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EX-10.1 2 dex101.htm EXECUTIVE EMPLOYMENT AGREEMENT BY AND BETWEEN MICHAEL P. DIMINO AND RURAL/METRO

Exhibit 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (this “Agreement”) is entered into as of May 20, 2010, by and between Michael P. DiMino (“Executive”), an individual, and Rural/Metro Corporation, a Delaware corporation (the “Company”).

The Company desires to employ Executive on a full-time basis and the Executive desires to be so employed, subject to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Executive agree as follows:

1. Employment; Duties and Responsibilities. The Company will employ Executive as its President and Chief Executive Officer (“CEO”), reporting to the Company’s Board of Directors (the “Board”), and Executive accepts employment to serve in such capacity, all upon the terms and conditions set forth in this Agreement. Executive shall have such duties and responsibilities as are consistent with Executive’s position as President and CEO of the Company, as determined by the Board. The Company reserves the right, in its sole discretion, to change or modify Executive’s position, title and duties during the term of this Agreement, subject to Executive’s rights under Section 9(c).

2. Term. Executive will commence his employment as President and CEO of the Company under the terms of this Agreement starting on June 1, 2010 (the “Commencement Date”). Executive will be employed under this Agreement until May 31, 2013 (the “Initial Term”), unless Executive’s employment is terminated earlier pursuant to Section 8. Thereafter, the Agreement will automatically renew for additional periods of one year (“Renewal Term(s)”), unless on or before March 1, 2013 (or March 1 of any Renewal Term), either Executive or the Company notifies the other in writing that it wishes to terminate employment under this Agreement at the end of the term then in effect; provided, however, that for purposes of Section 9 of this Agreement, the Company’s decision to provide notice of non-renewal shall be treated as a termination without “Cause” (as defined below) pursuant to Section 8(d) herein. The Initial Term and any Renewal Terms shall be referred to herein as the “Term.”

3. Board of Directors. Upon the Commencement Date (or as promptly as practicable thereafter), Executive shall be appointed to serve as a member of the Board. For so long as Executive is CEO, the Company shall use commercially reasonable efforts, subject to applicable law and regulations of the Nasdaq Capital Market, to cause Executive to be nominated for election as a director and to be recommended to the stockholders for election as a director. Upon any termination of employment as CEO, Executive will be deemed to have resigned from the Board, as well as the board of any Affiliate (as defined in Section 8(g)(1)) and Executive agrees that he will execute any and all documents necessary to effect such actions. The Company shall use commercially reasonable efforts to maintain commercially reasonable and appropriate levels of Directors and Officers liability insurance coverage during the Term, and for a period of six years thereafter.


4. Location. The location of Executive’s principal place of employment shall be in the Company’s principal executive offices in Scottsdale, Arizona; provided, however, that Executive shall travel and perform services outside of this area as reasonably required for the proper performance of Executive’s duties under this Agreement. Executive hereby agrees that he will relocate with his family from his current residence to the Scottsdale, Arizona metropolitan area no later than September 1, 2010.

5. Base Salary. The Company will pay Executive a base salary (“Base Salary”) at the annual rate of $550,000 per year. The Base Salary will be payable in accordance with the payroll practices of the Company in effect from time to time, but no less than monthly. Executive’s Base Salary will be reviewed at least annually in accordance with the Company’s executive compensation review policies and practices.

6. Incentive Compensation.

(a) Bonus. Executive shall be eligible to earn annual incentive compensation based on the achievement of certain goals and performance criteria established by the Board, following consultation with Executive, pursuant to the Company’s Management Incentive Plan as in effect from time to time or any successor incentive compensation program maintained by the Company from time to time (the “MIP”). The Company agrees that Executive’s target bonus under the MIP for fiscal 2011 will be 85% of the Base Salary, with a maximum payout of 100% (or such higher maximum percentage as may be determined by the Board at the time of approval of the MIP for fiscal 2011). Notwithstanding anything herein to the contrary, Executive acknowledges the discretionary nature of the MIP.

(b) Equity Incentive.

(1) Initial Grant. No later than 60 days after the Commencement Date, subject to Board approval, Executive will receive an equity grant pursuant to and governed by the terms and conditions of the Company’s 2008 Incentive Stock Plan (the “Plan”). The equity grant shall have an aggregate target value equal to $500,000, which grant value shall be equally divided between Restricted Stock Units (“RSUs”) and Stock Appreciation Rights (“SARs”). The number of RSUs and SARs shall be determined according to the Company’s customary practice for valuing equity grants. The RSUs and SARs shall vest over a period of three years from the date of grant (subject to (i) acceleration in full as provided in the Change in Control Agreement between Executive and the Company of even date herewith (the “CIC Agreement”), (ii) acceleration in full if the acquirer in a Change in Control does not assume the Company’s obligations with respect to the RSUs and SARs, and (iii) continued vesting for a six-month period if Executive’s employment is terminated by the Company without Cause or by Executive for Good Reason), and the RSUs further shall include performance criteria to be established by the Board following consultation with Executive.

(2) Subsequent Participation. Executive acknowledges that the equity grant provided pursuant to Section 6(b)(1) is intended to enhance the alignment of the interests of Executive and the Company’s stockholders on an accelerated basis, and that accordingly Executive shall next be eligible to receive grants pursuant to the Plan

 

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commencing with the regular annual cycle of grants to senior executives and other key employees scheduled for September 2012, subject in all cases to Board approval. The target annual value of such subsequent grants is currently expected to be $500,000; but the awarding of future grants, their values, and their vesting conditions (currently anticipated to include three-year vesting and a performance condition for RSUs) are subject to Board approval.

7. Executive Benefits.

(a) Fringe Benefits; Vacation. The Company will provide Executive with such fringe benefits and other executive benefits on the same terms and conditions as generally applicable to senior management from time to time (e.g., health and long-term disability insurance, etc.); provided, however, that nothing herein shall preclude the Company from amending or terminating any employee or general executive benefit plans or programs in a manner generally applicable to all of the Company’s senior executives. Executive is entitled to four weeks’ paid vacation during each calendar year, with the scheduling of such vacation to be determined in accordance with the Company’s vacation policies as in effect from time to time. If Executive does not take the full vacation available in any year, the unused vacation may not be carried over to the next calendar year, and Executive will not be compensated for it.

(b) Reimbursement of Expenses. Executive shall be entitled to reimbursement for reasonable business expenses incurred in the performance of his duties hereunder and in accordance with the Company’s expense reimbursement policies as they exist from time to time or as otherwise approved by the Board.

(c) Relocation Benefits. Executive will be entitled to relocation benefits in accordance with “Level One” as set forth in the Company’s relocation policy (the “Relocation Policy”); provided, however, notwithstanding the Relocation Policy, the Company will provide Executive, or reimburse Executive for expenses reasonably incurred in connection with, as the case may be, (i) packing, shipping, temporary storage and transportation of household goods, (ii) one way airfare for Executive, his spouse and children to Scottsdale, AZ, (iii) temporary housing from June 1 through August 31, 2010, (iv) reasonable expenses incurred for bi-weekly return trips to Ohio prior to relocation (not to extend past September 1, 2010), (v) airfare and lodging for two house-hunting trips for Executive, his spouse and children, and (vi) an additional payment equal to one month’s Base Salary to defray incidental expenses incurred. Other exceptions to the Relocation Policy will be reviewed by the Compensation Committee of the Board. In addition, the Company shall provide a guaranteed buyout program for Executive’s residence through Cartus Relocation Services by entering into the Relocation Management Agreement in substantially the form attached hereto as Exhibit A

8. Termination. Executive’s employment under this Agreement shall terminate:

(a) Resignation by Executive without Good Reason. Upon the date that is 30 days after Executive gives written notice to the Company stating that Executive is resigning from his employment with the Company for any reason other than “Good Reason” (as defined below) unless such notice period is waived by the Company in whole or in part (in which case such termination shall be effective as of the date of such waiver);

 

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(b) Resignation by Executive with Good Reason. Upon the effective date (if any) of Executive’s resignation for “Good Reason” as determined pursuant to Section 8(g)(3);

(c) Termination by the Company for Cause. Immediately upon written notice by the Company to Executive for Cause ;

(d) Termination by the Company without Cause. Upon the date that is 10 days after the Company gives written notice to Executive stating that Executive’s employment is being terminated without Cause;

(e) Death. Immediately upon the death of Executive; or

(f) Disability. Upon the date that is 10 days after the Company gives written notice to Executive stating that Executive’s employment is being terminated on account of Executive’s “Disability” (as defined below).

(g) Definitions. For purposes of this Agreement:

(1) “Affiliate” means any subsidiary or parent of the Company that is: (i) a member of a “controlled group of corporations” (within the meaning of Section 414(b) of the Internal Revenue Code of 1986, as amended (“Code”) as modified by Section 415(h) of the Code) that includes the Company as a member of the group; and (ii) a member of a group of trades or businesses under common control (within the meaning of Section 414(c) of the Code as modified by Section 415(h) of the Code) that includes the Company as a member of the group. In applying Section 1563(a)(1), (2) and (3) of the Code for purposes of determining the members of a controlled group of corporations under Section 414(b) of the Code, the language “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Section 1563(a)(1), (2) and (3) and in applying Treasury Regulation Section 1.414(c)-2 for purposes of determining the members of a group of trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c) of the Code, the language “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Treasury Regulation Section 1.414(c)-2.

(2) “Cause” will exist if the Company determines that Executive (i) willfully or through gross negligence acted or failed to act in a manner that materially damages the Company, any Affiliate, its stockholders or the Company’s or any Affiliate’s financial condition or reputation or involves fraud; (ii) materially violated the Company’s published policies or codes, including but not limited to the Company’s ethics policies and codes as in effect from time to time if such violation has not been cured within 15 days after notice by the Company reasonably identifying such failure or breach; provided that no notice and cure opportunity need be provided if Executive had knowledge of the policy or code at the time of the violation and the violation is not reasonably curable as determined by the Board; (iii) impeded, interfered, or failed to reasonably cooperate with an investigation authorized by the Board or willfully failed to follow a legal and proper Board directive; (iv) misrepresented or concealed a material fact for purposes of securing employment with the Company or this Agreement; (v) abused alcohol and/or drugs in a

 

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manner that materially impacts his ability to successfully perform his duties under this Agreement; or (vi) willfully failed to perform duties or obligations under this Agreement or otherwise breached Executive’s duties or obligations under this Agreement, if such failure or breach has not been cured within 15 days after notice by the Company reasonably identifying such failure or breach; provided that no notice and cure opportunity need be provided if the failure or breach relates to any matter included in subparts (i), (iii), (iv) or (v) of this Section 8(g)(2) or is otherwise not reasonably curable as determined by the Board. Notwithstanding anything in this Section 8(g)(2) to the contrary, the failure of the Company or any Affiliate to achieve budgeted or projected financial or similar performance objectives shall not, in and of itself, be considered a breach of any obligation under this Agreement or to otherwise constitute “Cause” as defined herein.

(3) “Good Reason” means (i) any material diminution of Executive’s position, authority and duties under this Agreement; (ii) Executive is required to relocate to an employment location that is more than 50 miles from Executive’s current employment location (which the parties agree is the Company’s present Scottsdale headquarters); (iii) Executive’s Base Salary rate is reduced to a level that is less than the rate paid to Executive during the immediately prior calendar year, unless Executive has agreed to said reduction or unless the Company makes an across-the-board reduction that applies to all executives; or (iv) the Company materially breaches any of its obligations under this Agreement. Notwithstanding the above provisions, a condition shall not be considered “Good Reason” unless (i) Executive gives the Company written notice of such condition within 30 days after the material facts regarding such condition become known to Executive; (ii) the Company fails to cure such condition within 20 days after receiving Executive’s written notice; and (iii) Executive terminates his employment within 20 days after the expiration of the Company’s cure period.

(4) “Disability” shall be deemed to exist if Executive is unable, despite reasonable accommodation, to perform the essential functions of his current position due to physical or mental illness, injury or other medical condition for a period of not less than six (6) full months in any 12-month period.

(5) “Separation from Service” means, either (a) termination of Executive’s employment with Company and all Affiliates, or (b) a permanent reduction in the level of bona fide services Executive provides to Company and all Affiliates to an amount that is 20% or less of the average level of bona fide services Executive provided to Company in the immediately preceding 36 months, with the level of bona fide service calculated in accordance with Treasury Regulations Section 1.409A-1(h)(1)(ii). Solely for purposes of determining whether Executive has a “Separation from Service,” Executive’s employment relationship is treated as continuing while Executive is on military leave, sick leave, or other bona fide leave of absence (if the period of such leave does not exceed six months, or if longer, so long as Executive’s right to reemployment with Company or an Affiliate is provided either by statute or contract). If Executive’s period of leave exceeds six months and Executive’s right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the expiration of such six-month period.

 

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Whether a termination of employment has occurred will be determined based on all of the facts and circumstances and in accordance with regulations issued by the United States Treasury Department pursuant to Section 409A of the Code.

(h) Leave of Absence. At the Company’s sole discretion, Executive may be placed on a paid administrative leave of absence for a reasonable period of time (not to exceed 30 days unless otherwise reasonably required to resolve matters under investigation) should the Board believe it necessary for any reason, including, but not limited to confirm that reasonable grounds exist for a termination for Cause, for example, pending the outcome of any internal or other investigation or any criminal charges. During this leave, the Company may bar Executive’s access to the Company’s or any Affiliate’s offices or facilities or may provide Executive with access subject to terms and conditions as the Company chooses to impose. The Company’s decision to place Executive on a paid leave of absence shall not constitute grounds for Executive to terminate his employment for Good Reason pursuant to Section 8(b) and receive any severance pursuant to Section 9(c).

(i) Reimbursement Obligation. In recognition of the significant upfront costs incurred by the Company in connection with retaining Executive to serve as CEO (including without limitation search firm and legal fees and expenses), Executive specifically agrees that if, before June 1, 2011, the Company terminates his employment for Cause, or he terminates his employment without Good Reason, Executive will be required to pay the Company the amount equal to the actual relocation expenses incurred by the Company on behalf of Executive under Section 7(c) up to a maximum of $300,000 in a single lump-sum payment due within thirty days after the effective date of termination of employment.

9. Compensation in the Event of Termination.

(a) Cause or Resignation without Good Reason. If Executive’s employment terminates under Section 8(a) or 8(c), Executive shall receive (i) payment of any earned but unpaid Base Salary earned up to and including the date of termination; and (ii) reimbursement of any unreimbursed business expenses incurred up to and including the date of termination (together, the “Accrued Obligations”).

(b) Death or Disability. If Executive’s employment terminates under Section 8(e) or 8(f), Executive, or Executive’s estate, if applicable, shall receive the Accrued Obligations and any vested benefits that Executive, or Executive’s estate, may be entitled to receive under any Company disability or insurance plan or other applicable employee benefit plan.

(c) Without Cause or for Good Reason. If Executive’s employment terminates under Section 8(b) or 8(d), Executive shall receive (subject to all of the terms and conditions of this Agreement, including without limitation Section 9(d) and Section 19): (i) the Accrued Obligations; (ii) the continuation of Executive’s then Base Salary for (A) 24 months for terminations effective prior to the end of the Initial Term, or (B) 18 months for terminations effective on or after the end of the Initial Term, less lawfully required withholdings, paid in accordance with the Company’s generally-applicable payroll practices; (iii) payment of any incentive compensation or bonus pursuant to the MIP (less lawfully required withholdings, and payable at the time payments are made to MIP participants generally), which was earned in or

 

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payable with respect to performance during the plan year immediately prior to the plan year in which the termination occurs and which has not been paid as of the date of termination (so long as Executive (x) was employed through the final day of the plan year in which the incentive compensation or bonus was earned; and (y) had not given notice of termination without Good Reason or received notice of termination for Cause, in either case prior to the final day of the plan year); and (iv) a portion of the Executive’s COBRA coverage premiums for 18 months (or such shorter time if such coverage terminates under Section 4980B of the Internal Revenue Code), provided that Executive shall continue to pay the same amount toward the cost of such premiums as paid immediately prior to the last day of Executive’s active employment and shall comply with applicable election and eligibility requirements.

(d) Release Agreement. Notwithstanding anything to the contrary herein, no payment shall be made or benefit furnished under Section 9(c) unless Executive executes (and does not revoke) a legal release (“Release Agreement”), in the form and substance reasonably requested by the Company, in which Executive releases the Company, Affiliates, directors, officers, employees, agents and others affiliated with the Company from any and all claims arising through the date of the Release Agreement, including claims relating to Executive’s employment with the Company and the termination of Executive’s employment; provided, however, that Executive will not be required to release any claim under the Indemnity Agreement entered into between Executive and the Company. The Release Agreement must be executed and returned to the Company within the 21 or 45 day (as applicable) period described in the Release Agreement and it must not be revoked by Executive within the seven-day revocation period described in the Release Agreement.

(e) Compliance with Code Section 409A. Any payment under this Section 9 shall be subject to the provisions of this Section 9(e) (except for a payment pursuant to death under Section 9(b)). If Executive is a “Specified Employee” of the Company for purposes of Code Section 409A at the time of a payment event set forth in Sections 8(b), (d) or (f) and if no exception from Code Section 409A applies in whole or in part, then the severance or other payments pursuant to this Section 9 (or the portion of such payments with respect to which no exemption from Code Section 409A applies) shall be made to Executive by the Company on the first day of the seventh month following the date of the Executive’s Separation from Service (the “409A Payment Date”), should this Section 9(e) result in a delay of payments to Executive, the Company shall begin to make such payments as described in this Section 9, provided that any amounts that would have been payable earlier but for the application of this Section 9, shall be paid in lump-sum on the 409A Payment Date along with accrued interest at the rate of interest announced by the Company’s primary bank from time to time as its prime rate from the date that payments to you should have been made under this Agreement. The balance of such severance payments shall be payable in accordance with regular payroll timing in effect on the date of Executive’s Separation from Service and the COBRA premiums shall be paid monthly. For purposes of this provision, the term Specified Employee shall have the meaning set forth in Code Section 409A(a)(2)(B)(i), or any successor provision and the treasury regulations and rulings issued hereunder.

 

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10. Confidentiality; Non-Disclosure; Ownership of Work.

(a) Confidentiality; Non-Disclosure. During the course of Executive’s employment, Executive will become exposed to a substantial amount of confidential and proprietary information, including, but not limited to, financial information, annual reports, audited and unaudited financial reports, operational budgets and strategies, methods of operation, customer lists, strategic plans, business plans, marketing plans and strategies, new business strategies, merger and acquisition strategies, management systems programs, computer systems, personnel and compensation information and payroll data, and other such reports, documents or information (collectively the “Confidential and Proprietary Information”). Due to Executive’s senior position with the Company its Affiliates, Executive acknowledges that Executive regularly receives Confidential and Proprietary Information with respect to the Company and/or its Affiliates; for the avoidance of doubt, all such information is expressly included in the defined term “Confidential and Proprietary Information.” In the event Executive’s employment is terminated by either party for any reason, Executive promises that Executive will not, retain, take with Executive or make any copies of such Confidential and Proprietary Information in any form, format, or manner whatsoever (including paper, digital or other storage in any form) nor will Executive disclose the same in whole or in part to any person or entity, in any manner either directly or indirectly. Excluded from this Agreement is information that (i) is or becomes publicly known through no violation of this Agreement, (ii) is lawfully received by the Executive from any third party without restriction on disclosure or use, (iii) is required to be disclosed by law, or (iv) is expressly approved in writing by the Company for release or other use by the Executive. The provisions of this paragraph shall survive the termination of this Agreement.

(b) Ownership of Work, Materials and Documents. All records, reports, notes, compilations, software, programs, designs and/or other recorded or created matters, copies thereof or reproductions, in whatever media form and whether stored on devices owned by the Company or owned by Executive, relating to the Company’s and its Affiliates’ trade secrets, operations, activities, or business, made or received by Executive during any past, present or future employment with the Company and its Affiliates are and shall be works made for hire and are, or shall become the exclusive property of the Company. Immediately upon the Company’s request at any time during or following the term of this Agreement, Executive shall return to the Company any and all Confidential and Proprietary Information and any other property of the Company or any Affiliate then within Executive’s possession, custody and/or control. Failure to return this property, whether during the term of this Agreement or after its termination, shall be a breach of this Agreement. The provisions of this paragraph shall survive the termination of this Agreement.

11. Covenant-Not-To-Compete.

(a) Interests to be Protected. The parties acknowledge that during the term of Executive’s employment, Executive will perform essential services for the Company and its Affiliates, employees and shareholders, and for municipalities and other persons or entities with which the Company or one or more of its Affiliates contracts or to or through which the Company or one or more of its Affiliates provides services (collectively, “clients”) of the Company. For purposes of this Section 11, reference to the Company shall include reference to

 

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the Company and its Affiliates. Therefore, Executive will be given an opportunity to meet, work with and develop close working relationships with the Company’s clients on a first-hand basis, and Executive will gain valuable insight as to the clients’ operations, personnel and need for services. In addition, Executive will be exposed to, have access to, and be required to work with, a considerable amount of the Confidential and Proprietary Information. The parties also expressly recognize and acknowledge that the personnel of the Company have been trained by, and are valuable to the Company, and that if the Company must hire new personnel or retrain existing personnel to fill vacancies it will incur substantial expense in recruiting and training such personnel. The parties expressly recognize that should Executive compete with the Company in any manner whatsoever, it could seriously impair the goodwill and diminish the value of the Company’s business. The parties acknowledge that these covenants set forth throughout this Section 11 have an extended duration; however, they agree that these covenants are reasonable and necessary for the protection of the legitimate business interests of the Company. For these and other reasons, and the fact that there are many other employment opportunities available to Executive if Executive’s employment with the Company should terminate (including opportunities in industries or lines of business in which the Company does not participate), the parties are in full and complete agreement that the following restrictive covenants (which together are referred to as the “Covenant-Not-To-Compete”) are fair and reasonable and are freely, voluntarily and knowingly entered into. Further, each party has been given the opportunity to consult with legal counsel before entering into this Agreement.

(b) Devotion to Employment. Executive shall devote substantially all Executive’s business time and efforts to the performance of Executive’s duties on behalf of the Company. During Executive’s term of employment, Executive shall not at any time or place or to any extent whatsoever, either directly or indirectly, without the express written consent of the Company, engage in any outside employment, or in any activity competitive with or adverse to the Company’s business, practice or affairs, whether alone or as partner, manager, officer, director, employee, shareholder of any corporation or as a trustee, fiduciary, consultant or other representative. This is not intended to prohibit Executive from engaging in nonprofessional activities such as personal investments or conducting to a reasonable extent private business affairs which may include other boards of directors’ activity, as long as they do not conflict with the Company and, in the case of positions on boards of directors or similar bodies, receive the prior written approval of the Board. Participation to a reasonable extent in civic, social or community activities is encouraged. Notwithstanding anything herein to the contrary, any non-Company activities shall be conducted in compliance with the Company’s corporate governance policies and other policies and procedures as in effect from time to time.

(c) Non-Solicitation of Clients. During the term of Executive’s employment with the Company and for a period, after the termination of employment with the Company, equal to two years (the “Non-Compete Period”), regardless of who initiates the termination and for whatever reason, Executive shall not directly or indirectly, for Executive, or on behalf of, or in conjunction with, any other person(s), company, partnership, corporation, or governmental entity, in any manner whatsoever, call upon, contact, encourage, handle, accept or solicit client(s) or prospective clients of the Company with whom (i) Executive worked as an employee of the Company at any time prior to termination, or at the time of termination; or (ii) about whom Executive possessed or had access to Confidential and Proprietary Information at any time prior to termination, or at the time of termination, for the purpose of soliciting, providing or

 

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selling such client(s) or prospective client(s) services that are the same, similar, or related to the services that the Company provides, or has prepared or offered to provide, to such client(s) or prospective client(s).

(d) Non-Solicitation of Employees. During the term of Executive’s employment with the Company and for the Non-Compete Period, regardless of who initiates the termination and for any reason, Executive shall not knowingly, directly or indirectly, for Executive, or on behalf of, or in conjunction with, any other person(s), company, partnership, corporation, or governmental entity, seek to hire any Company employees for the purpose of having such employee engage in services that are the same, similar or related to the services that such employee provided for the Company. For the purposes of this Section 11(d), “Company employee” shall mean any individual who (i) is employed by or who works as a contractor for the Company at any time during the 12-month period preceding the termination of this Agreement, or (ii) is employed by or who works as a contractor for the Company at any time during the Non-Compete Period.

(e) Competing Business. During the term of this Agreement and for the Non-Compete Period, Executive shall not, directly or indirectly, for Executive, or on behalf of, or in conjunction with, any other person(s), company, partnership, corporation, or governmental entity, in any manner whatsoever, engage in the same or similar business as the Company, which would be in competition with any Company line of business of the Company, in any geographical service area where the Company is engaged in business, or was considering engaging in business at any time prior to the termination or at the time of the termination of this Agreement. Without limiting the foregoing or any other aspect of this Covenant-not-to-Compete, Executive further specifically acknowledges and agrees that the limitations set forth in this Section 11(e) expressly preclude competitive activity of any nature in any geographical service area by Executive for or on behalf of American Medical Response (AMR) or any of AMR’s, Affiliates, successors or assigns. If the geographical service areas described above in this Section 11(e) should be found by a court to be unreasonable in scope, then the geographical service areas applicable herein shall be the geographical service areas in which Executive performed Executive’s duties pursuant to this Agreement. For the purposes of this provision, the term “competition” shall mean directly or indirectly engaging in or having a substantial interest in a business or operation which is, or will be, performing the same or similar services as those provided by the Company.

(f) Extension of Period. Executive agrees that the Non-Compete Period referred to in Sections 11(c), (d) and (e) shall be extended for a period of time equal to the duration of any breach thereof by Executive.

(g) Judicial Amendment. If the scope of any provision of Sections 10 or 11 of this Agreement is found by a court to be too broad to permit enforcement to its full extent, then such provision shall be enforced to the maximum extent permitted by law. The parties agree that the scope of any provision of this Agreement may be modified by a judge in any proceeding to enforce Sections 10 or 11 of this Agreement, so that such provision can be enforced to the maximum extent permitted by law. If any provision of this Agreement is found to be invalid or unenforceable for any reason, it shall not affect the validity of the remaining provisions of this Agreement.

 

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(h) Injunctive Relief, Damages and Forfeiture. Due to the nature of Executive’s position with the Company, and with full realization that a violation of Sections 10 and 11 will cause immediate and irreparable injury and damage, which is not readily measurable, and to protect the Company’s interests, Executive understands and agrees that in addition to instituting arbitration proceedings to recover damages resulting from a breach of this Agreement, the Company may seek to enforce this Agreement with a court action for injunctive relief in any state or federal court of competent jurisdiction in Maricopa County, Arizona, to cease or prevent any actual or threatened violation of this Agreement on the part of Executive. In any action brought pursuant to this Section 11(h), the prevailing party shall be entitled to an award of attorney’s fees and costs.

(i) Survival. The provisions of this Section 11 shall survive the termination of this Agreement.

12. Cooperation; No Disparagement. During the Non-Compete Period, Executive agrees to provide reasonable assistance to the Company (including assistance with litigation matters), upon the Company’s request, concerning the Executive’s previous employment responsibilities and functions with the Company. Additionally, at all times after the Executive’s employment with the Company has terminated, Company and Executive agree to refrain from making any disparaging or derogatory remarks, statements and/or publications regarding the other, its employees or its services. In consideration for such cooperation, but only if the Executive is not receiving severance pursuant to Section 9, Company shall compensate Executive for the time Executive spends on such cooperative efforts (at an hourly rate based on Executive’s Base Salary during the year preceding the date of termination) and, whether or not Executive is receiving severance, Company shall reimburse Executive for his reasonable out-of-pocket expenses incurred in connection with such cooperative efforts.

13. Severability. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under any applicable law, then such provision will be deemed to be modified to the extent necessary to render it legal, valid and enforceable, and if no such modification will make the provision legal, valid and enforceable, then this Agreement will be construed as if not containing the provision held to be invalid, and the rights and obligations of the parties will be construed and enforced accordingly.

14. Assignment by Company. Nothing in this Agreement shall preclude the Company from consolidating or merging into or with, or transferring all or substantially all of its assets to, another corporation or entity that assumes this Agreement and all obligations and undertakings hereunder. Upon such consolidation, merger or transfer of assets and assumption, the term “Company” as used herein shall mean such other corporation or entity, as appropriate, and this Agreement shall continue in full force and effect.

15. Entire Agreement. This Agreement, the CIC Agreement, and any agreements concerning equity compensation or other benefits, embody the complete agreement of the parties hereto with respect to the subject matter hereof and supersede any prior written, or prior or contemporaneous oral, understandings or agreements between the parties that may have related in any way to the subject matter hereof, including but not limited to the Term Sheet signed by Executive. This Agreement may be amended only in writing executed by the Company and Executive.

 

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16. Governing Law; Exclusive Venue. Because the Company has its principal place of business located in Scottsdale, Arizona, and because it is mutually agreed that it is in the best interests of the Company and all of its employees that a uniform body of law consistently interpreted be applied to the employment agreements to which the Company is a party, this Agreement shall be deemed entered into by the Company and Executive in Scottsdale, Arizona. The law of the State of Arizona shall govern the interpretation and application of all of the provisions of this Agreement. The parties expressly agree to submit to the exclusive jurisdiction and exclusive venue of the courts in Maricopa County, Arizona in connection with any litigation which may be brought with respect to a dispute between the parties, regardless of where Executive resides or where the services required by this Agreement are performed. Executive irrevocably waives Executive’s right, if any, to have any disputes between Executive and the Company decided in any jurisdiction or venue other than a court in the State of Arizona.

17. Notice. Any notice required or permitted under this Agreement must be in writing and will be deemed to have been given when delivered personally or by overnight courier service or three days after being sent by mail, postage prepaid, at the address indicated below or to such changed address as such person may subsequently give such notice of:

 

if to the Company:

  

Rural/Metro Corporation

9221 East Via de Ventura

Scottsdale, Arizona 85258

Attention: General Counsel

  

with a copy to:

  

Paul M. Gales, Esq.

8765 E. Bell Road, Suite 110

Scottsdale, Arizona 85260

  

if to Executive:

  

Michael P. DiMino

2925 SOM Center

Chagrin Falls, OH 44002

  

18. Dispute Resolution. Any dispute, controversy, or claim, whether contractual or non-contractual, including without limitation any federal or state statutory claim, common law or tort claim, or claim for attorneys fees, between the parties hereto arising directly or indirectly out of or connected with this Agreement and/or the parties’ employment relationship, unless mutually settled by the parties hereto, shall be resolved by binding arbitration conducted pursuant to the Federal Arbitration Act and in accordance with the Employment Arbitration Rules of the American Arbitration Association (the “AAA”). The parties agree that before proceeding to arbitration that they will mediate their disputes before a mutually selected mediator. If the parties are unable to mutually select a mediator, then the parties shall jointly request that the AAA appoint a mediator. Any arbitration shall be conducted by an arbitrator mutually selected by the parties. If the parties are unable to mutually select an arbitrator, the parties shall jointly request that the AAA appoint an arbitrator. All such disputes, controversies or claims shall be conducted by a single arbitrator, unless the parties mutually agree that the

 

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arbitration shall be conducted by a panel of three arbitrators. The resolution of the dispute by the arbitrator(s) shall be final, binding, nonappealable, and fully enforceable by a court of competent jurisdiction under the Federal Arbitration Act. The arbitrator(s) may award damages to the prevailing party. The arbitration award shall be in writing and shall include a statement of the reasons for the award. The arbitration shall be held in the Phoenix/Scottsdale metropolitan area. The Company shall initially pay all AAA, mediation, and arbitrator’s fees and costs. The arbitrator(s) may award reasonable attorneys’ fees and/or costs to the prevailing party.

19. Withholding; Release; No Duplication of Benefits. All of Executive’s compensation under this Agreement will be subject to deduction and withholding authorized or required by applicable law. The Company’s obligation to make any post-termination payments hereunder (other than salary payments and expense reimbursements through a date of termination), shall be subject to receipt by the Company from Executive of a release consistent with Section 9(d) of this Agreement, and compliance by Executive with the covenants set forth in Sections 10 and 11 hereof. If there is any conflict between the provisions of the CIC Agreement and this Agreement, such conflict shall be resolved so as to provide the greater benefit to Executive. However, in order to avoid duplication of any monetary benefits, any payments or benefits due under Executive’s CIC Agreement or under any employee severance plan to the extent such a plan exists or is subsequently implemented by the Company, will be reduced by any payments or benefits provided hereunder.

20. Non-Waiver; Construction; Counterparts. The failure in any one or more instances of a party to insist upon performance of any of the terms, covenants or conditions of this Agreement, to exercise any right or privilege conferred in this Agreement, or the waiver by said party of any breach of any of the terms, covenants or conditions of this Agreement, shall not be construed as a subsequent waiver of any such terms, covenants, conditions, rights or privileges, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party. This Agreement shall be construed fairly as to both parties and not in favor of or against either party, regardless of which party prepared the Agreement. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original, and all such counterparts shall constitute but one instrument.

21. Successors and Assigns. This Agreement is solely for the benefit of the parties and their respective successors, assigns, heirs and legatees. Nothing herein shall be construed to provide any right to any other entity or individual.

22. Executive Representations. Executive hereby represents that he is not subject to any contract or other restriction that would prevent, or in any way interfere with, his accepting employment with the Company and performing any or all of Executive’s duties contemplated pursuant to this Agreement. Executive further acknowledges that the Company has directed him to not misappropriate any confidential information or trade secrets from any prior employer or third party for use in the performance of his duties with the Company.

[signature page follows]

 

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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first above written.

 

RURAL/METRO CORPORATION, a Delaware corporation

By:

 

/s/ Conrad A. Conrad

 

Conrad A. Conrad

 

Chairman of the Board of Directors

EXECUTIVE: MICHAEL P. DiMINO

/s/ Michael P. DiMino

 

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EX-10.2 3 dex102.htm CHANGE OF CONTROL AGREEMENT BETWEEN MICHAEL P. DIMINO AND RURAL METRO CORP

Exhibit 10.2

CHANGE OF CONTROL AGREEMENT

Effective June 1, 2010

Michael P. DiMino

2925 SOM Center Road

Chagrin Falls, OH 44002

Dear Michael:

The Board of Directors (the “Board”) of Rural/Metro Corporation (“Rural/Metro”) believes that it is in the best interests of Rural/Metro and its shareholders to take appropriate steps to allay any concerns you (sometimes referred to herein as “Executive”) may have about your future employment opportunities with Rural/Metro. As a result, the Board has decided to offer to you the benefits described below.

1. Term of Agreement.

This agreement (“Agreement”) is effective on the date set forth above and will continue in effect as long as you are the Chief Executive Officer of Rural/Metro, unless you and Rural/Metro agree in writing to its termination.

2. Severance Payment.

If your employment with Rural/Metro is terminated without “Cause” (as defined in Section 7) at any time within two years following a “Change of Control” (as defined in Section 5), you will receive the “Severance Payment” described below. You will also receive the Severance Payment if you terminate your employment for “Good Reason” (as defined in Section 6) at any time within two years following a Change of Control.

The Severance Payment equals the sum of (i) two times the higher of (x) your annual base salary on the date of termination of your employment, or (y) your annual base salary on the date preceding the Change of Control, and (ii) two times the higher of (x) your average annual incentive compensation paid pursuant to Rural/Metro’s Management Incentive Plan or any successor incentive compensation program maintained by Rural/Metro from time to time from time to time (the “MIP”) for the two years prior to termination of your employment or (y) your annual incentive compensation pursuant to the MIP for the two years preceding the year in which the Change of Control occurred. Notwithstanding the above, if any portion of the Severance Payment would constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), then the amount of the Severance Payment shall be reduced to the maximum amount that could be paid to Executive without any portion of the Severance Payment or any other benefit to Executive under this Agreement constituting an “excess parachute payment”, but only if such reduction would provide a more favorable result in after tax benefit to the Executive (i.e., because the after tax proceeds to Executive of the reduced Severance Payment and other benefits under this Agreement would exceed the after tax proceeds


to the Executive of the Severance Payment and other benefits under this Agreement in the absence of any reduction, taking into account any excess taxes that would be imposed on the Executive pursuant to Section 4999 of the Code with respect to any “excess parachute payments”).

The Severance Payment will be paid in one lump sum on the 60th day following termination of your employment; provided that you have signed the release (explained in more detail below) and the revocation period has expired and provided further if you are a “specified employee” (as defined in Code Section 409A) and the payment does not comply with any exception to Code Section 409A, the above payment will be paid to you in one lump sum on the first day of the seventh month following the date of your “Separation from Service” (as defined in the employment agreement between Rural/Metro and you effective June 1, 2010 (the “Employment Agreement”)) along with accrued interest at the rate of interest announced by Rural/Metro’s principal bank from time to time as its prime rate (the “Prime Rate”) from the date that payments to you should have been made under this Agreement.

You are not entitled to receive the Severance Payment if your employment is terminated for Cause, if you terminate your employment without Good Reason, or if your employment is terminated by reason of your “Disability” (as defined in Section 8(d)) or your death (unless death or Disability occurs after a “Notice of Termination” (as defined in Section 8)). In addition, you are not entitled to receive the Severance Payment if your employment is terminated by you or Rural/Metro for any or no reason more than two years after a Change of Control has occurred.

Notwithstanding anything in this Agreement to the contrary, in order to receive the Severance Payment described in this Section 2, you must execute (and not revoke) a legal release (“Release Agreement”), in the form and substance reasonably requested by Rural/Metro, in which you release Rural/Metro, its “Affiliates” (as defined in the Employment Agreement), directors, officers, employees, agents and others affiliated with Rural/Metro from any and all claims, including claims relating to your employment with Rural/Metro and the termination of your employment. Rural/Metro shall provide you with the Release Agreement within five days following your termination of employment (or “Separation from Service” if you are a “Specified Employee”). The Release Agreement must be executed and returned to Rural/Metro within the 21 or 45 day (as applicable) period described in the Release Agreement and you must not revoke it within the 7-day revocation period described in the Release Agreement.

The Severance Payment will be paid to you without regard to whether you look for or obtain alternative employment following termination of your employment with Rural/Metro.

3. Benefits Continuation.

If you are entitled to severance under Section 2, you will continue to receive life, disability, accident and group health insurance benefits substantially similar to those which you were receiving immediately prior to termination of your employment for a period of 24 months following termination of your employment. Such benefits shall be provided on substantially the same terms and conditions as they were provided prior to the Change of Control, provided that, if coverage for such benefits is not available under the plans of the Company, the Company shall pay you an amount in cash equal to the cost of your obtaining such alternative coverage. Such cash payout shall be made within 60 days of your termination of employment

 

2


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); provided, however, you shall have no obligation to seek, solicit or accept employment from another employer in order to receive such benefits.

4. Stock Appreciation Rights and Restricted Stock Units Acceleration.

If you are entitled to receive the Severance Payment under Section 2, any stock appreciation rights, restricted stock units and other equity-based awards granted to you shall accelerate and become vested without further action and, to the extent permitted under the plan’s governing documents, you shall have a period of one year from the date of termination (or, if shorter, the earlier of the original expiration of the exercise term or 10 years from the date of grant) to exercise stock appreciation rights or other awards with an exercise provision. In addition, all restrictions on awards granted shall lapse. The foregoing shall not limit the acceleration of vesting, if any, provided pursuant to any applicable plan or grant documents in respect of any equity award, and any conflict or inconsistency between the language of this Section 4 and any other such document shall be resolved so as to provide the greater benefit to you.

5. Change of Control Defined.

For purposes of this Agreement, the term “Change of Control” shall mean and include the following transactions or situations:

(a) The acquisition of beneficial ownership, directly or indirectly, of securities having 30% or more of the combined voting power of Rural/Metro’s then outstanding securities by 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 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) 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.

(d) A change during any period of two consecutive years of a majority of the members of the Board for any reason, unless the election, or the nomination for election by Rural/Metro’s shareholders, of each director was approved by the vote of a majority of the directors then still in office who were directors at the beginning of the period.

 

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6. Good Reason Defined.

For purposes of this Agreement, the term “Good Reason” shall be defined as (a) any circumstance constituting Good Reason as defined by reference to the Employment Agreement; (b) the failure of Rural/Metro to cause any successor to expressly assume and agree to perform this Agreement pursuant to Section 9 hereof; and (c) any purported termination by Rural/Metro of your employment that is not effected by a Notice of Termination pursuant to Section 8 below or for grounds not constituting Cause.

7. Cause Defined.

For purposes of this Agreement, the term “Cause” will be defined by reference to the Employment Agreement.

8. Termination Notice And Procedure.

Any termination by Rural/Metro or you of your employment shall be communicated by written Notice of Termination to you if such Notice of Termination is delivered by Rural/Metro and to Rural/Metro 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.

(b) Any Notice of Termination by Rural/Metro shall be in writing signed by the Chairman of the Compensation Committee (the “Committee”) of the Board specifying in detail the basis for such termination.

(c) If Rural/Metro shall furnish a Notice of Termination for Cause and you in good faith notify Rural/Metro that a dispute exists concerning such termination within the 30-day period following your receipt of such notice, you may elect to continue your employment (or you may be placed on paid administrative leave, at Rural/Metro’s option), 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 15, or (B) the date of your death; or (ii) Cause did not exist, your employment shall continue as if Rural/Metro had not delivered its Notice of Termination and there shall be no Termination Date arising out of such notice. A determination of Cause shall be made by a majority of the members of the Board only after the Executive and his counsel, if any, have been given an opportunity to meet with the Board in advance of the Board’s vote on the matter; provided that, such determination of Cause shall be subject to the dispute resolution process described in Section 15.

(d) If Rural/Metro shall furnish a Notice of Termination by reason of Disability and you in good faith notify Rural/Metro that a dispute exists concerning such

 

4


termination within the 30-day period following your receipt of such notice, you may elect to continue your employment during such dispute (or you may be placed on paid administrative leave, at Rural/Metro’s option). 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 Rural/Metro 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 mean that Executive is deemed unable to perform the essential functions of Executive’s position due to physical or mental illness, injury or other medical condition for a period of not less than six full months in any 12-month period.

(e) If you in good faith furnish a Notice of Termination for Good Reason and Rural/Metro notifies you that a dispute exists concerning the termination within the 30-day period following Rural/Metro’s receipt of such notice, you may elect to continue your employment (or you may be placed on paid administrative leave, at Rural/Metro’s option), during such dispute. If it is thereafter determined that (i) Good Reason 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 15, (B) the date of your death, or (C) one day prior to the second anniversary of a Change of Control, and your payments hereunder shall reflect events occurring after you delivered the Notice of Termination; or (ii) Good Reason did not exist, your employment shall continue after such determination as if you had not delivered the Notice of Termination asserting Good Reason. Rural/Metro shall be given an opportunity to cure the event causing Good Reason within the 15-day period following Executive’s Notice of Termination for Good Reason.

(f) If you do not elect to continue employment pending resolution of a dispute regarding a Notice of Termination, and it is finally determined that the reason for termination set forth in such Notice of Termination did not exist, if such notice was delivered by you, you shall be deemed to have voluntarily terminated your employment other than for Good Reason and if delivered by Rural/Metro, Rural/Metro will be deemed to have terminated you other than by reason of Disability or with Cause.

9. 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 material breach of this

 

5


Agreement by Rural/Metro. 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.

10. 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.

11. 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 given when delivered personally or by overnight courier service or three days after being sent by mail, postage prepaid addressed as shown in the Employment Agreement, provided that all notices to Rural/Metro shall be directed to the attention of the Chairman of the Committee 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 a change of address shall be effective only upon receipt.

12. 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 Committee. 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 agreement 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 law 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 Rural/Metro that arise prior to the expiration of this Agreement shall survive the expiration of the term of this Agreement.

13. 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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14. 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.

15. 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 Section 8), be resolved in accordance with the arbitration and mediation provisions included in your Employment Agreement.

16. 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, the prevailing party shall recover 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 calculated at the Prime Rate from the date that payments were or should have been made under this Agreement.

17. 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. 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.

18. Effect on Employment Agreement.

This Agreement supplements, and does not replace, your Employment Agreement. If there is any conflict between the provisions of this Agreement and your Employment Agreement, such conflict shall be resolved so as to provide the greater benefit to you. However, Rural/Metro does not intend to provide duplicative payments, severance or benefits with any that may be provided pursuant to the Employment Agreement or under any employee severance plan to the extent such a plan exists or is subsequently implemented by Rural/Metro. As a result, benefits otherwise receivable pursuant to this Agreement shall be reduced or eliminated if and to the extent that you receive severance, benefits pursuant to the Employment Agreement, including, but not limited to, payments or benefits pursuant to Section 9 of the Employment Agreement, or pursuant to an employee severance plan; provided that, in no event shall this provision affect or negate the accelerated vesting of equity awards described in Section 4.

 

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19. Entire Agreement.

This Agreement, the Employment Agreement and any agreements concerning equity compensation or other benefits, set forth the entire agreement between you and Rural/Metro 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 Rural/Metro. Any prior agreements or understandings with respect to the subject matter set forth in this Agreement are hereby terminated and canceled. References herein to the Employment Agreement (including the definition of various terms) shall mean the 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, any such defined term shall be given the meaning ascribed to it in the last written Employment Agreement that was in effect between you and Rural/Metro that included a definition of such term.

20. 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 Code Section 162(m), exceeds the limitations on deductibility under Code Section 162(m), such payment will be delayed until the first year in which it is deductible.

21. Parties.

This Agreement is an agreement between you and Rural/Metro and all successors and assigns of Rural/Metro. In certain cases, though, obligations imposed upon Rural/Metro may be satisfied by a subsidiary of Rural/Metro. Any payment made or action taken by a subsidiary of Rural/Metro 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.

22. 409A Interpretation.

The parties intend for payments under this Agreement to be exempt from the requirements of Code Section 409A. Notwithstanding anything herein to the contrary, in the even that Executive is determined to be a specified employee within the meaning set forth in Code Section 409A(a)(2)(B)(i) or any successor provision and the Treasury Regulations issued thereunder, for purposes of any payment on termination of employment hereunder, payment(s) shall be made or begin, as applicable, on the first payroll date which is more than six months following the date of separation from service, to the extent required to avoid the imposition of the additional tax under Code Section 409A.

 

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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,

RURAL/METRO CORPORATION

By:

 

/s/ Conrad A. Conrad

 

Conrad A. Conrad

 

Chairman of the Board

ACCEPTANCE

I hereby accept the offer to participate in this special benefits program and I agree to be bound by all of the provisions noted above.

 

MICHAEL DIMINO

        /s/ Michael DiMino

 

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EX-10.3 4 dex103.htm EMPLOYMENT AGREEMENT BY AND BETWEEN THE REGISTRANT AND JACK E. BRUCKER

Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement’) is made and entered into by and between JACK BRUCKER (“Executive”) and RURAL/METRO CORPORATION, its subsidiaries, affiliates, joint ventures and partnerships (“Rural/Metro”). The Effective Date of this Agreement is January 1, 2005.

 

R E C I T A L S

 

A. The Board of Directors of Rural/Metro believes it is in the best interests of Rural/Metro to employ Executive as the President and Chief Executive Officer of Rural/Metro. The Board of Directors believes that Executive has been, is and is expected to continue to be, a key contributor to the success of Rural/Metro. Due to Executive’s experience as the Chief Executive Officer, President and the former Chief Operating Officer of Rural/Metro, Executive has particular skills and knowledge that the Board of Directors believes is imperative to retain for the benefit of Rural/Metro, its customers and all of its financial stakeholders.

 

B. In view of recent changes in the marketplace in which Rural/Metro competes and other factors deemed relevant by its Board of Directors, Rural/Metro has decided to offer Executive an amended and restated employment agreement, the terms and provisions of which are set forth below. Rural/Metro and Executive each desire to enter into this Agreement and, by doing so, mutually establish and maintain a meaningful long-term commitment to each other based upon the terms and provisions herein.

 

NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED AS FOLLOWS:

 

1. POSITION AND DUTIES.

 

Executive will be employed as the President and Chief Executive Officer of Rural/Metro and shall report only to the Board of Directors of Rural/Metro (the “Board”). Executive shall perform the duties of his position, as determined by the Board, in accordance with the policies, practices and bylaws of Rural/Metro. Executive shall serve Rural/Metro faithfully, loyally, honestly and to the best of his ability. Executive will devote his best efforts to the performance of his duties for, and in the business and affairs of, Rural/Metro. Rural/Metro reserves the right, in its sole discretion, to change or modify Executive’s position, title and duties during the term of this Agreement, subject to Executive’s rights under Section 6.


2. COMPENSATION.

 

As of the Effective Date, Executive’s annual compensation will be $1,200,000 (“Base Salary”). The Base Salary shall be adjusted annually for increases (but not decreases) in the 12-month percent change in the Consumer Price Index maintained by the US Department of Labor’s Bureau of Labor Statistics (“BLS”) for the following Consumer Price Index (“CPI”): population coverage is “CPI-U”; area coverage is “Unadjusted US City Average”; series title is “All Items”; and base period index is “1982-1984=l00” (or, if the foregoing is no longer available, such other more recent base period index that is maintained by the BLS and that will permit a fair and reasonable analysis of the 12-month percent change). Such adjustment to Executive’s Base Salary shall be made effective January 1 of each year (commencing January 1, 2006) based upon a comparison of the CPI for the September immediately preceding the effective date of the adjustment (initially, September 2005) to the CPI for the September of the preceding year (initially, September 2004). Executive’s Base Salary will be paid in substantially equal periodic installments as determined by Rural/Metro. Except as provided in the second sentence of this Section, it is the specific intention of the parties that the Base Salary shall not be increased during the term of this Agreement.

 

Throughout the term of this Agreement, Executive shall be eligible to participate in the Rural/Metro Management Incentive Program (“MIP”) and to receive additional compensation based upon Rural/Metro’s actual net income from continuing operations each fiscal year (as determined from Rural/Metro’s annual audited financial statements) as compared to the annual budget approved by the Board of Directors for such fiscal year, in the potential amount indicated in the table immediately below:

 

If Performance Compared to Budget is:


  

Bonus as Percent of Base Salary (as Base Salary has been
adjusted pursuant to this Section 2)


At least 90% but less than 100%

  

50% (as adjusted upward if Performance Compared to Budget exceeds 90%*)

At least 100% but less than 125%

  

80% (as adjusted upward if Performance Compared to Budget exceeds 100%*)

At least 125% but less than 150%

  

100% (as adjusted upward if Performance Compared to Budget exceeds 125%*)

150% or greater

  

125%


*

The bonus percentage shall be calculated by multiplying the applicable base bonus percentage above by a fraction, the numerator of which shall be the actual performance percentage compared to budget, and the denominator of which shall be the minimum target threshold for the applicable row in the left column above. For example: if Performance Compared to Budget is 110%, Executive’s bonus shall equal 80% of Base Salary multiplied by 110/100, or 88% of Base Salary. Similarly by way of example: if Performance Compared to Budget is 130%, Executive’s bonus shall equal 100% of Base Salary multiplied by 130/125, or 104%.

 

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3. RETENTION BONUS.

 

In January 2004, Rural/Metro paid to Executive a sum of $1,000,000 plus an additional amount in cash equal to the estimated sum of all taxes including, without limitation, any federal, state and local income taxes, payable by Executive as a result of the receipt of such payment (the “Retention Bonus”). The purpose of the Retention Bonus was to provide additional encouragement for Executive to maintain the employment relationship. If, nevertheless, Rural/Metro terminates the employment relationship for Cause (as defined in Section 5A); or if, following termination of employment for any reason, Executive joins American Medical Response (AMR), any of AMR’s successors or assigns, or any other company with nationally recognized ambulance operations prior to December 31, 2010 (other than via merger or other acquisition transaction approved by the Board of Directors), Executive shall pay Rural/Metro an amount equal to the Retention Bonus. If Executive terminates the employment relationship without Good Reason (as defined in Section 6A), Executive shall pay Rural/Metro that fraction of the Retention Bonus having a numerator equal to the number of days between the termination date and December 31, 2010, and a denominator of 2,190. Any payment required from Executive pursuant to this Section 3 shall be made in three equal annual installments, with the first installment payable on the first anniversary of the effective date of termination and the remaining installments due on the second and third anniversaries, respectively. Amounts payable under this Section 3 that are delinquent shall bear interest at the prime lending rate of Citibank, N.A., as published in the Wall Street Journal on the close of business on the effective date of termination (“Interest Rate”). Notwithstanding the foregoing, (i) no repayment shall be due from Executive if termination of employment occurs after December 31, 2010; and (ii) if Executive’s aggregate repayment obligation exceeds $1 million, Executive shall be required to make repayment of the portion in excess of $1 million only to the extent that Executive, promptly using good faith efforts, is able to recover income taxes previously paid on account of the Retention Bonus.

 

4. TERM AND TERMINATION.

 

This Agreement will continue in full force and effect until it is terminated by the parties. This Agreement may be terminated in any of the following ways; (a) it may be renegotiated and replaced by a written agreement signed by both parties; (b) Rural//Metro may elect to terminate this Agreement with or without “Cause”, as defined below; (c) Executive may elect to terminate this Agreement with or without “Good Reason”, as defined

 

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below; (d) Rural/Metro may serve notice on Executive of its desire to terminate this Agreement at the end of the “Initial Term” or any “Renewal Term”, or (e) this Agreement may terminate automatically upon Executive’s death or Disability pursuant to Section 7.

 

The “Initial Term” of this Agreement shall expire by its terms on December 31, 2011, unless sooner terminated in accordance with the provisions of this Agreement. This Agreement will be renewed at the end of the Initial Term for up to two additional one-year periods (a “Renewal Term”), unless Rural/Metro serves notice upon Executive of Rural/Metro’s desire not to renew this Agreement, which notice must be given at least one hundred eighty (180) days before the end of the Initial Term or the first Renewal Term. Executive shall receive no Severance Benefits if this Agreement terminates upon expiration of the Initial Term or any Renewal Term.

 

5. TERMINATION BY RURAL/METRO.

 

A. Termination For Cause.

 

Rural/Metro may terminate this Agreement and Executive’s employment for Cause at any time upon written notice. This means that Rural/Metro has the right to terminate the employment relationship for Cause at any time should there be Cause to do so.

 

For purposes of this Agreement, “Cause” shall be limited to discharge resulting from a determination by an affirmative vote of 75% of the members of the Board of Directors then in office that Executive: (a) has been convicted of (or has pleaded guilty or no contest to) a felony involving dishonesty, fraud, theft or embezzlement; (b) has repeatedly failed or refused, in a material respect to follow reasonable policies or directives established by Rural/Metro, if the failure or refusal has not been cured within sixty (60) days after Rural/Metro has provided written notice to Executive of the specific conduct constituting such failure or refusal; (c) has willfully and persistently failed or refused to attend to material duties or obligations imposed upon him under this Agreement, if the failure or refusal has not been cured within sixty (60) days after Rural/Metro has provided written notice to Executive of the specific conduct constituting such failure or refusal; or (d) has misrepresented or concealed a material fact for purposes of securing employment with Rural/Metro or this Employment Agreement. The existence of “Cause” shall be determined by Rural/Metro’s Board of Directors acting in good faith after prior notice to Executive and after providing Executive with an opportunity to be heard in a meeting with the Board of Directors.

 

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Because Executive is in a position which involves great responsibilities, Rural/Metro is not required to utilize its progressive discipline policy. In addition, no generally applicable grievance policy shall apply to grievances by Executive regarding his employment relationship with Rural/Metro.

 

If this Agreement and Executive’s employment is terminated for Cause, Executive shall receive no Severance Benefits.

 

B. Termination Without Cause.

 

Rural/Metro also may terminate this Agreement and Executive’s employment without Cause at any time after providing Executive with sixty (60) days advance written notice. In the event this Agreement and Executive’s employment are terminated by Rural/Metro without Cause, Executive shall receive the Severance Benefits pursuant to Section 8. Rural/Metro may place Executive on a paid administrative leave, and bar or restrict Executive’s access to Rural/Metro facilities, contemporaneously with or at any time following the delivery of the written notice to Executive. For the avoidance of doubt, any action by Rural/Metro pursuant to the foregoing sentence shall not constitute Good Reason or otherwise constitute a breach of this Agreement by Rural/Metro, and the foregoing sentence or any action by Rural/Metro pursuant thereto shall in no way limit or reduce the rights of Rural/Metro as provided elsewhere herein.

 

6. TERMINATION BY EXECUTIVE.

 

Executive may terminate this Agreement and his employment with or without “Good Reason” in accordance with the provisions of this Section 6.

 

A. Termination For Good Reason.

 

Executive may terminate this Agreement and his employment for “Good Reason” by giving written notice to Rural/Metro within sixty (60) days, or such longer period as may be agreed to in writing by Rural/Metro, of Executive’s receipt of notice of the occurrence of any event constituting “Good Reason”, as described below.

 

Executive shall have “Good Reason” to terminate this Agreement and his employment upon the occurrence of any of the following events: (a) Executive is assigned duties inconsistent with the positions, duties, responsibility and status of the President and Chief Executive Officer of Rural/Metro (provided that Executive shall not have “Good Reason” if Executive’s positions are changed to Vice Chairman of the Board of Directors at any time after January 1, 2011); (b) Executive is required to relocate to an employment location that is more than fifty

 

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(50) miles from his current employment location (which the parties agree is Rural/Metro’s present Scottsdale headquarters); or (c) Executive’s Base Salary rate is reduced to a level that is at least ten percent (10%) less than the salary paid to Executive during any prior calendar year, unless Executive has agreed to said reduction.

 

Notwithstanding the above provisions, Executive shall not have “Good Reason” to terminate this Agreement and his employment if, within thirty (30) days of the written notice of Good Reason provided to Rural/Metro by Executive, Rural/Metro corrects, remedies or reverses any event which resulted in Good Reason.

 

If Executive terminates this Agreement and his employment for Good Reason, Executive shall be entitled to receive Severance Benefits pursuant to Section 8.

 

B. Termination Without Good Reason.

 

Executive also may terminate this Agreement and his employment without Good Reason at any time by giving sixty (60) days notice to Rural/Metro. If Executive terminates this Agreement and his employment without Good Reason, Executive shall not receive Severance Benefits pursuant to Section 8.

 

C. Administrative Leave.

 

Rural/Metro may place Executive on a paid administrative leave, and bar or restrict Executive’s access to Rural/Metro facilities, contemporaneously with or at any time following the delivery of the written notice of termination by Executive pursuant to Section 6A or 6B. For the avoidance of doubt, any action by Rural/Metro pursuant to the foregoing sentence shall not constitute Good Reason or otherwise constitute a breach of this Agreement by Rural/Metro, and the foregoing sentence or any action by Rural/Metro pursuant thereto shall in no way limit or reduce the rights of Rural/Metro as provided elsewhere herein.

 

7. DEATH OR DISABILITY.

 

This Agreement will terminate automatically on Executive’s death. Any compensation or other amounts due to Executive for services rendered prior to his death shall be paid to Executive’s surviving spouse, or if Executive does not leave a surviving spouse, to Executive’s estate. If Executive is receiving Severance Benefits at the time of his death, the monetary portion of Executive’s Severance Benefits shall be paid to Executive’s surviving spouse, or if Executive does not leave a surviving spouse, to Executive’s estate, for the balance of the Benefit Period (as defined in Section 8) remaining at the time of Executive’s death. In addition, if, at the time of his death, Executive is receiving Severance Benefits that include the continuation of health, medical, dental, vision or pharmaceutical insurance benefits (as described in Section 8), and Executive’s surviving spouse is covered by such

 

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health, medical, dental, vision or pharmaceutical insurance benefits through Rural/Metro at the time of Executive’s death, then such coverage of Executive’s surviving spouse shall continue throughout the balance of the Benefit Period. No other benefits shall be payable to Executive’s heirs pursuant to this Agreement, but amounts may be payable pursuant to any life insurance or other benefit plans maintained by Rural/Metro.

 

In the event Executive becomes “Disabled,” Executive’s employment hereunder and Rural/Metro’s obligation to pay Executive’s Base Salary (less any amounts payable to Executive pursuant to any long-term disability insurance policy paid for by Rural/Metro) shall continue for a period of six (6) months from the date as of which Executive is determined to have become Disabled, at which point, Executive’s employment hereunder shall automatically cease and terminate. Executive shall be considered “Disabled” or to be suffering from a “Disability” for purposes of this Section 7 if Executive is unable, after any reasonable accommodations required by the Americans with Disabilities Act or other applicable law, to perform the essential functions of his position because of a physical or mental impairment. In the absence of agreement between Rural/Metro and Executive as to whether Executive is Disabled or suffering from a Disability (and the date as of which Executive became Disabled), such determinations shall be made by a licensed physician selected by Rural/Metro. If a licensed physician selected by Executive disagrees with the determination of the physician selected by Rural/Metro, the two physicians shall select a third physician. The decision of the third physician concerning whether Executive is Disabled or suffering from a Disability (and the date as of which Executive became Disabled) shall be binding and conclusive on all interested parties.

 

8. SEVERANCE BENEFITS.

 

If during the Initial Term or any Renewal Term, this Agreement and Executive’s employment are terminated without Cause by Rural/Metro as set forth in Section 5B prior to the last day of the Initial Term or any Renewal Term, or if Executive elects to terminate this Agreement for Good Reason as set forth in Section 6A, Executive shall receive the “Severance Benefits” provided by this Section. In addition, Executive also shall receive the Severance Benefits if his employment is terminated due to Disability as set forth in Section 7.

 

The Severance Benefits shall begin immediately following the effective date of termination of employment and, except as otherwise provided herein, will continue to be payable for a period (the “Benefit Period”) equal to (a) five (5) years, if employment is terminated on or before December 31, 2006, or (b) the greater of (i) two (2) years or (ii) five (5) years minus the number of days from January 1, 2007 through and including the effective date of termination of employment, if employment is terminated on or after January 1, 2007.

 

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The Executive’s Severance Benefits shall consist of the continuation of the Base Salary (as in effect on the date of termination of employment) throughout the Benefit Period, less lawfully required withholdings, which shall be paid in accordance with Rural/Metro’s generally-applicable payroll practices. Such Severance Benefits shall be paid in lieu of any accrued vacation time. Delinquent amounts shall bear interest at the Interest Rate. The Severance Benefits also shall consist of the continuation of any health, medical, dental, vision or pharmaceutical coverage that Executive was participating in as of the last day of active employment. These coverages shall be continued under COBRA beginning the first day of the month following the effective termination date and shall continue for the duration of the Benefit Period provided that Executive satisfactorily complies with all COBRA election requirements. During the Benefit Period, Executive shall continue to pay the same premiums paid as of the last day of active employment. Executive’s life insurance coverage may be converted to an individual policy within 30 days of the effective termination date, if a conversion right is then available pursuant to such coverage. Upon conversion, the cost of maintaining an individual policy resides with Executive. If a particular insurance benefit may not be continued for any reason, Rural/Metro shall pay a “Benefit Allowance” to the Executive. The “Benefit Allowance’ will equal 145% of the cost to Rural/Metro of providing the unavailable insurance benefit to a similarly situated employee. The Benefit Allowance shall be paid on a monthly basis or in a single lump sum. The cost of providing the unavailable benefit to a similarly situated employee and whether the Benefit Allowance will be paid in monthly installments or in a lump sum will be determined by Rural/Metro in the exercise of its discretion.

 

If Executive voluntarily terminates this Agreement and his employment without Good Reason prior to the end of the Initial Term or any Renewal Term, or if Rural/Metro terminates the Agreement and Executive’s employment for Cause, no Severance Benefits shall be paid to Executive. No Severance Benefits arc payable in the event of Executive’s death, except as set forth in Section 7.

 

Severance Benefits will cease if Executive elects to forgo future Severance Benefits pursuant to Section 11G in order to avoid any further restrictions on his ability to engage in a competing business or to solicit employees or clients. If Executive makes an election pursuant to Section 11G, the Severance Benefits will cease as of the effective date of the election. As a general rule, notwithstanding any contrary provision in any Stock Option Agreement or this Section 8, Executive will not be allowed to exercise any stock options following the effective date of an election made pursuant to Section 11G.

 

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Severance Benefits and Executive’s right to exercise any stock options also shall immediately cease if Executive commits a material violation of any of the terms of this Agreement relating to confidentiality and non-disclosure, as set forth in Section 10, or the Covenant-Not-To-Compete, as set forth in Section 11. Only material violations will result in the loss of Severance Benefits and the ability to exercise stock options. In addition, if a violation, even if material, is one that may be cured, the violation will not be considered to be material unless Executive fails to cure said violation within sixty (60) days after receiving written notice of said violation from Rural/Metro or unless Executive repeats said violation at any time after receiving said notice.

 

The payment of Severance Benefits shall not be affected by whether Executive seeks or obtains other employment. Executive shall have no obligation to seek or obtain other employment and Executive’s Severance Benefits shall not be impacted by Executive’s failure to “mitigate.”

 

Notwithstanding anything in this Agreement to the contrary, as a condition precedent to Executive’s right to receive the Severance Benefits, Executive must (i) execute any release reasonably requested by Rural/Metro, which shall include without limitation a mutual release of the parties and their respective heirs, officers, directors, employees, successors and assigns, of all claims, costs, losses and liabilities whatsoever, arising on or prior to the effective date of termination, that each party may have in connection with Executive’s employment or the cessation of his employment with Rural/Metro, and a mutual agreement of non-disparagement; and (ii) be in compliance with any applicable repayment obligation with respect to the Retention Bonus to the extent required in Section 3 of this Agreement.

 

Notwithstanding anything in this Agreement to the contrary, and without limiting Rural/Metro’s other rights or remedies, Rural/Metro in its sole discretion may elect to offset amounts otherwise payable to Executive under this Section 8 against amounts payable to Rural/Metro under Section 3.

 

9. BENEFITS.

 

A. Benefit Plans, Insurance, Options, etc.

 

Executive will be entitled to participate in any benefit plans, including, but not limited to, retirement plans, stock option plans, equity compensation or incentive plans, disability plans, life insurance plans and health, medical, dental, vision and pharmaceutical plans available to other Rural/Metro executive employees,

 

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subject to any restrictions (including waiting periods) specified in said plans. During the term of this Agreement and for a period of six years thereafter, Rural/Metro shall maintain Directors and Officers insurance policy(ies) providing coverage (subject to the terms of such policy) for the acts and omissions of Executive during the term of his employment.

 

B. Vacation.

 

Executive is entitled to four (4) weeks of paid vacation per calendar year, with such vacation to be scheduled and taken in accordance with Rural/Metro’s standard vacation policies. If Executive does not take the full vacation available in any year, the unused vacation may not be carried over to the next calendar year, and Executive will not be compensated for it.

 

10. CONFIDENTIALITY; NON-DISCLOSURE; OWNERSHIP OF WORK.

 

A. Confidentiality; Non-Disclosure.

 

During the course of his employment, Executive will become exposed to a substantial amount of confidential and proprietary information, including, but not limited to, financial information, annual reports, audited and unaudited financial reports, operational budgets and strategies, methods of operation, customer lists, strategic plans, business plans, marketing plans and strategies, new business strategies, merger and acquisition strategies, management systems programs, computer systems, personnel and compensation information and payroll data, and other such reports, documents or information (collectively the “Confidential and Proprietary Information”). In the event his employment is terminated by either party for any reason, Executive promises that he will not, retain, take with him or make any copies of such Confidential and Proprietary Information in any form, format, or manner whatsoever (including computer print-outs, computer tapes, floppy disks, CD-ROMs, etc.) nor will he disclose the same in whole or in part to any person or entity, in any manner either directly or indirectly. Excluded from this Agreement is information that (i) is or becomes publicly known through no violation of this Agreement, (ii) is lawfully received by the Executive from any third party without restriction on disclosure or use, (iii) is required to be disclosed by law, or (iv) is expressly approved in writing by Rural/Metro for release or other use by the Executive. The provisions of this paragraph shall survive the termination of this Agreement.

 

B. Ownership of Work, Materials and Documents.

 

All records, reports, notes, compilations, software, programs, designs and/or other recorded or created matters, copies thereof or reproductions, in whatever media form, relating to Rural/Metro’s trade secrets,

 

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operations, activities, or business, made or received by Executive during any past, present or future employment with Rural/Metro are and shall be works made for hire and are, or shall become the exclusive property of Rural/Metro. Immediately upon Rural/Metro’s request at any time during or following the Initial Term or any Renewal Term of this Agreement, Executive shall return to Rural/Metro any and all Confidential and Proprietary Information and any other property of Rural/Metro then within Executive’s possession, custody and/or control. Failure to return Rural/Metro’s property, whether during the term of this Agreement or after its termination, shall be a breach of this Agreement. The provisions of this paragraph shall survive the termination of this Agreement.

 

11. COVENANT-NOT-TO-COMPETE.

 

A. Interests to be Protected.

 

The parties acknowledge that during the term of his employment, Executive will perform essential services for Rural/Metro, its employees and shareholders, and for clients of Rural/Metro. Therefore, Executive will be given an opportunity to meet, work with and develop close working relationships with Rural/Metro’s clients on a first-hand basis and will gain valuable insight as to the clients’ operations, personnel and need for services. In addition, Executive will be exposed to, have access to, and be required to work with, a considerable amount of Rural/Metro’s Confidential and Proprietary Information.

 

The parties also expressly recognize and acknowledge that the personnel of Rural/Metro have been trained by, and are valuable to Rural/Metro, and that if Rural/Metro must hire new personnel or retrain existing personnel to fill vacancies it will incur substantial expense in recruiting and training such personnel. The parties expressly recognize that should Executive compete with Rural/Metro in any manner whatsoever, it could seriously impair the goodwill and diminish the value of Rural/Metro’s business.

 

The parties acknowledge that this covenant has an extended duration; however, they agree that this covenant is reasonable and it is necessary for the protection of Rural/Metro.

 

For these and other reasons, and the fact that there are many other employment opportunities available to Executive if he should terminate, the parties are in full and complete agreement that the following restrictive covenants (which together are referred to as the “Covenant-Not-To-Compete”) are fair and reasonable and are freely, voluntarily and knowingly entered into. Further, each party has been given the opportunity to consult with independent legal counsel before entering into this Agreement.

 

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B. Devotion to Employment.

 

Executive shall devote substantially all his business time and efforts to the performance of his duties on behalf of Rural/Metro. During his term of employment, Executive shall not at any time or place or to any extent whatsoever, either directly or indirectly, without the express written consent of Rural/Metro, engage in any outside employment, or in any activity competitive with or adverse to Rural/Metro’s business, practice or affairs, whether alone or as partner, officer, director, employee, or shareholder of any corporation or as a trustee, fiduciary, consultant or other representative. This is not intended to prohibit Executive from engaging in nonprofessional activities such as personal investments or conducting to a reasonable extent private business affairs which may include other boards of directors’ activity, as long as they do not conflict with Rural/Metro. Participation to a reasonable extent in civic, social or community activities is encouraged. Notwithstanding anything herein to the contrary, any non-Rural/Metro activities shall be conducted in compliance with Rural/Metro’s corporate governance policies and other policies and procedures as in effect from time to time.

 

C. Non-Solicitation of Clients.

 

During the term of Executive’s employment with Rural/Metro and for a period, after the termination of employment with Rural/Metro, equal to (a) five (5) years, if employment is terminated on or before December 31, 2006, or (b) the greater of (i) two (2) years or (ii) five (5) years minus the number of days from January 1, 2007 through and including the effective date of termination of employment, if employment is terminated on or after January 1, 2007 (the “Non-Compete Period’), regardless of who initiates the termination and for whatever reason, Executive shall not directly or indirectly, for himself, or on behalf of, or in conjunction with, any other person(s), company, partnership, corporation, or governmental entity, in any manner whatsoever, call upon, contact, encourage, handle or solicit client(s) or prospective clients of Rural/Metro with whom (i) he worked as an employee of Rural/Metro at any time prior to termination, or at the time of termination; or (ii) about whom he possessed or had access to Rural/Metro’s Confidential and Proprietary Information at any time prior to termination, or at the time of termination, for the purpose of soliciting or selling to such client(s) or prospective client(s) services that are the same, similar, or related to the services that Rural/Metro provides, or has prepared or offered to provide, to such client(s) or prospective client(s).

 

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D. Non-Solicitation of Employees.

 

During the term of Executive’s employment with Rural/Metro and for the Non-Compete Period, regardless of who initiates the termination and for any reason, Executive shall not knowingly, directly or indirectly, for himself, or on behalf of, or in conjunction with, any other person(s), company, partnership, corporation, or governmental entity, seek to hire, and/or hire any Rural/Metro employees for the purpose of having such employee engage in services that are the same, similar or related to the services that such employee provided for Rural/Metro. For purposes of this Section 11D, “Rural/Metro employee” shall mean any individual who (i) is employed by or who works as a contractor for Rural/Metro at any time during the twelve (12) month period preceding the termination of this Agreement, or (ii) is employed by or who works as a contractor for Rural/Metro at any time during the Non-Compete Period.

 

E. Competing Business.

 

During the term of this Agreement and for the Non-Compete Period, regardless of who initiates the termination and for any reason, Executive shall not, directly or indirectly, for himself, or on behalf of or in conjunction with, any other person(s), company, partnership, corporation, or governmental entity, in any manner whatsoever, engage in the same or similar business as Rural/Metro, which would be in competition with any Rural/Metro line of business, in any geographical service area where Rural/Metro is engaged in business, or was considering engaging in business at any time prior to the termination or at the time of the termination of this Agreement. Without limiting the foregoing or any other aspect of this Covenant-not-to-Compete, Executive specifically acknowledges and agrees that the scope of the foregoing limitation expressly includes AMR and any of AMR’s successors or assigns. For the purposes of this provision, the term “competition” shall mean directly or indirectly engaging in or having a substantial interest in a business or operation which is, or will be, performing the same services provided by Rural/Metro.

 

Executive specifically acknowledges and agrees that Rural/Metro is engaged in business in the State of California and that the restrictions on Executive’s activities during the Non-Compete Period, as described herein, extend to Rural/Metro’s business activities in California. Executive has been informed of and has read and is familiar with Section 16600 of the California Business and Professional Code, which section provides:

 

Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade or business of any kind is to that extent void.

 

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Executive specifically agrees and acknowledges that this Agreement is not intended nor does it purport to impose on Executive restrictions within the State of California that are impermissible under California law. Executive therefore waives all rights under California Business and Professional Code Section 16600 and any other state or federal statute or common law principle of similar effect, including any public policy claims arising under Section 16600.

 

F. Extension of Period.

 

Executive agrees that the Non-Compete Period referred to in subsections C, D and E shall be extended for a period of time equal to the duration of any breach of this Agreement by Executive.

 

G. Election to Shorten Period.

 

Executive may elect to shorten the Non-Compete Period referred to in subsections C, D and E to any period of at least twelve (12) months, provided that Executive is not in breach of such subsections at the time of such election. In order to make this election, Executive must be in compliance with any applicable repayment obligation with respect to the Retention Bonus to the extent required in Section 3 of this Agreement, and must provide Rural/Metro with written notice at least sixty (60) days prior to the expiration of the shortened period. As provided in Section 8, if Executive makes this election, any Severance Benefits provided by Section 8 will be discontinued as of the effective date of the election.

 

H. Automatic Reduction of Period.

 

If Executive is in compliance with any applicable repayment obligation with respect to the Retention Bonus to the extent required in Section 3 of this Agreement, the Non-Compete Period referred to in subsections C, D and E shall be shortened to twelve (12) months if Executive is not entitled to receive Severance Benefits pursuant to Section 8 at the time of his termination of employment.

 

I. Judicial Amendment.

 

If the scope of any provision of this Agreement is found by the Court to be too broad to permit enforcement to its full extent, then such provision shall be enforced to the maximum extent permitted by law. The parties agree that the scope of any provision of this Agreement may be modified by a judge in any proceeding to enforce this Agreement, so that such provision can be enforced to the maximum extent permitted by law. If any provision of this Agreement is found to be invalid or unenforceable for any reason, it shall not affect the validity of the remaining provisions of this Agreement.

 

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J. Injunctive Relief, Damages and Forfeiture.

 

Due to the nature of Executive’s position with Rural/Metro, and with full realization that a violation of Sections 10 and 11 will cause immediate and irreparable injury and damage, which is not readily measurable, and to protect Rural/Metro’s interests, Executive understands and agrees that in addition to instituting legal proceedings to recover damages resulting from a breach of this Agreement, Rural/Metro may seek to enforce this Agreement with a court action for injunctive relief, to cease or prevent any actual or threatened violation of this Agreement on the part of Executive. In any action brought pursuant to this Section 11J, the prevailing party shall be entitled to an award of his or its attorneys’ fees and costs.

 

K. Survival.

 

The provisions of this Section 11 shall survive the termination of this Agreement.

 

L. Payment.

 

In consideration of the enhanced noncompete provisions set forth herein, the Company hereby agrees to make a payment of $1,500,000 to Executive on the first business day of January 2005.

 

12. BUSINESS EXPENSES.

 

Rural/Metro will reimburse Executive for any and all necessary, customary, and usual expenses, properly receipted in accordance with Rural/Metro’s policies, incurred by Executive on behalf of Rural/Metro.

 

13. AMENDMENTS.

 

This Agreement, the Executive’s Indemnity Agreement, Stock Option Agreements and the Executive’s Change of Control Agreement constitute the entire agreement between the parties as to the subject matter hereof, and all prior Employment Agreements are being terminated as of the Effective Date. Accordingly, there are no side agreements or verbal agreements other than those which are stated above. Any amendment, modification or change in this Agreement must be done so in writing and signed by both parties. Nothing in this Agreement is intended to alter or modify Executive’s Change of Control Agreement, Indemnity Agreement or Stock Option Agreements, which shall continue in full force and effect following the execution of this Agreement. Notwithstanding the foregoing, however, the parties hereby agree to the following conforming amendments to Executive’s Change of Control Agreement: (i) the cross-reference to “paragraph 7A of your Employment Agreement” in Section 8(f) of the Change of Control Agreement is hereby deleted and replaced with the cross-reference to “paragraph 6A of your Employment Agreement;” and (ii) the final sentence of Section 4 of the Change of Control Agreement is hereby deleted and replaced with the following sentence: “The “Severance Period” shall equal the “Benefit Period” as defined in Section 8 of your Employment Agreement, but not less than two years for purposes of this Agreement.”

 

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14. SEVERABILITY.

 

In the event a court or arbitrator declares that any provision of this Agreement is invalid or unenforceable, it shall not affect or invalidate any of the remaining provisions. Further, the court shall have the authority to re-write that portion of the Agreement it deems unenforceable, to make it enforceable.

 

15. GOVERNING LAW.

 

The law of the State of Arizona shall govern the interpretation and application of all of the provisions of this Agreement.

 

16. DISPUTE RESOLUTION.

 

A. Mediation.

 

Any and all disputes arising under, pertaining to or touching upon this Agreement or the statutory rights or obligations of either party hereto, shall, if not settled by negotiation, be subject to non-binding mediation before an independent mediator selected by the parties pursuant to Section 16D. Notwithstanding the foregoing, both Executive and Rural/Metro may seek preliminary judicial relief if such action is necessary to avoid irreparable damage during the pendency of the proceedings described in this Section 16. Any demand for mediation shall be made in writing and served upon the other party to the dispute, by certified mail, return receipt requested, at the business address of Rural/Metro, or at the last known residence address of Executive, respectively. The demand shall set forth with reasonable specificity the basis of the dispute and the relief sought. The mediation hearing will occur at a time and place convenient to the parties in Maricopa County, Arizona, within thirty (30) days of the date of selection or appointment of the mediator. Each party shall bear its own attorneys fees in connection with any mediation, and the cost of any mediation shall be split equally between the parties.

 

B. Arbitration.

 

In the event that the dispute is not settled through mediation, the parties shall then proceed to binding arbitration before a single independent arbitrator selected pursuant to Section 16D. The mediator shall not serve as arbitrator. TO THE EXTENT ALLOWABLE UNDER APPLICABLE LAW, ALL DISPUTES INVOLVING ALLEGED UNLAWFUL EMPLOYMENT DISCRIMINATION, BREACH OF CONTRACT, OR EMPLOYMENT TORT COMMITTED BY RURAL/METRO OR A REPRESENTATIVE OF RURAL/METRO,

 

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INCLUDING CLAIMS OF VIOLATIONS OF FEDERAL OR STATE DISCRIMINATION STATUTES OR PUBLIC POLICY, SHALL BE RESOLVED PURSUANT TO THIS AGREEMENT AND THERE SHALL BE NO RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL. The arbitration hearing shall occur at a time and place convenient to the parties in Maricopa County, Arizona, within thirty (30) days of selection or appointment of the arbitrator. If Rural/Metro has adopted a policy that is applicable to arbitrations with executives, the arbitration shall be conducted in accordance with said policy to the extent that the policy is consistent with this Agreement and the Federal Arbitration Act, 9 U.S.C. §§ 1-16. If no such policy has been adopted, the arbitration shall be governed by the National Rules for the Resolution of Employment Disputes of the American Arbitration Association (“AAA”) in effect on the date of the first notice of demand for arbitration. The arbitrator shall issue written findings of fact and conclusions of law, and an award, within thirty (30) days of the date of the hearing unless the parties otherwise agree.

 

C. Damages.

 

In cases of breach of contract, damages shall be limited to contract damages. In cases of discrimination claims prohibited by statute, the arbitrator may direct payment consistent with the applicable statute. In cases of employment tort, the arbitrator may award punitive damages if proved by clear and convincing evidence. Issues of procedure, arbitrability, or confirmation of award shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16, except that Court review of the arbitrator’s award shall be that of an appellate court reviewing a decision of a trial judge sitting without a jury. Each party shall bear its own attorneys fees, and the cost of any arbitration shall be split equally between the parties.

 

D. Selection of Mediators or Arbitrators.

 

The parties shall select the mediator or arbitrator from a panel list made available by the AAA. If the parties are unable to agree to a mediator or arbitrator within thirty (30) days of receipt of a demand for mediation or arbitration, the mediator or arbitrator will be chosen by alternatively striking from a list of five (5) mediators or arbitrators obtained by Rural/Metro from AAA. Executive shall have the first strike.

 

17. MISCELLANEOUS.

 

A. Non-Waiver.

 

The failure in any one or more instances of a party to insist upon performance of any of the terms, covenants or conditions of this Agreement, to exercise any right or privilege conferred in this Agreement, or the

 

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waiver by said party of any breach of any of the terms, covenants or conditions of this Agreement, shall not be construed as a subsequent waiver of any such terms, covenants, conditions, rights or privileges, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.

 

B. Construction; Counterparts.

 

This Agreement shall be construed fairly as to both parties and not in favor of or against either party, regardless of which party prepared the Agreement. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original, and all such counterparts shall constitute but one instrument.

 

C. Successors and Assigns.

 

This Agreement shall be binding upon Rural/Metro’s successors and assigns, but may not be assigned by Executive.

 

D. Notices.

 

All notices required or permitted to be given hereunder shall be deemed given when delivered in person, or three (3) business days after being placed in the hands of a courier service (e.g., DHL or Federal Express) prepaid or faxed provided that a confirming copy is delivered forthwith as herein provided, addressed, when to Executive, at the last known mailing address in Rural/Metro’s human resources files, and, when to Rural/Metro, at the mailing address of the corporate headquarters and to the attention of Rural/Metro’s Corporate Secretary, and/or to such other respective addresses and/or addressees as may be designated by notice given in accordance with the provisions of this Section.

 

[Signature Page Immediately Follows]

 

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IN WITNESS WHEREOF, Rural/Metro and Executive have executed this Agreement.

 

EXECUTIVE

 

RURAL/METRO CORPORATION

/s/ Jack Brucker


 

By:

 

/s/ Mary Anne Carpenter


Jack Brucker

 

 

 

Mary Anne Carpenter

 

 

 

 

Chairman, Compensation Committee

December     , 2004

 

 

 

December     , 2004

 

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EX-10.1 2 dex101.htm AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT

Exhibit No. 10.1

AMENDMENT NO. 1

to

EMPLOYMENT AGREEMENT

This Amendment No. 1 (this “Amendment”) is dated effective February 8, 2008 by and between Jack E. Brucker (“Executive”) and Rural/Metro Corporation (“Rural/Metro”), and amends the Employment Agreement between the parties dated effective January 1, 2005 (the “Original Agreement”).

 

 

1.

Reason for this Amendment. The parties acknowledge and agree that it is in their mutual interest to modify the Original Agreement in recognition of the provisions of Section 409A of the Internal Revenue Code and to address certain other matters as set forth herein.

 

 

2.

Specific changes to the Original Agreement.

 

 

a.

The following provision shall be added as a new fourth paragraph to Section 8 of the Original Agreement:

“Notwithstanding anything in this Agreement to the contrary, if Executive is a “specified employee,” within the meaning of Section 409A of the Internal Revenue Code (the “Code”) and the regulations thereunder, and is subject to the provisions of Section 409A(a)(2)(B) of the Code (or any comparable successor provision) at the time Executive’s employment is terminated, the total amount of Severance Benefits (including continuation of Base Salary and any provision of insurance benefits) that may be paid to Executive during the first six months following Executive’s termination of employment may not exceed the amount set forth in Treasury Regulation section 1.409A-1(b)(9)(iii)(A). Any amount of Severance Benefits that would otherwise have been paid to Executive during such six-month period under the terms of this Agreement shall be paid to Executive on the first day of the seventh month following termination of Executive’s employment. Further, no Severance Benefits will be paid to Executive unless (and until) Executive’s termination of employment qualifies as a “separation from service” as such term is defined for purposes of Section 409A of the Code.”


 

b.

The last two sentences of the third paragraph of Section 8 of the Original Agreement are hereby deleted and replaced with the following two sentences:

“The Benefit Allowance shall be paid on a monthly basis. The cost of providing the unavailable benefit to a similarly situated employee will be determined by Rural/Metro in the exercise of its discretion.”

 

 

c.

To reflect the previous agreement of the parties to conform the Original Agreement to the Management Incentive Plan as adopted effective July 1, 2007, the first row of the chart in the second paragraph of Section 2 of the Original Agreement is hereby deleted.

 

 

d.

The following language is hereby added to the end of Section 9.A of the Original Agreement:

“Notwithstanding anything herein to the contrary, exclusion of Executive from receiving awards or otherwise participating in the 2008 Incentive Stock Plan will not constitute Good Reason or otherwise create a breach of this Agreement (including in particular this Section 9.A) by Rural/Metro.”

 

 

3.

Miscellaneous. Except as set forth in this Amendment, the Original Agreement remains in full force and effect. Capitalized terms used but not defined in this Amendment shall have the meaning set forth in the Original Agreement. The terms and conditions of this Amendment shall prevail in the event of inconsistency between this Amendment and the Original Agreement, if any.

IN WITNESS WHEREOF, Rural/Metro and Executive have executed this Amendment.

 

EXECUTIVE

 

 

RURAL/METRO CORPORATION

/s/ Jack E. Brucker

 

 

By:

 

/s/ Conrad A. Conrad

Jack E. Brucker

 

 

Conrad A. Conrad

Chief Executive Officer and President

 

 

Member, Compensation Committee

 

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