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Exhibit 10.16(i)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the date set forth below, by and between Rural/Metro Corporation, its
subsidiaries, affiliates, joint ventures and partnerships ("Rural/Metro") and
Xxxx Xxxxxxx ("Executive"). The Effective Date of this Agreement is October 1,
1999.
RECITALS
A. The Board of Directors of Rural/Metro believes it is in the best
interests of Rural/Metro to continue to employ Executive as Senior Vice
President and Chief Operating Officer.
B. Rural/Metro has decided to offer Executive an employment agreement,
the terms and provisions of which are set forth below.
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED AS FOLLOWS:
1. POSITION AND DUTIES.
Executive will be employed as Senior Vice President and Chief
Operating Officer of Rural/Metro and shall perform the duties of his position,
as determined by the Board of Directors and Chief Executive Officer of
Rural/Metro, in accordance with the policies, practices and bylaws of
Rural/Metro. The duties may change from time to time but initially will include,
but not be limited to, the following:
- Oversee all operational functions corporate-wide,
- Improve the efficiency and quality of the growing mix
of services by providing oversight to current staff
throughout the organization.
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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.
2. SALARY.
From the Effective Date of this Agreement through December 31,
1999, Executive's semimonthly salary will continue to be based on his
current annual compensation of Two Hundred Fifty Thousand Dollars ($250,000.00).
Beginning January 1, 2000, Executive's semimonthly salary will be based
on annual compensation of Two Hundred Eighty Thousand Dollars ($280,000.00).
Thereafter, the salary will be reviewed at least annually in accordance with
Rural/Metro's executive compensation review policies and practices, all
as determined by Rural/Metro, in its sole discretion.
3. MANAGEMENT INCENTIVE PROGRAM.
Executive shall be eligible to participate in the Rural/Metro
Management Incentive Program ("MIP") (or any other plan that is designated by
the Board as replacing the MIP) and to receive such additional compensation as
may be provided by the MIP from time to time.
4. OTHER AGREEMENTS.
Nothing in this Agreement is intended to alter or modify the
Stock Option Agreements or the Change of Control Agreement previously entered
into by the parties, which shall continue in full force and effect following the
execution of this Agreement.
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5. 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 below; or (d) either
party may serve notice on the other of its desire to terminate this Agreement at
the end of the "Initial Term" or any "Renewal Term."
The "Initial Term" of this Agreement begins on the Effective
Date and shall expire by its terms on September 30, 2001, unless sooner
terminated in accordance with the provisions of this Agreement. This Agreement
will be renewed at the end of the Initial Term for additional one-year periods
commencing on each October 1 and ending on the following September 30 (a
"Renewal Term"), unless either party serves notice of its desire not to renew or
of its desire to modify this Agreement on the other. Such notice must be given
at least thirty (30) days before the end of the Initial Term or the applicable
Renewal Term.
If Rural/Metro notifies Executive of its desire not to renew
this Agreement pursuant to this paragraph 5 and at the time of such notification
Rural/Metro does not have "Cause" to terminate this Agreement pursuant to
paragraph 6A, Executive shall be entitled to receive Severance Benefits pursuant
to paragraph 9.
If Executive notifies Rural/Metro of his desire not to renew
this Agreement pursuant to this paragraph 5 and at the time of such notification
Executive has Good Reason to terminate this
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Agreement pursuant to paragraph 7A, Executive shall be entitled to receive
Severance Benefits pursuant to paragraph 9. Executive also shall be entitled to
receive Severance Benefits pursuant to paragraph 9 if Rural/Metro proposes to
modify this Agreement pursuant to this paragraph 5 in a manner that gives rise
to Good Reason pursuant to paragraph 7A for Executive's termination of
employment and Executive rejects such proposed modifications. Severance Benefits
will not be payable pursuant to the preceding sentence if Rural/Metro rescinds
the proposed modifications and offers Executive a new agreement that does not
include any proposed modifications that give rise to Good Reason for Executive's
termination of employment.
6. 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 Rural/Metro that
Executive: (a) has been convicted of a felony involving dishonesty, fraud, theft
or embezzlement; (b) has repeatedly failed or refused, after written notice from
Rural/Metro, in a material respect to follow reasonable policies or directives
established by Rural/Metro; (c) has willfully and persistently failed, after
written notice from Rural/Metro, to attend to material duties or obligations
imposed upon him under this Agreement; (d) has performed an act or failed to
act, which, if he were prosecuted and convicted, would constitute a felony
involving
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$1,000 or more of money or property of Rural/Metro; or (e) has misrepresented or
concealed a material fact for purposes of securing employment with Rural/Metro.
Because Executive is in a position which involves great
responsibilities, Rural/Metro is not required to utilize its progressive
discipline policy.
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 by
giving thirty (30) days written notice to Executive. In the event this Agreement
and Executive's employment are terminated by Rural/Metro without Cause,
Executive shall be entitled to receive Severance Benefits pursuant to paragraph
9. Rural/Metro may place Executive on a paid administrative leave, and bar or
restrict Executives access to Rural/Metro facilities, contemporaneously with or
at any time following the delivery of the written notice to Executive.
7. TERMINATION BY EXECUTIVE.
Executive may terminate this Agreement and his employment with
or without "Good Reason" in accordance with the provisions of this paragraph 7.
A. Termination For Good Reason. Executive may terminate this
Agreement and his employment for "Good Reason" by giving written notice to
Rural/Metro within thirty (30) days, or such longer period as may be mutually
agreed to in writing by Executive and Rural/Metro, of Executive's receipt of
notice of the occurrence of any event constituting "Good Reason," as described
below.
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Executive shall have "Good Reason" to terminate this Agreement
and his employment upon the occurrence of any of the following events: (a)
Executive is demoted to a position of less stature or importance within
Rural/Metro than the position described in paragraph 1; (b) Executive is
required to relocate to an employment location that is more than 50 miles from
his employment location on the date of the execution of this Agreement; (c)
Executive's annualized 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 or unless an equal or
greater reduction applies to all executives of the same and higher level; or (d)
the potential incentive compensation (or bonus) to which Executive may become
entitled under the MIP at any level of performance by the Executive or
Rural/Metro is reduced by seventy-five percent (75%) or more as compared to any
prior year.
If Executive terminates this Agreement and his employment for
Good Reason, Executive shall be entitled to receive Severance Benefits pursuant
to paragraph 9.
B. Termination Without Good Reason. Executive also may
terminate this Agreement and his employment without Good Reason at any time by
giving thirty (30) days notice to Rural/Metro. If Executive terminates this
Agreement and his employment without Good Reason, Executive shall not be
entitled to receive Severance Benefits pursuant to paragraph 9.
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 paragraph
7A or 7B.
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8. DEATH OR DISABILITY.
This Agreement will terminate automatically on Executive's
death. Any salary 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. 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," and as a result is
unable to continue the proper performance of his duties hereunder, Executive's
employment hereunder and Rural/Metro's obligation to pay Executive's salary
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 paragraph 8 if Executive is unable, after any reasonable accommodations
required by the Americans with Disabilities Act or any applicable state 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,
whether Executive is Disabled or is suffering from a Disability (and the date as
of which Executive became Disabled) will be determined 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 (2)
physicians shall select a third (3rd) physician. The decision of the third (3rd)
physician concerning Executive's Disability then shall be binding and conclusive
on all interested parties.
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9. SEVERANCE BENEFITS.
If this Agreement and Executive's employment are
terminated without Cause by Rural/Metro pursuant to paragraph 6B prior to the
last day of the Initial Term or any Renewal Term, or if Executive elects to
terminate this Agreement for Good Reason pursuant to paragraph 7A, Executive
shall receive the "Severance Benefits" provided by this paragraph.
To the limited extent provided in paragraph 5, Executive also shall be entitled
to receive Severance Benefits if this Agreement is not renewed. In addition,
Executive shall be entitled to receive Severance Benefits if his employment is
terminated due to Disability pursuant to paragraph 8. The Severance Benefits
shall begin immediately following termination of employment and will continue to
be payable until the latest of (a) the last day of the Initial Term or the then
current Renewal Term, as the case may be; or (b) for twelve (12) months.
The Executive's "Severance Benefits" shall consist of the
continuation of the Executive's salary pursuant to paragraph 2 and the
continuation of any health, life, disability, or other insurance benefits that
Executive was receiving as of his last day of active employment. If a particular
insurance benefit may not be continued for any reason, Rural/Metro shall pay the
cash equivalent to the Executive on a monthly basis or in a single lump sum. The
amount of the cash equivalent of the benefit and whether the cash equivalent
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
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Executive. No Severance Benefits are payable in the event of Executive's death
while in the active employ of Rural/Metro.
Severance Benefits 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 paragraph 11, or the
Covenant-Not-To-Compete, as set forth in paragraph 12. Only material violations
will result in the loss of Severance Benefits. 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 thirty (30)
days after receiving written notice of said violation from Rural/Metro or unless
Executive repeats said violation at any time alter receiving said notice.
10. BENEFITS; OPTIONS.
Executive will be entitled to participate in any benefit
plans, including, but not limited to, retirement plans, stock option plans, life
insurance plans and health and dental plans available to other Rural/Metro
employees, subject to any restrictions (including waiting periods) specified in
said plans.
Executive will be eligible to participate in the
Company's Stock Option Plan. This plan entails the granting of options to
buy Rural/Metro Common Stock at the fair market value at the date of grant
(generally granted at the August Board of Director's meeting). The grant
of options is made at the discretion of the Board of Directors.
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.
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11. CONFIDENTIALITY AND 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"). Executive
promises that he will not make or retain 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
use or 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 is already disclosed to third parties and is in the public
domain or that Rural/Metro consents to be disclosed, with such consent to be in
writing. The provisions of this paragraph shall survive the termination of this
Agreement.
12. COVENANT-NOT-TO-COMPETE.
A. Interests to be Protected. The parties acknowledge that
prior to and during the term of his employment, Executive has been and will
continue to 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,
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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, its shareholders and employees.
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.
B. Devotion to Employment. Executive shall devote
substantially all his business time and best 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
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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, 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.
C. Non-Solicitation of Clients. During the term of
Executive's employment with Rural/Metro and for a period of twenty-four
(24) months after the termination of employment with Rural/Metro, 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) of Rural/Metro with whom he has worked as an employee of Rural/Metro
at any time prior to termination, or at the time of termination, for the purpose
of soliciting or selling such customer the same, similar, or related services
that he provided on behalf of Rural/Metro. This non-solicitation provision
applies even if Executive is terminated by Rural/Metro due to the cessation of
operations in any geographical service area where he was employed prior to
termination, or at the time of termination.
D. Non-Solicitation of Employees. During the term of
Executive's employment with Rural/Metro and for a period of twenty-four
(24) months after the termination of employment
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with Rural/Metro, 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, seek to hire, and/or hire any of
Rural/Metro's personnel or 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.
E. Competing Business. During the term of this Agreement and
for a period of twenty-four (24) months after the termination of employment with
Rural/Metro, 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 direct 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 time of termination. 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 has been, is,
or will be, performing the same services provided by Rural/Metro.
F. Judicial Amendment. If the scope of any provision of this
Agreement is found by the Court or arbitrator 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 or arbitrator in any
proceeding to enforce this Agreement, so that such provision can be enforced to
the maximum extent permitted by law.
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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.
G. Injunctive Relief Damages and Forfeiture. Due to the nature
of Executive's position with Rural/Metro, and with full realization that
a violation of this Agreement 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 an action for injunctive
relief, to cease or prevent any actual or threatened violation of this Agreement
on the part of Executive.
H. Survival. The provisions of this paragraph shall survive
the termination of this Agreement.
13. ENTIRE AGREEMENT; AMENDMENTS.
This Agreement, the Change of Control Agreement and any Stock
Option Agreements constitute the entire agreement between the parties as to the
subject matters dealt with in such Agreements. Accordingly, there are no side
agreements or verbal agreements other than those which are stated in this
document or in the Change of Control Agreement or any Stock Option Agreements.
Any amendment, modification or change in said Agreements must be done so in
writing and signed by both parties.
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,
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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. INDEMNITY.
Executive shall be indemnified in his position to the fullest
extent permitted or required by the laws of the State of Delaware.
17. 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 paragraph 17D. 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 paragraph 17. 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.
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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 paragraph 17D. The mediator
shall not serve as arbitrator. ALL DISPUTES INVOLVING ALLEGED UNLAWFUL
EMPLOYMENT DISCRIMINATION, BREACH OF CONTRACT OR POLICY, OR EMPLOYMENT TORT
COMMITTED BY RURAL/METRO OR A REPRESENTATIVE OF RURAL/METRO, INCLUDING CLAIMS OF
VIOLATIONS OF FEDERAL OR STATE DISCRIMINATION STATUTES OR PUBLIC POLICY, SHALL
BE RESOLVED PURSUANT TO THIS POLICY 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. Section
Section 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 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 fifteen (15) days of the date of the hearing unless the parties
otherwise agree.
C. Damages. In cases of breach of contract or policy, 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
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punitive damages if proved by clear and convincing evidence. The arbitrator may
award fees to the prevailing party and assess costs of the arbitration to the
non-prevailing party. Issues of procedure, arbitrability, or confirmation of
award shall be governed by the Federal Arbitration Act, 9 U.S.C. Section Section
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.
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 ten (10)
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.
IN WITNESS WHEREOF, Rural/Metro and Executive have executed
this Agreement on this 20th day of October, 1999.
RURAL/METRO CORPORATION
By: /s/ XXXX X. XXXXXX
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Title: President
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XXXX XXXXXXX
/s/ XXXX XXXXXXX
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