What seemed like a simple resignation of Atascadero’s police chief has now taken on a more curious hue.

After resigning Jan. 7 to “spend more time with his family,” James Mulhall, who had been Atascadero’s police chief since 2008, has cut a deal with the city.

In an agreement between the city and the chief signed Jan. 7 and approved Wednesday, Mulhall promised not to sue the city in exchange for $126,000 and the city’s promise it will not pursue its right to fire him with cause, according to a settlement released Wednesday by the city.

Under the terms, Mulhall will also be paid out any unused vacation or leave. That value was not disclosed. The city also agreed to give him a positive reference.

Mulhall’s annual salary, according to the city’s website, is $132,833. The city did not say how it determined the settlement amount of $126,000.

In a phone interview, Mulhall, 58, insisted he resigned. He would not elaborate on his departure or the settlement.

Mulhall was hired as police chief in 2007, and his employment agreement gave the city the right to fire Mulhall without cause. If the city were to fire him without cause, notes the employment agreement, he was entitled to six months severance. Under the employment agreement, if the city were to fire Mulhall with cause, he “shall not be entitled to the payment of any severance pay or compensation.” The employment agreement also noted that if Mulhall resigns from office, he is not entitled to any severance.

City Attorney Brian Pierik said he is prevented from speaking about the settlement agreement because it is a personnel issue.

“The only thing I can say to you is I don’t have anything to add beyond what is in the settlement agreement,” he said.

City Manager Wade McKinney was out of town and unavailable for comment.

Cmdr. Stephen Gesell has assumed the duties of acting police chief.