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Exhibit 10.3
EMPLOYMENT AGREEMENT
This
Agreement, made as of February 10, 2005 by and between
Emergency
Medical Services L.P., a Delaware limited partnership (the
"Company"), and
Randel G. Owen (the "Executive").
RECITALS
WHEREAS,
the Company has agreed to purchase all of the issued and
outstanding shares of common stock of (i) EmCare Holdings Inc., a
Delaware
corporation and (ii) American Medical Response, Inc., a Delaware
corporation;
WHEREAS,
Emergency Medical Services Corporation ("EMSC", the general
partner of the Company) has entered into that certain (i) Stock
Purchase
Agreement, dated as of December 6, 2004 by and among Laidlaw
International,
Inc., Laidlaw Medical Holdings, Inc. and EMSC (the "AMR Purchase
Agreement") and
(ii) Stock Purchase Agreement, dated as of December 6, 2004 by and
among Laidlaw
International, Inc., Laidlaw Medical Holdings, Inc. and EMSC (the
"EmCare
Purchase Agreement" and together with the AMR Purchase Agreement,
the "Stock
Purchase Agreements");
WHEREAS,
Executive is employed by AMR (as defined below), which will
become a subsidiary of the Company on the Effective Date;
WHEREAS,
Executive is employed by AMR, and will continue to be employed
by
the Company in a confidential relationship during which Executive
has and will
become familiar with and aware of information as to the specific
manner of doing
business, strategic plans for future business, and the identity of
customers of
the Company and its subsidiaries, affiliates and managed entities,
all of which
will be established and maintained at great expense to the Company,
all of which
information is a trade secret and constitutes the valuable goodwill
of the
Company;
WHEREAS,
Executive recognizes that the Company and its subsidiaries are
engaged in the business of medical transportation services, medical
triage and
physician practice management services as related to hospital
emergency
department and hospitalist outsourcing;
WHEREAS,
Executive recognizes that the Company and its subsidiaries and
managed entities depend upon a number of trade secrets (including
secret
techniques, methods and data) in the course of providing services
to their
clients and that the protection of these trade secrets is of
critical importance
to the Company and its subsidiaries; and
WHEREAS,
the Company and its subsidiaries will sustain great loss and
damage if Executive should violate the provisions of this
Agreement,
particularly with respect to confidential information and
restrictions on
competition and that monetary damages for such losses would be
extremely
difficult to measure.
NOW
THEREFORE, in consideration of the mutual promises, terms,
covenants
and conditions set forth herein and the performance of each,
effective as of the
time of the Effective Date, it is hereby agreed as follows:
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1.
Definitions:
Whenever
used in this Agreement, the following terms shall have the
meanings set forth below, and when the meaning is intended, the
initial letter
of the word is capitalized:
A. "Agreement" means this employment agreement, as amended from
time
to time.
B.
"AMR" means American Medical Response, Inc., a Delaware
corporation and, on the Effective Date, a wholly owned subsidiary
of the
Company.
C. "Base Salary" means the salary of record paid to the Executive
as
annual salary, as further indicated in paragraph (A) of Article
4.
D. "Board" means the board of directors of the Company's
general
partner unless the Company (or its successor) is then a
corporation, in which
event it means the Company's board of directors.
E. "Change in
Control" means, during the Term, the sale of all or
substantially all of the assets of the Company.
F. "Company" means Emergency Medical Services L.P., a limited
partnership formed under the laws of Delaware and, except where the
context
requires otherwise, including all affiliates and Subsidiaries of
the Company,
and any successor thereto.
G. "Effective Date" means the Closing Date as defined in the
Stock
Purchase Agreements.
H. "EmCare" means EmCare Holdings Inc., a Delaware corporation
and,
on the Effective Date, a wholly owned subsidiary of the
Company.
I. "Executive" means Randel G. Owen.
J. "15% Internal Rate of Return" means an Investor Return, in
cash
or cash equivalent, at least equal to an amount determined by
increasing the
amount of the initial investment, and all subsequent direct or
indirect
investments by Onex, by the total compounded annual rate of return
of 15%,
taking into account for these purposes the exercise of all options
to purchase
Partnership Units outstanding under the Plan or otherwise
(including, without
limitation, options, other equity awards or interests held by
affiliates of Onex
and their respective employees), which are then exercisable or
become
exercisable as a result of the realization of the 15% Internal Rate
of Return.
Whether the 15% Internal Rate of Return has been realized shall be
determined by
the Board whose decision shall be final and binding on the
Executive. For the
avoidance of doubt, a 15% Internal Rate of Return shall be deemed
realized only
if the Investor Return includes both the amount of the investments
and the
required return on the investments.
K. "Investor Return" means the sum of all cash amounts actually
received by Onex, on a cumulative basis through the date of
determination, in
the form of cash dividends, other distributions or sale proceeds in
connection
with (a) a disposition of all or any part of its Partnership Units
calculated
based on the actual net proceeds received from the disposition of
such
Partnership Units, (b) a disposition of all or substantially all of
the assets
of the Company
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or a Subsidiary or (c) a recapitalization of the Company or any
Subsidiary. Such
calculation shall take into account any transaction costs and fees
and shall
exclude any management, consulting or other similar fees received
by Onex or its
affiliates.
L. "IPO/Recap" means an initial public offering of the equity of
the
Company (an "IPO") or a recapitalization of the Company.
M. "Liquidity Event" means (i) the sale of all, or
substantially
all, of the Company's consolidated assets, including, without
limitation, a sale
of all or substantially all of the assets of the Company or any of
its
Subsidiaries whose assets constitute all or substantially all of
the Company's
consolidated assets in any single transaction or series of related
transactions
or (ii) any merger or consolidation of the Company with or into
another entity
unless, after giving effect to such merger or consolidation, the
holders of the
Company's Partnership Units (on a fully-diluted basis) immediately
prior to the
merger or consolidation, own voting securities (on a fully-diluted
basis) of the
surviving or resulting entity representing a majority of the
outstanding voting
power to elect directors of the surviving or resulting corporation
(or the
general partner of a surviving partnership) in the same proportions
that they
held their Partnership Units prior to such merger.
N. "Onex" means Onex Partners LP.
O. "Partnership Units" means units representing limited
partnership
interests in the Company.
P. "Subsidiary" means any corporation that is a subsidiary of
the
Company including, but not limited to EmCare and AMR.
2.
Employment.
A. From the Effective Date, EMSC shall continue to employ the
Executive as Chief Financial Officer of the Company, and, at the
Company's
request, as Chief Financial Officer of one or more Subsidiaries,
and the
Executive shall serve in such capacity, performing such duties as
are consistent
with the position, along with such other duties and
responsibilities assigned to
the Executive by the Chief Executive Officer ("CEO") of EMSC. The
Executive
shall devote his best efforts to the performance of his duties
under this
Agreement and shall perform them faithfully, diligently,
competently and in a
manner consistent with the policies of the Company as determined
from time to
time by the CEO or President of the Company.
B. The Executive shall report to the CEO on all matters
pertaining
to his duties hereunder.
C. The Executive shall not engage in other business activities
outside the scope of this Agreement, without the express approval
of the CEO.
D. The Executive shall not serve as an officer or director (or
the
equivalent position) of any entity other than the Company or its
affiliates or
managed entities, and shall not receive fees or other remuneration
for work
performed outside the scope of his employment without prior written
consent of
the CEO.
3. Term of
Employment. This Agreement will be effective and binding
immediately upon its execution, but, anything in this Agreement to
the contrary
notwithstanding, this
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Agreement shall not be operative until the Effective Date. The
Executive's
employment under this Agreement shall commence on the Effective
Date, shall
continue for a period of three years, and shall be renewed for
additional one
year periods thereafter (each a "Renewal Term") unless either party
informs the
other in writing within 90 days of this Agreement's expiration that
it does not
wish to renew the Agreement, or unless sooner terminated as
provided in this
Agreement.
4.
Compensation.
A. As full compensation for all services rendered by the
Executive
pursuant to this Agreement, the Company shall pay, or shall cause a
Subsidiary
to pay, to the Executive a salary of $350,000 per year ("Base
Salary"), less
applicable withholdings. The Base Salary shall be payable twice
monthly on the
15th business day and last business day of each month. Executive's
compensation
shall be reviewed by the Board annually during the Company's normal
review
period, beginning in the year following the first anniversary of
the Effective
Date.
B. The Executive will be eligible to participate in a
short-term
incentive plan. For fiscal years commencing September 1, 2004 and
thereafter,
the Executive's target bonus under such plan will be 50% of Base
Salary
(pro-rated for a partial fiscal year, including the first fiscal
year in the
term). The Executive's right to receive any bonus under such plan
shall be
determined based upon performance targets for each year fixed by
the Board or a
duly authorized committee thereof; provided, that in the case of
the partial
fiscal year beginning on the Effective Date the Executive's right
to receive any
bonus under such plan shall be based on the achievement of the
budget/business
plan of EmCare and AMR for the fiscal year beginning August 31,
2004 approved by
the board of directors of Laidlaw International, Inc.
C. The Executive has agreed to co-invest in the Company on the
Effective Date, by purchasing the same securities purchased by the
initial
equity investors at the per Partnership Unit price paid by the
initial equity
investors, in the amount of $200,000. Concurrently with this
co-investment by
the Executive, and pursuant to an equity option plan (the "Plan")
the Company
will adopt, the Company will grant to the Executive options to
purchase one
percent (1%) of the Partnership Units outstanding on the Effective
Date (the
"Owen Options"). For the avoidance of doubt, if the agreed-upon
co-investment is
not made on the Effective Date, then the Company shall have no
obligation to
grant the Owen Options.
The Owen Options, if granted, will contain the following terms
and
will otherwise be subject to the terms and provisions of the
Plan:
1. Exercise Price. The exercise price will be the per
Partnership Unit purchase price paid by the initial equity
investors in
the
Company.
2. Vesting and Exercisability.
a. 50% of the Owen Options will become vested and
exercisable 25% on each of the first four anniversaries of the
Effective
Date
without further condition.
b. 50% of the Owen Options will become vested and
exercisable 25% on each of the first four anniversaries of the
Effective
Date;
provided, that exercisability is subject to the further
condition
that Onex
has realized a 15% Internal Rate of Return.
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c. Notwithstanding the provisions of clause (b), upon
the
occurrence of a Liquidity Event in which Onex realizes a 15%
Internal
Rate of
Return, all of the Owen Options shall become fully vested and
exercisable on the occurrence of the Liquidity Event, and the Owen
Options
shall
terminate and be of no further force or effect if they are not
exercised
in connection with the Liquidity Event. For the purposes of
this
clause (c)
only, the 15% Internal Rate of Return shall be determined based
on (i)
cash received by Onex at any time and/or (ii) the fair market
value
of assets
received by Onex at any time (as such fair market value is
determined
by the Board). Any assets received by the Executive in the
Liquidity
Event shall be subject to the same restrictions (such as
lock-up
provisions) to which the assets received by Onex are subject.
d. On the fourth anniversary of the Effective Date, if
the Owen
Options referred to in clause (b) have not terminated pursuant
to
clause (c)
and have vested but are not exercisable because Onex has not
realized a
15% Internal Rate of Return, then such Owen Options shall also
become
exercisable if:
(i) the Company
has met the Cumulative Cash Flow Test, as such
term will be defined in the Plan, or
(ii) if (x) the
Company's common stock is publicly traded and
listed on a national securities exchange and (y) Onex would
have realized a 15% Internal Rate of Return if it had sold its
remaining common stock interest in the Company at a per share
price equal to the weighted average sale price of the Company
common stock (as quoted by such national securities exchange)
for any 30 consecutive trading days.
3. Term. For the avoi
