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Exhibit 10.1
This Agreement made as of December 6, 2004
By and Between
EMSC, Inc., a Delaware corporation ("Purchaser")
and
William A. Sanger (the "Executive")
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WHEREAS, Purchaser desires 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, concurrently with the execution and delivery of
this
Agreement, Purchaser will execute that certain (i) Stock
Purchase Agreement,
dated as of the date hereof, by and among Laidlaw International,
Inc., Laidlaw
Medical Holdings, Inc. and Purchaser (the "AMR Purchase
Agreement") and (ii)
Stock Purchase Agreement, dated as of the date hereof, by and
among Laidlaw
International, Inc., Laidlaw Medical Holdings, Inc. and
Purchaser (the "EmCare
Purchase Agreement" 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 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 Purchaser.
(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
a wholly owned subsidiary of Purchaser.
(i) "Executive" means William A. Sanger.
(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 Shares outstanding under the Plan or
otherwise
(including, without limitation, options, other stock 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
Shares
calculated based on the actual net proceeds received from the
disposition
of such Shares, (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
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corporation unless, after giving effect to such merger or
consolidation,
the holders of Purchaser's voting securities (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
representing a majority of the outstanding voting power to elect
directors
of the surviving or resulting corporation in the same
proportions that
they held their shares prior to such merger.
(n) "Onex" means Onex Partners LP.
(o) "Purchaser" means EMSC, Inc., a corporation incorporated
under
the laws of Delaware, and except where the context requires
otherwise,
including all affiliates and Subsidiaries of Purchaser, and any
successor
thereto.
(p) "Shares" means shares of the common stock of Purchaser.
(q) "Subsidiary" means any corporation that is a subsidiary
of
Purchaser, including but not limited to EmCare and AMR.
(r) "Change in ownership or control" means, during the Term,
the
sale of all or substantially all of the assets of the
Company.
ARTICLE 2
TERM OF THE AGREEMENT
This Agreement shall commence on the Effective Date and
shall
continue for a period of five years unless earlier terminated in
accordance with
Article 6 hereof.
ARTICLE 3
TITLE; COMMENCEMENT OF EMPLOYMENT; REPORTING
The Executive shall serve as the Chairman and Chief
Executive
Officer of Purchaser, and, at Purchaser's request, as President
and Chief
Executive Officer of a Subsidiary. The Executive's employment
shall commence on
the Effective Date. The Executive shall report to the Board.
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 $850,000.
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 annually beginning
in the year
following the second 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
Committee in
consultation with the Executive and with regard to the market
rates of
remuneration paid for similar duties and responsibilities.
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(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 100% of
Base Salary
(prorated 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
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 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) Purchaser will adopt a stock option plan (the "Plan") to
be
effective as of the Effective Date. Pursuant to the Plan,
Purchaser will grant
to the Executive, as of the Effective Date, options to purchase
four percent
(4%) of the Shares outstanding on the Effective Date (the
"Sanger Options"). The
Sanger Options 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 share
purchase price paid by the initial equity investors in
Purchaser.
(ii) Vesting and Exercisability.
(I) 50% of the Sanger Options will become vested and
exercisable 12.5% on each of the first eight sixth-month
anniversaries of
the Effective Date without further condition. In the event
Sanger is
terminated as provided in this Agreement, the Sanger Options
shall vest
and be exercisable as if Sanger had remained employed up to the
nearest
six-month anniversary.
(II) 50% of the Sanger Options will become vested and
exercisable 12.5% on each of the first eight sixth-month
anniversaries of
the Effective Date, provided, that exercisability is subject to
the
further condition that Onex has realized a 15% Internal Rate of
Return. In
the event Sanger is terminated as provided in this Agreement,
the Sanger
Options shall vest and be exercisable as if Sanger had remained
employed
up to the nearest sixth-month anniversary; 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 Sanger Options shall become
fully
vested and exercisable on the occurrence of the Liquidity Event,
and the
Sanger 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.
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(IV) On the fourth anniversary of the Effective Date, if
the Sanger 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 Sanger
Options shall
also become exercisable if:
(a) Purchaser has met the Cumulative Cash Flow
Test, as such term will be defined in the Plan, or
(b) if (x) Purchaser'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 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 Sanger 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 the leasing of an automobile and (ii) reimburse
the Executive for
expenses incurred by the Executive in connection with the
related operating
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