<PAGE>
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")
<PAGE>
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.
<PAGE>
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
2
<PAGE>
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.
3
<PAGE>
(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.
4
<PAGE>
(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 operatin
