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EXHIBIT 10.6
RURAL/METRO CORPORATION
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is made as of the Grant Date, as set
forth on the attached Exhibit A, by and between RURAL/METRO CORPORATION, a
Delaware corporation (the "Company"), and the person named as the Optionholder
(the "Optionholder") on the attached Exhibit A.
Optionholder is a key person associated with the Company, and the
Company considers it desirable and its best interest that Optionholder be given
an inducement to acquire a proprietary interest in the Company and added
incentive to advance the interest of the Company by possessing an option to
purchase the Company's Common Stock, all in accordance with the Rural/Metro
Corporation 1992 Stock Option Plan (the "Plan"), a copy of which is attached as
Exhibit B. For purposes of this Agreement, the term "Company" includes any
parent or subsidiary of the Company as defined in Section 424 of the Code.
NOW, THEREFORE, it is agreed by and between the parties as follows:
1. Grant of Option. The Company hereby grants to Optionholder, as of
the grant date (the "Grant Date") specified in the attached Exhibit A, the
right, privilege and option ("Option") to purchase shares of Stock as set forth
on the attached Exhibit A (the "Optioned Shares"), subject in all respects to
the terms, conditions and provisions of this Agreement and the Plan, which is
attached hereto as Exhibit B and incorporated by reference in this Agreement.
The Optionholder acknowledges having received and carefully reviewed a copy of
the Plan. It is set forth in Exhibit A whether or not the Option is intended to
be an Incentive Stock Option as defined in Section 422 of the Code.
2. Option Price. The option price (the "Option Price") as determined
by the Plan Administrator is set forth on the attached Exhibit A, which price
has been determined by the Plan Administrator to be not less than 100% of the
fair market value (as determined under the Plan) per share of the Stock on the
Grant Date of this Option if the Option is an Incentive Stock Option (110% if
the Option is an Incentive Stock Option and the Optionholder is a shareholder
who at the Grant Date owns stock possessing more than 10% of the combined voting
power of all classes of stock of the Company or any parent or subsidiary of the
Company).
3. Vesting of Option.
(a) Vesting Schedule. The Optionholder's ability to exercise
the Option shall vest in accordance with the vesting schedule set forth on
Exhibit A hereto.
(b) $100,000 Limitation. To the extent that the aggregate fair
market value (determined as of the Grant Date) of Common Stock with respect to
which an Incentive Stock Option is granted becomes exercisable for the first
time during any calendar year (under this Agreement and any other agreement
between the Company and Optionholder) exceeds $100,000, the portion of the
Option representing such excess value shall be treated as a Non-Qualified Stock
Option.
(c) Acceleration. The Plan Administrator may, by resolution
adopted after the Grant Date in its sole and absolute discretion, allow the
Option to be exercised on an accelerated basis.
(d) Full Vesting and Exercisability Upon Death or Disability.
The Option granted hereunder shall be fully vested and immediately exercisable
upon Optionholder's death or "disability" (as that term is defined in
Optionholder's Employment Agreement with the Company, or in
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the absence of an Employment Agreement, as defined in the Company's long-term
disability program in effect from time to time) while in the Service (as defined
in Section 6) of the Company; provided, however, that if the $100,000 limitation
relating to Incentive Stock Options (as referred to in Section 3(b)) would be
exceeded by such vesting upon death or disability, then a portion of the Option
shall be considered to be a Non-Qualified Option so that the $100,000 limitation
is not violated.
(e) Termination of Vesting. The Optionholder's rights with
respect to the portion of the Option that is not vested shall terminate upon the
termination of Optionholder's Service with the Company; provided, however, that
the Plan Administrator shall be entitled to extend the vesting period if the
Optionholder will render services to the Company as a consultant or independent
contractor.
4. Exercise of Option. The Option issued hereunder shall be
exercisable by written notice to the Company, addressed to the Company at its
principal place of business, in accordance with the terms of the Plan. Such
notice shall state the election to exercise the Option and the number of shares
with respect to which it is being exercised, and shall be signed by the
Optionholder. Such notice shall be accompanied by payment in full of the
exercise price for the number of shares being purchased. Payment may be made in
cash or by check or, if then permitted by the Plan Administrator, by tendering
duly endorsed certificates representing shares of Common Stock then owned by the
Optionholder and held for the requisite period necessary to avoid a charge to
the Company's earnings and valued at fair market value on the date of exercise.
Upon the exercise of the Option, the Company shall deliver, or cause to be
delivered, to the Optionholder a certificate or certificates representing the
shares of Common stock purchased upon such exercise as soon as practicable after
payment for those shares has been received by the Company. If the Option is
exercised pursuant to Section 10 hereof by any person other than the
Optionholder, such notice shall be accompanied by appropriate proof of the right
of such person to exercise the Option. All shares that are purchased and paid
for in full upon the exercise of the Option shall be fully paid and
non-assessable.
5. Stock Lock-up; Repurchase Right. The Optionholder hereby agrees
that, at the request of the Company, the Optionholder (or in the case of the
Optionholder's death, his or her successors as provided under the Plan) shall
agree not to sell or otherwise transfer any acquired Optioned Shares during any
stock lock-up period agreed to by the Company and any underwriter associated
with a public offering of Common Stock. Upon the proper exercise of the Option,
the Optionholder (or in the case of the Optionholder's death, his successors as
provided under Section 10) may be required to execute a stock repurchase
agreement in such form as may be required by the Plan Administrator from time to
time.
6. Termination of Option. The Option, to the extent not previously
exercised, shall terminate upon the first to occur of the date that is (a) three
months after termination of the Optionholder's Service with the Company, unless
due to disability (as defined in Section 22(e)(3) of the Code) or as otherwise
determined by the Plan Administrator or the Company's Board of Directors; (b)
one year after termination of Service due to disability or as otherwise
determined by the Plan Administrator or the Company's Board of Directors; or (c)
ten years after the Grant Date (five years after the Grant Date if the Option is
an Incentive Stock Option and the Optionholder is a shareholder who at the Grant
Date owns stock possessing more than 10% of the combined voting power of all
classes of stock of the Company or any parent or subsidiary of the Company).
Notwithstanding the foregoing, if the Optionholder's Service is terminated by
the Company for Cause (as defined in the Plan), then the Option shall thereafter
be void for all purposes. For purposes of this Agreement, unless otherwise set
forth in Exhibit A or as otherwise determined by the Plan Administrator, (i) an
Optionholder who was an employee of the Company on the Grant Date shall be
deemed to be in "Service" to the Company so long as such individual is an
employee of the Company, and (ii) if the Optionholder was a consultant or
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independent contractor to the Company on the Grant Date, the Optionholder shall
be deemed to be in "Service" to the Company so long as such individual renders
services to the Company in the capacity of an employee, consultant or
independent contractor.
7. No Privilege of Stock Ownership. The holder of the Option granted
hereunder shall not have any of the rights of a stockholder with respect to the
Optioned Shares until such Optionholder shall have exercised the Option, paid
the Option Price, and received a stock certificate for the purchased shares of
Common Stock.
8. Liability of the Company.
(a) If the Optioned Shares covered by this Agreement exceed,
as of the Grant Date, the number of shares of Common Stock that may without
stockholder approval be issued under the Plan, then this Option shall be void
with respect to such excess shares unless stockholder approval of an amendment
increasing the number of shares of Common Stock issuable under the Plan is
obtained in accordance with the applicable provisions of the Plan.
(b) The inability of the Company to obtain approval from any
regulatory body having authority deemed by the Company to be necessary to the
lawful issuance and sale of any Common Stock pursuant to this Agreement shall
relieve the Company of any liability with respect to the nonissuance or sale of
the Common Stock as to which such approval shall not have been obtained. The
Company, however, shall use its best efforts to obtain all such approvals.
9. No Employment or Service Contract. Nothing in this Agreement or
in the Plan shall confer upon the Optionholder any right to continue in the
service of the Company (or any parent or subsidiary corporation of the Company
employing or retaining Optionholder) for any period of time or to interfere with
or otherwise restrict in any way the rights of the Company (or any parent or
subsidiary corporation of the Company employing or retaining Optionholder) or
the Optionholder, which rights are hereby expressly reserved by each, to
terminate the service of Optionholder at any time for any reason whatsoever,
with or without cause.
10. Assignability. If this Option is an Incentive Stock Option,
neither this Option nor any rights or privileges conferred hereby shall be
assignable or transferable by the Optionholder other than by will or by the laws
of descent and distribution, and this Option shall be exercisable only by
Optionholder during the Optionholder's lifetime. If this Option is not an
Incentive Stock Option, unless the Optionholder has received written consent of
the Plan Administrator, neither this Option nor any rights or privileges
conferred hereby shall be assignable or transferable by the Optionholder other
than by will or by the laws of descent and distribution, and this Option shall
be exercisable only by Optionholder during the Optionholder's lifetime. Upon the
death of Optionholder, the rights of the successors to Optionholder shall be
limited as set forth in the Plan.
11. Binding Affect. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
12. Compliance With Laws and Regulations; Securities Matters.
(a) The exercise of the Option and the issuance of the Common
Stock upon such exercise shall be subject to compliance by the Company and the
Optionholder with all applicable requirements of law relating thereto and with
all applicable regulations of any stock exchange in which the shares of the
Common Stock may be listed at the time of such exercise and issuance. In
connection
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with the exercise of this Option, Optionholder shall execute and deliver to the
Company such representations in writing as may be requested by the Company in
order for it to comply with applicable requirements of federal and state
securities laws.
(b) The Option granted hereunder may be exercised by the
Optionholder only if (i) the shares of Common Stock which are to be issued upon
such exercise are registered under the Securities Act of 1933, as amended (the
"1933 Act") and any and all other applicable securities laws, or (ii) the
Company, upon advice of counsel, determines that the issuance of the shares of
Common Stock upon the exercise of the Option is exempt from registration
requirements.
(c) If the shares to be issued to the Optionholder upon the
exercise of the Option have not been registered under the 1933 Act and all other
applicable securities laws, those shares will be "restricted securities" within
the meaning of Rule 144 under the 1933 Act and must be held indefinitely without
any transfer, sale or other disposition unless (a) the shares are subsequently
registered under the 1933 Act and all other applicable securities laws, or (b)
the Optionholder obtains an opinion of counsel which is satisfactory to counsel
for the Company that the shares may be sold in reliance on an exemption from
registration requirements. In the event that the shares to be issued upon
exercise of the Option are "restricted securities," the certificates
representing shares of Common Stock issued upon exercise of an Option shall be
endorsed with a legend reading as follows:
The shares of Common Stock evidenced by this certificate have been
issued to the registered owner in reliance upon written
representations that these shares have been purchased solely for
investment. These shares may not be sold, transferred or assigned
unless in the opinion of the Company and its legal counsel such
sale, transfer or assignment will not be in violation of the
Securities Act of 1933, as amended, and the rules and regulations
thereunder.
13. Withholding Taxes; Other Deductions. The Company shall have the
right to deduct from any settlement of the Option, including the delivery or
vesting of shares (a) an amount sufficient to cover withholding as required by
law for any federal, state or local taxes, and (b) any amounts due from the
Optionholder to the Company or to any subsidiary or parent of the Company or to
take such other action as may be necessary to satisfy any such withholding or
other obligations, including withholding from any other cash amounts due or to
become due from the Company to the Optionholder an amount equal to such taxes or
obligations. Upon the exercise of the Option, the Company may also issue or
transfer the shares of Stock subject to such Option net of the number of shares
sufficient to satisfy the withholding or employment tax obligations.
14. Disposition of Optioned Shares. The Optionholder shall provide
written notification to the person who is then serving as Secretary of the
Company of any disposition of all or any portion of the Optioned Shares within
five days after such disposition. The Plan Administrator shall be entitled to
require the Optionholder to use a transfer agent designated by the Plan
Administrator for any disposition of all or any portion of the Optioned Shares.
15. Defined Terms. All capitalized terms herein which are not
otherwise defined herein shall have the same meaning ascribed to such terms in
the Plan.
16. Notices. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Company in care of the Corporate Secretary at its principal corporate
offices. Any notice required to be given or delivered to Optionholder at
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the address indicated on Exhibit A. All notices shall be deemed to have been
given or delivered upon personal delivery or upon deposit in the U.S. mail,
postage prepaid and properly addressed to the party to be notified.
17. Construction. This Agreement and the Option evidenced hereby are
made and granted pursuant to the Plan and are in all respects limited by and
subject to the express terms and provisions of the Plan. All decisions of the
Plan Administrator with respect to any question or issue arising under the Plan
or this Agreement shall be conclusive and binding on all persons having an
interest in this Option.
IN WITNESS WHEREOF the parties hereto have executed this Agreement
or caused it to be executed as of the Grant Date.
RURAL/METRO CORPORATION
By:
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Name: Xxxx X. Xxxxxxx
Its: Vice President, Financial Services
OPTIONHOLDER
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Printed Name:
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Social Security Number:
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EXHIBIT A
NAME/ADDRESS OF
OPTIONHOLDER:
GRANT DATE:
OPTION PRICE
PER SHARE:
NUMBER OF OPTIONED
SHARES SUBJECT TO
INCENTIVE STOCK OPTIONS:
NUMBER OF OPTIONED
SHARES SUBJECT TO
NON-QUALIFIED STOCK
OPTIONS:
VESTING SCHEDULE: The Optionholder's ability to exercise the Option shall vest
in accordance with the following schedule so that from each of the below-listed
vesting dates to termination of the Option, the Optionholder shall be entitled
to exercise the Option to purchase the number of additional Optioned Shares
subject to an Incentive Stock Option (ISO) and/or a Non-Qualified Stock Option
(NQSO) as specified with respect to such vesting date:
VESTING DATE ISO NQSO
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Grant Date
First Anniversary of Grant Date
Second Anniversary of Grant Date
Third Anniversary of Grant Date
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EXHIBIT B
1992 STOCK OPTION PLAN
B-1
