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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
