Employment Agreement

(a)

"Accrued Obligations" means any unpaid amounts with respect to (i) the Executive’s Base Salary through the Date of Termination, (ii) any then-unpaid Annual Bonus or other incentive compensation that the Executive may have earned pursuant to the terms of any applicable incentive compensation or bonus plan of Laidlaw with respect to any fiscal year or other performance period completed prior to the Date of Termination, (iii) reimbursement for any properly incurred, unreimbursed business expenses incurred prior to termination in accordance with Laidlaw’s business reimbursement policy applicable to the Executive prior to the Date of Termination and (iv) payments and benefits under the employee benefit and incentive plans and perquisite programs of Laidlaw, in accordance with the respective terms of those plans and perquisite programs.

(c)

"Annual Bonus" means the annual bonus under Laidlaw’s Short Term Incentive Plan or any successor annual incentive plan.

(d)

"Base Salary" means the salary of record paid to the Executive as annual salary, and as further indicated in Section (a) of Article 4.

(e)

"Board" means the Board of Directors of Laidlaw.

(f)

"Cause" means:

(i)

the continuous and willful failure or refusal by the Executive to perform the Executive’s material duties and responsibilities of his position with Laidlaw (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness), which has not ceased within twenty (20) days after a written demand for substantial performance is delivered to the Executive by Laidlaw, which demand identifies with particularity the manner in which Laidlaw believes that the Executive has not performed such duties,

(ii)

Executive’s willful malfeasance or willful misconduct in connection with Executive’s duties hereunder or any willful act or willful omission, including a willful failure to abide by the Laidlaw International, Inc. Code of Business Conduct and Ethics, which is materially injurious to the financial condition or business reputation of Laidlaw or any significant Subsidiary;

(iii)

Executive’s commission of an act of fraud, embezzlement or theft in connection with the Executive’s duties or in the course of his employment with Laidlaw or any Subsidiary;

(iv)

the conviction of the Executive of, or the entering of a plea of nolo contendere by, the Executive with respect to a felony; or

(v)

Executive’s breach of the provisions of Article 7 of this Agreement.

(g)

"Change in Control" means the occurrence during the term of this Agreement of any of the following events:

(i)

the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of the then-outstanding Voting Stock; provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from Laidlaw, (B) any acquisition by Laidlaw, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Laidlaw or any Subsidiary, or (D) any acquisition by any Person pursuant to a transaction that complies with clauses (A), (B) and (C) of Subsection (iii) of this Section (g);

(ii)

individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason (other than death or disability) to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by Laidlaw’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of Laidlaw in which such person is named as a nominee for director, without objection to such nomination) shall be considered as though such individual were a member of the Incumbent Board, but excluding for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

(iii)

consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of Laidlaw (a "Business Combination"), unless, in each case, immediately following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners of Voting Stock of Laidlaw immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns Laidlaw or all or substantially all of Laidlaw’s assets either directly or through one or more subsidiaries) in substantially the same proportions relative to each other as their ownership, immediately prior to such Business Combination, of the Voting Stock of Laidlaw, (B) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by Laidlaw, any Subsidiary or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, fifteen percent (15%) or more of the then outstanding shares of common stock of the entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such entity except to the extent such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or

(iv)

approval by the stockholders of Laidlaw of a complete liquidation or dissolution of Laidlaw.

(h)

"Code" means the Internal Revenue Code of 1986, as amended.

(l)

"Employee Benefits" means the perquisites, benefits and service credit for benefits as provided under any and all employee retirement income and welfare benefit policies, plans, programs or arrangements in which the Executive is entitled to participate, including, without limitation, any stock option, performance share, performance unit, stock purchase, stock appreciation, savings, pension, supplemental executive retirement, or other retirement income or welfare benefit, compensation, incentive compensation, group or other life, health, medical/hospital or other insurance (whether funded by actual insurance or self-insurance by Laidlaw or a Subsidiary), salary continuation, expense reimbursement and other employee benefit policies, plans, programs or arrangements.

(m)

"Exchange Act" means the Securities Exchange Act of 1934.

(n)

"Executive" means Jeffery A. McDougle.

(o)

"Good Reason" means the occurrence of one or more of the following events (regardless of whether any other reason, other than Cause, for such termination exists or has occurred, including, without limitation, other employment):

(i)

With respect to the two (2) year period commencing on a Change in Control, the failure to elect or reelect or otherwise to maintain the Executive in the office or the position, or a substantially equivalent office or position, of or with Laidlaw and/or a Subsidiary (or any successor thereto by operation of law of or otherwise), as the case may be, which the Executive held immediately prior to a Change in Control, or the removal of the Executive as a director of Laidlaw and/or a Subsidiary (or any successor thereto) if the Executive shall have been a director of Laidlaw and/or a Subsidiary immediately prior to the Change in Control;

(ii)

With respect to the two (2) year period commencing on a Change in Control, (A) a significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties attached to the position with Laidlaw and any Subsidiary which the Executive held immediately prior to the Change in Control, (B) a reduction in the aggregate of the Executive’s Base Salary received from Laidlaw and any Subsidiary or the Executive’s Incentive Pay opportunity from Laidlaw or its Subsidiaries, or (C) the termination or denial of the Executive’s rights to Employee Benefits or a reduction in the scope or value thereof to a level that is substantially lower in the aggregate from the level in effect at the time of the Change in Control, any of which is not remedied by Laidlaw within ten (10) calendar days after receipt by Laidlaw of written notice from the Executive of such change, reduction, denial or termination, as the case may be;

(iii)

The liquidation, dissolution, merger, consolidation or reorganization of Laidlaw or transfer of all or substantially all of its business and/or assets, unless the successor or successors (by liquidation, merger, consolidation, reorganization, transfer or otherwise) to which all or substantially all of its business and/or assets have been transferred (by operation of law or otherwise) assumes all duties and obligations of Laidlaw under this Agreement pursuant to Section (a) of Article 14;

(iv)

Laidlaw relocates its principal executive offices (if such offices are the principal location of the Executive’s work), or requires the Executive to have his principal location of work changed, to any location that, in either case, increases the Executive’s commute to work by more than fifty (50) miles without his prior written consent; or

(v)

Without limiting the generality or effect of the foregoing, any material breach of this Agreement by Laidlaw or any successor thereto which is not remedied by Laidlaw within ten (10) calendar days after receipt by Laidlaw of written notice from the Executive of such breach.

(p)

"Laidlaw" means Laidlaw International Inc., a Delaware corporation.

(q)

"Notice of Termination" has the meaning ascribed to such term in Section (d) of Article 6.

(r)

"Retirement Plans" means the retirement income, supplemental executive retirement, excess benefits and retiree medical, life and similar benefit plans, programs or arrangements of Laidlaw or a Subsidiary in which the Executive is entitled to participate.

(s)

"Subsidiary" means an entity in which Laidlaw directly or indirectly beneficially owns fifty percent (50%) or more of the outstanding Voting Stock.

(t)

"Target Bonus" has the meaning ascribed to such term in Section (b) of Article 4.

(u)

"Voting Stock" means securities entitled to vote generally in the election of directors.

Article 2 — Term of the Agreement

(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 is established by the Committee at the annualized rate of Three Hundred and Eighteen Thousand, Six Hundred and Thirteen Dollars ($318,613.00). The Base Salary shall be payable twice monthly on the fifteenth business day and the last business day of each month. The Base Salary shall be reviewed annually during Laidlaw’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. As a result of such review, the Executive’s Base Salary may be increased, but not decreased.

(b)

The Executive will be eligible to participate in and be eligible to receive an Annual Bonus under Laidlaw’s Short Term Incentive Plan or any successor plan or program. For each fiscal year of Laidlaw, the Executive’s target bonus shall be no less than fifty percent (50%) of Base Salary and the maximum bonus shall be no less than one hundred percent (100%) of Base Salary. The Executive’s right to receive any bonus under Laidlaw’s Short Term Incentive Plan shall be determined based upon measurements established by the Committee after consultation with the Executive and as set forth in accordance with Laidlaw’s Short Term Incentive Plan.

(c)

The Executive shall participate in the Supplemental Executive Retirement Plan sponsored by Laidlaw for the benefit of its employees.

(d)

Subject to approval by the Committee, the Executive will be eligible to receive equity or equity based grants from time to time. Such grants will be on terms and conditions established by the Committee in accordance with the Laidlaw International, Inc. Amended and Restated 2003 Equity and Performance Incentive Plan or any successor plan.

Article 5 — Benefits

(a)

Expenses

(b)

Vacation

(c)

Welfare Benefits

(d)

Change in Control Vesting

Article 6 — Termination of Employment

(a)

The parties understand and agree that this Agreement and the Executive’s employment hereunder may be terminated in the following manner in the specified circumstances:

(i)

The Executive’s employment hereunder shall automatically terminate upon the death of the Executive.

(ii)

By Laidlaw, if, as a result of the Executive’s incapacity due to physical or mental illness which is expected to be of more than a brief duration, the Executive has been unable to perform the essential functions of his job for one hundred and eighty (180) days (whether or not consecutive) during any period of eighteen (18) consecutive months ("Disability"), and no reasonable accommodation can be made that will allow Executive to perform the essential functions of his position with Laidlaw. Upon such termination, the Executive shall be entitled to the same severance benefits and payments described in Subsection (v) or (vi), as applicable, as if such termination was a termination by Laidlaw without Cause.

(iii)

By the Executive, at any time, for any reason. Laidlaw may waive notice required by Section (d) of this Article 6, in whole or in part, upon immediate payment to the Executive of the Executive’s Base Salary for such portion of notice period as is waived by Laidlaw. If such termination is for Good Reason, then unless the provisions of Subsection (vi) apply, the Executive shall be entitled to the same payments and benefits as provided in Subsection (v) for terminations by Laidlaw without Cause. If such termination is for any other reason, Laidlaw shall pay to the Executive the Accrued Obligations.

(iv)

By Laidlaw, in its absolute discretion, without any pay in lieu of notice, for Cause. Upon such termination, Laidlaw shall pay to the Executive the Accrued Obligations.

(v)

By Laidlaw, in its absolute discretion and for any reason, without Cause. Upon such termination, unless the provisions of Subsection (vi) hereof apply, Laidlaw shall (A) continue to pay the Executive his Base Salary in effect at the time of such termination for a period of twelve (12) months following such termination, (B) pay the Executive a monthly amount equal to one-twelfth of the Executive’s Target Bonus in effect at the time of Executive’s termination of employment for a period of twelve (12) months following such termination, (C) continue to provide the Executive term life insurance for a period of twelve (12) months after termination, or, if such benefits cannot be provided by Laidlaw, Laidlaw shall pay to the Executive an equivalent lump sum cash amount in lieu of such benefits, (D) continue to provide the Executive (and his eligible dependents) with the opportunity to continue to participate in its group medical and dental benefits (with such continuation being counted towards any required COBRA continuation period), at the Executive’s sole expense based on COBRA rates charged from time to time; provided, however, that Laidlaw shall pay to the Executive over the twelve (12) month period an amount equal to the full COBRA cost of such coverage, (E) reasonable outplacement services by a firm selected by the Executive, at the expense of Laidlaw, in an amount up to Twenty-Five Thousand Dollars ($25,000.00) and (F) pay to the Executive the Accrued Obligations. Notwithstanding the foregoing, if the Executive is a "specified employee" within the meaning of Code Section 409A at the Date of Termination, then

(I)

the total amount which would have been payable to the Executive over the twelve (12) month period pursuant to this Subsection (v) shall instead be paid to the Executive in equal monthly amounts over the period commencing on the Date of Termination and ending no later than the first day of the third month following the later of (X) the calendar year in which the Date of Termination occurred and (Y) the fiscal year of Laidlaw in which the Date of Termination occurred, if such payments would not be subject to Code Section 409A, or

(II)

if the payments specified in Clause (I) would be subject to Code Section 409A, then such payments shall be paid in the manner set forth above without regard to Clause (I) hereof, but payments which would otherwise have been made during the first six (6) months following the Date of Termination, shall be withheld and paid to the Executive during the seventh month following the Date of Termination, increased for interest as provided in Section (b) hereof.

(vi)

In the event that during the two (2) year period commencing on the date of a Change in Control, Laidlaw terminates the Executive’s employment without Cause or the Executive terminates employment for Good Reason, Laidlaw shall pay to the Executive the amounts described in Annex A within five (5) business days after the Date of Termination and shall provide to the Executive the benefits described on Annex A for the periods described therein. Notwithstanding the foregoing, in the event that the Executive is at the Date of Termination a "specified employee" within the meaning of Code Section 409A, payment to the Executive shall be made within five (5) days following the expiration of six (6) months from the Date of Termination, and not before such six (6) month period, if necessary to avoid adverse tax consequences to the Executive under Code Section 409A.

(b)

Without limiting the rights of the Executive at law or in equity, in the event it is determined that Laidlaw fails to make any payment or provide any benefit required to be made or provided under Section (a) hereof on a timely basis, Laidlaw shall pay interest on the amount or value thereof at an annualized rate of interest equal to the so-called composite "prime rate" as quoted from time to time during the relevant period in The Wall Street Journal . Any change in such prime rate shall be effective on and as of the date of such change. In addition, if any payment described in Subsection (v) or (vi) of Section (a) hereof by Laidlaw subjects the Executive to the excise tax under Code Section 409A on such payment, Laidlaw shall pay on the Executive’s behalf to the applicable taxing authorities, an amount which, after payment of all state, local and federal income and employment taxes which may be due on such payment (calculated at the highest marginal rates), is equal to the excise tax under Code Section 409A which arose as a result of Laidlaw’s delay or acceleration in to making such payment.

(c)

In order to receive the entitlement under Subsection (vi) of Section (a) hereof, or Clauses (A), (B), (C), (D) and (E) of Subsection (v) of Section (a) hereof (whether such termination is by the Executive for Good Reason or by Laidlaw without Cause), the Executive must undertake to sign a release in a form satisfactory to Laidlaw, fully releasing Laidlaw from further claims upon payment of the amounts stipulated herein and must not revoke such release. However, the form of release shall not require that the Executive give up any rights of indemnity which the Executive may have had against Laidlaw for acts carried out by the Executive in the ordinary course of Laidlaw’s business, nor shall it require the release of the benefits this Agreement payable due to or after the Executive’s termination of employment. Laidlaw may withhold payment of such amount until the period during which the Executive may revoke such waiver (normally seven (7) days) has elapsed.

(d)

Any purported termination of the Executive’s employment by Laidlaw or by the Executive shall be communicated by written Notice of Termination to the other party hereto in accordance with Article 15. "Notice of Termination" shall mean a notice that shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.

(e)

"Date of Termination" shall mean (i) if the Executive’s employment is terminated because of death, the date of the Executive’s death, (ii) if the Executive’s employment is terminated for Disability, the date Notice of Termination is delivered to the Executive following a determination that Disability exists pursuant to the provisions of this Agreement, (iii) if the Executive’s employment is terminated by Laidlaw for any other reason other than Disability or for Cause or if the Executive terminates employment for Good Reason, the date specified in the Notice of Termination which shall not be less than thirty (30) days from the date such Notice of Termination is given, (iv) if the Executive’s employment is terminated by Laidlaw for reasons of Cause, immediately upon delivery of the Notice of Termination and the expiration of any cure period provided under Section (d) of Article I, and (v) if the Executive’s employment is terminated by the Executive pursuant to Subsection (iii) of Section (a) of this Article for reasons other than Good Reason, the date specified in the Notice of Termination which shall not be less than ninety (90) days from the date such Notice of Termination is given.

(f)

Any termination of employment of the Executive or the removal of the Executive from the office or position in Laidlaw or any Subsidiary that occurs (i) not more than ninety (90) days prior to the date on which a Change in Control occurs, and (ii) following the commencement of any discussion with a third person that ultimately results in a Change in Control,