Exhibit No. 10.6(a)

 

LOGO [g18077img_ruralmetro.jpg]   

Rural/Metro

Corporation

   The premier provider of
health and safety solutions.      

June 15, 1998

Mr. Kurt Krumperman

c/o Rural/Metro Corporation

8401 East Indian School Road

Scottsdale, Arizona 85251

Change of Control Agreement

Dear Kurt:

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

Please bear in mind that these benefits are being offered only to a few,
selected employees and we accordingly ask that you refrain from discussing this
special program with others. Also, please note that the special benefits package
described below will only be effective if you sign the extra copy of this Change
of Control Agreement (the “Agreement”) which is enclosed and return it to me on
or before June 30, 1998.

 

  1. TERM OF AGREEMENT.

This Agreement is effective immediately and will continue in effect as long as
you are actively employed by Rural/Metro, unless you and Rural/Metro agree in
writing to its termination.

 

  2. SEVERANCE PAYMENT.

If your employment with the Company is terminated without “Cause” (as defined in
Section 8) within two years following a Change of Control, you will receive the
“Severance Payment” described below. The Severance Payment also will be payable
if you terminate your employment for “Good Reason” (as defined in Section 7)
within two years following a Change of Control.

The “Severance Payment” is a lump sum payment equal to the sum of: (a) 150% of
your annualized base salary as of the day on which the Change of Control occurs;
plus (b) 150% of an amount equal to the incentive compensation paid or payable
to you pursuant to our Management Incentive Program on account of performance
during the calendar year immediately preceding the

 

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8401 E. Indian School Rd. Scottsdale, Arizona 85251

Phone (602) 994-3886 Fax (602) 481 -3328

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Kurt Krumperman

June 15, 1998

Page 2

 

calendar year in which the Change of Control occurs plus any other bonuses or
incentive compensation paid or payable to you for such year; less (c) the full
amount of any payments to which you may be entitled due to your termination
pursuant to the terms of your “Employment Agreement” (as defined in Section 20),
any applicable law, or otherwise.

The Severance Payment will be paid in one lump sum within five days following
your termination of employment.

The Severance Payment will not be payable if your employment is terminated for
Cause, if you terminate your employment without Good Reason, or if your
employment is terminated by reason of your “Disability” (as defined in
Section 10(d)) or your death. In addition, the Severance Payment will not be
payable if your employment is terminated by you or the Company for any or no
reason before a Change of Control occurs or more than two years after a Change
of Control has occurred.

In order to receive the Severance Payment, you must execute any release
reasonably requested by Rural/Metro of claims that you may have pursuant to this
Agreement (but not any other claims).

The Severance Payment will be payable without regard to whether you look for or
obtain alternative employment following your termination of employment with the
Company.

 

  3. ACCELERATION OF OR PAYMENT FOR OPTIONS.

Except as otherwise noted below, if an agreement is entered into that will
result in a Change of Control, before the Change of Control occurs the “Senior
Committee” will accelerate the exercisability of any options you hold to acquire
Company stock pursuant to the Rural/Metro Corporation 1992 Stock Option Plan
(the “1992 Plan”) that, pursuant to their terms, are not yet exercisable (the
“Existing Options”). For this purpose, the “Senior Committee” is the “Senior
Committee” established pursuant to the 1992 Plan.

The Senior Committee will not be obligated to accelerate the exercisability of
Existing Options (although it may if it so chooses) if any party to the
agreement expressly indicates, in a writing addressed to the Senior Committee,
that it intends to use pooling of interest accounting for all or any part of the
transaction and the Senior Committee, based on the advice of its advisors,
concludes (a) that pooling of interests accounting is available to such party
for all or any portion of the transaction, and (b) that the availability of
pooling of interests accounting will be jeopardized if the Senior Committee
accelerates the exercisability of the Existing Options.

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Kurt Krumperman

June 15, 1998

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If you are employed by the Company on the day on which a Change of Control
occurs and at that time you hold any Existing Options that are not accelerated
pursuant to the preceding paragraphs, you may be entitled to receive a special
“Option Payment”.

The Option Payment will only be payable if all of the following conditions are
met: (a) you are employed by the Company on the day on which the Change of
Control occurs; (b) the exercisability of the Existing Options is not
accelerated by action of the Senior Committee or otherwise on a basis that
allows you to exercise your options prior to the Change of Control; (c) the
Existing Options are not replaced by other options on the stock of the acquirer
(the “Replacement Options”), which the Senior Committee, as constituted
immediately prior to the Change of Control, in its discretion, determines to be
comparable; and (d) Rural/Metro does not continue as a publicly held corporation
required to be registered pursuant to the provisions of the Securities Exchange
Act of 1934 following the Change of Control, or if Rural/Metro does continue as
a registered publicly held corporation, the Senior Committee, as constituted
immediately prior to the Change of Control, determines, in its discretion, that
Rural/Metro has undergone a fundamental change such that the value of the
Existing Options after the Change of Control is less than 75% of the value of
the Existing Options prior to the Change of Control.

While the Senior Committee has the discretion to determine whether Replacement
Options are “comparable” to Existing Options for purposes of clause (c) of the
preceding paragraph, it may not consider Replacement Options to be comparable to
Existing Options unless, at a minimum, the Replacement Options are exercisable
as rapidly as the Existing Options and the Replacement Options are structured to
preserve the aggregate positive spread between the aggregate exercise price for
the Existing Options and the aggregate “Deal Value” of the Rural/Metro stock
subject to the Existing Options.

For purposes of this Section, the “Deal Value” of the Rural/Metro stock is the
value placed on the Rural/Metro stock by the parties for purposes of the
transaction that results in the Change of Control. If no single transaction
results in the Change of Control, or if the parties to such transaction do not
expressly agree to a value to be assigned to the Rural/Metro stock for purposes
of such transaction, the Deal Value of the Rural/Metro stock shall be the value
that the Senior Committee determines to be the inherent value of the Rural/Metro
stock as of the date on which the Change of Control occurs.

For purposes of clause (d) of the third paragraph of this Section, the Senior
Committee may use any option pricing model it chooses to compare the value of
the Existing Options before and after the Change of Control.

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Kurt Krumperman

June 15, 1998

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The Option Payment for each share of stock subject to an Existing Option will be
an amount equal to the Deal Value of the Rural/Metro stock less the option price
for such share as designated in the relevant option agreement.

The Option Payment for all shares subject to an Existing Option shall be paid in
one lump sum within 30 days following the occurrence of the last event that
entitles you to receive the Option Payment. Any option for which an Option
Payment is made will be automatically canceled upon payment of the Option
Payment.

The Option Payment will only be made for “Existing Options”. As a result, no
Option Payment will be made with respect to an option that is exercisable prior
to the day on which the Change of Control occurs, since the term “Existing
Option” does not include exercisable options.

Any determinations made in good faith by the Senior Committee for purposes of
this Agreement shall be final and binding on all parties.

 

  4. BENEFITS CONTINUATION.

If your employment is terminated by the Company without Cause, or if you
terminate your employment for Good Reason, within two years following a Change
of Control, you will continue to receive life, disability, accident and group
health insurance benefits substantially similar to those which you were
receiving immediately prior to your termination of employment for a period of
eighteen (18) months following your termination of employment. Such benefits
shall be provided on substantially the same terms and conditions as they were
provided prior to the Change of Control.

The Company does not intend to provide duplicative benefits. As a result,
benefits otherwise receivable pursuant to this Section shall be reduced or
eliminated if and to the extent that you receive such benefits pursuant to your
Employment Agreement.

Benefits otherwise receivable pursuant to this Section also shall be reduced or
eliminated if and to the extent that you receive comparable benefits from any
other source (for example, another employer).

 

  5. INCENTIVE COMPENSATION.

If you are employed by the Company on the day on which a Change of Control
occurs, the incentive compensation to which you will be entitled under the
Management Incentive Program

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Kurt Krumperman

June 15, 1998

Page 5

 

for the calendar year in which the Change of Control occurs will equal at least
the “Minimum Incentive Compensation Amount”. The “Minimum Incentive Compensation
Amount” will equal the incentive compensation to which you would have been
entitled if the year were to end on the day on which the Change of Control
occurs, based upon performance up to that date. In measuring financial
performance, financial results through the date of the Change of Control will be
annualized.

 

  6. CHANGE OF CONTROL DEFINED.

For purposes of this Agreement, the term Change of Control shall mean and
include any one or more of the following transactions or situations:

(a) A sale, transfer, or other disposition by Rural/Metro through a single
transaction or a series of transactions of securities of Rural/Metro
representing 30% or more of the combined voting power of Rural/Metro’s then
outstanding securities to any “Unrelated Person” or “Unrelated Persons” acting
in concert with one another. For purposes of this Section, the term “Person”
shall mean and include any individual, partnership, joint venture, association,
trust, corporation, or other entity (including a “group” as referred to in
Section 13(d)(3) of the Securities Exchange Act of 1934 (the “Act”)). For
purposes of this Section, the term “Unrelated Person” shall mean and include any
Person other than: Rural/Metro, a wholly-owned subsidiary of Rural/Metro, or an
employee benefit plan of Rural/Metro.

(b) A sale, transfer, or other disposition through a single transaction or a
series of transactions of all or substantially all of the assets of Rural/Metro
to an Unrelated Person or Unrelated Persons acting in concert with one another.

(c) A change in the ownership of Rural/Metro through a single transaction or a
series of transactions such that any Unrelated Person or Unrelated Persons
acting in concert with one another become the “Beneficial Owner”, directly or
indirectly, of securities of Rural/Metro representing at least 30% of the
combined voting power of Rural/Metro’s then outstanding securities. For purposes
of this Section, the term “Beneficial Owner” shall have the same meaning as
given to that term in Rule 13d-3 promulgated under the Act, provided that any
pledgee of voting securities shall not be deemed to be the Beneficial Owner
thereof prior to its acquisition of voting rights with respect to such
securities.

(d) Any consolidation or merger of Rural/Metro with or into an Unrelated Person,
unless immediately after the consolidation or merger the holders of the common
stock of Rural/Metro immediately prior to the consolidation or merger are the
Beneficial Owners of securities of the surviving corporation representing at
least 50% of the combined voting power of the surviving corporation’s then
outstanding securities.

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Kurt Krumperman

June 15, 1998

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(e) During any period of two (2) years, individuals who, at the beginning of
such period, constituted the Board of Directors of Rural/Metro cease, for any
reason, to constitute at least a majority thereof, unless the election or
nomination for election of each new director was approved by the vote of at
least two-thirds (2/3rds) of the directors then still in office who were
directors at the beginning of such period.

(f) A change in control of Rural/Metro of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Act, or any successor regulation of similar import, regardless of
whether Rural/Metro is subject to such reporting requirement.

Notwithstanding any provision herein to the contrary, the filing of a proceeding
for the reorganization of Rural/Metro under Chapter 11 of the Federal Bankruptcy
Code or any successor or other statute of similar import shall not be deemed to
be a Change of Control for purpose of this Agreement.

 

  7. GOOD REASON DEFINED.

For purposes of this Agreement, “Good Reason” shall mean any one or more of the
following:

(a) The assignment to you of any duties which are inconsistent with, or the
reduction of powers or functions associated with, your positions, duties,
responsibilities and status with Rural/Metro, or a change in your reporting
responsibilities, or in the conditions of your employment; provided that a
single reduction by Rural/Metro of less than 10% (or aggregate reductions
totaling less than 10%) in your base salary as in effect on the date hereof or
as the same may be increased as provided in your Employment Agreement is
permissible and shall not constitute “Good Reason”.

(b) The failure of Rural/Metro to cause any successor to expressly assume and
agree to perform this Agreement pursuant to Section 11 hereof.

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Kurt Krumperman

June 15, 1998

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(c) Any purported termination by Rural/Metro of your employment that is not
effected by a Notice of Termination pursuant to Subsection 10 below and/or for
grounds not constituting Cause.

(d) Rural/Metro relieving you of your duties.

(e) Rural/Metro requiring you to relocate, without your express written consent
to an employment location which is more than 50 miles from your employment
location on the date of the Change of Control.

 

  8. CAUSE DEFINED.

For purposes of this Agreement, the term “Cause” shall be given the meaning
ascribed to such term in your Employment Agreement, as it may be amended from
time to time. If no written Employment Agreement is in effect at the time of
your termination of employment, “Cause” shall be given the meaning ascribed to
it in the last written Employment Agreement that was in effect between you and
the Company that included a definition of “Cause”.

 

  9. CEILING ON BENEFITS.

The Internal Revenue Code (the “Code”) places significant tax burdens on you and
the Company if the total payments made to you due to a Change of Control exceed
prescribed limits. For example, if your limit is $300,000 and the total payments
exceed the limit by even $1.00, you are subject to an excise tax under
Section 4999 of the Code of 20% of all amounts paid to you in excess of
$100,000. If your limit is $300,000, you will not be subject to an excise tax if
you receive exactly $300,000. If you receive $301,000, you will be subject to an
excise tax of $40,000 (20% of $201,000).

In order to avoid this excise tax and the related adverse tax consequences for
the Company, by signing this Agreement, you will be agreeing that the present
value of your “Total Payments” (as defined below) will not exceed an amount
equal to two and ninety-nine hundredths (2.99) times your “Base Period Income”
(as defined below). This is the maximum amount which you may receive without
becoming subject to the excise tax imposed by Section 4999 of the Code or which
the Company may pay without loss of deduction under Section 280G of the Code.

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Kurt Krumperman

June 15, 1998

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“Base Period Income” is an amount equal to your “annualized includable
compensation” for the “base period” as defined in Sections 280G(d)(l) and (2) of
the Code and the regulations adopted thereunder. Generally, your “annualized
includable compensation” is the average of your annual taxable income from the
Company for the “base period”, which is the five calendar years prior to the
year in which the Change of Control occurs. These concepts are complicated and
technical and all of the rules set forth in the applicable regulations apply for
purposes of this Agreement.

Your “Total Payments” include the sum of the Severance Payment and any other
“payments in the nature of compensation” (as defined in Section 280G of the Code
and the regulations adopted thereunder), including the Option Payment, to or for
your benefit, the receipt of which is contingent on a Change of Control and to
which Section 280G of the Code applies.

If Rural/Metro believes that these rules will result in a reduction of the
payments to which you are entitled under this Agreement, it will so notify you
within 60 days following delivery of the “Notice of Termination” described in
Section 10. You and Rural/Metro will then, at Rural/Metro’s expense, retain
legal counsel, certified public accountants, and/or a firm of recognized
executive compensation consultants to provide an opinion or opinions concerning
whether your Total Payments exceed the limit discussed above.

Rural/Metro will select the legal counsel, certified public accountants and
executive compensation consultants. If you do not accept one or more of the
parties selected by Rural/Metro, you may provide Rural/Metro with the names of
legal counsel, certified public accountants and/or executive compensation
consultants acceptable to you. If Rural/Metro does not accept the party or
parties selected by you, the legal counsel, certified public accountants and/or
executive compensation consultants selected by you and Rural/Metro,
respectively, will select the legal counsel, certified public accountants and/or
executive compensation consultants to provide the opinions required.

At a minimum, the opinions required by this Section must set forth (a) the
amount of your Base Period Income, (b) the present value of the Total Payments
and (c) the amount and present value of any excess parachute payments.

If the opinions state that there would be an excess parachute payment, your
payments under this Agreement will be reduced to the extent necessary to
eliminate the excess. You will be allowed to choose the payment (i.e., the
Severance Payment or the Option Payment) that should be reduced or eliminated,
but the payment you choose to reduce or eliminate must be a payment determined
by such counsel to be includable in Total Payments. You will make your decision
in writing and deliver it to Rural/Metro within 30 days of your receipt of such
opinions. If you fail to so notify Rural/Metro, it will decide which payments to
reduce or eliminate.

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Kurt Krumperman

June 15, 1998

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For purposes of determining whether your “Total Payments” exceed the limitation
mentioned above, Rural/Metro and all legal counsel, certified public
accountants, and executive compensation consultants will be bound to make
certain assumptions.

The first assumption that must be made is that, except as otherwise noted below,
none of the amounts or benefits payable to you pursuant to the severance
provisions of your Employment Agreement are contingent on a Change of Control.
The only exception to this rule is that any increases in such amounts due to an
amendment to your Employment Agreement that occurs within one (1) year of the
Change of Control may be treated as contingent on the Change of Control.

The second assumption that must be made is that the vesting of your stock grants
under your Conditional Stock Grant and Repurchase Agreement is not in any way
contingent on a Change of Control.

If the legal counsel or certified public accountants selected to provide the
opinions referred to above so requests in connection with the opinion required
by this Section, a firm of recognized executive compensation consultants,
selected by you and Rural/Metro pursuant to the procedures set forth above,
shall provide an opinion, upon which such legal counsel or certified public
accountants may rely, as to the reasonableness of any item of compensation as
reasonable compensation for services rendered before or after the Change of
Control.

If Rural/Metro believes that your Total Payments will exceed the limitations of
this Section, it will nonetheless make payments to you, at the times stated
above, in the maximum amount that it believes may be paid without exceeding such
limitations. The balance, if any, will then be paid after the opinions called
for above have been received.

If the Internal Revenue Service concludes in a final determination that the
amounts paid to you exceed the limitations of this Section, as a general rule,
the excess will be treated as a loan to you by Rural/Metro and shall be
repayable on the 90th day following demand by Rural/Metro, together with
interest at the “applicable federal rate” provided in Section 1274(d) of the
Code. All or a portion of the excess will not be treated as a loan and you will
not be required to return or repay it if both of the following conditions are
met:

(a) The excess is equal to or greater than $100,000; and

(b) All or a portion of the excess is attributable to a determination by the IRS
that amounts or benefits payable to you pursuant to the severance provisions of
your Employment Agreement, or the value of all or a portion of the stock grant
to which you are entitled pursuant to your Conditional Stock Grant and
Repurchase Agreement, must be treated as being

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Kurt Krumperman

June 15, 1998

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contingent on a Change of Control. If both of the conditions set forth in the
preceding sentence are satisfied, you may retain the portion of the excess that
is described in clause (b) of the preceding sentence. The balance of the excess
will be treated as a loan and will be repayable as described above.

If you are not required to return all or a portion of an excess payment pursuant
to the preceding paragraph, Rural/Metro also will make a special cash payment to
you equal to twenty percent (20%) of the amount by which your Total Payments
exceed your Base Period Income, as determined prior to the making of the cash
payment.

In the event that the provisions of Sections 280G and 4999 of the Code are
repealed without succession, this Section shall be of no further force or
effect.

 

  10. TERMINATION NOTICE AND PROCEDURE.

Any termination by the Company or you of your employment shall be communicated
by written Notice of Termination to you if such Notice of Termination is
delivered by the Company and to the Company if such Notice of Termination is
delivered by you, all in accordance with the following procedures:

(a) The Notice of Termination shall indicate the specific termination provision
in this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances alleged to provide a basis for termination.

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

(c) If the Company shall furnish a Notice of Termination for Cause and you in
good faith notify the Company that a dispute exists concerning such termination
within the 15 day period following your receipt of such notice, you may elect to
continue your employment during such dispute. If it is thereafter determined
that (i) Cause did exist, your “Termination Date” shall be the earlier of
(A) the date on which the dispute is finally determined, either by mutual
written agreement of the parties or pursuant to the alternative dispute
resolution provisions of Section 17 or (B) the date of your death, or (ii) Cause
did not exist, your employment shall continue as if the Company had not
delivered its Notice of Termination and there shall be no Termination Date
arising out of such notice.

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

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Kurt Krumperman

June 15, 1998

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within the 15-day period following your receipt of such notice, you may elect to
continue your employment during such dispute. The dispute relating to the
existence of a Disability shall be resolved by the opinion of the licensed
physician selected by Rural/Metro; provided, however, that if you do not accept
the opinion of the licensed physician selected by Rural/Metro, the dispute shall
be resolved by the opinion of a licensed physician who shall be selected by you;
provided further, however, that if Rural/Metro does not accept the opinion of
the licensed physician selected by you, the dispute shall be finally resolved by
the opinion of a licensed physician selected by the licensed physicians selected
by Rural/Metro and you, respectively. If it is thereafter determined that (i) a
Disability did exist, your Termination Date shall be the earlier of (A) the date
on which the dispute is resolved or (B) the date of your death, or (ii) a
Disability did not exist, your employment shall continue as if the Company had
not delivered its Notice of Termination and there shall be no Termination Date
arising out of such notice. For purposes of this Agreement, “Disability” shall
be given the meaning ascribed to such term in your Employment Agreement at the
time the Disability determination is being made. If there is no Employment
Agreement that defines “Disability”, “Disability” shall mean your inability to
perform your customary duties for the Company due to a physical or mental
condition that is considered to be of long-lasting or indefinite duration.

(e) If you in good faith furnish a Notice of Termination for Good Reason and the
Company notifies you that a dispute exists concerning the termination within the
15 day period following the Company’s receipt of such notice, you may elect to
continue your employment 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 17, (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 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.

(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 the Company, the
Company will be deemed to have terminated you other than by reason of Disability
or Cause.

(g) For purposes of this Agreement, a transfer from Rural/Metro to one of its
subsidiaries or a transfer from a subsidiary to Rural/Metro or another
subsidiary shall not be treated as a termination of employment. Such a transfer
may, however, in certain circumstances, provide you with Good Reason to
terminate employment pursuant to Section 7.

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Kurt Krumperman

June 15, 1998

Page 12

 

  11. SUCCESSORS.

Rural/Metro will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of Rural/Metro or any of its subsidiaries to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
Rural/Metro or any subsidiary would be required to perform it if no such
succession had taken place. Failure of Rural/Metro to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle you to compensation in the same amount and on
the same terms to which you would be entitled hereunder if you terminate your
employment for Good Reason following a Change of Control, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Termination Date. As used in this
Agreement, “Rural/Metro” shall mean Rural/Metro as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law or otherwise.

 

  12. 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.

 

  13. NOTICE.

For purposes of this Agreement, notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed to the respective addresses
set forth on the first page of this Agreement, provided that all notices to
Rural/Metro shall be directed to the attention of the Chairman of the Board of
Rural/Metro with a copy to the Secretary of Rural/Metro, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.

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Kurt Krumperman

June 15, 1998

Page 13

 

  14. MISCELLANEOUS.

No provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by you and
the Chairman of the Board of Rural/Metro. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Arizona without regard
to its conflicts of law principles. All references to sections of the Securities
Exchange Act of 1934 or the Code shall be deemed also to refer to any successor
provisions to such sections. Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law.
The obligations of the Company that arise prior to the expiration of this
Agreement shall survive the expiration of the term of this Agreement.

 

  15. 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.

 

  16. 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.

 

  17. ALTERNATIVE DISPUTE RESOLUTION.

All claims, disputes and other matters in question between the parties arising
under this Agreement shall, unless otherwise provided herein (such as in
Sections 9 and 10(d)), be resolved in accordance with the arbitration or
alternative dispute resolution provisions included in your Employment Agreement.
If no written Employment Agreement is in effect at the time of your termination
of employment, or, if the Employment Agreement in effect at the time of your
termination of employment does not include arbitration or alternative dispute
resolution provisions, all claims,

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Kurt Krumperman

June 15, 1998

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disputes and other matters in question between the parties arising under this
Agreement shall be decided by arbitration in Phoenix, Arizona, in accordance
with the Model Employment Arbitration Procedures of the American Arbitration
Association (including such procedures governing selection of the specific
arbitrator or arbitrators), unless the parties mutually agree otherwise. The
Company shall pay the costs of any such arbitration. The award by the arbitrator
or arbitrators shall be final, and judgment may be entered upon it in accordance
with applicable law in any state or Federal court having jurisdiction thereof.

 

  18. EXPENSES AND INTEREST.

If a good faith dispute shall arise with respect to the enforcement of your
rights under this Agreement or if any arbitration or legal proceeding shall be
brought in good faith to enforce or interpret any provision contained herein, or
to recover damages for breach hereof, and you are the prevailing party, you
shall recover from the Company any reasonable attorneys’ fees and necessary
costs and disbursements incurred as a result of such dispute or legal
proceeding, and prejudgment interest on any money judgment obtained by you
calculated at the rate of interest announced by Bank One, Arizona, NA from time
to time as its prime rate from the date that payments to you should have been
made under this Agreement. It is expressly provided that the Company shall in no
event recover from you any attorneys’ fees, costs, disbursements or interest as
a result of any dispute or legal proceeding involving the Company and you.

 

  19. PAYMENT OBLIGATIONS ABSOLUTE.

Rural/Metro’s obligation to pay you the compensation and to make the
arrangements in accordance with the provisions herein shall be absolute and
unconditional and shall not be affected by any circumstances; provided, however,
that Rural/Metro may apply amounts payable under this Agreement to any debts
owed to the Rural/Metro by you on your Termination Date. All amounts payable by
Rural/Metro in accordance with this Agreement shall be paid without notice or
demand. If Rural/Metro has paid you more than the amount to which you are
entitled under this Agreement, Rural/Metro shall have the right to recover all
or any part of such overpayment from you or from whomsoever has received such
amount.

 

  20. EFFECT ON EMPLOYMENT AGREEMENT.

This Agreement supplements, and does not replace, your Employment Agreement, as
it may be amended or replaced from time to time (the “Employment Agreement”).
You will be

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Kurt Krumperman

June 15, 1998

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entitled to receive all amounts due to you pursuant to your Employment
Agreement, but some payments under your Employment Agreement may reduce your
Severance Payments as provided in Section 2 and benefits due pursuant to your
Employment Agreement may reduce the benefits due pursuant to Section 4. In
addition, the IRS may consider payments under your Employment Agreement as part
of your Total Payment, which could result in a reduction in payments as provided
in Section 9. If there is any conflict between the provisions of this Agreement
and your Employment Agreement, the provisions of this Agreement shall control.

 

  21. ENTIRE AGREEMENT.

This Agreement, your Employment Agreement and the Stock Option Agreements set
forth the entire agreement between you and the Company concerning the subject
matter discussed in such agreements and supersede all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether written or oral, by any officer, employee or representative
of the Company. Any prior agreements or understandings with respect to the
subject matter set forth in the aforementioned agreements are hereby terminated
and canceled.

 

  22. DEFERRAL OF PAYMENTS.

To the extent that any payment under this Agreement, when combined with all
other payments received during the year that are subject to the limitations on
deductibility under Section 162(m) of the Code, exceeds the limitations on
deductibility under Section 162(m) of the Code, such payment shall, in the
discretion of Rural/Metro, be deferred to the next succeeding calendar year.
Such deferred amounts shall be paid no later than the 60th day after the end of
such next succeeding calendar year, provided that such payment, when combined
with any other payments subject to the Section 162(m) limitations received
during the year, does not exceed the limitations on deductibility under
Section 162(m) of the Code.

 

  23. PARTIES.

This Agreement is an agreement between you and Rural/Metro. In certain cases,
though, obligations imposed upon Rural/Metro may be satisfied by a Rural/Metro
subsidiary. Any payment made or action taken by a Rural/Metro subsidiary shall
be considered to be a payment made or action taken by Rural/Metro for purposes
of determining whether Rural/Metro has satisfied its obligations under this
Agreement.

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Kurt Krumperman

June 15, 1998

Page 16

 

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,

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Jack Brucker Chief Operating Officer Rural/Metro Corporation

Enclosure

ACCEPTANCE

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

 

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Kurt Krumperman