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Exhibit 10(e)
March 16, 1988
Dear
The Newhall Land and Farming Company (a California Limited
Partnership) (the "Partnership") considers the establishment and maintenance of
a sound and vital management to be essential to protecting and enhancing the
best interests of the Partnership and holders of its depositary units. In this
connection, the Partnership recognizes that the possibility of a change in
control and the uncertainty and questions which it may raise among management
may result in the departure or distraction of management personnel to the
detriment of the Partnership. Accordingly, the Partnership has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of members of the Partnership's management, including
yourself, to their assigned duties without distraction in the face of the
potentially disturbing circumstances arising from the possibility of a change
in control of the Partnership.
As a result, the Partnership is implementing a Change of
Control Severance Program (the "Program") which will provide you with financial
support in the event the Partnership undergoes a significant change of
ownership or other change in control. The terms of the Program are outlined in
this letter. If you accept the terms of the Program, you should acknowledge
such by signing the acceptance at the end of the letter. Your participation the
Program will begin effective as of the date your acceptance is received by the
Partnership.
1. Events Entitling You to Benefits.
No benefits will be payable under the Program unless there is
a Change of Control (as defined below). You will become entitled to benefits
under the Program if, within the two-year period following a Change of Control,
EXHIBIT A
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March 16, 1988 Page 2
(i) Your employment with the Partnership or Newhall Management
Corporation ("NMC") is terminated involuntarily for reasons other than death,
disability or discharge for Good and Sufficient Cause (as defined below); or
(ii) You voluntarily choose to terminate your employment for
Good Reason (as defined below).
As used herein, "Change of Control" means:
(i) Any "person" (as defined below), other than a
trustee or other fiduciary holding securities under an
employee benefit plan of the Partnership or an entity owned
directly or indirectly by the holders of depositary units of
the Partnership in substantially the same proportions as their
ownership of depositary units of the Partnership, becomes the
"beneficial owner" (as defined below), directly or indirectly,
of securities representing 25% or more of the total voting
power represented by the Partnership's then outstanding voting
securities; or (ii) NMC is removed as Managing General
Partner; or (iii) the holders of depositary units of the
Partnership approve a merger or consolidation of the
Partnership with any other entity, other than a merger or
consolidation which would result in the voting securities of
the Partnership outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving
entity) at least 75% of the total voting power represented by
the voting securities of the Partnership or such surviving
entity outstanding immediately after such merger or
consolidation, or (iv) a plan of complete liquidation of the
Partnership is adopted or the holders of depositary units of
the Partnership approve an agreement for the sale or
disposition by the Partnership (in one transaction or a series
of transactions) of all or substantially all the Partnership's
assets.
For purposes of this subparagraph, "person" shall mean any
individual firm, company or other entity and shall
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Exhibit 10 (e)
March 16, 1988 Page 3
include any group comprised of any person and any other person with whom such
person or an Affiliate or Associate of such person has any agreement,
arrangement or understanding, directly or indirectly, for the purposes of
acquiring, holding, voting or disposing of Partnership interests.
For purposes of this subparagraph, a person shall be a
beneficial owner of any Partnership interest (i) which such person or any of
its Affiliates or Associates (as defined in Rule 12b-2 under the Securities Act
of 1933, reading the term "registrant" to mean the Partnership, and except that
"Associate" as used herein shall not include any relative or spouse of such
person, or any relative of such spouse, who is also a director or officer of
NMC, merely because of such directorship or officership) beneficially owns,
directly or indirectly; (ii) with regard to which such person or any of its
Affiliates or Associates has, directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or subject only to the passage
of time) pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement or
understanding; or (iii) which is beneficially owned, directly or indirectly, by
any other person with which such person or any of its Affiliates or Associates
has any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any partnership interest.
As used herein, voluntary termination by you your employment
for "Good Reason" means termination subsequent to a Change of Control of the
Partnership, resulting from the occurrence of one of the following without your
express written consent:
(i) A material reduction in your responsibilities, titles or
offices as in effect immediately prior to a Change of Control in
connection with the Partnership or NMC or any removal of you from or
any failure to re-elect you to any such positions, except in
connection with the involuntary termination of your employment for
Good and Sufficient Cause, or as a result of your death,
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Exhibit 10 (e)
March 16, 1988 Page 4
disability or voluntary retirement, or voluntary termination by you
for other than Good Reason;
(ii) A reduction by the Partnership or NMC in your base salary
as in effect immediately prior to the Change of Control;
(iii) The requirement by the Partnership or NMC that you be
based anywhere other than within a 50-mile radius of your location
immediately prior to a Change of Control, except for required travel
on the Partnership's business to an extent substantially consistent
with your present business travel obligations;
(iv) The failure by the Partnership or NMC to continue in
effect, or any action by the Partnership or NMC to change your
participation or benefits under, any bonus plan or incentive
compensation plan, any employee benefit plan qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended from time to
time (the "Code"), any severance plan, any non-qualified retirement or
deferred compensation plan, any ownership, purchase, option or other
equity incentive plan, any life, health, accident, disability or
similar plan providing welfare benefits or any plan or program of
fringe benefits in which you are participating immediately prior to a
Change of Control, the effect of which would be to materially reduce
your aggregate benefits under all such plans or programs as such
existed immediately prior to the Change of Control, or the failure by
the Partnership to provide you with the number of paid vacation days
to which you are entitled in accordance with the Partnership's general
vacation policy in effect immediately prior to the Change of Control;
or
(v) The failure of the Partnership or NMC to obtain the
express assumption by any successor of the Partnership's obligations
under the Program, as contemplated in Section 3.
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March 16, 1988 Page 5
As used herein, "Good and Sufficient Cause" means any act of
fraud or dishonesty, or conviction of a felony involving moral turpitude or
your knowingly engaging in acts seriously detrimental to any of the operations
of the Partnership.
2. Benefits.
Benefits payable to you under the Program will consist of the
following:
(i) Payment of a single lump sum equal to
continuation of monthly payments of your base salary (as in
effect immediately prior to the Change of Control) for a
period of three years from the date of your termination;
(ii) Payment in a single lump sum of three times the
average of your bonus payments for the two fiscal years prior
to the Change of Control;
(iii) Continuation of participation and coverage for
a period of three years from the date of your termination
under all the Partnership's life, medical, dental and
disability plans and the Senior Management Survivor Benefit
Plan, and all fringe benefit plans and programs which you are
participating in immediately prior to your termination of
employment, under the same coverages and on the same terms as
in effect immediately prior to the date of your termination
(or in the case of your voluntary termination for Good Reason
following a Change of Control as a result of a reduction in
benefits, such coverages and terms as were in effect
immediately prior to a Change of Control); provided that your
continued participation is not possible under the general
terms and provisions of such plans and programs, the
Partnership shall arrange to provide you with substantially
similar benefits;
(iv) Immediate vesting of any non-qualified deferred
compensation or retirement benefits and of any outstanding
options to purchase depositary units and related appreciation
rights; and immediate lapse of any rights of the Partnership
to the return or repurchase of depositary units granted to you
pursuant to restricted units;
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March 16, 1988 Page 6
(v) A retirement benefit, payable at the same time
and in the same form as benefits payable to you under The
Newhall Land and Farming Partnership Retirement Plan and The
Newhall Land and Farming Partnership Pension Restoration Plan
(the "Retirement Plans"), in the amount of the additional
benefits to which you would have been entitled under the terms
of the Retirement Plans (as in effect on the date of the
Change of Control) if you had remained employed for two years
following your termination; and
(vi) An additional retirement benefit, payable at the
same time and in the same form as benefits payable to you
under the Retirement Plans, in an amount calculated as
follows: three percent (0.03) of your Final Average Credited
Compensation, reduced by two and one half percent (0.025) of
your Primary Social Security Benefit for each year of Credited
Benefit Service, as defined in the Retirement Plans, up to
twenty years of service, reduced by any benefits payable to
you from the Retirement Plans and pursuant to subparagraph (v)
above, without regard to the limitations of Section 415 of the
Internal Revenue Code.
Benefit accruals under the Partnership's employee
benefit plans qualified under Section 401(a) of the Code which you are
participating in immediately prior to you termination shall cease as of your
date of termination. You will become entitled to payment of benefits under
such plans in accordance with their terms.
Benefits payable under the Program will be in lieu of
any severance pay benefits provided under the Partnership's or NMC's general
severance pay policy. In the event you have an outstanding employment
agreement with the Partnership or NMC in effect as of your date-of-termination
and such agreement provides you with compensation and benefits which will
continue during the period of time coincident with that covered by this
Program, your benefits under the Program will be provided only to the extent
they exceed the benefits under such agreement.
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Exhibit 1O(e)
March 16, 1988 Page 7
3. Successors.
As used herein, "Partnership" means the Partnership (as
defined above) and any successor to its business and/or assets.
The Partnership will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Partnership, by
agreement to expressly assume the Partnership's obligations under the Program
in the same manner and to the same extent that the Partnership would be
required to perform if no such succession had taken place.
4. Re-employment.
Entitlement to benefits under the Program is not contingent
upon your seeking or obtaining other employment. However, should you receive
compensation for services performed as an employee for another employer
(including services performed for another employer as an independent contractor
if such services are performed full time for one entity and are of the type
ordinarily performed by an employee in the line of business) during the three
year period following your termination, your benefits under the Program will be
reduced as follows:
1. To the extent that your new employer provides you with
comparable medical, dental, disability or life insurance coverage, such
benefits provided under the Program shall terminate.
2. For each month of employment with a new employer during the
three year period following your termination, you shall repay to the
Partnership an amount equal to the compensation received by you from such
employer for services performed in that month, but not in excess of 1/36 of the
lump sum salary continuation payment received by you pursuant to this
agreement. For this purpose "Compensation" shall mean only cash compensation
and amounts that would have been paid to you in cash but for any election made
by you to defer receipt of payment will be deemed received by you.
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Exhibit 1O(e)
March 16, 1988 Page 8
Your benefits will not be reduced for earnings from
self-employment, except for earnings for services performed fulltime for a
single entity as an independent contractor if such services are of a type
ordinarily performed by an employee in the line of business.
5. Confidential Information.
You shall hold in a fiduciary capacity for the benefit of the
Partnership all secret or confidential information, knowledge or data relating
to the Partnership or any of its affiliated companies, and their respective
business, which shall have been obtained by you during your employment by the
Partnership or any of its affiliated companies and which shall not be public
knowledge (other than by your acts or acts of your representatives in violation
of this Section 5). After termination of your employment with the Partnership,
you shall not, without the prior written consent of the Partnership,
communicate or divulge any such information, knowledge or data to anyone other
than the Partnership and those designated by it. In no event shall an asserted
violation of the provisions of this Section 5 constitute a basis for deferring
or withholding any amounts otherwise payable to you under the Program.
6. General Provisions.
No provision in this Program shall be construed to guarantee
continued employment by the Partnership or NMC for any specified period of
time, or to impair or interfere with the Partnership's and NMC's right to
dismiss its employees.
You will be entitled to reimbursement by the Partnership of
all reasonable expenses, including attorneys' fees, incurred by you in
enforcing the provisions of this Program.
All payments are subject to applicable withholding taxes and
income taxes.
Please indicate your acceptance of the terms of the Program by
signing one copy of this letter and returning it to the Partnership in the
enclosed envelope. The second copy is for your own records.
Sincerely,
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Exhibit 1O(e)
March 16, 1988 Page 9
I have read this letter and understand that the Program defines the entire
obligation of The Newhall Land and Farming Company ("Partnership") with respect
to the benefits identified above and is limited to those benefits. I further
understand that the Program modifies the Partnership's or NMC's obligations
under the Partnership's or NMC's general severance pay policy in the manner
described above and that the opportunity to receive the special benefits
provided under the Program represents valuable consideration for this
modification. I accept the terms of the Program.
Date:
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