-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UFV0DvBMwJp3RsaPxSS4/ljuHyEIIwrwnujPUcPeuoSzsoLuuDi4nZ6MREgazkw7 cwa9oBuyVqpENfHRobuRXg== /in/edgar/work/20000804/0000912057-00-034804/0000912057-00-034804.txt : 20000921 0000912057-00-034804.hdr.sgml : 20000921 ACCESSION NUMBER: 0000912057-00-034804 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000804 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEWHALL LAND & FARMING CO /CA/ CENTRAL INDEX KEY: 0000751976 STANDARD INDUSTRIAL CLASSIFICATION: [6552 ] IRS NUMBER: 953931727 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08885 FILM NUMBER: 686773 BUSINESS ADDRESS: STREET 1: 23823 VALENCIA BLVD CITY: VALENCIA STATE: CA ZIP: 91355 BUSINESS PHONE: 6612554000 MAIL ADDRESS: STREET 2: 23823 VALENCIA BLVD CITY: VALENCIA STATE: CA ZIP: 91355 10-Q 1 a10-q.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10 - Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-7585 THE NEWHALL LAND AND FARMING COMPANY (A CALIFORNIA LIMITED PARTNERSHIP) (Exact name of Registrant as specified in its charter) California 95-3931727 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 23823 Valencia Boulevard, Valencia, CA 91355 (Address of principal executive offices) (Zip Code) (661) 255-4000 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS EXCEPT PER UNIT)
Three Months ended Six Months Ended June 30, June 30, ------------------- -------------------- 2000 1999 2000 1999 -------- ------- -------- ------- REVENUES Real estate Residential home and land sales $ 10,568 $ 20,254 $ 18,956 $ 24,554 Industrial and commercial sales 25,748 26,679 28,333 46,665 Commercial operations Income-producing properties 14,627 11,714 28,954 23,021 Valencia Water Company 2,982 2,699 5,393 4,937 -------- -------- -------- -------- 53,925 61,346 81,636 99,177 -------- -------- -------- -------- Agriculture Operations 1,394 1,692 2,047 2,177 Ranch sales - - - 3,957 -------- -------- -------- -------- 1,394 1,692 2,047 6,134 -------- -------- -------- -------- Total revenues $ 55,319 $ 63,038 $ 83,683 $105,311 ======== ======== ======== ======== CONTRIBUTION TO INCOME Real estate Residential home and land sales $ 3,570 $ 3,779 $ 6,348 $ 3,572 Industrial and commercial sales 4,670 13,410 4,869 21,817 Community development (2,417) (3,819) (4,437) (5,840) Commercial operations Income-producing properties 6,150 4,203 13,047 7,951 Valencia Water Company 640 676 1,239 1,077 -------- -------- -------- -------- 12,613 18,249 21,066 28,577 -------- -------- -------- -------- Agriculture Operations 310 411 717 591 Ranch sales - - - 2,847 -------- -------- -------- -------- 310 411 717 3,438 -------- -------- -------- -------- Operating income 12,923 18,660 21,783 32,015 General and administrative expense (2,280) (3,404) (4,523) (6,056) Interest and other, net (4,295) (2,533) (7,715) (4,953) -------- -------- -------- -------- Net income $ 6,348 $ 12,723 $ 9,545 $ 21,006 ======== ======== ======== ======== Net income per unit $ 0.23 $ 0.40 $ 0.34 $ 0.66 ======== ======== ======== ======== Net income per unit - diluted $ 0.22 $ 0.40 $ 0.33 $ 0.65 ======== ======== ======== ======== Number of units used in computing per unit amounts: Net income per unit 27,925 31,688 28,435 32,066 Net income per unit - diluted 28,289 31,998 28,799 32,369 Cash distributions per unit: Regular $ 0.10 $ 0.10 $ 0.20 $ 0.20 Special 0.35 0.22
2 CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
June 30, December 31, 2000 1999 --------- ------------ ASSETS Cash and cash equivalents $ 2,883 $ 1,624 Accounts and notes receivable 36,344 61,567 Land under development 56,762 39,401 Land held for future development 28,073 28,570 Income-producing properties held for sale, net 139,626 149,433 Income-producing properties, net 136,580 131,627 Property and equipment, net 64,947 61,318 Investment in joint ventures 17,070 16,682 Other assets and deferred charges 16,065 14,602 --------- --------- $ 498,350 $ 504,824 ========= ========= LIABILITIES AND PARTNERS' CAPITAL Accounts payable $ 25,032 $ 24,244 Accrued expenses 49,404 46,329 Deferred revenues 14,095 21,227 Mortgage and other debt 290,958 222,825 Advances and contributions from developers for utility construction 30,445 25,690 Other liabilities 25,348 24,784 --------- --------- Total liabilities 435,282 365,099 Partners' capital 27,157 units outstanding, excluding 9,615 units in treasury (cost-$227,778), at June 30, 2000 and 29,668 units outstanding, excluding 7,104 units in treasury (cost-$157,394), at December 31, 1999 63,068 139,725 --------- --------- $ 498,350 $ 504,824 ========= =========
3 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (IN THOUSANDS)
Six Months Ended June 30, --------------------------- 2000 1999 --------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 9,545 $ 21,006 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,968 6,878 Increase in land under development (34,640) (47,614) Cost of sales and other inventory changes 17,775 38,041 Decrease (increase) in accounts and notes receivable 25,223 (37,374) (Decrease) increase in accounts payable, accrued expenses and deferred revenues (3,269) 18,853 Cost of property sold 14,669 5,045 Other adjustments, net (915) 40 --------- --------- Net cash provided by operating activities 33,356 4,875 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Development of income-producing properties (13,075) (32,681) Purchase of property and equipment (5,320) (4,919) (Investment in) distribution from joint venture (388) 10 --------- --------- Net cash used in investing activities (18,783) (37,590) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions paid (15,618) (13,677) Increase in mortgage and other debt 68,133 78,978 Increase (decrease) in advances and contributions from developers for utility construction 4,755 (2,064) Purchase of partnership units (71,767) (30,323) Issuance of partnership units 1,383 833 Other - (870) --------- --------- Net cash provided by (used in) financing activities (13,314) 32,877 --------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS 1,259 162 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,624 2,188 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,833 $ 2,350 ========= =========
4 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 1. ACCOUNTING POLICIES The consolidated financial statements include the accounts of The Newhall Land and Farming Company and its subsidiaries, all of which are wholly-owned (collectively, "the Company"). All significant intercompany balances and transactions are eliminated. The Company's unaudited interim financial statements have been prepared in conformity with generally accepted accounting principles used in the preparation of the Company's annual financial statements. In the opinion of the Company, all adjustments necessary for a fair statement of the results of operations for the three and six months ended June 30, 2000 and 1999 have been made. The interim statements are condensed and do not include some of the information necessary for a more complete understanding of the financial data. Accordingly, your attention is directed to the footnote disclosures found on pages 24 through 32 of the December 31, 1999 Annual Report to Partners and particularly to Note 2 therein which includes a summary of significant accounting policies. Certain reclassifications have been made to prior periods' amounts to conform to the current period presentation. Interim financial information for the Company has substantial limitations as an indicator for the calendar year because: - - Land sales occur irregularly and are recognized at the close of escrow or on the percentage of completion basis if the Company has an obligation to complete certain future improvements and provided profit recognition criteria are met. - - Sales of income properties and non-developable farmland occur irregularly and are recognized upon close of escrow provided profit recognition criteria are met. - - Agricultural crops are on an annual cycle and income is recognized upon harvest. Most major crops are harvested during the fall and winter.
=========================================================================================================== NOTE 2. DETAILS OF LAND UNDER DEVELOPMENT June 30, December 31, (In $000) 2000 1999 - ------------------------------------------------------------------------------------------------------- Valencia Residential development $ 8,389 $ 4,532 Industrial and commercial land development 47,171 34,524 Agriculture 1,202 345 - ------------------------------------------------------------------------------------------------------- Total land under development $ 56,762 $ 39,401 =================================================
=========================================================================================================== NOTE 3. DETAILS FOR EARNINGS PER UNIT CALCULATION Income Units Per Unit (In 000's except per unit) (numerator) (denominator) - ----------------------------------------------------------------------------------------------------------- For three months ended June 30, 2000 Net income per unit Net income available to unitholders $6,348 27,925 $.23 Effect of dilutive securities Unit options - 364 (.01) - ----------------------------------------------------------------------------------------------------------- Net income per unit - diluted $6,348 28,289 $.22 =================================================
5 NOTE 3 (CONTINUED)
Income Units Per Unit (In 000's except per unit) (numerator) (denominator) - --------------------------------------------------------------------------------------------------------------- For three months ended June 30, 1999 Net income per unit Net income available to unitholders $12,723 31,688 $.40 Effect of dilutive securities Unit options - 310 - - --------------------------------------------------------------------------------------------------------------- Net income per unit - diluted $12,723 31,998 $.40 ====================================================== For six months ended June 30, 2000 Net income per unit Net income available to unitholders $9,545 28,435 $.34 Effect of dilutive securities Unit options - 364 (.01) - --------------------------------------------------------------------------------------------------------------- Net income per unit - diluted $9,545 28,799 $.33 ====================================================== For six months ended June 30, 1999 Net income per unit Net income available to unitholders $21,006 32,066 $.66 Effect of dilutive securities Unit options - 303 (.01) - --------------------------------------------------------------------------------------------------------------- Net income per unit - diluted $21,006 32,369 $.65 ======================================================
=============================================================================================================== NOTE 4. DETAILS OF INCOME-PRODUCING PROPERTIES, INCOME PRODUCING PROPERTIES HELD FOR SALE AND PROPERTY AND EQUIPMENT June 30, December 31, (In $000s) 2000 1999 - --------------------------------------------------------------------------------------------------------- Income-producing properties Land $ 21,399 $ 21,399 Buildings 112,552 112,304 Other 14,500 14,498 Properties under development 16,888 8,904 - ----------------------------------------------------------------------------------------------------------- 165,339 157,105 Accumulated depreciation (28,759) (25,478) - ----------------------------------------------------------------------------------------------------------- $136,580 $131,627 ================================================== Income-producing properties held for sale Retail $103,131 $115,462 Office 36,550 36,545 Other 19,924 19,857 - ----------------------------------------------------------------------------------------------------------- 159,605 171,864 Accumulated depreciation (19,979) (22,431) - ----------------------------------------------------------------------------------------------------------- $139,626 $149,433 ==================================================
6 NOTE 4 (CONTINUED)
June 30, December 31, (In $000s) 2000 1999 - --------------------------------------------------------------------------------------------------------- Property and equipment Land $ 3,759 $ 3,759 Buildings 5,803 5,343 Equipment 9,354 9,311 Water supply systems, orchards and other 76,468 73,635 Construction in progress 6,777 5,111 - ----------------------------------------------------------------------------------------------------------- 102,161 97,159 Accumulated depreciation (37,214) (35,841) - ----------------------------------------------------------------------------------------------------------- $ 64,947 $ 61,318 ==================================================
================================================================================ NOTE 5. BUSINESS SEGMENT REPORTING The following table provides financial information regarding revenues from external customers, income and total assets for the Company's business segments and also provides a reconciliation to the Company's consolidated totals:
THREE MONTHS ENDED JUNE 30, 2000 ----------------------------------------------- Contribution (In $000s) Revenues to Income Assets - --------------------------------------------------------------------------------------------------------- Real Estate Residential $10,568 $ 3,602 $ 30,237 Industrial and commercial 25,748 4,726 92,440 Community development - (2,372) 11,851 Income-producing properties 14,627 6,160 280,271 Valencia Water Company 2,982 654 64,414 Agriculture 1,394 317 7,505 Central administration - (2,094) 11,632 -------------------------------------------------- $55,319 10,993 498,350 Interest and other, net - (4,295) - All other - (350) - -------------------------------------------------- $55,319 $ 6,348 $498,350 ==================================================
THREE MONTHS ENDED JUNE 30, 1999 ----------------------------------------------- Contribution (In $000s) Revenues to Income Assets - --------------------------------------------------------------------------------------------------------- Real Estate Residential $20,254 $ 3,851 $ 19,442 Industrial and commercial 26,679 13,494 114,068 Community development - (3,753) 8,482 Income-producing properties 11,714 4,221 276,354 Valencia Water Company 2,699 706 58,030 Agriculture 1,692 435 19,563 Central administration - (3,098) 9,522 -------------------------------------------------- 63,038 15,856 505,461 Interest and other, net - (2,533) - All other - (600) - -------------------------------------------------- $63,038 $12,723 $505,461 ==================================================
7 NOTE 5 (CONTINUED)
SIX MONTHS ENDED JUNE 30, 2000 ------------------------------------------- Contribution (In $000s) Revenues to Income Assets - ------------------------------------------------------------------------------------------------------------------- Real Estate Residential $ 18,956 $ 6,398 $ 30,237 Industrial and commercial 28,333 4,957 92,440 Community development - (4,366) 11,851 Income-producing properties 28,954 13,063 280,271 Valencia Water Company 5,393 1,261 64,414 Agriculture 2,047 728 7,505 Central administration - (4,231) 11,632 ----------------------------------------------- $ 83,683 17,810 498,350 Interest and other, net - (7,715) - All other - (550) - ----------------------------------------------- $ 83,683 $ 9,545 $ 498,350 ===============================================
SIX MONTHS ENDED JUNE 30, 1999 ------------------------------------------- Contribution (In $000S) Revenues to Income Assets - ------------------------------------------------------------------------------------------------------------------- Real Estate Residential $ 24,554 $ 3,704 $ 19,442 Industrial and commercial 46,665 21,971 114,068 Community development - (5,719) 8,482 Income-producing properties 23,021 7,984 276,354 Valencia Water Company 4,937 1,132 58,030 Agriculture 6,134 3,482 19,563 Central administration - (5,495) 9,522 ----------------------------------------------- 105,311 27,059 505,461 Interest and other, net - (4,953) - All other - (1,100) - ----------------------------------------------- $ 105,311 $ 21,006 $ 505,461 ===============================================
8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS Comparison of Second Quarter and Six Months of 2000 to Second Quarter and Six Months of 1999 - -------------------------------------------------------------------------------- UNAUDITED The amounts of increase or decrease in revenues and income from the prior year second quarter and six months are as follows (in 000s, except per unit):
Second Quarter Six Months ------------------- ------------------- Increase (Decrease) Increase (Decrease) ------------------- ------------------- Amount % Amount % ------------------- ------------------- REVENUES Real Estate Residential home and land sales $ (9,686) -48% $ (5,598) -23% Industrial and commercial sales (931) -3% (18,332) -39% Commercial operations Income-producing properties 2,913 25% 5,933 26% Valencia Water Company 283 10% 456 9% -------- -------- -------- -------- (7,421) -12% (17,541) -18% Agriculture Operations (298) -18% (130) -6% Ranch sales - - (3,957) -100% -------- -------- -------- -------- Total revenues $ (7,719) -12% $(21,628) -21% ======== ======== ======== ======== CONTRIBUTION TO INCOME Real Estate Residential home and land sales $ (209) -6% $ 2,776 78% Industrial and commercial sales (8,740) -65% (16,948) -78% Community development 1,402 37% 1,403 24% Commercial operations Income-producing properties 1,947 46% 5,096 64% Valencia Water Company (36) -5% 162 15% -------- -------- -------- -------- (5,636) -31% (7,511) -26% Agriculture Operations (101) -25% 126 21% Ranch sales - - (2,847) -100% -------- -------- -------- -------- Operating income (5,737) -31% (10,232) -32% General and administrative expense 1,124 33% 1,533 25% Interest and other, net (1,762) -70% (2,762) -56% -------- -------- -------- -------- Net income $ (6,375) -50% $(11,461) -55% ======== ======== ======== ======== Net income per unit $ (0.17) -43% $ (0.32) -48% ======== ======== ======== ======== Net income per unit - diluted $ (0.18) -45% $ (0.32) -49% ======== ======== ======== ======== Number of units used in computing per unit amounts: Net income per unit (3,763) -12% (3,631) -11% ======== ======== ======== ======== Net income per unit - diluted (3,709) -12% (3,570) -11% ======== ======== ======== ========
9 The increases and decreases in revenues and income for the three and six months are attributable to the following: For the three months ended June 30, 2000, revenues totaled $55.3 million and net income totaled $6.3 million compared to revenues for the 1999 second quarter of $63.0 million and net income of $12.7 million. Results for the second quarter of 1999 included the sale of 40.9 acres of industrial and commercial land, including a high value 32.8-acre apartment site as well as 193 residential lots. Revenues for the six months ended June 30, 2000 totaled $83.7 million and net income totaled $9.5 million compared to the same 1999 period when revenues totaled $105.3 million and net income $21.0 million. Results for the 1999 six-month period also included the first quarter sale of the Cowell Ranch which contributed $10 million to revenues and $8.2 million to income. The primary contributors to the 2000 second quarter results are the sale of two of the 11 income properties slated for sale as part of the Company's strategic plan to finance its unit repurchase program. These two properties, Castaic Shopping Center and Plaza del Rancho, contributed $18.8 million to revenues and $3.7 million to income. Also contributing to second quarter results were the sale of the last 78 residential lots in Bridgeport and an 11.2-acre site for a Lowe's Home Improvement Warehouse. These two sales combined added $11.1 million to revenues and $4.7 million to income under percentage of completion accounting. The 2000 six-month period also includes the first quarter sale of 130 residential lots which added $4.4 million to revenues and $1.9 million to income under percentage of completion. RESIDENTIAL HOME AND LAND SALES The supply of new homes released for sale increased 50% during the second quarter and merchant builders are now better positioned to meet demand for new homes in Valencia. Four new projects were added to the seven projects available at the end of the first quarter, with at least four additional projects slated to open in the third quarter. During the 2000 second quarter, merchant builders sold 68 homes bringing the total for the first six months of 2000 to 154 homes sold. This is below the 87 homes sold during the second quarter of 1999, which included 55 homes by merchant builders and 32 by the Company's joint ventures. The Company completed the sell-out of its remaining Valencia homebuilding joint ventures in 1999 and its efforts have since been concentrated on lot sales to merchant builders. While the Company does not participate directly in profits generated from escrow closings by merchant builders, the absorption of these previously sold lots is key to the Company's future success in selling additional lots. In the quarter ended June 30, 2000, the last 78 lots closed escrow in Bridgeport, the Company's lake community, adding $7.0 million to revenues and $3.2 million to income under percentage of completion accounting. In addition, revenues of $3.4 million and income of $1.4 million were recognized from previous lot sales in Bridgeport under percentage of completion. The 2000 six-month period also includes the sale of 130 lots in Bridgeport which added $4.4 million to revenues and $1.9 million to income as well as revenues of $3.8 million and income of $1.8 million from prior lot sales all accounted for under percentage of completion. In the 2000 second quarter, the City of Santa Clarita approved the annexation of 136 acres planned for 1,900 homes. The area, located northwest of Valencia Northbridge, will include three neighborhoods: Alta Vista, Creekside and East Creek. The Company is marketing lots in Alta Vista and combined with East Creek expected to be marketed later this year, plans to offer approximately 500 lots for sale during the remainder of 2000. The Company expects final approval from the Los Angeles County Board of Supervisors on another 2,545 lots in Valencia's West Creek neighborhood later this year. The Company continues to work with its joint-venture partner, Kaufman and Broad of Southern California, on plans for the 1,900-acre City Ranch development in Palmdale, California. The Company is the master planner and has a 50.1% interest in the project. The master plan calls for approximately 4,200 single-family homes, 300 apartment units, 260,000 square feet of commercial development and several hundred acres of open space. 10 Results for the 1999 second quarter and six months included the sale of 193 residential lots adding $8.9 million to revenues and $3.6 million to income under percentage of completion. Also included were a total of 50 home-sale closings by the Company's two joint ventures contributing $11.4 million to revenues and $1.3 million to income to the 1999 second quarter. The 1999 six-month period included a total of 76 joint-venture home closings for $15.7 million adding $1.6 million to income. At June 30, 1999, a total of 85 residential lots were in escrow. INDUSTRIAL AND COMMERCIAL SALES INDUSTRIAL SALES Results for the second quarter and six-month period of 2000 include two industrial parcels totaling 4.2 acres which closed escrow for $2.3 million and contributed $0.7 million to income. At June 30, 2000, a total of 41.6 acres was in escrow for $21.1 million, with closings scheduled during the remainder of the year. All escrow closings are subject to market and other conditions. The industrial vacancy rate in the Company's two industrial/business parks is 3.9% compared with 5.8% at the end of the 2000 first quarter. The Company has approximately 360 acres of entitled industrial land remaining. Planning continues on 500 acres west of I-5 surrounding Six Flags Magic Mountain for mixed-use development. In the second quarter of 1999, escrow closed on three industrial parcels totaling 5.3 acres, contributing $2.9 million to revenues and $1.0 million to income. These sales brought industrial escrow closings for the first six months of 1999 to a total of 20.4 acres which combined contributed $9.9 million to revenues and $2.0 million to income. The six-month period ended June 30, 1999 also included the sale of the last remaining large parcel at the Cowell Ranch in northern California which added $10.0 million to revenues and $8.2 million to income. COMMERCIAL LAND SALES One commercial parcel totaling 11.2 acres closed escrow for $6.4 million and contributed $1.5 million to income for the 2000 second quarter and six-month period under percentage of completion accounting. A Lowe's Home Improvement Warehouse will be constructed on the site. At June 30, 2000, eight parcels totaling 42.7 acres were in escrow for approximately $28 million with closings scheduled during the third and fourth quarters. All escrow closings are subject to market and other conditions. Three commercial escrow closings in the 1999 second quarter, totaling 35.6 acres, contributed $22.6 million to revenues and $13.3 million to income. The largest was a 32.8-acre apartment site which added $18.7 million to revenues and $10.9 million to income under percentage of completion accounting. In the first six months of 1999, the Company recognized $3.4 million in revenues from the prior year sale of Valencia Marketplace, a high volume retail center; however, no income was recognized due to revised costs to complete the construction and leasing of the center. COMMERCIAL ASSET SALES During the 2000 first quarter, escrow closed on the first two retail properties in the Company's asset sales program, Castaic Shopping Center and Plaza del Rancho, adding $18.8 million to revenues and $3.7 million to income. The sales are part of the Company's plan to sell approximately one-half of its income portfolio, valued at $220 million, to finance the unit repurchase program. For additional information on the unit repurchase program, refer to the LIQUIDITY AND CAPITAL RESOURCES section of this discussion. A buyer has been identified for the Valencia Town Center regional mall, Valencia Entertainment Center and retail buildings along Town Center Drive. Escrow is expected to close in the third quarter. A prospective buyer for the three-story building on Town Center Drive, six-story Princess Cruises building and two additional buildings under construction for Princess Cruises has commenced its due diligence review on the properties. The sale is expected to be completed later this year. All escrow closings are subject to market and other conditions. Aggregate prices are on target with the Company's expectations. Offers are still being received and reviewed on the Bank of America building and the Spectrum Club building, including 7.9 acres surrounding the club. 11 COMMUNITY DEVELOPMENT The Company's community development activities are focused on securing the necessary entitlements as well as an intensified strategic marketing and branding program to support the buildout of Valencia residential land by 2005 and begin the development of approximately 21,600 homes in Newhall Ranch, a new town on the Company's 12,000 acres west of Valencia. The Company's ability to achieve its goals and increase the pace of development is contingent upon obtaining the necessary entitlements from the County of Los Angeles and the City of Santa Clarita. As previously announced, on May 31, Superior Court Judge Roger Randall sent six issues addressed in the Newhall Ranch Environmental Impact Report to Los Angeles County for further environmental review. These six issues include the impact of the Newhall Ranch development on the Salt Creek wildlife corridor and traffic in Ventura County; biological impacts on the Santa Clara River corridor due to bank protection and storm water runoff; consistency with the General Plan and impacts in Significant Ecological Area 23; adequacy and reliability of water supply; and, a further alternative site analysis for the water reclamation plant location. The Court ruled in the Company's favor on all other issues raised by opponents. After evaluating the above ruling, the Company is addressing the issues and believes they can be resolved to the satisfaction of the Court in about one year, in which case the process is expected to delay the start of the project until 2003. However, the length of time of the public hearing and judicial process is difficult to predict, and circumstances could further delay resolution of the issues. The supplemental environmental analysis of the six issues will be circulated for public review and comments. Following the public review period, both the Los Angeles County Regional Planning Commission and the Board of Supervisors must review the issues, hold public hearings and certify the environmental analysis before the case is referred back to the Court. An adverse decision by the County or the Court and/or additional legal action will likely delay the start of the development of the community beyond 2003. Also during the second quarter, a Los Angeles Superior Court ruled favorably on the Environmental Impact Report for Valencia's Westridge Golf Course community; however, the plaintiff has filed a notice that it will appeal the ruling. The Company continues to work on plans for the community consisting of approximately 1,200 homes and 500 apartments. About 400 homes are expected to have golf course frontage or other spectacular views, many on estate-size lots. The community will also have approximately 230 acres as designated open space, including a preserve for oak trees. Lots are expected to be sold to builders starting in 2001, with homes expected for sale in 2002 and 2003; and the Tournament Players Club (TPC) Golf Course scheduled to open in 2002. These schedules may be adversely affected by additional legal actions, including, but not limited to, the appeal of the Los Angeles County Superior Court ruling. In addition, several groups have provided the Company with notice of their intent to challenge a permit relating to the development of a portion of the community which was issued by the U.S. Army Corps of Engineers. The Company holds an option on 1,800 acres in the City of Broomfield, Colorado, between Denver and Boulder. The Company is in discussions with a possible buyer to assume development of the project. Current plans are for approximately 3,000 homes and 215 acres of office and commercial development. Community development expenses decreased 37% and 24% from comparative prior year three and six-month periods, respectively, primarily due to expenses in the prior year relating to Newhall Ranch entitlements and certain initial costs relating to commercial properties under development. With additional entitlement and legal costs relating to Newhall Ranch and with the Company's continued focus on obtaining entitlements and strategic marketing, community development expenses for the year are expected to increase about 10% over 1999. INCOME-PRODUCING PROPERTIES As announced in September 1999, the Company plans to sell approximately one-half of its income portfolio, valued at about $220 million, to finance the repurchase of up to 6,384,446 of the Company's partnership units, equal to approximately 20% of the outstanding units at that time. During the 2000 second quarter, escrow closed 12 on two retail properties, Castaic Shopping Center and Plaza del Rancho. When the asset sales program is completed, revenues and income from the commercial portfolio will be substantially reduced. For additional information on properties to be sold and the unit repurchase program, refer to the INDUSTRIAL AND COMMERCIAL LAND SALES and LIQUIDITY AND CAPITAL RESOURCES sections of this discussion. Revenues and income increased 25% and 46%, respectively, in the second quarter of 2000 over the year earlier quarter due in large part to suspension of depreciation on income properties held for sale. Also, contributing to the increases were new retail leases along Town Center Drive, improved performances by the Hyatt Valencia hotel, and higher apartment occupancy rates. For the six-month period, revenues and income were up 26% and 64%, respectively, over the first six months of 1999. Approximately 60% of the increase in income in the second quarter of 2000 and approximately 50% of the increase in the 2000 six-month period is attributable to depreciation no longer being taken on properties expected to be sold this year. With businesses moving into Valencia creating new jobs, demand for apartments continues to be strong. At the end of the second quarter, occupancy rates at the Company's three established apartment complexes were close to 100%, while Montecito, the Company's new 210-unit, high-end apartment complex is 94% leased and continues to command the highest rents in the Santa Clarita Valley. The Hyatt Valencia hotel followed an improved first quarter 2000 performance with a stronger second quarter. For the six months ended June 30, 2000, occupancy rates were 64% compared with 42% for the year earlier period. Room rates also increased. Occupancy rates at the Hilton Garden Inn were 72% compared with 74% last year. The Company's two neighborhood shopping centers, River Oaks and NorthPark Village Square, are 99% and 100% leased, respectively. VALENCIA WATER COMPANY Valencia Water Company is a regulated utility and a wholly-owned subsidiary of the Company. For the second quarter of 2000, revenues increased 10% and income decreased 5% as a result of nonrecurring administration costs in connection with Public Utilities Commission proceedings. For the six months ended June 30, 2000, income increased 15% on a 9% increase in revenues as the utility benefited from continued expansion of the customer base, drier weather and continued improvement in operating efficiencies. AGRICULTURAL OPERATIONS AND RANCH SALES For the three months ended June 30, 2000, agriculture revenues and income, including the Company's energy operations, were below the year earlier quarter primarily due to a sharp decline in the price of oranges. This was partially offset by higher earnings from energy operations, due to oil prices being more than double from prices recorded during the three months ended June 30, 1999. For the first half of 2000, income was ahead of the year earlier on slightly lower revenues, again with energy being a primary contributor. With less land for farming as a result of sales of ranch land in the prior year, income from agricultural operations is expected to decrease substantially for all of 2000 compared to last year. The 1999 six-month period included the sale of the Company's three remaining parcels at the Merced Ranch for $4.0 million contributing $2.8 million to income. The sale was part of a strategic plan to sell land not suitable for development. No additional sales of non-developable farmland are planned for 2000. With the first quarter 1999 sale of the remaining portions of the Merced Ranch and the fourth quarter 1999 sale of the Suey Ranch, agricultural operations are now concentrated on the 14,000-acre New Columbia Ranch, which is about 74% leased to tenant farmers, and the 1,000-acre Newhall Orchard in Ventura County, where oranges and lemons remain as the major crops. Most of the remaining 15,000 acres owned in Ventura County is leased for cattle grazing. 13 GENERAL AND ADMINISTRATIVE EXPENSE Decreases of 33% and 25% in general and administrative expenses from the prior year comparable three- and six- month periods, respectively, are primarily due to lower expenses for land acquisition activities. For all of 2000, general and administrative expenses are expected to decrease about 15% from 1999 levels. INTEREST AND OTHER Net interest expense for the second quarter increased 70% from the prior year three-month period and 56% from the prior year six-month period due to the Company increasing its borrowings under credit facilities to fund partnership unit repurchases. The increases are partially offset in both periods by higher interest income from land sale promissory notes. A portion of the sales proceeds from income properties held for sale will be used to pay down debt as escrows close. Interest expense in 2000 for the total year is expected to be substantially higher than in the previous year due to the Company's increased borrowings. FINANCIAL CONDITION LIQUIDITY AND CAPITAL RESOURCES At June 30, 2000, the Company had cash and cash equivalents of $2.9 million and $40.6 million, respectively, available under bank lines, net of $13.4 million in letters of credit. Borrowings outstanding totaled $128 million against unsecured lines of credit and $40 million against a revolving mortgage facility. In addition, the Company had fixed rate debt totaling $123.0 million. The Company believes it has adequate sources of cash from operations and debt capacity to finance its operations and, combined with anticipated land and property sales, to fund its unit repurchases. At June 30, 2000, there was no debt against raw land or land under development inventories in Valencia. A $40 million revolving mortgage facility secured by Valencia Town Center, which matured in December 1999 and was previously extended until May 22, 2000, has been extended until the earlier of September 22, 2000 or the sale of the center. In addition, in June 2000, the Company procured a new $20 million unsecured line with Wells Fargo which matures on September 22, 2000. The Company continues to follow its business strategy announced in September 1999 to capitalize on its significant underlying asset values by repurchasing up to 6,384,446 units, including 884,446 units under a previous authorization, equal to approximately 20% of the outstanding units at that time. During the first six months of 2000, the Company repurchased a total of 2,584,355 units for $71.8 million, or an average price of $27.77 per unit. From the plan's announcement through June 30, 2000, the Company has repurchased 4,308,307 units, or 67.5% of the 6,384,446 units, for $114.0 million, or $26.46 per unit. At June 30, 2000, a total of 2,076,139 units remained to be repurchased under the current authorization. The Company plans to provide the cash to fund the unit repurchases and provide the capital to continue ongoing planning and land development activities through the use of existing debt capacity until the proposed land and income property sales are completed during 2000. The Company repurchases partnership units from time to time in the open market and through block transactions. Numerous factors could affect the Company's ability to complete the repurchase program including, but not limited to, changing market conditions, rising interest rates, challenges to governmental approvals, and finding suitable buyers for certain properties. There are no material commitments for capital expenditures other than the Company's plans in the ordinary course of its business to complete income properties under construction. The Company expects to spend approximately $15 million in the second half of 2000 to complete construction of the two office buildings which have been leased to Princess Cruises and to complete the Valencia Entertainment Center expansion. These properties are expected to be sold later this year as part of the Company' plan to fund the unit repurchase program. In addition, the Company expects to invest approximately $25 million in major roads and freeway improvements and approximately $30 million in land development in the second half of 2000 to enable the Company to close additional land sales. 14 THE FOLLOWING DISCUSSION RELATES TO PRINCIPAL ITEMS IN THE CONSOLIDATED STATEMENTS OF CASH FLOW: OPERATING ACTIVITIES Net cash provided by operating activities totaled $33.4 million for the first six months of 2000 and included the sale of 208 residential lots, 15.4 industrial and commercial acres, and the sale of two income properties, Castaic Shopping Center and Plaza del Rancho. These sales provided $40.0 million in cash including a $3.7 million note from a first quarter residential lot sale which was paid in the second quarter. In addition, $21.9 million of notes in conjunction with land sales in prior years were collected. Expenditures for land under development inventories totaled $34.6 million and were primarily related to land preparation and infrastructure improvements to ready land for development for sale and agricultural crop costs. INVESTING ACTIVITIES Expenditures for development of income-producing properties totaled $13.1 million and were primarily for two office buildings under construction for Princess Cruises and the Valencia Entertainment Center expansion. Purchase of property and equipment was primarily for water utility construction FINANCING ACTIVITIES Distributions totaling $15.8 million have been paid year-to-date consisting of two quarterly distributions of $.10 per unit each and a $.35 per unit special distribution. An additional $.10 per unit distribution was declared on July 19, 2000 payable September 11, 2000 to unitholders of record on August 4, 2000. The declaration of distributions and the amount declared is reviewed by the Board of Directors on a quarterly basis taking into account the Company's earnings, financial condition and prospects. Borrowings against lines of credit increased $68.6 million during the six-month period due to the Company's plan to utilize available debt capacity to fund the unit repurchase program until income property sales and land sales close escrow later in the year. For the six-month period ended June 30, 2000, a total of 2,584,355 units were repurchased for $71.8 million, or an average price of $27.77per unit. INFLATION, RISKS AND RELATED FACTORS AFFECTING FORWARD-LOOKING INFORMATION This report and other published reports by the Company contain forward-looking statements regarding the status of proposed or pending sales and rental activity, future planned development, plus the long-term growth goals of the Company. The forward-looking statements made in this report are based, in part, on present trends the Company is experiencing in residential, industrial and commercial markets. The forward-looking statements may also involve unknown risks, uncertainties and other factors that may cause the Company's actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this report. Such forward-looking statements speak only as of the date of this report. The Company expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any changes in Company expectations or results or any change in events. Also, the Company's success in obtaining entitlements, governmental and environmental regulations, timing of escrow closings and marketplace acceptance of its business strategies are among the factors that could affect results. The following risks and related factors, among others, should be taken into consideration in evaluating the future prospects for the Company. Actual results may materially differ from those predicted. SALES OF REAL ESTATE: The majority of the Company's revenues is generated by its real estate operations. The ability of the Company to consummate sales of real estate is dependent on various factors including, but not limited to, availability of financing to the buyer, regulatory and legal issues and successful completion of the buyer's due diligence. The fact that a real estate transaction has entered escrow does not necessarily mean that the transaction will ultimately close. Therefore, the timing of sales may differ from that anticipated by the Company. The inability to close sales as anticipated could adversely impact the recognition of revenue in any specific period. ECONOMIC CONDITIONS: Real estate development is significantly impacted by general and local economic conditions which are beyond the control of the Company. The Company's real estate operations are concentrated in Southern California. The regional economy is profoundly affected by the entertainment, technology, defense and 15 certain other segments, which have been known to affect the region's demographics. Consequently, all sectors of real estate development for the Company tend to be cyclical. While the economy of Southern California is currently robust, there can be no assurances that present trends will continue. INFLATION: The Company believes it is well positioned against the effects of inflation. Historically, during periods of inflation, the Company has been able to increase selling prices of properties to offset rising costs of land development and construction. Recently, residential land values have been increasing at a faster rate than costs. However, there are no assurances that this trend will continue. A portion of the commercial income portfolio is protected from inflation since percentage rent clauses and Consumer Price Index increases in the Company's leases tend to adjust rental receipts for inflation, while the underlying value of commercial properties has tended to rise over the long term. INTEREST RATES AND FINANCING: Fluctuations in interest rates and the availability of financing have an important impact on the Company's performance. Sales of the Company's properties could be adversely impacted by the inability of buyers to obtain adequate financing. Further, the Company's real estate development activities are dependent on the availability of adequate sources of capital. A majority of the Company's credit facilities bear interest at variable rates and would be negatively impacted by increasing interest rates. COMPETITION: The sale and leasing of residential, industrial and commercial real estate is highly competitive, with competition coming from numerous and varied sources. The degree of competition is affected by such factors as the supply of real estate available which is comparable to that sold and leased by the Company and the level of demand for such real estate. The Company has experienced a slight decrease in its new home sale market share at both the local and the county level, due to the temporary decline in Valencia new home inventory. New competition is expected to deliver competing projects in the future that could impact the Company's ability to reverse this trend. GEOGRAPHIC CONCENTRATION: The Company's real estate development activities are focused on 21,500 acres in Los Angeles County. The Company's entire commercial income portfolio is located in the Valencia area. Therefore, any factors affecting that concentrated area, such as changes in the housing market, economic changes and environmental factors, including seismic activity, which cannot be predicted with certainty, could affect future results. GOVERNMENT REGULATION AND ENTITLEMENT RISKS: In developing its projects, the Company must obtain the approval of numerous governmental authorities regulating such matters as permitted land uses, density and traffic, and the providing of utility services such as electricity, water and waste disposal. In addition, the Company is subject to a variety of federal, state and local laws and regulations concerning protection of health and the environment. This government regulation affects the types of projects which can be pursued by the Company and increases the cost of development and ownership. The Company devotes substantial financial and managerial resources to comply with these requirements. To varying degrees, certain permits and approvals will be required to complete the developments currently being undertaken, or planned by the Company. Furthermore, the timing, cost and scope of planned projects may be subject to legal challenges, particularly large projects with regional impacts. (See following "Litigation" discussion.) In addition, the continued effectiveness of permits already granted is subject to factors such as changes in policies, rules and regulations and their interpretation and application. The ability to obtain necessary approvals and permits for its projects can be beyond the Company's control and could restrict or prevent development of otherwise desirable new properties. The Company's results of operations in any period will be affected by the amount of entitled properties the Company has in inventory. LITIGATION: The land use approval processes the Company must follow to ultimately develop its projects have become increasingly complex. Moreover, the statutes, regulations and ordinances governing the approval processes provide third parties the opportunity to challenge the proposed plans and approvals. As a result, the prospect of, and actual, third-party challenges to planned real estate developments have provided additional uncertainties in real estate development planning and entitlements. Third-party challenges in the form of litigation will, by its nature, adversely affect the length of time required to obtain the necessary approvals. In addition, adverse decisions arising from any litigation increase the costs and may adversely affect the designs, scope, plans and profitability of a project. 16 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The Company is exposed to market risk primarily due to fluctuations in interest rates. The Company utilizes both fixed rate and variable rate debt. At June 30, 2000, the Company had $168 million of variable debt with interest rates ranging from 7.61% to 8.15% and $123 million of fixed rate debt with interest rates ranging from 6.51% to 8.45% The table below presents principal cash flows and related weighted average interest rates of the Company's long-term fixed rate and variable rate debt at of June 30, 2000 by expected maturity dates:
Expected Maturity Date Fair -------------------------------------------------------------- (IN $000S) 2000 2001 2002 2003 2004 Thereafter Total Value -------------------------------------------------------------- ------------ -------------- Mortgage and Other Debt Fixed Rate Debt $ 1,376 $ 4,992 $ 5,153 $ 14,688 $ 5,272 $91,477 $122,958 $122,958 Weighted Average Interest Rate 7.37% 7.70% 7.68% 8.16% 7.61% 7.02% 7.24% Variable Rate Debt (1) $ 168,000 $168,000 $168,000 Weighted Average Interest Rate 7.83% 7.83%
(1) The Company has a $40 million revolving mortgage facility which bears interest at LIBOR plus 1.0% or Wells Fargo Bank's prime rate, at the election of the Company, against which $40 million was outstanding at June 30, 2000. The Company also has a $159 million unsecured revolving line of credit on which the rate is LIBOR plus 1.2%. At June 30, 2000, $128 million was outstanding against this line and $1 million was outstanding against a $1 million line of credit with Valencia Bank & Trust. In addition, the Company has procured a $20 million unsecured line with Wells Fargo on which the rate is LIBOR plus 1.35%. There was no outstanding balance against this line at June 30, 2000. The amounts set forth in the table above assume that the outstanding amounts under variable rate credit facilities will be repaid at the facilities' respective maturity dates. Management is in discussions with its lenders on a new unsecured revolving credit facility. There is inherent rollover risk for borrowings as they mature and are renewed at current market rates. The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and the Company's future financing requirements. The Company manages its interest rate risk by maintaining a conservative ratio of fixed rate, long-term debt to total debt in order to maintain variable rate exposure at an acceptable level and by taking advantage of favorable market conditions for long-term debt. PART II . OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. Please refer to "Community Development" under Part I, Item 2. - "Management's Discussion and Analysis of Financial Condition and Results of Operations". ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits (listed by numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K): 27 Financial Data Schedule 99(a) Amended and Restated Shareholders' Agreement dated July 19, 2000 by and among Newhall Management Corporation, its shareholders and the Newhall Management Corporation Voting Trust. 99(b) Extension Agreement dated July 19, 2000 by and among Newhall Management Corporation, its shareholders and the Newhall Management Corporation Voting Trust, which extends the term for an additional ten years of the Voting Trust Agreement dated November 14, 1990. 17 99(c) Amendment Number One dated July 19, 2000 to the Limited Partnership Agreement of Newhall Management Limited Partnership. 99(d) Second Amendment dated July 19, 2000 to the Partnership Agreement of Newhall General Partnership. 99(e) Amended and Restated By-laws of Newhall Management Corporation (b) The following report on Form 8-K was filed in the second quarter ended June 30, 2000.
Item Reported Date of Report ------------- -------------- A news release issued by the Company on June 1, 2000 June 1, 2000 concerning a ruling on the Newhall Ranch EIR litigation.
18 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE NEWHALL LAND AND FARMING COMPANY (a California Limited Partnership) Registrant By Newhall Management Limited Partnership, Managing General Partner By Newhall Management Corporation, Managing General Partner Date: July 28, 2000 By /s/ THOMAS L. LEE --------------------------------------------- Thomas L. Lee, Chairman and Chief Executive Officer of Newhall Management Corporation (Principal Executive Officer) Date: July 28, 2000 By /s/ STUART R. MORK --------------------------------------------- Stuart R. Mork, Senior Vice President and Chief Financial Officer of Newhall Management Corporation (Principal Financial Officer) Date: July 28, 2000 By /s/ DONALD L. KIMBALL --------------------------------------------- Donald L. Kimball, Vice President - Finance and Controller of Newhall Management Corporation (Principal Accounting Officer) 19 EX-27 2 ex-27.txt EXHIBIT 27
5 1,000 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 2,883 0 36,344 1,632 56,762 0 455,178 85,952 498,350 0 290,958 0 0 0 63,068 498,350 49,336 83,683 37,402 61,900 0 0 7,715 9,545 0 9,545 0 0 0 9,545 .34 .33
EX-99.(A) 3 ex-99_a.txt EXHIBIT 99(A) Exhibit 99(a) AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT THIS AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT, dated as of July 19, 2000, by and among Newhall Management Corporation, a California corporation and formerly known as New Newhall Management Corporation (the "Company"), the person who from time to time shall serve as the Secretary of the Company and trustee of a voting trust created pursuant to a Voting Trust Agreement dated November 14, 1990 (as amended, the "Voting Trust Agreement") (the "Trustee"), and George L. Argyros, Gary M. Cusumano, Thomas L. Lee, Thomas V. McKernan, Jr., Henry K. Newhall, Jane Newhall, Peter T. Pope, Carl E. Reichardt, Thomas C. Sutton, Barry Lawson Williams, and Ezra K. Zilkha (the "Shareholders"). This Agreement hereby amends and restates in its entirety the Shareholders' Agreement dated November 14, 1990 by the parties hereto, as amended by that certain Amendment to Shareholders' Agreement dated as of November 20, 1991 ("Prior Shareholders' Agreement"). WITNESSETH: WHEREAS, the Company is the Managing General Partner of Newhall Management Limited Partnership (the "Partnership"), which is the Managing General Partner of The Newhall Land and Farming Company (a California Limited Partnership) ("Newhall"); and WHEREAS, the Shareholders beneficially own all of the issued and outstanding stock of the Company; and WHEREAS, simultaneously with the execution of the Prior Shareholders' Agreement all the Shareholders have entered into the Voting Trust Agreement, providing for the voting of the Common Stock of the Company; and WHEREAS, all of the Shareholders together constitute all of the directors of the Company; and WHEREAS, the parties hereto desire to promote their mutual interest and the interests of the Company and the Partnership by imposing certain restrictions upon the ownership and transferability of the Common Stock of the Company; and WHEREAS, the Shareholders wish to amend and restate the Prior Shareholders' Agreement to permit transfers of beneficial ownership of the Common Stock of the Company to a living trust for the exclusive benefit of the Shareholders for estate planning purposes: NOW, THEREFORE, the parties hereby agree as follows: ARTICLE 1 SHARES Section 1.1 SHARES. This Agreement applies to all shares of Common Stock and any other equity securities of the Company and to any Voting Trust Certificates issued pursuant to the Voting Trust Agreement and the interests represented by the Voting Trust Certificates. Each share of Common Stock and any other equity security of the Company, including any equity securities issued as a dividend or other distribution with respect to such shares or securities, and the rights to receive such shares and securities and any interests which are represented by a Voting Trust Certificate, shall be deemed to be a "Share" under this Agreement and are collectively referred to as "Shares." 1 ARTICLE 2 contributions Section 2.1 CAPITAL CONTRIBUTION. (a) Each Shareholder represents that he or she has contributed to the capital of the Company the number of Units set forth opposite his or her name below and has received one Share for each Unit so contributed:
No. of Shareholder Units ----------- ------ George L. Argyros 350 Gary M. Cusumano 350 Thomas L. Lee 370 Thomas V. McKernan, Jr. 350 Henry K. Newhall 370 Jane Newhall 20 Peter T. Pope 350 Carl E. Reichardt 370 Thomas C. Sutton 350 Barry Lawson Williams 350 Ezra K. Zilkha 370 ----- Total 3,600
(b) The Shareholders understand that the directors of the Company intend that distributions, if any, by the Partnership with respect to Units contributed to the capital of the Company will be declared as dividends of the Company. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS Section 3.1 REPRESENTATIONS AND WARRANTIES. Each Shareholder represents and warrants that: (a) Subject to the Voting Trust Agreement, he or she is the owner of the number of Shares set forth opposite his or her name on the signature line of this Agreement, free and clear of all liens and encumbrances, and there are no outstanding options, agreements, contracts, calls, commitments or demands of any character to which the Shareholder is a party or of which the Shareholder knows, which restrict or require the transfer of, or otherwise relate to, the Shares, except this Agreement, the Voting Trust Agreement, and the Bylaws of the Company, and (b) He or she is acquiring the Shares for investment and not with a view to or for resale in connection with any distribution of the Shares. ARTICLE 4 TRANSFER Section 4.1 RESTRICTION ON TRANSFER. 2 (a) Except as provided in this Agreement, no Shareholder or holder of a Voting Trust Certificate ("Certificate Holder") will sell, assign, transfer, convey, pledge, hypothecate, give a security interest in, encumber, give, or otherwise dispose or attempt to dispose of any of the Shares or any interest therein (all of the foregoing are herein referred to as a "Transfer"); provided, however, that the Shareholder may transfer the Shares to a trustee of a revocable inter vivos trust for the exclusive benefit of the Shareholder and the Shareholder's spouse which qualifies under Section 1361(c) of the Code as a permissible Shareholder of a corporation qualified under Subchapter S of the Code ("Permitted Transfer" and the transferee shall be referred to as "Permitted Transferee"). Any purported Transfer of any Shares contrary to this Agreement shall be null and void, and the purported purchaser or other transferee shall acquire no interest whatsoever in such Shares. (b) Each person to whom Shares are transferred by means of the Permitted Transfer specified in Section 4.1(a) hereof must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Company that such person is bound by the provisions of this Agreement and that the transferred shares are subject to the Company's transferability restrictions, to the same extent the Shares would be so subject if retained by the Shareholder. (c) For purposes of this Agreement the term "Owner" shall include the Shareholder and all subsequent holders of the Shares who derive their chain of ownership through a Permitted Transfer from the Shareholder in accordance with Section 4.1(a) hereof. The term "Owner" shall not include transferees pursuant to Section 4.4. The term "Respective Shareholder" shall mean the Shareholder, and or, in the event of Permitted Transfer, the Shareholder who transferred the Shares to the Owner. Section 4.2 REPURCHASE EVENT. (a) As to each Owner, any of the following events constitutes a "Repurchase Event": (i) the Respective Shareholder ceases to be a director of the Company for any reason; (ii) the Owner fails to re-execute the Voting Trust Agreement, as provided in the Voting Trust Agreement, as it may be amended from time to time; (iii) any Shares held by an Owner are levied upon under a writ of execution, become subject to sale under any legal process, are transferred or ordered to be transferred to or for the benefit of any person or entity as a result of or in connection with any final property settlement or judgment incident to a divorce, dissolution of marriage, or separation or are transferred or ordered to be transferred to any person by decree of distribution or other court order in proceedings arising from the death of the spouse of any Owner (on and as of the date of such levy, legal process, settlement, judgment, decree, or order); (iv) the Shareholder, together with his or her Permitted Transferees, fails to own at least one limited partner unit in the Partnership; (v) a Transfer or attempted or purported Transfer in violation of Section 4.1 occurs; (vi) the Shareholder fails to make a contribution to capital as set forth in Section 2.1(a); 3 (vii) the Owner fails to sign a consent to the Company's election under Subchapter S of the Internal Revenue Code of 1986, as amended (the "Code"), whenever such consent may be requested by the Company; (viii) the Owner's spouse, if applicable, fails to sign any consent which may be required; or (ix) the Owner or Respective Shareholder materially breaches this Agreement or the Voting Trust Agreement. (b) Upon the occurrence of any Repurchase Event: (i) the owner of the Shares subject to the Repurchase Event shall promptly notify the Company of the Repurchase Event; (ii) the Respective Shareholder subject to the Repurchase Event shall resign immediately as a Director of the Company; and (iii) the Company shall repurchase (or otherwise direct the sale of) all Shares owned by the Owner and Respective Shareholder in accordance with Section 4.3 within one year from the Repurchase Event and the Company shall use its best efforts to repurchase such Shares as soon as possible after the Repurchase Event. Section 4.3 REPURCHASE OF SHARES. (a) The Company shall repurchase the Shares of an Owner as follows: (i) The purchase price per Share repurchased by the Company shall be an amount equal to the then current market value of one unit representing a limited partnership unit of Newhall ("Public Unit"), as adjusted to reflect splits, recapitalizations, or like events, which may have occurred after the issuance of the Shares and which were not reflected in a corresponding split in the Shares. The market value of one Public Unit of Newhall shall be deemed to be the closing trading price of a Public Unit on the New York Stock Exchange on the last trading day immediately preceding the repurchase. (ii) Subject to Section 4.2(b)(iii), the Shares shall be repurchased at such time or times as the Company shall determine. In connection with any such repurchase, the appropriate number of Shares shall be withdrawn from the voting trust and surrendered to the Company for cancellation. (b) Notwithstanding anything to the contrary herein, if a Repurchase Event occurs, the Company may approve or require the sale of the Shares by an Owner directly or indirectly to his or her successor as director at a price per Share equal to that set forth in Section 4.3(a)(i) hereof. Section 4.4 TRANSFER PURSUANT TO ADDITION OF DIRECTOR. If approved by the Board of Directors of the Company, a Shareholder may transfer Shares owned by the Shareholder directly or indirectly to a new or existing director at a price per Share equal to that set forth in Section 4.3(a)(i) hereof. 4 ARTICLE 5 LEGEND; SPOUSAL AGREEMENT Section 5.1 LEGEND. The Company will transfer Shares on its books only in accordance with the terms and conditions of this Agreement and the Voting Trust Agreement. The Trustee will transfer Voting Trust Certificates only on his books and only in accordance with the terms and conditions of this Agreement and the Voting Trust Agreement. Certificates representing Shares of the Company held pursuant to the Voting Trust Agreement and each of the Voting Trust Certificates shall bear a legend in the form of Exhibit A hereto. Section 5.2 SPOUSAL AGREEMENT. The spouse of each Shareholder shall execute a Consent and Agreement of Spouse in the form attached hereto as Exhibit B, if the respective Spouse has not previously consented to any amendment of the Prior Shareholders' Agreement. ARTICLE 6 ADDITIONAL PARTIES Section 6.1 ADDITIONAL PARTIES. The parties hereto agree and consent in advance that upon the election of a replacement director to the Board of Directors of the Company, who is not already a party to this Agreement, such new director shall, upon agreeing in writing to be bound by the terms and provisions of this Agreement and the Voting Trust Agreement, and upon the purchase of Shares from a prior Shareholder (including Shares held by Shareholder and his or her Permitted Transferees) pursuant to Section 4.3(b) or Section 4.4 or the purchase from the Company for cash of the number of Shares owned by the leaving director, become a party to this Agreement. The parties hereto agree and consent in advance that upon the election of a new director, such new director shall, upon agreeing in writing to be bound by the terms and provisions of this Agreement and the Voting Trust Agreement, and upon the purchase of a number of Shares specified by the directors in their sole discretion at a price per Share equal to that set forth in Section 4.3(a)(i) hereof, become a party to this Agreement. In the event other persons become parties to this Agreement, this Agreement will continue to be binding upon every Owner of the Company without the re-execution of, or amendment to this Agreement. Section 6.2 PARTNERSHIP UNITS. Each new director shall own at least one limited partner unit in the Partnership and the failure to own at least one limited partner unit in the Partnership is a Repurchase Event under Section 4.2(a). ARTICLE 7 TERMINATION Section 7.1 TERMINATION. (a) This Agreement shall terminate as to all parties if the Company shall cease for any reason to be the Managing General Partner of the Partnership, or the Partnership shall cease for any reason to be the Managing General Partner of Newhall, or if all parties to this Agreement consent to its termination. (b) This Agreement shall terminate as to an individual Owner upon the repurchase of all of his or her Shares pursuant to this Agreement. No termination as to any Owner shall cause or constitute a termination of this Agreement as to any other Owner. (c) This Agreement may only be terminated pursuant to this Section 7.1. 5 ARTICLE 8 NOTICES Section 8.1 NOTICES. Any notice, request, instruction, or other document to be given by any party to another party shall be in writing and shall be deemed given at the time it is deposited in the United States mails, postage prepaid, by registered or certified mail, at the time it is personally delivered to the person to whom the notice is given, or at the time the notice is delivered to a common carrier for transmission or is actually transmitted by the person giving the notice by electronic means to the person to whom notice is given, whichever first occurs. Notice shall be given to the parties hereto at the following addresses or to such other persons or addresses as may be designated in writing by the party to receive such notice as any party hereto shall hereafter specify to the other parties hereto.
Name Address - ---- ------- Newhall Management Corporation 23823 Valencia Boulevard Valencia, CA 91355 George L. Argyros Arnel & Affiliates 949 South Coast Drive, Suite 600 Costa Mesa, CA 92626 Gary M. Cusumano The Newhall Land and Farming Company 23823 Valencia Boulevard Valencia, CA 91355 Thomas L. Lee The Newhall Land and Farming Company 23823 Valencia Boulevard Valencia, CA 91355 Thomas V. McKernan, Jr. Automobile Club of So. California 3333 Fairview Road Costa Mesa, CA 92626 Henry K. Newhall 118 Fernwood Drive San Rafael, CA 94901 Jane Newhall 2950 Pacific Avenue San Francisco, CA 94115 Peter T. Pope Pope & Talbot, Inc. P.O. Box 8171 Portland, OR 97207 Carl E. Reichardt Wells Fargo & Company P.O. Box 63710 San Francisco, CA 94163 Thomas C. Sutton Pacific Life Insurance Company 700 Newport Center Drive Newport Beach, CA 92660 6 Barry Lawson Williams Williams Pacific Ventures, Inc. 109 Stevenson Street, 5th Floor San Francisco, CA 94105 Ezra K. Zilkha Zilkha & Sons, Inc. 767 Fifth Avenue, Suite 4605 New York, NY 10153-0002 Newhall Management Corporation 23823 Valencia Boulevard Voting Trust Valencia, CA 91355
ARTICLE 9 MISCELLANEOUS Section 9.1 SUCCESSORS AND ASSIGNS. Except as otherwise herein provided, this Agreement shall bind and inure to the benefit of each and all of the successors and assigns of the parties. Section 9.2 AMENDMENT. This Agreement may be modified only by a subsequent written agreement executed by all of the parties hereto, except for the addition or termination of parties to this Agreement pursuant to Sections 6.1 and 7.1(b). Section 9.3 ENTIRE AGREEMENT. This Agreement and the Voting Trust Agreement constitute the entire agreement between the parties and supersede any and all prior agreements and understandings, both oral and written, between and among the parties hereto. Section 9.4 FURTHER ACTS. Each party to this Agreement agrees to perform any further acts and execute and deliver any documents that may be reasonably necessary or appropriate to carry out the provisions of this Agreement. Section 9.5 SEVERABILITY. If any provision of this Agreement is held to be illegal, void, or unenforceable, the remaining provisions will continue to be in full force and effect. Section 9.6 GOVERNING LAW. This Agreement shall be construed in accordance with and governed by the laws of the State of California as applied to agreements solely among California residents to be executed and performed entirely within California. Section 9.7 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Section 9.8 GENDER; NUMBER. The use of any gender shall be construed to include any or all other genders where appropriate. The singular shall include the plural, and vice versa. Section 9.9 SECTION HEADINGS. The section and other headings are for reference only and shall not affect in any way the meaning or interpretation of this Agreement. Section 9.10 SPECIFIC PERFORMANCE. Each party acknowledges that it has bargained for the performance of the specific duties and obligations of each of the parties contained in this Agreement, and that, in the event of a default by any party, money damages would be difficult to determine and, in any event, would not adequately compensate the injured party or parties. Accordingly, each party agrees and consents to the entry by a court of competent jurisdiction of a judgment or decree of specific performance with respect to its duties and obligations in the event of its failure to perform such duties and obligations in accordance with the terms of this Agreement. 7 Section 9.11 SUBCHAPTER S ELECTION. The Shareholders agree that it is in the best interests of each Shareholder (including his Permitted Transferees) and the Company to elect to be taxed under Subchapter S of the Code, and in furtherance thereof the Owners each agree to provide written consents to the Subchapter S election whenever such consents are requested by the Board of Directors of the Company. Section 9.12 FILING. Upon execution of this Agreement, or any amendment to this Agreement, and upon the addition of parties to this Agreement pursuant to Section 6.1, a copy of the agreement or amendment shall be filed in the principal executive office of the Company in the State of California with the secretary and the copy shall be open to the inspection of any shareholder of the Company during the normal business hours of the Company. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first set out above.
NEWHALL MANAGEMENT CORPORATION Number of Shares Owned By: /s/ Trude Tsujimoto --------------------------------- TRUDE A. TSUJIMOTO, Secretary 350 By: /s/ George L. Argyros --------------------------------- GEORGE L. ARGYROS 350 By: /s/ Gary M. Cusumano --------------------------------- GARY M. CUSUMANO 370 By: /s/ Thomas L. Lee --------------------------------- THOMAS L. LEE 350 By: /s/ Thomas V. McKernan, Jr. --------------------------------- THOMAS V. MCKERNAN, JR. 370 By: /s/ Henry K. Newhall --------------------------------- HENRY K. NEWHALL 20 By: /s/ Jane Newhall --------------------------------- JANE NEWHALL 350 By: /s/ Peter Pope --------------------------------- PETER T. POPE 370 By: /s/ Carl E. Reichardt --------------------------------- CARL E. REICHARDT 350 By: /s/ Thomas Sutton --------------------------------- THOMAS C. SUTTON 350 By: /s/ Barry Lawson Williams --------------------------------- BARRY LAWSON WILLIAMS 8 370 By: /s/ Ezra Zilkha --------------------------------- EZRA K. ZILKHA NEWHALL MANAGEMENT CORPORATION VOTING TRUST By: /s/ Trude Tsujimoto --------------------------------- Trude A. Tsujimoto, Secretary of Newhall Management Corporation, as Trustee
9 EXHIBIT A THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE, THE VOTING RIGHTS OF THE HOLDER HEREOF AND CERTAIN OTHER RIGHTS OF THE HOLDER HEREOF ARE SUBJECT TO AND RESTRICTED BY THE TERMS AND CONDITIONS OF AN AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT DATED AS OF JULY 19, 2000, A VOTING TRUST AGREEMENT DATED AS OF NOVEMBER 14, 1990, AS AMENDED, AND THE BYLAWS OF NEWHALL MANAGEMENT CORPORATION IN EACH CASE AS THE SAME MAY BE MODIFIED, AMENDED OR SUPPLEMENTED FROM TIME TO TIME. NO TRANSFER OF THE SECURITIES REPRESENTED HEREBY SHALL BE VALID OR EFFECTIVE UNLESS THE TERMS AND CONDITIONS OF SAID AGREEMENTS, COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF NEWHALL MANAGEMENT CORPORATION, IN THE STATE OF CALIFORNIA, HAVE BEEN SATISFIED. 10 EXHIBIT B consent and agreement of spouse The undersigned spouse of ______________________________ , a shareholder of Newhall Management Corporation, formerly known as New Newhall Management Corporation (the "Company"), who is a party to the Amended and Restated Shareholders' Agreement ("Restated Shareholders' Agreement") dated as of July 19, 2000, among Newhall Management Corporation, its shareholders and the Newhall Management Corporation Voting Trust, which amends and restates in full the Shareholders' Agreement dated as of November 14, 1990 by the parties thereto, and to a Voting Trust Agreement dated as of November 14, 1990, as amended, among Newhall Management Corporation, its shareholders and the trustee of the Newhall Management Corporation Voting Trust, hereby acknowledges and agrees that he or she: 1. Has read the Restated Shareholders' Agreement, the Voting Trust Agreement and the Bylaws of the Company; 2. Has been informed of and is familiar with the background of and the reasons for the provisions of the Restated Shareholders' Agreement, Voting Trust Agreement and Bylaws of the Company; 3. Hereby consents to the terms and conditions of the Restated Shareholders' Agreement, the Voting Trust Agreement and the Bylaws of the Company as the same may be modified, amended or supplemented from time to time, agrees to provide all notices and information required by him or her, and confirms his or her express agreement to be bound by any required transfer which shall arise in the event of the occurrence with respect to his or her spouse, of any of the events set forth in said Restated Shareholders' Agreement or the Bylaws of the Company which give rise to a required transfer, including divorce, dissolution of marriage or separation, and to cooperate fully and take all such action as may be necessary to facilitate the exercise of any required transfer in accordance with the Restated Shareholders' Agreement, as it may be amended from time to time; and 4. Hereby consents to any amendment to the Restated Shareholders' Agreement, the Voting Trust Agreement and Bylaws of the Company and to any change in the parties to the Restated Shareholders' Agreement and the Voting Trust Agreement. Dated as of _______________, 2000 ---------------------------------- 11 EX-99.(B) 4 ex-99_b.txt EXHIBIT 99(B) Exhibit 99(b) EXTENSION AGREEMENT This Extension Agreement (the "AGREEMENT") is entered into as of the 19th day of July, 2000, by and among Newhall Management Corporation, a California corporation and formerly known as New Newhall Management Corporation (the "Company"), the person who from time to time shall serve as the Secretary of the Company and serve as the trustee of the Newhall Management Corporation Voting Trust, a voting trust created pursuant to a Voting Trust Agreement dated November 14, 1990 (the "Trustee"), and George L. Argyros, Gary M. Cusumano, Thomas L. Lee, Thomas V. McKernan, Jr., Henry K. Newhall, Jane Newhall, Peter T. Pope, Carl E. Reichardt, Thomas C. Sutton, Barry Lawson Williams, and Ezra K. Zilkha (the "Shareholders"). This Agreement hereby extends the term of the Voting Trust Agreement dated as of November 14, 1990 ("Voting Trust Agreement") by and among the parties listed therein. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Voting Trust Agreement. AGREEMENT For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree, effective immediately, as follows: 1. EXTENSION OF THE TERM OF THE VOTING TRUST AGREEMENT. Pursuant to Section 3.3 of the Voting Trust Agreement, the term of the Voting Trust Agreement shall be hereby extended for an additional ten (10) years, and the Voting Trust Agreement shall terminate on November 14, 2010. 2. MISCELLANEOUS. a. CONSTRUCTION. This Agreement shall be governed, construed and interpreted under and according to the laws of the State of California as applied to agreements solely among California residents to be executed and performed entirely within California. b. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among the parties pertaining to the subject matter hereof and supercedes any and all prior or contemporaneous amendments relating to the subject matter hereof. Except as expressly extending the term of such agreement, the Voting Trust Agreement shall remain unchanged and in full force and effect. This Agreement shall be deemed part of and is hereby incorporated into the Voting Trust Agreement. To the extent that any term and conditions of the Voting Trust Agreement shall contradict or be in conflict with any terms or conditions of this Agreement, the terms and conditions of this Agreement shall control. c. COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart. d. AGREEMENTS. In the event other persons become parties to this Agreement, this Agreement will continue to be binding upon every Shareholder of the Company without the re-execution of or amendment to this Agreement. Except for the admission of parties as provided above, this Agreement cannot be altered, amended, changed or modified in any respect or particular except by an instrument in writing signed by all of the parties hereto. e. FURTHER ACTS. Each party to this Agreement agrees to perform any further acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement. 1 IN WITNESS WHEREOF, the undersigned have caused this Extension Agreement to be executed and delivered as of the date first written above. NEWHALL MANAGEMENT CORPORATION By: /s/ Trude Tsujimoto -------------------------------------- TRUDE A. TSUJIMOTO, Secretary /s/ George L. Argyros -------------------------------------------- GEORGE L. ARGYROS, Shareholder /s/ Gary M. Cusumano -------------------------------------------- GARY M. CUSUMANO, Shareholder /s/ Thomas L. Lee -------------------------------------------- THOMAS L. LEE, Shareholder /s/ Thomas V. McKernan, Jr. -------------------------------------------- THOMAS V. MCKERNAN, JR., Shareholder /s/ Henry K. Newhall -------------------------------------------- HENRY K. NEWHALL, Shareholder /s/ Jane Newhall -------------------------------------------- JANE NEWHALL, Shareholder /s/ Peter Pope -------------------------------------------- PETER T. POPE, Shareholder 2 /s/ Carl E. Reichardt -------------------------------------------- CARL E. REICHARDT, Shareholder /s/ Thomas Sutton -------------------------------------------- THOMAS C. SUTTON, Shareholder /s/ Barry Lawson Williams -------------------------------------------- BARRY LAWSON WILLIAMS, Shareholder /s/ Ezra Zilkha -------------------------------------------- EZRA K. ZILKHA, Shareholder /s/ Trude Tsujimoto -------------------------------------------- TRUDE A. TSUJIMOTO, Secretary of Newhall Management Corporation, as TRUSTEE 3 EX-99.(C) 5 ex-99_c.txt EXHIBIT 99(C) Exhibit 99(c) AMENDMENT NUMBER ONE TO LIMITED PARTNERSHIP AGREEMENT This Amendment Number One (the "Amendment") to the Limited Partnership Agreement of Newhall Management Limited Partnership is entered into as of the 19th day of July, 2000, by and between Newhall Management Corporation, a California corporation ("NMC"), Newhall General Partnership, a California general partnership ("NGC"), as general partners, and the other parties set forth on the signature page attached hereto as limited partners. The Amendment hereby amends that certain Limited Partnership Agreement of Newhall Management Limited Partnership dated November 14, 1990 (as amended, "Partnership Agreement") by the parties listed therein. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Partnership Agreement, as amended hereby. AGREEMENT For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree to amend the Partnership Agreement, effective immediately, as follows: 1. AMENDMENTS TO PARTNERSHIP AGREEMENT. a. Section 12.1(C) shall be amended and restated in its entirety to read as follows: "Except (i) as provided in Section 12.2, (ii) with respect to the transfer from the Original Limited Partner to the Limited Partners pursuant to Section 7.2, (iii) with the express written consent of the Managing General Partner, or (iv) to a trustee of a revocable inter vivos trust for the exclusive benefit of the Partner and/or the Partner's spouse ("Permitted Transfer" and the transferee shall be referred to as "Permitted Transferee") so long as such Permitted Transferee agrees in writing to be bound by the terms and conditions of this Agreement as applicable to a Limited Partner, no Limited Partner may Transfer any of his or her Limited Partners' Units or any interest therein. Any purported Transfer of any Limited Partners' Units contrary to this Agreement shall be null and void, and the purported purchaser or other transferee shall acquire no interest whatsoever in such Limited Partners' Units." b. Section 12.2(A)(i) shall be amended and restated in its entirety to read as follows: "(i) in the case of a Limited Partner who is a director of NNMC, or a Limited Partner who received its Units through a Permitted Transfer from a director of NNMC, such director ceases to be a director of NNMC for any reason;" c. Section 12.2(A)(i) shall be amended and restated in its entirety to read as follows: "(ii) in the case of a Limited Partner who is a shareholder of NNMC or a Limited Partner who received its Units through a Permitted Transfer from a shareholder of NNMC, such shareholder either fails to execute or materially breaches the Shareholders' Agreement or the Voting Trust Agreement, as they may be amended from time to time;" 3. CONSTRUCTION. This Amendment shall be governed by and construed in accordance with the laws of the State of California. 4. ENTIRE AMENDMENT. This Amendment constitutes the entire agreement among the parties pertaining to the subject matter hereof and supercedes any and all prior or contemporaneous 1 amendments relating to the subject matter hereof. Except as expressly amended hereby, the Partnership Agreement shall remain unchanged and in full force and effect. This Amendment shall be deemed part of and is hereby incorporated into the Partnership Agreement. To the extent that any term and conditions of the Partnership Agreement shall contradict or be in conflict with any terms or conditions of this Amendment, the terms and conditions of this Amendment shall control. 5. COUNTERPARTS. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Amendment by signing any such counterpart. 6. AMENDMENTS. This Amendment cannot be altered, amended, changed or modified at any time and from time to time in the manner set forth in Section 6.9 of the Partnership Agreement. 2 IN WITNESS WHEREOF, the undersigned have caused this Amendment Number One to the Limited Partnership Agreement of Newhall Management Limited Partnership to be executed and delivered as of the date first written above. GENERAL PARTNERS: NEWHALL MANAGEMENT CORPORATION, a California corporation By: /s/ Trude Tsujimoto ----------------------------------------------- Name: Trude A. Tsujimoto Title: Secretary NEWHALL GENERAL PARTNERSHIP By: /s/ Thomas L. Lee ----------------------------------------------- Name: Thomas L. Lee Title: General Partner, Attorney-In-Fact LIMITED PARTNERS: /s/ George L. Argyros ----------------------------------------- George L. Argyros /s/ Gary M. Cusumano ----------------------------------------- Gary M. Cusumano /s/ Thomas L. Lee ----------------------------------------- Thomas L. Lee /s/ Thomas V. McKernan, Jr. ----------------------------------------- Thomas V. McKernan, Jr. /s/ Henry K. Newhall ----------------------------------------- Henry K. Newhall /s/ Jane Newhall ----------------------------------------- Jane Newhall /s/ Peter Pope ----------------------------------------- Peter T. Pope /s/ Carl E. Reichardt ----------------------------------------- Carl E. Reichardt /s/ Thomas Sutton ----------------------------------------- Thomas C. Sutton /s/ Barry Lawson Williams ----------------------------------------- Barry Lawson Williams /s/ Ezra Zilkha ----------------------------------------- Ezra K. Zilkha 3 EX-99.(D) 6 ex-99_d.txt EXHIBIT 99(D) Exhibit 99(d) SECOND AMENDMENT TO PARTNERSHIP AGREEMENT OF NEWHALL GENERAL PARTNERSHIP This Second Amendment (the "AMENDMENT") to Partnership Agreement of Newhall General Partnership is entered into as of the 19th day of July, 2000 by and among Newhall Management Corporation, a California corporation, Gary M. Cusumano and Thomas L. Lee. This Amendment hereby amends that certain Partnership Agreement of Newhall General Partnership dated as of August 15, 1984, as amended by that certain Certificate of Amendment of Partnership Agreement of Newhall General Partnership dated as of November 14, 1990 by the same parties hereto (as amended the "PARTNERSHIP AGREEMENT"). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Partnership Agreement, as amended hereby. AGREEMENT For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree to amend the Partnership Agreement, effective immediately, as follows: 1. AMENDMENT TO PARTNERSHIP AGREEMENT. a. SECTION 5.1 of the Partnership Agreement is hereby amended and restated in its entirety as follows: "No Partner shall sell, assign, transfer, mortgage, hypothecate, or encumber its interest in the Partnership, except (I) to a revocable inter vivos trust for the exclusive benefit of such Partner and such Partner's spouse or (II) with the written consent of Newhall Management Corporation or its successor." 2. MISCELLANEOUS. a. CONSTRUCTION. This Amendment shall be governed, construed and interpreted under and according to the laws of the State of California as applied to agreements solely among California residents to be executed and performed entirely within California. b. ENTIRE AMENDMENT. This Amendment constitutes the entire agreement among the parties pertaining to the subject matter hereof and supercedes any and all prior or contemporaneous amendments relating to the subject matter hereof. Except as expressly amended hereby, the Partnership Agreement shall remain unchanged and in full force and effect. This Amendment shall be deemed part of and is hereby incorporated into the Partnership Agreement. To the extent that any term and conditions of the Partnership Agreement shall contradict or be in conflict with any terms or conditions of this Amendment, the terms and conditions of this Amendment shall control. c. COUNTERPARTS. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Amendment by signing any such counterpart. d. AMENDMENTS. In the event other persons become parties to this Amendment, this Amendment will continue to be binding upon every Shareholder of the Company without the re-execution of or amendment to this Amendment. Except for the admission of parties as provided above, 1 this Amendment cannot be altered, amended, changed or modified in any respect or particular except by an instrument in writing signed by all of the parties hereto. e. FURTHER ACTS. Each party to this Amendment agrees to perform any further acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Amendment. IN WITNESS WHEREOF, the undersigned have caused this Second Amendment to Partnership Agreement to be executed and delivered as of the date first written above. NEWHALL MANAGEMENT CORPORATION By: /s/ Trude Tsujimoto ---------------------------------------- TRUDE A. TSUJIMOTO, Secretary /s/ Gary M. Cusumano ---------------------------------------- GARY M. CUSUMANO, Partner /s/ Thomas L. Lee ---------------------------------------- THOMAS L. LEE, Partner 2 EX-99.(E) 7 ex-99_e.txt EXHIBIT 99(E) Exhibit 99(e) BYLAWS OF NEWHALL MANAGEMENT CORPORATION ARTICLE 1 OFFICES Section 1.1 The principal executive office of Newhall Management Corporation (the "Corporation") shall be at 23823 Valencia Boulevard, in Valencia, County of Los Angeles, State of California 91355 or at such other place as the Board of Directors shall determine. Section 1.2 The Corporation may also have offices at such other places as the Board of Directors may from time to time designate, or as the business of the Corporation may require. ARTICLE 2 SHAREHOLDERS' MEETINGS Section 2.1 ANNUAL MEETINGS. The annual meeting of the shareholders of the Corporation for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting shall be held at such time, date and place as may be determined by resolution of the Board of Directors and stated in the notice of the meeting. If the annual meeting of the shareholders be not held as herein prescribed, the election of directors may be held at any meeting thereafter called pursuant to these Bylaws. Section 2.2 SPECIAL MEETINGS. Special meetings of the shareholders, for any purpose whatsoever, unless otherwise prescribed by statute, may be called at any time by the Chairman of the Board, the President, the Chief Executive Officer, the Board of Directors, a majority of the members of the Board of Directors, a committee of the Board of Directors which has been duly designated by the Board of Directors, and whose powers and authority, as provided in a resolution of the Board of Directors or in the Bylaws, explicitly or implicitly include the power to call such meetings, or one or more shareholders holding not less than ten percent (10%)of the voting power of the Corporation, but special meetings may not be called by any other person or persons. Section 2.3 PLACE. All meetings of the shareholders shall be at any place within or without the State of California designated by the Board of Directors or by written consent of all the persons entitled to vote thereat, given either before or after the meeting. In the absence of any such designation, shareholders' meetings shall be held at the principal executive office of the Corporation. Section 2.4 NOTICE. Notice of meetings of the shareholders of the Corporation shall be given in writing to each shareholder entitled to vote, either personally or by first-class mail (unless the Corporation has 500 or more shareholders determined as provided by the California Corporations Code on the record date for the meeting, in which case notice may be sent by third-class mail) or other means of written communication, charges prepaid, addressed to the shareholder at his address appearing on the books of the Corporation or given by the shareholder to the Corporation for the purpose of notice. Notice of any such meeting of shareholders shall be sent to each shareholder entitled thereto not less than ten (10) (or, if sent by third-class mail, thirty (30)) nor more than sixty (60) days before the meeting. The notice shall state the place, date and hour of the meeting and, (1) in the case of special meetings, the general nature of the business to be transacted, and no other business may be transacted, or (2) in the case of annual meetings, those matters which the Board of Directors, at the time of the mailing of the notice, intends to present for action by the shareholders, but subject to Section 601(f) of the California Corporations Code any proper matter may be presented at the meeting for shareholder action, and (3) in 1 the case of any meeting at which directors are to be elected, the names of the nominees intended at the time of the mailing of the notice to be presented by management for election. Section 2.5 ADJOURNED MEETINGS. Any shareholders' meeting may be adjourned from time to time by the vote of the holders of a majority of the voting shares present at the meeting either in person or by proxy. Notice of any adjourned meeting need not be given unless a meeting is adjourned for forty-five (45) days or more from the date set for the original meeting or a new record date is selected. Section 2.6 QUORUM. The presence in person or by proxy of the persons entitled to vote a majority of the shares entitled to vote at any meeting constitutes a quorum for the transaction of business. The shareholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. In the absence of a quorum, any meeting of shareholders may be adjourned from time to time by the vote of a majority of the shares, the holders of which are either present in person or represented by proxy thereat, but no other business may be transacted, except as provided above. Section 2.7 SHAREHOLDER ACTION BY WRITTEN CONSENT. Any action which may be taken at any meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted; provided, however, that (1) unless the consents of all shareholders entitled to vote have been solicited in writing, notice of any shareholder approval without a meeting by less than unanimous written consent shall be given as required by the California Corporations Code, and (2) directors may not be elected by written consent except by unanimous written consent of all shares entitled to vote for the election of directors. Any written consent may be revoked by a writing received by the Secretary of the Corporation prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the Secretary. Section 2.8 WAIVER OF NOTICE. The transactions of any meeting of shareholders, however called and noticed, and whenever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice, or a consent to the holding of the meeting, or an approval of the minutes thereof. All such waivers, consents, or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Section 2.9 VOTING. The voting at all meetings of shareholders need not be by ballot, but any qualified shareholder before the voting begins may demand a stock vote whereupon such stock vote shall be taken by ballot, each of which shall state the name of the shareholder voting and the number of shares voted by such shareholder, and if such ballot be cast by a proxy, it shall also state the name of such proxy. At any meeting of the shareholders, every shareholder having the right to vote shall be entitled to vote in person, or by proxy appointed in a writing subscribed by such shareholder and bearing a date not more than eleven (11) months prior to said meeting, unless the writing states that it is irrevocable and satisfies Section 705(e) of the California Corporations Code, in which event it is irrevocable for the period specified in said writing and said Section 705(e). Section 2.10 RECORD DATES. If the Board of Directors fixes a day for the determination of shareholders of record entitled to vote as provided in Section 6.3 of these Bylaws, then, subject to the 2 provisions of the General Corporation Law of the State of California, only persons in whose name shares entitled to vote stand on the stock records of the Corporation at the close of business on such day shall be entitled to vote. If no record date is fixed: The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held; The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the day on which the first written consent is given; and The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto, or the sixtieth (60th) day prior to the date of such other action, whichever is later. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the Board of Directors fixes a new record date for the adjourned meeting, but the Board of Directors shall fix a new record date if the meeting is adjourned for more than forty-five (45) days. ARTICLE 3 BOARD OF DIRECTORS Section 3.1 POWERS. Subject to any limitations in the Articles of Incorporation or these Bylaws and to any provision of the California Corporations Code requiring shareholder authorization or approval for a particular action, the business and affairs of the Corporation shall be managed and all corporate powers shall be exercised by, or under the direction of, the Board of Directors. The Board of Directors may delegate the management of the day-to-day operation of the business of the Corporation to a management company or other person provided that the business and affairs of the Corporation shall be managed and all corporate powers shall be exercised, under the ultimate direction of the Board of Directors. Section 3.2 NUMBER, TENURE AND QUALIFICATIONS. The number of directors that shall constitute the whole board shall be not more than thirteen (13) nor fewer than seven (7). The exact number of directors may be fixed from time to time within such limit by a duly adopted resolution of the Board of Directors or shareholders. The exact number of directors presently authorized shall be eleven (11) until changed within the limits specified above by a duly adopted resolution of the Board of Directors or shareholders. Directors shall hold office until the next annual meeting of shareholders and until their respective successors are elected. If any such annual meeting is not held, or the directors are not elected thereat, the directors may be elected at any special meeting of shareholders held for that purpose. No person may serve as a director of the Corporation unless that person beneficially owns one or more shares of the common stock of the Corporation. A director, other than any person who served as an initial member of the Board of Directors, shall retire at the next meeting of shareholders after such director becomes seventy-two (72) years of age. Section 3.3 REGULAR MEETINGS. A regular annual meeting of the Board of Directors shall be held without other notice than this Bylaw immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide for other regular meetings from time to time by resolution. 3 Section 3.4 SPECIAL MEETINGS. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board, the President, the Chief Executive Officer or any two (2) directors. Written notice of the time and place of all special meetings of the Board of Directors shall be delivered personally or by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, telegraph, facsimile, electronic mail or other electronic means to each director at least forty-eight (48) hours before the meeting, or sent to each director by first-class mail, postage prepaid, at least four (4) days before the meeting. The notice need not specify the purpose of the meeting. Notice of any meeting of the Board of Directors need not be given to any director who signs a waiver of notice, whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to the director. Section 3.5 PLACE OF MEETINGS. Meetings of the Board of Directors may be held at any place within or without the State of California, which has been designated in the notice, or if not stated in the notice or there is no notice, the principal executive office of the Corporation or as designated by the resolution duly adopted by the Board of Directors. Section 3.6 PARTICIPATION BY TELEPHONE. Members of the Board of Directors may participate in a meeting through use of conference telephone, electronic video screen communication, or other communications equipment. Participation in a meeting through use of conference telephone constitutes presence in person at the meeting as long as all members participating in such meeting can hear one another. Participation in a meeting through the use of electronic video screen communication or other communications equipment (other than conference telephone) constitutes presence in person at that meeting if all of the following apply: (a) each member participating in the meeting can communicate with all of the other members concurrently, (b) each member is provided the means of participating in all matters before the Board of Directors, including, without limitation, the capacity to propose, or to interpose an objection to, a specific action to be taken by the Corporation, and (c) the Corporation adopts and implements some means of verifying that (i) a person participating in the meeting is a director or other person entitled to participate in the Board of Directors' meeting, and (ii) all actions of, or votes by, the Board of Directors are taken or cast only by the directors and not by persons who are not directors. Section 3.7 QUORUM. A quorum at all meetings of the Board of Directors shall be a majority of the authorized number of directors. In the absence of a quorum a majority of the directors present may adjourn any meeting to another time and place. Notice of any adjourned meeting need not be given. Section 3.8 ACTION AT MEETING. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the Board of Directors. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting. Section 3.9 WAIVER OF NOTICE. The transactions of any meeting of the Board of Directors, however called and noticed or wherever held, are as valid as though had at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, a consent to holding the meeting, or an approval of the minutes thereof. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Section 3.10 ACTION WITHOUT MEETING. Any action required or permitted to be taken by the Board of Directors may be taken without a meeting, if all members of the Board individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board. Such action by written consent shall have the same force and effect as a unanimous vote of such directors. 4 Section 3.11 REMOVAL. The Board of Directors may declare vacant the office of a director who has been declared of unsound mind by an order of court or who has been convicted of a felony. The entire Board of Directors or any individual director may be removed from office without cause by a vote of shareholders holding a majority of the outstanding shares entitled to vote at an election of directors. In the event an office of a director is so declared vacant or in case the Board or any one or more directors be so removed, new directors may be elected at the same meeting. Section 3.12 RESIGNATIONS. Any director may resign effective upon giving written notice to the Chairman of the Board, the President, the Secretary or the Board of Directors of the Corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective. Section 3.13 VACANCIES. Except for a vacancy created by the removal of a director, all vacancies in the Board of Directors, whether caused by resignation, death or otherwise, may be filled by a majority of the remaining directors or, if the number of directors then in office is less than a quorum, by (a) the unanimous written consent of the directors then in office, (b) the affirmative vote of a majority of the directors then in office at a meeting held pursuant to notice or waivers of notice complying with California Corporations Code Section 307, or (c) a sole remaining director, and each director so elected shall hold office until his successor is elected at an annual, regular or special meeting of the shareholders. Vacancies created by the removal of a director may be filled only by approval of the shareholders. The shareholders may elect a director at any time to fill any vacancy not filled by the directors. Any such election by written consent requires the consent of a majority of the outstanding shares entitled to vote. Section 3.14 COMPENSATION. No stated salary shall be paid directors, as such, for their services, but, by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of such Board; provided that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. Section 3.15 COMMITTEES. The Board of Directors may, by resolution adopted by a majority of the authorized number of directors, designate one or more committees, each consisting of two (2) or more directors, to serve at the pleasure of the Board of Directors. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent member at any meeting of the committee. The appointment of members or alternate members of a committee requires the vote of a majority of the authorized number of directors. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have all the authority of the Board of Directors in the management of the business and affairs of the Corporation, except with respect to (a) the approval of any action requiring shareholders' approval or approval of the outstanding shares, (b) the filling of vacancies on the Board or any committee, (c) the fixing of compensation of directors for serving on the Board or any committee, (d) the adoption, amendment or repeal of Bylaws, (e) the amendment or repeal of any resolution of the Board which by its express terms is not so amendable or repealable, (f) a distribution to shareholders, except at a rate or in a periodic amount or within a price range determined by the Board, and (g) the appointment of other committees of the Board or the members thereof. 5 ARTICLE 4 OFFICERS Section 4.1 OFFICERS. The officers of the Corporation shall be a President, a Chief Executive Officer, one or more Vice Presidents, a Secretary, a Chief Financial Officer, and a Controller. The Corporation may also have, at the discretion of the Board of Directors, a Chairman of the Board, one or more Assistant Vice Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers and such other officers as may be appointed in accordance with the provisions of Section 4.3 of this Article 4. One person may hold two or more offices, except that the Secretary may not hold the office of, or serve as, Chief Executive Officer. Section 4.2 ELECTION. The officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 4.3 or Section 4.5 of this Article, shall be chosen annually by the Board of Directors, and each shall hold his office until he shall resign or shall be removed or otherwise disqualified to serve, or his successor shall be elected and qualified. Section 4.3 SUBORDINATE OFFICERS, ETC. The Board of Directors may appoint such other officers as the business of the Corporation may require, each of whom shall have such authority and perform such duties as are provided in these Bylaws or as the Board may from time to time specify, and shall hold office until he shall resign or shall be removed or otherwise disqualified to serve. Section 4.4 REMOVAL AND RESIGNATION. Any officer may be removed, either with or without cause, by a majority of the directors at the time in office, at any regular or special meeting of the Board of Directors, or by any officer upon whom such power of removal may be conferred by the Board. Any officer may resign at any time by giving written notice to the Board or to the President, or the Secretary of the Corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 4.5 VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in the Bylaws for regular appointments to such office. Section 4.6 CHAIRMAN OF THE BOARD. The Chairman of the Board, if such office is filled by the Board of Directors, shall preside at all meetings of shareholders and the Board of Directors and shall perform all such other duties as from time to time may be assigned to him by the Board of Directors. Section 4.7 PRESIDENT. Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board and the Chief Executive Officer, if there be such officers, the President shall be the Chief Executive Officer of the Corporation, unless the Board of Directors designates another person to serve as Chief Executive Officer and shall have such duties and responsibilities as the Board of Directors shall determine. Section 4.8 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be the President or such other person as is designated by the Board of Directors and shall, subject to the control of the Board, have general supervision, direction and control of the business and affairs of the Corporation. He shall have the general powers and duties of management usually vested in the office of Chief Executive Officer or President of a corporation, and shall have such other powers and duties with respect to the administration of the business and affairs of the Corporation as may from time to time be assigned to him by the Board or as is prescribed by the Bylaws. He shall preside at all meetings of shareholders. 6 Section 4.9 VICE PRESIDENTS. The Vice Presidents shall exercise and perform such powers and duties with respect to the administration of the business and affairs of the Corporation as may from time to time be assigned to each of them by the President or by the Board of Directors or as is prescribed by the Bylaws. In the absence or disability of the President, the Vice Presidents, in order of their rank as fixed by the Board, or if not ranked, the Vice President designated by the Board, shall perform all of the duties of the President and when so acting shall have all of the powers of and be subject to all the restrictions upon the President. Section 4.10 SECRETARY. The Secretary shall keep, or cause to be kept, a book of minutes at the principal office for the transaction of the business of the Corporation, or such other place as the Board of Directors may order, of all meetings of directors and shareholders, with the time and place of holding, whether regular or special, and if special, how authorized and the notice thereof given, the names of those present at directors' meetings, the number of shares present or represented at shareholders' meetings and the proceedings thereof. The Secretary shall keep, or cause to be kept, at the principal office for the transaction of the business of the Corporation or at the office of the Corporation's transfer agent, a share register, or a duplicate share register, showing the names of the shareholders and their addresses; the number and classes of shares held by each; the number and date of certificates issued for the same; and the number and date of cancellation of every certificate surrendered for cancellation. The Secretary shall give, or cause to be given, notice of all the meetings of the shareholders and of the Board required by these Bylaws or by law to be given, and he shall keep the seal of the Corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board or these Bylaws. If for any reason the Secretary shall fail to give notice of any special meeting of the Board called by one or more of the persons identified in Section 3.4, or if he shall fail to give notice of any special meeting of the shareholders called by one or more of the persons identified in Section 2.2, then any such person or persons may give notice of any such special meeting. Section 4.11 CHIEF FINANCIAL OFFICER. The Chief Financial Officer may also be designated by the alternate title of "Treasurer." The Treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, surplus, and shares. The books of account shall at all reasonable times be open to inspection by any director. The Treasurer shall deposit all moneys and other valuables in the name and to the credit of the Corporation with such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board, shall render to the President, and directors, whenever they request it, an account of all of his transactions as Treasurer and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board or these Bylaws. Section 4.12 CONTROLLER. The Controller shall supervise the maintenance of adequate and correct accounts of the properties and business transactions of all subsidiaries of the Corporation and shall exercise and perform such powers and duties with respect to the administration of the business and affairs of the Corporation as may from time to time be assigned to him by the President, by the Chief Executive Officer, by any Vice President or by the Board of Directors, or as is prescribed by the Bylaws. Section 4.13 INABILITY TO ACT. In the case of absence or inability to act of any officer of the Corporation and of any person herein authorized to act in his place, the Board of Directors may from time to time delegate the powers or duties of such officer to any other officer, or any director or other person whom it may select. 7 ARTICLE 5 CONTRACTS, CHECKS, DRAFTS BANK ACCOUNTS, ETC. Section 5.1 EXECUTION OF CONTRACTS. The Board of Directors, except as in these Bylaws otherwise provided, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name and on behalf of the Corporation, and such authority may be general or confined to specific instances; and unless so authorized by the Board or by these Bylaws, no officer, agent, or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or in any amount. Section 5.2 CHECKS, DRAFTS, ETC. All checks, drafts, or other orders for payment of money, notes, or other evidence of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board of Directors. Each such person shall give such bond, if any, as the Board may require. Section 5.3 DEPOSIT. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies, or other depositories as the Board of Directors may select, or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. For the purpose of deposit and for the purpose of collection for the account of the Corporation, the President, the Chief Executive Officer, any Vice President or the Treasurer (or any other officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation who shall from time to time be determined by the Board) may endorse, assign and deliver checks, drafts and other orders for the payment of money which are payable to the order of the Corporation. Section 5.4 GENERAL AND SPECIAL BANK ACCOUNTS. The Board of Directors may from time to time authorize the opening and keeping of general and special bank accounts with such banks, trust companies or other depositories as the Board may select or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of these Bylaws, as it may deem expedient. ARTICLE 6 SHARES AND THEIR TRANSFER Section 6.1 CERTIFICATES FOR STOCK. Every record owner of stock of the Corporation shall be entitled to have a certificate or certificates, to be in such form as the Board of Directors shall prescribe, certifying the number and class of shares of the stock of the Corporation owned by him. The certificates representing shares of such stock shall be numbered in the order in which they shall be issued and shall be signed in the name of the Corporation (1) by the President, Chief Executive Officer, or a Vice President, and (2) by the Secretary or an Assistant Secretary or by the Treasurer or an Assistant Treasurer. Any or all of the signatures on the certificates may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon any such certificate shall thereafter have ceased to be such officer, transfer agent, or registrar before such certificate is issued, such certificate may nevertheless be issued by the Corporation with the same effect as though the person who signed such certificate, or whose facsimile signature shall have been placed thereupon, were such officer, transfer agent, or registrar at the date of issue. A record shall be kept of the respective names of the persons, firms, or corporations owning the stock represented by such certificates, the number and class of shares represented by such certificates, respectively, and the respective dates thereof, and in case of cancellation, the respective dates of cancellation. Every certificate surrendered to 8 the Corporation for exchange or transfer shall be cancelled, and no new certificate or certificates shall be issued in exchange for any existing certificate until such existing certificate shall have been so cancelled, except in cases provided for in Section 6.2. Section 6.2 LOST, STOLEN, DESTROYED AND MUTILATED CERTIFICATES. In any case of loss, theft, destruction, or mutilation of any certificate of stock, another may be issued in its place upon proof of such loss, theft, destruction, or mutilation and upon the giving of a bond of indemnity to the Corporation in such form and in such sum as the Board may direct; provided, however, that a new certificate may be issued without requiring any bond when, in the judgment of the Board, it is proper so to do. Section 6.3 RECORD DATE AND CLOSING OF STOCK BOOKS. The Board of Directors may fix a time in the future as a record date for the determination of the shareholders entitled to notice of and to vote at any meeting of shareholders or entitled to receive payment of any dividend or distribution, or any allotment of rights, or to exercise rights in respect to any other lawful action. The record date so fixed shall not be more than sixty (60) nor less than ten (10) days prior to the date of the meeting or event for the purposes of which it is fixed. When a record date is so fixed, only shareholders of record at the close of business on that date are entitled to notice of and to vote at the meeting or to receive the dividend, distribution, or allotment of rights, or to exercise the rights, as the case may be, notwithstanding any transfer of any, shares on the books of the Corporation after the record date. The Board of Directors may close the books of the Corporation against transfers of shares during the whole or any part of a period of not more than sixty (60) days prior to the date of a shareholders' meeting, the date when the right to any dividend, distribution, or allotment of rights vests, or the effective date of any change, conversion, or exchange of shares. Section 6.4 REGISTERED OWNER. Prior to due presentation of transfers for registration in the stock transfer book of the Corporation, the registered owner of shares shall be treated as the person exclusively entitled to vote, to receive notice, and to exercise all other rights and receive all other entitlements of shareholders, except as may be otherwise provided by California law. Section 6.5 TRANSFER TO VOTING TRUST. All persons who are issued shares of common stock of the Corporation shall execute and become a party to a voting trust agreement ("Voting Trust Agreement") among the Corporation, all of its shareholders, and the trustee of the voting trust. Each of the persons who is issued any such shares shall deposit the certificates for the shares with the trustee of the voting trust pursuant to the Voting Trust Agreement and shall be issued a voting trust certificate ("Voting Trust Certificate") representing the issuee's beneficial interest in the shares deposited. Section 6.6 SHAREHOLDERS' AGREEMENT. All persons who are issued shares of common stock of the Corporation shall execute and become a party to a shareholders' agreement ("Shareholders' Agreement") among the Corporation, all of its shareholders, and the voting trust, pursuant to which the transfer of shares of the Corporation will be restricted. The Shareholders' Agreement may require each person who is issued shares of common stock of the Corporation to contribute general partner units of partnership interest ("Units") in Newhall Management Limited Partnership or Depositary Receipts representing units of limited partner interests in The Newhall Land and Farming Company (a California Limited Partnership) ("Public Units"), to the capital of the Corporation. Section 6.7 RESTRICTION ON TRANSFER. Except as set forth in these Bylaws, the Voting Trust Agreement, or the Shareholders' Agreement, no shareholder or holder of a Voting Trust Certificate shall sell, assign, transfer, convey, pledge, hypothecate, give a security interest in, encumber, give, or otherwise dispose or attempt to dispose of any of the shares of common stock of the Corporation or any interest therein, including any interest represented by a Voting Trust Certificate. Any purported sale or other transfer of any shares, Voting Trust Certificate or any interest therein contrary to these Bylaws, the Voting Trust Agreement, or the Shareholders' Agreement shall be null and void and the purported purchaser or other transferee shall acquire no interest whatsoever in the shares or Voting Trust Certificate. 9 Section 6.8 REPURCHASE OF SHARES. (a) Any of the following events will constitute a "Repurchase Event" as to any Owner (as defined in the Shareholders' Agreement) (other than the trustee of the voting trust in its capacity as trustee) or holder of a Voting Trust Certificate: (i) the Respective Shareholder (as defined in the Shareholders' Agreement) ceases to be a Director of the Corporation for any reason; (ii) that person fails to re-execute the Voting Trust Agreement, as provided in the Voting Trust Agreement, as it may be amended from time to time; (iii) any shares of that person are levied upon under a writ of execution, become subject to sale under any legal process, are transferred or ordered to be transferred to or for the benefit of any person or entity as a result of or in connection with any final property settlement or judgment incident to a divorce, dissolution of marriage, or separation or are transferred or ordered to be transferred to any person who is not a shareholder or holder of a Voting Trust Certificate by decree of distribution or other court order in proceedings arising from the death of the spouse of that person (on and as of the date of such levy, legal process, settlement, judgment, decree, or order); (iv) the Shareholder (together with his Permitted Transferees (as defined in the Shareholders' Agreement) fails to own at least one limited partner unit in Newhall Management Limited Partnership; (v) a transfer or attempted or purported transfer in violation of Section 6.7 occurs; (vi) that person fails to make a contribution to the capital of the Corporation as set forth in the Shareholders' Agreement; (vii) that person fails to sign a consent to the Corporation's election under Subchapter S of the Internal Revenue Code of 1986, as amended, whenever such consent may be requested by the Corporation; (viii) that person's spouse fails to sign any consent which may be required; or (ix) that person or the Respective Shareholder materially breaches the Shareholder's Agreement or the Voting Trust Agreement. (b) Upon the occurrence of any Repurchase Event: (i) the shareholder or holder of the Voting Trust Certificate shall promptly notify the Corporation of the Repurchase Event; (ii) the Respective Shareholder subject to the Repurchase Event shall resign immediately as a Director of the Corporation; and (iii) the Corporation shall repurchase (or otherwise direct the sale of) all shares owned by the shareholder or holder of a Voting Trust Certificate in accordance with Section 6.8(c) within one year from the Repurchase Event and the Corporation shall use its best efforts to repurchase such shares as soon as possible after the Repurchase Event. (c) The Corporation shall repurchase the shares of a shareholder as follows: 10 (i) The purchase price per share repurchased by the Corporation shall be an amount equal to the then current market value of one Public Unit of Newhall, as adjusted to reflect splits, recapitalizations, or like events, which may have occurred after the issuance of the shares and which were not reflected in a corresponding split in the shares. The market value of one Public Unit of Newhall shall be deemed to be the closing trading price of a Public Unit on the New York Stock Exchange on the last trading day immediately preceding the repurchase day. (ii) Subject to Section 6.8(b)(iii) the shares shall be repurchased at such time or times as the Corporation shall determine. In connection with any such repurchase the shareholder or holder of a Voting Trust Certificate shall immediately cause his or her shares which are being repurchased to be withdrawn from the voting trust and surrendered to the Corporation for cancellation. (d) Notwithstanding anything to the contrary herein, if a Repurchase Event occurs, the Corporation may approve or require the sale of the shares by the beneficial owner of the shares directly or indirectly to his or her successor as Director at a price per share equal to that set forth in Section 6.8(c)(i) hereof. Section 6.9 ADDITIONAL SHAREHOLDERS. Any person who becomes a shareholder of the Corporation shall contribute all of the shares owned by that person to the voting trust as described in Section 6.5, and shall execute and become a party to the Voting Trust Agreement, the Shareholders' Agreement, and any other agreement among all of the shareholders or holders of Voting Trust Certificates. Upon the election of a new director pursuant to an amendment of Section 3.2 hereof increasing the number of directors, such new director shall purchase a number of shares of capital stock of the Corporation specified by the directors in their sole discretion at a price per share equal to that set forth in Section 6.8(c)(i) hereof. Each new shareholder shall own at least one limited partner unit in Newhall Management Limited Partnership, and the failure to own at least one limited partner unit in Newhall Management Limited Partnership is a Repurchase Event under Section 6.8(a). ARTICLE 7 INDEMNIFICATION Section 7.1 ACTIONS, ETC. OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines, settlements, and other amounts actually and reasonably incurred by him in connection with such action, suit, or proceeding if he acted in good faith and in a manner he reasonably believed to be in the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, that he had reasonable cause to believe that his conduct was unlawful. Section 7.2 ACTIONS, ETC. BY OR IN THE RIGHT OF THE CORPORATION. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, or other enterprise, or as a member of any committee or similar body, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the 11 defense or settlement of such action or suit if he acted in good faith, in a manner he reasonably believed to be in the best interests of the Corporation, and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances, except that no indemnification shall be required under this Section 7.2 (i) in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable in the performance of his duty to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper, (ii) of amounts paid in settling or otherwise disposing of a threatened or pending action, with or without court approval, or (iii) of expenses incurred in defending a threatened or pending action which is settled or otherwise disposed of without court approval. Section 7.3 DETERMINATION OF RIGHT OF INDEMNIFICATION. Any indemnification under Section 7.1 or 7.2 (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 7.1 and 7.2. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, (ii) by the shareholders (with the shares owned by the person to be indemnified not being entitled to vote thereon), or (iii) by the court in which the action, suit or proceeding is or was pending upon application made by the Corporation or the person seeking indemnification or the attorney or other person rendering services in connection with the defense, whether or not such application by the person seeking indemnification, by the attorney, or by such other person is opposed by the Corporation. Section 7.4 INDEMNIFICATION AGAINST EXPENSES OF SUCCESSFUL PARTY. Notwithstanding the other provisions of this Article, to the extent that a director, officer, employee, or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 7.1 or 7.2, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. Section 7.5 ADVANCE OF EXPENSES. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board in the specific case upon receipt of an undertaking by or on behalf of the director, officer, employee, or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this Article. Section 7.6 OTHER RIGHTS AND REMEDIES. The indemnification provided by this Article shall not be deemed exclusive and is declared expressly to be nonexclusive of any other rights to which those seeking indemnification may be entitled under the Limited Partnership Agreement of The Newhall Land and Farming Company (a California Limited Partnership) or the Limited Partnership Agreement of Newhall Management Limited Partnership. Section 7.7 INSURANCE. Upon resolution passed by the Board, the Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise or as a member of any committee or similar body against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article. 12 ARTICLE 8 MISCELLANEOUS Section 8.1 REPRESENTATION OF SHARES IN OTHER CORPORATIONS. Shares of other corporations or units of partnership interests standing in the name of this Corporation may be voted or represented and all incidents thereto may be exercised on behalf of the Corporation by any officer or by such other person as any officer may designate. Section 8.2 FISCAL YEAR. The fiscal year of the Corporation shall end on the 31st day of December or such other day as the Board of Directors shall determine. Section 8.3 ANNUAL REPORTS. The Annual Report to shareholders, described in the California Corporations Code, is expressly waived and dispensed with until such time as the Corporation has more than 100 shareholders. Section 8.4 AMENDMENTS. Except as provided below, Bylaws may be adopted, amended, or repealed by the vote or the written consent of shareholders entitled to exercise a majority of the voting power of the Corporation or by the Board of Directors. Notwithstanding the foregoing, no amendment to these Bylaws shall be valid or binding as to any shareholder or holder of a Voting Trust Certificate who does not consent to the amendment, if the amendment would have a material adverse effect on the right of such person to receive dividends or distributions from the Corporation or would materially increase the restrictions on the transferability of the shares, any interest in the shares or Voting Trust Certificates held or owned by such person. Section 8.5 TERMINATION OF SUBCHAPTER S ELECTION. No resolution, Bylaw, or agreement terminating or which would have the effect of terminating the election of the Corporation to be an S corporation pursuant to Subchapter S of the Internal Revenue Code of 1986, as amended, shall be valid or binding without the consent or approval of every holder of a Voting Trust Certificate. 13 CERTIFICATE OF SECRETARY OF NEWHALL MANAGEMENT CORPORATION The undersigned, Trude A. Tsujimoto, Secretary of Newhall Management Corporation (the "Corporation"), a California corporation, hereby certifies that the attached document is a true and complete copy of the Bylaws of the Corporation as in effect on the date hereof. IN WITNESS WHEREOF, the undersigned has executed this certificate as of this 19th day of July, 2000. /s/ Trude Tsujimoto ------------------------------ Trude A. Tsujimoto, Secretary -----END PRIVACY-ENHANCED MESSAGE-----