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Exhibit 10.2
This Agreement made as of February 10, 2005
By and Between
Emergency Medical Services L.P., a Delaware limited partnership
("Purchaser")
and
Don S. Harvey (the "Executive")
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WHEREAS, Purchaser intends 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
(the "Contemplated Transactions");
WHEREAS, Emergency Medical Services Corporation ("EMSC"),
the
general partner of Purchaser, has executed 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, Purchaser desires that the Executive enter into
employment
with Purchaser and the Executive desires to be employed by
Purchaser.
NOW THEREFORE, the parties have agreed that the terms and
conditions
of the relationship shall be as follows:
ARTICLE 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
Purchaser.
(c) "Base Salary" means the salary of record paid to the
Executive
as annual salary, and as further indicated in paragraph (a) of
Article 4.
(d) "Board" means the Board of Directors of the general partner
of
Purchaser unless Purchaser (or its successor) is then a
corporation, in
which event it shall mean Purchaser's Board of Directors.
(e) "Cause" means the Executive's:
(i) Willful and continued failure to perform substantially
the
Executive's duties with Purchaser or a Subsidiary, which failure
is not
cured within 30 days after Purchaser delivers to the Executive
written
demand for substantial performance, specifically identifying the
manner in
which the Executive has not substantially performed his
duties;
(ii) Conviction of an indictable offense; or
(iii) Willfully engaging in illegal conduct or gross
misconduct which is materially and demonstrably injurious to
Purchaser or
a Subsidiary.
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For purposes of this paragraph and Article 12, no act or
omission by the
Executive shall be considered "willful" unless it is done or
omitted in
bad faith or without reasonable belief that the Executive's
action or
omission was in the best interests of Purchaser or a
Subsidiary.
(f) "Committee" means the Compensation Committee of the Board or
if
there is no Compensation Committee, the Board.
(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
Purchaser.
(i) "Executive" means Don S. Harvey.
(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 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
Units
calculated based on the actual net proceeds received from the
disposition
of such Units, (b) a disposition of all or substantially all of
the assets
of Purchaser or a Subsidiary or (c) a recapitalization of
Purchaser 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
Purchaser (an "IPO") or a recapitalization of the Purchaser.
(m) "Liquidity Event" means (i) the sale of all, or
substantially
all, of Purchaser's consolidated assets, including, without
limitation, a
sale of all or substantially all of the assets of Purchaser or
any of its
Subsidiaries whose assets constitute all or substantially all
of
Purchaser's consolidated assets in any single transaction or
series of
related transactions or (ii) any merger or consolidation of
Purchaser with
or into another entity unless, after giving effect to such
merger or
consolidation, the holders of Purchaser'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
corporation or other equity representing a majority of the
outstanding
voting power to elect directors of the surviving or resulting
corporation
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(or the general partner of a surviving partnership) in the
same
proportions that they held their Units prior to such merger.
(n) "Onex" means Onex Partners LP.
(o) "Purchaser" means Emergency Medical Services L.P., a
limited
partnership organized under the laws of Delaware, and except
where the
context requires otherwise, including all affiliates and
Subsidiaries of
Purchaser, and any successor thereto.
(p) "Units" means Units of limited partnership interest of
Purchaser.
(q) "Subsidiary" means any corporation that is a subsidiary
of
Purchaser, including but not limited to EmCare and AMR.
ARTICLE 2
TERM OF THE AGREEMENT
This Agreement will be effective and binding immediately upon
its
execution, but, anything in this Agreement the contrary
notwithstanding, this
Agreement will not be operative until the Effective Date. The
Executive's
employment pursuant to this Agreement shall commence on the
Effective Date and
shall continue for a period of four years unless terminated
earlier in
accordance with Article 6 hereof.
ARTICLE 3
TITLE; COMMENCEMENT OF EMPLOYMENT; REPORTING
The Executive shall serve as the President and Chief
Operating
Officer of EmCare and of EMSC, and, at the request of Purchaser
and mutual
agreement, as the Chief Operating Officer of any other
Subsidiary. The
Executive's employment shall commence on the Effective Date. The
Executive shall
report to the Chief Executive Officer ("CEO") of EMSC.
ARTICLE 4
COMPENSATION
(a) Unless otherwise provided, all dollar amounts set forth in
this
Agreement shall be in United States Dollars. The Base Salary of
the Executive
for his services shall be at the annualized rate of $500,000.
The Base Salary
shall be payable twice monthly on the 15th business day and last
business day of
each month. The Base Salary shall be reviewed by the Board
annually beginning in
the year following the first anniversary of the Effective Date
during
Purchaser's normal review period. The review will be undertaken
by assessing the
Executive's achievement of the overall objectives established by
the Board in
consultation with the CEO and the Executive.
(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 75% 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 fiscal year
for Purchaser
fixed by the Board or the Committee during the first quarter of
the year;
provided, that in the case of the partial fiscal year beginning
on the Effective
Date the Executive's right to receive any bonus
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under such plan shall be based on the achievement of the
budget/business plan of
EmCare and AMR for the fiscal year ending August 31, 2005
approved by the board
of directors of Laidlaw International, Inc.
(c) The Executive has agreed to co-invest in Purchaser on
the
Effective Date, by purchasing the same securities purchased by
the initial
equity investors at the per Unit price paid by the initial
equity investors, in
the amount of $500,000. Concurrently with this co-investment by
the Executive,
and pursuant to an equity option plan (the "Plan") Purchaser
will adopt, the
Purchaser will grant to the Executive options to purchase one
percent (1%) of
the Units outstanding on the Effective Date (the "Harvey
Options"). For the
avoidance of doubt, if the agreed-upon co-investment is not made
on the
Effective Date, then Purchaser shall have no obligation to grant
the Harvey
Options.
The Harvey Options, if granted, will contain the following terms
and
will otherwise be subject to the terms and provisions of the
Plan:
(i) Exercise Price. The exercise price will be the per Unit
purchase price paid by the initial equity investors in
Purchaser.
(ii) Vesting and Exercisability.
(I) 50% of the Harvey Options will become vested and
exercisable 25% on each of the first four anniversaries of the
Effective
Date without further condition.
(II) 50% of the Harvey 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.
(III) Notwithstanding the provisions of clause (II),
upon the occurrence of a Liquidity Event in which Onex realizes
a 15%
Internal Rate of Return, all of the Harvey Options shall become
fully
vested and exercisable on the occurrence of the Liquidity Event,
and the
Harvey 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 (III) 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.
(IV) On the fourth anniversary of the Effective Date, if
the Harvey Options referred to in clause (II) have not
terminated pursuant
to clause (III) and have vested but are not exercisable because
Onex has
not realized a 15% Internal Rate of Return, then such Harvey
Options shall
also become exercisable if:
(i) Purchaser has met the Cumulative Cash Flow
Test, as such term will be defined in the Plan, or
(ii) if (x) Purchaser's common stock is publicly
traded and listed on a national securities exchange and (y) Onex
would
have realized a 15%
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Internal Rate of Return if it had sold its remaining common
stock interest
in Purchaser at a per share price equal to the weighted average
sale price
of the Purchaser common stock (as quoted by such national
securities
exchange) for any 30 consecutive trading days.
(iii) Term. For the avoidance of doubt, options that
have vested (by acceleration or otherwise) upon the occurrence
of a
Liquidity Event but are not exercisable because Onex has not
realized a
15% Internal Rate of Return shall terminate on the occurrence of
the
Liquidity Event, and be of no further force or effect. The
occurrence of
an IPO/Recap shall not affect the vesting of the Harvey
Options.
ARTICLE 5
BENEFITS
(a) AUTOMOBILE
Purchaser will, or will cause a Subsidiary to, (i) provide
the
Executive with a monthly allowance of $1,200 for expenses
incurred by the
Executive for an automobile and (ii) reimburse the Executive for
expenses
incurred by the Executive in connection with the related
operating expenses for
suc
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