Exhibit
10.1


HEALTH CARE PROPERTY INVESTORS, INC.

CHANGE IN CONTROL SEVERANCE PLAN


1.             Establishment and
Purpose.  Health Care Property
Investors, Inc. (the “Corporation”) considers it essential to the best
interests of its shareholders to foster the continuous employment of key
management personnel.  In connection with
this, the Corporation’s Board of Directors (the “Board”) recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Corporation may exist and that the uncertainty and
questions that it may raise among management could result in the departure or
distraction of management personnel to the detriment of the Corporation and its
shareholders.  The Board has decided to
reinforce and encourage the continued attention and dedication of selected
members of the Corporation’s management to their assigned duties without the
distraction arising from the possibility of a change in control of the
Corporation.  In order to induce such
members of management to remain in its employ, the Corporation hereby agrees
that on and after the Effective Date (as defined in Section 2), subject to the
terms and conditions of this Plan, Participants (as defined in Section 3) shall
be eligible to receive the severance benefits set forth in Section 6 of this
Plan in the event that the Participants’ employment with the Corporation is
terminated under the circumstances described in Section 5 of this Plan
subsequent to a Change in Control (as defined in Section 4).  Upon the Effective Date, any prior severance
agreement or letter between each participant and the Corporation shall
terminate and be of no further effect.


2.             Term of Plan.  This Plan shall commence on the date of its
approval by the Compensation Committee of the Board (the “Effective Date”)
and shall continue in effect through December 31, 2008 (the “Term”);
provided, however, commencing on January 1, 2008 and on each January 1
thereafter, the Term shall automatically be extended for one additional year as
to each Participant then in the Plan unless, not later than November 30 of the
preceding year, the Corporation shall have given notice to the Participant that
it does not wish to extend the Term, and if such notice is timely given, the
Plan will terminate at the end of the Term then in effect as to each
Participant who is timely given such notice (with no extension or further
notice, as the case may be); provided, further, that if a Change in Control,
occurs during the Term (or the extended Term, as the case may be), the Term
shall continue in effect as to each Participant in the Plan at the time of the
Change in Control for a period of not less than twenty-four (24) months beyond
the month in which such Change in Control occurred.  For purposes of clarity, the Corporation may
give notice of termination of the Term to all or only certain Participants. If
such notice is given to only certain Participants, the Term shall continue as
set forth above as to all other Participants (subject to the Corporation’s
rights to similarly terminate the Term in accordance with the foregoing on some
future date(s) as to any such Participants). 
A Participant shall cease to be eligible for benefits under this Plan
(and shall cease to be a Participant) at midnight Pacific Time on the last day
of the Term applicable to that Participant. 
The termination or expiration of the Term as to a Participant shall not
affect the Participant’s obligations under Section 10 or affect the Participant’s
right to benefits (if any) pursuant to Section 6 as to any termination of
employment that occurred during such Term.



   
 









3.             Participation.


(a)           Participation.  The Compensation Committee of the Board (the “Committee”)
shall from time to time designate in writing those employees of the Corporation
(each, an “Eligible Person”) who are, subject to Section 3(b), eligible
to participate in the Plan (each, a “Participant”).  Notwithstanding anything else contained
herein to the contrary, the Committee shall limit the class of persons selected
to participate in this Plan to a select group of management or highly
compensated employees, as set forth in Sections 201, 301 and 401 of ERISA.


(b)           Participation
Agreement.  To the extent the
Committee has designated an Eligible Person as being eligible to participate in
this Plan, the Eligible Person shall become a Participant only by promptly
completing, fully executing, and returning to the Corporation a participation
agreement in substantially the form attached hereto as Exhibit A (or
such other form as the Committee may require and provide for at the time it
designates the Eligible Person as being eligible to participate in this
Plan).  The Participation Agreement shall
set forth the Participant’s applicable “Severance Multiplier” for the purposes
of calculating the Participant’s benefits under Section 6.


(c)           Termination of
Employment.  Notwithstanding anything
else contained in the Plan to the contrary, a Participant shall not be deemed
to have terminated employment with the Corporation if his or her employment by
the Corporation terminates but he or she otherwise continues, immediately after
such termination of employment, as an employee of a subsidiary of the
Corporation (a “Subsidiary”); provided that whether the Participant has
Good Reason to terminate employment shall be determined by comparing the
Participant’s authority, duties, responsibilities and other terms of employment
after giving effect to such change to the Participant’s authority, duties,
responsibilities and other terms of employment before giving effect to such
change (in each case relative to the Corporation and its Subsidiaries on a
consolidated basis, not simply with reference to the Participant’s employer).


(d)           Benefit Offset.  Notwithstanding anything else contained in
the Plan to the contrary, any severance benefits otherwise payable under the
Plan to a Participant shall be offset or reduced by the amount of severance
benefits payable or deliverable to the Participant under any other plan,
program, or agreement of or with the Corporation or any of its Subsidiaries.


4.             Change in Control.  No benefits shall be payable under Section 6
of this Plan unless there has been a Change in Control.  For purposes of this Plan, a Change in
Control shall be deemed to occur if any of the following take place on or after
the Effective Date:


(a)           The acquisition by any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934 (the “Exchange Act”) (a “Person”))
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of either (1) the then-outstanding shares of
common stock of the Corporation (the “Outstanding Company Common Stock”)
or (2) the combined voting power of the then-outstanding voting securities of
the Corporation entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that, for purposes of this
clause (a), the following acquisitions shall not constitute a Change in
Control:



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(A) any acquisition
directly from the Corporation, (B) any acquisition by the Corporation, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Corporation or any affiliate of the Corporation or a
successor, (D) any acquisition by any entity pursuant to a transaction that
complies with clauses (c)(1), (2) and (3) below, and (E) any acquisition by a
Person who owned at least 25% of either the Outstanding Company Common Stock or
the Outstanding Company Voting Securities as of the Effective Date or an
affiliate of any such Person;


(b)           A change in the Board
or its members such that individuals who, as of the later of the Effective Date
or the date that is two years prior to such change (the later of such two dates
is referred to as the “Measurement Date”), constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the Measurement Date whose election, or nomination for election by the
Corporation’s stockholders, was approved by a vote of at least two-thirds of
the directors then comprising the Incumbent Board (including for these
purposes, the new members whose election or nomination was so approved, without
counting the member and his predecessor twice) 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 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;


(c)           Consummation of a
reorganization, merger, statutory share exchange or consolidation or similar
corporate transaction involving the Corporation or any of its Subsidiaries, a
sale or other disposition of all or substantially all of the assets of the
Corporation, or the acquisition of assets or stock of another entity by the
Corporation or any of its Subsidiaries (each, a “Business Combination”),
in each case unless, following such Business Combination, (1) all or
substantially all of the individuals and entities that were the beneficial
owners of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 66-2/3% 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, as the case
may be, of the entity resulting from such Business Combination (including,
without limitation, an entity that, as a result of such transaction, owns the Corporation
or all or substantially all of the Corporation’s assets directly or through one
or more subsidiaries (a “Parent”)) in substantially the same proportions
as their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities,
as the case may be, (2) no Person (excluding any entity resulting from such
Business Combination or a Parent or any employee benefit plan (or related
trust) of the Corporation or such entity resulting from such Business
Combination or Parent) beneficially owns, directly or indirectly, more than 25%
of, respectively, 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 that
the ownership in excess of 25% existed prior to the Business Combination, and
(3) at least a majority of the members of the board of directors or trustees of
the entity resulting from such Business Combination or a Parent were members of
the Incumbent Board (determined pursuant to clause (b) above using the date
that is the later of the Effective Date or the date that is two years prior to
the Business Combination as the Measurement Date) at the time of the execution
of the initial agreement or of the action of the Board providing for such
Business Combination; or



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(d)           Approval by the
stockholders of the Corporation of a complete liquidation or dissolution of the
Corporation other than in the context of a transaction that does not constitute
a Change in Control under clause (c) above.


5.             Termination
Following Change in Control.


(a)           General.  During the Term, if any of the events
described in Section 4 constituting a Change in Control shall have occurred,
each Participant shall be entitled to the benefits provided in Section 6(b)
upon the subsequent termination of his or her employment, provided that such
termination occurs during the Term and within the two (2) year period immediately
following the date of such Change in Control, unless such termination is (i)
because of the Participant’s death or Disability (as defined in Section 5(b)),
(ii) by the Corporation for Cause (as defined in Section 5(c)), or (iii) by the
Participant other than for Good Reason (including a voluntary retirement when
the Participant otherwise does not have Good Reason to terminate
employment).  In the event that the
Participant is entitled to such benefits, such benefits shall be paid
notwithstanding the subsequent expiration of the Term.  For purposes of clarity, no Participant shall
be entitled to any benefits under this Plan if his or her employment with the
Corporation terminates for any reason before a Change in Control occurs or more
than two (2) years after a Change in Control occurs.


(b)           Disability.  As to any particular Participant, “Disability”
means the Participant’s inability, because of physical or mental illness or
injury, to perform the essential functions of his or her customary duties to
the Corporation, even with a reasonable accommodation, and the continuation of
such disabled condition for a period of one hundred eighty (180) continuous
days, or for not less than two hundred ten (210) days during any continuous
twenty-four (24) month period.


(c)           Cause.  Termination by the Corporation of a
Participant’s employment for “Cause” shall mean termination (i) upon the
Participant’s willful and continued failure to perform his or her duties with
the Corporation (other than any such failure resulting from his or her
incapacity due to physical or mental illness or any such actual or anticipated
failure after the Participant’s issuance of a Notice of Termination (as defined
in Section 5(f)) for Good Reason, after a written demand for performance is
delivered to the Participant by the Committee, which demand specifically
identifies the manner in which the Committee believes that the Participant has
not performed his or her duties, (ii) upon the Participant’s willful and
continued failure to follow and comply with the specific and lawful directives
of the Committee, as reasonably determined by the Committee (other than any
such failure resulting from the Participant’s incapacity due to physical or
mental illness or any such actual or anticipated failure after the Participant’s
issuance of a Notice of Termination for Good Reason), after a written demand
for performance is delivered to the Participant by the Committee, which demand
specifically identifies the manner in which the Committee believes that the
Participant has not performed his or her duties, (iii) upon the Participant’s
willful and continued failure to follow and comply with the policies of the
Corporation as in effect from time to time (other than any such failure



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resulting from the
Participant’s incapacity due to physical or mental illness or any such actual
or anticipated failure after the Participant’s issuance of a Notice of
Termination (as defined in Section 5(f)) for Good Reason, after a written
demand for performance is delivered to the Participant by the Committee, which
demand specifically identifies the manner in which the Committee believes that
the Participant has not followed or complied with such Corporation policies;
(iv) upon the Participant’s willful commission of an act of fraud or dishonesty
resulting in material economic or financial injury to the Corporation; (v) upon
the Participant’s willful engagement in illegal conduct or gross misconduct, in
each case which is materially and demonstrably injurious to the Corporation; or
(vi) upon the Participant’s indictment for, conviction of, or a plea of guilty
or nolo contendere to any felony.


(d)           Good Reason.  A Participant shall be entitled to terminate
his or her employment for Good Reason. For purposes of this Plan, “Good
Reason” shall mean, without the Participant’s express written consent, the
occurrence after a Change in Control and during the Term of any of the
following:


(i)            the assignment to the
Participant of any duties inconsistent with the position in the Corporation
that the Participant held immediately prior to the Change in Control, a
significant adverse alteration in the nature or status of the Participant’s
responsibilities or the conditions of the Participant’s employment from those
in effect immediately prior to such Change in Control, or any other action by
the Corporation that results in a material diminution in the Participant’s
position, authority, duties or responsibilities;


(ii)           the Corporation’s
reduction of the Participant’s annual base salary as in effect on the Effective
Date or as the same may be increased from time to time;


(iii)          the relocation of the
Corporation’s offices at which the Participant is principally employed
immediately prior to the date of the Change in Control (the Participant’s “Principal
Location”) to a location more than thirty (30) miles from such location, or
the Corporation’s requiring the Participant, without the Participant’s written
consent, to be based anywhere other than his or her Principal Location,
provided that such relocation results in a longer commute (measured by actual
mileage) for the Participant from the Participant’s primary residence to such
new location and except for required travel on the Corporation’s business to an
extent substantially consistent with the Participant’s current business travel
obligations;


(iv)          the Corporation’s
failure to pay to the Participant any portion of his or her current
compensation or to pay to the Participant any portion of an installment of
deferred compensation under any deferred compensation program of the
Corporation reasonably promptly after the date such compensation is due;


(v)           the Corporation’s
failure to continue in effect any material compensation or benefit plan in
which the Participant participates immediately prior to the Change in Control,
unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the Corporation’s
failure to continue the Participant’s participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of the Participant’s
participation relative to other participants, as existed at the time of the
Change in Control;



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(vi)          the Corporation’s failure
to obtain a satisfactory agreement from any successor to assume and agree to
perform this Plan, as contemplated in Section 8 hereof; or


(vii)         any purported termination
of the Participant’s employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 5(f) hereof (and, if
applicable, the requirements of Section 5(c) hereof), which purported
termination shall not be effective for purposes of this Agreement.


Notwithstanding the foregoing, no such condition shall
constitute “Good Reason” unless the Participant provides written notice of such
condition to the Corporation and the Corporation fails to remedy the condition
claimed to constitute Good Reason within thirty (30) days of receiving written
notice thereof; and provided, further, that in all events the termination of
the Participant’s employment with the Corporation shall not be treated as a
termination for “Good Reason” unless such termination occurs not more than six
(6) months following the initial existence of the condition claimed to
constitute Good Reason.  A Participant’s
right to terminate his or her employment pursuant to this Section 5(d) shall
not be affected by his or her incapacity due to physical or mental
illness.  A Participant’s continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.


(e)           Termination
Generally.  For purposes of clarity,
a Participant or the Corporation shall be entitled to terminate the Participant’s
employment for any reason or no reason at any time after a Change in Control
effective as of the applicable date set forth in Section 5(a).


(f)            Notice of
Termination.  Any purported
termination of a Participant’s employment by the Corporation or by the
Participant (other than termination due to death which shall terminate the
Participant’s employment automatically) shall be communicated by written Notice
of Termination to the Participant or the Corporation, respectively, other party
hereto in accordance with Section 14. “Notice of Termination” shall mean
a notice that shall indicate the specific termination provision in this Plan
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Participant’s
employment under the provision so indicated.


(g)           Date of Termination,
Etc.  “Date of Termination”
shall mean (a) if a Participant’s employment is terminated due to the
Participant’s death, the date of the Participant’s death; (b) if a Participant’s
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Participant shall not have returned to
the full-time performance of his or her duties during such thirty (30)-day
period), and (c) if a Participant’s employment is terminated for any other
reason, the date specified in the Notice of Termination.



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6.             Compensation Upon
Termination Following A Change in Control. 
If a Participant’s employment is terminated following a Change in Control
during the Term and during the two (2) year period immediately following the
date of the Change in Control, the Participant shall be entitled to the
benefits described below, subject to the other terms and conditions of this
Plan:


(a)           If the Participant’s
employment is terminated in such circumstances by the Corporation for Cause or
Disability or by the Participant other than for Good Reason or due to the
Participant’s death, the Corporation shall pay the Participant (i) the
Participant’s accrued and unpaid base salary and vacation (if any) through the
Date of Termination, and (ii) all other amounts to which the Participant is
entitled under any compensation plan of the Corporation at the time such
payments are due, and the Corporation shall have no further obligations to the
Participant under this Agreement.


(b)           If the Participant’s
employment by the Corporation shall be terminated by the Participant for Good
Reason or by the Corporation other than for Cause or Disability and in all
cases other than due to the Participant’s death, then, subject to the
provisions of Section 7, the Participant shall be entitled to the benefits
provided below.  For purposes of this
Section 6(b), a Participant’s “Annual Bonus Amount” shall mean the
greater of (i) one-third (1/3) of the Participant’s annual base salary as in
effect as of the Date of Termination or (ii) the average annual bonus received
by the Participant in the three (3) years immediately prior to the Change in
Control for each full year of employment with the Corporation, which shall be
determined without regard to the payment of any special bonuses (e.g.
transaction bonuses).  For purposes of
this Section 6(b), a Participant’s “Annual Base Salary” shall mean the
greater of (x) the Participant’s annual base salary as in effect as of the Date
of Termination or (y) the Participant’s annual base salary as in effect
immediately prior to the Change in Control.


(i)            The Corporation shall
pay to the Participant (1) the Participant’s accrued and unpaid base salary and
vacation (if any) through the Date of Termination, (2) the unpaid portion, if
any, of any annual bonus, plus an amount equal to the Participant’s applicable
Annual Bonus Amount multiplied by a fraction, the numerator of which is the
number of calendar days that the Participant was employed by the Corporation
during the year of termination and the denominator of which is 365, and (3) all
other amounts to which the Participant is entitled under any compensation plan
of the Corporation at the time such payments are due;


(ii)           A lump sum severance
payment equal to the sum of: (A) the Participant’s Severance Multiplier times
the Participant’s Annual Base Salary; plus (B) the Participant’s Severance
Multiplier times the Participant’s Annual Bonus Amount;


(iii)          A cash payment equal to
the expected aggregate cost of the premiums that would be charged to the
Participant to continue medical coverage pursuant to the Consolidated Omnibus
Budget Reconciliation Act (“COBRA”), at the same or reasonably
equivalent medical coverage for the Participant (and, if applicable, the
Participant’s eligible dependents) as in effect immediately prior to the
Participant’s Date of Termination, for a period of months after the Participant’s
Date of Termination equal to twelve (12) multiplied by the Participant’s
Severance Multiplier.



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(iv)          (A) Any stock options or
equity or equity-related compensation or grants that vest based on the passage
of time and continued performance of services (to the extent outstanding and
not otherwise vested as of the Date of Termination, and exclusive of any grants
that include performance-based vesting criteria) shall become fully vested
immediately prior to such termination; (B) any stock options or equity or
equity-related compensation or grants that vest based on the satisfaction of
performance-based criteria (to the extent outstanding and not otherwise vested
as of the Severance Date) shall continue to be governed by the provisions of
the applicable award agreement in the circumstances; provided, however, that to
the extent that any such then-outstanding equity-based awards are subject to
forfeiture and/or vesting requirements based on the passage of time, such
awards shall be fully accelerated with respect to such time-based forfeiture
and/or vesting provisions; and (C) the Participant shall have until the date
that is twelve (12) months after his or her Date of Termination to exercise any
stock option to the extent that it has become vested on the Date of
Termination, subject to earlier termination of the stock option upon the stock
option’s original expiration date or the occurrence of a change in control
event or certain similar reorganization event under the terms of the applicable
award agreement.  Except as provided in
this Section 6(b)(iv), the effect of a termination of employment on a
Participant’s equity-based awards shall be determined under the terms of the
applicable award agreement.


(v)           The Participant shall
be fully vested in his or her accrued benefits under any nonqualified pension,
profit sharing, deferred compensation or supplemental plans maintained by the
Corporation and the Corporation shall pay the
Participant a cash lump sum amount equal to the portion of the Participant’s
account under the Corporation’s 401(k) plan (including, without limitation, any
401(k) matching contributions), if any, that has not become vested under the
terms of such plan as of the Date of Termination.


(vi)          The Corporation shall
furnish the Participant for six (6) years following the Date of Termination
(without reference to whether the Term continues in effect) with directors’ and
officers’ liability insurance insuring the Participant against insurable events
which occur or have occurred while the Participant was a director or officer of
the Corporation, such insurance to have policy limits aggregating not less than
the amount in effect immediately prior to the Change in Control, and otherwise
to be in substantially the same form and to contain substantially the same
terms, conditions and exceptions as the liability issuance policies provided
for officers and directors of the Corporation in force from time to time,
provided, however, that such terms, conditions and exceptions shall not be, in
the aggregate, materially less favorable to the Participant than those in effect
on the Effective Date; provided, further, that if the aggregate annual premiums
for such insurance at any time during such period exceed one hundred and fifty
percent (150%) of the per annum rate of premium currently paid by the
Corporation for such insurance, then the Corporation shall provide the maximum
coverage that will then be available at an annual premium equal to one hundred
and fifty percent (150%) of such rate; and


(vii)         In any situation where
under applicable law the Corporation has the power to indemnify (or advance
expenses to) the Participant in respect of any judgments, fines, settlements,
loss, cost or expense (including attorneys’ fees) of any nature related to or
arising out of the Participant’s activities as an agent, employee, officer or
director of the



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Corporation or in
any other capacity on behalf of or at the request of the Corporation, the
Corporation shall promptly on written request, indemnify (and advance expenses
to) the Participant to the fullest extent permitted by applicable law,
including but not limited to making such findings and determinations and taking
any and all such actions as the Corporation may, under applicable law, be
permitted to have the discretion to take so as to effectuate such
indemnification or advancement.  Such
agreement by the Corporation shall not be deemed to impair any other obligation
of the Corporation respecting the Participant’s indemnification otherwise
arising out of this or any other agreement or promise of the Corporation or
under any statute.


(c)           Subject to Section 7
and Section 22, the payments described in Sections 6(a)(i), 6(b)(i)(1),
6(b)(i)(2), 6(b)(ii), 6(b)(iii) and 6(b)(iv), as applicable, shall be paid in
cash to the Participant in a single lump sum as soon as practicable following the
Date of Termination, but in no event beyond seventy four (74) days from such
date (or, if earlier, the (10) business days after the Participant’s release
contemplated by Section 7(a) becomes irrevocable by the Participant in
accordance with applicable law.


(d)           The foregoing
provisions of this Section 6 shall not affect: (i) a Participant’s receipt of
benefits otherwise due terminated employees under group insurance coverage
consistent with the terms of the applicable Corporation welfare benefit plan;
(ii) a Participant’s rights under COBRA to continue participation in medical,
dental, hospitalization and life insurance coverage; or (iii) a Participant’s
receipt of benefits otherwise due in accordance with the terms of the
Corporation’s 401(k) plan (if any).


7.             Release; Exclusive
Remedy.


(a)           This Section 7 shall
apply notwithstanding anything else contained in this Plan or any other stock
option, restricted stock or other equity-based award agreement to the
contrary.  Notwithstanding anything to
the contrary contained in this Plan, the Corporation’s obligation to make any
payment of benefits with respect to a Participant pursuant to Section 6(b) of
this Plan (if the Participant is otherwise entitles to such benefits) is
subject to the condition precedent that (i) the Participant has fully executed
a valid and effective release (in the form attached hereto as Exhibit B
or such other form as the Committee may reasonably require in the
circumstances, which other form shall be substantially similar to that attached
hereto as Exhibit B but with such changes as the Committee may determine
to be required or reasonably advisable in order to make the release enforceable
and otherwise compliant with applicable laws), (ii) such executed release is
delivered by the Participant to the Corporation so that it is received by the
Corporation in the time period specified below, and (iii) such release is not
revoked by the Participant (pursuant to any revocation rights afforded by
applicable law).  In order to satisfy the
requirements of this Section 7(a), a Participant’s release referred to in the
preceding sentence must be delivered by the Participant to the Corporation so
that it is received by the Corporation no later than twenty five (25) calendar
days after the Participant’s Date of Termination (or such later date as may be
required for an enforceable release of the Participant’s claims under the
United States Age Discrimination in Employment Act of 1967, as amended (“ADEA”),
to the extent the ADEA is applicable in the circumstances, in which case the
Participant will be provided with either twenty one (21) or forty five (45)
days, depending on the circumstances of the termination, to consider the
release).  In addition, the Corporation may
require that the Participant’s release be executed no earlier than the date
that the Participant’s employment with the Corporation terminates.



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(b)           Each Participant agrees
that the general release agreement described in Section 7(a) will require that
the Participant acknowledge, as a condition to the payment of any benefits
under Section 6(b), that the payments contemplated by Section 6(b) shall
constitute the exclusive and sole remedy for any termination of the Participant’s
employment, and each Participant will be required to covenant, as a condition
to receiving any such payment, not to assert or pursue any other remedies, at
law or in equity, with respect to any termination of employment.  No Participant shall be required to mitigate
the amount of any payment provided for in Section 6 by seeking other employment
or otherwise nor shall the amount of any payment or benefit provided for in
Section 6 be reduced by any compensation earned by the Participant as the
result of employment by another employer or self-employment, by retirement
benefits, by offset against any amount claimed to be owed by the Participant to
the Corporation, or otherwise.


8.             Section
280G.  Each Participant shall be
covered by the provisions set forth in Exhibit C hereto, incorporated
herein by this reference.


9.             Successors;
Assigns


(a)           The Corporation shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Corporation to expressly assume and agree to perform the
obligations under this Plan in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession had taken
place.  Failure of the Corporation to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall be deemed a material breach of this Plan by the Corporation
and shall entitle each Participant to terminate his or her employment and
receive compensation from the Corporation in the same amount and on the same
terms to which the Participant would be entitled hereunder if the Participant
terminates his or her employment for Good Reason following a Change in Control,
except that for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of Termination.  Unless expressly provided otherwise, “Corporation”
as used herein shall mean the Corporation as defined in this Plan and any
successor to its business and/or assets as aforesaid.


(b)           None of the benefits,
payments, proceeds or claims of any Eligible Person or Participant shall be
subject to any claim of any creditor and, in particular, the same shall not be
subject to attachment or garnishment or other legal process by any creditor,
nor shall any such Eligible Person or Participant have any right to alienate,
anticipate, commute, pledge, encumber or assign any of the benefits or payments
or proceeds which he or she may expect to receive, contingently or otherwise,
under the Plan.  Notwithstanding the
foregoing, benefits which are in pay status may be subject to a court-ordered
garnishment or wage assignment, or similar order, or a tax levy.  The Plan shall inure to the benefit of and be
enforceable by each Participant’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees.  If a Participant dies while any amount would
still be payable to him or her hereunder had he or she continued to live, all
such amounts, unless otherwise provided herein, shall be paid to the
Participant’s estate in accordance with the terms of the Plan.



 10
 









10.           Confidentiality,
Noncompetition and Non-Solicitation Covenants.  Each Participant by accepting participation
in the Plan expressly agrees to each of the foregoing provisions of this
Section 10:


(a)           Confidentiality.  Each Participant shall not at any time
(whether during or after the Participant’s employment with the Corporation and
whether or not the Participant subsequently ceases to participate in this Plan
or is ever entitled to the benefits provided in Section 6) directly or
indirectly, other than in the course of the Participant’s duties hereunder,
disclose or make available to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever, any Confidential Information
(as defined below); provided, however, that this Section 10(a) shall not apply
when (i) disclosure is required by law or by any court, arbitrator, mediator or
administrative or legislative body (including any committee thereof) with
apparent jurisdiction to order the Participant to disclose or make available
such information (provided, however, that the Participant shall promptly notify
the Corporation in writing upon receiving a request for such information), or
(ii) with respect to any other litigation, arbitration or mediation involving
this Plan, including but not limited to enforcement of this Plan.  Upon termination of a Participant’s
employment with the Corporation, all Confidential Information in the
Participant’s possession that is in written, digital or other tangible form
(together with all copies or duplicates thereof, including computer files)
shall be returned to the Corporation and shall not be retained by the
Participant or furnished to any third party, in any form except as provided
herein; provided, however, that the Participant shall not be obligated to treat
as confidential, or return to the Corporation copies of any Confidential
Information that (x) was publicly known at the time it was disclosed to the
Participant, (y) becomes publicly known or available thereafter other than by
any means in violation of this Plan or any other duty owed to the Corporation
by any person or entity, or (z) is lawfully disclosed to the Participant by a
third party.  As used in this Plan, the
term “Confidential Information” means: information disclosed to a
Participant or known by a Participant as a consequence of or through the
Participant’s relationship with the Corporation, about the suppliers,
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to supplier lists or customer lists, of the Corporation and its
affiliates (collectively, the “Company Group”).


(b)           Noncompetition.  Each Participant acknowledges that the nature
of the Company Group’s business and the Participant’s position with the
Corporation is such that if the Participant were to become employed by, or
substantially involved in, the business of a competitor of the Company Group
during the twelve (12) months following the termination of the Participant’s
employment with the Corporation, it would be very difficult for the Participant
not to rely on or use the Company Group’s trade secrets and Confidential
Information.  Thus, to avoid the
inevitable disclosure of the Company Group’s trade secrets and Confidential
Information, and to protect such trade secrets and Confidential Information and
the Company Group’s relationships and goodwill with customers, during the Participant’s
employment with the Corporation and for a period of twelve (12) months after
the Date of Termination for any reason (the “Restricted Period”), the
Participant will not directly or indirectly engage in (whether as an employee,
consultant, agent, proprietor, principal, partner, stockholder, corporate
officer, director or otherwise), nor have any ownership interest in, or
participate in the financing, operation, management or control of, any person,
firm, corporation or business anywhere in the United States and Mexico (the “Restricted
Area”) that competes with any member of the



 11
 









Company Group in the
healthcare real estate acquisition, development, management, investment or
financing industry (a “Competing Business”); provided, that the
Participant may purchase and hold only for investment purposes less than 2% of
the shares of any corporation in competition with the Company Group whose
shares are regularly traded on a national securities exchange.  Notwithstanding the preceding sentence, in
the event a Participant accepts employment with or provides services to a
business (the “Service Recipient”) that is affiliated with another
business that engages in a Competing Business or which derives a de minimis
portion of its gross revenues from Competing Businesses, the Participant’s
employment by or service to the Service Recipient shall not, in and of itself,
constitute a breach by that Participant of his or her obligations pursuant to
this Section 10(b) so long as each of the following conditions is satisfied at
all times during the Restricted Period and while the Participant is employed by
or providing service to the Service Recipient: (i) no more than 10% of the
gross revenues of the Service Recipient are derived from Competing Businesses;
(ii) no more than 10% of the gross revenues of the Service Recipient and those
entities that (directly or through one or more intermediaries) are controlled
by, control, or are under common control with such Service Recipient, together
on a consolidated basis, are derived from Competing Businesses; and (iii) in
the course of the Participant’s services for the Service Recipient, a material
portion of the Participant’s services are not directly involved in or
responsible for any Competing Business. 
The foregoing covenants in this Section 10(b) shall continue in effect
through the entire Restricted Period regardless of whether the Participant is
then entitled to receive any severance payments from the Corporation.


(c)           Non-Solicitation of
Employees. During the Restricted Period, each Participant shall not to
directly or indirectly solicit, induce, attempt to hire, recruit, encourage,
take away, or hire any employee or independent contractor of the Company Group
whose annual rate of compensation is then $50,000 or more or cause any such
Company Group employee or contractor to leave his or her employment or
engagement with the Company Group either for employment with the Participant or
for any other entity or person.  The
foregoing covenants in this Section 10(c) shall continue in effect through the
entire Restricted Period regardless of whether the Participant is then entitled
to receive any severance payments from the Corporation.


(d)           Non-Solicitation of
Customers.  During the Restricted
Period, each Participant shall not to directly or indirectly influence or
attempt to influence customers, vendors, suppliers, licensors, lessors, joint
venturers, associates, consultants, agents, or partners of the Company Group to
divert their business away from the Company Group to any Competing Business,
and each Participant agrees not to otherwise interfere with, disrupt or attempt
to disrupt the business relationships, contractual or otherwise, between any
member of the Company Group and any of its customers, suppliers, vendors,
lessors, licensors, joint venturers, associates, officers, employees,
consultants, managers, partners, members or investors.  The foregoing covenants in this Section 10(d)
shall continue in effect through the entire Restricted Period regardless of
whether the Participant is then entitled to receive any severance payments from
the Corporation.


(e)           Understanding of
Covenants. Each Participant, by accepting participation in this Plan
represents as follows: the Participant (i) is familiar with the foregoing
covenants set forth in this Section 10, (ii) is fully aware of the Participant’s
obligations hereunder, (iii) agrees to the reasonableness of the length of
time, scope and geographic coverage of the foregoing



 12
 









covenants set forth in
this Section 10, (iv) agrees that the Company Group currently conducts business
throughout the Restricted Area, (v) agrees that such covenants are necessary to
protect the Company Group’s confidential and proprietary information, good
will, stable workforce, and customer relations, (vi) agrees that the
Participant’s coverage by this Plan for the Term applicable to the Participant
is good, valid and sufficient consideration for (among other things) the
Participant’s agreement to such covenants, and (vii) agrees that such covenants
shall continue in effect as to the Participant even if the Participant ceases
at any time in the future to participate in the Plan (i.e., the Participant
ceases to be a “Participant”) and even if the Participant is never entitled to
the benefits set forth in Section 6 (and accordingly, the term “Participant”
includes a former “Participant” to the extent necessary to effect such
covenants).


(f)            Right to Injunctive
and Equitable Relief.  Each
Participant’s obligations not to disclose or use Confidential Information and
to refrain from the solicitations described in this Section 10 are of a special
and unique character, which gives them a peculiar value.  The Corporation cannot be reasonably or
adequately compensated in damages in an action at law in the event a
Participant breaches such obligations, and the breach of such obligations would
cause irreparable harm to the Corporation. 
Therefore, the Corporation shall be entitled to injunctive and other
equitable relief without bond or other security in the event of such breach in
addition to any other rights or remedies which the Corporation may
possess.  Furthermore, each Participant’s
obligations and the rights and remedies of the Corporation under this Section
10 are cumulative and in addition to, and not in lieu of, any obligations,
rights, or remedies created by applicable law relating to misappropriation or
theft of trade secrets or confidential information.


(g)           Cooperation.  During each Participant’s employment with the
Corporation and thereafter, the Participant shall respond to all reasonable
inquiries of the Corporation about any matters concerning the Corporation or
its affairs that occurred or arose during the Participant’s employment by the
Corporation, and each Participant shall reasonably cooperate with the
Corporation in investigating, prosecuting and defending any charges, claims,
demands, liabilities, causes of action, lawsuits or other proceedings by,
against or involving the Corporation relating to the period during which the
Participant was employed by the Corporation or relating to matters of which the
Participant had or should have had knowledge or information.  Further, except as required by law, each
Participant will at no time voluntarily serve as a witness or offer written or
oral testimony against the Corporation in conjunction with any complaints,
charges or lawsuits brought against the Corporation by or on behalf of any
current or former employees, or any governmental or administrative agencies
related to the Participant’s period of employment and will provide the
Corporation with notice of any subpoena or other request for such information
or testimony.


11.           Claims Procedures.


(a)           Presentation of
Claim.  Any Participant (such
Participant being referred to below as a “Claimant”) may deliver to the
Committee a written claim for a determination with respect to the benefits
payable to such Claimant pursuant to this Plan. 
If such a claim relates to the contents of a notice received by the
Claimant, the claim must be made within sixty (60) days after such notice was
received by the Claimant.  All other
claims must be made within one hundred eighty (180) days of the date on which
the event that caused the claim to arise occurred.  The claim must state with particularity the
determination desired by the Claimant.



 13















(b)           Notification of
Decision.  The Committee shall
consider a Claimant’s claim within a reasonable time, but no later than ninety
(90) days after receiving the claim.  If
the Committee determines that special circumstances require an extension of
time for processing the claim, written notice of the extension shall be
furnished to the Claimant prior to the termination of the initial ninety (90)
day period.  In no event shall such
extension exceed a period of ninety (90) days from the end of the initial ninety
(90) day period.  The extension notice
shall indicate the special circumstances requiring an extension of time and the
date by which the Committee expects to render the benefit determination.  The Committee shall notify the Claimant in
writing:


(i)            that the Claimant’s
requested determination has been made, and that the claim has been allowed in
full; or


(ii)           that the Committee has
reached a conclusion contrary, in whole or in part, to the Claimant’s requested
determination, and such notice must set forth in a manner calculated to be
understood by the Claimant:


(1)           the specific reason(s)
for the denial of the claim, or any part of it;


(2)           specific reference(s)
to pertinent provisions of the Plan upon which such denial was based;


(3)           a description of any
additional material or information necessary for the Claimant to perfect the
claim, and an explanation of why such material or information is necessary;


(4)           an explanation of the
claim review procedure and the time limits applicable to such procedures set
forth in Section 11(c); and


(5)           a statement of the
Claimant’s right to bring a civil action under ERISA Section 502(a) following
an adverse determination on review.


(c)           Review of a Denied
Claim.  On or before sixty (60) days
after receiving a notice from the Committee that a claim has been denied, in
whole or in part, a Claimant (or the Claimant’s duly authorized representative)
may file with the Committee a written request for a review of the denial of the
claim.  The Claimant (or the Claimant’s
duly authorized representative):


(i)            may, upon request and
free of charge, have reasonable access to, and copies of, all documents,
records and other information relevant to the claim for benefits;


(ii)           may submit written
comments or other documents; and/or


(iii)          may request a hearing,
which the Committee, in its sole discretion, may grant.



 14
 









(d)           Decision on Review.  The Committee shall render its decision on
review promptly, and no later than sixty (60) days after the Committee receives
the Claimant’s written request for a review of the denial of the claim.  If the Committee determines that special
circumstances require an extension of time for processing the claim, written
notice of the extension shall be furnished to the Claimant prior to the
termination of the initial sixty (60) day period.  In no event shall such extension exceed a
period of sixty (60) days from the end of the initial sixty (60) day
period.  The extension notice shall
indicate the special circumstances requiring an extension of time and the date
by which the Committee expects to render the benefit determination.  In rendering its decision, the Committee
shall take into account all comments, documents, records and other information
submitted by the Claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit
determination.  The decision must be
written in a manner calculated to be understood by the Claimant, and it must
contain:


(i)            specific reasons for
the decision;


(ii)           specific reference(s)
to the pertinent Plan provisions upon which the decision was based;


(iii)          a statement that the
Claimant is entitled to receive, upon request and free of charge, reasonable
access to and copies of, all documents, records and other information relevant
(as defined in applicable ERISA regulations) to the Claimant’s claim for
benefits; and


(iv)          a description of the
Claimant’s right to bring a civil action under Section 502(a) of ERISA
following an adverse benefit determination on review.


12.           Arbitration; Dispute
Resolution, Etc.


(a)           Notwithstanding
anything to the contrary contained in the Plan, the Participant, in his or her
sole discretion, may elect to have any claim or controversy arising out of or
in connection with the Plan and/or a Participation Agreement submitted to
binding arbitration and adjudicated in accordance with this Section 12 without
first having to exhaust the claims procedures set forth in Article 11.


(b)             The Corporation and, by accepting
participation in this Plan, each Participant hereby consent to the resolution
by mandatory and binding arbitration of all claims or controversies arising out
of or in connection with the Plan and/or the Participant’s Participation
Agreement that the Corporation may have against the Participant, or that the
Participant may have against the Corporation or against any of its officers,
directors, employees or agents acting in their capacity as such, and which are
not resolved under the terms of Article 11 (or which are not required to be
resolved under the terms of Article 11, as the case may be).  Each party’s promise to resolve all such
claims or controversies by arbitration in accordance with the Plan rather than
through the courts is consideration for the other party’s like promise.  It is further agreed that the decision of an
arbitrator on any issue, dispute, claim or controversy submitted for
arbitration, shall be final and binding upon the Corporation and the
Participant and that judgment may be entered on the award of the arbitrator in
any court having proper jurisdiction.



 15
 









(c)           Except as otherwise
provided in this procedure or by mutual agreement of the parties, any
arbitration shall be before a sole arbitrator (the “Arbitrator”)
selected from Judicial Arbitration & Mediation Services, Inc., Los Angeles,
California, or its successor (“JAMS”), or if JAMS is no longer able to
supply the arbitrator, such arbitrator shall be selected from the American
Arbitration Association, and shall be conducted in accordance with the
provisions of California Civil Procedure Code Sections 1280 et. seq. as the
exclusive remedy of such dispute.


(d)           The Arbitrator shall
interpret the Plan, any applicable Corporation policy or rules and regulations,
any applicable substantive law (and the law of remedies, if applicable) of the
state in which the claim arose, or applicable federal law.  If arbitration is brought after the claim or
controversy has been submitted for review by the Committee in accordance with
Article 11, the Arbitrator shall limit his or her review to whether or not the
Committee has abused its discretion in its interpretation of the Plan and such
policies, rules, and regulations; provided, however, that the Arbitrator shall
apply a de novo standard of review with respect to any claim for benefits
hereunder in connection with a Change in Control.  In reaching his or her decision, the
Arbitrator shall have no authority to change or modify any lawful Corporation
policy, rule or regulation, or the Plan. 
Except as provided in Section 12(e), the Arbitrator, and not any
federal, state or local court or agency, shall have exclusive and broad
authority to resolve any dispute relating to the interpretation, applicability,
enforceability or formation of the Plan, including but not limited to, any
claim that all or any part of the Plan is voidable.  The Arbitrator shall have the authority to
decide dispositive motions.  Following
completion of the arbitration, the arbitrator shall issue a written decision
disclosing the essential findings and conclusions upon which the award is
based.


(e)           Notwithstanding the
foregoing, provisional injunctive relief may, but need not, be sought by the
Participant or the Corporation in a court of law while arbitration proceedings
are pending, and any provisional injunctive relief granted by such court shall
remain effective until the matter is finally resolved by the Arbitrator in
accordance with the foregoing.  Final
resolution of any dispute through arbitration may include any remedy or relief
which would otherwise be available at law and which the Arbitrator deems just
and equitable.  The Arbitrator shall have
the authority to award full damages as provided by law.  Any award or relief granted by the Arbitrator
hereunder shall be final and binding on the parties hereto and may be enforced
by any court of competent jurisdiction.


(f)            The Corporation shall
pay the reasonable fees and expenses of the Arbitrator and of a stenographic
reporter, if employed.  Each party shall
pay its own legal fees and other expenses and costs incurred with respect to the
arbitration.


13.           Administration of
the Plan.


(a)           Administration -
General.  The Corporation shall be
the plan administrator (within the meaning of Section 3(16)(A) of ERISA).  The Corporation delegates its duties under
the Plan to the Committee.  The Committee
delegates the day-to-day ministerial duties with respect to the Plan to the
Corporation’s management.  The Committee
and its delegates shall be named fiduciaries of the Plan to the extent required
by ERISA



 16
 









(b)           Powers and Duties of
the Committee.  The Committee shall
enforce the Plan in accordance with its terms, shall be charged with the
general administration of the Plan, and shall have all powers necessary to
accomplish its purposes, including, but not by way of limitation, the power and
authority to do the following:


(i)            To determine
eligibility for and participation in the Plan;


(ii)           To construe and
interpret the terms and provisions of the Plan;


(iii)          To compute and certify
to the amount and kind of benefits payable to Participants and their beneficiaries,
and to determine the amount of withholding taxes to be deducted pursuant to
Section 16;


(iv)          To maintain all records
that may be necessary for the administration of the Plan;


(v)           To provide for the
disclosure of all information and the filing or provision of all reports and
statements to Participants, beneficiaries or governmental agencies as shall be
required by law;


(vi)          To make and publish such
rules for the regulation of the Plan and procedures for the administration of
the Plan as are not inconsistent with the terms hereof; and


(vii)         To appoint a plan manager
or any other agent, and to delegate to them such powers and duties in
connection with the administration of the Plan as the Committee may from time
to time prescribe.


(c)           Committee Action.  Subject to Section 11, the Committee shall
act with respect to the Plan at meetings by affirmative vote of a majority of
the members of the Committee.  Any action
permitted to be taken at a meeting with respect to the Plan may be taken
without a meeting if, prior to such action, a written consent to the action is
signed by all members of the Committee and such written consent is filed with
the minutes of the proceedings of the Committee.  A member of the Committee shall not vote or
act upon any matter which relates solely to himself or herself as a
Participant.  The Chairman or any other
member or members of the Committee designated by the Chairman may execute any
certificate or other written direction on behalf of the Committee.


(d)           Construction and Interpretation.
As to any event prior to a Change in Control, the Committee shall have full
discretion to construe and interpret the terms and provisions of the Plan and
any and all Participation Agreements, which interpretation or construction
shall be final and binding on all parties, including but not limited to the
Corporation and any Participant, beneficiary or other person.



 17
 









14.           Notice.  All notices under or with respect to this
Plan or any Participation Agreement shall be in writing and shall be either
personally delivered or mailed postage prepaid, by certified mail, return
receipt requested:


(a)           if to the Corporation:


Health Care Property
Investors, Inc.


Attention: Compensation Committee


3760 Kilroy Airport Way,
Suite 300

                                  Long
Beach, California 90806


with a copy to:


Health Care Property Investors, Inc.


Attention: Secretary of the Corporation


3760 Kilroy Airport Way,
Suite 300

Long Beach, California 90806


 (b)                              if
to a Participant, to the Participant’s address most recently on file in the
payroll records of the Corporation.


Notice shall be effective when personally delivered,
or five (5) business days after being so mailed.  Any party may change its address for purposes
of giving future notices pursuant to the Plan and any Participation Agreement
by notifying the other party in writing of such change in address, such notice
to be delivered or mailed in accordance with the foregoing.


15.           Governing Law.  The Plan and any Participation Agreement
hereunder will be governed by and construed in accordance with ERISA and, to
the extent not preempted thereby, the laws of the State of California (unless
otherwise expressly provided in the Participant’s Participation Agreement, in
which case the law of the state specified in the Participant’s Participation
Agreement shall apply instead of the law of the State of California as to that
Participant), without giving effect to any choice of law or conflicting
provision or rule (whether of the State of California or any other
jurisdiction) that would cause the laws of any jurisdiction other than United
States federal law and the law of the State of California (or other state, as
applicable) to be applied.  In
furtherance of the foregoing, applicable federal law and, to the extent not
preempted by applicable federal law, the internal law of the State of
California (or other state, as applicable), will control the interpretation and
construction of the Plan and any Participation Agreement hereunder, even if
under such jurisdiction’s choice of law or conflict of law analysis, the
substantive law of some other jurisdiction would ordinarily apply.  Any statutory reference in the Plan or any
Participation Agreement shall also be deemed to refer to all applicable final
rules and final regulations promulgated under or with respect to the referenced
statutory provision.


16.           Miscellaneous.  The Committee may from time to time amend the
Plan or any Participation Agreement in any way it deems to be advisable;
provided that no such amendment shall materially and adversely affect the rights
of any Participant (or former Participant) under the Plan or Participation
Agreement, as applicable, without that Participant’s (or former Participant’s,
as the case may be) consent.  Neither the
failure nor any delay on the part of a party to exercise any right, remedy,
power or privilege under the Plan or any Participation Agreement shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
remedy, power or privilege preclude any other or further exercise of the same or
of any right,



 18
 









remedy, power or
privilege, nor shall any waiver of any right, remedy, power or privilege with
respect to any occurrence be construed as a waiver of such right, remedy, power
or privilege with respect to any other occurrence.  No waiver shall be effective unless it is in
writing and is signed by the party asserted to have granted such waiver.  No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by the Corporation which are not expressly set forth in this Plan.
All references to sections of the Exchange Act or the Code shall be deemed also
to refer to any successor provisions to such sections.  The Corporation may withhold (or cause there
to be withheld, as the case may be) from any amounts otherwise due or payable
under or pursuant to this Plan such federal, state and local income,
employment, or other taxes as may be required to be withheld pursuant to any
applicable law or regulation.  Any
obligations of the Corporation under Sections 4 and 6 shall survive the
expiration of the term of this Agreement. The section headings contained in
this Agreement are for convenience only, and shall not affect the
interpretation of this Agreement.


17.           Unsecured General
Creditor.  Participants and their
heirs, successors, and assigns shall have no legal or equitable rights, claims,
or interest in any specific property or assets of the Corporation or any
Subsidiary.  No assets of the Corporation
shall be held under any trust, or held in any way as collateral security, for
the fulfilling of the obligations of the Corporation under this Plan.  Any and all of the Corporation’s assets shall
be, and remain, the general unpledged, unrestricted assets of the Corporation
(unless pledged or restricted with respect to the Corporation’s obligations
other than the Plan).  The Corporation’s
obligation under the Plan shall be merely that of an unfunded and unsecured
promise of the Corporation to pay money and benefits in the future, and the
rights of the Participants and their heirs or successors as to benefits under
the Plan shall be no greater than those of unsecured general creditors of the
Corporation.


18.           Other Benefit Plans.  All payments, benefits and amounts provided
under the Plan shall be in addition to and not in substitution for any pension
rights under the any tax-qualified pension or retirement plan in which the
Participant participates, and any disability, workers’ compensation or other
Corporation benefit plan distribution that a Participant is entitled to (other
than severance benefits), under the terms of any such plan, at the time the
Participant ceases to be employed by the Corporation.  Notwithstanding the foregoing, the Plan shall
not create an inference that any duplicate payments shall be required.  Payments received by a person under the Plan
shall not be deemed a part of the person’s compensation for purposes of the
determination of benefits under any other employee pension, welfare or other
benefit plans or arrangements, if any, provided by the Corporation, except
where explicitly provided under the terms of such plans or arrangements.


19.           Severability.  In the event any provision of the Plan or any
Participation Agreement shall be adjudicated by a court of competent jurisdiction
to be invalid, prohibited or unenforceable under any present or future law,
such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of the Plan or Participation Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction.  Furthermore, in lieu of
such invalid or unenforceable provision there will be added automatically as a
part of the Plan or Participation Agreement, as applicable, a legal, valid and
enforceable provision as similar in terms to such invalid or unenforceable
provision as may be possible. 
Notwithstanding the foregoing, if such provision could be more narrowly
drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of the Plan or Participation Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction.



 19
 









20.           Employment Status.  Except as may be provided under any other
written agreement between a Participant and the Corporation (other than the
Plan and the Participation Agreement entered into with respect to this Plan),
the employment of each Participant by the Corporation is “at will,” and may be
terminated by either the Participant or the Corporation at any time.


21.           Payments on Behalf
of Persons Under Incapacity.  In the
event that any amount becomes payable under this Plan to a person who, in the
sole judgment of the Committee, is considered by reason of physical or mental
condition to be unable to give a valid receipt therefor the Committee may
direct that such payment be made to any person found by the Committee, in its
sole judgment, to have assumed the care of such person.  Any payment made pursuant to such
determination shall constitute a full release and discharge of the Committee
and the Corporation.


22.           Code Section 409A.  The provisions of this section shall only
apply if, and to the extent, required to avoid the imputation of any tax,
penalty or interest pursuant to Section 409A of the Code (“Code Section 409A”).  Notwithstanding any provision of the Plan to
the contrary, if a Participant is a “specified employee” as defined for
purposes of Code Section 409A, the Participant shall not be entitled to any
payments pursuant to the Plan upon a termination of his or her employment until
the earlier of (a) the date which is six (6) months after the Participant’s
separation from service (as defined for purposes of Code Section 409A) with the
Corporation, or (b) the date of the Participant’s death.  In such event, any amounts otherwise payable
to the Participant following a termination of the Participant’s employment that
are not so paid by reason of this paragraph shall be paid as soon as
practicable after the date that is six (6) months after the Participant’s
separation from service (as defined for purposes of Code Section 409A) with the
Corporation (or, if earlier, the date of the Participant’s death).  To the extent that the Plan is subject to
Code Section 409A, the Plan shall be construed and interpreted to the maximum
extent reasonably possible to avoid the imputation of any tax, penalty or
interest pursuant to Code Section 409A.


 



 20















EXHIBIT A


FORM OF PARTICIPATION AGREEMENT


[Date]


Dear                              :


You have been
selected to participate in the Health Care Property Investors, Inc. Change in
Control Severance Plan (the “Plan”), subject to your execution and
return of this letter agreement (this “Participation  Agreement”) to Health Care Property
Investors, Inc. (the “Corporation”).


For purposes
of calculating any severance benefits you may become entitled to under Section
6 of the Plan, the following multiplier will apply: 




	
  Severance Multiplier:

  	
  [       ]

  






                Note that the
agreements you make by executing this Participation Agreement will be
enforceable against you, regardless of whether or not your employment
terminates in circumstances that entitle you to severance benefits under the
Plan.   Nevertheless, you agree that your
participation in the Plan (even if you never become entitled to severance
benefits pursuant to the Plan), as well as your continued employment by the Corporation,
each in and of itself and without the other constitutes good and adequate
consideration for the agreements you make in this Participation Agreement.


By signing
this Participation Agreement you specifically agree that you have received and
read the Plan and agree to be bound by its terms.  The Plan is incorporated into (made a part
of) this Participation Agreement by this reference.  You acknowledge and agree that the Corporation
has not made any promises or representations to you concerning the Plan other
than as set forth in the Plan and this Participation Agreement.


As to your
participation in the Plan, the Plan and this Participation Agreement will be
governed by and construed in accordance with ERISA and, to the extent not
preempted thereby, the laws of the State of [                           ],
without giving effect to any choice of law or conflicting provision or rule
(whether of the State of [                          ]
or any other jurisdiction) that would cause the laws of any jurisdiction other
than United States federal law and the law of the State of [                          ]
to be applied.  In furtherance of the
foregoing, applicable federal law and, to the extent not preempted by
applicable federal law, the internal law of the State of [                          ],
will control the interpretation and construction of the Plan and this
Participation Agreement, even if under such jurisdiction’s choice of law or
conflict of law analysis, the substantive law of some other jurisdiction would
ordinarily apply.



 A-1
 









Please note that you are not required to participate in the Plan, and
may decline participation in the Plan by not returning this Participation
Agreement.  If you want to accept
participation in the Plan, you must execute this Participation Agreement and
see that it is returned in person or via facsimile to the Corporation’s [                          ]
at (       )        -         so
that it is received no later than [                          ].  This Participation Agreement may be executed
in separate counterparts, each of which is deemed to be an original and all of
which taken together constitute one and the same agreement.


	
   

  	
  HEALTH CARE PROPERTY INVESTORS, INC.,

  	 

	
   

  	
  a Maryland corporation

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	 

	
   

  	
  Title:

  	
   

  	
   

  
							



 


	
  ACCEPTED AND AGREED:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  
			



 



 A-2















EXHIBIT B


FORM OF RELEASE AGREEMENT(1)


This Release Agreement (this “Release Agreement”)
is entered into this         day of                     
20        , by and between                                    ,
an individual (“Executive”), and Health Care Property Investors, Inc., a
Maryland corporation (the “Company”).


WHEREAS, Executive
has been employed by the Company; and


WHEREAS, Executive’s
employment by the Company has terminated and, in connection with the Company’s
Change in Control Severance Plan (the “Plan”), the Company and Executive
desire to enter into this Release Agreement upon the terms set forth herein;


NOW, THEREFORE, in
consideration of the covenants undertaken and the releases contained in this
Release Agreement, and in consideration of the obligations of the Company (or
one of its subsidiaries) to pay severance benefits (conditioned upon this
Release Agreement) under and pursuant to the Plan, Executive and the Company
agree as follows:


1.             Release.  Executive, on behalf of himself or herself,
his or her descendants, dependents, heirs, executors, administrators, assigns,
and successors, and each of them, hereby acknowledges full and complete
satisfaction of and covenants not to sue and fully releases and discharges the
Company and each of its parents, subsidiaries and affiliates, past and present,
as well as its and their trustees, directors, officers, members, managers,
partners, agents, attorneys, insurers, employees, stockholders,
representatives, assigns, and successors, past and present, and each of them,
hereinafter together and collectively referred to as the “Releasees,”
with respect to and from any and all claims, wages, demands, rights, liens,
agreements or contracts (written or oral), covenants, actions, suits, causes of
action, obligations, debts, costs, expenses, attorneys’ fees, damages,
judgments, orders and liabilities of whatever kind or nature in law, equity or
otherwise, whether now known or unknown, suspected or unsuspected, and whether
or not concealed or hidden (each, a “Claim”), which he or she now owns
or holds or he or she has at any time heretofore owned or held or may in the
future hold as against any of said Releasees (including, without limitation,
any Claim arising out of or in any way connected with Executive’s service as an
officer, director, employee, member or manager of any Releasee, Executive’s
separation from his or her position as an officer, director, employee, manager
and/or member, as applicable, of any Releasee, or any other transactions,
occurrences, acts or omissions or any loss, damage or injury whatever), whether
known or unknown, suspected or unsuspected, resulting from any act or omission
by or on the part of said Releasees, or any of them, committed or omitted prior
to the date of this Release Agreement including, without limiting the
generality of the foregoing, any Claim under Title VII of the Civil Rights Act
of 1964, the Age Discrimination in Employment Act of 1967, the Americans with
Disabilities Act, the Family and Medical Leave Act of 1993, the California Fair
Employment and Housing Act, the California Family Rights Act, or any other
federal, state or local law, regulation, or ordinance, or any Claim for
severance pay, bonus, sick leave, holiday pay, vacation pay, life insurance,
health or medical insurance or any other fringe benefit, workers’ compensation
or disability; provided however,






(1) The Company reserves
the right to modify this form as to any Participant employed outside of
California.



 B-1
 









that the foregoing
release shall not apply to any obligation of the Company to Executive pursuant
to any of the forgoing:  (1) any
obligation created by or arising out of the Plan for which receipt or
satisfaction has not been acknowledged, (2) any equity-based awards previously
granted by the Company to Executive, to the extent that such awards continue
after the termination of Executive’s employment with the Company in accordance
with the applicable terms of such awards; (3) any right to indemnification that
Executive may have pursuant to the Fourth Amended and Restated Bylaws of the
Company, its corporate charter or under any written indemnification agreement
with the Company (or any corresponding provision of any subsidiary or affiliate
of the Company) with respect to any loss, damages or expenses (including but
not limited to attorneys’ fees to the extent otherwise provided) that Executive
may in the future incur with respect to his service as an employee, officer or
director of the Company or any of its subsidiaries or affiliates; (4) with
respect to any rights that Executive may have to insurance coverage for such
losses, damages or expenses under any Company (or subsidiary or affiliate)
directors and officers liability insurance policy; (5) any rights to continued
medical or dental coverage that Executive may have under COBRA; (6) any rights
to payment of benefits that Executive may have under a retirement plan
sponsored or maintained by the Company that is intended to qualify under
Section 401(a) of the Internal Revenue Code of 1986, as amended, or (7) any
deferred compensation or supplemental retirement benefits that Executive may be
entitled to under a nonqualified deferred compensation or supplemental
retirement plan of the Company.  In
addition, this release does not cover any Claim that cannot be so released as a
matter of applicable law.  Executive
acknowledges and agrees that he or she has received any and all leave and other
benefits that he or she has been and is entitled to pursuant to the Family and
Medical Leave Act of 1993.


2.             Acknowledgment of
Payment of Wages.  Except for accrued
vacation (which the parties agree totals approximately [         ]
days of pay) and salary for the current pay period, Executive acknowledges that
he/she has received all amounts owed for his or her regular and usual salary
(including, but not limited to, any bonus, severance, or other wages), and
usual benefits through the date of this Agreement.


3.             1542 Waiver.  It is the intention of Executive in executing
this Release Agreement that the same shall be effective as a bar to each and
every Claim hereinabove specified.  In
furtherance of this intention, Executive hereby expressly waives any and all
rights and benefits conferred upon him or her by the provisions of SECTION 1542
OF THE CALIFORNIA CIVIL CODE and expressly consents that this Release Agreement
shall be given full force and effect according to each and all of its express
terms and provisions, including those related to unknown and unsuspected
Claims, if any, as well as those relating to any other Claims hereinabove
specified. SECTION 1542 provides:


“A GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.”



 B-2
 









Executive acknowledges
that he may hereafter discover Claims or facts in addition to or different from
those which Executive now knows or believes to exist with respect to the
subject matter of this Release Agreement and which, if known or suspected at
the time of executing this Release Agreement, may have materially affected this
settlement.  Nevertheless, Executive
hereby waives any right, Claim or cause of action that might arise as a result
of such different or additional Claims or facts.  Executive acknowledges that he or she
understands the significance and consequences of such release and such specific
waiver of SECTION 1542.


4.             [ADEA
Waiver.  Executive expressly
acknowledges and agrees that by entering into this Release Agreement, Executive
is waiving any and all rights or Claims that he or she may have arising under
the Age Discrimination in Employment Act of 1967, as amended (the “ADEA”),
which have arisen on or before the date of execution of this Release
Agreement.  Executive further expressly
acknowledges and agrees that:


A.            In return for this
Release Agreement, the Executive will receive consideration beyond that which
the Executive was already entitled to receive before entering into this Release
Agreement;


B.            Executive is hereby
advised in writing by this Release Agreement to consult with an attorney before
signing this Release Agreement;


C.            Executive has
voluntarily chosen to enter into this Release Agreement and has not been forced
or pressured in any way to sign it;


D.            Executive was given a
copy of this Release Agreement on [                               ,
20       ] and informed that he or she had [twenty one (21)/forty five (45)]
days within which to consider this Release Agreement and that if he or she
wished to execute this Release Agreement prior to expiration of such [21-day/45-day] period, he or
she should execute the Endorsement attached hereto;


E.             Executive was
informed that he or she had seven (7) days following the date of execution of
this Release Agreement in which to revoke this Release Agreement, and this
Release Agreement will become null and void if Executive elects revocation
during that time.  Any revocation must be
in writing and must be received by the Company during the seven-day revocation
period.  In the event that Executive
exercises his or her right of revocation, neither the Company nor Executive
will have any obligations under this Release Agreement;


F.             Nothing in this
Release Agreement prevents or precludes Executive from challenging or seeking a
determination in good faith of the validity of this waiver under the ADEA, nor
does it impose any condition precedent, penalties or costs from doing so,
unless specifically authorized by federal law.](2)






(2) Except as noted below, Section 3 will be included
if the Executive is age 40 or older as of the date that the Executive’s
employment by the Company terminates or in such other circumstances (if any) as
the Executive may have claims under the ADEA. 
In the event Section 3 is included, whether the Executive has 21 days,
45 days, or some other period in which to consider the Release Agreement will
be determined with reference to the requirements of the ADEA in order for such
waiver to be valid in the circumstances. 
The determinations referred to in the preceding two sentences shall be
made by the Company in its sole discretion. 
In any event (regardless of the applicability of the ADEA in the
circumstances) the Release Agreement will include the Executive’s
acknowledgements and agreements set forth in clauses 3.A, 3.B, and 3.C.



 B-3
 









5.             No Transferred
Claims.  Executive warrants and
represents that the Executive has not heretofore assigned or transferred to any
person not a party to this Release Agreement any released matter or any part or
portion thereof and he or she shall defend, indemnify and hold the Company and
each of its affiliates harmless from and against any claim (including the
payment of attorneys’ fees and costs actually incurred whether or not
litigation is commenced) based on or in connection with or arising out of any
such assignment or transfer made, purported or claimed.


6.             Compliance With
Participation Agreement.  Executive
warrants and represents that Executive has complied fully with his or her
obligations pursuant to that certain Participation Agreement entered into by
Executive in connection with the Plan. 
Executive covenants that he or she will continue to abide by the
applicable provisions of such Participation Agreement.


7.             Severability.  It is the desire and intent of the parties
hereto that the provisions of this Release Agreement be enforced to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. 
Accordingly, if any particular provision of this Release Agreement shall
be adjudicated by a court of competent jurisdiction to be invalid, prohibited
or unenforceable under any present or future law, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Release Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction; furthermore, in
lieu of such invalid or unenforceable provision there will be added
automatically as a part of this Release Agreement, a legal, valid and
enforceable provision as similar in terms to such invalid or unenforceable
provision as may be possible. 
Notwithstanding the foregoing, if such provision could be more narrowly
drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Release Agreement or affecting
the validity or enforceability of such provision in any other jurisdiction.


8.             Counterparts.  This Release Agreement may be executed in
separate counterparts, each of which is deemed to be an original and all of
which taken together constitute one and the same agreement.


9.             Governing Law.  THIS RELEASE AGREEMENT WILL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH UNITED STATES FEDERAL LAW AND, TO THE EXTENT
NOT PREEMPTED BY UNITED STATES FEDERAL LAW, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION
OR RULE (WHETHER OF THE STATE OF CALIFORNIA OR ANY OTHER JURISDICTION) THAT
WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN UNITED STATES FEDERAL LAW
AND THE LAW OF THE STATE OF CALIFORNIA TO BE APPLIED.  IN FURTHERANCE OF THE FOREGOING, APPLICABLE
FEDERAL LAW AND, TO THE EXTENT NOT PREEMPTED BY APPLICABLE FEDERAL LAW, THE
INTERNAL LAW OF THE STATE OF CALIFORNIA, WILL CONTROL THE INTERPRETATION AND
CONSTRUCTION OF THIS RELEASE AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S
CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER
JURISDICTION WOULD ORDINARILY APPLY.



 B-4
 









10.           Amendment and Waiver.  The provisions of this Release Agreement may
be amended and waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Release Agreement shall be construed as a waiver of such
provisions or affect the validity, binding effect or enforceability of this
Release Agreement or any provision hereof.


11.           Descriptive Headings.  The descriptive headings of this Release
Agreement are inserted for convenience only and do not constitute a part of
this Release Agreement.


12.           Construction.  Where specific language is used to clarify by
example a general statement contained herein, such specific language shall not
be deemed to modify, limit or restrict in any manner the construction of the
general statement to which it relates. 
The language used in this Release Agreement shall be deemed to be the
language chosen by the parties to express their mutual intent, and no rule of
strict construction shall be applied against any party.


13.           Arbitration.  Any claim or controversy arising out of or
relating to this Agreement shall be submitted to arbitration in accordance with
the arbitration provision set forth in the Plan.


14.           Nouns and Pronouns.  Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice-versa.


15.           Legal Counsel.  Each party recognizes that this is a legally
binding contract and acknowledges and agrees that they have had the opportunity
to consult with legal counsel of their choice. 
Executive acknowledges and agrees that he has read and understands this
Agreement completely, is entering into it freely and voluntarily, and has been
advised to seek counsel prior to entering into this Agreement and he has had
ample opportunity to do so.



 B-5
 









The undersigned have read
and understand the consequences of this Release Agreement and voluntarily sign
it.  The undersigned declare under
penalty of perjury under the laws of the State of California that the foregoing
is true and correct.


EXECUTED
this                   
day of                     
20     , at                        ,
California.


	
   

  	
  “Executive”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HEALTH CARE PROPERTY INVESTORS, INC.,

  
	
   

  	
  a Maryland corporation,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						



 



 B-6
 









ENDORSEMENT


I,                                       ,
hereby acknowledge that I was given [21/45] days to consider the foregoing Release Agreement and
voluntarily chose to sign the Release Agreement prior to the expiration of the [21-day/45-day] period.


I declare under penalty of perjury under the laws of
the United States and the State of California that the foregoing is true and
correct.


EXECUTED this  [            ]
day of [                     
200        ], at                              ,
California.


	
  

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  	
   

  
					



 



 B-7















EXHIBIT C


SECTION
280G PROVISIONS


The provisions of this Exhibit C shall apply to each
Participant in the Health Care Property Investors, Inc. Change in Control
Severance Plan (the “Plan”).  Capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Plan.


1.             Gross-Up Payment.


(a)           Subject to Section
1(b), in the event it is determined (pursuant to Section 2 below) or finally
determined (as defined in Section 3(c) below) that any payment, distribution,
transfer, benefit or other event with respect to the Corporation or a
successor, direct or indirect subsidiary or affiliate of the Corporation (or
any successor or affiliate of any of them, and including any benefit plan of
any of them), and arising in connection with an event described in Section
280G(b)(2)(A)(i) of the Code, occurring after the Effective Date, to or for the
benefit of a Participant or a Participant’s dependents, heirs or beneficiaries
(whether such payment, distribution, transfer, benefit or other event occurs
pursuant to the terms of this Plan or otherwise, but determined without regard
to any additional payments required under this Section 1) (each a “Payment”
and collectively the “Payments”) is or was subject to the excise tax
imposed by Section 4999 of the Code, and any successor provision or any
comparable provision of state or local income tax law (collectively, “Section
4999”), or any interest, penalty or addition to tax is or was incurred by
the Participant with respect to such excise tax (such excise tax, together with
any such interest, penalty, addition to tax, and costs (including professional
fees) hereinafter collectively referred to as the “Excise Tax”), then,
within 10 days after such determination or final determination, as the case may
be, the Corporation shall pay to the Participant (or to the applicable taxing
authority on the Participant’s behalf) an additional cash payment (hereinafter
referred to as the “Gross-Up Payment”) equal to an amount such that
after payment by the Participant of all taxes, interest, penalties, additions
to tax and costs imposed or incurred with respect to the Gross-Up Payment
(including, without limitation, any income and excise taxes imposed upon the
Gross-Up Payment), the Participant retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon such Payment or Payments.  The Gross-Up Payment, if triggered pursuant
to this Section 1(a), is intended to put the Participant in the same position
as the Participant would have been had no Excise Tax been imposed upon or
incurred as a result of any Payment.


(b)           Notwithstanding
anything contained in Section 1(a) or any other provision of the Plan to the
contrary, if a reduction in the amount of the Payments by an amount up to but
not in excess of twenty five thousand dollars ($25,000) would avoid the
imputation of any Excise Tax on the remaining Payments (after such reduction),
then the Payments shall be reduced (but not below zero) so that the maximum
amount of the Payments (after reduction) shall be one dollar ($1.00) less than
the amount which would cause the Payments to be subject to the Excise Tax.  Unless the Participant shall have given prior
written notice to the Corporation to effectuate a reduction in the Payments if
such a reduction is required, the Corporation shall reduce or eliminate the
Payments by first reducing or eliminating any cash severance benefits, then by
reducing or eliminating any accelerated vesting of stock options, then by
reducing or eliminating any accelerated vesting of other equity-based awards,
then by reducing or eliminating any other remaining Payments.



 C-1
 









(c)           The preceding
provisions of this Section 1 shall take precedence over the provisions of any
other plan, arrangement or agreement governing the Participant’s rights and
entitlements to any benefits or compensation.


2.             Determination of
Gross-Up.


(a)           Except as provided in
Section 3, the determination that a Payment is subject to an Excise Tax, and in
such event, whether a Gross-Up Payment or a reduction in Payments is required
pursuant to Section 1(a) and Section 1(b), shall be made in writing by a
nationally recognized accounting firm or executive compensation consulting firm
selected by the Corporation (the “Accounting Firm”).  Such determination shall include the amount
of the Gross-Up Payment or reduction in Payments, as applicable, and detailed
computations thereof, including any assumptions used in such computations.  Any determination by the Accounting Firm will
be binding on the Participant and the Corporation.


(b)           For purposes of
determining whether a Gross-Up Payment is required, and if so, the amount of
any such Gross-Up Payment, the Participant shall be deemed to pay Federal
income taxes at the highest marginal rate of Federal individual income taxation
in the calendar year in which the Payment is to be made.  Such highest marginal rate shall take into
account the loss of itemized deductions by the Participant and shall also
include the Participant’s share of the hospital insurance portion of FICA and
state and local income taxes at the highest marginal rate of individual income
taxation in the state and locality of the Participant’s residence on the date
that the Payment is made, net of the maximum reduction in Federal income taxes
that could be obtained from the deduction of such state and local taxes.


3.             Notification.


(a)           The Participant shall
notify the Corporation in writing of any claim by the Internal Revenue Service
(or any successor thereof) or any state or local taxing authority (individually
or collectively, the “Taxing Authority”) that, if successful, would
require the payment by the Corporation
of a Gross-Up Payment.  Such notification
shall be given as soon as practicable but no later than 30 days after the
Participant receives written notice of such claim and shall apprise the
Corporation of the nature of such claim and the date on which such claim is
requested to be paid; provided, however, that if the Participant fails to give
such notice within such 30-day period it shall not result in a waiver or
forfeiture of any of the Participant’s rights under this Exhibit C except to
the extent of actual damages suffered by the Corporation as a result of such failure.  the Participant shall not pay such claim
prior to the expiration of the 15-day period following the date on which the
Participant gives such notice to the Corporation (or such shorter period ending
on the date that any payment of taxes, interest, penalties or additions to tax
with respect to such claim is due).  If
the Corporation notifies the Participant in writing prior to the expiration of
such 15-day period (regardless of whether such claim was earlier paid as
contemplated by the preceding parenthetical) that it desires to contest such
claim, the Participant shall:



 C-2
 









(i)            give the Corporation
any information reasonably requested by the Corporation relating to such claim;


(ii)           take such action in
connection with contesting such claim as the Corporation shall reasonably
request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney selected by the
Corporation;


(iii)          cooperate with the
Corporation in good faith in order effectively to contest such claim; and


(iv)          permit the Corporation
to participate in any proceedings relating to such claim;


provided, however,
that the Corporation
shall bear and pay directly all attorneys fees, costs and expenses (including
additional interest, penalties and additions to tax) incurred in connection
with such contest and shall indemnify and hold the Participant harmless, on an
after-tax basis, for all taxes (including, without limitation, income and
excise taxes), interest, penalties and additions to tax imposed in relation to
such claim and in relation to the payment of such costs and expenses or
indemnification.


(b)           Without limitation on
the foregoing provisions of this Section 3, and to the extent its actions do
not unreasonably interfere with or prejudice the Participant’s disputes with
the Taxing Authority as to other issues, the Corporation shall control all
proceedings taken in connection with such contest and, in its reasonable
discretion, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the Taxing Authority in respect of
such claim and may, at its or in their sole option, either direct the
Participant to pay the tax, interest or penalties claimed and sue for a refund
or contest the claim in any permissible manner, and the Participant agrees to
prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Corporation shall determine; provided, however, that if the Corporation directs
the Participant to pay such claim and sue for a refund, the Corporation shall advance an amount
equal to such payment to the Participant, on an interest-free basis, and shall
indemnify and hold the Participant harmless, on an after-tax basis, from all
taxes (including, without limitation, income and excise taxes), interest,
penalties and additions to tax imposed with respect to such advance or with
respect to any imputed income with respect to such advance, as any such amounts
are incurred; and, further, provided, that any extension of the statute of limitations
relating to payment of taxes, interest, penalties or additions to tax for the
Participant’s taxable year with respect to which such contested amount is
claimed to be due is limited solely to such contested amount; and, provided,
further, that any settlement of any claim shall be reasonably acceptable to the
Participant, and the Corporation’s control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder, and
the Participant shall be entitled to settle or contest, as the case may be, any
other issue.



 C-3
 









(d)           If, after the
Participant receives an amount advanced by the Corporation pursuant to Section 3(a), the Participant receives
any refund with respect to such claim, the Participant shall (subject to the Corporation’s compliance with the
requirements of this Exhibit C) promptly pay to the Corporation an amount equal to such refund (together with any
interest paid or credited thereof after taxes applicable thereto), net of any
taxes (including, without limitation, any income or excise taxes), interest,
penalties or additions to tax and any other costs incurred by the Participant
in connection with such advance, after giving effect to such repayment.  If, after the Participant receives an amount
advanced by the Corporation
pursuant to Section 3(a), it is finally determined that the Participant is not
entitled to any refund with respect to such claim, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall be treated as a Gross-Up Payment and shall offset, to the extent thereof,
the amount of any Gross-Up Payment otherwise required to be paid.


(e)           For purposes of this
Exhibit C, whether the Excise Tax is applicable to a Payment shall be deemed to
be “finally determined” upon the earliest of: (1) the expiration of the 15-day
period referred to in Section 3(a) if the Corporation or the Participant’s
Employer has not notified the Participant that it intends to contest the
underlying claim, (2) the expiration of any period following which no right of
appeal exists, (3) the date upon which a closing agreement or similar agreement
with respect to the claim is executed by the Participant and the Taxing
Authority (which agreement may be executed only in compliance with this
section), or (4) the Participant receives notice from the Corporation that it
no longer seeks to pursue a contest (which shall be deemed received if the
Corporation does not, within 15 days following receipt of a written inquiry
from the Participant, affirmatively indicate in writing to the Participant that
the Corporation intends to continue to pursue such contest).


4.             Underpayment and
Overpayment.  It is possible that no
Gross-Up Payment will initially be made but that a Gross-Up Payment should have
been made, or that a Gross-Up Payment will initially be made in an amount that
is less than what should have been made, or that a reduction in Payments was
made that should not have been made (any of such events is referred to as an “Underpayment”).  It is also possible that a Gross-Up Payment
will initially be made in an amount that is greater than what should have been
made or that Payments were reduced by an amount less than that required by
Section 1(b) (an “Overpayment”). 
The determination of any Underpayment or Overpayment shall be made by
the Accounting Firm in accordance with Section 2.  In the event of an Underpayment, the
Corporation shall pay the Participant the amount of any such Underpayment (plus
any interest or penalties payable with respect to such excess).  In the event of an Overpayment, the
Participant shall promptly pay to the Corporation the amount of such
Overpayment together with interest on such amount at the applicable Federal
rate provided for in Section 1274(d) of the Code for the period commencing on
the date of the Overpayment to the date of such payment by the Participant to
the Corporation.  The Participant shall
make such payment to the Corporation as soon as administratively practicable
after the Corporation notifies the Participant of (a) the Accounting Firm’s
determination that an Overpayment was made and (b) the amount to be repaid.


5.             Compliance with
Law.  Nothing
in this Exhibit C is intended to violate the Sarbanes-Oxley Act of 2002, and to
the extent that any advance or repayment obligation hereunder would constitute
such a violation, such obligation shall be modified so as to make the advance a
nonrefundable payment to the Participant and the repayment obligation null and
void to the extent required by such Act.



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6.             Section
409A.  Notwithstanding anything to
the contrary provided herein, the payment by the Corporation to the Participant
of any Gross-Up Payment required hereunder shall be paid to the Participant no
later than the last day of the calendar year that follows the calendar year in
which the applicable Excise Taxes on the Payments are remitted to the
applicable Taxing Authority.



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