rural/Metro will select the legal counsel, certified public accountants
and executive compensation consultants. If you do not accept one or more of the
parties selected by Rural/Metro, you may provide Rural/Metro with the names of
legal counsel, certified public accountants and/or executive compensation
consultants acceptable to you. If Rural/Metro does not accept the party or
parties selected by you, the legal counsel, certified public accountants and/or
executive compensation consultants selected by you and Rural/Metro,
respectively, will select the legal counsel, certified public accountants and/or
executive compensation consultants to provide the opinions required.
At a minimum, the opinions required by this Section must set forth (a)
the amount of your Base Period Income, (b) the present value of the Total
Payments and (c) the amount and present value of any excess parachute payments.
If the opinions state that there would be an excess parachute payment,
your payments under this Agreement will be reduced to the extent necessary to
eliminate the excess. You will be allowed to choose the payment (i.e., the
Severance Payment or the Option Payment)
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that should be reduced or eliminated, but the payment you choose to reduce or
eliminate must be a payment determined by such counsel to be includable in Total
Payments. You will make your decision in writing and deliver it to Rural/Metro
within 30 days of your receipt of such opinions. If you fail to so notify
Rural/Metro, it will decide which payments to reduce or eliminate.
For purposes of determining whether your "Total Payments" exceed the
limitation mentioned above, Rural/Metro and all legal counsel, certified public
accountants, and executive compensation consultants will be bound to make
certain assumptions.
The first assumption that must be made is that, except as otherwise
noted below, none of the amounts or benefits payable to you pursuant to the
severance provisions of your Employment Agreement are contingent on a Change of
Control. The only exception to this rule is that any increases in such amounts
due to an amendment to your Employment Agreement that occurs within one (1) year
of the Change of Control may be treated as contingent on the Change of Control.
The second assumption that must be made is that the vesting of your
stock grants under your Conditional Stock Grant and Repurchase Agreement is not
in any way contingent on a Change of Control.
If the legal counsel or certified public accountants selected to
provide the opinions referred to above so requests in connection with the
opinion required by this Section, a firm of recognized executive compensation
consultants, selected by you and Rural/Metro pursuant to the procedures set
forth above, shall provide an opinion, upon which such legal counsel or
certified public accountants may rely, as to the reasonableness of any item of
compensation as reasonable compensation for services rendered before or after
the Change of Control.
If Rural/Metro believes that your Total Payments will exceed the
limitations of this Section, it will nonetheless make payments to you, at the
times stated above, in the maximum amount that it believes may be paid without
exceeding such limitations. The balance, if any, will then be paid after the
opinions called for above have been received.
If the Internal Revenue Service concludes in a final determination that
the amounts paid to you exceed the limitations of this Section, as a general
rule, the excess will be treated as a loan to you by Rural/Metro and shall be
repayable on the 90th day following demand by Rural/Metro, together with
interest at the "applicable federal rate" provided in Section 1274(d)
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of the Code. All or a portion of the excess will not be treated as a loan and
you will not be required to return or repay it if both of the following
conditions are met:
(a) The excess is equal to or greater than $100,000; and
(b) All or a portion of the excess is attributable to a
determination by the IRS that amounts or benefits payable to you pursuant to the
severance provisions of your Employment Agreement, or the value of all or a
portion of the stock grant to which you are entitled pursuant to your
Conditional Stock Grant and Repurchase Agreement, must be treated as being
contingent on a Change of Control. If both of the conditions set forth in the
preceding sentence are satisfied, you may retain the portion of the excess that
is described in clause (b) of the preceding sentence. The balance of the excess
will be treated as a loan and will be repayable as described above.
If you are not required to return all or a portion of an excess payment
pursuant to the preceding paragraph, Rural/Metro also will make a special cash
payment to you equal to twenty percent (20%) of the amount by which your Total
Payments exceed your Base Period Income, as determined prior to the making of
the cash payment.
In the event that the provisions of Sections 280G and 4999 of the Code
are repealed without succession, this Section shall be of no further force or
effect.
9. TERMINATION NOTICE AND PROCEDURE.
Any termination by the Company or you of your employment shall be
communicated by written Notice of Termination to you if such Notice of
Termination is delivered by the Company and to the Company if such Notice of
Termination is delivered by you, all in accordance with the following
procedures:
(a) The Notice of Termination shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances alleged to provide a basis for
termination.
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(b) Any Notice of Termination by the Company shall be in
writing signed by the Chairman of the Board of Rural/Metro, specifying in detail
the basis for such termination.
(c) If the Company shall furnish a Notice of Termination
for Cause and you in good faith notify the Company that a dispute exists
concerning such termination within the 15 day period following your receipt of
such notice, you may elect to continue your employment during such dispute. If
it is thereafter determined that (i) Cause did exist, your "Termination Date"
shall be the earlier of (A) the date on which the dispute is finally determined,
either by mutual written agreement of the parties or pursuant to the alternative
dispute resolution provisions of Section 16 or (B) the date of your death, or
(ii) Cause did not exist, your employment shall continue as if the Company had
not delivered its Notice of Termination and there shall be no Termination Date
arising out of such notice.
(d) If the Company shall furnish a Notice of Termination
by reason of Disability and you in good faith notify the Company that a dispute
exists concerning such termination within the 15-day period following your
receipt of such notice, you may elect to continue your employment during such
dispute. The dispute relating to the existence of a Disability shall be resolved
by the opinion of the licensed physician selected by Rural/Metro; provided,
however, that if you do not accept the opinion of the licensed physician
selected by Rural/Metro, the dispute shall be resolved by the opinion of a
licensed physician who shall be selected by you; provided further, however, that
if Rural/Metro does not accept the opinion of the licensed physician selected by
you, the dispute shall be finally resolved by the opinion of a licensed
physician selected by the licensed physicians selected by Rural/Metro and you,
respectively. If it is thereafter determined that (i) a Disability did exist,
your Termination Date shall be the earlier of (A) the date on which the dispute
is resolved or (B) the date of your death, or (ii) a Disability did not exist,
your employment shall continue as if the Company had not delivered its Notice of
Termination and there shall be no Termination Date arising out of such notice.
For purposes of this Agreement, "Disability" shall be given the meaning ascribed
to such term in your Employment Agreement at the time the Disability
determination is being made. If there is no Employment Agreement that defines
"Disability", "Disability" shall mean your inability to perform your customary
duties for the Company due to a physical or mental condition that is considered
to be of long-lasting or indefinite duration.
(e) If you do not elect to continue employment pending
resolution of a dispute regarding a Notice of Termination by the Company and it
is finally determined that the
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reason for termination set forth in such Notice of Termination did not exist,
the Company will be deemed to have terminated you other than by reason of
Disability or Cause.
(f) For purposes of this Agreement, a transfer from
Rural/Metro to one of its subsidiaries or a transfer from a subsidiary to
Rural/Metro or another subsidiary shall not be treated as a termination of
employment.
10. SUCCESSORS.
Rural/Metro will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of Rural/Metro or any of its subsidiaries to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that Rural/Metro or any subsidiary would be required to perform it if no
such succession had taken place. Failure of Rural/Metro to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle you to compensation in the same
amount and on the same terms to which you would be entitled hereunder if you
elect to terminate your employment following a Change of Control, except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Termination Date. As used in
this Agreement, "Rural/Metro" shall mean Rural/Metro as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law or otherwise.
11. BINDING AGREEMENT.
This Agreement shall inure to the benefit of and be enforceable by you
and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
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12. NOTICE.
For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to Rural/Metro shall be directed to the attention of the
Chairman of the Board of Rural/Metro with a copy to the Secretary of
Rural/Metro, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change of address
shall be effective only upon receipt.
13. MISCELLANEOUS.
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed
by you and the Chairman of the Board of Rural/Metro. 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 or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Arizona without regard to its conflicts of law principles. All references to
sections of the Securities Exchange Act of 1934 or the Code shall be deemed also
to refer to any successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state or local law. The obligations of the Company that arise prior to
the expiration of this Agreement shall survive the expiration of the term of
this Agreement.
14. VALIDITY.
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 shall remain in full force and effect.
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15. COUNTERPARTS.
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.
16. ALTERNATIVE DISPUTE RESOLUTION.
All claims, disputes and other matters in question between the parties
arising under this Agreement shall, unless otherwise provided herein (such as in
Sections 8 and 9(d)), be resolved in accordance with the arbitration or
alternative dispute resolution provisions included in your Employment Agreement.
If no written Employment Agreement is in effect at the time of your termination
of employment, or, if the Employment Agreement in effect at the time of your
termination of employment does not include arbitration or alternative dispute
resolution provisions, all claims, disputes and other matters in question
between the parties arising under this Agreement shall be decided by arbitration
in Phoenix, Arizona, in accordance with the Model Employment Arbitration
Procedures of the American Arbitration Association (including such procedures
governing selection of the specific arbitrator or arbitrators), unless the
parties mutually agree otherwise. The Company shall pay the costs of any such
arbitration. The award by the arbitrator or arbitrators shall be final, and
judgment may be entered upon it in accordance with applicable law in any state
or Federal court having jurisdiction thereof.
17. EXPENSES AND INTEREST.
If a good faith dispute shall arise with respect to the enforcement of
your rights under this Agreement or if any arbitration or legal proceeding shall
be brought in good faith to enforce or interpret any provision contained herein,
or to recover damages for breach hereof, and you are the prevailing party, you
shall recover from the Company any reasonable attorneys' fees and necessary
costs and disbursements incurred as a result of such dispute or legal
proceeding, and prejudgment interest on any money judgment obtained by you
calculated at the rate of interest announced by Bank One, Arizona, NA from time
to time as its prime rate from the date that payments to you should have been
made under this Agreement. It is expressly provided that the Company shall in no
event recover from you any attorneys' fees, costs, disbursements or interest as
a result of any dispute or legal proceeding involving the Company and you.
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18. PAYMENT OBLIGATIONS ABSOLUTE.
Rural/Metro's obligation to pay you the compensation and to make the
arrangements in accordance with the provisions herein shall be absolute and
unconditional and shall not be affected by any circumstances; provided, however,
that Rural/Metro may apply amounts payable under this Agreement to any debts
owed to the Rural/Metro by you on your Termination Date. All amounts payable by
Rural/Metro in accordance with this Agreement shall be paid without notice or
demand. If Rural/Metro has paid you more than the amount to which you are
entitled under this Agreement, Rural/Metro shall have the right to recover all
or any part of such overpayment from you or from whomsoever has received such
amount.
19. EFFECT ON EMPLOYMENT AGREEMENT.
This Agreement supplements, and does not replace, your Employment
Agreement, as it may be amended or replaced from time to time (the "Employment
Agreement"). You will be entitled to receive all amounts due to you pursuant to
the terms of your Employment Agreement, but some payments under your Employment
Agreement may reduce your Severance Payments as provided in Section 2 and
benefits due pursuant to your Employment Agreement may reduce the benefits due
pursuant to Section 4. In addition, the IRS may consider payments under your
Employment Agreement as part of your Total Payment, which could result in a
reduction in payments as provided in Section 8. If there is any conflict between
the provisions of this Agreement and your Employment Agreement, the provisions
of this Agreement shall control.
20. ENTIRE AGREEMENT.
This Agreement and your Employment Agreement set forth the entire
agreement between you and the Company concerning the subject matter discussed in
this Agreement and supersede all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether written or
oral, by any officer, employee or representative of the Company. Any prior
agreements or understandings with respect to the subject matter set forth in
this Agreement are hereby terminated and cancelled.
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21. DEFERRAL OF PAYMENTS.
To the extent that any payment under this Agreement, when combined with
all other payments received during the year that are subject to the limitations
on deductibility under Section 162(m) of the Code, exceeds the limitations on
deductibility under Section 162(m) of the Code, such payment shall, in the
discretion of Rural/Metro, be deferred to the next succeeding calendar year.
Such deferred amounts shall be paid no later than the 60th day after the end of
such next succeeding calendar year, provided that such payment, when combined
with any other payments subject to the Section 162(m) limitations received
during the year, does not exceed the limitations on deductibility under Section
162(m) of the Code.
22. PARTIES.
This Agreement is an agreement between you and Rural/Metro. In certain
cases, though, obligations imposed upon Rural/Metro may be satisfied by a
Rural/Metro subsidiary. Any payment made or action taken by a Rural/Metro
subsidiary shall be considered to be a payment made or action taken by
Rural/Metro for purposes of determining whether Rural/Metro has satisfied its
obligations under this Agreement.
If you would like to participate in this special benefits program,
please sign and return the extra copy of this letter which is enclosed.
Sincerely,
_______________________________________
Warren Rustand
Chairman of the Board
Rural/Metro Corporation
Enclosure
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ACCEPTANCE
I hereby accept the offer to participate in this special benefit
program, and I agree to be bound by all of the provisions noted above.
_______________________________________
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