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Exhibit 10(e)
November 19, 1997
Dear Thomas L. Lee:
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 implemented a Change of Control Severance
Program as of March 16, 1988, which will provide you with financial support in
the event the Partnership undergoes a significant change of ownership or other
change in control. The Partnership has determined that it is appropriate to
modify such program as of the date of this letter. The terms of the Change of
Control Program, as modified (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 in 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,
(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
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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 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 of 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 events
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, 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;
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(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.
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 three (3) times the
aggregate of your annual base salary, general partners fees and
directors fees (as in effect immediately prior to the Change of
Control), which payment shall be made within thirty (30) days following
the date of your termination;
(ii) Payment in a single lump sum of three times the average of your
annual bonus payments for the two fiscal years prior to the Change of
Control, which payment shall be made within thirty (30) days following
the date of your termination;
(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, 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 if 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;
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(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;
(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, as amended (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:
(a) The sum of 2.025% (1.62% for Plan Years beginning on and after
January 1, 1997) of your Final Average Credited Compensation not
in excess of your Covered Compensation multiplied by your years
of Credited Benefit Service, up to twenty years of Credited
Benefit Service,
plus
(b) 3% (2.4% for Plan Years beginning on and after January 1, 1997)
of your Final Average Credited Compensation in excess of your
Covered Compensation in (a) above multiplied by your years of
Credited Benefit Service, up to twenty years of Credited Benefit
Service,
reduced by
(c) 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 your termination shall cease as the 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.
3. Successors.
As used herein, "Partnership" means the Partnership (as defined above)
and any successor to its business and/or assets.
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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 period during which you would
otherwise be entitled to receive benefits pursuant to Section 2(iii) of this
Program, then to the extent that your new employer provides you with comparable
medical, dental, disability or life insurance coverage or other benefits, such
benefits provided under Section (iii) of the Program shall terminate.
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.
This Program supersedes the Change of Control Severance Program entered
into as of March 16, 1988 between you and the Partnership.
Sincerely,
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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: __________________ _____________________________
L:Board\CICTLL