FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: September 28, 1996
MAXXAM INC.
(Exact name of Registrant as Specified in its Charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-3924
(Commission File Number)
95-2078752
(I.R.S. Employer Identification Number)
5847 SAN FELIPE, SUITE 2600 77057
HOUSTON, TEXAS (Zip Code)
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code: (713) 975-7600
ITEM 5. OTHER EVENTS
On September 28, 1996, MAXXAM Inc. ("MAXXAM") and its principal
forest products subsidiary, The Pacific Lumber Company, on behalf of
itself, its subsidiaries and its affiliates ("Pacific Lumber," and together
with MAXXAM, the "Pacific Lumber Parties"), entered into an agreement which
provides the framework for the acquisition by the United States of America
("United States") and the State of California ("California") of certain
timberlands of Pacific Lumber (the "Agreement"). A copy of the Agreement
is attached hereto as Exhibit 10.1.
The Agreement requires the parties to use their respective best,
good faith efforts to achieve certain items (the "Specified Items"). The
Specified Items include the transfer of approximately 5,600 acres of
Pacific Lumber's timberlands to the United States and California, such
timberlands consisting of the areas commonly referred to as the Headwaters
Forest and the Elk Head Springs Forest and related buffer zones
(respectively, the "Headwaters Forest" and the "Elk Head Forest"). These
timberlands would be transferred in exchange for (a) the Exchanged Elk River
Property (as defined below), and (b) other property and consideration
(including cash) from both the United States and California having an
aggregate fair market value of $300 million. The Specified Items also
include acquisition by the United States and California of approximately
9,600 acres of timberlands known as the Elk River Timber Company property
(the "Elk River Property"), approximately 7,755 acres of which would be
transferred to Pacific Lumber (the "Exchanged Elk River Property"). An
additional Specified Item is the expedited development and submission by
Pacific Lumber and processing (a) by the United States of an incidental
take permit ("Permit") to be based upon a multi-species Habitat
Conservation Plan ("HCP") covering Pacific Lumber's remaining timberlands
and the timberlands and timber harvesting rights which Pacific Lumber will
own as a result of the various transactions (the "Resulting Pacific Lumber
Timber Property") as well as the Headwaters Forest and the Elk Head Forest
(both as conserved habitat) and (b) by California of a sustained yield plan
("SYP") covering the Resulting Pacific Lumber Timber Property. The
Agreement contains various provisions regarding the processing of the HCP,
the Permit and the SYP.
The Specified Items also require, among other things, dismissal
with prejudice at closing of the two "takings" cases pending against the
United States and California. These cases are entitled Salmon Creek
Corporation v. California State Board of Forestry, et al. and The Pacific
Lumber Company et al. v. The United States of America (collectively, the
"Litigation") and are further described in Part II. Item 1, "Legal
Proceedings" of the Company's Quarterly Report on Form 10-Q for the
quarterly reporting periods ended March 31, 1996 and June 30, 1996. The
Agreement provides that the parties will file appropriate joint motions to
stay the Litigation, subject to certain rights of the parties to terminate
the stay.
The Agreement provides that the Pacific Lumber Parties will not
enter the Headwaters Forest or the Elk Head Forest to conduct logging
operations, including salvage logging (the "Moratorium"). The Moratorium
will, however, terminate if within ten months from the date of the
Agreement the parties have not achieved the Specified Items to their
respective satisfaction. In addition, as a condition to the continued
effectiveness of the Moratorium, the United States and/or California must
provide to Pacific Lumber, within 60 days of the date of the Agreement, a
list of property interests owned or controlled by the United States and/or
California meeting certain conditions, including that they have a good
faith estimated fair market value equal to or in excess of $300 million
(the "Presented Properties"). Should California and/or the United States
fail to perform this obligation within 120 days from the date of the
Agreement, the Moratorium terminates. If the Presented Properties list is
furnished, the parties have a ten-day period of time in which to agree upon
the procedures to be used for determining the fair market value of the
Presented Properties. Pacific Lumber has an additional 30-day period of
time (the "Evaluation Period") in which to evaluate the Presented
Properties. The Moratorium terminates if the parties fail to agree upon
such appraisal procedures by the end of the ten-day period or if at the end
of the Evaluation Period Pacific Lumber has failed to identify $300 million
in fair market value of Presented Properties that it finds acceptable.
Closing of the Agreement is subject to various conditions,
including (a) completion of the Specified Items, (b) approval of an HCP and
SYP and issuance of the Permit, each in form and substance satisfactory to
Pacific Lumber, (c) the issuance by the Internal Revenue Service and the
California Franchise Tax Board of closing agreements in form and substance
sought by and satisfactory to the Pacific Lumber Parties, (d) the absence
of a judicial decision in any litigation brought by third parties that any
party reasonably believes will significantly delay or impair the
transactions described in the Agreement, and (e) approval by the boards of
directors of the applicable Pacific Lumber Parties. The Agreement also
provides that the parties will cooperate and act in good faith to preserve
diligently the Agreement, the HCP, the Permit and the SYP against third
party challenge.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
a. Financial statements of business acquired.
Not applicable.
b. Pro forma financial information.
Not applicable.
c. Exhibits.
10.1 Agreement dated September 28, 1996 between MAXXAM Inc.,
The Pacific Lumber Company, on behalf of itself, its
subsidiaries and its affiliates, the United States of
America and the State of California
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 hereunto duly authorized.
MAXXAM Inc.
(Registrant)
Date: October 3, 1996 By: ANTHONY R. PIERNO
Anthony R. Pierno
Senior Vice President and General
Counsel
September 28, 1996
AGREEMENT
WHEREAS, MAXXAM Inc. ("MAXXAM"), The Pacific Lumber Company, on behalf
of itself, its subsidiaries and its affiliates ("Pacific Lumber," and
together with MAXXAM, the "Pacific Lumber Parties"), the United States of
America ("United States") and the State of California ("California") (all
of the foregoing collectively, the "Parties") have been negotiating a
possible land exchange of the Headwaters Forest for valuable federal and
state considerations;
WHEREAS, Pacific Lumber desires to obtain a permit under section 10(a)
of the Endangered Species Act ("ESA");
WHEREAS, the United States Fish and Wildlife Service, an agency within
the United States Department of the Interior, and the National Marine
Fisheries Service, an agency within the United States Department of
Commerce (collectively, the "Services"), are required to comply with their
responsibilities under the ESA and the National Environmental Policy Act
("NEPA");
NOW, THEREFORE, the Parties agree as follows:
1. The Pacific Lumber Parties will not enter either the approximately
4,500 acres of Pacific Lumber's timberlands commonly referred to as the
Headwaters Forest (the "Headwaters Forest") or the approximately 1,125
acres commonly referred to as the Elk Head Spring Forest (the "Elk Head
Forest") to conduct logging operations, including salvage logging (the
"Moratorium"), provided that the Moratorium shall terminate, unless
extended by agreement of the Parties, if within 10 months from the date of
this Agreement (the "Expiration Date") the Parties have not achieved the
following items to their respective satisfaction, such achievement to be
evidenced by written instrument(s) in form and substance satisfactory to
all of the Parties. The Parties agree to use their respective best, good
faith efforts to achieve such items:
a. Transfer of the Headwaters Forest and the Elk Head Forest to the
United States and California in exchange for (i) the Exchanged Elk River
Property (as defined below) and (ii) property and other consideration from
both the United States and California (including cash) having an aggregate
fair market value of $300 million;
b. Acquisition by the United States and California of the
approximately 9,600 acre Elk River Timber Company property ("Elk River
Property") to serve, in part, as an additional buffer zone of approximately
1,845 acres (the "Preserved Elk River Property") for the Headwaters Forest,
with the remaining approximately 7,755 acres (the "Exchanged Elk River
Property") to serve as additional consideration to be received by Pacific
Lumber in exchange for the Headwaters Forest and the Elk Head Forest under
Subparagraph 1.a., above.
c. The Parties agree to use their respective best, good faith
efforts to achieve expedited development and submission by Pacific Lumber
and processing
(i). by the United States of an incidental take permit
("Permit") under section 10(a) of the ESA, 16 U.S.C. Section 1539(a),
based upon a multi-species Habitat Conservation Plan ("HCP") covering
the remaining lands of Pacific Lumber, the Elk River Property, any
other timberlands or timber harvesting rights acquired by Pacific
Lumber as a result of the herein-described transactions (collectively,
the "Resulting Pacific Lumber Timber Property"), the Headwaters Forest
and the Elk Head Forest, and
(ii). by California of a Sustained Yield Plan ("SYP")
covering the Resulting Pacific Lumber Timber Property.
(iii). In order to facilitate processing of the Permit and
SYP, the parties agree to follow the procedures set forth below:
A. Development of HCP. Pacific Lumber and the Services
shall within 30 days of the date of this Agreement begin good
faith negotiations for a multi-species HCP covering all of the
Pacific Lumber Timber Property and the Elk River Property,
including the Headwaters Forest, the Elk Head Forest and any
buffer. Such HCP shall be prepared in full compliance with the
requirements of the ESA and other applicable laws and regulations
and shall be consistent with the regulations applicable to the
critical habitat designated for the marbled murrelet, 50 C.F.R
Section 17.95(b). The HCP shall provide for the management and
harvest of the Resulting Pacific Lumber Timber Property
consistent with the requirements of the ESA and other applicable
laws and regulations. The HCP shall be subject to the Department
of the Interior's "No Surprises" policy.
B. Submission of HCP and Application for Permit.
Within 120 days from the date of this Agreement, Pacific Lumber
intends to submit to the Services an application for a Permit and a
proposed multi-species HCP that covers the Headwaters Forest, the
Elk Head Forest and the Resulting Pacific Lumber Timber Property.
C. Review and Approval of the HCP and Permit.
The Services will expedite consideration of the application for the
Permit and will use their best efforts to review and decide upon
the application for the Permit as soon as practicable after
Pacific Lumber submits the application to the Services. The
Parties recognize and understand that the Services must make
their decision on the application for the Permit based on sound
science and in full compliance with the requirements of the ESA
and all other applicable laws and regulations.
D. Public Involvement. The Parties understand
that Pacific Lumber can, by involving the public in the HCP
planning process, facilitate early public review of the HCP and
expedite development and consideration of the HCP. The Services
are responsible for ensuring that the public involvement
requirements in the ESA, NEPA, and other applicable laws and
regulations are met.
E. NEPA Compliance. The Parties understand and
agree that issuance of an incidental take permit requires
compliance with NEPA and that the Services are responsible for
this compliance. It is Pacific Lumber's intent to submit an
HCP that will not significantly affect the quality of the human
environment and to prepare a draft Environmental Assessment
("EA") for review by the Services. The Services will (I) assist
Pacific Lumber in outlining the type of information required for
the EA, (II) independently evaluate the environmental issues,
(III) make any changes necessary, and (IV) take responsibility
for the document's scope and content. The Services will promptly
advise Pacific Lumber if, at any point, the Services believe
an environmental impact statement ("EIS") is required. The Parties
will pursue the HCP and NEPA processes concurrently.
F. Submission Review and Approval of SYP. Pacific
Lumber will submit to the State of California a proposed SYP which
(I) covers the Resulting Pacific Lumber Timber Property, and which
the Parties agree will be amended to include any timberlands or
timber harvesting rights received by Pacific Lumber in exchange
for the Headwaters Forest and Elk Head Forest, including
Exchanged Elk River Property, and (II) complies with terms and
specifications to be agreed upon by Pacific Lumber and California
as soon as practicable, such agreement to be evidenced by an
instrument in form and substance satisfactory to Pacific Lumber
and California (the "SYP Terms Condition"). The State of
California will expedite consideration of such SYP upon its
formal submission to California. Appropriate procedures will be
followed for submission, review and approval. Such SYP shall
provide for management and harvest, consistent with applicable
and legal requirements, of all the Resulting Pacific Lumber
Timber Property and shall be with respect to the marbled
murrelet, the coho salmon, the northern spotted owl and all other
species specifically or generally identified in the SYP (whether
now or hereafter listed as threatened or endangered under the
laws of the United States or California). The State of
California shall use its best efforts to review and approve the
SYP.
d. The dismissal with prejudice at closing by Pacific Lumber of the
following pending legal actions: Pacific Lumber Co. v. United States, No.
96-257L (Fed. Cls.) and Salmon Creek Corp. v. California Board of Forestry,
No. 96-CS-1057 (Cal. Super. Ct.), such dismissals will obviate that
litigation and be evidenced by instruments in form and substance
satisfactory to each of the parties to those cases.
e. All property furnished by the United States and/or California to
Pacific Lumber pursuant to Subparagraph 1.a. having been freed of all
mortgages, liens, pledges, security interests or encumbrances of any kind
(other than permitted encumbrances to be agreed upon by the Parties).
f. All consents, approvals, opinions, or similar items from third
parties necessary to consummation of the transactions described in this
Agreement having been furnished.
g. In addition to the documents and instruments specifically
referenced above, execution by the Parties of appropriate documents and
instruments, in form and substance satisfactory to the Parties, evidencing
the transactions described in this Agreement.
2. It is a condition to the continued effectiveness of the Moratorium
that the United States and/or California provide to Pacific Lumber, within
60 days of this Agreement, a list of property interests owned or controlled
by the United States and/or California with a good faith estimated fair
market value equal to or in excess of $300 million which are available and
acceptable to Pacific Lumber for exchange under Subparagraph 1.a. above
(the "Presented Properties"). Such list shall be accompanied by sufficient
background information (including, where available, appraisals and any
other evaluation information) regarding the Presented Properties as will
enable Pacific Lumber to make a determination as to the commercial
viability of such property interests and the ability to monetize such
property interests; Pacific Lumber shall also be given access to enter and
inspect such Properties. Should California and/or the United States fail to
perform this obligation within 120 days from the date of this Agreement,
the Moratorium shall terminate. If the United States and/or California do
furnish the required amount and type of Presented Properties (together with
access and sufficient information to evaluate the Properties) by such date,
(a) the Parties shall have a ten-day period of time commencing on the date
that the Presented Properties list is provided during which to agree upon
the procedures to be used in determining the fair market value of the
Presented Properties (the "Appraisal Procedure Period"), such agreement to
be evidenced by an instrument in form and substance satisfactory to all of
the Parties, and (b) Pacific Lumber shall have an additional 30-day period
following the Appraisal Procedure Period in which to evaluate the Presented
Properties (the "Evaluation Period"). If at the end of the Appraisal
Procedure Period, all of the Parties hereto have failed to execute an
instrument indicating their agreement as to the procedures to be used in
determining the fair market value of the Presented Properties, the
Moratorium shall terminate. Furthermore, if at the end of the Evaluation
Period, Pacific Lumber has failed to identify $300 million in fair market
value of Presented Properties which it finds acceptable for exchange, the
Moratorium shall terminate. The Parties further agree to supplement this
Agreement to provide for an effective exchange at closing.
3. As soon as practicable, and no later than October 4, 1996, the Parties
shall file appropriate joint motions to stay the litigation (the
"Litigation") referenced in Subparagraph 1.d. above; provided, that each
Party shall retain and have the right, at any point after the presentation
of the Presented Properties list, to move to terminate the stay (a) at any
time when the Moratorium has terminated, or (b) if such Party has a
reasonable belief that the matters provided for under Paragraph 1 of this
Agreement will not be achieved. The Parties also agree to cease and desist
all activities in connection with the Litigation, except as ordered by the
court, until the motions are granted.
4. All discussions relating to, or arising from, this Agreement,
including but not limited to, all negotiations and final products shall be
subject to the Principles Governing Discussions dated August 23, 1996,
notwithstanding any stated termination date thereof.
5. The exercise by any Party of its right of termination under this
Agreement or to end the Moratorium shall be preceded by two weeks written
notice to the other Parties.
6. It is agreed that the following shall each be a condition to closing
of the Agreement:
a. Completion of each of the matters described in Subparagraphs
1.a., 1.b. and 1.d. through 1.g. above;
b. Approval of an HCP and SYP and issuance of a Permit, each in a
form and substance satisfactory to Pacific Lumber, such satisfaction to be
evidenced by a written instrument executed by Pacific Lumber satisfactory
in form and substance to all of the Parties;
c. The issuance on or before the closing date by the Internal
Revenue Service and the California Franchise Tax Board of closing
agreements in form and substance sought by and satisfactory to the Pacific
Lumber Parties, setting forth acceptable federal and California income tax
consequences of the transactions;
d. The absence of a judicial decision in any litigation brought by
third parties that any Party reasonably believes will significantly delay
or impair the transactions described in this Agreement; and
e. Approval by the Boards of Directors (and any special committee
thereof) of the applicable Pacific Lumber Parties and, as appropriate,
their affiliates, of the transactions described in this Agreement.
f. The obtaining of all governmental approvals and authorizations
necessary to consummate the transactions described in this Agreement
including a my requisite approvals under the Federal Land Policy and
Management Act, 43 U.S.C. Section 1701 et seq., and other applicable laws.
7. In the event that a claim or action is brought or threatened by a
third party challenging the legality, enforceability or validity of this
Agreement, or any portion thereof, including the HCP, Permit or SYP, the
Parties agree to cooperate and act in good faith to preserve diligently
this Agreement, HCP, Permit or SYP against such third party challenge.
IN WITNESS WHEREOF, the Parties agree to the foregoing as of September
28, 1996.
THE UNITED STATES OF AMERICA
By: /s/ John Garamendi
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THE STATE OF CALIFORNIA
By: /s/ Doug Wheeler
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MAXXAM INC.
By: /s/ Charles E. Hurwitz
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THE PACIFIC LUMBER COMPANY
By: /s/ John A. Campbell
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We fully support this agreement.
/s/ Dianne Feinstein
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/s/ Frank Riggs, M.C.
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