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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
