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Exhibit 10.4
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 Todd
Zimmerman (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 EmCare (as defined below),
which will
become a subsidiary of the Company on the Effective Date;
WHEREAS, Executive is employed by EmCare, 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, 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.
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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:
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 Todd Zimmerman.
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.
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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 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, the Company shall employ the
Executive
as General Counsel of EMSC, AMR and EmCare, 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.
B. The Executive shall report to the CEO, and shall provide
support
to the President of AMR or the President of EmCare, as
applicable, 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
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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 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 two 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 $325,000 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 $100,000,or such greater amount
determined by the
Executive in his sole discretion. 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 four-tenths
of one percent (0.4%) of the Partnership Units outstanding on
the Effective Date
(the "Zimmerman 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 Zimmerman Options.
The Zimmerman 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 unit
purchase price paid by the initial equity investors in the
Company.
2. Vesting and Exercisability.
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a. 50% of the Zimmerman 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 Zimmerman 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.
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 Zimmerman Options shall become fully
vested and
exercisable on the occurrence of the Liquidity Event, and the
Zimmerman
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 Zimmerman 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
Zimmerman
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
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