Exhibit 10.4

 

[CEO FOUR YEAR TIME-BASED INSTALLMENT VESTING FORM]

 

HCP, INC.

TERMS AND CONDITIONS APPLICABLE TO

TIME-BASED RESTRICTED STOCK UNITS

GRANTED UNDER THE 2006 PERFORMANCE INCENTIVE PLAN

 

These Terms and Conditions (“Terms”) apply to certain time-based restricted
stock units granted by HCP, Inc., a Maryland corporation (the “Company”),
pursuant to the HCP, Inc. 2006 Performance Incentive Plan, as amended and/or
restated from time to time (the “Plan”).  If you were granted an award of
time-based restricted stock units by the Company, the date of grant (the “Grant
Date”) of your time-based restricted stock units (your “Units”) and the total
number of shares of Common Stock with respect to your Units are set forth in the
letter from the Company announcing your Unit grant (your “Grant Letter”) and are
reflected in the electronic stock plan award recordkeeping system (the “Stock
Plan System”) maintained by the Company or its designee.  These Terms apply to
your Units if referenced in your Grant Letter and/or the Stock Plan System with
respect to your Units.  If you were granted Units, you are referred to as the
“Grantee” with respect to your Units.  Capitalized terms not defined herein
shall have the meanings assigned to such terms in the Plan.

 

The Units are subject to adjustment as provided in Section 7.1 of the Plan.  The
Compensation Committee (the “Committee”) of the Board of Directors of the
Company (the “Board”) is the administrator of the Plan for purposes of your
Units.  The Units are subject to all of the terms and conditions set forth in
these Terms, and are further subject to all of the terms and conditions of the
Plan, as it may be amended from time to time, and any rules adopted by the
Committee, as such rules are in effect from time to time.

 

I.              Vesting.

 

(a)           Vesting of Units.  Subject to the terms and conditions of these
Terms, your Units shall vest and become nonforfeitable in accordance with the
following schedule, subject to your continuous service to the Company until the
applicable vesting date.  (Vesting amounts pursuant to the following schedule
are cumulative.)

 

Tranche

 

Percentage of Units that Vest

 

Vesting Date

1

 

25%

 

1st Anniversary of Grant Date

2

 

25%

 

2nd Anniversary of Grant Date

3

 

25%

 

3rd Anniversary of Grant Date

4

 

25%

 

4th Anniversary of Grant Date

 

The vesting schedule requires continued employment through each applicable
Vesting Date as a condition to vesting of the applicable Tranche and the
corresponding rights and benefits under these Terms.  Unless otherwise expressly
provided herein with respect to accelerated vesting of the Units under certain
circumstances, employment

 

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for only a portion of a vesting period, even if a substantial portion, will not
entitle you to any proportionate vesting or avoid or mitigate a termination of
rights and benefits upon or following a termination of employment as provided in
these Terms.

 

(b)           Acceleration on Certain Terminations of Employment.  If at any
time prior to the date your Units become fully vested in accordance with
Section I(a), your employment with the Company is terminated as a result of
(i) your death, Disability or Retirement, (ii) a Termination Other Than For
Cause, (iii) a Termination For Good Reason, or (iv) a Termination Upon a Change
in Control (including a Covered Resignation), your then outstanding Units (to
the extent not previously forfeited and otherwise unvested) shall fully vest
immediately upon such termination of employment.  For purposes of these Terms,
the terms “Covered Resignation,” “Disability,” “Termination Other Than For
Cause,” “Termination for Good Reason” and “Termination Upon a Change in Control”
shall have the meanings ascribed to such terms in your Amended and Restated
Employment Agreement with the Company dated April 24, 2008 (the “Employment
Agreement”).  Such meanings shall continue to apply for purposes of these Terms
notwithstanding any termination of the “Employment Period” (as such term is
defined in the Employment Agreement) in accordance with the Employment
Agreement.  For purposes of these Terms, “Retirement” means a termination of
your employment with the Company or any of its Subsidiaries after you have
either (i) attained age 65 and completed at least five (5) years of service as
an employee of the Company or any of its Subsidiaries or as a member of the
Board or (ii) attained age 60 and completed at least fifteen (15) years of
service as an employee of the Company or any of its Subsidiaries or as a member
of the Board.

 

(c)           No Acceleration or Vesting Upon Other Terminations.  Except as
otherwise provided in the Plan, if at any time your employment with the Company
is terminated (i) by the Company, or (ii) by you, under any circumstances (other
than as a result of your death, Disability, Retirement, a Termination Other Than
For Cause, a Termination For Good Reason, or a Termination Upon a Change in
Control, including a Covered Resignation), any of your Units that remain
outstanding and otherwise unvested at the time of such termination of employment
shall be automatically forfeited and cancelled in full, effective as of such
termination of employment and these Terms shall be null and void and of no
further force and effect.

 

(d)           Employment Termination Date.  If the Employment Period is in
effect, the date of your termination of employment for purposes of these Terms
shall be no earlier than the “Date of Termination,” as such term is defined in
the Employment Agreement.  If the Employment Period is not then in effect, the
date of termination of your termination of employment for purposes of these
Terms shall be your actual date of termination of employment.

 

II.            Timing and Form of Payment.

 

(a)           Distribution Date.  The distribution date (the “Distribution
Date”) for your Units that become vested pursuant to these Terms will be the
scheduled Vesting Date of such Units as set forth in Section I(a) hereof;
provided, however, that in the event that the vesting of your Units is
accelerated pursuant to Section I(b), the Distribution Date of such accelerated
Units will be the earlier of (i) subject to Section XIII, your Separation from
Service and (ii) the scheduled Vesting Date of such Units as set forth in
Section I(a) hereof.  Distribution of your vested Units will be made by the
Company in shares of Common Stock (on a one-to-one basis)

 

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on or as soon as practicable after the Distribution Date with respect to such
vested Units, but in no event later than two and one-half (2 ½) months after the
Distribution Date.  You will have no right to distribution of any of your Units
that do not vest in accordance with the provisions hereof.  Once a vested Unit
has been paid pursuant to these Terms, you will have no further rights with
respect to that Unit.  For purposes of these Terms, “Separation from Service”
means a “separation from service” within the meaning of Treasury Regulation
Section 1.409A-1(h)(1), without regard to the optional alternative definitions
available thereunder (i.e., generally a termination of your employment with the
Company or a Subsidiary).

 

(b)           Change in Control.  Notwithstanding the foregoing provisions of
this Section II, the Administrator may provide for payment of your vested Units
in accordance with the requirements of Treasury Regulation
1.409A-3(j)(4)(ix)(A), (B) or (C) promulgated under Section 409A of the Code (or
any similar successor provision), which regulation generally provides that a
deferred compensation arrangement may be terminated in limited circumstances
following a dissolution or change in control of the Company.

 

III.           Dividend Equivalent Rights.  During such time as each Unit
remains outstanding and prior to the distribution of such Unit in accordance
with Section II, you will have the right to receive, with respect to such Unit,
an amount equal to the amount of any cash dividend paid on a share of Common
Stock (a “Dividend Equivalent Right”).  You will have a Dividend Equivalent
Right with respect to each Unit that is outstanding on the record date of such
dividend, and such Dividend Equivalent Rights will be paid to you in cash
(without interest) at the same time or within thirty (30) days after the related
dividend is paid to stockholders of the Company.  Dividend Equivalent Rights
will not be paid to you with respect to any Units that are forfeited pursuant to
Section I, effective as of the date such Units are forfeited.  You will have no
Dividend Equivalent Rights as of the record date of any such cash dividend in
respect of any Units that have been paid in Common Stock; provided that you are
the record holder of such Common Stock on or before such record date.

 

IV.           Transferability.  No benefit payable under, or interest in, the
Units or these Terms shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge and any such attempted
action shall be void and no such benefit or interest shall be, in any manner,
liable for, or subject to, your or your beneficiary’s debts, contracts,
liabilities or torts; provided, however, nothing in this Section IV shall
prevent transfer of your Units by will or by applicable laws of descent and
distribution.  You may designate a beneficiary to receive distribution of your
vested Units upon your death by submitting a written beneficiary designation to
the Committee in the form provided to you as part of your Grant Letter.  You may
revoke a beneficiary designation by submitting a new beneficiary designation.

 

V.            Withholding.  Subject to Section 8.1 of the Plan and such
rules and procedures as the Committee may impose, upon any distribution of
shares of Common Stock in respect of your Units, the Company shall automatically
reduce the number of shares to be delivered by (or otherwise reacquire) the
appropriate number of whole shares, valued at their then fair market value (with
the “fair market value” of such shares determined in accordance with the
applicable provisions of the Plan), to satisfy any withholding obligations of
the Company or its Subsidiaries with respect to such distribution of shares at
the minimum applicable withholding rates; provided, however, that the foregoing
provision shall not apply in the event that you have made

 

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other provision in advance of the date of such distribution for the satisfaction
of such withholding obligations.  In the event that the Company cannot legally
satisfy such withholding obligations by such reduction of shares, or in the
event of a cash payment or any other withholding event in respect of your Units,
the Company (or a Subsidiary) shall be entitled to require a cash payment by you
or on your behalf and/or to deduct from other compensation payable to you any
sums required by federal, state or local tax law to be withheld with respect to
such distribution or payment.

 

VI.           No Contract for Employment.  These Terms, the Grant Letter and the
Stock Plan System are not an employment or service contract and nothing in these
Terms, the Grant Letter or the Stock Plan System shall be deemed to create in
any way whatsoever any obligation on your part to continue in the employ or
service of the Company, or of the Company to continue your employment or service
with the Company.

 

VII.          Notices.  Any notices provided for in these Terms, the Grant
Letter, the Stock Plan System or the Plan, including a Distribution Election,
shall be given in writing and shall be deemed effectively given upon receipt if
delivered by hand or, in the case of notices delivered by United States mail,
five (5) days after deposit in the United States mail, postage prepaid,
addressed, as applicable, to the Company or if to you, at such address as is
currently maintained in the Company’s records or at such other address as you
hereafter designate by written notice to the Company.

 

VIII.        Plan.  The provisions of the Plan are hereby made a part of these
Terms.  In the event of any conflict between the provisions of these Terms, the
Grant Letter, the Stock Plan System and those of the Plan, the provisions of
these Terms shall control.

 

IX.           Entire Agreement.  These Terms and the Grant Letter, together with
the Employment Agreement, contain the entire understanding of the parties in
respect of the Units and supersede upon their effectiveness all other prior
agreements and understandings between the parties with respect to the Units.  In
the event of any discrepancy between these Terms, the Grant Letter and the
Employment Agreement, the Employment Agreement shall control, except the
definition of “Distribution Date” in these Terms shall always control.

 

X.            Amendment.  These Terms may be amended by the Committee; provided,
however that no such amendment shall, without your prior written consent, alter,
terminate, impair or adversely affect your rights under these Terms.

 

XI.           Governing Law.  These Terms shall be construed and interpreted,
and the rights of the parties shall be determined, in accordance with the laws
of the State of Maryland, without regard to conflicts of law provisions thereof.

 

XII.         Tax Consequences.  You may be subject to adverse tax consequences
as a result of the issuance, vesting and/or distribution of your Units and the
payment of your Dividend Equivalent Rights.  YOU ARE ENCOURAGED TO CONSULT A TAX
ADVISOR AS TO THE TAX CONSEQUENCES OF YOUR UNITS AND SUBSEQUENT DISTRIBUTION OF
COMMON STOCK AND THE TAX CONSEQUENCES OF YOUR DIVIDEND EQUIVALENT RIGHTS.

 

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XIII.        Construction.  To the extent that these Terms are subject to
Section 409A of the Code, you and the Company agree to cooperate and work
together in good faith to timely amend these Terms to prevent application of the
penalty and interest provisions of Section 409A(a)(1)(B) of the Code.  In the
event that you and the Company do not agree as to the necessity, timing or
nature of a particular amendment intended to prevent application of the penalty
and interest provisions of Section 409A(a)(1)(B) of the Code, reasonable
deference will be given to your reasonable interpretation of such provisions. 
Notwithstanding anything to the contrary contained in these Terms or the Plan,
in the event that (i) the Distribution Date (as determined under Section II) of
any of your vested Units is the date of your Separation from Service and
(ii) you are at the time of such Separation from Service a “specified employee”
(within the meaning of Section 409A of the Code), the Distribution Date of such
vested Units shall be the earlier of the date that is six (6) months after your
Separation from Service or the date of your death, provided that this sentence
shall only apply if and to the extent required to avoid the imputation of any
tax, penalty or interest under Section 409A.

 

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