EX-10 14 exhibit104.htm Kennedy's Employment Agreement

Exhibit 10.4

FORM OF
EMPLOYMENT AGREEMENT

                 EMPLOYMENT AGREEMENT, dated as of June 1, 2002 by and between
ALTERRA HEALTHCARE CORPORATION, a Delaware corporation, with offices at 10000
Innovation Drive, Milwaukee, Wisconsin 53226 (the “Company”), and PATRICK F.
KENNEDY, residing at 923 16th Avenue East, Seattle, WA 98112 (the “Executive”).

                WHEREAS, the Executive has served as the President and Chief
Executive Officer of the Company, pursuant to a Consulting Services Agreement,
dated as of November 1, 2001 between the Company and Holiday Retirement
Consulting Services, LLC (the “Prior Agreement”); and

                WHEREAS, the Company wishes the Executive to continue to serve
in these positions pursuant to the terms of this Agreement following the
expiration of the term of the Prior Agreement, and the Executive is willing to
do so;

                NOW THEREFORE, in consideration of the mutual promises and
agreements set forth below, the Company and the Executive agree as follows:

1.     Term. The Company agrees to employ the Executive and the Executive agrees
to serve, on the terms and conditions set forth herein, for a period commencing
as of June 1, 2002 and ending on May 31, 2003 (“Original Term”), unless earlier
terminated pursuant to the terms hereof; provided, however, that this Agreement
will automatically renew for an additional year on June 1, 2003 (such extended
period, the “Renewal Term”), unless the Company gives notice to Executive that
the Company does not wish to renew this Agreement at least thirty (30) days
prior to the expiration of the Original Term. Notwithstanding the foregoing,
either the Company or Executive may terminate this Agreement by giving at least
thirty (30) days' advanced written notice to the other. The period during which
Executive is employed pursuant to this Agreement (including any Renewal Term) is
hereinafter referred to as the “Employment Period.”

2.     Title; Duties and Services; Location.

(a)        The Executive shall serve as the President and Chief Executive
Officer of the Company and shall have the duties, responsibilities and authority
associated with those positions pursuant to the Amended and Restated Bylaws of
the Company, as in effect from time to time, together with such duties,
responsibilities and authority as from time to time may be assigned to him by
the Board of Directors of the Company. At no time shall the Executive be
requested to perform duties that are not commensurate with his status as the
Company's Chief Executive Officer and President; provided, however, that at the
request of the Board of Directors, and without additional consideration, the
Executive shall serve as a director, executive officer, trustee or agent for the
Company and its affiliates so long as he continues as an officer of the Company.
During the Employment Period, and excluding any periods of disability or of
vacation and sick leave to which Executive is entitled, Executive agrees to
devote at least 75% of his business time to the business and affairs of the
Company. It shall not be a violation of this Agreement for Executive to (A)
serve on civic or charitable boards or committees, (B) fulfill speaking
engagements and (C) manage personal investments, so long as such activities,
individually or in the aggregate, do not interfere with the performance of
Executive's responsibilities as an employee of the Company in accordance with
this Agreement (other than occasional interference of a minor and insignificant
nature).

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                 (b)        Executive shall be permitted to maintain his
existing residence and office in Seattle, Washington and shall travel to the
Company's offices in Milwaukee to the extent necessary to fulfill his duties to
the Company. When not present in Milwaukee, Executive shall be generally
available by telephone, e-mail and fax to discharge his responsibilities to the
Company.

3.     Compensation and Benefits.

(a)        Base Salary. As compensation for his services hereunder, the Company
agrees to pay the Executive a base salary (the “Base Salary”) at the monthly
rate of $45,000.00.

(b)        Incentive Bonus. It is contemplated that members of the Company's
senior management may be awarded bonuses and equity participation in the Company
upon completion of a successful financial restructure of the Company and its
subsidiaries. Executive shall be entitled to participate in such bonuses and
equity participation based upon the Board's assessment of his contribution to
the completion of a successful restructuring of the Company. In addition,
Executive may be eligible for such further bonuses as the Board shall determine
to be appropriate in the circumstances based upon his willingness to continue
with the Company following completion of the Company's restructuring. Executive
also shall be entitled to such other bonuses as the Board shall award him from
time to time. Otherwise, Executive shall not be entitled to participate in any
incentive bonus programs applicable to other Company officers or other
employees.

(c)        Benefit Plans and Fringe Benefits. The Executive shall be eligible to
participate (subject to any applicable waiting periods) in all employee benefit
plans (including, but not limited to, qualified and nonqualified pension, profit
sharing and savings plans and medical, long-term disability and life insurance
plans) maintained or established by the Company for the benefit of senior
executives of the Company generally during the Employment Period and to receive
all fringe benefits available generally to senior executives of the Company;
provided, however, that Executive shall only be entitled to participate in bonus
plans and programs and equity participation programs to the extent contemplated
by Section 3(b) hereof. The Company shall be entitled, at its expense, to
arrange for the purchase of “key man” insurance on the Executive's life in an
amount determined by the Board, and the Executive shall reasonably cooperate
with the Company in procuring such insurance.

(d)        Expenses. The Executive shall be entitled to reimbursement for all
reasonable travel (coach airfare) and other out-of-pocket expenses incurred in
the performance of his duties hereunder (“Reimbursable Expenses”), including
reasonable expenses for travel between Seattle and Milwaukee and for lodging,
meals and general transportation incurred when Executive is resident in
Milwaukee, upon submission and approval of written statements and bills in
accordance with the regular expense reimbursement policies and procedures of the
Company applicable to senior executives.

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(e)        Vacation/PTO. Notwithstanding anything to the contrary in the Company
“PTO” plan, Executive shall be entitled to five (5) weeks (25 business days) of
vacation and paid time off under the Company's “PTO” plan for each calendar year
during the Employment Period, and as prorated during any portion of a calendar
year either upon the commencement or termination of this Agreement (i.e., 14.5
days of vacation and paid time off in calendar year 2002), and in the event
Executive does not utilize all such vacation/PTO days during any calendar year
or prior to the termination of Executive's employment hereunder, the unused days
of vacation/PTO shall be deemed forfeited at the earlier of the end of such
calendar year or upon the termination of Executive's employment with the
Company.

4.     Termination.

(a)     For Death and Disability. The Executive's employment hereunder shall
terminate upon his death, and may be terminated by the Company upon notice to
Executive due to disability (e.g., a physical or mental incapacity that renders
the Executive unable to substantially discharge his duties hereunder).

(b)      For Cause or Without Cause. The Company may terminate the Executive's
employment hereunder at any time for cause upon notice to Executive or without
cause upon thirty (30) days advanced notice to Executive.

(c)      Voluntary Termination. Executive may terminate his employment hereunder
by electing to voluntarily resign by giving as least thirty (30) days' advanced
notice thereof to the Company.

5.      Compensation upon Termination.
                (a)        Accrued Payments Payable Upon Termination. In the
event of termination of Executive's employment for any reason, including without
limitation, for cause, the Executive shall be entitled to receive (i) any
accrued but unpaid Base Salary through such date of termination, (ii) any
amounts due but unpaid for any prior completed fiscal year, and (iii) any unpaid
travel and other out-of-pocket expenses previously and reasonably incurred in
the performance of his duties hereunder (“Reimbursable Expenses”). Any such Base
Salary and/or Reimbursable Expenses shall be promptly paid in a lump sum in
cash.
        (b)        No Severance Obligations. Upon the termination of Executive's
employment with the Company for any reason, Executive shall not be entitled to
any severance payment. Executive shall not participate in the Company's
severance program, and shall be entitled to receive, in lieu of any other
payments or benefits, only the amounts required to be paid by Section 5(a)
hereof.

6.     Resignation of Offices and Directorships. Effective upon the termination
of the Executive's employment with the Company, the Executive shall be deemed to
have resigned as an officer, director, trustee and agent, if applicable, of the
Company and its affiliates and shall execute any documents required by the
Company to evidence the same; provided, however, notwithstanding the foregoing,
Executive shall defer any resignation contemplated hereby for a period of up to
90 days following his termination of employment if requested by the Company in
order to facilitate any notices, filings, approvals or other procedures
necessary or appropriate in connection with Executive's resignation or the
appointment of his successor; provided, however, that during any such 90-day
period Executive shall not have any material duties or responsibilities on
behalf of the Company and its affiliates other than to reasonably cooperate with
the Company in complying with such notices, filings, approvals or other
procedures.

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7.     Return of Company Property. The Executive agrees that, upon the
termination of his employment for any reason whatsoever (whether voluntarily or
involuntarily), he will not take with him or retain without written
authorization from the Board, and he will promptly deliver to the Company,
originals and all copies of all papers, files or other documents containing any
Confidential Information and all other property belonging to the Company and in
his possession or under his control. Notwithstanding the immediately preceding
sentence, the Executive shall be permitted to retain any personal memorabilia
belonging to him, notes taken by him as a member of the Board, or any committee
thereof, and any other such materials which the Executive deems to be of value
to him in the event the same may be needed by the Executive in connection with
the defense of any lawsuit, action or proceeding brought against him for any
reason whatsoever.

8.     Restrictive Covenants.

(a)        The Executive acknowledges that the covenants herein are necessary to
protect the goodwill and other value of the Company and in view of the unique
and essential nature of the services the Executive is to perform hereunder, and
the irreparable injury that would befall the Company should the Executive breach
such covenants. The Executive further acknowledges that (i) his services
hereunder are of a special, unique and extraordinary character and that his
position with the Company places him in a position of confidence and trust with
the customers and employees of the Company and allows him access to Confidential
Information (as hereinafter defined), (ii) the type and periods of restrictions
imposed by the covenants in this Section are fair and reasonable and that such
restrictions will not prevent the Executive from earning a livelihood, (iii) the
Company is engaged in the business of owning, operating or managing assisted
living facilities and specialty care facilities for the treatment of individuals
suffering from Alzheimer's disease; (iv) the Company conducts its business
activity in and throughout the Area (as hereinafter defined); and (v) Competing
Businesses (as hereinafter defined) are engaged in businesses like and similar
to the business of the Company.

(b)        Having acknowledged the foregoing, the Executive covenants and agrees
with the Company that, while he is in the Company's employ and for a period of
twelve (12) months following his date of termination of employment, he will not,
directly or indirectly:

(i)      disclose or use for his own benefit or the benefit of any other person,
except as may be necessary in the performance of his duties hereunder, any
Confidential Information disclosed to the Executive or of which the Executive
became aware by reason of his employment with or service as an officer of the
Company;

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(ii)solicit for employment by any Competing Business in the Area any person who
now or during the term hereof is employed by the Company in a management
position (defined to include corporate officers of the Company, home office
management personnel and field level personnel at or above the residence
director level); provided, however, that nothing herein shall prohibit Executive
from hiring or participating in the hiring by another employer any such persons
if (i) such employment results from solicitations placed in general circulation,
trade or industry publications or other media or with placement agencies; (ii)
such persons are terminated by the Company or voluntarily leave the Company's
employ (otherwise than as a result of any prohibited solicitation by Executive)
or (iii) such persons were solicited and hired exclusively by persons other than
Executive (otherwise than as a result of any prohibited solicitation by
Executive).

(c)     For purposes of this Agreement, the term (i) “Area” means a fifty (50)
mile radius of any assisted care facility owned, managed or operated by the
Company at the time Executive's employment hereunder is terminated; (ii)
“Competing Business” means the business of owning, operating or managing
assisted living facilities or specialty assisted care facilities for the
treatment of individuals suffering from Alzheimer's disease having gross
annualized revenues of at least $35 Million or representing at least 1,000
owned, operated and/or managed beds; and (iii) “Confidential Information” means
any and all data and information relating to the business and business
opportunities of the Company (whether or not constituting a trade secret) that
is, has been or will be disclosed to Executive or of which Executive becomes
aware as a consequence of or through his relationship with the Company under
this Agreement, under the Prior Agreement or under the letter agreement between
the Company and Holiday Retirement Corp. dated as of March 1, 2000 (the
“Existing Confidentiality Agreement”) and that has value to the Company and is
not generally known by its competitors. Confidential Information shall not
include any data or information that has been voluntarily disclosed to the
public by the Company (except where such public disclosure has been made without
authorization by the Company), or that has been independently developed and
disclosed by others, or that otherwise enters the public domain through lawful
means. Confidential Information includes, but is not limited to, information
relating to the Company's financial affairs, assets, market research, services,
customers, employees, financing and potential financing, development,
purchasing, accounting or marketing.

(d)     The Executive acknowledges that irreparable loss and injury would result
to the Company upon the breach of any of the covenants in this Section and that
damages arising out of such breach would be difficult to ascertain. The
Executive hereby agrees that, in addition to all other remedies provided at law
or in equity and notwithstanding the agreement to arbitrate disputes set forth
in Section 10 hereof, the Company may petition and obtain from a court of law or
equity both temporary and permanent injunctive relief to prevent a breach by the
Executive of any covenant contained in either Section 7, 8 or 9 of this
Agreement. The parties hereto agree that all references to the Company in
Sections 7, 8 and 9 of this Agreement shall include, unless the context
otherwise requires, all subsidiaries and affiliates of the Company.

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9.     Corporate Opportunity. Executive shall not, during the term of this
Agreement and for a period of twelve (12) months following the termination of
this Agreement, (i) take or utilize for the benefit of any party other than the
Company, any corporate or business opportunity that may be offered to or become
known by Executive as a result of providing services to the Company or through
Confidential Information provided to Executive as a result of or pursuant to
this Agreement or the Prior Agreement unless such opportunity has first been
presented to the Board and the Board has specifically and expressly elected to
forego on such opportunity and to allow Executive to pursue such opportunity.

10.     Arbitration. Any and all disputes or controversies arising out of or
relating to this Agreement, shall be resolved by arbitration at the office of
the American Arbitration Association nearest to the Company's executive offices
at such time before a panel of one arbitrator under the then existing rules and
regulations of the American Arbitration Association. The arbitrator will be
chosen by mutual agreement by the Executive and the Company. The parties agree
that in any such arbitration, the arbitrator shall not have the power to reform
or modify this Agreement in any way and to that extent their powers are so
limited. The determination of the arbitrator shall be final and binding on the
parties hereto and judgment on it may be entered in any court of competent
jurisdiction. Except as required by law or as determined to be appropriate
disclosure by the Company under applicable securities laws or stock exchange
regulations, neither the Company nor Executives shall issue any press release or
make any statement which is reasonably foreseeable to become public with respect
to any arbitration or dispute between the parties without receiving the prior
written consent of the other party to the content of such press release or
statement. The Company and the Executive shall share the cost of the arbitration
proceeding equally; provided that the arbitrator shall have discretion to award
the prevailing party the right to collect from the other party all or a portion,
in the discretion of the arbitrator, of the prevailing party's costs and
expenses incurred in enforcing the terms of this Agreement, including the
prevailing party's portion of the costs of the arbitrator and the arbitration.

11.     Miscellaneous

(a)        Binding Effect. This Agreement shall inure to the benefit of and
shall be binding upon the Executive, his executor, administrator, heirs,
personal representatives and assigns, and upon the Company and its successors
and assigns; provided that the obligations and duties of the Executive may not
be assigned or delegated.

(b)        Governing Law. This Agreement shall be deemed to be made in, and in
all respects shall be interpreted, construed and governed by and in accordance
with, the laws of the State of Washington, without giving effect to principles
of conflicts of laws.

(c)        Invalid Provisions. The parties hereto agree that the agreements,
provisions and covenants contained in this Agreement (including, without
limitation, the agreements, provisions and covenants contained in Section 8
hereof) are several and divisible, that none of such agreements, provisions or
covenants depends upon any other provision, agreement or covenant for its
enforceability, and that each such agreement, provision, and covenant
constitutes an enforceable obligation between the Company and the Executive.
Consequently, the parties hereto agree that neither the invalidity nor the
unenforceability of any agreement, provision or covenant of this Agreement shall
affect the other agreements, provisions or covenants hereof, and this Agreement
shall remain in full force and effect and be construed in all respects as if
such invalid or unenforceable agreement, provision or covenant were omitted.

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(d)        Assignment. Except as otherwise provided in this Section, this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, representatives, successors and assigns. This
Agreement shall not be assignable by the Executive, and shall be assignable by
the Company only to any corporation or other entity resulting from the
reorganization, merger or consolidation of the Company with any other
corporation or entity or any corporation or entity to or with which the
Company's business or substantially all of its business or assets may be sold,
exchanged or transferred, and it must be so assigned by the Company to, and
accepted as binding upon it by, such other corporation or entity in connection
with any such reorganization, merger, consolidation, sale, exchange or transfer
(the provisions of this sentence also being applicable to each successive such
transaction).

(e)        Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning of interpretation of this Agreement.

(f)        Legal Fees. Each party hereto shall be responsible for its legal fees
incurred in connection herewith.

(g)        Notices. All communications provided for hereunder shall be in
writing and shall be deemed to be given when delivered in person or deposited in
the United States mail, first class, registered mail, return receipt requested,
with proper postage prepaid, and

If to the Executive, addressed to:

Patrick F. Kennedy
923 16th Avenue East
Seattle, WA 98112

If to the Company, addressed to:

Alterra Healthcare Corporation
10000 Innovation Drive
Milwaukee, Wisconsin 53226
Chief Financial Officer and Chairman of the Compensation
    Committee of the Board of Directors

with a copy to:

Rogers & Hardin LLP
2700 International Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Alan C. Leet, Esq.

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or at such other place or places or to such other person or persons as shall be
designated in writing by the parties hereto in the manner provided above for
notices.

(h)        Facsimile Signature; Counterparts. This Agreement may be executed by
facsimile signature and in one or more counterparts, each of which shall be
deemed to be an original but all of which together shall constitute one and the
same instrument.

(i)        Waiver. The waiver by either party hereto of a breach of any
provision, agreement or covenant of this Agreement by the other party hereto
shall not operate or be construed as a waiver of any prior or subsequent breach
of the same or any other provision, agreement or covenant by such other party
hereto.

(j)         Entire Agreement. This Agreement is intended by the parties hereto
to be the final expression of their agreement and is the complete and exclusive
statement thereof notwithstanding any representation or statements to the
contrary heretofore made. This Agreement may be modified only by written
instrument signed by each of the parties hereto.

(k)     Taxes. Any amounts payable to the Executive hereunder shall be paid to
the Executive subject to all applicable taxes required to be withheld by the
Company pursuant to federal, state or local law. The Executive or his
beneficiary, if applicable, shall be solely responsible for all taxes imposed on
the Executive or his beneficiary by reason of his receipt of any amounts of
compensation or benefits payable to the Executive hereunder.

IN WITNESS WHEREOF, the Executive has duly executed, and the Company has caused
this Agreement to be duly executed by its duly authorized officer, and the
parties have caused this Agreement to be delivered, all as of the day and year
first written above.
ALTERRA HEALTHCARE CORPORATION

By:                                         

EXECUTIVE:

                                              
PATRICK F. KENNEDY