-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UrmMpJdjybYAyzyNImfOQlSYJx2yQKfAQ8hUnteBHojiVXRTnSnYnS4/6scgDuY6 oMJxBlfTFhGC7BYOsNQqXA== 0000950151-97-000071.txt : 19970222 0000950151-97-000071.hdr.sgml : 19970222 ACCESSION NUMBER: 0000950151-97-000071 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RURAL METRO CORP /DE/ CENTRAL INDEX KEY: 0000906326 STANDARD INDUSTRIAL CLASSIFICATION: LOCAL & SUBURBAN TRANSIT & INTERURBAN HWY PASSENGER TRAINS [4100] IRS NUMBER: 860746929 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-22056 FILM NUMBER: 97532402 BUSINESS ADDRESS: STREET 1: 8401 EAST INDIAN SCHOOL RD CITY: SCOTTSDALE STATE: AZ ZIP: 85251 BUSINESS PHONE: 6029443886 10-Q 1 FORM 10-Q FOR THE PERIOD ENDING 12/31/96. 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------- ---------- Commission file number 0-22056 ------- RURAL/METRO CORPORATION (Exact name of Registrant as specified in its charter) DELAWARE 86-0746929 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 8401 EAST INDIAN SCHOOL ROAD SCOTTSDALE, ARIZONA 85251 (Address of principal executive offices) (Zip Code) (602) 994-3886 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- At February 11, 1997 there were 11,861,530 shares of Common Stock outstanding, exclusive of treasury shares held by the Registrant. 2 RURAL/METRO CORPORATION INDEX TO QUARTERLY REPORT ON FORM 10-Q
Page ---- Part I. Financial Statements Item 1. Consolidated Financial Statements: Consolidated Balance Sheets 3 Consolidated Statements of Income 4 Consolidated Statements of Cash Flows 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 13 Signatures 14
3 RURAL/METRO CORPORATION CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1996 AND JUNE 30, 1996 (IN THOUSANDS)
December 31, June 30, 1996 1996 --------- --------- (unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 403 $ 1,388 Accounts receivable, net 83,388 68,642 Inventories 5,983 5,170 Prepaid expenses and other 5,976 5,710 --------- --------- Total current assets 95,750 80,910 PROPERTY AND EQUIPMENT, net 53,559 48,401 INTANGIBLE ASSETS, net 110,173 96,373 OTHER ASSETS 4,409 4,430 --------- --------- $ 263,891 $ 230,114 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 3,268 $ 4,092 Accrued liabilities 13,242 14,806 Current portion of long-term debt 11,643 6,610 --------- --------- Total current liabilities 28,153 25,508 LONG-TERM DEBT, net of current portion 77,123 60,731 NON-REFUNDABLE SUBSCRIPTION INCOME 12,731 12,582 DEFERRED INCOME TAXES 9,930 9,060 OTHER LIABILITIES 2,220 2,267 --------- --------- Total liabilities 130,157 110,148 --------- --------- STOCKHOLDERS' EQUITY Preferred stock -- -- Common stock 117 113 Additional paid-in capital 98,819 92,359 Retained earnings 37,251 30,181 Deferred compensation (1,214) (1,448) Treasury stock (1,239) (1,239) --------- --------- Total stockholders' equity 133,734 119,966 --------- --------- $ 263,891 $ 230,114 ========= =========
The accompanying notes are an integral part of these consolidated balance sheets. 4 RURAL/METRO CORPORATION CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995 (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended December 31, Six Months Ended December 31, --------------------------------- ------------------------------ 1996 1995 1996 1995 -------- -------- -------- -------- REVENUE Ambulance services $ 62,465 $ 48,053 $121,493 $ 91,457 Fire protection services 10,349 9,435 20,654 18,690 Other 4,716 3,351 9,377 6,455 -------- -------- -------- -------- Total revenue 77,530 60,839 151,524 116,602 -------- -------- -------- -------- OPERATING EXPENSES Payroll and employee benefits 41,867 33,140 82,501 63,602 Provision for doubtful accounts 10,404 7,489 20,159 14,307 Depreciation 2,918 2,354 5,651 4,492 Amortization of intangibles 1,110 857 2,200 1,686 Other operating expenses 13,757 11,660 26,947 22,362 -------- -------- -------- -------- Total expenses 70,056 55,500 137,458 106,449 -------- -------- -------- -------- OPERATING INCOME 7,474 5,339 14,066 10,153 INTEREST EXPENSE, net 1,072 1,281 2,082 2,430 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 6,402 4,058 11,984 7,723 PROVISION FOR INCOME TAXES 2,631 1,662 4,914 3,225 -------- -------- -------- -------- NET INCOME $ 3,771 $ 2,396 $ 7,070 $ 4,498 ======== ======== ======== ======== EARNINGS PER COMMON STOCK AND COMMON STOCK EQUIVALENT $ 0.31 $ 0.25 $ 0.59 $ 0.48 ======== ======== ======== ======== WEIGHTED AVERAGE NUMBER OF COMMON STOCK AND COMMON STOCK EQUIVALENTS OUTSTANDING 12,175 9,580 12,082 9,416
The accompanying notes are an integral part of these consolidated financial statements. 5 RURAL/METRO CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995 (UNAUDITED) (IN THOUSANDS)
Six Months Ended December 31, 1996 1995 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 7,070 $ 4,498 Adjustments to reconcile net income to cash used in operations - Depreciation and amortization 7,851 6,178 Amortization of deferred compensation 327 286 Amortization of gain on sale of real estate (52) (52) Provision for doubtful accounts 20,159 14,306 Change in assets and liabilities, net of effect of businesses acquired - Increase in accounts receivable (34,355) (23,599) Increase in inventories (746) (158) Increase in prepaid expenses and other (310) (1,716) Decrease in accounts payable (838) (1,653) Increase (decrease) in accrued liabilities and other (3,605) 200 Increase in nonrefundable subscription income 149 52 Increase in deferred income taxes 870 1,036 -------- -------- Net cash used in operating activities (3,480) (622) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on revolving credit facilities, net 19,600 21,600 Repayment of debt and capital lease obligations (6,488) (13,361) Borrowings of debt -- 2,016 Issuance of common stock 6,371 1,294 -------- -------- Net cash provided by financing activities 19,483 11,549 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for businesses acquired (9,284) (2,017) Capital expenditures (7,725) (9,320) (Increase) decrease in other assets 21 (220) -------- -------- Net cash used in investing activities (16,988) (11,557) -------- -------- DECREASE IN CASH AND CASH EQUIVALENT (985) (630) CASH AND CASH EQUIVALENTS, beginning of period 1,388 900 -------- -------- CASH AND CASH EQUIVALENTS, end of the period $ 403 $ 270 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. 6 RURAL/METRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. (1) INTERIM RESULTS In the opinion of management, the consolidated financial statements for the six month periods ended December 31, 1996 and 1995 include all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the consolidated financial position and results of operations for that period. The results of operations for the six month periods ended December 31, 1996 and 1995 are not necessarily indicative of the results of operations for a full fiscal year. (2) ACQUISITIONS During the six months ended December 31, 1996 the Company purchased the stock of an ambulance service provider operating in Kentucky and the assets of ambulance service providers operating in Indiana, Ohio, Kentucky, South Carolina and Georgia. The acquisitions were accounted for as purchases in accordance with Accounting Principles Board Opinion No. 16 (APB 16) and, accordingly, the purchased assets and assumed liabilities were recorded at their estimated fair values at each respective acquisition date. The aggregate purchase price consisted of the following:
(in thousands) Cash $ 9,284 Notes payable to sellers 2,276 Assumption of liabilities 8,412 ------- $19,972
The unaudited pro forma combined condensed statements of income for the fiscal year ended June 30, 1996 and the six months ended December 31, 1996 give effect to the acquisitions as if each had been consummated as of the beginning of each respective period. The pro forma combined condensed financial statements do not purport to represent what the Company's actual results of operations or financial position would have been had such transactions in fact occurred on such dates. The pro forma combined condensed statements of income also do not purport to project the results of operations of the Company for the current year or for any future period. 7 RURAL/METRO CORPORATION UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME FOR THE YEAR ENDED JUNE 30, 1996 AND FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED SIX MONTHS ENDED JUNE 30, 1996 DECEMBER 31, 1996 ----------------------- ---------------------- PROFORMA PROFORMA HISTORICAL COMBINED HISTORICAL COMBINED Revenue $250,263 $294,496 $151,524 $158,936 Net income $ 11,512 $ 14,302 $ 7,070 $ 7,679 Earnings per share $ 1.14 $ 1.36 $ 0.59 $ 0.64
Pro forma adjustments include adjustments to: (i) reflect amortization of the cost in excess of the fair value of net assets acquired; (ii) adjust payroll and related expenses for the effect of certain former owners of the acquired businesses not being employed by the Company and to reflect the difference between the actual compensation paid to officers of the businesses acquired and the lower level of aggregate compensation such individuals would have received under the terms of employment agreements executed between the Company and such individuals; (iii) adjust other operating expenses to reflect the reduction of expenses related to certain real estate and buildings not acquired and sellers' costs incurred in connection with the sale of their respective businesses; (iv) adjust interest expense to reflect interest expense related to debt issued in connection with the acquisitions; and, (v) adjust income taxes to reflect the tax effect of the adjustments and the tax effect of treating all of the acquisitions as if they had C corporation status. Subsequent to December 31, 1996, subsidiaries of the Company merged with and into an ambulance service provider operating in Pennsylvania and an ambulance service provider operating in Arkansas. The Company issued an aggregate of 361,970 shares of its common stock in exchange for all of the issued and outstanding stock of the acquired companies. The transactions were accounted for as poolings-of-interest in accordance with APB 16. 8 ITEM 2-- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company derives its revenue primarily from fees charged for ambulance and fire protection services. The Company provides ambulance services in response to emergency medical calls ("911" emergency ambulance services) and non-emergency transport services (general transport services) to patients on both a fee-for-service basis and non-refundable subscription fee basis. Per transport revenue depends on various factors, including the mix of rates between existing markets and new markets and the mix of activity between "911" emergency ambulance services and general transport services as well as other competitive factors. Fire protection services are provided either under contracts with municipalities or fire districts or on a non-refundable subscription fee basis to individual homeowners or commercial property owners. Ambulance service fees are recorded net of Medicare, Medicaid and other reimbursement limitations and are recognized when services are provided. Payments received from third-party payors represent a substantial portion of the Company's ambulance service fee receipts. Provision for doubtful accounts is made for the expected difference between ambulance services fees and amounts actually collected. The Company's provision for doubtful accounts generally is higher with respect to collections to be derived directly from patients than for collections to be derived from third-party payors and generally is higher for "911" emergency ambulance services than for general ambulance transport services. Because of the nature of the Company's ambulance services, it is necessary to respond to a number of calls, primarily "911" emergency ambulance service calls, which may not result in transports. Results of operations are discussed below on the basis of actual transports since transports are more directly related to revenue. Expenses associated with calls that do not result in transports are included in operating expenses. The percentage of calls not resulting in transports varies substantially depending upon the mix of general transport and "911" emergency ambulance service calls in the Company's markets and is generally higher in markets in which the calls are primarily "911" emergency ambulance service calls. Rates in the Company's markets take into account the anticipated number of calls that may not result in transports. The Company does not separately account for expenses associated with calls that do not result in transports. Revenue generated under fire protection services contracts is recognized over the life of the contract. Subscription fees received in advance are deferred and recognized over the term of the subscription agreement, which is generally one year. Other revenue consists primarily of fees associated with alternative transportation services and is recognized when the services are provided. Other operating expenses consist primarily of rent and related occupancy expenses, maintenance and repairs, insurance, fuel and supplies, travel and professional fees. 9 THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 1995 REVENUE Total revenue increased $16.7 million, or 27.5%, from $60.8 million for the three months ended December 31, 1995 to $77.5 million for the three months ended December 31, 1996. Approximately $9.4 million of this increase resulted from the acquisition of ambulance service providers during the last two quarters of fiscal 1996 and the first two quarters of fiscal 1997. Ambulance service revenue in markets served by the Company in both of the three month periods ended December 31, 1995 and 1996 increased by 10.4%. Fire protection services revenue increased $0.9 million, or 9.6%, from $9.4 million for the three months ended December 31, 1995 to $10.3 million for the three months ended December 31, 1996. Other revenue increased by $1.4 million, or 41.2%, in the three months ended December 31, 1996. Total ambulance transports increased by 44,000, or 25.4%, from 173,000 for the three months ended December 31, 1995 to 217,000 for the three months ended December 31, 1996. The acquisition of sixteen ambulance service companies during the last two quarters of fiscal 1996 and the first two quarters of fiscal 1997 accounted for 29,000 of these additional transports. Fire protection services revenue increased due to revenue generated from new fire protection contracts awarded to the Company through competitive bidding and due to rate increases for fire protection services. OPERATING EXPENSES Payroll and employee benefit expenses increased $8.7 million, or 26.3%, from $33.1 million for the three months ended December 31, 1995 to $41.8 million for the three months ended December 31, 1996. This increase was primarily due to the acquisition of sixteen ambulance service providers during the last two quarters of fiscal 1996 and the first two quarters of fiscal 1997. Provision for doubtful accounts increased $2.9 million, or 38.7%, from $7.5 million for the three months ended December 31, 1995 to $10.4 million for the three months ended December 31, 1996. Provision for doubtful accounts increased from 12.3% of total revenue for the three months ended December 31, 1995 to 13.4% of total revenue for the three months ended December 31, 1996, reflecting the effect of the acquisition of ambulance service providers during the second half of fiscal 1996 and the first half of fiscal 1997 operating in markets with a greater mix of "911" emergency activity. Depreciation increased $0.5 million, or 20.8%, from $2.4 million for the three months ended December 31, 1995 to $2.9 million for the three months ended December 31, 1996, primarily as a result of depreciation expense on property and equipment obtained through recent ambulance service acquisitions. Depreciation decreased from 3.9% of total revenue for the three months ended December 31, 1995 to 3.8% of total revenue for the three months ended December 31, 1996. Amortization of intangibles increased by $0.3 million, or 37.5%, from $0.8 million for the three months ended December 31, 1995 to $1.1 million for the three months ended December 31, 1996. This increase is primarily a result of intangible assets recorded in recent acquisitions. Amortization of intangibles was 1.4% of total revenue for the three month periods ended December 31, 1995 and 1996. Other operating expenses increased approximately $2.1 million, or 17.9%, from $11.7 million for the three months ended December 31, 1995 to $13.8 million for the three months ended December 31, 1996, primarily due to increased expenses associated with the operation of the sixteen ambulance service providers acquired during the last two quarters of fiscal 1996 and the first two quarters of fiscal 1997. Other operating expenses decreased from 19.2% of total revenue for the three months ended December 31, 1995 to 17.7% of total revenue for the three months ended December 31, 1996 as a result of operational efficiencies realized through the integration of these acquired companies. 10 Interest expense decreased by $0.2 million from $1.3 million for the three months ended December 31, 1995 to $1.1 million for the three months ended December 31, 1996. This decrease was attributable to lower interest rates on the Company's $125 million revolving credit facility and lower balances outstanding during the quarter as a result of the Company's April 1996 stock offering. The Company's effective tax rate increased from 41.0% for the three months ended December 31, 1995 to 41.1% for the three months ended December 31, 1996, primarily the result of increased balances of non-deductible goodwill, partially offset by the results of tax planning strategies implemented by the Company during fiscal 1996. SIX MONTHS ENDED DECEMBER 31, 1996 COMPARED TO SIX MONTHS ENDED DECEMBER 31, 1995 REVENUE Total revenue increased $34.9 million, or 29.9%, from $116.6 million for the six months ended December 31, 1995 to $151.5 million for the six months ended December 31, 1996. Approximately $20.7 million of this increase resulted from the acquisition of ambulance service providers during the last two quarters of fiscal 1996 and the first two quarters of fiscal 1997. Ambulance service revenue in markets served by the Company in both of the six month periods ended December 31, 1995 and 1996 increased by 10.2%. Fire protection services revenue increased by $2.0 million, or 10.7%, from $18.7 million for the six months ended December 31, 1995 to $20.7 million for the six months ended December 31, 1996. Other revenue increased by $2.9 million, or 44.6%, in the six months ended December 31, 1996. Total ambulance transports increased by 87,000, or 25.8%, from 337,000 for the six months ended December 31, 1995 to 424,000 for the six months ended December 31, 1996. The acquisition of sixteen ambulance service companies during the last two quarters of fiscal 1996 and the first two quarters of fiscal 1997 accounted for 65,000 of these additional transports. Fire protection services revenue increased due to revenue generated from new fire protection contracts awarded to the Company through competitive bidding and due to rate increases for fire protection services. OPERATING EXPENSES Payroll and employee benefit expenses increased $18.9 million, or 29.7%, from $63.6 million for the six months ended December 31, 1995 to $82.5 million for the six months ended December 31, 1996. This increase was primarily due to the acquisition of sixteen ambulance service providers during the last two quarters of fiscal 1996 and the first two quarters of fiscal 1997. Provision for doubtful accounts increased $5.9 million, or 41.3%, from $14.3 million for the six months ended December 31, 1995 to $20.2 million for the six months ended December 31, 1996. Provision for doubtful accounts increased from 12.3% of total revenue for the six months ended December 31, 1995 to 13.3% of total revenue for the six months ended December 31, 1996, reflecting the effect of the acquisition of ambulance service providers during the second half of fiscal 1996 and the first half of fiscal 1997 operating in markets with a greater mix of "911" emergency activity. Depreciation increased $1.2 million, or 26.7%, from $4.5 million for the six months ended December 31, 1995 to $5.7 million for the six months ended December 31, 1996, primarily as a result of depreciation expense on property and equipment obtained through recent ambulance service acquisitions. Depreciation decreased from 3.9% of total revenue for the six months ended December 31, 1995 to 3.7% of total revenue for the six months ended December 31, 1996. Amortization of intangibles increased by $0.5 million, or 29.4%, from $1.7 million for the six months ended December 31, 1995 to $2.2 million for the six months ended December 31, 1996. 11 This increase is primarily a result of intangible assets recorded in recent acquisitions. Amortization of intangibles was 1.5% of total revenue for the six months ended December 31, 1995 and 1996. Other operating expenses increased approximately $4.5 million, or 20.1%, from $22.4 million for the six months ended December 31, 1995 to $26.9 million for the six months ended December 31, 1996, primarily due to increased expenses associated with the operation of the sixteen ambulance service providers acquired during the last two quarters of fiscal 1996 and the first two quarters of fiscal 1997. Other operating expenses decreased from 19.2% of total revenue for the six months ended December 31, 1995 to 17.8% of total revenue for the six months ended December 31, 1996 as a result of operational efficiencies realized through the integration of these acquired companies. Interest expense decreased by $0.3 million from $2.4 million for the six months ended December 31, 1995 to $2.1 million for the six months ended December 31, 1996. This decrease was attributable to lower interest rates on the Company's $125 million revolving credit facility and lower balances outstanding during the quarter as a result of the Company's April 1996 Stock Offering. The Company's effective tax rate decreased from 41.8% for the six months ended December 31, 1995 to 41.0% for the six months ended December 31, 1996, primarily the result of tax planning strategies implemented by the Company during fiscal 1996. LIQUIDITY AND CAPITAL RESOURCES Historically, the Company has financed its cash requirements principally through cash flow from operating activities, term and revolving indebtedness, capital equipment lease financing, the sale of stock through an initial public offering in July 1993, subsequent public stock offerings in May 1994 and April 1996, and the on-going exercise of stock options. During the six months ended December 31, 1996 the Company used cash flow from operations of $3.5 million. This compares to cash flow used in operations of $0.6 million for the six months ended December 31, 1995. This change resulted primarily from increases in accounts receivable and inventories and a decrease in accrued liabilities. Approximately $69.6 million was outstanding on the Company's revolving credit facility at December 31, 1996. Availability on the facility was $55.4 million at December 31, 1996. During the six months ended December 31, 1996 the Company purchased the stock of an ambulance service provider operating in Kentucky and the assets of ambulance service providers operating in Indiana, Ohio, Kentucky, South Carolina and Georgia. The acquisitions were accounted for as purchases in accordance with Accounting Principles Board Opinion No. 16 (APB 16). The aggregate purchase price was $20.0 million, consisting of cash of $9.3 million, notes payable to sellers of $2.3 million and liabilities assumed of $8.4 million. The Company funded the cash portion of the acquisitions through operating cash flow and from the Company's revolving credit facility. Subsequent to December 31, 1996, subsidiaries of the Company merged with and into an ambulance service provider operating in Pennsylvania and an ambulance service provider operating in Arkansas. The Company issued an aggregate of 361,970 shares of its common stock in exchange for all of the issued and outstanding stock of the acquired companies. The transactions were accounted for as poolings-of-interest in accordance with APB 16. Subsequent to December 31, 1996, the Company made an investment of $2.5 million in National Health Enhancement Systems (NHES), a provider of medical information, technology and software products to managed care providers. The Company purchased 370,370 shares of NHES' common stock, representing approximately 7.4% of its aggregate outstanding common stock. The Company has registered 3.2 million shares of common stock for issuance in connection with acquisitions. At February 12, 1997, 1.8 million of the shares have been issued. 12 The Company expects that cash flow from operations and additional borrowing capacity will be sufficient to meet its operating and capital needs for existing operations as well as to fund certain service area expansion and acquisitions for the twelve months subsequent to December 31, 1996. The Company is engaged in an active acquisition program. The Company intends to fund any acquisitions that it consummates through the use of cash from operations, credit facilities, seller notes payable and the issuance of common stock. In addition, the Company may seek to raise additional capital through public or private debt or equity financing. The availability of these capital sources will depend upon prevailing market conditions, interest rates and the financial condition of the Company. 13 PART II -- OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10.36 Employee Stock Purchase Plan, as amended through September 6, 1996 10.45(b) First Amendment to Credit Agreement by and among Registrant as guarantor, certain of its subsidiaries as borrowers, First Union Bank of North Carolina, as agent, and various lenders, dated as of December 20, 1996 (b) Reports on Form 8-K - none 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. RURAL/METRO CORPORATION Date: February 13, 1997 By /s/ W. R. Crowell ------------------------------------- W. R. Crowell, Vice President and Principal Accounting Officer EX-10.36 2 RURAL/METRO EMPLOYEE STOCK PURCHASE PLAN 1 Exhibit 10.36 RURAL/METRO CORPORATION EMPLOYEE STOCK PURCHASE PLAN AS AMENDED THROUGH SEPTEMBER 6, 1996 ARTICLE I PURPOSE 1.1 NAME. This Stock Purchase Plan shall be known as the Rural/Metro Employee Stock Purchase Plan (the "Plan"). 1.2 PURPOSE. The Plan is intended to provide a method whereby employees of Rural/Metro Corporation, a Delaware corporation (the "Company"), and one or more of its Subsidiary Corporations will have an opportunity to acquire a proprietary interest in the Company through the purchase of shares of the Common Stock of the Company. 1.3 QUALIFICATION. It is the intention of the Company to have the Plan qualify as an "employee stock purchase plan" under section 423 of the Internal Revenue Code of 1986, as amended (the "Code"). The provisions of the Plan shall be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code. ARTICLE II DEFINITIONS 2.1 BASE PAY. "Base Pay" shall mean the estimated annual compensation of an Employee and (a) with respect to a salaried Employee, shall be based on such Employee's current annual salary and (b) with respect to a hourly Employee, shall be based on such Employee's RHE times such Employee's regular straight-time hourly rate. Shift premium, bonuses, "skill-based" pay, and other special payments, commissions (unless such commissions represent the primary source of compensation, as determined by the Committee) and other marketing incentive payments shall not be included in Base Pay. For purpose of the foregoing, "RHE" for a full time Employee shall mean the sum of (i) 2080 and (ii) 1.5 times the estimated number of overtime hours to be worked annually and "RHE" for a part-time Employee shall mean 1040. If any Offering is a six month Offering, the Base Pay shall be divided by one-half. 2.2 COMMITTEE. "Committee" shall mean the individuals described in Article XI. 2.3 EMPLOYEE. "Employee" shall mean any person who is customarily employed on a full-time or part-time basis by the Company and is regularly scheduled to work more than 20 hours per week. 2.4 PARTICIPATING COMPANY. "Participating Company" shall mean the Company, all Subsidiary Corporations listed on Exhibit A attached hereto, and such other Subsidiary Corporations as may be designated from time to time by the Board of Directors of the Company upon its decision to extend the benefits of the Plan to the eligible Employees of such Subsidiary Corporation. 1 2 2.5 STOCK. "Stock" shall mean the Common Stock of the Company, par value one cent ($.01). 2.6 SUBSIDIARY CORPORATION. "Subsidiary Corporation" shall mean any present or future corporation which would be a "subsidiary corporation" of the Company, as that term is defined in Code section 424. ARTICLE III ELIGIBILITY AND PARTICIPATION 3.1 INITIAL ELIGIBILITY. Any Employee who shall have completed 30 days of continuous employment with a Participating Company and is employed by a Participating Company on the date such Employee's participation in the Plan is to become effective shall be eligible to participate in Offerings under the Plan which commence on or after such 30 day employment period has concluded. Any Corporation which becomes a Subsidiary Corporation after the initial Offering Commencement Date shall become a Participating Company only upon the decision of the Board of Directors of the Company to designate such Subsidiary Corporation as a Participating Company and to extend the benefits of the Plan to its eligible Employees. For any Subsidiary Corporation which becomes a Participating Company in the Plan after July 1, 1994, a subsequent effective date shall be designated with respect to its participation by the eligible Employees of such Participating Company. 3.2 LEAVE OF ABSENCE. For purposes of participation in the Plan, a person on leave of absence shall be deemed to be an Employee for the first 90 days of such leave of absence and such Employee's employment shall be deemed to have terminated at the close of business on the 90th day of such leave of absence unless such Employee shall have returned to regular full-time or part-time employment (as the case may be) prior to the close of business on such 90th day. Termination by a Participating Company of any Employee's leave of absence, other than termination of such leave of absence on return to full time or part time employment, shall terminate an Employee's employment for all purposes of the Plan and shall terminate such Employee's participation in the Plan and right to exercise any option. 3.3 RESTRICTIONS ON PARTICIPATION. Notwithstanding any provisions of the Plan to the contrary, no Employee shall be granted an option to participate in the Plan: (a) if, immediately after the grant, such Employee would own stock, and/or hold outstanding options to purchase stock, possessing five percent or more of the total combined voting power or value of all classes of stock of the Company (for purposes of this paragraph, the rules of section 424(d) of the Code shall apply in determining stock ownership of any Employee); or (b) which permits such Employee's rights to purchase stock under all Employee stock purchase plans of the Company and all Participating Companies to accrue at a rate which exceeds $25,000 in fair market value of the stock (determined at the time such option is granted) for each calendar year in which such option is outstanding. 3.4 COMMENCEMENT OF PARTICIPATION. An eligible Employee may become a participant by completing the enrollment forms prescribed by the Committee (including a purchase agreement and a payroll deduction authorization) and filing such forms with the designated office of the Company prior to the Offering Commencement Date for the next scheduled Offering (as such terms are 2 3 defined below). Payroll deductions for a participant shall commence on the next scheduled Offering Commencement Date when such Employee's authorization for a payroll deduction becomes effective and shall continue in effect for the term of this Plan, except to the extent such payroll deduction is changed in accordance with this Section 3.4 or terminated in accordance with Article VIII. The participant may, at any time, increase or decrease the rate of the participant's payroll deduction by filing the appropriate form with the designated office of the Company. The new rate shall become effective as of the next applicable Offering Commencement Date. ARTICLE IV OFFERINGS 4.1 ANNUAL OFFERINGS. The Plan will be implemented by up to 10 annual offerings of the Company's Common Stock (the "Offerings") beginning on the 1st day of July in each of the years 1994 through 2003, with each Offering terminating on June 15 of the following year, provided, however, that each annual Offering may, in the discretion of the Committee exercised prior to the commencement thereof, be divided into two six-month Offerings commencing respectively, on July 1 and January 1 and terminating six months thereafter. The total number of shares issuable under the Plan shall be 150,000. As used in the Plan, "Offering Commencement Date" means the January 1 or July 1, as the case may be, on which the particular Offering begins and "Offering Termination Date" means the June 15 or December 31 as the case may be, on which the particular Offering terminates. Any decision of the Committee to adjust the number of shares in an Offering must be made prior to the Offering Commencement Date of that Offering. ARTICLE V PAYROLL DEDUCTIONS 5.1 PERCENTAGE OF PARTICIPATION. At the time an Employee files authorization for payroll deduction and becomes a participant in the Plan, the Employee shall elect to have deductions made from the Employee's pay on each payday during the time the Employee is a participant in an Offering. Such deductions shall be an amount equal to the Employee's Participation Amount divided by the number of payroll periods occurring during the Offering. An Employee's "Participation Amount" shall equal the rate of 1, 2, 3, 4, 5, 6, 7, 8, 9 or 10 percent (as elected by the Employee) times such Employee's Base Pay in effect at the Offering Commencement Date of such Offering; provided, however, that prior to any Offering Commencement Date, the Committee shall have the discretion to limit deductions to less than 10 percent (but no less than 5 percent) for any Offering. 5.2 CALCULATION OF BASE PAY. An Employee's Base Pay of the date of an Offering and whether an Employee is "part-time" shall be determined in the discretion of the Company based on the provisions of this Plan. In calculating an Employee's normal weekly rate of pay under this Section 6.1, retroactive adjustments occurring during an Offering which are retroactive to the last day prior to the Commencement Date of that particular Offering shall be taken into account. In addition, if a participant's Base Pay includes commissions, then the Committee may set such Employee's Base Pay based upon averages and standards as determined in the discretion of the Committee. 5.3 PARTICIPANT'S ACCOUNT. All payroll deductions made for a participant shall be credited to such Employee's account under the Plan. A participant may not make any separate cash payment into such account except when on leave of absence and then only as provided in Section 5.5. 3 4 5.4 CHANGES IN PAYROLL DEDUCTIONS. A participant may discontinue participation in the Plan as provided in Article VIII, but no other change can be made during an Offering and, specifically, a participant may not alter the amount of such participant's payroll deductions for that Offering. 5.5 LEAVE OF ABSENCE. If a participant goes on a leave of absence, such participant shall have the right to elect: (a) to withdraw the balance in such participant's account pursuant to Section 8.1 hereof, or (b) to discontinue contributions to the Plan but remain a participant in the Plan, or remain a participant in the Plan during such leave of absence, authorizing deductions to be made from payments by the Company to the participant during such leave of absence and undertaking to make cash payments to the Plan at the end of each payroll period to the extent that amounts payable by the Participating Company to such participant are insufficient to meet such participant's authorized Plan deductions. ARTICLE VI GRANTING OF OPTION 6.1 NUMBER OF OPTION SHARES. On each Offering Commencement Date, a participating Employee shall be deemed to have been granted an option to purchase a maximum number of shares of the Stock of the Company equal to the Participation Amount (as defined in Section 5.1 hereof) divided by the Option Price of the stock of the Company on the applicable Offering Commencement Date, determined as provided in Section 6.2 hereof. 6.2 OPTION PRICE. The Option Price of Stock purchased with payroll deductions made during each annual Offering for a participant therein shall be 85 percent of the closing price of the Stock on the Offering Commencement Date or the nearest prior business day on which trading occurred on The Nasdaq National Market. ARTICLE VII EXERCISE OF OPTION 7.1 AUTOMATIC EXERCISE. Unless a participant gives written notice to the Company as hereinafter provided, such participant's option for the purchase of stock granted under Section 6.1 hereof will be deemed to have been exercised automatically on the Offering Termination Date applicable to such Offering for the purchase of the number of full shares of Stock which the accumulated payroll deductions in such Employee's account at that time will purchase at the applicable Option Price (but not in excess of the number of shares for which options have been granted to the Employee pursuant to Section 6.1 hereof), and any excess in such Employee's account at that time will be returned to the participant. 7.2 FRACTIONAL SHARES. Fractional shares will not be issued under the Plan and any accumulated payroll deductions which would have been used to purchase fractional shares will be returned to any Employee promptly following the termination of an Offering, without interest. 7.3 TRANSFERABILITY OF OPTION. During a participant's lifetime, options held by such participant shall be exercisable only by that participant. 7.4 DELIVERY OF STOCK. As promptly as practicable after the Offering Termination Date of each Offering, the Company will deliver to each participant, as appropriate, the Stock purchased 4 5 upon exercise of such Employee's option. All Stock delivered to each participant will contain a restriction stating that such Stock is restricted from being transferred for a period of one year from the date of issuance unless the Committee otherwise consents. It is not the intention of the Committee to consent to transfers except in extraordinary situations such as upon the death of a participant. The Committee may withhold its consent to any such transfer in its absolute and sole arbitrary discretion. Any transfer in violation of the legend placed on each such stock certificate shall be void ab initio. In no event, however, shall stock be forfeited for violation of the transfer restriction. ARTICLE VIII WITHDRAWAL 8.1 IN GENERAL. At any time prior to the last five days of an Offering period, a participant may withdraw payroll deductions credited to such participant's account under the Plan by giving written notice to the designated office of the Company, which withdrawal notice shall be in form and substance as decided by the Committee. All of the participant's payroll deductions credited to the participant's account will be paid to the participant promptly after receipt of such participant's notice of withdrawal, and no further payroll deductions will be made from the participant's pay during such Offering or during any subsequent Offering unless an Employee re-enrolls as provided in Section 8.2 hereof. The Company may, at its option, treat any attempt by a participant to borrow on the security of such participant's accumulated payroll deductions as an election to withdraw such deductions. 8.2 EFFECT ON SUBSEQUENT PARTICIPATION. A participant's withdrawal from any Offering will not have any effect upon such Employee's eligibility to participate in any succeeding Offering or in any similar plan which may hereafter be adopted by the Company. In order to be eligible for a subsequent Offering, however, a participant who has withdrawn from an Offering must satisfy the requirements of Section 3.4 hereof prior to the Offering Commencement Date of the next succeeding Offering. 8.3 TERMINATION OF EMPLOYMENT. Upon termination of the participant's employment for any reason, including retirement (but excluding death or permanent disablement while in the employ of the Company or continuation of a leave of absence for a period beyond 90 days), the payroll deductions credited to such Employee's account will be returned to the Employee, or, in the case of the Employee's death subsequent to the termination of such Employee's employment, to the person or persons entitled thereto under Section 12.1 hereof. 8.4 TERMINATION OF EMPLOYMENT DUE TO DEATH. Upon termination of the participant's employment because of death or permanent disablement, the participant or participant's beneficiary (as defined in Section 12.1 hereof) shall have the right to elect, by written notice given to the designated office of the Company prior to the earlier of the Offering Termination Date or the expiration of a period of 60 days commencing with the termination of the participant's employment, either: (a) to withdraw all of the payroll deductions credited to the participant's account under the Plan, or (b) to exercise the participant's option on the next Offering Termination Date and purchase the number of full shares of stock which the accumulated payroll deductions in the participant's account at the date of the participant's cessation of employment will purchase at the 5 6 applicable option price, and any excess in such account will be returned to said beneficiary, without interest. In the event that no such written notice of election shall be duly received by the designated office of the Company, the beneficiary shall automatically be deemed to have elected, pursuant to paragraph (b), to exercise the participant's option. 8.5 LEAVE OF ABSENCE. A participant on leave of absence shall, subject to the election made by such participant pursuant to Section 5.5 hereof, continue to be a participant in the Plan so long as such participant is on continuous leave of absence. A participant who has been on leave of absence for more than 90 days and who therefore is not an Employee for the purpose of the Plan shall not be entitled to participate in any Offering commencing after the 90th day of such leave of absence. Notwithstanding any other provisions of the Plan, unless a participant on leave of absence returns to regular full time or part time employment with the Company at the earlier of: (a) the termination of such leave of absence or (b) three months from the 90th day of such leave of absence, such participant's participation in the Plan shall terminate on whichever of such dates first occurs. ARTICLE IX INTEREST 9.1 PAYMENT OF INTEREST. No interest will be paid or allowed on any money paid into the Plan or credited to the account of any participant Employee including any interest paid on any and all money which is distributed to an Employee or such Employee's beneficiary pursuant to the provisions of Sections 8.1, 8.3, 8.4 and 10.1 hereof. ARTICLE X STOCK 10.1 MAXIMUM SHARES. The maximum number of shares which shall be issued under the Plan, subject to adjustment upon changes in capitalization of the Company as provided in Section 12.4 hereof, shall be 150,000 shares. If the total number of shares for which options are exercised on any Offering Termination Date in accordance with Article VI exceeds the maximum number of shares for the applicable Offering, the Company shall make a pro rata allocation of the shares available for delivery and distribution in as nearly a uniform manner as shall be practicable and as the Committee shall determine to be equitable, and the balance of payroll deductions credited to the account of each participant under the Plan shall be returned to such participant as promptly as possible. 10.2 PARTICIPANT'S INTEREST IN OPTION STOCK. The participant will have no interest in stock covered by such Employee's option until such option has been exercised. 10.3 REGISTRATION OF STOCK. Stock to be delivered to a participant under the Plan will be registered in the name of the participant, or, if the participant so directs by written notice to the designated office of the Company prior to the Offering Termination Date applicable thereto, in the names of the participant and one such other person as may be designated by the participant, in the form and manner permitted by applicable law. 10.4 RESTRICTIONS ON EXERCISE. The Board of Directors may, in its discretion, require as conditions to the exercise of any option that the shares of Common Stock reserved for issuance upon 6 7 the exercise of the option shall have been duly listed, upon official notice of issuance, upon a stock exchange or the Nasdaq National Market, and that either: (a) a Registration Statement under the Securities Act of 1933, as amended, with respect to said shares shall be effective, or (b) the participant shall have represented at the time of purchase, in form and substance satisfactory to the Company, that it is such Employee's intention to purchase the shares for investment and not for resale or distribution. ARTICLE XI ADMINISTRATION 11.1 APPOINTMENT OF COMMITTEE. The Board of Directors shall appoint a committee (the "Committee") to administer the Plan, which shall consist of no fewer than two (2) members of the Board of Directors. Members of the Committee who are Employees shall be eligible to purchase stock under the Plan. 11.2 AUTHORITY OF COMMITTEE. Subject to the express provisions of the Plan, the Committee shall have plenary authority in its discretion to interpret and construe any and all provisions of the Plan, to adopt rules and regulations for administering the Plan, and to make all other determinations deemed necessary or advisable for administering the Plan. The Committee's determination on the foregoing matters shall be conclusive. The Committee may delegate its authority as it deems necessary. 11.3 RULES GOVERNING THE ADMINISTRATION OF THE COMMITTEE. The Board of Directors may from time to time appoint members of the Committee in substitution for or in addition to members previously appointed and may fill vacancies, however caused, in the Committee. The Committee may select one of its members as its Chairman and shall hold its meetings at such times and places as it shall deem advisable and may hold telephonic meetings. A majority of its members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. The Committee may correct any defect or omission or reconcile any inconsistency in the Plan, in the manner and to the extent it shall deem desirable. Any decision or determination reduced to writing and signed by a majority of the members of the Committee shall be as fully effective as if it had been made by a majority vote at a meeting duly called and held. The Committee may appoint a secretary and shall make such rules and regulations for the conduct of its business as it shall deem advisable. ARTICLE XII MISCELLANEOUS 12.1 DESIGNATION OF BENEFICIARY. A participant may file a written designation of a beneficiary who is to receive any Stock and/or cash. Such designation of beneficiary may be changed by the participant at any time by written notice to the designated office of the Company. Upon the death of a participant and upon receipt by the Company of proof of identity and existence at the participant's death of a beneficiary validly designated by the participant under the Plan, the Company shall deliver such Stock and/or cash to such beneficiary. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant's death, the Company shall deliver such Stock and/or cash to the executor or administrator of the estate of the 7 8 participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such Stock and/or cash to the spouse or to any one or more dependents of the participant as the Company may designate. No beneficiary shall, prior to the death of the participant by whom he has been designated, acquire any interest in the Stock or cash credited to the participant under the Plan. 12.2 TRANSFERABILITY. Neither payroll deductions credited to a participant's account nor any rights with regard to the exercise of an option or to receive Stock under the Plan may be assigned, transferred, pledged, or otherwise disposed of in any way by the participant other than by will or the laws of descent and distribution. Any such attempted assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds in accordance with Article VIII. 12.3 USE OF FUNDS. All payroll deductions received or held by the Company under this Plan may be used by the Company for any corporate purpose and the Company shall not be obligated to segregate such payroll deductions. 12.4 ADJUSTMENT UPON CHANGES IN CAPITALIZATION. (a) If, while any options are outstanding, the outstanding shares of Common Stock of the Company have increased, decreased, changed into, or been exchanged for a different number or kind of shares or securities of the Company through reorganization, merger, recapitalization, reclassification, stock split (whether or not effected in the form of a stock dividend), reverse stock split or similar transaction, appropriate and proportionate adjustments may be made by the Committee in the number and/or kind of shares which are subject to purchase under outstanding options and on the option exercise price or prices applicable to such outstanding options. In addition, in any such event, the number and/or kind of shares which may be offered in the Offerings described in Article IV hereof shall also be proportionately adjusted. (b) Upon the dissolution or liquidation of the Company, or upon a reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, or upon a sale of substantially all of the property or stock of the Company to another corporation, the holder of each option then outstanding under the Plan will thereafter be entitled to receive at the next Offering Termination Date upon the exercise of such option for each share as to which such option shall be exercised, as nearly as reasonably may be determined, the cash, securities and/or property which a holder of one share of the Company's Common Stock was entitled to receive upon and at the time of such transaction. The Board of Directors shall take such steps in connection with such transactions as the Board shall deem necessary to assure that the provisions of this Section 12.4 shall thereafter be applicable, as nearly as reasonably may be determined, in relation to the said cash, securities and/or property as to which such holder of such option might thereafter be entitled to receive. 12.5 AMENDMENT AND TERMINATION. The Board of Directors shall have complete power and authority to terminate or amend the Plan; provided, however, that the Board of Directors shall not, without the approval of the stockholders of the Corporation (i) increase the maximum number of shares which may be issued under any Offering (except pursuant to Section 12.4 hereof); or (ii) amend the requirements as to the class of Employees eligible to purchase stock under the Plan. No termination, 8 9 modification, or amendment of the Plan may, without the consent of an Employee then having an option under the Plan to purchase stock, adversely affect the rights of such Employee under such option. 12.6 EFFECTIVE DATE. The original Plan was effective as of July 1, 1994 and was thereafter approved by the holders of the majority of the Common Stock present and represented at the annual meeting of the shareholders held on December 8, 1994. 12.7 NO EMPLOYMENT RIGHTS. The Plan does not, directly or indirectly, create any right for the benefit of any Employee or class of Employees to purchase any shares under the Plan, or create in any Employee or class of Employees any right with respect to continuation of employment by the Company, and it shall not be deemed to interfere in any way with the Company's right to terminate, or otherwise modify, an Employee's employment at any time. 12.8 EFFECT OF PLAN. The provisions of the Plan shall, in accordance with its terms, be binding upon, and inure to the benefit of, all successors of each Employee participating in the Plan, including, without limitation, such Employee's estate and the executors, administrators or trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy or representative of creditors of such Employee. 12.9 GOVERNING LAW. The law of the State of Arizona will govern all matters relating to this Plan except to the extent it is superseded by the laws of the United States. RURAL/METRO CORPORATION, a Delaware corporation By: /s/Warren S. Rustand -------------------------------- Its: Chief Executive Officer -------------------------------- Attest: /s/Louis G. Jekel - -------------------------------------- Secretary 9 10 RURAL/METRO CORPORATION EMPLOYEE STOCK PURCHASE PLAN EXHIBIT A LIST OF PARTICIPATING COMPANIES Effective Date as of September 6, 1996 EX-10.45(B) 3 FIRST AMENDMENT TO CREDIT AGREEMENT 1 EXHIBIT 10.45(b) FIRST AMENDMENT TO CREDIT AGREEMENT THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "First Amendment") is made and entered into as of this 20th day of December, 1996 by and among RURAL/METRO CORPORATION, a corporation organized under the laws of Delaware ("Rural/Metro"), as Guarantor, the Subsidiaries of Rural/Metro listed on the signature pages hereto (the "Borrowers"), the Lenders party to the Credit Agreement referenced below (the "Lenders"), and FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association, as Agent for the Lenders (the "Agent"). Statement of Purpose The Lenders agreed to extend certain credit facilities to the Borrowers pursuant to the Credit Agreement dated as of September 29, 1995 by and among Rural/Metro, as Guarantor, the Borrowers, the Lenders and the Agent (as amended, amended and restated, modified or otherwise supplemented from time to time, the "Credit Agreement"). The parties now desire to amend the Credit Agreement in certain respects pursuant to the terms and conditions set forth below. NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows: 1. Effect of Amendment. Except as expressly amended hereby, the Credit Agreement and Loan Documents shall be and remain in full force and effect. The amendments and waivers granted in this First Amendment are specific and limited and shall not constitute a modification, acceptance or waiver of any other provision of the Credit Agreement, or any other document or instrument entered into in connection therewith, or a future modification, acceptance or waiver of the provisions set forth therein. 2. Capitalized Terms. All capitalized undefined terms used in this First Amendment shall have the meanings assigned thereto in the Credit Agreement. 3. Modification of Credit Agreement. The Credit Agreement shall be hereby modified as follows: (a) Section 1.1 shall hereby be modified be deleting the defined term "Net Income" in its entirety and inserting the following defined terms in the correct alphabetical order: 2 "'First Amendment' means the First Amendment to Credit Agreement dated as of December 20, 1996 by and among the Credit Parties, the Lenders and the Agent. 'Net Income' means, with respect to Rural/Metro and its Subsidiaries for any period, the Consolidated net income (or loss) of Rural/Metro and its Subsidiaries for such period determined in accordance with GAAP; provided, that there shall be excluded from Consolidated net income (or loss): (a) the income (or loss) of any Person in which any Credit Party made an investment pursuant to Section 10.4(j) (other than RMC Insurance, Ltd.), (b) other than Persons referred to in clause (a), the income (or loss) of any Person (other than a Subsidiary of any Credit Party) in which a Credit Party has an ownership interest unless received by such Credit Party in a cash distribution, (c) the income (or loss) of any Person accrued prior to the date it became a Subsidiary of any Credit Party or is merged into or consolidated with any Credit Party, and (d) to the extent not included in clauses (b) and (c) above, any after-tax extraordinary gains and non-cash losses." (b) Section 4.1 (c) shall hereby be modified to delete the chart set forth therein in its entirety and to substitute the following chart in lieu thereof:
"Senior Debt Applicable Margin Per Annum Leverage Ratio Base Rate + LIBOR Rate + -------------- ----------- ------------ Less than 0.75 to 1.00 0.00% 0.625% Greater than or equal to 0.75 to 1.00 and less than 1.75 to 1.00 0.00% 0.875% Greater than or equal to 1.75 to 1.00 and less than 2.25 to 1.00 0.00% 1.125% Greater than or equal to 2.25 to 1.00 and less than 2.75 to 1.00 0.00% 1.375% Greater than or equal to 2.75 to 1.00 0.125% 1.625%"
(c) Section 4.3(b) shall hereby be deleted in its entirety and the following Section 4.3(b) shall be substituted in lieu thereof: "(b) Commitment Fee. The Borrowers shall pay to the Agent, for the account of the Lenders, a non-refundable 2 3 commitment fee on the average daily unused portion of the Aggregate Commitment at a rate per annum equal to 0.25%. The commitment fee shall be payable in arrears on the last Business Day of each calendar quarter commencing December 31, 1996, and on the Termination Date. Such commitment fee shall be distributed by the Agent to the Lenders pro rata in accordance with the Lenders' respective Commitment Percentages." (d) Section 7.1(c) shall hereby be deleted in its entirety and the following Section 7.1(c) shall be substituted in lieu thereof: "(c) Annual Financial Projections. As soon as practicable and in any event within ninety (90) days after the beginning of each Fiscal Year, a business plan of Rural/Metro and its Subsidiaries for the ensuing Fiscal Year, such plan to include, the following: a quarterly operating and capital budget, a projected quarterly income statement, statement of cash flows and balance sheet and a report containing management's discussion and analysis of such projections, accompanied by a certificate from the chief executive officer or chief financial officer of Rural/Metro on behalf of the Credit Parties to the effect that such projections are based on reasonable estimates and assumptions, all of which are reasonable in light of current conditions, have been prepared on the basis of the assumptions stated therein, and reflect, as of the time so furnished, the reasonable estimate of Rural/Metro and its Subsidiaries of the projected results of operations and other information projected therein." (e) Section 7.2 shall hereby be amended by deleting clauses (c) and (d) therefrom in their entirety and substituting the following in lieu thereof: "(c) setting forth as at the end of such fiscal quarter the calculations required to establish (i) whether or not Rural/Metro and its Subsidiaries were in compliance with the financial covenants set forth in Article IX hereof (ii) whether or not Rural/Metro and its Subsidiaries were in compliance with the investment and acquisition covenant set forth in Section 10.4 hereof (calculated pursuant to the calculation worksheet attached as Schedule 1 to Exhibit D) and (iii) the calculation of the Applicable Margin pursuant to Section 4.1(c) as at the end of such period; and (d) attaching a Consolidated aging of the accounts receivable of Rural/Metro and its Subsidiaries as of the end of such fiscal quarter, including a detailed report by payor for Medicare, private pay and Medicaid (for system integrated accounts receivable only; provided, that payor detail shall 3 4 cover not less than 70% of total accounts receivable) and a written discussion of any increase in Average Accounts Receivable Days since the report delivered as of the end of the prior fiscal quarter, all certified by the chief financial officer of Rural/Metro on behalf of the Credit Parties in the form of Exhibit D hereto." (f) Section 8.11 shall hereby be deleted in its entirety and the following Section 8.11 shall be substituted in lieu thereof: "SECTION 8.11. Additional Borrowers. Upon the creation of any Subsidiary permitted by this Agreement (other than a Subsidiary permitted pursuant to Section 10.4(j); provided, that RMC Insurance, Ltd. shall not be excluded from the requirements of this Section 8.11), cause to be executed and delivered to the Agent within ten (10) Business Days after the creation of such Subsidiary, (a) the joinder agreement attached as Exhibit K hereto executed by such new Subsidiary, (b) the supplement substantially in the form attached as Annex II to the Security Agreement executed by such new Subsidiary, (c) the supplement substantially in the form attached as Exhibit A to the Pledge Agreement executed by the applicable Credit Party, (d) the closing documents and certificates required of each of the Credit Parties pursuant to Section 5.2(b) and (c) hereof with respect to such new Subsidiary; provided, that upon the written request of the Borrowers, the Majority Lenders, in their sole discretion, may waive the requirement that an opinion of counsel be delivered with respect to such new Subsidiary and (e) such other documents reasonably requested by the Agent in order that such Subsidiary shall become bound by all of the terms, covenants and agreements contained in the Loan Documents and the capital stock and applicable assets of such Subsidiary shall become Collateral for the Obligations. Upon satisfaction of the conditions set forth in this Section 8.11, each Subsidiary shall become a Borrower hereunder and the other Loan Documents, as of such date, as if an original signatory hereto and to the other Loan Documents." (g) Section 9.7 shall hereby be deleted in its entirety and the following Section 9.7 shall be substituted in lieu thereof: "SECTION 9.7. Limitation on Capital Expenditures. Make or incur Capital Expenditures during the following periods in an aggregate amount in excess of the following amounts: (a) for the Fiscal Year ending June 30, 1997, $22,000,000, (b) for any fiscal quarter ending after June 30, 1997 and on or prior to June 30, 1998 (the "Applicable Quarter"), an amount equal to 1.50% of the Consolidated Net Revenues of Rural/Metro and its Subsidiaries for the period of four (4) consecutive fiscal quarters ending with the preceding fiscal quarter; provided, 4 5 that in the event that the Total Debt Leverage Ratio calculated pursuant to Section 9.1 shall have been less than 2.25 to 1.00 at the end of the preceding fiscal quarter, Capital Expenditures for the Applicable Quarter shall not exceed an amount equal to 2.25% of the Consolidated Net Revenues of Rural/Metro and its Subsidiaries for the period of four (4) consecutive fiscal quarters ending with the preceding fiscal quarter and (c) for any fiscal quarter thereafter, an amount equal to 1.00% of the Consolidated Net Revenues of Rural/Metro and its Subsidiaries for the period of four (4) consecutive fiscal quarters ending with the preceding fiscal quarter. Notwithstanding and in addition to the foregoing, after the date of the First Amendment, Rural/Metro and its Subsidiaries shall be permitted to incur Capital Expenditures in connection with upgrading the building located at 4141 North Granite Reef, Scottsdale, Arizona in an aggregate amount not to exceed $5,000,000." (h) Section 9.8 shall hereby be deleted in its entirety and the following Section 9.8 shall be substituted in lieu thereof: "SECTION 9.8. Limitation on Operating Leases. Incur Net Rental and Operating Lease Expense for any period of four (4) consecutive fiscal quarters in an amount greater than 3.00% of Consolidated Net Revenues for such four (4) fiscal quarter period." (i) Sections 10.1(e) and 10.1(i) shall hereby be deleted in their entirety and the following Sections 10.1(e) and 10.1(i) shall be substituted in lieu thereof: "(e) Parent Seller Financing, Subordinated Seller Financing and Earn-Out Obligations in an aggregate principal amount at any time outstanding not to exceed $20,000,000 (less any and all current outstanding principal amounts of all items identified on Schedule 10.1 as "seller financing");" "(i) Capital Leases and purchase money Debt described in Section 10.3(c) and Debt (with terms and conditions reasonably satisfactory to the Majority Lenders) of any Person assumed by a Credit Party in connection with a Permitted Acquisition, in an aggregate principal amount at any time outstanding not to exceed $15,000,000 (less any and all current outstanding principal amounts of all items identified on Schedule 10.1 as Capital Leases and purchase money Debt); and" (j) Section 10.3 shall be modified by deleting the word "and" after clause (j) thereof; deleting the period at the end of clause (k) thereof; and adding the following at the end thereof: 5 6 "; and (l) Liens in favor of Governmental Authorities in the form of contingent lease agreements executed or assumed by a Credit Party after the date of the First Amendment (the "Contingent Liens"), in form and substance satisfactory to the Agent in its reasonable discretion, which agreements permit such Governmental Authorities to lease or purchase existing inventory and equipment used in connection with emergency service contracts between Credit Parties and such Governmental Authorities upon the early termination of such contracts for a period not to exceed twelve (12) months after such termination; provided, that the aggregate fair saleable value of all assets subject to such Contingent Liens created by agreements executed or assumed by a Credit Party after the date of the First Amendment shall not exceed $4,000,000 at any time." (k) Section 10.4 shall be modified by deleting clauses (f) and (g) therefrom in their entirety and substituting the following clauses (f) and (g) in lieu thereof: "(f) investments by any Credit Party in the form of acquisitions of all or substantially all of the business or a line of business (whether by the acquisition of capital stock, assets, any combination thereof or any "pooling of interests") of any other Person if each such acquisition meets all of the following requirements: (i) the Person to be acquired shall engage in an ambulance service business (which business may include a fire protection component), (ii) a Credit Party shall be the surviving Person and no Default or Event of Default shall have occurred and be continuing both before and after giving effect to the acquisition, (iii) the Credit Parties shall have certified to the Agent that they are in pro forma compliance with each covenant contained in Article IX and Article X hereof prior to consummating the acquisition and, if any Lender requests in its sole discretion, the Credit Parties shall have provided evidence to the Agent of such pro forma compliance, (iv) the Fair Market Value of all Consideration (as defined below) paid in connection with such acquisition (or series of related acquisitions in the same Fiscal Year) shall not exceed $10,000,000; provided, that in the event that the Total Debt Leverage Ratio as of the most recent fiscal quarter end prior to the acquisition date, calculated on a pro forma basis to include any and all Debt incurred by the Credit Parties in connection with such acquisition and any and all Debt of such acquired Person assumed by the Credit Parties, shall be less than 2.25 to 1.00, the Fair Market Value of all Consideration paid in connection with such acquisition (or series of related acquisitions in the same Fiscal Year) shall not exceed $12,500,000, and (v) the Fair Market Value of all Consideration paid in connection with all such acquisitions 6 7 shall not exceed in the aggregate (A) for the Fiscal Year ending June 30, 1997, $50,000,000 (excluding the Fair Market Value of all Consideration paid in connection with the acquisition of Commonwealth Ambulance Service, Inc. and its subsidiaries), (B) for the Fiscal Year ending June 30, 1998, 17.5% of Consolidated Net Revenues of Rural/Metro and its Subsidiaries for the previous Fiscal Year and (C) thereafter, $15,000,000 per annum; (g) acquisitions otherwise approved in writing by the Majority Lenders;" (l) Section 10.4 shall be modified by deleting the word "and" after clause (h) thereof; deleting the period at the end of clause (i) thereof; and adding the following at the end thereof: and; (j) investments (including working capital investments) by any Credit Party in Persons organized or operating outside of the United States and in Persons that are not Wholly-Owned Subsidiaries of such Credit Party if each such investment meets all of the following requirements: (i) no Default or Event of Default shall have occurred and be continuing both before and after giving effect to such investment, (ii) the Fair Market Value of all Consideration paid in connection with such investments shall not exceed the amounts set forth on Exhibit M attached hereto and (iii) such Credit Party shall execute such documents necessary to pledge 100% of its ownership interest in such Person within ten (10) Business Days after such investment is made. Notwithstanding anything contained herein to the contrary, it is understood by the parties hereto that this clause (j), together with clauses (a) and (i) above, are the only clauses which permit investments by any Credit Party in Persons organized or operating outside of the United States and in Persons that are not Wholly-Owned Subsidiaries of such Credit Party; provided, that Rural/Metro or one of its Subsidiaries shall be permitted to form RMC Insurance, Ltd., a corporation formed under the laws of Barbados, which will be capitalized with a letter of credit with a face amount of $125,000, cash in the amount of $25,000 and the building located at 4141 North Granite Reef, Scottsdale, Arizona. For the purposes of calculating compliance with clauses (f) and (j) of this Section 10.4, the "Fair Market Value of all Consideration" paid in connection with any acquisition or investment shall include (1) any cash consideration paid in connection with such acquisition or investment, (2) the face amount of any Seller Financing issued in connection with such acquisition or investment (excluding Earn-Out Obligations on terms and conditions satisfactory to the Agent to be paid to a seller in connection with additional business or contracts 7 8 not in existence at the time of such acquisition or investment), (3) the face amount of any Debt assumed in connection with such acquisition or investment, (4) the amount of any commissions paid in connection with such acquisition or investment, (5) 100% of the fair market value (calculated in the same manner as in the applicable acquisition or investment contract, such calculation to be reasonably satisfactory to the Agent) of any unrestricted stock issued or transferred in a pooling of interest or otherwise and (6) 65% of the fair market value (calculated in the same manner as in the applicable acquisition or investment contract, such calculation to be reasonably satisfactory to the Agent) of any restricted stock (stock which cannot by agreement be sold or transferred for a period of at least 2 years or is otherwise deemed to be restricted by the Agent, in its reasonable discretion) issued or transferred in a pooling of interest or otherwise and minus (7) any cash balances assumed in such acquisition or investment. (m) Section 10.6 shall be modified by deleting the word "and" after clause (e) thereof; deleting the period at the end of clause (f) thereof; and adding the following at the end thereof: ";(g) any conveyance, sale, lease, assignment, transfer or other disposition of assets to Governmental Authorities in connection with contingent lease agreements executed or assumed by a Credit Party after the date of the First Amendment, in form and substance satisfactory to the Agent in its reasonable discretion, which agreements permit such Governmental Authorities to lease or purchase existing inventory and equipment used in connection with emergency service contracts between Credit Parties and such Governmental Authorities upon the early termination of such contracts for a period not to exceed twelve (12) months after such termination; provided, that the aggregate fair saleable value of all assets so conveyed, sold, leased, assigned or transferred by a Credit Party after the date of the First Amendment shall not exceed $4,000,000; and (h) Capital Leases and operating leases for fair market value to any Person in which a Credit Party made an investment pursuant to Section 10.4(j) above; provided, that the aggregate fair saleable value of all assets so leased shall not exceed $3,000,000. (n) Section 10.7 shall hereby be deleted in its entirety and the following Section 10.7 shall be substituted in lieu thereof: "SECTION 10.7. Limitations on Dividends and Distributions. Declare or pay any dividends upon any of its capital stock or purchase, redeem, retire or otherwise 8 9 acquire, directly or indirectly, any shares of its capital stock, or make any distribution of cash, property or assets among the holders of shares of its capital stock; provided that (a) any Credit Party may pay dividends solely in shares of its own capital stock, (b) any Subsidiary may pay cash dividends to a Credit Party, (c) Rural/Metro may make a dividend distribution to its shareholders of "Rights" to purchase "Series A Junior Participating Preferred Stock" of Rural/Metro, pursuant to the terms and conditions of a Rights Agreement dated as of August 23, 1995 between Rural/Metro and American Securities Transfer, Inc., as Rights Agent, (d) Rural/Metro may pay cash dividends in any fiscal quarter in an aggregate amount not to exceed 25% of Net Income for the most recently ended fiscal quarter, (e) Rural/Metro may redeem shares of its capital stock; provided, that (i) the fair market value of any such shares of capital stock redeemed in any fiscal quarter, together with any and all cash dividends made pursuant to clause (d) above, shall not exceed 25% of Net Income for the most recently ended fiscal quarter and (ii) the fair market value of all such shares of capital stock redeemed shall not exceed $5,000,000 in the aggregate and (f) Rural/Metro may make contributions of (i) any amount of capital stock and (ii) cash in an aggregate amount not to exceed $1,000,000, in any of the Fiscal Years ending on June 30, 1996, June 30, 1997 and June 30, 1998 to its Employee Stock Ownership Plan; provided that, in connection with any distribution or payment pursuant to clauses (d) and (e) above, no Default or Event of Default shall have occurred before and after giving effect to any such dividend or payment." (o) Section 10.11 shall hereby be deleted in its entirety and the following Section 10.11 shall be substituted in lieu thereof "SECTION 10.11. Restrictive Agreements. Enter into any agreement after the Closing Date which restricts, limits or otherwise encumbers its ability to incur Liens on or with respect to any of its assets or properties; provided, that any contingent lease agreement permitted pursuant to Sections 10.3(l) and 10.6(g) may restrict or limit the ability of the Credit Party party to such contingent lease agreement to incur Liens on or otherwise encumber the assets subject to such contingent lease agreement." (p) Exhibit D to the Credit Agreement shall be deleted in its entirety and the Exhibit D attached hereto shall be substituted in lieu thereof. (q) Exhibit M attached hereto shall be added as Exhibit M to the Credit Agreement. 9 10 4. Waivers of the Credit Agreement and Loan Documents. The Lenders hereby waive any Default or Event of Default which may have occurred as a result of the Borrower's failure to comply with the maximum Capital Expenditures limitations set forth in Section 9.7 for the fiscal quarter ending September 30, 1996; provided, that nothing contained herein shall be construed to be a waiver of the Capital Expenditures limitations set forth in Section 9.7 (as amended herein) for the Fiscal Year ending June 30, 1997 (which shall include any and all Capital Expenditures incurred during the fiscal quarter ending September 30, 1996). 5. Representations and Warranties/No Default. By their execution hereof, the Credit Parties hereby certify that each of the representations and warranties set forth in the Credit Agreement and the other Loan Documents is true and correct as of the date hereof as if fully set forth herein and that as of the date hereof no Default or Event of Default has occurred and is continuing. 6. Expenses. The Credit Parties shall pay all reasonable out-of-pocket expenses of the Agent in connection with the preparation, execution and delivery of this First Amendment, including without limitation, the reasonable fees and disbursements of counsel for the Agent. 7. Governing Law. This First Amendment shall be governed by and construed in accordance with the laws of the State of North Carolina. 8. Counterparts. This First Amendment may be executed in separate counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument. 10 11 IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed as of the date and year first above written. BORROWERS: THE AID AMBULANCE COMPANY, INC. By:________________________________ Name:___________________________ Title:__________________________ AID AMBULANCE AT VIGO COUNTY, INC. By:________________________________ Name:___________________________ Title:__________________________ THE AID COMPANY, INC. By:________________________________ Name:___________________________ Title:__________________________ AMERICAN LIMOUSINE SERVICE, INC. By:________________________________ Name:___________________________ Title:__________________________ BEACON TRANSPORTATION, INC. By:________________________________ Name:___________________________ Title:__________________________ CITY WIDE AMBULANCE SERVICE, INC. By:________________________________ Name:___________________________ Title:__________________________ 11 12 CORNING AMBULANCE SERVICE INC. By:________________________________ Name:___________________________ Title:__________________________ E.M.S. VENTURES, INC. By:________________________________ Name:___________________________ Title:__________________________ EMS VENTURES OF SOUTH CAROLINA, INC. By:________________________________ Name:___________________________ Title:__________________________ EASTERN AMBULANCE SERVICE, INC. By:________________________________ Name:___________________________ Title:__________________________ EASTERN PARAMEDICS, INC. By:________________________________ Name:___________________________ Title:__________________________ THE GEORGE HEISEL CORPORATION By:________________________________ Name:___________________________ Title:__________________________ 12 13 GOLD CROSS AMBULANCE SERVICES, INC. By:________________________________ Name:___________________________ Title:__________________________ GOLD CROSS AMBULANCE SERVICE OF PA., INC. By:________________________________ Name:___________________________ Title:__________________________ LASALLE AMBULANCE INC. By:________________________________ Name:___________________________ Title:__________________________ MEDICAL TRANSPORTATION SERVICES, INC. By:________________________________ Name:___________________________ Title:__________________________ MEDSTAR EMERGENCY MEDICAL SERVICES, INC. By:________________________________ Name:___________________________ Title:__________________________ METRO CARE CORP. By:________________________________ Name:___________________________ Title:__________________________ METROPOLITAN FIRE DEPT., INC. By:________________________________ Name:___________________________ Title:__________________________ 13 14 MYERS AMBULANCE SERVICE, INC. By:________________________________ Name:___________________________ Title:__________________________ NATIONAL AMBULANCE & OXYGEN SERVICE, INC. By:________________________________ Name:___________________________ Title:__________________________ PHYSICIANS AMBULANCE SERVICE, INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO INTERNATIONAL, INC. By:________________________________ Name:___________________________ Title:__________________________ R/M MANAGEMENT CO., INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO TEXAS HOLDINGS, INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO CORPORATION, AN ARIZONA CORPORATION By:________________________________ Name:___________________________ Title:__________________________ 14 15 RURAL/METRO CORPORATION OF FLORIDA By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO CORPORATION OF TENNESSEE By:________________________________ Name:___________________________ Title:__________________________ R/M OF TENNESSEE G.P., INC. By:________________________________ Name:___________________________ Title:__________________________ R/M OF TENNESSEE L.P., INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF TENNESSEE L.P. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO FIRE DEPT., INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF ALABAMA, INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF ARDMORE, INC. By:________________________________ Name:___________________________ 15 16 Title:__________________________ RURAL/METRO OF ARLINGTON, INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF ATLANTA, INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF CANADA, INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF CENTRAL ALABAMA, INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF CENTRAL OHIO, INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF GEORGIA, INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF INDIANA, INC. By:________________________________ Name:___________________________ Title:__________________________ 16 17 RURAL/METRO OF INDIANA, L.P. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF INDIANA II, L.P. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF NEBRASKA, INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF NEW YORK, INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF NORTH FLORIDA, INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF OHIO, INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF OREGON, INC. By:________________________________ Name:___________________________ Title:__________________________ 17 18 RURAL/METRO OF SOUTH CAROLINA, INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF SOUTH DAKOTA, INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF TEXAS, INC. By:________________________________ Name:___________________________ Title:__________________________ RURAL/METRO OF TEXAS, L.P. By:________________________________ Name:___________________________ Title:__________________________ R/M OF TEXAS, G.P., INC. By:________________________________ Name:___________________________ Title:__________________________ SIOUX FALLS AMBULANCE, INC. By:________________________________ Name:___________________________ Title:__________________________ TOWNS AMBULANCE SERVICE, INC. By:________________________________ Name:___________________________ Title:__________________________ 18 19 VALLEY FIRE SERVICE, INC. By:________________________________ Name:___________________________ Title:__________________________ W & W LEASING COMPANY, INC. By:________________________________ Name:___________________________ Title:__________________________ THE WESTERN NEW YORK EMERGENCY MEDICAL SERVICES TRAINING INSTITUTE INC. By:________________________________ Name:___________________________ Title:__________________________ GUARANTOR: RURAL/METRO CORPORATION, A DELAWARE CORPORATION By:________________________________ Name:___________________________ Title:__________________________ 19 20 AGENT: FIRST UNION NATIONAL BANK OF NORTH CAROLINA, as Agent By:________________________________ Name:___________________________ Title:__________________________ LENDERS: FIRST UNION NATIONAL BANK OF NORTH CAROLINA, as Lender By:________________________________ Name:___________________________ Title:__________________________ FLEET BANK, N.A. (formerly known as Natwest Bank N.A.) By:________________________________ Name:___________________________ Title:__________________________ NBD BANK By:________________________________ Name:___________________________ Title:__________________________ ABN AMRO BANK N.V. By:________________________________ Name:___________________________ Title:__________________________ By:________________________________ Name:___________________________ Title:__________________________ FIRST INTERSTATE BANK OF ARIZONA, N.A. By:________________________________ 20 21 Name:___________________________ Title:__________________________ THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED By:________________________________ Name:___________________________ Title:__________________________ BANK OF AMERICA ARIZONA By:________________________________ Name:___________________________ Title:__________________________ BANQUE PARIBAS By:________________________________ Name:___________________________ Title:__________________________ By:________________________________ Name:___________________________ Title:__________________________ 21 EX-27 4 FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS YEAR JUN-30-1997 JUL-01-1996 DEC-31-1996 1 403 0 105,666 22,278 5,983 95,570 91,875 38,316 263,891 28,153 88,766 0 0 117 133,617 263,891 151,524 151,524 0 117,299 0 20,159 2,082 11,894 4,914 7,070 0 0 0 7,070 .59 .59
-----END PRIVACY-ENHANCED MESSAGE-----