Document:

Exhibit 10.18

 

[CEO
THREE YEAR CLIFF VESTING]

 

HEALTH CARE PROPERTY INVESTORS,
INC.

2006 PERFORMANCE INCENTIVE PLAN

PERFORMANCE RESTRICTED STOCK UNIT
AGREEMENT

 

James F. Flaherty III[                            ],
Grantee:

 

As of
the [            ] day of [              
2007] (the “Grant Date”), HCP, Inc.
(formerly known as Health Care Property Investors, Inc.), a Maryland
corporation (the “Company”), pursuant to the Health Care Property
Investors, Inc. 2006 Performance Incentive Plan, as amended and/or restated
from time to time (the “Plan”), has granted to you, the Grantee named
above, [              ] performance restricted stock units (the “Units”)
with respect to [            ] shares of Common Stock on the terms and conditions set
forth in this Performance Restricted Stock Unit Agreement (this “Agreement”)
and the Plan.  The Units are subject to
adjustment as provided in Section 7.1 of the Plan.  Capitalized terms not defined herein shall
have the meanings assigned to such terms in the Plan.  The Compensation Committee (the “Committee”)
of the Board of Directors of the Company (the “Board”) is the
administrator of the Plan for purposes of your Units.

 

I.                               Forfeiture of Units.

 

(a)                                  Forfeiture Based Upon Company Performance. 
Your Units will be paid only to the extent your Units are not forfeited
pursuant to this Section I and only to the extent such
non-forfeited Units vest pursuant to this Section I or Section II
below.  Your Units are subject to
forfeiture if the Company’s Funds From Operations Per Share for the 2007
calendar year (the “Performance Period”) is less than [$      ].  If the Company’s Funds From Operations Per
Share for the Performance Period is less than [$      ],
the aggregate percentage of Units that you will forfeit will be determined in
accordance with Exhibit A hereto. 
For purposes of this Agreement, “Funds From Operations Per Share”
means the Company’s funds from operations per share during the Performance
Period, as prescribed by the National Association of Real Estate Investment Trusts
(“NAREIT”) as in effect on the first day of the Performance Period, and shall
be calculated on a fully diluted basis using the weighted average of diluted
shares of Common Stock outstanding during the Performance Period.  Funds From Operations Per Share shall be
calculated before taking into account any non-recurring charges incurred by the
Company with respect to the Performance Period for (i) material strategic
or financing transactions approved by the Board of Directors and (ii) impairments.  The determination as to whether the Company
has attained the performance goals with respect to the Performance Period shall
be made by the Committee acting in good faith. 
The Committee’s determination regarding whether the Company has attained
the performance goals (the “Committee Determination”) shall be made no
later than the March 15 following the end of the Performance Period.  Your Units shall not be deemed vested
pursuant to any other provision of this Agreement earlier than the date that
the Committee makes such determination, as required by Section 162(m) of
the Code and the regulations promulgated thereunder.  Any Units forfeited pursuant to this Section I(a) shall
be deemed to have been forfeited as of the last day of the Performance Period.

 

1

 

(b)                                 Forfeiture of Units Upon Termination of
Employment.  Except as provided in Section I(c), if
at any time during the Performance Period your employment with the Company is
terminated, all of your Units shall be automatically forfeited and cancelled in
full effective as of such termination of employment and this Agreement shall be
null and void and of no further force and effect.

 

(c)                                  Certain Terminations during the
Performance Period.  This Section I(c) applies in the
event your employment with the Company is terminated as a result of (i) your
death, Disability or Retirement, (ii) a Termination Other Than For Cause, (iii) a
Termination For Good Reason, or (iv) a Termination Upon a Change in
Control (including a Covered Resignation). 
In the event of any such termination during the Performance Period, your
Units will remain outstanding during the remainder of the Performance Period
and will be subject to forfeiture in the manner set forth in subsection (a) upon
completion of the Performance Period.  In
such a case, any Units not so forfeited pursuant to subsection (a) shall
fully vest as of the date of the Committee Determination.  For purposes of this Agreement, the terms “Covered
Resignation,” “Disability,” “Termination Other Than For Cause,”
“Termination For Good Reason,” and “Termination Upon a Change in
Control” shall have the meanings ascribed to such terms in your Employment
Agreement with the Company dated October 26, 2005 (the “Employment
Agreement”).  Such meanings shall
continue to apply for purposes of this Agreement notwithstanding any
termination of the “Employment Period” (as such term is defined in the
Employment Agreement) in accordance with the Employment Agreement.

 

II.                                     Vesting.

 

(a)                                Vesting of Non-Forfeited Units. 
You will have no further rights with respect to any Units that are
forfeited in accordance with Section I. 
Subject to the terms and conditions of this Agreement, your Units that (i) are
not forfeited in accordance with Section I and (ii) do not otherwise
vest in accordance with Section I, if any, shall vest upon the third
anniversary of the Grant Date (the “Vesting Date”), subject to your
continuous service to the Company until the Vesting Date.

 

The vesting schedule requires continued employment
through the Vesting Date as a condition to vesting of the Units and the rights
and benefits under this Agreement. 
Unless otherwise expressly provided herein with respect to accelerated
vesting of the Units under certain circumstances, employment for only a portion
of the vesting period, even if a substantial portion, will not entitle you to
any proportionate vesting or avoid or mitigate a termination of rights and
benefits upon or following a termination of employment as provided in this
Agreement.

 

(b)                               Acceleration on Certain Terminations
Following Performance Period.  If at any
time following the completion of the Performance Period and prior to the Vesting
Date, your employment with the Company is terminated as a result of (i) your
death, Disability or Retirement, (ii) a Termination Other Than For Cause (iii) a
Termination For Good Reason, or (iv) a Termination Upon a Change in
Control (including a Covered Resignation), your then outstanding Units (to the
extent not previously forfeited and otherwise unvested) shall fully vest
immediately upon such termination of employment.

 

(c)                                No Acceleration or Vesting Upon Other
Terminations.  Except as otherwise provided in the Plan, if
at any time your employment with the Company is terminated (i) by the Company,
or (ii) by you, under any circumstances (other than as a result of your
death,

 

2

 

Disability or Retirement,
a Termination Other Than For Cause, a Termination For Good Reason, or a
Termination Upon a Change in Control, including a Covered Resignation), any of
your Units that remain outstanding and otherwise unvested at the time of such
termination of employment shall be automatically forfeited and cancelled in
full, effective as of such termination of employment.

 

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

 

III.                                 Timing and Form of Payment.

 

(a)                                Distribution Date. 
Unless you elect otherwise on or before the Grant Date, the distribution
date (the “Distribution Date”) for your Units that become vested
pursuant to this Agreement will be the date that such Units vest; provided that
in no event shall the Distribution Date occur earlier than the date of the
Committee Determination.  Distribution of
your vested Units will be made by the Company in shares of Common Stock (on a
one-to-one basis) on or as soon as practicable after the Distribution Date with
respect to such vested Units, but in no event later than two and one-half (2 1⁄2)
months after the year in which such Units became vested.  You will only receive distributions in
respect of your vested Units and will have no right to distribution of your
unvested Units unless and until such Units vest (and are not otherwise
forfeited pursuant to Section I(a)). 
Once a vested Unit has been paid pursuant to this Agreement, you will
have no further rights with respect to that Unit.  You may, however, elect (a “Distribution
Election”) to (A) defer your Distribution Date with respect to some or
all of your vested Units and/or (B) have your vested Units distributed to
you in annual installments as provided in Section IV(b), provided that
such election complies with this Section IV.  You may change your Distribution Election up
to three times without the approval of the Committee, provided such
Distribution Election is made in a timely manner.  Any Distribution Elections with respect to your
vested Units in addition to the three provided in the preceding sentence may
only be made with the approval of the Committee, in its sole discretion.  In order for a Distribution Election to be
valid, it must be made at least one year prior to the then-existing
Distribution Date, the new Distribution Date must be at least five years after
the then-existing Distribution Date, and the election must otherwise be
consistent with the “subsequent election” rules of Section 409A(a)(4)(C) of
the Code so as to prevent application of the penalty and interest provisions of
Section 409A(a)(1)(B) of the Code. 
Your Distribution Date with respect to any portion of your Units may not
be prior to the earlier of the Vesting Date for such vested Units or the date
of the Committee Determination. 
Distribution Elections may only be made by delivering a written election
to the Company care of its General Counsel in the form attached as Exhibit B
hereto.

 

(b)                               Form of Distribution. 
Unless you elect otherwise on or before the Grant Date, distribution of
your vested Unitswill be made in a lump sum on or as soon as practicable after
your Distribution Date, but in no event later than two and one-half (2 1⁄2) months
after the year in which such Units became vested.  You may, however, elect to have vested Units

 

3

 

distributed in the form
of two or more annual installments over a fixed number of years, provided that
each installment payment must be for a minimum of 1,000 shares of Common
Stock.  If you elect to have your vested
Units distributed in annual installments, the first installment will be paid on
or within 90 days after the Distribution Date and subsequent installments will
be paid on or within 90 days after each of the anniversaries of the
Distribution Date during your elected installment period, with each such
payment date during such time period within the Company’s sole discretion.  You may change an election you make pursuant
to this Section IV(b) (or you may make an initial election in the event that
you did not elect a form of payment at the time of your award and, accordingly,
your Units were subject to the lump sum default payment rule) by filing a new
written election with the Committee; provided that you must also elect a later
Distribution Date pursuant to Section IV(a) as to any Units that are
subject to such election and in no event may such an election result in an
acceleration of distributions within the meaning of Section 409A of the
Code so as to prevent application of the penalty and interest provisions of Section 409A(a)(1)(B) of
the Code.  Distribution Elections may
only be made by delivering a written election to the Company care of its
General Counsel in the form attached as Exhibit B hereto.

 

(c)                                Hardship Distribution. 
If you experience an Unforeseeable Emergency (as defined below) you may
elect to receive immediate distribution of some or all or your vested Units
upon such Unforeseeable Emergency. 
Distribution upon an Unforeseeable Emergency shall be made no later than
thirty (30) days following written notice to the Company care of its General
Counsel of the Unforeseeable Emergency. 
For purposes of this Agreement, an “Unforeseeable Emergency” shall mean
a severe financial hardship resulting from (i) an illness or accident of
you, your spouse, or your dependent (as defined in Section 152(a) of
the Code without regard to Section 152(b)(1), (b)(2) and (d)(1)(B)), (ii) loss
of your property due to casualty, or (iii) any other similar extraordinary
and unforeseeable circumstances arising as a result of events beyond your
control, all as reasonably determined by the Committee in good faith.  No distribution shall be made in respect of
an Unforeseeable Emergency to the extent that such Unforeseeable Emergency is
or may be relieved through reimbursement or compensation by insurance or
otherwise or by liquidation of your assets (to the extent such liquidation
would not itself cause a severe financial hardship).  Any distribution of your vested Units as a
result of an Unforeseeable Emergency shall be limited to the amount reasonably
necessary to relieve the Unforeseeable Emergency (which may include amounts
necessary to pay any federal, state or local income taxes or penalties
reasonably anticipated to result from the distribution).

 

IV.                                 Dividend Equivalent Rights. 
During such time as each Unit remains outstanding and prior to the
distribution of such Unit in accordance with Section IV, you will have the
right to receive, in cash, with respect to such Unit, the amount of any cash
dividend paid on a share of Common Stock (a “Dividend Equivalent Right”).  You will have a Dividend Equivalent Right
with respect to each Unit that is outstanding on the record date of such
dividend.  Dividend Equivalent Rights
will be paid to you at the same time or within 30 days after dividends are paid
to stockholders of the Company.  Dividend
Equivalent Rights will not be paid to you with respect to any Units that are
forfeited pursuant to Sections I and II, effective as of the date such  Units are forfeited.  You will have no Dividend Equivalent Rights
as of the record date of any such cash dividend in respect of any Units that
have been paid in Common Stock; provided that you are the record holder of such
Common Stock on or before such record date.

 

4

 

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

 

VI.                                 Withholding.  Subject
to Section 8.1 of the Plan and such rules and procedures as the
Committee may impose, upon any distribution of shares of Common Stock in respect
of your Units, the Company shall automatically reduce the number of shares to
be delivered by (or otherwise reacquire) the appropriate number of whole
shares, valued at their then fair market value (with the “fair market value” of
such shares determined in accordance with the applicable provisions of the
Plan), to satisfy any withholding obligations of the Company or its
Subsidiaries with respect to such distribution of shares at the minimum
applicable withholding rates; provided, however, that the foregoing provision
shall not apply in the event that you have made other provision in advance of
the date of such distribution for the satisfaction of such withholding
obligations.  In the event that the
Company cannot legally satisfy such withholding obligations by such reduction
of shares, or in the event of a cash payment or any other withholding event in
respect of your Units, the Company (or a Subsidiary) shall be entitled to
require a cash payment by you or on your behalf and/or to deduct from other compensation
payable to you any sums required by federal, state or local tax law to be
withheld with respect to such distribution or payment.

 

VII.                             No Contract for Employment. 
This Agreement is not an employment or service contract and nothing in
this Agreement shall be deemed to create in any way whatsoever any obligation
on your part to continue in the employ or service of the Company, or of the
Company to continue your employment or service with the Company.

 

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

 

IX.                                Plan.  The
provisions of the Plan are hereby made a part of this Agreement.  In the event of any conflict between the
provisions of this Agreement and those of the Plan, the provisions of this
Agreement shall control.

 

X.                                    Entire Agreement. 
This Agreement, together with the Employment Agreement, contains the
entire understanding of the parties in respect of the Units and supersedes upon
its effectiveness all other prior agreements and understandings between the
parties with respect to the Units.  In
the event of any discrepancy between this Agreement and the Employment Agreement,
the Employment Agreement shall control, except the definition of “Distribution
Date” in this Agreement shall always control.

 

5

 

XI.                                Amendment.  This
Agreement may be amended by the Committee; provided, however that no such
amendment shall, without your prior written consent, alter, terminate, impair
or adversely affect your rights under this Agreement.

 

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

 

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

 

XIV.                        Construction.  To
the extent that this Agreement is subject to Section 409A of the Code, you
and the Company agree to cooperate and work together in good faith to timely
amend this Agreement to prevent application of the penalty and interest
provisions of Section 409A(a)(1)(B) of the Code.  In the event that you and the Company do not
agree as to the necessity, timing or nature of a particular amendment intended
to prevent application of the penalty and interest provisions of Section 409A(a)(1)(B) of
the Code, reasonable deference will be given to your reasonable interpretation
of such provisions.  Notwithstanding
anything to the contrary contained in this Agreement or the Plan, in the event
that you are to receive a payment hereunder in connection with your termination
of employment (other than due to your death) which constitutes a “deferral of
compensation” pursuant to Section 409A of the Code at a time when you are
a “specified employee” (within the meaning of Section 409A of the Code),
the Company shall delay the making of such payment to a date that is not
earlier than the first to occur of six months and one day after your “separation
from service” (within the meaning of Section 409A of the Code) or the date
of your death.

 

[Remainder of page intentionally
left blank]

 

6

 

Very truly yours,

 

	
   

  	
  HCP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
				

 

Accepted and Agreed, 

effective as of the date first written above.

 

 

	
  By:

  	
   

  	
   

  
	
  Name: James F. Flaherty III

  

 

7

 

[CEO THREE YEAR CLIFF VESTING]

 

EXHIBIT A

 

PERFORMANCE GOALS

 

	
  Funds From Operations
  Per Share

  	
   

  	
  Aggregate Percentage Forfeited

  	
   

  
	
  [$    ] or greater

  	
   

  	
  0

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  2

  	
  %

  
	
  Equal to or greater than [$     ]
  but less than [$     ]

  	
   

  	
  4

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  6

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  8

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  10

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  12

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  14

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  16

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  18

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  20

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  22

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  24

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  26

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  28

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  30

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  32

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  34

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  36

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  38

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  40

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  50

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  60

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  70

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  80

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  90

  	
  %

  
	
  Equal to or greater than [$     ] but less than [$     ]

  	
   

  	
  100

  	
  %

  

 

A-1

 

EXHIBIT B

 

HEALTH CARE PROPERTY INVESTORS,
INC.

2006 PERFORMANCE INCENTIVE PLAN

 

RESTRICTED STOCK UNITS

DISTRIBUTION ELECTION AND
BENEFICIARY DESIGNATION FORM

 

	
  Name: James F. Flaherty III

  	
   

  	
  Social Security No.:

  	
   

  

 

In connection with your award of Performance
Restricted Stock Units on [                ,
2007] under the Health Care Property Investors, Inc. 2006 Performance
Incentive Plan, as amended and/or restated from time to time (the “Plan”), you
have the option of selecting the timing and form of payment of the shares of
Common Stock underlying your vested Units.

 

Please complete this election form and return it
to Edward J. Henning, the Company’s General Counsel and Corporate Secretary.

 

Deferral of Distribution Date

 

Unless you elect otherwise, the Distribution Date for
your Units that vest will be the vesting date of such Units; provided that in
no event shall the Distribution Date occur earlier than the date of the
Committee Determination with respect to such Units.  You may elect a new Distribution Date with
respect to your Units that vest by completing the information request
below.  Please note
that, subject to the restrictions set forth below and in the Agreement, your
new Distribution Date can take any of the following forms:

 

·                                          You may elect a date certain for your
Distribution Date (e.g., January 1, 2011),

 

·                                          You may elect that your Distribution Date
will be the date of your death or termination of employment, or

 

·                                          You may elect a Distribution Date that is
the earlier of two dates/events (e.g., the earlier of January 1, 2011, or termination
of your employment).

 

If you do not elect a Distribution Date on or
before the Grant Date, you will be deemed to have elected distribution of your
vested Units on or as soon as administratively practical after the vesting date
of your Units, but in no event later than two and one-half (2 1⁄2) months after
the year in which such Units became vested. 
If, after the Grant Date, you want to change the Distribution Date with
respect to any of your vested Units, your new election must be made at least
one year prior to the then-existing Distribution Date, the new Distribution
Date you elect must be at least five years after the then-existing
Distribution Date, and the change must otherwise satisfy the “subsequent
election” rules of Section 409A(a)(4)(C) of the Code.  If your election to defer your Distribution Date
is not timely, it will not be valid.

 

B-1

 

You acknowledge and understand that by electing a
new Distribution Date, you are hereby revoking the then-existing Distribution
Date.  You further acknowledge and agree
that the distribution of the shares of Common Stock underlying your Units may
coincide with a period during which you are prohibited from selling, disposing
or otherwise transferring such shares pursuant to the Company’s Insider Trading
Policy, or by law, and therefore, you may not be able to sell, dispose or
otherwise transfer such shares to pay any sums required by federal, state or
local tax law to be withheld with respect to the issuance of such shares.

 

I elect the
following Distribution Date with respect to the shares of Common Stock
underlying my Units:  (Specify “Vesting Date” if
you desire payment of the vested Units on or as soon as administratively
practical after the vesting date of the Units. 
Otherwise, indicate the Distribution Date you elect.  In all events your election is subject to the
rules stated above (including, without limitation, the 5-year deferral
requirement set forth above if you are electing a change after the Grant Date).

 

Form of Payment

 

Distribution of all of your vested Units will be made
in shares of Common Stock in a lump sum on or as soon as practicable after the
Distribution Date with respect to such Units, but in no event later than two
and one-half (2 1⁄2) months after the year in which such Units became vested.  You may, however, elect at the time of your
award to have vested Units distributed in the form of two or more annual
installments over a fixed number of years. 
For example, if you elect to have your vested Units distributed in five
installments, your vested Units will be distributed to you in five equal
payments on or as soon as practicable after the Distribution Date and each of
the first four anniversaries of the Distribution Date.

 

If you elect to have your vested Units distributed
in installments, you must elect a number of equal annual installments which
will result in a distribution of at least 1,000 shares of Common Stock per
installment (otherwise, the number of installments you elected will be reduced
by the Company to produce a distribution of at least 1,000 shares of Common
Stock per installment).  If you would
like to change a form of distribution election you have made (or if you would
like to make an initial form of distribution election in the event that you did
not make such an election at the time of the award), your election must be made
at least one year prior to the then-existing Distribution Date, and you must
elect a new Distribution Date that is at least five years after the
then-existing Distribution Date.  If your
election to defer your Distribution Date is not timely, it will not be
valid.  Furthermore, if you are changing
an existing form of distribution election, your election change cannot
result in an acceleration (within the meaning of Section 409A of the Code)
of payments, and the change must otherwise satisfy the “subsequent election” rules of
Section 409A(a)(4)(C) of the Code.

 

I elect the following number of annual installments
with respect to the distribution of the shares of Common Stock underlying my
Units:                                       .

 

B-2

 

Beneficiary Designation

 

I
hereby designate the following individual as beneficiary to receive
distribution of my vested Units, if any, in the event of my death.  Distribution of such vested Units will be in
the form, and on the Distribution Date(s), in effect with respect to such
vested Units as of the date of my death.

 

	
  Beneficiary Information 

  
	
   

  
	
  Name:

  	
   

  
	
  (Please print)

  	
  Last

  	
  First

  	
   

  	
  Middle Initial

  
	
   

  
	
  Sex:

  	
   

  	
  Relationship to Participant: 
  

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Social Security No.:

  	
   

  	
  Date of Birth:

  	
   

  
	
   

  
	
  Address: 

  	
   

  
	
   

  
	
  City:

  	
   

  	
  State:

  	
   

  	
  Zip Code:

  	
   

  
																	

 

Please retain a copy of this Distribution Election Form for
your records.

 

	
   

  	
   

  	
   

  
	
  Signature:  James F. Flaherty III

  	
  Date Signed

  

 

B-3Exhibit
10.25

 

HEALTH
CARE PROPERTY INVESTORS, INC.

2006
PERFORMANCE INCENTIVE PLAN

AMENDED
AND RESTATED STOCK UNIT AWARD AGREEMENT

 

THIS
AMENDED AND RESTATED STOCK UNIT AWARD AGREEMENT (this “Agreement”) is
dated as of April 24, 2008 by and between HCP, Inc. (formerly known
as Health Care Property Investors, Inc.), a Maryland corporation (together
with its successors and assigns, the “Corporation”),
and James F. Flaherty III (the “Executive”).

 

W
I T N E S S E T H

 

WHEREAS, pursuant to the Health Care Property Investors, Inc. 2006
Performance Incentive Plan (the “Plan”), on August 14,
2006 (the “Award Date”), the Corporation
granted to the Executive restricted stock units under the Plan (the “Stock Unit Award” or “Award”), upon
the terms and conditions set forth in a Stock Unit Award Agreement dated as of August 14,
2006 (the “Prior Stock Unit Award Agreement”)
and in the Plan; and

 

WHEREAS, the Corporation and Officer desire to amend
and restate the Prior Stock Unit Award Agreement upon the terms and conditions
set forth in this Agreement.

 

NOW THEREFORE, in consideration of services rendered and to be
rendered by the Executive, and the mutual promises made herein and the mutual
benefits to be derived therefrom, the parties agree as follows:

 

1.     Defined Terms.  As used
herein, the following terms shall have the meanings ascribed to them in that
certain Amended and Restated Employment Agreement by and between the
Corporation and the Executive, dated as of April 24, 2008 (the “Employment Agreement”) and as in effect as of the date
hereof, which definitions are incorporated in full into this Agreement:  “Cause,” “Change in Control,” “Covered Resignation,”
“Date of Termination,” “Disability,” “Employment Period,”
“Good Reason,”  “Termination For Good
Reason,” “Termination Other Than For
Cause” and “Termination Upon a Change
in Control.”  Such meanings
shall continue to apply for purposes of this Agreement notwithstanding any
termination of the “Employment Period” of the Employment Agreement.  In addition, “Fair Market Value” for purposes of this Agreement means the
closing price of a share of Common Stock as reported on the composite tape for
securities listed on the New York Stock Exchange or, if the Common Stock is not
then traded on the New York Stock Exchange, the closing price of a share of
Common Stock on the principal public exchange on which the Corporation’s Common
Stock is then traded (the New York Stock Exchange or such other exchange, as
applicable, the “Exchange”) for the date in
question, or, if no sales of Common Stock were made on the Exchange on that
date, the average of the closing prices of a share of Common Stock for the next
preceding day and the next succeeding day on which sales of Common Stock were
made on the Exchange.  In the event the
Common Stock is not then traded on any public exchange, the Fair Market Value
of the Common Stock will be reasonably determined by the Administrator in a
manner which does not impose additional taxes, interest or penalties on the
Executive pursuant to Section 409A of the Internal Revenue Code of 1986,
as amended from time to time (the “Code”)
and its implementing regulations (“Section 409A”).  For purposes of 

 

 

this Agreement, “Pro-Rata
Vesting Percentage” means the vesting percentage that would apply on
the Executive’s birthday that immediately follows the Separation From Service
Date minus the vesting percentage that applies as of the Executive’s birthday
that immediately precedes the Separation From Service Date multiplied by a
fraction (not greater than one), the numerator of which is the number of days
from the Executive’s birthday that immediately precedes the Separation From
Service Date through (and including) the Separation From Service Date, and the
denominator of which is 365; provided that the Pro Rata Vesting Percentage
shall be zero if the Separation From Service Date coincides with the Executive’s
birthday.  For purposes of this
Agreement, the term “Additional Annual Vesting
Amount” shall apply if the Severance Date is after the Separation
From Service Date and, in this event, such term means as to any particular
birthday of the Executive the vesting percentage that applies on that birthday
minus the vesting percentage that applied on the immediately preceding birthday
of the Executive; provided that with respect to the Executive’s birthday that
immediately follows the Separation From Service Date, the Additional Annual
Vesting Amount shall be reduced by the Pro-Rata Vesting Percentage, if any,
that applied upon the Separation From Service Date.  For purposes of this Agreement, the term “Additional Pro-Rata Vesting Percentage” shall apply if the
Severance Date is after the Separation From Service Date and, in this event
such term means the percentage that results from (1) taking the vesting
percentage that would apply on the Executive’s birthday that immediately
follows the Severance Date minus the vesting percentage that applies as of the
Executive’s birthday that immediately precedes the Severance Date multiplied by
a fraction (not greater than one), the numerator of which is the number of days
from the Executive’s birthday that immediately precedes the Severance Date
through (and including) the Severance Date, and the denominator is the
365.  For purposes of this Agreement, “Separation From Service Date” means the date on which the
Executive has a “separation from service” (within the meaning of Section 409A)
from the Corporation and its Subsidiaries and “Severance Date” means the last day the Executive is employed
by the Corporation or its Subsidiaries (regardless of the reason for such
termination of the Executive’s employment), which if the Employment Period is
in effect shall not be earlier than the Date of Termination. Capitalized terms
used herein and not otherwise defined herein shall have the meaning assigned to
such terms in the Plan.

 

2.     Grant.  Subject to
the terms of this Agreement, as of the Award Date, the Corporation granted to
the Executive a Stock Unit Award with respect to an aggregate of 219,000 stock
units (subject to increase for any dividend equivalents to be credited pursuant
to Section 5(b) hereof and to adjustment as otherwise provided in Section 7.1
of the Plan and/or Section 9 of this Agreement) (the “Stock Units”).  As used herein, the term “stock unit” shall
mean a non-voting unit of measurement which is deemed for bookkeeping purposes
to be equivalent to one outstanding share of the Corporation’s Common Stock
(subject to adjustment as provided in Section 7.1 of the Plan and/or Section 9
hereof) solely for purposes of the Plan and this Agreement.  The Stock Units shall be used solely as a
device for the determination of the payment to eventually be made to the
Executive if such Stock Units vest pursuant to Section 3 or Section 8
hereof.  The Stock Units shall not be
treated as property or as a trust fund of any kind.

 

3.     Vesting.  Subject to Section 8
and Section 9, the Award shall vest with respect to the applicable
percentage of the total number of Stock Units (as increased by any dividend
equivalents credited (or to be credited) pursuant to Section 5(b) hereof)
(with such total number subject to adjustment under Section 7.1 of the
Plan and/or Section 9 hereof) subject to the Award 

 

2

 

on the Executive’s attainment of each age set forth in
the table below (with such percentage increased by the Pro-Rata Vesting
Percentage or the Additional Pro-Rata Vesting Percentage, as applicable, in the
event the Executive’s Severance Date or both Severance Date and Separation From
Service Date occur after, but not before, Executive’s attainment of age 55):

 

	
  Age

  	
   

  	
  Percentage of Units

  That Vest

  
	
   

  	
   

  	
   

  
	
  55

  	
   

  	
  14 %

  
	
  56

  	
   

  	
  19 %

  
	
  57

  	
   

  	
  26 %

  
	
  58

  	
   

  	
  34 %

  
	
  59

  	
   

  	
  43 %

  
	
  60

  	
   

  	
  54 %

  
	
  61

  	
   

  	
  62 %

  
	
  62

  	
   

  	
  70 %

  
	
  63

  	
   

  	
  79 %

  
	
  64

  	
   

  	
  89 %

  
	
  65

  	
   

  	
  100 %

  

 

The vesting percentages set forth in the preceding
table are not cumulative and are aggregate vesting percentages that take into
account all prior vesting.  For the
avoidance of doubt, to compute the total percentage of vested Stock Units
applicable to a Separation From Service Date or a Severance Date, each
percentage above shall be increased by any applicable Pro-Rata Vesting
Percentage and any applicable Additional Pro-Rata Vesting Percentage.  Thus, if the Separation From Service Date and
the Severance Date both occurred on the day the Executive turned 55 1⁄2, the
total percentage of vested Stock Units would be 16.5% (sum of (i) 14%
(percentage that vested on his 55th birthday) and (ii) 2.5%
(Pro-Rata Vesting Percentage)).  If the
Separation From Service Date occurs on the date the Executive turns 55 1⁄2 but
the Severance Date is the date he turns 57 1⁄2, the total percentage of vested
Stock Units would be 30% (sum of (i) 14% (percentage that vested on his 55th
birthday) plus (ii) 2.5% (Pro-Rata Vesting Percentage) plus (iii) 2.5%
(Additional Annual Vesting Amount applicable to age 56), plus (iv) 7%
(Additional Annual Vesting Percentage applicable to age 57), plus (v) 4%
(Additional Pro-Rata Vesting Percentage). 
Any additional Stock Units subject to the Award (other than the Stock
Units vesting solely by application of any Additional Annual Vesting Amounts
and the Additional Pro-Rata Vesting Percentage) which vest pursuant to this Section 3
shall be deemed vested as of the Executive’s Separation From Service Date.  Any additional Stock Units subject to the
Award that vest solely by application of the Additional Annual Vesting Amount
pursuant to this Section 3 shall be deemed vested as of the applicable
birthday of the Executive that corresponds to such amount.  And any additional Stock Units subject to the
Award that vest solely through application of the Additional Pro-Rata Vesting
Percentage pursuant to this Section 3 shall be deemed vested as of the
Executive’s Severance Date.  Once vested,
whether pursuant to this Section 3 or Section 8 hereof, the vested
Stock Units shall be non-forfeitable. 
For purposes of Section 409A, the Stock Units which vest and are
delivered to the Executive solely pursuant to the applicable the Additional
Annual Vesting Amounts (which in the second example above would be 2.5% and 7%)
and the Stock Units which vest and are delivered to the Executive solely
pursuant to application of the Additional Pro-Rata Vesting Percentage (which in
the 

 

3

 

second example above would be 4%) shall each be deemed
to be a separate payment distinct from the Stock Units which vest as of the
Separation From Service Date (which in the second example above would be
16.5%).  For the avoidance of doubt, if
the Separation From Service Date is prior to the date the Executive reaches age
55, but the Severance Date is on or after such date, then the vested percentage
under this Section 3 shall be no less than 14%.

 

4.     Continuance of Employment. 
Except for any accelerated vesting expressly provided for in Section 8
in the circumstances referred to therein and except for application of any
applicable Pro-Rata Vesting Percentage or Additional Pro-Rata Vesting
Percentage, the vesting schedule requires continued employment or service
through each applicable vesting date as a condition to the vesting of the
applicable installment of the Award and the rights and benefits under this
Agreement.  Except for application of any
applicable Pro-Rata Vesting Percentage or Additional Pro-Rata Vesting
Percentage, employment or service for only a portion of a vesting period, even
if a substantial portion, will not entitle the Executive to any proportionate
vesting or avoid or mitigate a termination of rights and benefits upon or
following a termination of employment or services as provided in Section 8
below or under the Plan.

 

Nothing
contained in this Agreement or the Plan constitutes an employment or service
commitment by the Corporation, affects the Executive’s status as an employee at
will who is subject to termination without cause, confers upon the Executive
any right to remain employed by or in service to the Corporation or any
Subsidiary, interferes in any way with the right of the Corporation or any
Subsidiary at any time to terminate such employment or services, or affects the
right of the Corporation or any Subsidiary to increase or decrease the
Executive’s other compensation or benefits. 
Nothing in this paragraph, however, is intended to adversely affect any
independent contractual right of the Executive without his consent thereto.

 

5.     Dividend and Voting Rights.

 

(a)           Limitations on Rights
Associated with Units. 
The Executive shall have no rights as a stockholder of the Corporation,
no dividend rights (except as expressly provided in Section 5(b) with
respect to dividend equivalent rights) and no voting rights, with respect to
the Stock Units and any shares of Common Stock underlying or issuable in
respect of such Stock Units until such shares of Common Stock are actually
issued to and held of record by the Executive. 
No adjustments will be made for dividends or other rights of a holder
for which the record date is prior to the date the stock certificate should be
issued pursuant to Section 7 hereof.

 

(b)           Dividend Equivalent Rights
Distributions.  As of any
date that the Corporation pays an ordinary cash dividend on its Common Stock,
the Corporation shall credit the Executive with an additional number of Stock
Units equal to (i) the per share cash dividend paid by the Corporation on
its Common Stock on such date, multiplied by (ii) the total number of
Stock Units (including any dividend equivalents previously credited hereunder)
(with such total number adjusted pursuant to Section 7.1 of the Plan
and/or Section 9 hereof) subject to the Award as of the related dividend
payment record date, divided by (iii) the Fair Market Value of a share of
Common Stock on the date of payment of such dividend.  Any Stock Units credited pursuant to the
foregoing provisions of this Section 5(b) shall be subject to the
same vesting, payment and other terms, conditions and restrictions as the
original Stock Units to which they relate. 
No crediting of Stock Units shall be made pursuant to this Section 5(b) with
respect to 

 

4

 

any Stock Units which, as of such record date, have
either been paid pursuant to Section 7 or terminated pursuant to Section 8.  Not less frequently than once per annum, the
Corporation shall provide the Executive with a statement of the total number of
Stock Units which are subject to this Award.

 

6.     Restrictions on Transfer. 
Neither the Stock Unit Award, nor any interest therein or amount or
shares payable in respect thereof may be sold, assigned, transferred, pledged
or otherwise disposed of, alienated or encumbered, either voluntarily or
involuntarily.  The transfer restrictions
in the preceding sentence shall not apply to (a) transfers to the
Corporation, or (b) transfers by will or the laws of descent and
distribution.

 

7.     Timing and Manner of Payment of Stock Units. 
The Stock Units subject to this Award (including any dividend
equivalents credited (or to be credited) pursuant to Section 5(b) hereof)
that have vested in accordance with the terms hereof shall be distributed to
Executive as follows:

 

(a)   Subject to Section 7(e) below, the
Stock Units subject to this Award that have vested as of the Separation From
Service Date (whether pursuant to Section 3, Section 8(b) or 8(c) or
Section 9) shall be distributed to the Executive in the year that
immediately follows the year in which the Separation From Service Date occurs,
but in no event later than March 15th of such year.

 

(b)   Subject to Section 7(e) below, any
Stock Units subject to this Award (including any dividend equivalents credited
(or to be credited) pursuant to Section 5(b) hereof on or after the
Separation From Service Date) that vest after the Separation From Service Date
in accordance with Section 3, Section 8(b) or Section 8(c) or
Section 9, shall be distributed to the Executive as soon as practicable
but in no event later than March 15th of the year following the
year in which such Stock Units vest pursuant to the terms of this Award.

 

(c)   Payment of the vested Stock Units shall be
made by delivery to the Executive of a number of shares of Common Stock (either by
delivering one or more certificates for such shares or by entering such shares
in book entry form, as determined by the Corporation in its discretion) equal
to the number of Stock Units being paid (provided that the Corporation shall
pay any fractional share in cash).  The Executive shall have no further
rights with respect to any Stock Units that are paid or that terminate pursuant
to Section 8.

 

(d)   By making distribution of the vested Stock
Units in the year immediately following the year in which the Separation From
Service Date occurs, it is intended that the Corporation’s federal income tax
deduction with respect to such distribution not be limited or eliminated by
application of Section 162(m) of the Code.  If it should become reasonably foreseeable
that the Corporation’s federal income tax deduction with respect to such
distribution could be limited or eliminated by application of Section 162(m) of
the Code, the parties agree to cooperate in good faith to amend this Award to
mitigate, to the maximum extent reasonably possible in the circumstances, the
impact to the Corporation of Section 162(m) of the Code with respect
to such distribution; provided that any such amendment shall not result in the
application of any tax, penalty or interest to the Executive under Section 409A
of the Code and shall preserve the intended economic benefit of this Award
and/or the distribution to the Executive.

 

5

 

(e)   Except in the case of the Executive’s death,
if at the time of the Separation From Service Date the Executive is a “specified
employee,” as defined in Section 409A(a)(2)(B)(i) and determined in
accordance with its implementing regulation, any distribution to the Executive
in connection with such separation which is deemed to be a “deferral of
compensation” within the meaning of Section 409A shall not be distributed
to the Executive until one day after the sixth month anniversary of the
Separation From Service Date; provided that if the Executive’s “separation from
service” (within the meaning of Section 409A) is due to Disability and
such Disability satisfies the requirements of Section 409A(a)(2)(C), then
such payment may be made promptly following the Separation From Service Date
without regard to whether the Executive was a “specified employee” at such
time.

 

8.     Effect of Termination of Employment or Change in
Control.

 

(a)   Termination of Unvested
Units.  On the Severance
Date, the Executive’s Stock Units shall terminate to the extent such units have
not theretofore become vested pursuant to Section 3 and do not vest in
connection with the termination of the Executive’s employment pursuant to the
following subsections of this Section 8. 
If any unvested Stock Units are terminated hereunder, such Stock Units
shall automatically terminate and be cancelled as of the applicable termination
date without payment of any consideration by the Corporation and without any
other action by the Executive, or the Executive’s beneficiary or personal
representative, as the case may be.  In
no event shall accelerated vesting be triggered pursuant to both Sections 8(b) and
8(c).  In the event both Sections 8(b) and
8(c) would otherwise apply, Section 8(c) shall control.  In no event shall the number of Stock Units
that are vested as of the termination of the Executive’s employment be less
than the number that would have theretofore vested pursuant to Section 3
had neither Section 8(b) nor Section 8(c) applied.  For purposes of clarity, no Stock Units shall
vest after Executive’s Severance Date (even if the Separation From Service Date
occurs after the Severance Date).

 

(b)   Acceleration of Vesting on
Certain Terminations of Employment.  In the event that the Executive’s employment
by the Corporation or one of its Subsidiaries is terminated by the Corporation
without Cause (including a Termination Other Than for Cause), by the Executive
for Good Reason (including a Termination For Good Reason), or due to the
Executive’s death or Disability, and in each case only to the extent Section 8(c) below
does not apply, the Award shall be deemed vested as of the Severance Date with
respect to the applicable percentage of the total number of Stock Units
(including any dividend equivalents credited (or to be credited) pursuant to Section 5(b) hereof)
(with such total number subject to adjustment under Section 7.1 of the
Plan and/or Section 9 hereof) subject to the Award set forth in the table
below based on the Executive’s age as of the Severance Date (with such
percentage increased by any applicable Pro-Rata Vesting Percentage or
Additional Pro-Rata Vesting Percentage):

 

6

 

	
  Age

  	
   

  	
  Percentage of Units 

  Deemed Vested

  
	
   

  	
   

  	
   

  
	
  49

  	
   

  	
  8%

  
	
  50

  	
   

  	
  10%

  
	
  51

  	
   

  	
  13%

  
	
  52

  	
   

  	
  16%

  
	
  53

  	
   

  	
  20%

  
	
  54

  	
   

  	
  24%

  
	
  55

  	
   

  	
  28%

  
	
  56

  	
   

  	
  32%

  
	
  57

  	
   

  	
  37%

  
	
  58

  	
   

  	
  42%

  
	
  59

  	
   

  	
  48%

  
	
  60

  	
   

  	
  54%

  
	
  61

  	
   

  	
  62%

  
	
  62

  	
   

  	
  70%

  
	
  63

  	
   

  	
  79%

  
	
  64

  	
   

  	
  89%

  
	
  65

  	
   

  	
  100%

  

 

The vesting percentages set forth in the preceding
table are not cumulative and are aggregate vesting percentages that take into
account all prior vesting (i.e., the
vested percentage includes, and is not in addition to, any vesting of the Stock
Units that had theretofore occurred pursuant to Section 3).  For the avoidance of doubt, each percentage
above shall be increased by any applicable Pro-Rata Vesting Percentage.  In addition, for avoidance of doubt, if the
Severance Date occurs after the Separation From Service Date, the Award shall
be deemed vested as of the Severance Date with respect to the applicable
percentage of the total number of Stock Units (including any dividend equivalents
credited (or to be credited) pursuant to Section 5(b) hereof) (with
such total number subject to adjustment under Section 7.1 of the Plan
and/or Section 9 hereof) subject to the Award set forth in the table above
based on the Executive’s age as of the Severance Date (with such percentage
increased by any applicable Additional Pro-Rata Vesting Percentage), with the
actual percentage of Stock Units that become vested as of the Severance Date
determined by subtracting from such total percentage of vested Stock Units the
percentage of the total number of Stock Units (including any dividend
equivalents credited (or to be credited) pursuant to Section 5(b) hereof)
(with such total number subject to adjustment under Section 7.1 of the
Plan and/or Section 9 hereof) that had become vested pursuant to Section 3
prior to the Severance Date.

 

By way of example, if the Separation From Service Date
and the Severance Date both occurred on the day the Executive turned 55 1⁄2, the
total percentage of vested Stock Units would be 30%.  In addition, if the Separation From Service
Date occurs on the date the Executive turns 55 1⁄2 but the Severance Date is the
date he turns 56 1⁄2, the amount vesting as of the Severance Date pursuant to this
Section 8(b) shall be 15.5% (resulting in a total percentage of
vested Stock Units of 34.5%; the vested Stock Units at the Separation From
Service Date would have been 16.5%, the Additional Annual Vesting Amount on the
Executive’s 56th birthday would have been 2.5% 

 

7

 

and the additional amount vesting pursuant to this Section 8(b) based
on the Executive’s age of 561⁄2 would be 15.5%.) 
Any additional Stock Units subject to the Award that vest upon the
Severance Date solely through application of the Additional Pro-Rata Vesting
Percentage pursuant to this Section 8(b) in connection with the
termination of Executive’s employment (which in the second example above would
be 15.5%) shall be deemed vested as of the Executive’s Severance Date.  For purposes of Section 409A, the Stock
Units which vest and are delivered to the Executive solely pursuant to
application of this Section 8(b) (which in the second example above
would be 15.5%) shall be deemed to be a separate payment distinct from the
Stock Units which vested as of the Separation From Service Date and the
Additional Annual Vesting Amount (which in the second example above would be
16.5% and 2.5%, respectively).

 

(c)   Acceleration
in Connection with a Termination In Connection with a Change in Control.  In the event that the Executive’s employment
by the Corporation or one of its Subsidiaries is terminated pursuant to a
Termination Upon a Change in Control (including a Covered Resignation) or if
the Employment Period is not in effect, pursuant to a termination without Cause
by the Company or a termination for Good Reason by the Executive, in both cases
upon or within two years following the Change in Control, or pursuant to
resignation by the Executive for any reason within the 30-day period following
the first anniversary of the Change in Control, or, whether or not the
Employment Period is in effect, the Executive’s employment is terminated
pursuant to a Termination Other Than for Cause within the 90-day period
preceding the Change in Control, the Award shall be deemed vested as of the
date of such termination (i.e., the Severance Date) with respect to the
applicable percentage of the total number of Stock Units (including any
dividend equivalents paid pursuant to Section 5(b) hereof) (with such
total number subject to adjustment under Section 7.1 of the Plan and/or Section 9
hereof) subject to the Award set forth in the table below based on the
Executive’s age as of the Severance Date (with such percentage increased by any
applicable Pro-Rata Vesting Percentage or Additional Pro-Rata Vesting
Percentage):

 

	
  Age

  	
   

  	
  Percentage of Units 

  Deemed Vested

  
	
   

  	
   

  	
   

  
	
  49

  	
   

  	
  14%

  
	
  50

  	
   

  	
  17%

  
	
  51

  	
   

  	
  20%

  
	
  52

  	
   

  	
  24%

  
	
  53

  	
   

  	
  28%

  
	
  54

  	
   

  	
  32%

  
	
  55

  	
   

  	
  36%

  
	
  56

  	
   

  	
  41%

  
	
  57

  	
   

  	
  46%

  
	
  58

  	
   

  	
  53%

  
	
  59

  	
   

  	
  61%

  
	
  60

  	
   

  	
  69%

  
	
  61

  	
   

  	
  77%

  
	
  62

  	
   

  	
  86%

  
	
  63

  	
   

  	
  91%

  
	
  64

  	
   

  	
  95%

  
	
  65

  	
   

  	
  100%

  

 

8

 

The vesting percentages set forth in the preceding
table are not cumulative and are aggregate vesting percentages that take into
account all prior vesting (i.e., the
vested percentage includes, and is not in addition to, any vesting of the Stock
Units that had theretofore occurred pursuant to Section 3).  For the avoidance of doubt, each percentage
above shall be increased by any applicable Pro-Rata Vesting Percentage or
Additional Pro-Rata Vesting Percentage. 
In addition, for avoidance of doubt, if the Severance Date occurs after
the Separation From Service Date, the Award shall be deemed vested as of the
Severance Date with respect to the applicable percentage of the total number of
Stock Units (including any dividend equivalents credited (or to be credited)
pursuant to Section 5(b) hereof) (with such total number subject to
adjustment under Section 7.1 of the Plan and/or Section 9 hereof)
subject to the Award set forth in the table above based on the Executive’s age
as of the Severance Date (with such percentage increased by any applicable
Additional Pro-Rata Vesting Percentage), with the actual percentage of Stock
Units that become vested as of the Severance Date determined by subtracting
from such total percentage of vested Stock Units the percentage of the total
number of Stock Units (including any dividend equivalents credited (or to be
credited) pursuant to Section 5(b) hereof) (with such total number
subject to adjustment under Section 7.1 of the Plan and/or Section 9
hereof) that had become vested pursuant to Section 3 prior to the
Severance Date.

 

By way of example, if the Separation From Service Date
and the Severance Date both occurred on the day the Executive turned 55 1⁄2, the
total percentage of vested Stock Units would be 38.5%.  In addition, if the Separation From Service
Date occurs on the date the Executive turns 55 1⁄2 but the Severance Date is the
date he turns 56 1⁄2, the amount vesting as of Severance Date pursuant to this Section 8(c) would
be 24.5% (resulting in a total percentage of vested Stock Units of 43.5%; the
vested units at the Separation From Service Date would have been 16.5% and the
Additional Annual Vesting Amount at the Executive’s 56th birthday
would have been 2.5% and the additional amount vesting pursuant to this Section 8(c) based
on the Executive’s age of 561⁄2 would be 24.5%). 
Any additional Stock Units subject to the Award that vest upon the
Severance Date solely through application of this Section 8(c) in
connection with the termination of Executive’s employment (which in the second
example above would be 24.5%) shall be deemed vested as of the Executive’s
Severance Date.  In addition, if a
successor to all or substantially all of the business and/or assets of the
Corporation fails to assume this Agreement, the Executive shall be deemed to
have vested in the Stock Units subject to this Award with respect to such
percentage of Stock Units that would have vested if his employment had been
terminated pursuant to this Section 8(c) as of the Change in
Control.   For purposes of Section 409A,
the Stock Units which vest and are delivered to the Executive solely pursuant
to application of this Section 8(c) (which in the second example
above would be 24.5%) shall be deemed to be a separate payment distinct from
the Stock Units which vested as of the Separation From Service Date and the
Additional Annual Vesting Amount (which in the second example above would be
16.5% and 2.5%, respectively).

 

9.     Adjustments Upon Specified Events. 
The Administrator may accelerate the vesting of the Stock Units in such
circumstances as it, in its sole discretion, may determine.  In addition, upon the occurrence of the
events relating to the Corporation’s stock contemplated by Section 7.1 of
the Plan (including, without limitation, an extraordinary cash dividend on such
stock), the Administrator shall make adjustments in the number of Stock Units
then outstanding and the number and kind of securities or other property that
may be issued in respect of the Stock Unit Award in order to keep the Executive
in the same economic position.  No such
adjustment shall be made with respect to any ordinary cash dividend for which
dividend equivalents are credited pursuant to Section 5(b).

 

9

 

10.  Tax Issues.  Upon any
distribution of shares of the Common Stock in respect of the Stock Units, the
Corporation shall reduce the number of shares to be delivered by (or otherwise
reacquire) the appropriate number of whole shares, valued at their then Fair Market
Value, required to
satisfy any tax withholding obligations the Corporation or a Subsidiary may
have with respect to such distribution at the minimum applicable withholding
rates; provided, however, that in the event such reduction of shares would not
be in compliance with applicable law or that any payment of the Stock Units is
not made in the form of shares of the Common Stock, the Executive shall, at his
option, have the right to either (a) pay or provide for payment in cash of
the amount of any taxes that the Corporation or a Subsidiary may be required to
withhold with respect to such payment and/or distribution, or (b) have the
Corporation or Subsidiary deduct from any amount payable to the Executive the
amount of any taxes which the Corporation or Subsidiary may be required to
withhold with respect to such payment and/or distribution.

 

11.  Notices.  All notices
and other communications under this Agreement shall be in writing and shall be
given (i) when personally delivered to the recipient (provided a written
acknowledgement of receipt is obtained), (ii) three days after mailing by
first class mail, postage pre-paid, certified or registered with return receipt
requested or (iii) one day after being sent by a nationally recognized
overnight courier (provided that a written acknowledgement of receipt is
obtained by the overnight courier), to the party concerned at the address
indicated below:

 

If to the Corporation:

 

HCP, Inc.

3760 Kilroy Airport Way, Suite 300

Long Beach, California  90806

Attention:  General Counsel

 

If to the Executive:

 

To the most recent home
address in the Corporation’s records.

 

Any party may change such party’s address for notices by notice duly
given pursuant to this Section 11.

 

12.  Plan.  The Award and
all rights of the Executive under this Agreement are subject to, and the
Executive agrees to be bound by, all of the terms and conditions of the
provisions of the Plan, incorporated herein by reference.  In the event of a conflict or inconsistency
between the terms and conditions of this Agreement and of the Plan, the terms
and conditions of this Agreement shall govern. 
The Executive acknowledges having read and understood the Plan and this
Agreement.  Unless otherwise expressly
provided in other sections of this Agreement, provisions of the Plan that
confer discretionary authority on the Administrator do not (and shall not be
deemed to) create any rights in the Executive unless such rights are expressly
set forth herein or are otherwise in the sole discretion of the Administrator
so conferred by appropriate action of the Administrator under the Plan after
the date hereof.

 

10

 

13.  Entire Agreement.  This
Agreement and the Plan, together with the provisions of the Employment
Agreement incorporated herein, constitute the entire agreement and supersede
all prior understandings and agreements, written or oral, of the parties hereto
with respect to the subject matter hereof (other than the Employment Agreement).  Any and all modifications to this Agreement
must be in writing and signed by the party against whom enforcement of such
modification is sought.  With respect to
any provision of the Employment Agreement that is incorporated herein, any
references in such provision to “Officer” and “this Agreement” shall refer to
the Executive and this Agreement, respectively. 
The waiver of the breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach of the same or other
provision hereof.  Any waiver to be
effective must be in writing, specifically referring to the provision being
waiver and signed by the party against whom the waiver is being enforced.  Should a court or other body of competent
jurisdiction, including any arbitrator selected pursuant to Section 6(h)(i) of
the Employment Agreement, determine that any provision of this Agreement is
invalid or unenforceable, such provision shall be adjusted rather than voided,
if possible, taking into account the intent of the parties when they entered
into this Agreement and all other provisions of this Agreement shall be deemed
valid and enforceable to the extent possible.

 

14.  Limitation on Executive’s Rights.  Participation in the Plan  confers
no  rights or interests other than as
herein provided.  This Agreement creates
only a contractual obligation on the part of the Corporation as to amounts
payable and shall not be construed as creating a trust.  Neither the Plan nor any underlying program,
in and of itself, has any assets.  The
Executive shall have only the rights of a general unsecured creditor of the
Corporation with respect to amounts credited and benefits payable, if any, with
respect to the Stock Units, and rights no greater than the right to receive the
Common Stock as a general unsecured creditor with respect to Stock Units, as
and when payable hereunder.

 

15.  Binding on Successors.  This Agreement shall, subject to the provisions hereof, be binding upon
and inure to the benefit of the parties, including their heirs (in the case of
the Executive), successors and assigns. 
The rights and obligations under this Agreement shall not be assignable
by any party hereto without the other party’s written consent; provided,
however, that the Corporation may assign this Agreement to any successor in
connection with a Change in Control.  Any successor entity to the Corporation
(or, in the case of a Change in Control pursuant to a sale of the Corporation’s
assets, by the buyer of such assets), shall
agree in writing to discharge and perform all the promises, covenants, duties,
and obligations of the Corporation hereunder.

 

16.  Dispute Resolution.  Any dispute
regarding this Agreement shall be submitted to mandatory, binding arbitration.
The arbitration shall be conducted in accordance with the provisions respecting
arbitration set forth in the Employment Agreement.  Sections 6(h)(iii) and Section 6(q) of
the Employment Agreement shall apply as to any fees incurred in connection with
any such arbitration, provided that any reference to “Officer” in such
provision shall be deemed to refer to the Executive or his beneficiary, as the
case may be.

 

11

 

17.  Representations. The Corporation represents and warrants to the
Executive that (i) the execution, delivery and performance of this
Agreement by the Corporation has been fully and validly authorized by all
necessary corporate actions, (ii) the officer signing this Agreement on
behalf of the Corporation is duly authorized to do so, (iii) the
execution, delivery and performance of this Agreement does not violate any
applicable law, regulation, order, judgment or decree or any agreement, plan or
corporate governance document to which the Corporation is a party or by which
it is bound, and (iv) upon execution and delivery of this Agreement by the
parties, it shall be a valid and binding obligation of the Corporation,
enforceable against the Corporation in accordance with its terms.

 

18.  No Mitigation/No Offset.  The Executive
shall not be required to mitigate the amount of any payment or benefit provided
for hereunder, nor shall the amount of any such payment or benefit be reduced
by any compensation earned by the Executive as the result of employment by
another employer or self-employment, by retirement benefits or by offset
against any claim or amount claimed to be owed by the Executive to the
Corporation or any Subsidiary, or otherwise.

 

19.  Counterparts.  This
Agreement may be executed simultaneously in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument.

 

20.  Section Headings.  The section
headings of this Agreement are for convenience of reference only and shall not
be deemed to alter or affect any provision hereof.

 

21.  Governing Law.  This
Agreement shall be governed by and construed and enforced in accordance with
the laws of the State of Maryland without regard to conflict of law principles
thereunder.

 

22.  Construction.  The
Corporation and the Executive agree to cooperate and work together in good
faith to timely amend this Agreement to the extent necessary to avoid any
additional tax, interest or penalties imposed by Section 409A on the
Executive   In the event that the
Executive and the Corporation do not agree as to the necessity, timing or
nature of a particular amendment intended to satisfy Section 409A,
reasonable deference will be given to the Executive’s reasonable interpretation
of such provisions.

 

23.  Legal Counsel; Mutual Drafting. 
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.  Each
party has cooperated in the drafting, negotiation and preparation of this
Agreement.  Hence, in any construction to
be made of this Agreement, the same shall not be construed against either party
on the basis of that party being the drafter of such language.  The Executive agrees and acknowledges that he
has read and understands this Agreement, is entering into it freely and
voluntarily, and has been advised to seek counsel prior to entering into this
Agreement and has had ample opportunity to do so.

 

[Remainder of page intentionally
left blank]

 

12

 

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed on its behalf by a duly authorized officer and the Executive has
hereunto set his hand as of the date and year first above written.

 

	
  HCP,
  INC.,

  	
   

  	
  EXECUTIVE

  
	
  a
  Maryland corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /S/
  EDWARD J. HENNING

  	
   

  	
    /S/ JAMES F. FLAHERTY III

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Print Name:
  Edward J. Henning

  	
   

  	
   

  
	
   

  	
   

  	
  Print Name: James F. Flaherty III

  
	
  Its: Executive
  Vice President, General 

  Counsel, Chief Administrative Officer 

  and Corporate Secretary

  	
   

  	
   

  
				

 

13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}]]