EXHIBIT 10.11
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this
____ day of ____________, 1997 by and between Brookdale Living Communities,
Inc., a Delaware corporation ("Employer"), and Xxxx X. Xxxxxxxxxx, an individual
domiciled in the State of Illinois ("Executive").
W I T N E S S E T H
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A. Employer is engaged primarily in the ownership, management, leasing,
marketing, acquisition, development and construction of senior and assisted
living facilities throughout the United States.
B. Employer believes that it would benefit from the application of
Executive's particular and unique skill, experience, and background to the
management and operation of Employer.
C. Executive wishes to commit himself to serve Employer in the position
set forth herein on the terms herein provided.
D. The parties wish by this Agreement to set forth the terms and
conditions of the employment relationship between Employer and Executive.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein set forth, and for other good and valuable consideration, Employer and
Executive hereby agree as follows:
1. Employment and Duties. During the Employment Term (as defined in
Section 2 hereof), Employer agrees to employ Executive, and Executive agrees to
be employed by Employer, as the Vice President - Development of Employer on the
terms and conditions provided in this Agreement. Executive shall conduct,
operate, manage and promote the business and business concept of Employer, and
exercise such other powers and authority as are provided by the By-laws of
Employer ("By-laws"). The Board of Directors of Employer (the "Board") or the
Chief Executive Officer may from time to time further define and clarify
Executive's duties and services hereunder or under the By-laws as Vice President
- Development. Executive agrees to devote Executive's best efforts and
substantially all of Executive's business time, attention, energy and skill to
perform Executive's duties as Vice President - Development of Employer.
2. Term. The initial term of this Agreement (the "Initial Term") shall
commence on the date Employer's Registration Statement on Form S-1, as amended
(No. 333-12259; the "Registration Statement") is declared effective (the
"Effective Date") and expire on December 31, 1999 (the "Scheduled Termination
Date"), provided, however, this Agreement shall automatically extend for one
year terms following the Initial Term (each a "Renewal Term", together with the
Initial Term, the "Employment Term"), unless either party shall give the other
party prior to thirty (30) days before the end of the Initial Term or any
Renewal Term, as applicable, written notice of its intention to terminate this
Agreement.
3. Compensation and Related Matters. (a) Base Salary. As compensation
for performing the services required by this Agreement during the Employment
Term, Employer shall pay to Executive an annual salary of no less than One
Hundred Thirty-Five Thousand Dollars ($135,000) ("Base Compensation"), payable
in accordance with the general policies and procedures for payment of salaries
to its executive personnel maintained, from time to time, by Employer (but no
less frequently than monthly), subject to withholding for applicable federal,
state, and local taxes. Increases in Base Compensation, if any, shall be
determined by the Compensation Committee of the Board (the "Committee") based on
periodic reviews of Executive's performance conducted on at least an annual
basis.
(b) Bonus. In addition to Base Compensation, Executive shall have the
right to receive, and Employer agrees to distribute to Executive, performance
bonus distributions (a "Performance Bonus Distribution") with respect to each
facility developed by Employer or one of its affiliates with respect to which
Executive had primary responsibility, structured as follows:
(i) A Performance Bonus Distribution in the amount of $7,500 will be paid
to Executive within thirty (30) days following the day on which a development
site is put under contract and all required zoning approvals and/or municipal
approvals for the proposed development have been received;
(ii) A Performance Bonus Distribution in the amount of $7,500 will be paid
to Executive within thirty (30) days following the day on which all required
permits to commence and complete the construction of a facility on the
development site have been received and the full construction of the facility
has commenced;
(iii) In the event the acquisition of the development site or the
development or construction of the facility is financed, in whole or in part,
with the proceeds of tax-exempt bonds, a Performance Bonus Distribution in the
amount of $10,000 will be paid to Executive within thirty (30) days following
the day on which tax-exempt bonds are issued and Employer (or an affiliate of
Employer) has received a draw from the proceeds generated from the sale of such
bonds;
(iv) In the event the acquisition of the development site or the
development or construction of the facility is financed, in whole or in part, by
the proceeds of tax increment financing ("TIF") bonds or other material
municipal assistance, a Performance Bonus Distribution in an amount equal to the
lower of (A) $5,000 or (B) three percent (3%) of the present value of the
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economic benefit to Employer of such TIF financing or municipal assistance will
be paid to Executive within thirty (30) days following the day on which the TIF
bonds are issued or the other municipal assistance approved and Employer (or an
affiliate of Employer) has received a draw from the proceeds of the TIF bonds or
has received all or a significant portion of the municipal assistance; and
(v) A Performance Bonus Distribution in the amount of $10,000 will be paid
to Executive within thirty (30) days following the day on which a Certificate of
Occupancy is received for or with respect to the entire facility.
Executive acknowledges that Executive is entitled to Performance Bonus
Distributions only with respect to development sites and the development of
facilities for which Executive has primary responsibilities and will not be
entitled to a Performance Bonus Distribution with respect to any other
development projects undertaken by Employer.
(c) Benefits. During the Employment Term and subject to the limitations
and alternative rights set forth in this Section 3(c), Executive and Executive's
eligible dependents shall have the right to participate in any retirement,
pension, insurance, health, dental or other benefit plan or program that has
been or is hereafter adopted by Employer (or in which Employer participates), as
such plans and programs may be amended or modified from time to time by
Employer, according to the terms of such plan or program with all the benefits,
rights and privileges as are enjoyed by any other senior executive officer of
Employer. If the participation of Executive would adversely affect the
qualification of a plan intended to be qualified under Section 401(a) of the
Internal Revenue Code as the same may be amended from time to time (the "Code"),
Employer shall have the right to exclude Executive from that plan in return for
Executive's participation in (i) a nonqualified deferred compensation plan or
(ii) an arrangement providing substantially comparable benefits under a plan
that is either a qualified or nonqualified under the Code at Employer's option.
(d) Expenses. Executive shall be reimbursed, subject to Employer's receipt
of invoices or similar records as Employer may reasonably request in accordance
with its policies and procedures, as such policies as and procedures may be
amended or modified from time to time by Employer, for all reasonable and
necessary expenses incurred by Executive in the performance of Executive's
duties hereunder.
(e) Vacations. During the Employment Term, Executive shall be entitled to
two (2) weeks paid vacation in accordance with Employer's practices, as such
practices may be amended or modified from time to time by Employer.
4. Stock Options. Employer has established a stock incentive plan (the
"Stock Incentive Plan") that will become effective prior to the completion of
the initial public offering of shares of common stock of Employer (the "Common
Stock") contemplated by the Registration Statement. The Stock Incentive Plan
initially provides, among other things, for the issuance from time to time to
certain officers, directors and other employees of Employer of up to 830,000
stock options ("Options"). On the Effective Date, Employer shall grant to
Executive 25,000 Options that will
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have such terms and conditions as are set forth in the Stock Incentive Plan and
the Stock Option Agreement to be entered into between Employer and Executive.
5. Termination and Termination Benefits. (a) Termination by Employer.
(i) Without Cause. Employer may terminate this Agreement and Executive's
employment at any time for any reason or for no reason at all upon thirty (30)
days' prior written notice to Executive following notice of termination. In
connection with the termination of Executive's employment pursuant to this
Section 5(a)(i), Executive shall (A) be paid Executive's Base Compensation in
accordance with Section 3(a) hereof, and be entitled to the benefits set forth
in Sections 3(c), 3(d) and 3(e) hereof, up to the effective date of such
termination, (B) be paid any Performance Bonus Distribution to which Executive
becomes entitled as a result of the occurrence of any of the events specified in
Section 3(b)(i) through (v) hereof prior to the date of such termination and (C)
receive the Termination Compensation specified in Section 5(d) hereof. For
purposes of this Agreement, in the event Employer defaults in its obligation
under Section 9 hereof and, as a consequence thereof, Executive's employment
with Employer (or Employer's successor or assign) is terminated, such
termination shall be deemed to be a termination under this Section 5(a)(i).
(ii) With Cause. Employer may terminate this Agreement with cause
immediately upon written notice to Executive. Employer may elect to require
Executive to continue to perform Executive's duties under this Agreement for an
additional thirty (30) days following notice of termination. In connection with
the termination of Executive's employment pursuant to this Section 5(a)(ii),
Executive shall (A) be paid Executive's Base Compensation in accordance with
Section 3(a) hereof, and be entitled to the benefits set forth in Sections 3(c),
3(d) and 3(e) hereof, up to the effective date of such termination, and (B) be
paid any Performance Bonus Distribution to which Executive becomes entitled as a
result of the occurrence of any of the events specified in Section 3(b)(i)
through (v) hereof prior to the date of such termination. For purposes of this
Section 5(a)(ii), "cause" shall mean (A) a finding by the Chief Executive
Officer of Employer or the Board that Executive has materially harmed Employer,
its business, assets or employees through an act of dishonesty, material
conflict of interest, gross misconduct or willful malfeasance, (B) Executive's
conviction of (or pleading nolo contendere to) a felony, (C) Executive's failure
to perform (which shall not include inability to perform due to disability) in
any material respects Executive's material duties under this Agreement, (D) the
breach by Executive of any of Executive's material obligations hereunder (other
than those covered by clause (C) above) and the failure of Executive to cure
such breach within ten (10) days after receipt by Executive of a written notice
of Employer specifying in reasonable detail the nature of the breach, (E)
Executive's sanction (including restrictions, prohibitions and limitations
agreed to under a consent decree or agreed order) under, or conviction for
violation of, any federal or state securities law, rule or regulation (provided
that in the case of a sanction, such sanction materially impedes or impairs the
ability of Executive to perform Executive's duties and exercise Executive's
responsibilities hereunder in a satisfactory manner), or (F) Executive's willful
breach of any material policies or procedures of Employer.
(iii) Disability. If due to illness, physical or mental disability, or
other incapacity, Executive shall fail during any four (4) consecutive months to
perform the duties required by this Agreement, Employer may terminate this
Agreement upon thirty (30) days' written
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notice to Executive. In such event, Executive shall (A) be paid Executive's
Base Compensation in accordance with Section 3(a) hereof, and be entitled to the
benefits set forth in Section 3(c) hereof (or the after-tax cash equivalent), up
to the effective date of such termination and be entitled to the benefits set
forth in Sections 3(d) and 3(e) hereof up to the date of such disability, and
(B) be paid any Performance Bonus Distribution to which Executive becomes
entitled as a result of the occurrence of any of the events specified in Section
3(b)(i) through (v) hereof prior to the date of such disability. This Section
5(a)(iii) shall not limit the entitlement of Executive, Executive's estate or
beneficiaries to any disability or other benefits available to Executive under
any disability insurance or other benefits plan or policy which is maintained by
Employer for Executive's benefit. For purposes of this Agreement, the "date of
disability" shall mean the first day of the consecutive period during which
Executive fails to perform the duties required by this Agreement due to illness,
physical or mental disability or other incapacity.
(b) Termination by Executive Without Good Reason. Executive may terminate
this Agreement and Executive's employment at any time for any reason or for no
reason at all upon thirty (30) days' written notice to Employer, during which
period Executive shall continue to perform Executive's duties under this
Agreement if Employer so elects. In connection with the termination of
Executive's employment pursuant to this Section 5(b), Executive shall (A) be
paid Executive's Base Compensation in accordance with Section 3(a) hereof, and
be entitled to the benefits set forth in Sections 3(c), 3(d) and 3(e) hereof, up
to the effective date of such termination, and (B) be paid any Performance Bonus
Distribution to which Executive becomes entitled as a result of the occurrence
of any of the events specified in Section 3(b)(i) through (v) hereof prior to
the date of such termination.
(c) Death. Notwithstanding any other provision of this Agreement, this
Agreement shall terminate on the date of Executive's death. In such event,
Executive shall (A) be paid Executive's Base Compensation in accordance with
Section 3(a) hereof, and be entitled to the benefits set forth in Sections 3(c)
(or the after-tax cash equivalent), 3(d) and 3(e) hereof, up to the date of such
death, and (B) be paid any Performance Bonus Distribution to which Executive
becomes entitled as a result of the occurrence of any of the events specified in
Section 3(b)(i) through (v) hereof prior to the date of such death. This
Section 5(c) shall not limit the entitlement of Executive, Executive's estate or
beneficiaries under any insurance or other benefits plan or policy which is
maintained by Employer for Executive's benefit.
(d) Termination Compensation. In the event of a termination of this
Agreement pursuant to Section 5(a)(i) hereof, Employer shall pay to Executive,
within thirty (30) days of termination, an amount in one lump sum ("Termination
Compensation") equal to 50% of Executive's annual Base Compensation as of the
effective date of such termination.
6. Covenants of Executive.
(a) No Conflicts. Executive represents and warrants that he is not
personally subject to any agreement, order or decree which restricts Executive's
acceptance of this Agreement and the performance of Executive's duties with
Employer hereunder.
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(b) Non-Competition. In return for the performance of the management
duties described in Section 1 hereof, during the Employment Term and for a
period of two years thereafter in the event of the termination of this Agreement
pursuant to the provisions of Sections 5(a)(i), 5(a)(ii) or 5(b) hereof,
Executive shall not, directly or indirectly, in any capacity whatsoever, either
on Executive's own behalf or on behalf of any other person or entity with whom
he may be employed or associated, own any interest in, participate or engage in
the day-to-day supervision, management, development, marketing or operation of
any senior, assisted living or semi-acute care facilities or such other
business as Employer may be engaged in as of the date of the applicable Section
5 termination event (the "Business"). Furthermore, for a period of two years
after any applicable Section 5 termination event, Executive shall not, directly
or indirectly, solicit, attempt to hire or hire any employee of Employer.
Notwithstanding the foregoing, nothing herein shall prohibit Executive from
owning 5% or less of any securities of a competitor engaged in the same Business
if such securities are listed on a nationally recognized securities exchange or
traded over-the-counter on the National Association of Securities Dealers
Automated Quotation System or otherwise.
(c) Non-Disclosure. During the Employment Term and for a period of two
years after the expiration or termination of this Agreement for any reason,
Executive shall not disclose or use, except in the pursuit of the Business for
or on behalf of Employer, any Trade Secret (as hereinafter defined) of Employer,
whether such Trade Secret is in Executive's memory or embodied in writing or
other physical form. For purposes of this Section 6(c), "Trade Secret" means
any information which derives independent economic value, actual or potential,
with respect to Employer from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic
value from its disclosure or use and is the subject of efforts to maintain its
secrecy that are reasonable under the circumstances, including, but not limited
to, trade secrets, customer lists, sales records and other proprietary
commercial information. Said term, however, shall not include general "know-
how" information acquired by Executive during the course of Executive's service
which could have been obtained by Executive from public sources without the
expenditure of significant time, effort and expense which does not relate to
Employer.
(d) Return of Documents. Upon termination of Executive's services with
Employer, Executive shall return all originals and copies of books, records,
documents, customer lists, sales materials, tapes, keys, credit cards and other
tangible property of Employer within Executive's possession or under Executive's
control.
(e) Equitable Relief. In the event of any breach by Executive of any of
the covenants contained in this Section 6, it is specifically understood and
agreed that Employer shall be entitled, in addition to any other remedy which it
may have, to equitable relief by way of injunction, an accounting or otherwise
and to notify any employer or prospective employer of Executive as to the terms
and conditions hereof.
(f) Acknowledgment. Executive acknowledges that he will be directly and
materially involved as a senior executive in all important policy and
operational decisions of Employer. Executive further acknowledges that the
scope of the foregoing restrictions has been
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specifically bargained between Employer and Executive, each being fully informed
of all relevant facts. Accordingly, Executive acknowledges that the foregoing
restrictions of Section 6 are fair and reasonable, are minimally necessary to
protect Employer, its other stockholders and the public from the unfair
competition of Executive who, as a result of Executive's performance of services
on behalf of Employer, will have had unlimited access to the most confidential
and important information of Employer, its business and future plans. Executive
furthermore acknowledges that no unreasonable harm or injury will be suffered by
Executive from enforcement of the covenants contained herein and that he will be
able to earn a reasonable livelihood following termination of Executive's
services notwithstanding enforcement of the covenants contained herein.
7. Prior Agreements. This Agreement supersedes and is in lieu of any and
all other employment arrangements between Executive and Employer or its
predecessor or any subsidiary and any and all such employment agreements and
arrangements are hereby terminated and deemed of no further force or effect.
8. Assignment. Neither this Agreement nor any rights or duties of
Executive hereunder shall be assignable by Executive and any such purported
assignment by Executive shall be void. Employer may assign all or any of its
rights hereunder provided that substantially all of the assets of Employer are
also transferred to the same party.
9. Successor to Employer. Employer will require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all the business and/or assets of Employer, as the case may
be, by agreement in form and substance reasonably satisfactory to Executive,
expressly, absolutely and unconditionally to assume and agree to perform this
Agreement in the same manner and to the same extent that Employer would be
required to perform it if no such succession or assignment had taken place. Any
failure of Employer to obtain such agreement prior to the effectiveness of any
such succession or assignment shall be a material breach of this Agreement.
This Agreement shall inure to the benefit of and be enforceable by Executive's
personal and legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If Executive should die while any
amounts are still payable to Executive hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee or other designee or, if there be no
such designee, to Executive's estate.
10. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if personally delivered or sent
by courier or certified mail, postage or delivery charges prepaid, to the
following addresses:
(a) if to Executive, to:
Xxxx X. Xxxxxxxxxx
000 Xxxxxx Xxxx
Xxxxxxxx Xxxx, XX 00000
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(b) if to Employer, to:
Brookdale Living Communities, Inc.
Xxxxx 0000
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Chief Executive Officer
With a copy to:
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Brookdale Living Communities, Inc.
Xxxxx 0000
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: General Counsel
and to:
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Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Any notice, claim, demand, request or other communication given as provided in
this Section 10, if delivered personally, shall be effective upon delivery; and
if given by courier, shall be effective one (1) business day after deposit with
the courier if next day delivery is guaranteed; and if given by mail, shall be
effective three (3) business days after deposit in the mail. Either party may
change the address at which it is to be given notice by giving written notice to
the other party as provided in this Section 10.
11. Amendment. This Agreement may not be changed, modified or amended
except in writing signed by both parties hereto.
12. Waiver of Breach. The waiver by either party of the breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by either party.
13. Severability. Employer and Executive each expressly agree and
contract that it is not the intention of either party to violate any public
policy, statutory or common law, and that if any covenant, sentence, paragraph,
clause or combination of the same of this Agreement (a "Contractual Provision")
is in violation of the law of any state where applicable, such Contractual
Provision shall be void in the jurisdictions where it is unlawful, and the
remainder of such Contractual Provision, if any, and the remainder of this
Agreement shall remain binding on the parties such that such Contractual
Provision shall be binding only to the extent that such Contractual Provision is
lawful or may be lawfully performed under then applicable laws. In the event
that any part of any
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Contractual Provision of this Agreement is determined by a court of competent
jurisdiction to be overly broad thereby making the Contractual Provision
unenforceable, the parties hereto agree, and it is their desire, that such court
shall substitute a judicially enforceable limitation in its place, and that the
Contractual Provision, as so modified, shall be binding upon the parties as if
originally set forth herein.
14. Equitable Relief. In the event of any breach by Executive of any of
the covenants contained in this Agreement, it is specifically understood and
agreed that Employer shall be entitled, in addition to any other remedy which it
may have, to equitable relief by way of injunction, an accounting or otherwise
and to notify any employer or prospective employer of Executive as to the terms
and conditions hereof.
15. Indemnification. Executive shall indemnify Employer for any and all
consequential damages, costs and expenses resulting from any of Executive's acts
or omissions that constitute bad faith, willful or intentional conduct that
cause harm to Employer's business or reputation. Executive also shall indemnify
Employer for any and all consequential damages, costs and expenses resulting
from Executive's acts of omission constituting reckless disregard of Executive's
duties to Employer following notice thereof by Employer after it becomes aware
of such conduct and Executive's failure to so cure within thirty (30) days.
16. Governing Law. This Agreement shall be governed by, and construed,
interpreted and enforced in accordance with the laws of the State of Illinois,
exclusive of the conflict of laws provisions of the State of Illinois.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
EMPLOYER:
BROOKDALE LIVING COMMUNITIES, INC.
By:_____________________________________
Title:__________________________________
________________________________________
Xxxx X. Xxxxxxxxxx
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