EXHIBIT 10.11
April 10, 1996
Mr. Robert Stine
PO Box 2261
Ranch Santa Fe, CA 92067
Dear Bob:
I am writing to confirm the terms of the agreement between you
and Tejon Ranch Co. (the "Company") as to the terms of your
employment. Those terms are as follows:
1 Position. You will be employed as the President and
Chief Executive Officer of the Company, subject to the direction
and control of and reporting to the Board of Directors or a
committee thereof. You will also be elected as a member of the
Board of Directors. You agree to devote your full business time
and energies to the business and affairs of the Company, to use
your best efforts, skill and abilities to promote the Company's
interests and to perform your duties in accordance with policies
and practices established from time to time by the Board of
Directors. Your duties may include serving as an officer and/or
director of subsidiaries or other affiliates of the Company.
While employed by the Company, you agree that you will not render
services to others or engage in any other activities that would
interfere with or prevent your fulfilling your obligations to the
Company. The Company agrees that you can continue to serve on
the Board of Directors of Rancho Santa Fe National Bank and that
you may participate in civic and charitable activities in the
Bakersfield area that do not interfere with or prevent you from
performing your obligations to the Company. You agree that you
will not serve on any other boards of directors without the prior
approval of the Company's Board of Directors, which will not be
unreasonably withheld.
2. Salary. Your base salary will be at the annual rate of
$275,000 per annum but will be pro rated for the calendar year
1996 based upon a start date of May 1, 1996. This means that the
annual compensation for calendar year 1996 will in fact be
$183,333 if you start on that date. Your salary will be payable
on the same date as salaries to other executives of the Company
are paid. The amount of your salary will be subject to review
from time to time by the Board of Directors or a committee
thereof (expected to be the Compensation Committee), but not
before November 1997.
3. Incentive Compensation. In addition to your salary,
you will be paid a bonus within 45 days after the end of each
full fiscal year of the Company that you are employed pursuant to
this Agreement in an amount to be determined by the Board of
Directors or a committee thereof ranging between 0 and 50% of
your salary for the relevant year, except that the bonus for 1996
will be guaranteed at 20% of your base salary, i.e., $36,667 for
the period from May 1, 1996 to December 31, 1996. For 1997 and
thereafter, the bonus will be based upon performance criteria
determined by the Board of Directors or a committee thereof.
4. Equity Participation. At or about the date you begin
working, the Company will grant you an option to purchase 100,000
shares of its Common Stock under its 1992 Stock Option Plan at an
exercise price equal to the fair market value of the shares on
the date of grant determined in accordance with the Plan. The
option will have a term of 10 years and will vest (i.e., become
exercisable) as to the following number of shares on the
anniversaries of the date you begin work as set forth below:
First Anniversary - 10,000 shares
Second Anniversary - an additional 15,000 shares
Third Anniversary - an additional 15,000 shares
Fourth Anniversary - an additional 30,000 shares
Fifth Anniversary - an additional 30,000 shares
Except as provided in Section 8 below, if your employment
terminates you will have the right to exercise the option to the
extent that it was exercisable on the date of termination at any
time within three months after the date of termination. In the
case of termination of employment as a result of death or
disability, the three-month period shall be extended to one year.
The option is intended to constitute an "incentive stock
option" under Section 422 of the Internal Revenue Code, except to
the extent that the aggregate fair market value of shares with
respect to which incentive stock options are exercisable for the
first time by you during any calendar year under all plans of the
Company and its parents and subsidiaries exceeds $100,000, all as
determined pursuant to Section 422(d) of the Internal Revenue
Code.
In order to permit a so called "cashless exercise" of your
option, the Company will cooperate with you to permit you to
exercise the option (to the extent it is then exercisable),
immediately sell the shares and apply the proceeds of sale to the
exercise price but only to the extent the Company can do so
without violating any applicable provision of law and only if the
shares purchased are at the time registered under the Securities
Act of 1933 and can be sold by you under Rule 144 of the
Securities and Exchange Commission or any successor provision.
5. Relocation Benefits. The Company will reimburse you
for the sales commission and for standard escrow fees, title
insurance premiums and other closing costs typically paid by
sellers with respect to the sale of your present home. In
addition, the Company will pay the reasonable costs of moving
your furniture and personal effects to Bakersfield The "other
closing costs" referred to above shall include such items as
recording costs and costs of obtaining lenders' beneficiary
statements but shall not include any cost of any improvements to
your property (or the payment of cash in lieu thereof) or any
amounts payable with respect to representations, warranties and
other similar obligations incurred in connection with the sale or
any prepayment penalties. In addition, the Company will make
available to you the use of Residence No. 7 on the Ranch until
your residence in Rancho Santa Fe is sold and you have arranged
for permanent housing in Bakersfield, although the period for
your use of this housing shall not exceed eight months.
6. Perquisites. The Company will provide you with a 4-
wheel drive vehicle costing approximately $35,000 and will
reimburse you for your insurance, normal maintenance and repair
and fuel expenses while you are employed. In addition, the
Company will provide you with a membership at the Stockdale
Country Club, and will pay the dues with respect to that
membership while you are employed as the President and Chief
Executive Officer of the Company. You will also participate in
the health insurance, life insurance and retirement programs made
available from time to time by the Company to other executive
officers, and you will be entitled to the same vacation benefits
made available from time to time to other executive officers of
the Company. The Company will reimburse you for all reasonable
out-of-pocket business expenses incurred in performing the
services contemplated by this agreement in accordance with then
prevailing Company policies, provided that reasonable
documentation of such expenses is provided by you.
7. Death and Disability. If you become disabled and are
unable to perform your duties, the Company will continue to pay
your salary and provide the perquisites referred to in Section 6
for the period of such disability up to a maximum of 90 days, and
the Company will have the right to terminate this agreement
effective upon the expiration of said 90-day period. Thereafter
you will be entitled to receive benefits under any then-existing
disability insurance program of the Company. "Disability" means
any physical or mental condition which renders you unable to
perform the essential functions of your position, even with
reasonable accommodation. In the event of your death, this
Agreement shall automatically terminate.
8. Severance Benefits. In the event of termination of
your employment by the Company without cause at any time during
the first two years of your employment, the Company will continue
to pay you, as a severance benefit, the amount of your salary
then in effect (less appropriate withholding amounts) for a
period of two years after such termination. Such payments will
be made on the normal salary payment days of the Company. In the
event of termination by the Company without cause after the first
two years, the Company will continue to pay your salary as
provided above for a period of one year after such termination.
In addition, if your employment is terminated by the Company
without cause, the option referred to in Section 4 will fully
vest (i.e., become exercisable as to all of the shares) but
remain subject to the requirement referred to in Section 4 that
it be exercised within three months of such termination.
For purposes of this Section 8, termination for cause shall
include termination for personal dishonesty; willful misconduct;
breach of fiduciary duty involving self-dealing or personal
profit; intentional failure to perform duties or abide by Company
policies, in each case to the extent such duties or policies have
been communicated to you in writing or their existence is
otherwise known to you, and you have not cured such failure
within a reasonable time after written notice of such failure is
given to you: conviction, entry of a plea of guilty or nolo
contendere in connection with any alleged violation, or any
actual violation, of any law, rule, regulation (other than
traffic violations or similar offenses) or any cease-and-desist
or other court order; involvement in any legal proceeding which,
in the opinion of legal counsel to the Company, would be required
to be disclosed pursuant to Item 401(f) of Regulation S-K of the
Securities and Exchange Commission (a copy of which is attached
to this agreement), other than proceedings under federal
bankruptcy laws or state insolvency laws involving entities in
which you have less than a 50% interest; any material breach of
this agreement; non-prescription use of any controlled substance
or the use of alcohol or any other non-controlled substance which
the Board reasonably determines renders you unfit to serve in
your capacity as an officer of the Company; and any act or
omission which has a material adverse effect on the public image,
reputation or integrity of the Company.
If you voluntarily resign or your employment is terminated
by the Company for cause or your employment terminates as a
result of your death or disability, you will not be entitled to
any severance benefits pursuant to the first paragraph of this
Section 8 except as provided in Section 7 with respect to
disability pay and disability insurance and except in the case of
death for any life insurance benefits. Also, in such event the
exercise dates of your option will not be accelerated, although
your option will still be exercisable during the three month or
one year period specified in Section 4 (whichever is applicable)
with respect to the number of shares as to which it had become
exercisable on the date of termination (determined without any
acceleration of the exercise dates) In the event that a
voluntary resignation by you is caused by a reduction in your
duties and responsibilities below those appropriate for a senior
executive of the Company or any other material change in the
circumstances of your employment made by the Company for the
purpose and with the intention of causing you to resign, you will
be treated as having been terminated by the Company.
9. Employment at Will. The employment relationship
contemplated by this agreement is an at-will relationship under
which you and the Company each has the right at any time to
terminate the relationship with or without cause and without
notice, subject only to the severance benefits set forth in
Section 8 above in the event the Company terminates the
relationship without cause. Nothing in this agreement is
intended to create a term of employment for a period of years or
otherwise.
10. Nondisclosure. You agree that, for so long as you
remain in the employ of the Company and thereafter, you will not
disclose to any person or entity or otherwise use or exploit any
proprietary or confidential information of the Company, including
without limitation trade secrets, processes, proposals, reports,
methods, computer software or programming or budgets or other
financial information regarding the Company, its business,
properties, customers or affairs obtained by you while you are
employed by the Company, except to the extent required by you to
perform your duties pursuant to this agreement. Information will
not be deemed to be confidential for purposes of this agreement
if it is or becomes generally available to the public other than
as a result of a disclosure by you. You will have the right to
use any such confidential information to the extent necessary to
assert any right or defend against any claim arising under this
agreement or pertaining to confidential information or its use
and to the extent necessary to comply within the applicable
provision of law. All files, records, documents, computer
recorded information, specifications and other similar items
relating to the business of the Company, whether prepared by you
or otherwise coming into your possession, shall remain the
exclusive property of the Company and shall not be removed from
the premises of the Company except when (and only for the period)
necessary to carry out your duties. If removed, all such
materials shall be immediately returned to the Company upon any
terminatin of your employment, and no copies thereof shall be
kept by you, except that you shall be entitled to retain
documents reasonably related to your rights as an optionholder,
stockholder and former employee of the Company. You acknowledge
and agree that the remedy for any breach of the provisions of
this Section 10 may be inadequate in that the Company may, in
addition to all other remedies that may be available to it at
law, seek injunctive relief prohibiting any such breach.
11. Noninterference with Business. During the period of
your employment and for any two-year period thereafter
(regardless of the reason for termination of employment) you
agree that you will not participate with or advise in any
capacity any person or entity in any negotiation between such
person or entity and the Company or any affiliate of the Company.
In addition, during such period you agree that you will not,
directly or indirectly, solicit or induce (or assist in or
encourage the solicitation of) any employee of the Company or its
affiliated entities to leave the employ of the Company for
purposes of accepting employment with any other person or entity.
For purposes of this agreement "affiliate" means the corporation
or other entity controlled by the Company, directly or
indirectly, through stock ownership or any other means.
12. Assignment. This agreement is personal to you and is
not assignable by you under any circumstances. Likewise, the
Company will not have the right to assign this agreement to any
other person or entity except for any corporation or entity into
which the Company may be merged or consolidated or any person or
entity which may acquire all or a substantial portion of the
assets of the Company.
13. Attorneys Fees. In the event of any litigation brought
to enforce the provisions of this agreement, the prevailing party
will have the right to recover his or its reasonable attorneys'
fees incurred in connection therewith.
14. Entire Agreement. This agreement sets forth the entire
understanding of you and the Company with respect to the subject
matter hereof and supersedes all prior agreements, memoranda,
discussions and understandings of any kind. This agreement
cannot be amended except in a writing signed by you and the
Company, and no course of dealing contrary to its terms shall
constitute an amendment. No right or obligation hereunder can be
waived except in a writing signed by the party making the waiver.
15. Partial Invalidity. If any provision of this agreement
is invalid or unenforceable in any jurisdiction that provision
shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any way affecting
the remaining provisions of this agreement.
16. Governing Law. This agreement shall be construed and
enforced in accordance with the substantive law of the State of
California without regard to provisions relating to choice of law
or conflict of laws.
If this letter correctly sets forth the terms of our
agreement with respect to your employment, please execute this
letter and the enclosed copy in the place indicated and return
the copy to me, and thereupon this letter shall become a binding
and enforceable agreement between you and the Company.
Sincerely,
Donald Haskell, Chairman
AGREED:
Robert A. Stine
Dated: April 10, 1996