Option,appreciation Rights & Restricted Units Plan

THE NEWHALL LAND AND FARMING COMPANY
(A CALIFORNIA LIMITED PARTNERSHIP)


OPTION, APPRECIATION RIGHTS AND
RESTRICTED UNITS PLAN
FIRST AMENDMENT AND RESTATEMENT


1. PURPOSE.


The Newhall Land and Farming Company Option, Appreciation Rights and Restricted Units Plan ("Plan") is intended to benefit The Newhall Land and Farming Company (a California Limited Partnership) ("Partnership") by encouraging certain key employees of the Partnership, its affiliates and Newhall Management Corporation ("NMC"), the Partnership's managing general partner, to acquire a proprietary interest in the Partnership's success, and thereby motivate, attract, and retain in the employ of the Partnership, its affiliates and NMC those highly competent people upon whose judgment, initiative, and leadership the success of the Partnership depends. For purposes of the Plan, the term "Awards" encompasses options, appreciation rights and restricted units.


2. ADMINISTRATION.


This Plan shall be administered by either the Board of Directors ("Board") of NMC, or a committee ("Committee") consisting of three (3) or more members appointed by the Board, none of whom is or at any time within the preceding one (1) year was eligible to receive an Award under the Plan. For the purposes of the Plan, the term "Committee" shall refer to the Board, if the Board has not appointed a committee to administer the Plan. The Committee shall have and exercise all of the powers and authority granted to it by the provisions of the Plan.


Subject to the express provisions and limitations of the Plan, the Committee shall establish, and may from time to time amend, such rules, regulations, and procedures with respect to the Plan as it deems appropriate. All questions arising under the Plan. the terms of any Award granted pursuant to the Plan, or any rule, regulation, or procedure adopted by the Committee shall be determined by the Committee. Such determinations shall be final, binding, and conclusive. No member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award granted under it.


3. DEPOSITARY UNITS.


(a) The equity securities to be subject to Awards under the Plan shall be limited partnership interests in the Partnership represented by transferable depositary units. The aggregate number of depositary units which may be issued under options or Restricted Units granted pursuant to the Plan. or with respect to which appreciation rights or


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Exhibit 10 (a)


Restricted Units payments may be made, shall not exceed 600,000, and subject to adjustment as provided in Section 3(b) of the Plan. Should any Award or any portion thereof be terminated or cancelled for any reason (including pursuant to a cancellation and new grant of Awards pursuant to Section 9) without the full number of depositary units, or cash in lieu thereof, being paid to the holder thereunder, the depositary units subject to such terminated or cancelled portion of the Award shall be available for subsequent Award grants under this Plan. Depositary units subject to appreciation rights exercised in accordance with Section 6 shall not be available for subsequent grant under the Plan. If cash is paid in lieu of the issuance of depositary units under a Restricted Unit, the number of depositary units with respect to which such payment is made shall not be available for subsequent Awards under the Plan.


(b) In the event that (i) any change is made to the depositary units issuable under the Plan or (ii ) the Partnership makes a distribution to holders of depositary units which results from the sale or disposition of a major asset or separate operating division of the Partnership and, in the judgment of the Committee would significantly dilute the rights of holders of Awards, then, subject to the provisions of Section 7 of the Plan, the Committee may make appropriate adjustments in the maximum number and/or kind of securities issuable under the Plan to reflect the effect of such change or distribution upon the Partnership's capital structure, and may make appropriate adjustments to the number and/or kind of securities and the price of the securities subject to each outstanding Award to prevent the dilution of benefits thereunder. The adjustments determined by the Committee shall be final, binding, and conclusive.


(c) Awards may be granted under this Plan with respect to depositary units in excess of the number specified in Section 3(a) thereof, provided that (i) an amendment to increase such maximum number of depositary units is adopted by the Board prior to the initial grant of any such Awards and is thereafter submitted to the holders of depositary units for approval and (ii) each Award so granted is not to become exercisable, (or, in the case of a Restricted Unit, become vested) in whole or in part. at any time prior to obtaining such approval.


(d) Depositary units issued under the Plan may be subject to such restrictions on transfer, repurchase rights, or other restrictions as shall be determined by the Committee.


4. ELIGIBILITY.


The persons who shall be eligible to receive Awards pursuant to the Plan shall be such key employees of the Partnership, its affiliates, or NMC as the Committee shall select from time to time.


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Exhibit 10 (a)


5. EFFECTIVE DATE AND TERM OF PLAN.


(a) The First Amendment and Restatement of the Plan shall become effective when adopted by the Board.


(b) Unless the Plan is sooner terminated in accordance with Section 7 or by the Board. no further Awards shall be granted under the Plan after the earlier of (i) the tenth (1Oth) anniversary of the date of the adoption of the First Amendment and Restatement of the Plan by the Board, or (ii) the date on which all depositary units available for issuance under the Plan have been issued or their availability cancelled by the exercise of Awards granted hereunder.


6. TERMS AND CONDITIONS OF AWARDS.


The Committee may grant the following kinds of Awards under the Plan options, tandem appreciation rights, bonus appreciation rights and Restricted Units. All Awards shall be evidenced by instruments in such form, and including such terms and conditions, as the Committee shall from time to time approve; provided, however, that each such instrument shall comply with the following terms and conditions:


(a) Options.


(1) Options granted pursuant to the Plan shall be authorized by the
Committee and shall be non-statutory options not intended to meet the
requirements of Section 422A of the Internal Revenue Code.


(2) The option price per depositary receipt shall be fixed by the
Committee, but shall in no event be less than one hundred percent
(100%) of the fair market value of a depositary receipt on the date of
the option grant. The option price shall become immediately due upon
exercise of the option and shall be payable in one of the alternative
forms specified below:


(i) full payment in United States Dollars in cash or cash
equivalents;


(ii) if, and subject to such restrictions as the Committee
shall determine, full payment in depositary units having a fair market
value on the date the option is exercised equal to the option price;


(iii) if, and subject to such restrictions as the Committee
shall determine, a combination of depositary units, valued at fair
market value on the date the option is exercised, and cash or cash
equivalents, equal in the aggregate to the option price; or


(iv) such other lawful consideration as the Committee shall
determine.


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Exhibit 10 (a)


(b) Tandem Appreciation Rights. If, and upon such terms and conditions as the Committee shall specify, an option may provide, or may be amended to provide, that the option holder may surrender all or part of the option to the extent then exercisable, in exchange for an appreciation distribution equal in amount to the difference between (i) the fair market value (at date of surrender) of the depositary units for which the surrendered option or portion thereof is t ...