Document:

Exhibit 10.5

 

RESIGNATION AND CONSULTING AGREEMENT

 

HCP, Inc.,
and its affiliates and subsidiaries (hereinafter collectively “Company”) and
Mark A. Wallace (“Wallace”) hereby agree to end their employment relationship
on the following basis:

 

1.                                       Wallace has voluntarily resigned from his
position as Executive Vice President - Chief Financial Officer and Treasurer
and all other employment relationships with the Company effective Tuesday, March 31,
2009.  Wallace will be paid his normal
salary through that date, any earned but unused vacation and personal days, and
all outstanding expense reports.  In
addition, on March 15, 2009, 4,000 shares of HCP restricted stock granted
to Wallace on March 15, 2004 will vest.

 

2.                                       Prior to his departure on March 31,
2009, Wallace will cooperate fully in a professional manner to complete his
normal duties and responsibilities and to accomplish a smooth and amicable
transition of such duties and responsibilities to the persons designated by the
Company to assume them.  In addition,
Wallace will return to the Company by March 31, 2009, all files, records,
credit cards, keys, equipment, and all other Company property or documents
maintained by Wallace for the Company’s use or benefit.

 

3.                                       Wallace represents that Wallace is
signing this Agreement voluntarily and with a full understanding of and
agreement with all of its terms, for the purpose of receiving the additional
pay and benefits from the Company set forth below.

 

4.                                       In reliance on Wallace’s agreement with
the terms, representations, and releases in this Agreement, the Company will
provide Wallace (or other entity designated by Wallace formed and controlled by
Wallace through which he may conduct business) with the following additional
pay and benefits:

 

a.                                       On March 31, 2009, the Company will
pay Wallace a $92,500 discretionary cash bonus, less legally required
deductions, as recognition for his service to the Company during the first
three months of 2009.

 

b.                                      The consultancy relationship set forth in
paragraph 5 of this Agreement.

 

c.                                       The Company will reimburse Wallace’s
actual attorney fees and costs incurred for his attorney’s review of and advice
regarding this Agreement, to a maximum of $6000.  This reimbursement will be made directly to
Wallace’s attorney upon the presentment of a statement of fees actually
incurred.

 

Wallace agrees that Wallace is not entitled to
receive, and will not claim, entitlement to any compensation not provided for
in this Agreement, including but not limited to any bonus, stock grant or
option, or other incentive compensation.

 

1

 

5.                                       Wallace has agreed to continue to assist
the Company in a consulting relationship during a twelve month consulting
period from April 1, 2009 to and including March 31, 2010
(“Consultancy Period”) on the following terms. 
During such Consultancy Period,

 

a.                                       Wallace will be reasonably available to
consult as needed on matters familiar to him as a result of his working with
the Company, provided, however, that such consultancy is non-exclusive and will
in no way interfere with other consulting or employment relationships with
others.

 

b.                                      Wallace agrees that if he accepts any
consulting or employment relationship with a direct competitor of the Company
during the Consultancy Period, the Consultancy Period, and all of the benefits
and payments to him provided by this paragraph 5, will automatically end.  No other consequence for going to work for a
direct competitor is contemplated by this agreement.

 

c.                                       During the Consultancy Period, Wallace
agrees that he will not, directly or indirectly, solicit or encourage Company
employees to leave employment with the Company.

 

d.                                      The Company will pay Wallace (or other
entity designated by Wallace formed and controlled by Wallace through which he
may conduct business) a consulting fee of $60,000 per month, without offset or
deduction of any kind, payable by the end of each month during such Consultancy
Period, and Wallace will be responsible for all taxes owed on such payments.

 

e.                                       The Company will reimburse Wallace his
cost of his COBRA premiums for up to 18 months to enable him and his family to
maintain his current insurance benefits (including medical, dental and vision)
if he elects to exercise his COBRA rights, plus payment of an additional
reasonable gross-up amount so that the Company reimburses him for the tax
liability arising from the Company’s reimbursement of his COBRA premiums.

 

f.                                         Wallace will continue to vest in 12,118
shares of restricted stock or any restricted stock units that are scheduled to
vest during the Consultancy Period, but will not vest in any stock options
during this time.

 

g.                                      For the length of the Consultancy Period
only, Wallace will continue to receive dividends issued on his restricted stock
and restricted stock units that will vest during the Consultancy Period.

 

During the Consultancy
Period, Wallace agrees that he is retained solely as an independent contractor
to the Company.  Wallace agrees that he
is not, and will not claim or represent himself to be, an employee or agent of
the Company, that he has no authority to enter into any contracts or agreements
on behalf of the Company or to otherwise bind the Company in any manner, and
that he will not represent to any person or entity that he has any such authority.

 

 

6.                                       Apart from the 4,000 shares of restricted
stock referred to in paragraph 1 of this Agreement and the continued vesting of
currently scheduled restricted stock and restricted stock units referred to in
paragraph 5f of this Agreement, Wallace acknowledges that he has no other
restricted stock, restricted stock units, or stock options to which he has any
entitlement or rights.  Wallace hereby
waives any claims to earning, vesting, or receiving any additional dividends,
restricted stock, restricted stock units, or stock options other than those
permitted by this paragraph and paragraph 5g.

 

7.                                       In exchange for the additional pay and
benefits provided herein, Wallace also promises

 

a.                                       not to use or disclose any confidential
information, trade secrets, or financial, personnel, proprietary information,
or client information which Wallace learned while employed by the Company.

 

b.                                      not to disparage the Company or its
management, services, or investments. 
This promise shall in no way preclude Wallace from giving truthful
testimony pursuant to any legal order or in response to any governmental
inquiry.

 

c.                                       not to encourage or assist any other
person or entity to assert any legal claim against any Released Party in this
Agreement, which obligation shall not prohibit his giving truthful testimony in
response to any legal order or in any governmental inquiry.

 

If Wallace breaches any of the promises, representations, or releases
in this Agreement, the Company may stop any payments or benefits otherwise
owing under this Agreement and may seek additional relief or remedy as provided
herein.

 

If Wallace believes that any payment or benefit in paragraph 5 has not
been properly paid to him, he shall advise the Company’s General Counsel in
writing, and the Company shall have fifteen (15) days to correct any mistaken
or inadvertent non-payment.  If the
Company has not corrected such non-payment within 15 days and if after
adjudicating the matter in arbitration, the arbitrator finds that the Company
did not have a valid basis for discontinuing the Consultancy Period payments,
the arbitrator will award Wallace his reasonable attorneys’ fees in addition to
the restoration of the Consultancy Period benefits.  In addition, if the arbitrator finds that the
Company had no basis to discontinue the Consultancy Period payments, the
arbitrator will award Wallace an additional $100,000 as liquidated damages in
lieu of the financial injury that would be incurred by Wallace as a result of
the delay in payment, such damages being difficult to assess otherwise.

 

8.                                       Wallace does hereby, for Wallace and
Wallace’s heirs, successors and assigns, release, acquit and forever discharge
the Company, and its officers, directors, managers, employees, representatives,
lawyers, insurers, agents, trustees, related entities, affiliates,
subsidiaries, and each of their respective divisions, groups, business units,
associates, owners, stockholders, predecessors, successors, heirs, and assigns,
employee welfare benefit plans and pension or deferred plans under Section 401
of the Internal Revenue Code of 1954, as amended, and their trustees,
administrators and other fiduciaries or representatives, and all persons acting
by, through, under, or in concert with 

 

 

them, or any of them (the “Released Parties”), of and
from any and all waiveable claims, actions, charges, complaints, causes of
action, rights, demands, debts, damages, or accountings of whatever nature,
known or unknown, which Wallace or Wallace’s heirs may have against such
persons or entities based on any act or omission which occurred prior to the
effective date of this Agreement, including but not limited to those related
to, or arising from, Wallace’s employment with the Company or his resignation,
provided, however, that nothing in this paragraph or paragraph 10 of this
Agreement changes or waives Wallace’s rights to be defended and indemnified in
accordance with the terms of his Indemnification Agreement with the Company
dated February 14, 2008, and Wallace will be continued on the Company’s
D&O liability insurance policy for the duration of the Indemnification
Agreement.

 

The
Company does hereby release, acquit and forever discharge Wallace of and from
any and all waiveable claims, action, charges, complaints, causes of action,
rights, demands debts, damages or accountings of whatever nature that are based
on information presently known to the Company’s Board of Directors or its Chief
Executive Officer Jay Flaherty.

 

9.                                       In exchange for material portions of the
additional pay and benefits provided in paragraph 3 and in accordance with the
Older Workers Benefit Protection Act, Wallace hereby knowingly and voluntarily
waives and releases all rights and claims, known and unknown, arising under the
Age Discrimination In Employment Act of 1967, as amended, which he might
otherwise have had against the Released Parties regarding any act or omission
which occurred on or before the effective date of this Agreement.

 

10.                                 It is further understood and agreed that
as a condition of this Settlement, all rights under Section 1542 of the
Civil Code of the State of California are expressly waived by Wallace.  Such Section reads as follows:

 

“A General Release does
not extend to claims which a 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.”

 

Wallace affirms that this waiver of Section 1542 is not a mere
recital.  Wallace affirms that he is
aware that the Company would not have entered into this Agreement but for
Wallace’s agreement to a full waiver of all waiveable claims of any type and
description, including unknown claims.

 

11.                                 This Agreement contains all of the terms,
promises, representations, and understandings made between the parties and
supersedes any previous representations, understandings, or agreements, except
for (a) the Arbitration Agreement referred to in paragraph 13 of this
Agreement, (b) any agreement by Wallace regarding confidentiality and/or
protection of Company information, property, or trade secrets, and the HCP
Insider Trading Policy signed by Wallace on August 8, 2008, and (c) Indemnity
Agreement signed by Wallace on February 14, 2008, all of which agreements
shall continue in full force and effect. 
Furthermore, the terms of this Agreement cannot be modified or amended
in any way except by a writing signed by Wallace and an executive officer of
the Company.

 

 

12.                                 Wallace is hereby advised (a) to
consult with an attorney prior to signing this Agreement and (b) that he
has 21 days in which to consider and accept this Agreement by signing this
Agreement, which should then be promptly returned to the Company’s General
Counsel.  In addition, Wallace has a
period of 7 days following his signing of this Agreement in which he may revoke
the Agreement.  If Wallace does not
advise the Company (by a writing received by the Company’s General Counsel
within such 7 day period) of his intent to revoke the Agreement, the Agreement
will become effective and enforceable upon the expiration of the 7 days.

 

13.                                 The Company and Wallace have entered into
an agreement dated January 20, 2005 to arbitrate disputes arising out of
or relating to their employment relationship (the “Arbitration
Agreement”).  Any disputes arising out of
or relating to this Agreement, as well as any other matters that are subject to
the Arbitration Agreement, shall be subject to determination through final and
binding arbitration in accordance with the Arbitration Agreement.

 

	
  HCP, Inc.

  	
   

  	
  Mark A. Wallace

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/Edward J.
  Henning, Esq.

  	
   

  	
  By:

  	
  /s/Mark A. Wallace

  
	
   

  	
  Edward J.
  Henning, Esq.

  	
   

  	
  Date Signed:
  February 28, 2009

  
	
   

  	
  Executive Vice
  President and General CounselExhibit 10.6

 

March 2,
2009

 

Dear
Tom:

 

We
are very pleased to offer you the position of Executive Vice President – Chief
Financial Officer at HCP, Inc.  Your
start date will be no later than May 1, 2009.   If you are unable to start by that date, this
offer will be withdrawn.  This offer is
contingent upon the satisfactory completion of a background check and other
pre-employment screenings.  An
Authorization and Disclosure Form is attached for your review and
signature.  We will notify you once the
pre-employment screenings have been completed.

 

Arrangements
of your employment are as follows:

 

1.               Your base annual
compensation is $350,000 paid on a semi-monthly basis.  Your position is exempt.

 

2.               Your bonus for 2009 will be
$400,000 unless you resign or are discharged for misconduct prior to December 31,
2009. Thereafter, annual bonuses are discretionary. Since discretionary bonuses
are paid both for performance during a year and for continued active service
until the date the bonus is paid, no discretionary bonus will be paid unless
you are still actively employed at the time bonuses are paid. Bonuses are
typically awarded in the first quarter of the year following the year for which
performance is evaluated.

 

3.               Performance and compensation
evaluations are performed on an annual basis.

 

4.               You are eligible for four
weeks of vacation per year, which begin accruing upon employment.   Hours for your initial month will be
pro-rated based upon your start date.

 

5.               You are also eligible for
four personal days per year, which begin accruing upon employment.  Hours for your initial month will be
pro-rated based upon your start date.

 

6.               Upon employment, restricted common stock
with a value of $750,000 (based on the closing stock price on the date of
grant) will be awarded to you.  This is a
“one-time” grant in the context of joining HCP. 
This stock is subject to a pro rata three year annual vesting schedule.

 

7.               In the first quarter of 2010, you will be
granted a combination of restricted stock, performance based restricted stock
units and stock options with a “value upon grant” of $750,000.  Value upon grant means (i) for
restricted stock or restricted stock units, the closing price of HCP’s common
stock on the date of the grant times the number of shares granted plus (ii) for
stock options, the value as calculated by the Black—Scholes or other similar
valuation method times the number of options granted.  The equity described in this paragraph 7 is
subject to a pro rata five year annual vesting schedule.

 

 

8.               On the first of the month
following date of employment (or coincident with the date of employment if such
date is the first business day of the month) you will be eligible for the
following benefits to the extent provided to regular employees of HCP: medical,
dental, vision, life and disability insurance and eligible to contribute to the
401(k) Plan.  Additionally, on the
first of the month following 90 days of employment, you will be eligible to
participate in the Section 125 Cafeteria Plan’s Health Care & Dependent
Care Flexible Spending Plan.  You will
become eligible to receive the company matching contribution for the 40l (k) Plan
on the first of the month following three months of employment.

 

9.               HCP will reimburse you for
actual documented relocation expenses as set forth in the attached addendum,
but not to exceed $150,000. If not previously utilized, relocation benefits
will expire in their entirety after 18 months from your start date.

 

10.         In addition to the
relocation expenses described in paragraph 9, HCP will reimburse up to 50% (but
in no event to exceed $50,000) of the amount by which the gross sales price of
your primary residence in Colorado is less than the appraised value of the
residence provided the sale closes within 210 days of the date of this letter.
The appraisal shall be obtained by you and prepared by a licensed appraiser
with appropriate experience with single family residences in your area.

 

11.         HCP will provide a
reasonable “gross-up” for tax purposes on reimbursed expenses provided for in
both paragraphs 9 and 10 and such gross-up will not be subject to the $150,000
and $50,000 caps.

 

You understand that you will be an employee
at will and that you may quit or be transferred, reassigned, promoted,
suspended, demoted and/or discharged at any time with or without cause and with
or without prior notice.  No other
promises or representations have been made to you.

 

You will also be required to sign an
agreement that any employment dispute will be subject to arbitration.  Attached is the agreement for your review.

 

Tom, once you have had a chance to review the
foregoing, please sign the enclosed copy of this letter, and return under
confidential cover to me.  This offer
will expire on March 4, 2009, if not earlier accepted.

 

Kind regards,

 

	
  /s/ James F. Flaherty III

  	
   

  	
   

  	
   

  	
   

  

 

I agree to accept employment with HCP on this basis. I agree that no
other promises or representations have been made to me relating to my
employment other than those set forth in writing above.

 

	
  Accepted by:

  	
  /s/ Thomas M. Herzog

  	
   

  	
   

  
	
   

  
	
  Dated:

  	
  March 2, 2009

  	
   

  	
   

  
					

 

Attachments

 

2

 

Addendum to Offer Letter

Reimbursable
Relocation Expenses

 

1.               Movement (packing, unpacking,
transportation, and insurance) of household goods and personal effects.

 

2.               Transportation of up to two automobiles.

 

3.               Temporary storage of household goods and
personal effects.

 

4.               Temporary rental and commuting (between
Denver and Southern California) until the earlier of six months after your
start date or 10 days after the sale of your primary residence.

 

5.               Normal closing costs of buying and
selling primary residences (including broker’s commission, legal, title,
inspection, transfer taxes/documentary stamps, survey, recording, notary,
credit report, appraisal and loan origination/discount points).

 

6.               New residence utility connection fees.

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