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.
