UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 27)
MAXXAM Inc.
(Name of Issuer)
Common Stock,
par value $.50 per share
(Title of Class of Securities)
577913-10-6
(CUSIP Number)
Ezra G. Levin, Esq.
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
(212) 715-9100
(Name, Address and Telephone Number
of Person Authorized to Receive
Notices and Communications)
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box / /.
Check the following box if a fee is being paid with this statement / /.
<PAGE>
1) Name of Reporting Person Federated Development Company
S.S. or I.R.S.
Identification No. of
Above Person
2) Check the Appropriate (a) /X/
Box if a Member of a (b) / /
Group
3) SEC Use Only
4) Source of Funds WC, AF
5) Check Box if Disclosure Not applicable
of Legal Proceedings is
Required Pursuant to
Items 2(d) or 2(e)
6) Citizenship or Place of New York
Organization
Number of Shares Beneficially 7) Sole Voting None
Owned by Each Reporting Power
Person With 8) Shared Voting 2,462,003*
Power
9) Sole Dispositive None
Power
10) Shared 2,462,003*
Dispositive
Power
11) Aggregate Amount 2,462,003*
Beneficially Owned by
Each Reporting Person
12) Check Box if the / /
Aggregate Amount in Row
(11) Excludes Certain
Shares
13) Percent of Class 31.8%
Represented by Amount in
Row (11)
14) Type of Reporting Person OO
_______________
* Includes (i) 71,175 shares of Common Stock, par value $.50 ("Common
Stock"), of MAXXAM Inc. (the "Company") that Federated Development
Inc. ("FDI"), a wholly owned subsidiary of Federated Development
Company ("Federated"), may acquire in exchange for 394.318 shares of
7% Cumulative Exchangeable Preferred Stock (the "MCOP Preferred
Stock") of MCO Properties Inc. ("MCOP"), whose issued and outstanding
common stock is wholly owned by the Company, and (ii) 661,377 shares
of Common Stock that FDI may acquire on a share-for-share basis upon
conversion of Class A $.05 Non-Cumulative Participating Convertible
Preferred Stock ("Preferred Stock") of the Company held by FDI.
<PAGE>
1) Name of Reporting Person Federated Development Inc.
S.S. or I.R.S.
Identification No. of Above
Person
2) Check the Appropriate Box (a) /X/
if a Member of a Group (b) / /
3) SEC Use Only
4) Source of Funds OO
5) Check Box if Disclosure of Not applicable
Legal Proceedings is
Required Pursuant to Items
2(d) or 2(e)
6) Citizenship or Place of Delaware
Organization
Number of Shares Beneficially 7) Sole Voting None
Owned by Each Reporting Person Power
With
8) Shared Voting 2,462,003*
Power
9) Sole None
Dispositive
Power
10) Shared 2,462,003*
Dispositive
Power
11) Aggregate Amount 2,462,003*
Beneficially Owned by Each
Reporting Person
12) Check Box if the Aggregate / /
Amount in Row (11) Excludes
Certain Shares
13) Percent of Class 31.8%
Represented by Amount in
Row (11)
14) Type of Reporting Person CO
_______________
* Includes (i) 71,175 shares of Common Stock that FDI may acquire in
exchange for the MCOP Preferred Stock, and (ii) 661,377 shares of
Common Stock that FDI may acquire on a share-for-share basis upon
conversion of Preferred Stock that FDI holds.
<PAGE>
1) Name of Reporting Person Federated Development
Investments, LLC
S.S. or I.R.S.
Identification No. of Above
Person
2) Check the Appropriate Box (a) /X/
if a Member of a Group (b) / /
3) SEC Use Only
4) Source of Funds 00
5) Check Box if Disclosure of Not applicable
Legal Proceedings is
Required Pursuant to Items
2(d) or 2(e)
6) Citizenship or Place of Texas
Organization
Number of Shares Beneficially 7) Sole Voting None
Owned by Each Reporting Person Power
With
8) Shared Voting 60,000
Power
9) Sole None
Dispositive
Power
10) Shared 60,000
Dispositive
Power
11) Aggregate Amount 60,000
Beneficially Owned by Each
Reporting Person
12) Check Box if the Aggregate / /
Amount in Row (11) Excludes
Certain Shares
13) Percent of Class Less than 1%
Represented by Amount in
Row (11)
14) Type of Reporting Person OO
<PAGE>
1) Name of Reporting Person Charles E. Hurwitz
S.S. or I.R.S.
Identification No. of
Above Person
2) Check the Appropriate Box (a) /X/
if a Member of a Group (b) / /
3) SEC Use Only
4) Source of Funds AF, PF
5) Check Box if Disclosure of Not applicable
Legal Proceedings is
Required Pursuant to Items
2(d) or 2(e)
6) Citizenship or Place of United States
Organization
Number of Shares Beneficially 7) Sole Voting 818,686*
Owned by Each Reporting Person Power
With
8) Shared Voting 2,617,797**
Power
9) Sole 818,686*
Dispositive
Power
10) Shared 2,617,797**
Dispositive
Power
11) Aggregate Amount 3,436,483
Beneficially Owned by Each
Reporting Person
12) Check Box if the Aggregate / /
Amount in Row (11)
Excludes Certain Shares
13) Percent of Class 44.2%
Represented by Amount in
Row (11)
14) Type of Reporting Person IN
_______________
* Includes (i) 41,564 shares of Common Stock that Mr. Hurwitz may
acquire on a share-for-share basis upon conversion of Preferred Stock
beneficially held by him, 1,064 shares of Preferred Stock of which he
holds directly and 40,500 shares of Preferred Stock of which Mr.
Hurwitz has the right to acquire pursuant to options exercisable
within 60 days of December 10, 1997, and (ii) 26,161 shares of Common
Stock owned by Mr. Hurwitz's spouse, of which Mr. Hurwitz disclaims
beneficial ownership.
** Includes (i) 71,175 shares of Common Stock that FDI may acquire in
exchange for the MCOP Preferred Stock, and (ii) 661,377 shares of
Common Stock that FDI may acquire on a share-for-share basis upon
conversion of Preferred Stock that FDI holds.
<PAGE>
1) Name of Reporting Person Hurwitz Investment
Partnership, L.P.
S.S. or I.R.S.
Identification No. of Above
Person
2) Check the Appropriate Box (a) /X/
if a Member of a Group (b) / /
3) SEC Use Only
4) Source of Funds 00
5) Check Box if Disclosure of Not applicable
Legal Proceedings is
Required Pursuant to Items
2(d) or 2(e)
6) Citizenship or Place of Texas
Organization
Number of Shares Beneficially 7) Sole Voting None
Owned by Each Reporting Person Power
With
8) Shared Voting 46,500
Power
9) Sole None
Dispositive
Power
10) Shared 46,500
Dispositive
Power
11) Aggregate Amount 46,500
Beneficially Owned by Each
Reporting Person
12) Check Box if the Aggregate / /
Amount in Row (11) Excludes
Certain Shares
13) Percent of Class Less than 1%
Represented by Amount in
Row (11)
14) Type of Reporting Person PN
<PAGE>
1) Name of Reporting Person Hurwitz 1992 Investment
Partnership, L.P.
S.S. or I.R.S.
Identification No. of Above
Person
2) Check the Appropriate Box (a) /X/
if a Member of a Group (b) / /
3) SEC Use Only
4) Source of Funds 00
5) Check Box if Disclosure of Not applicable
Legal Proceedings is
Required Pursuant to Items
2(d) or 2(e)
6) Citizenship or Place of Texas
Organization
Number of Shares Beneficially 7) Sole Voting None
Owned by Each Reporting Person Power
With
8) Shared Voting 109,294
Power
9) Sole None
Dispositive
Power
10) Shared 109,294
Dispositive
Power
11) Aggregate Amount 109,294
Beneficially Owned by Each
Reporting Person
12) Check Box if the Aggregate / /
Amount in Row (11) Excludes
Certain Shares
13) Percent of Class 1.4%
Represented by Amount in
Row (11)
14) Type of Reporting Person PN
<PAGE>
1) Name of Reporting Person Ezra G. Levin
S.S. or I.R.S.
Identification No. of Above
Person
2) Check the Appropriate Box (a) /X/
if a Member of a Group (b) / /
3) SEC Use Only
4) Source of Funds AF
5) Check Box if Disclosure of / /
Legal Proceedings is
Required Pursuant to Items
2(d) or 2(e)
6) Citizenship or Place of United States
Organization
Number of Shares Beneficially 7) Sole Voting 1,600*
Owned by Each Reporting Person Power
With
8) Shared Voting None
Power
9) Sole 1,600*
Dispositive
Power
10) Shared None
Dispositive
Power
11) Aggregate Amount 1,600*
Beneficially Owned by Each
Reporting Person
12) Check Box if the Aggregate / /
Amount in Row (11) Excludes
Certain Shares
13) Percent of Class Less than 1%
Represented by Amount in
Row (11)
14) Type of Reporting Person IN
_______________
* Includes 600 shares of Common Stock that Mr. Levin has the right to
acquire pursuant to presently exercisable options.
<PAGE>
1) Name of Reporting Person James H. Paulin, Jr.
S.S. or I.R.S.
Identification No. of Above
Person
2) Check the Appropriate Box (a) /X/
if a Member of a Group (b) / /
3) SEC Use Only
4) Source of Funds PF
5) Check Box if Disclosure of Not applicable
Legal Proceedings is
Required Pursuant to Items
2(d) or 2(e)
6) Citizenship or Place of United States
Organization
Number of Shares Beneficially 7) Sole Voting 485
Owned by Each Reporting Person Power
With
8) Shared None
Voting
Power
9) Sole 485
Dispositive
Power
10) Shared None
Dispositive
Power
11) Aggregate Amount 485
Beneficially Owned by Each
Reporting Person
12) Check Box if the Aggregate Not applicable
Amount in Row (11) Excludes
Certain Shares
13) Percent of Class Less than 1%
Represented by Amount in
Row (11)
14) Type of Reporting Person IN
_______________
* Includes 133 shares of Common Stock that Mr. Paulin has the right to
acquire on a share-for-share basis upon conversion of shares of
Preferred Stock that he holds.
<PAGE>
SCHEDULE 13D - AMENDMENT No. 27
The undersigned hereby amend and restate in its entirety their
Schedule 13D dated May 10, 1978, as amended by Amendment Nos. 1 through 26
thereto (the "Statement"), relating to the Common Stock of the Company, as
set forth below. Notwithstanding such amendment, each prior text of the
Statement speaks as of the respective date thereof. The information presented
herein is as of December 10, 1997.
Item 1. Security and Issuer.
The class of equity securities to which this Statement relates is the
Common Stock of the Company. The principal executive offices of the
Company are located at 5847 San Felipe, Suite 2600, Houston, Texas 77057.
Item 2. Identity and Background.
(a)-(c) The Statement is being filed by a group consisting of
Federated, FDI, Federated Development Investments, LLC ("FDILLC"), Charles
E. Hurwitz, the Hurwitz Investment Partnership, L.P. (the "Investment
Partnership"), the Hurwitz 1992 Investment Partnership, L.P. (the "1992
Partnership," and collectively with the Investment Partnership, the
"Partnerships"), Ezra G. Levin and James H. Paulin, Jr. (hereinafter
collectively referred to as the "Group").
Federated is a New York business trust, FDI is a Delaware corporation,
the Partnerships are Texas limited partnerships, and FDILLC is a Texas
limited liability company, all of which have their principal executive
offices at 5847 San Felipe, Suite 2600, Houston, Texas 77057. Federated is
wholly owned by Mr. Hurwitz and certain members of his immediate family and
trusts for the benefit thereof. FDI is a wholly owned subsidiary of
Federated. On November 30, 1995, Federated transferred 1,669,451 shares of
the Company's Common Stock to FDI along with 394.318 shares of the MCOP
Preferred Stock exchangeable for 71,175 shares of Common Stock. Federated
is principally engaged in the management of real estate loans and a
portfolio of real estate properties. Through FDI's ownership of a majority
of the voting power of the Company, Federated and FDI are also engaged in
the businesses conducted by the Company, including aluminum operations,
forest products operations and real estate management and development.
Mr. and Mrs. Hurwitz each have a 4.32% general partnership interest
and a 1% general partnership interest in the Investment Partnership and the
1992 Partnership, respectively. The Charles E. Hurwitz Grantor Retained
Interest Trust and the Barbara Hurwitz Grantor Retained Interest Trust each
hold a 45.68% limited partnership interest in the Investment Partnership.
The Charles E. Hurwitz 1992 Irrevocable Retained Annuity Trust and the
Barbara Hurwitz 1992 Irrevocable Retained Annuity Trust each hold a 49%
limited partnership interest in the 1992 Partnership. The Partnerships are
investment partnerships.
FDILLC is owned 79% by FDI and 21% by Mr. Hurwitz. FDI is the
managing member of FDILLC. On December 3, 1997, Mr. Hurwitz transferred
60,000 shares of the Company's Common Stock to FDILLC. See Item 6 below.
Mr. Hurwitz is Chairman of the Board, Chief Executive Officer,
President and Trustee of Federated; President and a director of FDI; and
Chairman of the Board, Chief Executive Officer and President of the
Company. Ezra G. Levin is a former trustee of Federated, and a director
and a member of the Executive Committee of the Company. Mr. Paulin is
Secretary-Treasurer of Federated and FDI.
Appendix A annexed hereto sets forth additional information with
respect to the residence or business address, present principal occupation
or employment and name, principal business and address of the organization
in which such employment is conducted of the executive officers and
trustees of Federated and the executive officers and directors of FDI,
including the individual members of the Group.
(d)-(e) During the last five years, none of the members of the Group
has been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors). During the last five years none of the members
of the Group was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws, or finding any violation with respect to
such laws.
(f) The individual members of the Group are citizens of the United
States.
Item 3. Source and Amount of Funds or Other Consideration.
As of December 10, 1997, the members of the Group beneficially owned
an aggregate of 3,438,568 shares of Common Stock, which includes (i)
703,074 shares of the Company's Preferred Stock convertible on a share-for-
share basis into Common Stock (40,500 shares of Preferred Stock of which
Mr. Hurwitz has the right to acquire pursuant to options exercisable within
60 days of December 10, 1997) and (ii) 600 shares of Common Stock of which
Mr. Levin has the right to acquire pursuant to options exercisable within
60 days of December 10, 1997.<F1> The shares of Preferred Stock are
convertible on a share-for-share basis into shares of Common Stock.
Of the Preferred Stock beneficially owned by members of the Group,
596,150 shares (plus cash in lieu of fractional interests in shares of
Preferred Stock) were acquired pursuant to the Company's offer dated August
26, 1981 (the "Exchange Offer") to exchange shares of its Preferred Stock
for 850,000 shares of its Common Stock. A copy of the Offering Circular
relating to the Exchange Offer is incorporated in the Statement by
reference as Exhibit F-2. During March 1982, Federated acquired 632 shares
of Preferred Stock on the open market for a purchase price of $6,478 or
$10.25 per share. During November 1982 and April 1983, Federated acquired
an additional 50,000 and 10,204 shares of Preferred Stock, for purchase
prices of $660,000.00 and $121,682.70, respectively. Mr. Hurwitz inherited
1,064 shares of Preferred Stock during April 1983. During May 1995,
Federated acquired 4,524 shares of Preferred Stock on the open market for
a purchase price of $141,375 or $31.25 per share.
The aggregate purchase price for the 1,581,458 shares of Common Stock
owned by the members of the Group prior to May 20, 1988 (including the
purchase price of shares of Common Stock that were exchanged for Preferred
Stock pursuant to the Exchange Offer) was $8,867,921, of which the
following amounts related to shares of Common Stock (including the shares
of Common Stock that were exchanged for Preferred Stock pursuant to the
Exchange Offer) held by current members of the Group named below:
Member of Group Aggregate Purchase Price
Federated $8,820,140
Charles E. Hurwitz 34,875
Ezra G. Levin 10,994
James H. Paulin, Jr. 1,912
On May 20, 1988, members of the Group as then constituted acquired
92,163<F2> shares of Common Stock in the merger of MAXXAM Group Inc.
("MGI") with a wholly owned subsidiary of the Company (the "MGI Merger"),
in exchange for 368,655 shares of common stock of MGI. In the MGI Merger,
each share of common stock of MGI issued and outstanding immediately prior
to the effective time of the MGI Merger (other than shares owned by the
Company or its subsidiaries and other than shares held by stockholders of
record who perfected appraisal rights available under Delaware law) was
converted into the right to receive (i) $5.00 in cash, plus interest on
$5.00 at 8 1/2% per annum for the period from February 15, 1988 to the date
of the MGI Merger, (ii) .25 shares of Common Stock, (iii) $6.00 principal
amount of the Company's 13 1/2% Senior Subordinated Reset Notes (the
"Merger Notes") and (iv) under certain conditions, additional Merger Notes
or additional cash following the fourth anniversary of the MGI Merger
(collectively, the "Merger Consideration").<F3> A copy of the Merger
Agreement is incorporated herein by reference as Exhibit G. The Company
also agreed, in settlement of certain litigation relating to the MGI
Merger, to pay an additional $1.00 in cash in respect of each share of
common stock of MGI converted in the MGI Merger. Copies of the Stipulation
and Agreement of Compromise and Settlement, the Amendment to Stipulation
and the Order and Final Judgment and a Press Release of the Company and
MGI, dated May 19, 1988, with respect to the settlement of the Merger
Litigation are incorporated by reference in this Statement as Exhibits H,
I, J and K respectively. See Item 4.
On July 6, 1989, Mr. Hurwitz acquired 990,400 shares of Common Stock
for $10,304,068 pursuant to a Put and Call Agreement, as amended, with
MAXXAM Properties Inc., a wholly owned subsidiary of the Company. The
purchase price for such shares was obtained from the personal funds of Mr.
Hurwitz and from a loan in the amount of $8,500,000 (the "Loan") from
Federated. The Loan was evidenced by a Note, dated July 6, 1989 (the
"Note"), executed by Mr. Hurwitz in favor of Federated. The Note bore
interest at the rate of 1/8% over Federated's effective borrowing rate, was
due on July 6, 1994 and was secured by a pledge of 600,000 shares of Common
Stock pursuant to the terms of a Security Agreement dated July 6, 1989 (the
"Security Agreement"). Copies of the Put and Call Agreement, Letter
Agreement amending the Put and Call Agreement, Note and Security Agreement
are incorporated herein by reference as Exhibits M, N, Q and R. The
foregoing description is qualified in its entirety by reference to such
exhibits.
Further, Mr. Hurwitz acquired 73,798 shares of Common Stock pursuant
to stock appreciation right exercises from March 1991 to present at prices
of $7.785 to $28.125 per share. From May 1992 to December 1995, Mr.
Hurwitz disposed of 74,100 of Common Stock shares by gift.
Item 4. Purpose of Transaction.
This Statement is being filed by the Group primarily due to the increase
of its percentage ownership as a result of a stock repurchase transaction
by the Company. On October 17, 1997, the Company, NL Industries, Inc., a
New Jersey corporation ("NL"), and NL's affiliate, The Combined Master
Retirement Trust, a Texas trust ("CMRT"), entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement"), an Escrow Agreement (the
"Escrow Agreement") and certain related agreements. Pursuant to the Stock
Purchase Agreement, the Company purchased 250,000 shares of Common Stock
from NL and 1,027,250 shares of Common Stock from CMRT (collectively, the
"Repurchased Shares"). The purchase price was $55 per share, with one-half
of the $70,248,750.00 purchase price paid in cash and the other half
represented by one-year notes payable to the order of NL and CMRT and
bearing interest at 10% per annum. Such notes are secured by the Common
Stock being repurchased. The foregoing is collectively referred to herein
as the "Repurchase Transaction." Copies of the Stock Purchase Agreement,
Escrow Agreement and promissory notes are incorporated herein by reference
in this Statement as Exhibits S, T, U and V, respectively. The foregoing
description of the terms of the Repurchase Transaction is qualified in its
entirety by reference to such exhibits.
The cash, notes and Repurchased Shares were placed in escrow (the
"Escrow Deposits"). Pursuant to the terms of the Escrow Agreement, the
Escrow Deposits were released from escrow on December 10, 1997. The
Company began treating the Repurchased Shares as treasury shares (and as no
longer outstanding) upon their release from escrow.
The shares of Common Stock and Preferred Stock acquired by the members
of the Group as herein described were acquired for investment purposes.
Except as set forth herein, no member of the Group has any plans or
proposals which relate to or would result in (a) the acquisition by any
person of additional securities of the Company (other than potential
repurchases by the Company of its own shares), or the disposition of
securities of the Company, (b) an extraordinary corporate transaction, such
as a merger, reorganization or liquidation, involving the Company or any of
its subsidiaries, (c) a sale or transfer of a material amount of assets of
the Company or any of its subsidiaries, (d) any change in the present board
of directors or management of the Company, including any plans or proposals
to change the number or term of office of any director or to fill any
existing vacancies on the board, (e) any material change in the present
capitalization or dividend policy of the Company, (f) any other material
change in the Company's business or corporate structure, (g) changes in the
Company's charter, by-laws or instruments corresponding thereto or other
actions which may impede the acquisition of control of the Company by any
person, (h) causing a class of securities of the Company to be delisted
from a national securities exchange or to cease to be authorized to be
quoted in an interdealer quotation system of a registered national
securities association, (i) a class of equity securities of the Company
becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934, or (j) any action similar
to any of those enumerated above.
By reason of the shares of Common Stock and Preferred Stock owned by
the members of the Group, members of the Group may collectively be deemed
to control the Company. In connection with this control, some members of
the Group are continually involved in the analysis and deployment of the
assets, the capital needs, evaluation of business opportunities, earnings
projections and operations of the Company and its various subsidiaries.
The Company sells shares of Common Stock pursuant to employee and
director stock incentive plans, which authorize the Company to grant stock
options to eligible participants for Common Stock or Preferred Stock, with
or without related stock appreciation rights. Various officers and
directors of the Company, including Messrs. Hurwitz and Levin, hold such
stock options.
The members of the Group reserve the right to change their respective
intentions with respect to all or any part of the matters described above,
including the possible acquisition of additional shares of Common Stock or
the disposition of any of such shares.
Item 5. Interest in Securities of Issuer.
(a)-(b) As of December 10, 1997, the aggregate number of shares of
Common Stock deemed to be beneficially owned by members of the Group
(inclusive of Common Stock issuable upon conversion of shares of Preferred
Stock currently held or options for Common Stock or Preferred Stock
exercisable within sixty (60) days of December 10, 1997) was 3,438,568<F1>,
constituting approximately 44.2% of the shares of Common Stock
outstanding.<F4>
Each share of Common Stock has one vote per share and each share of
Preferred Stock generally has ten votes per share. Accordingly, as of
December 10, 1997, the Group possesses approximately 68.9% of the combined
voting power of the Company's outstanding Common Stock and Preferred
Stock.<F5> The following table lists, as of December 10, 1997, (i) all
shares of the Company's Common Stock and Preferred Stock directly owned by
each member of the Group, (ii) the percentage of the Company's outstanding
shares of Common Stock and Preferred Stock held by each member of the
Group, and (iii) the percentage of combined voting power of the Company's
outstanding Common Stock and Preferred Stock held by each member of the
Group:
<TABLE>
<CAPTION>
Percent
of
Percent Combined
Member of No. of Shares of Voting
Group Title of Class Directly Owned Class (1) Power (1)
<S> <C> <C> <C> <C>
FDI Common Stock 1,740,626(2) 24.6 61.1
Preferred Stock 661,377 98.9
Charles E. Common Stock 777,122(2)(3) 11.1 8.5
Hurwitz Preferred Stock 41,564(4) 5.9
1992 Common Stock 109,294 1.6
Partnership Preferred Stock -0- *
FDILLC Common Stock 60,000 * *
Preferred Stock -0- *
Investment Common Stock 46,500 * *
Partnership Preferred Stock -0- *
Ezra G. Levin Common Stock 1,600(5) * *
Preferred Stock -0- *
James H. Common Stock 352 * *
Paulin, Jr. Preferred Stock 133 *
<FN>
- ---------------
(1) These percentages give effect to the Repurchase Transaction.
(2) Includes (a) 71,175 shares of Common Stock which FDI may acquire in
exchange for the MCOP Preferred Stock, and (b) 1,669,451 and 60,000
shares of Common Stock owned by FDI and FDILLC, respectively, as to
which Mr. Hurwitz indirectly possesses voting and investment power.
(3) Includes 26,161 shares of Common Stock separately owned by Mr.
Hurwitz's spouse and as to which Mr. Hurwitz disclaims beneficial
ownership. Does not include shares of Preferred Stock, or options
exercisable within 60 days therefor, convertible into Common Stock.
(4) Includes (a) 1,064 shares of Preferred Stock directly owned by Mr. Hurwitz,
and (b) 40,500 shares of Preferred Stock which may be acquired pursuant to
options exercisable within 60 days of December 10, 1997.
(5) Includes 600 shares of Common Stock which may be acquired pursuant to
options exercisable within 60 days of December 10, 1997.
* Less than 1%.
</TABLE>
By reason of their positions and/or relationships with FDI, the
Partnerships or FDILLC, Mr. Hurwitz and Federated may be deemed to possess
shared voting and investment power with respect to the Company's securities
held by FDI and FDILLC. The filing of this Statement shall not be
construed as an admission that any individual member of the Group other
than Mr. Hurwitz or Federated indirectly beneficially owns, for purposes of
Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended,
any of the Company's securities held by FDI or FDILLC.
Except as indicated in this Item 5, no member of the Group or, to the
best knowledge of such members, any other person identified or referred to
in Item 2 of this Statement, owns beneficially or has a right to acquire
beneficial ownership of any shares of Common Stock or Preferred Stock.
(c) To the best knowledge of the members of the Group, except as
otherwise described herein, there were no transactions effected by members
of the Group within the last sixty (60) days in the Company's Common Stock.
(d) Not applicable
(e) Not applicable
Item 6. Contracts, Arrangements, Undertakings or Relationships with Respect
to Securities of the Issuer.
On December 3, 1997, FDI, Mr. Hurwitz and FDILLC entered into a
Subscription Agreement, and Bill of Sale and Agreement regarding Assumption
of Liabilities (the Subscription Agreement ). Pursuant to the
Subscription Agreement, in consideration for a 79% interest in FDILLC, FDI
transferred a certain promissory note of Mr. Hurwitz payable to FDI in the
outstanding principal amount of $2.2 million, together with all security
therefor (the Note ), and all of its interest in the cash, securities or
other instruments representing the margin coverage (the Margin Fund ) in
respect of the Short Position, as hereinafter defined, to FDILLC. In
consideration for Mr. Hurwitz s 21% interest in FDILLC and the assumption
by FDILLC of (i) all of Mr. Hurwitz s obligations pursuant to the Note and
(ii) the closing of a short position in respect of U.S. Government
securities established by Mr. Hurwitz (the Short Position ), which Short
Position represented a liability as of December 3, 1997 in the amount of
$2,194,500.00, Mr. Hurwitz transferred to FDILLC (i) $2,196,046.00 in cash
(representing proceeds received by Mr. Hurwitz in connection with his
establishing the Short Position) and (ii) 60,000 shares of Common Stock of
the Company having a market value as of the close of business on December
3, 1997, in the aggregate amount of approximately $2,820,000.00. A copy of
the Subscription Agreement is incorporated herein by reference in this
Statement as Exhibit W and the foregoing description of its terms is
qualified in its entirety by reference to such exhibit.
On December 8, 1997, the Delaware Chancery Court entered an order (the
"Order") approving the settlement of certain shareholder derivative and
related actions. The settlement provides for, among other things, transfer
by Federated (or its subsidiaries) to MCOP of the MCOP Preferred Stock, but
excluding the right of Federated (or its subsidiaries) to purchase
approximately 71,175 shares of the Company's Common Stock at a price of
approximately $55 per share, and payment by Federated (or its subsidiaries)
to MCOP of approximately $1 million in cash or cancellation of the same
dollar value of options to purchase the Company's Common Stock held by
Federated (or its subsidiaries) or Mr. Hurwitz. The settlement is not
final until expiration of the thirty day appeal period with respect to the
Order. A copy of the Stipulation of Settlement as approved by the court is
incorporated herein by reference in this Statement as Exhibit X and the
foregoing description of the terms of such settlement is qualified in its
entirety by reference to such exhibit.
Federated executed a Letter Agreement with the Company, dated May 20,
1988, in respect of shares of Common Stock that Federated acquired in the
MGI Merger. A copy of such Letter Agreement is incorporated herein by
reference as Exhibit O.
Item 7. Material to Be Filed as Exhibits.
Exhibit A -- [deleted]
Exhibit B -- [deleted]
Exhibit C -- [deleted]
Exhibit D -- [deleted]
Exhibit E -- [deleted]
Exhibit F-1 -- [deleted]
Exhibit F-2 -- Offering Circular of MCO Holdings, Inc. with respect to the
Exchange Offer of Class A $.05 Non-Cumulative Participating
Convertible Preferred Stock for 850,000 shares of Common
Stock, dated August 26, 1981 (incorporated herein by
reference to Exhibit F to Amendment No. 19 to this Statement
dated August 28, 1981).
Exhibit G -- Second Amended and Restated Agreement and Plan of Merger,
dated as of December 30, 1987, by and among MCO Holdings,
Inc., MCO Acquisition Corporation and MAXXAM Group Inc.
(incorporated herein by reference from Exhibit 2 to MCO's
Registration Statement on Form S-4 No. 33-20096).
Exhibit H-- Stipulation and Agreement of Compromise and Settlement, In
Re MAXXAM Group, Inc. Stockholders Litigation, Court of
Chancery of the State of Delaware (incorporated herein by
reference from Exhibit U to the Statement on Schedule 13D of
the Company and others with respect to the common stock of
MGI, as amended (the "MGI Schedule 13D")).
Exhibit I-- Amendment to Stipulation, In Re MAXXAM Group, Inc.
Stockholders Litigation, Court of Chancery of the State of
Delaware (incorporated herein by reference from Exhibit V to
the MGI Schedule 13D).
Exhibit J-- Order and Final Judgment, In Re MAXXAM Group, Inc.
Stockholders Litigation, Court of Chancery of the State of
Delaware (incorporated herein by reference to Exhibit W to
the MGI Schedule 13D).
Exhibit K-- Press Release, dated May 19, 1988 (incorporated herein by
reference to Exhibit X to the MGI Schedule 13D).
Exhibit L-- [deleted]
Exhibit M -- Put and Call Agreement dated November 16, 1987, between
Charles E. Hurwitz and MAXXAM Properties Inc. (incorporated
herein by reference from Exhibit C to the Statement on
Schedule 13D of MGI and Properties with respect to the
Common Stock, as amended (the "MGI/MCO Schedule 13D").
Exhibit N -- Letter Agreement amending the Put and Call Agreement, dated
May 18, 1988, between MAXXAM Properties Inc. and Charles E.
Hurwitz (incorporated herein by reference to Exhibit D to
the MGI/MCO Schedule 13D).
Exhibit O -- Letter Agreement, dated May 20, 1988, between Federated and
the Company (incorporated herein by reference to Exhibit O
to Amendment No. 24 to this Statement dated May 20, 1988).
Exhibit P -- Letter, dated February 17, 1989, from MAXXAM Inc. and MAXXAM
Properties Inc. to Mr. Charles E. Hurwitz (incorporated
herein by reference to Exhibit P to Amendment No. 25 to this
Statement dated March 23, 1989).
Exhibit Q -- Promissory Note, dated July 6, 1989, executed by Charles E.
Hurwitz and payable to Federated Development Company
(incorporated herein by reference to Exhibit Q to Amendment
No. 26 to this Statement dated July 6, 1989).
Exhibit R -- Security Agreement, dated July 6, 1989, between Charles E.
Hurwitz and Federated Development Company (incorporated
herein by reference to Exhibit R to Amendment No. 26 to this
Statement dated July 6, 1989).
Exhibit S -- Stock Purchase Agreement, dated October 17, 1997, by and
among the Company, CMRT and NL (incorporated herein by
reference to Exhibit 10.1 to the Company s Quarterly Report
on Form 10-Q for the quarter ended September 30, 1997, File
No. 1-3924).
Exhibit T -- Escrow Agreement, dated as of October 17, 1997, by and among
the Company CMRT and NL (incorporated herein by reference to
Exhibit 10.2 to the Company s Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997, File No. 1-3924).
Exhibit U -- Non-Negotiable Secured Promissory Note, dated as of October
17, 1997, by the Company payable to CMRT (incorporated
herein by reference to Exhibit 10.3 to the Company s
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, File No. 1-3924).
Exhibit V -- Non-Negotiable Secured Promissory Note, dated as of October
17, 1997, by the Company payable to NL (incorporated herein
by reference to Exhibit 10.4 to the Company s Quarterly
Report on Form 10-Q for the quarter ended September 30,
1997, File No. 1-3924).
Exhibit W* -- Subscription Agreement, and Bill of Sale and Agreement
Regarding Assumption of Liabilities, dated December 3, 1997,
by and among FDI, Charles E. Hurwitz and FDILLC.
Exhibit X* -- Stipulation of Settlement, In Re MAXXAM Inc./Federated
Development Shareholders Litigation, Court of Chancery of
the State of Delaware.
- ---------------
* Filed herewith.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: December 30, 1997 Federated Development Company
By: JAMES H. PAULIN, JR.
Name: James H. Paulin, Jr.
Title: Secretary and Treasurer
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: December 30, 1997 Federated Development Inc.
By: JAMES H. PAULIN, JR.
Name: James H. Paulin, Jr.
Title: Secretary and Treasurer
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: December 30, 1997 Federated Development Investments,
LLC
By: Federated Development, Inc.,
its Manager
By: JAMES H. PAULIN, JR.
Name: James H. Paulin, Jr.
Title: Secretary and Treasurer
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: December 30, 1997
CHARLES E. HURWITZ
Charles E. Hurwitz
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: December 30, 1997
EZRA G. LEVIN
Ezra G. Levin
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: December 30, 1997
JAMES H. PAULIN, JR.
James H. Paulin, Jr.
<PAGE>
FOOTNOTES
<F1> Consists of (a) 71,175 shares of Common Stock which FDI may acquire in
exchange for the MCOP Preferred Stock, (b) 1,669,451 and 60,000 shares
of Common Stock owned by FDI and FDILLC, respectively, and 663,377 shares
of Preferred Stock owned by FDI, in all of which Mr. Hurwitz indirectly
possesses voting and investment power, (c) 26,161 shares of Common
Stock separately owned by Mr. Hurwitz's spouse and as to which Mr.
Hurwitz disclaims beneficial ownership, (d) 46,500 shares of Common Stock
owned by a limited partnership controlled by Mr. Hurwitz and his spouse,
23,250 of which shares were separately owned by Mr. Hurwitz's spouse
prior to their transfer to such limited partnership and as to which Mr.
Hurwitz disclaims beneficial ownership, (e) 109,294 shares of Common
Stock owned by the 1992 Hurwitz Investment Partnership L.P., of which
54,647 shares are owned by Mr. Hurwitz's spouse as separate property and
as to which Mr. Hurwitz disclaims beneficial ownership, (f) 750,961
shares of Common Stock held directly by Mr. Hurwitz, (g) 1,000 shares of
Common Stock and options exercisable within 60 days of December 10, 1997
to purchase 600 shares of Common Stock held by Mr. Levin, (h) 1,064 shares
of Preferred Stock and options exercisable within 60 days of December 10,
1997 to purchase 40,500 shares of Preferred Stock held by Mr. Hurwitz,
and (i) 352 shares of Common Stock and 133 shares of Preferred Stock held
by Mr. Paulin.
<F2> Does not include options Mr. Hurwitz acquired in the MGI Merger to
purchase 26,000 shares of Common Stock, which shares he has since
acquired.
<F3> In addition, each option or warrant to purchase shares of common stock of
MGI outstanding at the effective time of the MGI Merger was converted
into an option or warrant to receive the cash, shares of Common Stock
and Merger Notes that the holder of such option or warrant would have
received in the MGI Merger had he exercised such option or warrant
immediately prior to the effective time of the MGI Merger.
<F4> Based on 7,000,597 shares of Common Stock outstanding on December 10, 1997
(after giving effect to the Repurchase Transaction), as increased by
(i) 703,074 shares of Common Stock that members of the Group may acquire
upon conversion of Preferred Stock they hold or options for Common
Stock or Preferred Stock exercisable within sixty (60) days of December
10, 1997, (ii) 71,175 shares of Common Stock which FDI may acquire in
exchange for the MCOP Preferred Stock, and (iii) 600 shares of Common
Stock issuable to a member of the Group under options presently
exercisable or exercisable within 60 days of December 10, 1997 to acquire
such shares.
<F5> Based on 7,000,597 and 668,856 of shares of Common Stock and Preferred
Stock outstanding on December 10, 1997 (after giving effect to the
Repurchase Transaction), respectively, as increased by the number of
shares of Common Stock and Preferred Stock issuable to members of the
Group under options presently exercisable or exercisable within 60 days
of December 10, 1997 to acquire such shares, and (ii) 71,175 shares
of Common Stock which FDI may acquire in exchange for the MCOP Preferred
Stock. This percentage gives effect to the voting rights of ten votes
per share of Preferred Stock.
<PAGE>
APPENDIX A
EXECUTIVE OFFICERS AND TRUSTEES
FEDERATED DEVELOPMENT COMPANY ("FDC")
EXECUTIVE OFFICERS AND DIRECTORS
FEDERATED DEVELOPMENT INC. ("FDI")
<TABLE>
<CAPTION>
Name and Present Principal
Positions Held Business Address Occupation or Employment
<S> <C> <C>
Charles E. Hurwitz 5847 San Felipe, Ste. Chairman of the Board, Chief
2600 Executive Officer, President and
Chairman of the Board, Houston, TX 77057 Trustee, Federated Development
Chief Executive Officer, Company; President and Director,
President and Trustee Federated Development Inc., a
(FDC) wholly owned subsidiary of
Federated Development Company;
President and Director Chairman of the Board, President
(FDI) and Chief Executive Officer,
MAXXAM Inc., a majority owned
subsidiary of Federated
Development Inc. engaged in
aluminum operations, forest
products operations, real estate
management and development and
horse racing; Chairman of the
Board, President and Chief
Executive Officer, MAXXAM Group
Holdings Inc., a wholly owned
subsidiary of MAXXAM Inc. engaged
in aluminum operations and forest
products operations; Director,
Kaiser Aluminum Corporation, a
subsidiary of MAXXAM Inc. and
MAXXAM Group Holdings Inc. engaged
in aluminum operations; Director
and Vice Chairman of the Board,
Kaiser Aluminum & Chemical
Corporation, a wholly owned
subsidiary of Kaiser Aluminum
Corporation engaged in aluminum
operations; Chairman of the Board,
President and Chief Executive
Officer, MAXXAM Group Inc., a
wholly owned subsidiary of MAXXAM
Group Holdings Inc. engaged in
forest products operations.
James H. Paulin, Jr. 5847 San Felipe, Ste. Secretary-Treasurer, Federated
2600 Development Company; Secretary-
Secretary-Treasurer (FDC Houston, TX 77057 Treasurer, Federated Development
and FDI) Inc., a wholly owned subsidiary of
Federated Development Company;
Vice President, Sam Houston Race
Park, Ltd., a limited partnership
engaged in horse racing.
</TABLE>
EXHIBIT 1
AGREEMENT OF JOINT FILING
Pursuant to Rule 13d-1(f) promulgated under the Securities Exchange Act of
1934, as amended, the undersigned persons hereby agree to file with the
Securities and Exchange Commission the Statement on Schedule 13D/A (the
"Statement") to which this Agreement is attached as an exhibit, and agree that
such Statement, as so filed, is filed on behalf of each of them.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
December 30, 1997.
FEDERATED DEVELOPMENT COMPANY
JAMES H. PAULIN, JR.
Name: James H. Paulin, Jr.
Title: Secretary-Treasurer
FEDERATED DEVELOPMENT INC.
JAMES H. PAULIN, JR.
Name: James H. Paulin, Jr.
Title: Secretary-Treasurer
FEDERATED DEVELOPMENT INVESTMENTS, LLC
By: Federated Development Inc., its Manager
JAMES H. PAULIN, JR.
Name: James H. Paulin, Jr.
Title: Secretary-Treasurer
CHARLES E. HURWITZ
Charles E. Hurwitz
EZRA G. LEVIN
Ezra G. Levin
JAMES H. PAULIN, JR.
James H. Paulin, Jr.
Exhibit W
SUBSCRIPTION AGREEMENT, AND BILL OF SALE AND AGREEMENT
REGARDING ASSUMPTION OF LIABILITIES
THIS SUBSCRIPTION AGREEMENT, AND BILL OF SALE AND AGREEMENT REGARDING
ASSUMPTION OF LIABILITIES (the "Agreement") is made and entered into as of
the 3rd day of December, 1997, by and among Federated Development Inc., a
Delaware corporation ("Federated"), Charles E. Hurwitz ("CEH") (Federated
and CEH collectively referred as the "Subscribers") and Federated
Development Investments, LLC, a Texas limited liability company (the
"Company") in which Subscribers have agreed to become members and unit
holders.
W I T N E S S E T H:
WHEREAS, Subscribers have caused the Company to be formed as a limited
liability company under the Texas Limited Liability Company Act, Tex. Rev.
Civ. Stat Art. 1528n (the "Act"); and
WHEREAS, upon the organization of the Company, Subscribers will be the
only members and unit holders of the Company; and
WHEREAS, in connection with the organization of the Company, and in
consideration of the Company's issuance to the Subscribers of units of
membership in the Company ("Units") (or, in the case of CEH, partially in
consideration of such issuance of Units), the Subscribers have agreed to
contribute, assign, convey and set over to the Company certain of their
respective assets; and,
WHEREAS, in connection with the contribution of assets by CEH, in
addition to its issuance of Units to CEH, the Company has agreed to assume
certain liabilities of CEH in connection therewith; and
WHEREAS, the parties further contemplate that CEH may contribute
additional assets to the Company, in the form of a direct contribution of
such assets or by transferring to the Company ownership of one or more
entities owning such assets; and in the event of such an additional
contribution, the parties' ownership of Units will be adjusted so as to
give retroactive effect to such contribution and the relative value of the
assets so contributed; but in no event will the transactions set forth
herein be subject to or conditioned upon such additional contribution
taking place;
NOW THEREFORE, in consideration of the mutual agreements set forth in
this Agreement, the parties hereto agree as follows, intending to be
legally bound hereby:
SECTION 1. SUBSCRIPTION FOR UNITS. The Subscribers hereby subscribe
for and agree to purchase and acquire, as members of the Company, the
following number of Units of membership, representing in the aggregate the
following respective percentages of ownership of the Company:
SUBSCRIBER NUMBER OF UNITS PERCENTAGE OWNERSHIP
Federated 79 79%
CEH 21 21%
--- ---
Total 100 100%
The Company hereby accepts the above subscription for Units on the terms
set forth in this Agreement.
SECTION 2. CONTRIBUTION BY FEDERATED. In consideration of the
Company's issuance of the above Units to Federated, Federated hereby
grants, sells, transfers, conveys, assigns and delivers to the Company, its
successors and assigns, to have and to hold forever, all of Sellers right,
title and interest in and to that certain promissory note and related
security agreement more particularly described as follows:
Promissory note of Charles E. Hurwitz, as maker, payable to
Federated Development Company as payee, dated July 6, 1989, in
the original principal amount of $8,500,000, as modified by
allonge dated July 6, 1994, as previously assigned to Federated
Development, Inc., such note having an outstanding principal
balance as of the date hereof in the amount of $2,200,000;
together with all security therefor, as granted pursuant to and
evidenced by a security agreement of CEH dated July 6, 1989 (all
such obligations collectively referred to as the "Note").
In further consideration of the Company's issuance of such Units, Federated
hereby further assigns, transfers and delivers to the Company all of
Federated's interest in the cash, securities or other instruments
representing the margin coverage (the "Margin Fund") in respect of the
"Short Position," as hereinafter defined (Federated having acquired such
Margin Fund from CEH simultaneously with the other transactions set forth
herein pursuant to Section 5 hereof).
The Company hereby accepts and takes delivery of the Note and the Margin
Fund, as Federated's contribution in respect of the Units to be issued to
Federated hereunder, and as full consideration in payment therefor.
SECTION 3. CONTRIBUTION BY CEH. In consideration of the Company's
issuance to CEH of the Units set forth above, and in consideration of the
Company's assumption of certain obligations of CEH as set forth in Section
4 below, CEH hereby grants, sells, transfers, conveys, assigns and delivers
to the Company, its successors and assigns, to have and to hold forever,
all of CEH's right, title and interest in and to the following assets (the
"CEH Contributed Assets"):
(a) Cash in the amount of $2,196,046 (representing proceeds received
by CEH in connection with his establishing the "Short Position"
defined below; and
(b) 60,000 shares of stock of MAXXAM, Inc., a Delaware corporation
("MAXXAM"), having a market value as of the close of business on
December 3, 1997 in the aggregate amount of $2,820,000.
The Company hereby accepts and takes delivery of the CEH Contributed
Assets, as CEH's contribution in respect of the Units to be issued to CEH
hereunder, and as full consideration in payment therefor; and the Company
further agrees to assume certain liabilities of CEH in connection with the
CEH Contributed Assets, as set forth in Section 4 of this Agreement.
SECTION 4. ASSUMPTION OF LIABILITIES BY THE COMPANY. In
consideration of the CEH Contributed Assets acquired by the Company
hereunder, the Company has issued 21 Units to CEH as set forth above; and
as further consideration for the CEH Contributed Assets, the Company hereby
further accepts, assumes and agrees to fully perform all of CEH's
obligations pursuant to and in connection with (a) the Note and (b) the
closing of a short position in respect of U.S. Government securities
established under CEH's account no. 624-12147-2-2-023 with Smith Barney
(the "Short Position"), which Short Position represented a liability,
measured at the close of business on December 3, 1997, in the amount of
$2,194,500.
SECTION 5. TRANSFER OF SHORT POSITION; ASSIGNMENT OF MARGIN FUND.
CEH and the Company will direct and cause Smith Barney to transfer the
Short Position, as it exists prior to such transfer, in an "open" status,
and with all obligations intact in respect of closing such position,
together with the entire Margin Fund covering such Short Position, to the
Company's account no. 624-59444-1-5 with Smith Barney. Simultaneously with
the consummation of the transactions set forth in this Agreement, CEH
assigns, transfers and delivers to Federated all of his right in and to the
Margin Fund; and Federated agrees to pay CEH in consideration thereof
$132,050, which represents the cash value of the Margin Fund as of the date
hereof.
SECTION 6. ADOPTION OF CODE OF REGULATIONS. The Company and the
Subscribers hereby adopt the Code of Regulations attached hereto as Exhibit
A to serve as the regulations governing the operation and direction of the
Company and its business and affairs.
SECTION 7. POSSIBLE ADDITIONAL CONTRIBUTION AND REALLOCATION OF
UNITS. The parties contemplate that at a future date Sage Southwest, Inc.,
a Texas corporation that is owned by CEH and Federated ("Sage") may
contribute additional assets to the Company, either by direct transfer of
such assets or by assigning and transferring to the Company ownership
interests in one or more entities owning such assets. In the event such
additional assets are so contributed to the Company, the additional
contribution would be deemed to take place substantially simultaneously
with the transactions set forth in this Agreement; and to that end, the
parties agree that the number of Units issued to each Subscriber (or to
each Subscriber and Sage), and their proportional ownership of the Company,
would be retroactively revised, effective as of the date hereof, to give
effect to the relative net value of all assets contributed by each
Subscriber (and, if applicable, Sage) after giving effect to such
additional contribution. The parties further acknowledge and confirm,
however, that any such additional contribution of assets would be subject,
among other matters, to (a) the receipt of any third-party consents
necessary to give effect to the transfer of assets effected in connection
with such contribution, and (b) the parties' complete satisfaction with all
terms and conditions of such transfer and contribution. The transactions
contemplated by this Agreement are in no respect contingent upon the
completion, in whole or in part, of any such additional contribution of
assets; and in the event such contribution of assets is for any reason not
effected, the transactions set forth in this Agreement shall continue in
full force and effect, without modification or abatement.
SECTION 8. FURTHER ASSURANCES. From time to time hereafter, the
parties shall each execute and deliver such additional or further
instruments of conveyance, assignment and transfer, or instruments of
assumption, as applicable, and take such actions as the other parties may
reasonably request in order to more effectively convey and transfer the
assets transferred and assigned hereunder, or as applicable, the
obligations assumed hereby, all shall reasonably be necessary or
appropriate in connection with carrying out the purpose of intent of this
Agreement.
SECTION 9. COUNTERPARTS. This Agreement may executed in
counterparts, each of which when executed by the parties hereto shall be
deemed an original and all of which together shall be deemed the same
agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Subscription
Agreement, and Bill of Sale and Agreement Regarding Assumption of
Liabilities as of the date first written above.
SUBSCRIBERS:
FEDERATED DEVELOPMENT, INC.
By: /s/ James H. Paulin, Jr.
Name: James H. Paulin, Jr.
Title: Secretary-Treasurer
/s/ Charles E. Hurwitz
CHARLES E. HURWITZ
THE COMPANY:
FEDERATED DEVELOPMENT INVESTMENTS, LLC.
By: Federated Development, Inc., its
Manager
By: /s/ James H. Paulin, Jr.
Name: James H. Paulin, Jr.
Title: Secretary-Treasurer
Exhibit X
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
IN RE MAXXAM INC./FEDERATED :
DEVELOPMENT SHAREHOLDERS : Consolidated Civil
LITIGATION : Action No. 12111
:
- -----------------------------------:
:
NL INDUSTRIES, INC. and HAROLD :
C. SIMMONS, in his capacity as :
Trustee of the Combined Master :
Retirement Trust, :
:
Plaintiffs, :
:
v. : Civil Action
: No. 12353
MAXXAM, INC., MCO PROPERTIES, :
INC., FEDERATED DEVELOPMENT CO., :
CHARLES E. HURWITZ, BARRY :
MUNITZ, JOHN M. SEIDL, WILLIAM :
C. LEONE, and STANLEY D. ROSENBERG,:
:
Defendants. :
:
STIPULATION OF SETTLEMENT
The parties to the above-captioned actions, by and through their
respective attorneys, have entered into the following Stipulation of
Settlement (the "Stipulation") subject to the approval of the Court of
Chancery of the State of Delaware in and for New Castle County (the
"Court"):
WHEREAS,
<PAGE>
A. On May 28, 1991, a shareholder derivative and double
derivative action captioned Progressive United Corp. v. MAXXAM, Inc., et
al., C.A. No. 12111 ("Progressive Action") was filed with the Court on
behalf of MAXXAM Inc. ("MAXXAM" or the "Company") and its wholly-owned
subsidiary MCO Properties Inc. ("MCOP"), naming as defendants present and
former directors of the Company ("individual defendants") and Federated
Development Company (together with its subsidiaries, "Federated"), the
Company's majority voting shareholder. On November 13, 1991, a second
shareholder derivative action captioned NL Indus., et al. v. MAXXAM, Inc.,
et al., C.A. No. 12353 ("NL Action"), was filed with the Court against the
same defendants named in the Progressive Action by NL Industries, Inc.
("NL") and Harold C. Simmons, in his capacity as Trustee of the Combined
Master Retirement Trust ("Simmons"), who, together, owned 14% of MAXXAM's
stock and were the largest non-management shareholders of MAXXAM
(collectively the "NL Plaintiffs"). Subsequently, commencing on December
2, 1991, several other shareholder derivative suits captioned Kahn v.
Federal Development Company, et al, C.A. No. 12373, Glinert v. Hurwitz, et
al., C.A. No. 12383, Friscia v. MAXXAM, Inc., et al., C.A. No. 12390,
Kassoway v. MAXXAM, Inc., et al., C.A. No. 12404 (collectively the
<PAGE>
"Additional Actions") and Thistlethwaite v. MAXXAM, Inc., et al., C.A. No.
12377 ("Thistlethwaite Action"), were filed with the Court against the same
defendants named in the Progressive Action and the NL Action. By an Order
of Consolidation and Coordination dated February 3, 1992, the Court: (1)
consolidated the Progressive Action with the Additional Actions under the
single caption In Re MAXXAM Inc./Federated Development Shareholders
Litigation, Consolidated C.A. No. 12111 (the "Consolidated Action")
(plaintiffs in the Consolidated Action are hereinafter collectively
referred to as "Consolidated Plaintiffs"); (2) ordered the Consolidated
Plaintiffs to file a consolidated complaint superseding the complaints in
the Progressive Action and the Additional Actions; and (3) ordered the
Consolidated Action coordinated with the NL Action. (the Consolidated
Action and the NL Action are hereinafter referred to as the "Coordinated
Actions," and the plaintiffs therein, the "Coordinated Plaintiffs") On
February 10, 1992, the Court entered an Order staying the Thistlethwaite
Action, a case substantially identical to the NL Action.
B. The Consolidated Plaintiffs filed a Consolidated Amended
Shareholder Derivative Complaint with the Court on February 28, 1992 (the
"First Complaint"). The First Complaint alleged that Federated breached
its fiduciary duties to the Company by
<PAGE>
mismanaging the development of a real estate development project located at
Cathedral City, California and Rancho Mirage, California (the "Mirada") and
also alleged that the individual defendants breached their fiduciary duties
of care and loyalty to the Company by approving an exchange of property and
securities in July 1991 between Federated, the Company and MCOP (the
"Exchange"). Pursuant to the Exchange, Federated transferred real estate
assets and development rights in the Mirada to MCOP for $1.4 million in
cash, 394.318 shares of MCOP 7% Cumulative Exchangeable Preferred Stock
(having a liquidation value of $3,943,180), and the assumption of $36.3
million in liabilities, of which $34.3 million consisted of the balance due
to the Company from Federated on non-recourse loans made by the Company in
1987 secured by property at the Mirada (the "1987 Loans"). The First
Complaint alleged that the Exchange was unfair to the Company and MCOP,
constituted waste and served to benefit only Federated and Charles E.
Hurwitz ("Hurwitz"), Federated's principal shareholder. The First
Complaint also claimed that a special committee of the Company formed to
evaluate the Exchange, which included individual defendants John B.
Connally ("Connally"), John M. Seidl ("Seidl"), William C. Leone ("Leone"),
Stanley D. Rosenberg ("Rosenberg") and C.V. Wood, Jr. ("Wood"), breached
their fiduciary duties of care and loyalty by approving
<PAGE>
the Exchange. The First Complaint demanded: (1) rescission of the
Exchange; (2) an accounting from Federated and the individual defendants;
(3) attorneys' fees and experts' fees; and (4) any other relief the Court
deemed appropriate.
C. The NL Action and the Thistlethwaite Action asserted claims
substantially similar to those alleged in the First Complaint, and sought
similar relief.
D. On March 19, 1992, all defendants named in the First
Complaint, except for Federated, filed answers (the "Answers") to the First
Complaint and the NL Action denying the substantive allegations of the
First Complaint and the NL Action. On April 8, 1992, defendant Federated
filed a Motion to Dismiss the NL Action on the grounds of lack of personal
jurisdiction, and insufficiency of process and service of process. On
October 21, 1992, the Court entered an order dismissing Federated from the
NL Action, ruling that it was not subject to personal jurisdiction in
Delaware. On November 19, 1992, the Court entered an order dismissing
defendant Wood from the Consolidated Action and the NL Action due to his
death during the pendency of the proceedings. Connally's death during the
pendency of both proceedings was suggested on the record in the
Consolidated Action and in the NL Action on February 10,
<PAGE>
1994, effectively removing him as a party in the cases, no timely
substitution of his estate having been made.
E. On January 22, 1993, the Consolidated Plaintiffs filed a
motion for leave to file a Consolidated Second Amended Derivative Complaint
(the "Second Complaint"). The Second Complaint realleged the same basic
claims against the individual defendants regarding the Exchange pleaded in
the First Complaint and dropped Federated from the case. The Second
Complaint added new claims against the individual defendants, except for
Connally and Seidl, arising out of the 1987 Loans (the "1987 Loan Claims").
The Second Complaint charged that the 1987 Loans were unduly favorable to
Federated, detrimental to MCOP, and not the result of arm's-length
bargaining. The Second Complaint also charged the individual defendants
with fraudulent self-dealing in connection with the 1987 Loans, alleging
that the proceeds from the 1987 Loans were diverted for Hurwitz's personal
use and that material information concerning the 1987 Loans was allegedly
concealed from the Company's shareholders. The Second Complaint requested:
(1) an accounting from the individual defendants; (2) rescission of the
Exchange; (3) an award of costs, expenses and legal fees; and (4) any
further and additional relief the Court deemed appropriate.
<PAGE>
F. Defendants opposed Plaintiffs' motion to file their Second
Complaint on grounds that the claims relating to the 1987 Loans were time-
barred. On April 13, 1993, the Court issued a letter opinion denying the
Consolidated Plaintiffs' motion to amend. However, the Court granted the
Consolidated Plaintiffs an opportunity to file a third amended complaint,
within thirty days of the Court's Order, to raise any additional facts
that, if true, would be sufficient to toll the statute of limitations on
their claims relating to the 1987 Loans.
G. Pursuant to that directive, the Consolidated Plaintiffs
filed a Consolidated Third Amended Stockholders' Derivative Complaint (the
"Third Complaint") on April 22, 1993. The Third Complaint alleged that the
applicable statute of limitations had been tolled, because of defendants'
failure to disclose material facts concerning: (1) uses made of the 1987
Loan proceeds; (2) the ability of Federated to pay interest; and (3)
problems confronting the development of the Mirada. The Third Complaint
demanded: (1) an accounting from defendants; (2) rescission of the 1987
Loans; (3) rescission of the Exchange; (4) an award of the Consolidated
Plaintiffs' costs and expenses, including legal fees; and (5) any
additional relief the Court deemed appropriate. On May 6, 1993, defendants
filed motions to
<PAGE>
dismiss the allegations in the Third Complaint regarding the 1987 Loans on
the grounds that they failed to state a claim upon which relief could be
granted and on the grounds that such claims were time-barred.
H. On January 20, 1994, the NL Plaintiffs filed a suit in the
District Court of Dallas County, Texas, captioned NL Indus., Inc., et al.
v. Federated Development Company, et al. (the "NL Texas Action"), naming
Federated as a defendant and the Company as a nominal defendant. The NL
Texas Action, which was brought both as an individual and derivative
action, was based on the same occurrences and transactions as those in the
Coordinated Actions. The NL Texas Action sought (1) over $40 million in
damages; (2) exemplary damages; (3) pre-judgment interest on any damage
award; (4) an award from the Company of expenses, including reasonable
attorneys' fees incurred in connection with the suit; and (5) any other
costs and other relief which the Court deemed appropriate.
I. On July 6, 1994, while defendants' motion to dismiss the
Third Complaint was pending, the Consolidated Plaintiffs executed a
Stipulation of Settlement with defendants, to settle and dismiss all claims
asserted in the above mentioned actions, or that could have been asserted
therein (the "Proposed Settlement"). On July 7, 1994, pursuant to a
Stipulation and Order of the Court, the
<PAGE>
Consolidated Plaintiffs served and filed a Consolidated Fourth Amended
Stockholders' Derivative Complaint (the "Fourth Complaint"), renaming
Federated as a defendant in the Consolidated Action and reasserting claims
against Federated. In connection therewith, Federated appeared in the
Consolidated Action, submitted to the jurisdiction of the Court for all
purposes, and was reinstated as a party defendant pursuant to the Court's
order.
J. The NL Plaintiffs objected to the Proposed Settlement. In
an Opinion and Order dated February 10, 1995 (the "February 1995 Opinion"),
the Court rejected the Proposed Settlement as inadequate. The Court stated
that it could not conclude, based upon the record before it, that the 1987
Loan Claims would, more likely than not, be time barred and that defendants
had failed to demonstrate that, more likely than not, they could establish
the entire fairness of the challenged transactions. Based upon these
findings, the Court held that the settlement consideration was inadequate.
K. On March 10, 1995, the Court consolidated the Coordinated
Actions for all purposes, including trial.
L. Thereafter, defendants renewed their motion to dismiss the
1987 Loan Claims, now asserted in the Fourth Complaint, and defendant
Federated joined in that motion. This motion was
<PAGE>
denied by the Court in an Opinion and Order, dated June 21, 1995 (the "June
1995 Opinion"). In that Opinion, the Court held the Fourth Complaint
alleged facts, that if true, would toll the applicable statute of
limitations with respect to the 1987 Loan Claims.
M. Throughout the remainder of 1995 and early 1996, the
attorneys for the NL Plaintiffs and the attorneys for the plaintiff in the
Progressive Action engaged in extensive discovery in preparation of the
action for trial ("Trial Counsel"). The parties selected expert witnesses
who were then examined.
N. On December 6, 1995, defendants moved in limine for an order
precluding rescission as a remedy. This motion was granted by the Court in
a Pre-Trial Order, dated December 22, 1995 (the "Pre-Trial Order").
O. Beginning on January 29, 1996, and continuing through
February 8, 1996, Trial Counsel tried this action before the Court for nine
days. Trial Counsel took additional testimony from one witness by
videotape on March 1, 1996.
P. During the course of the trial, on February 1, 1996,
defendants moved, pursuant to Chancery Rule 41(b), for dismissal of the
1987 Loan Claims based on the fact that the only plaintiff who was alleged
to be an owner of MAXXAM stock at the time of the 1987
<PAGE>
Loans, Joseph Kassoway, actually owned shares of a different company,
MAXXAM Group, Inc., rather than shares of MAXXAM and that, as a result, no
Consolidated Plaintiff was a shareholder of MAXXAM at the time of the 1987
Loans with standing to challenge such transactions.
Q. On February 2, 1996, Harry Lewis ("Lewis"), a shareholder of
MAXXAM at all relevant times, moved to intervene as a party plaintiff in
the Action. Defendants opposed his motion on the grounds that: (1)
intervention was improper in an action where the original plaintiff lacked
standing to sue; (2) Lewis's claims were barred by the applicable statute
of limitations which, defendants asserted, was not tolled during the
pendency of the Action, and (3) Lewis was an inadequate representative
plaintiff. Additional interrogatories, deposition testimony, and
documentary discovery were taken with respect to this issue.
R. In an Opinion and Order, dated September 10, 1996, the Court
denied defendants' motion to dismiss and granted Lewis's motion to
intervene. The Court held that intervention was proper, that Lewis's
claims were not time-barred, and that Lewis was an adequate derivative
plaintiff.
S. On April 4, 1997, in a Memorandum Opinion, the Court issued
its decision, after trial, on the merits (the "Post-Trial
<PAGE>
Opinion"). In its Post-Trial opinion, the Court considered, and rejected,
defendants' threshold defense that the 1987 Loan Claims were barred by the
statute of limitations, except as to defendant Rosenberg, who, the Court
found, was disinterested and independent, and who engaged in no fraudulent
concealment. The Court dismissed the 1987 Loan Claims as to defendant
Rosenberg. The Court then determined that defendants had the burden of
proving that the 1987 Loans were entirely fair to MAXXAM, and that they had
failed to meet that burden. Further, the Court found that defendants had
the burden of proving that the Exchange was entirely fair to MAXXAM, and
that they had also failed to meet their burden with respect to that
transaction. The Court, however, declined to make any determination with
respect to remedy. Instead, the Court determined to bifurcate the
proceedings for two reasons. First, the court determined that its Pre-
Trial Order may have improvidently precluded rescission. Second, the Court
determined that it might be more efficient to obtain an appellate review of
the various pretrial procedural and substantive determinations before
resolving the damages issue.
T. On April 11, 1997, defendant Leone moved to reargue the
Court's ruling that the statute of limitations was tolled as to him with
respect to the 1987 Loan claims. The Court granted
<PAGE>
Leone's motion and, in a Memorandum Opinion dated July 2, 1997, dismissed
such claims against Leone as time-barred.
U. On August 20, 1997, the Court, by letter, determined to
adhere to its original decision to preclude rescission as a potential
remedy. Further, the Court decided to enter an order permitting the
defendants to seek an interlocutory appeal of the rulings affecting
liability. At the same time, the Court entered an Order stating: (1) that
defendants Hurwitz, Munitz, and Federated had breached their fiduciary
duties in connection with the 1987 Loans and the exchange, entitling MAXXAM
and MCO to a remedy to be determined, and (2) that defendants Seidl, Leone,
and Rosenberg had failed to satisfy their burden to demonstrate that the
Exchange was entirely fair, but reserving a determination of the legal
consequences of that failure for further proceedings. Pursuant to a
stipulation of the parties approved by the Court, that Order was vacated on
September 5, 1997, which had the effect of terminating proceedings which
had been initiated by defendants to seek an interlocutory appeal.
V. On October 14, 1997, the parties in the NL Texas Action
entered an Agreed Order of Dismissal Without Prejudice dismissing the NL
Texas Action pursuant to the terms of an
<PAGE>
agreement among the parties to that action tolling the statute of
limitations under certain circumstances.
W. Trial Counsel believe that the claims asserted in the
Coordinated Actions have merit; however, they also believe that the
settlement provided for herein (the "Settlement") will provide substantial
benefits of no less than $20 million to the Company and, when weighed
against the attendant risks of continuing the litigation, represents a fair
resolution of the claims. Trial Counsel have considered the risks on
appeal and the difficulties in calculating damages noted by the Court in
its Post-Trial Opinion. In light of these considerations, Trial Counsel
have engaged in arm's-length negotiations with counsel for defendants in an
attempt to achieve the certainty of a positive outcome in the Coordinated
Actions, and have determined that it is in the best interests of MAXXAM and
MCOP to settle the Coordinated Actions on the terms set forth herein.
X. The parties to the Coordinated Actions agree that they have
compromised and settled their differences upon the terms set forth herein
to avoid the expense and inconvenience of further prosecution and defense
of the claims asserted. The parties acknowledge that the Court's rulings,
orders, and opinions in the Coordinated Actions, including the Post-Trial
opinion, are
<PAGE>
interlocutory, not final and are subject to reversal on appeal. By
settling and dismissing the Coordinated Actions, the parties do not intend
that the Court's rulings, orders, and opinions in the Coordinated Actions
shall be considered final and acknowledge their intention that these
rulings, orders and opinions remain interlocutory.
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED, subject to
the approval of the Court, pursuant to Chancery Court Rule 23.1, that any
and all claims, rights, causes of action, suits, matters and issues,
liquidated or non-liquidated, contingent or absolute, state or federal,
that have been, could have been, or in the future could be asserted by
MCOP, MAXXAM, or derivatively by MAXXAM's stockholders, or by the
plaintiffs, whether individually, derivatively in the right and on behalf
of MAXXAM or MCOP or as representatives of all shareholders of MAXXAM in
their capacity as such, and each of them, and their present or former
directors, officers, agents, employees, attorneys, accountants,
representatives, advisers, appraisers, investment bankers, commercial
bankers, trustees, parents, affiliates, subsidiaries, general or limited
partners, stockholders, heirs, executors, administrators, successors and
assigns (the "Releasing Persons"), against the defendants, or any of their
respective present or
<PAGE>
former directors, officers, agents, employees, attorneys, accountants,
representatives, advisers, appraisers, investment bankers, commercial
bankers, trustees, parents, affiliates, subsidiaries, general or limited
partners, stockholders, heirs, executors, administrators, successors and
assigns, or anyone else (the "Released Persons") in connection with, or
that arise out of or relate to, the subject matter of the Coordinated
Actions, or any of the acts, facts, transactions, occurrences,
representations or omissions alleged in any pleading or proposed pleading
filed by any party in the Coordinated Actions, the NL Texas Action or the
Thistlethwaite Action (collectively, the "Settled Claims"), except for any
claims to enforce the terms or conditions of the Stipulation, shall be
fully, finally, and forever compromised, settled, discharged, dismissed
with prejudice and released pursuant to the terms and conditions set forth
herein.
THE SETTLEMENT
1. In consideration for the full settlement, satisfaction,
compromise and release of the Settled Claims, the parties to the
Coordinated Actions have agreed to settle the litigation by modifying the
terms of the Exchange as follows:
a. The payment by, or on behalf of the individual
defendants to MCOP of the sum of $7.5 million;
<PAGE>
b. The transfer by Federated to MCOP of good title, free
and clear of all mortgages and liens of a 23.7 acre Commercial Development
Site, located on Highway 111, Rancho Mirage, California, together with the
assignment of an offer to purchase such property, subject to certain
financing terms, for $8.5 million;
c. The transfer by Federated to MCOP of 394.318 shares of
MCOP 7% Cumulative Exchangeable Preferred Stock (having a liquidation value
of $3,943,180), but excluding the right of Federated appurtenant thereto to
acquire 71,174.93 shares of MAXXAM common stock at an exercise price of
$55.40125 per share, which right shall be retained by Federated to be
evidenced by an appropriate form of warrant or other instrument; and,
d. The payment by Federated to MCOP of $1,056,820 in cash
or, at the direction of Federated, the cancellation of options to purchase
MAXXAM common stock held by Federated or Hurwitz having a value of
$1,056,820, determined using the Black-Scholes Option Price Model, as
described in Statement of Financial Accounting Standards No. 123,
"Accounting For Stock-Based Compensation," such value to be determined as
of the close of business ten business days preceding the date of transfer,
or any combination of the foregoing.
<PAGE>
SUBMISSION AND APPLICATION TO COURT
2. As soon as practicable after the execution of the
Stipulation, the parties hereto shall jointly apply to the Court for an
order in the form attached hereto as Exhibit A (the "Scheduling Order"),
which shall include provisions that:
a. a settlement hearing (the "Settlement Hearing") be held
to determine whether the Court should (i) approve the Settlement pursuant
to Chancery Court Rule 23.1 as fair, reasonable, and adequate and in the
best interests of MAXXAM's stockholders, (ii) enter an Order and Final
Judgment dismissing the Coordinated Actions with prejudice, each party to
bear its own costs (except as provided herein) and extinguish, release and
enjoin prosecution of any and all Settled Claims, and (iii) hear such
other matters as the Court may deem necessary and appropriate; and
b. provide that a copy of the Notice of Pendency of
Derivative Action, Proposed Settlement of Derivative Action, Settlement
Hearing, Right to Appear and Proposed Dismissal of Plaintiffs NL
Industries, Inc. and Harold C. Simmons (the "Notice"), substantially in the
form attached hereto as Exhibit B, shall be sent to all shareholders of
record of MAXXAM as of the date of the Scheduling Order, and further
provide that the
<PAGE>
distribution of the Notice substantially in the manner set forth in the
Scheduling Order herein constitutes the best notice practicable under the
circumstances, meets the requirements of applicable law and due process, is
due and sufficient notice of all matters relating to the Settlement and
fully satisfies the requirements of due process and of Rule 23.1 of the
Chancery Court Rules.
NOTICES
3. All costs incurred in identifying and notifying MAXXAM's
stockholders of the Settlement, including the printing and copying of the
Notice, as set forth in the Scheduling Order (attached hereto as Exhibit A)
will be paid by MAXXAM or MCOP.
FINAL ORDER AND JUDGMENT
4. If the Settlement (including any modification thereto made
with the consent of the parties as provided for herein) is approved by the
Court, the parties shall promptly request the Court to enter an Order and
Final Judgment substantially in the form attached hereto as Exhibit C,
which among other things:
a. approves the Settlement, adjudges the terms thereof to
be fair, reasonable, adequate and in the best interests of MCOP, MAXXAM and
MAXXAM's stockholders, and directs consummation
<PAGE>
of the Settlement in accordance with the terms and conditions of the
Stipulation;
b. determines that the requirements of Rule 23.1 of the
Chancery Court Rules and due process have been satisfied in connection with
Notice to MAXXAM's stockholders and that the Coordinated Plaintiffs served
as adequate representatives of MAXXAM in the Coordinated Actions;
c. dismisses the Coordinated Actions with prejudice as to
all Released Persons, extinguishing, discharging and releasing any and all
Settled Claims as against each plaintiff and all stockholders, without
costs except as herein provided, said dismissal subject only to compliance
by the parties and the stockholders with the terms of this Stipulation and
any Order of the Court concerning this Stipulation, and permanently
enjoining the Coordinated Plaintiffs and any stockholder from asserting,
commencing, prosecuting or continuing either directly, individually,
representatively, derivatively or in any other capacity any of the Settled
Claims; and
d. awards attorneys' fees and expenses to Trial Counsel as
provided in paragraph 7 herein.
FINALITY OF SETTLEMENT
<PAGE>
5. The approval of the Settlement shall be considered final
("Final" or "Finally Approved") for purposes of this Stipulation: (i) upon
entry of the Order and Final Judgment approving the Settlement; and (ii)
upon the expiration of any applicable appeal period for the appeal of the
Order and Final Judgment without an appeal having been filed or, if an
appeal is taken, upon entry of an order affirming the Order and Final
Judgment appealed from and the expiration of any applicable period for the
reconsideration, rehearing or appeal of such affirmance without any motion
for reconsideration or rehearing or further appeal having been filed.
RIGHT TO WITHDRAW FROM THE SETTLEMENT
6. a. Each of the parties shall have the option to withdraw
from and terminate the Settlement in the event that (i) either the
Scheduling Order or the Order and Final Judgment referred to above are not
entered substantially in the forms specified herein, including such
modifications thereto as may be ordered by the Court with the consent of
the parties, or (ii) the Settlement is not approved by the Court or is
disapproved or materially modified upon appeal.
<PAGE>
b. In the event the Settlement proposed herein is not
approved by the Court, or the Court approves the Settlement but such
approval is reversed or vacated on appeal, reconsideration or otherwise,
and such order reversing or vacating the Settlement becomes final by lapse
of time or otherwise, or if any of the conditions to such Settlement are
not fulfilled, then the Settlement proposed herein shall be of no further
force and effect, and this Stipulation and all negotiations, proceedings
and statements relating thereto and any amendment thereof shall be null and
void and without prejudice to any party hereto, and each party shall be
restored to his, her or its respective position as it existed prior to the
execution of this Stipulation.
ATTORNEYS' FEES
7. At the hearing, Trial Counsel will apply for an award of
attorneys' fees in an amount to be determined by the Court, but not to
exceed $5 million, plus reimbursement of out-of-pocket expenses actually
incurred not to exceed $525,000. MAXXAM and MCOP have agreed not to oppose
an award of fees, and appropriate and documented expenses, sought by Trial
Counsel within the aforesaid limits.
8. Subject to the terms and conditions of this Stipulation,
payment of the Court's award of attorneys' fees and
<PAGE>
expenses will be made fifteen (15) business days after the Settlement and
such awards have been Finally Approved as defined in paragraph 5 of this
Stipulation.
AUTHORITY
9. Each of the attorneys executing the Stipulation on behalf of
one or more of the parties hereto warrants and represents that he or she
has been duly authorized and empowered to execute this Stipulation on
behalf of his or her respective client or clients.
STIPULATION NOT AN ADMISSION
10. The provisions contained in the Stipulation and all
negotiations, statements and proceedings in connection therewith shall not
be deemed a presumption, a concession or an admission by any defendant of
any fault, liability or wrongdoing as to any fact or claim alleged or
asserted in the Coordinated Actions or any other actions or proceedings and
shall not be interpreted, construed, deemed, invoked, offered or received
in evidence or otherwise used by any person in these or any other actions
or proceedings, whether civil, criminal or administrative, except in a
proceeding to enforce the terms or conditions of this Stipulation.
COUNTERPARTS
<PAGE>
11. This Stipulation may be executed in any number of actual or
telecopied counterparts and by each of the different parties thereto on
several counterparts, each of which when so executed and delivered shall be
an original. The executed signature page(s) from each actual or telecopied
counterpart may be joined together and attached to one such original and
shall constitute one and the same instrument.
WAIVER
12. The waiver by any party of any breach of this Stipulation
shall not be deemed or construed as a waiver of any other breach, whether
prior, subsequent, or contemporaneous, of this Stipulation.
ENTIRE AGREEMENT; AMENDMENTS
13. This Stipulation constitutes the entire agreement among the
parties with respect to the subject matter hereof, and may not be amended,
or any of its provisions waived, except by a writing executed by all of the
parties hereto.
14. This Stipulation, upon becoming operative, shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, assigns, heirs, executors and administrators and upon any
corporation, partnership or entity into or with which any party may merge
or consolidate.
<PAGE>
15. All of the exhibits hereto are incorporated herein by
reference as if set forth herein verbatim, and the terms of all exhibits
are expressly made part of this Stipulation.
GOVERNING LAW
16. This Stipulation shall be construed and enforced in
accordance with the laws of the State of Delaware, without regard to
conflict of law principles.
BEST EFFORTS
17. The parties hereto and their attorneys agree to cooperate
fully with one another in seeking the Court's approval of this Stipulation
and the Settlement and to use their best efforts to effect the confirmation
of this Stipulation and the Settlement.
MORRIS, JAMES, HITCHENS & WILLIAMS
By: /s/ Henry N. Herndon, Jr.
Henry N. Herndon, Jr.
222 Delaware Avenue
P.O. Box 2306
Wilmington, DE 19899
(302) 888-6800
Attorneys for the NL Plaintiffs
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
<PAGE>
By: /s/ Joseph A. Rosenthal
Joseph A. Rosenthal
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899
(302) 656-4433
Attorneys for the
Consolidated Plaintiffs
ASHBY & GEDDES
By: /s/ Lawrence C. Ashby
Lawrence C. Ashby
One Rodney Square
P.O. Box 1150
Wilmington, Delaware 19899
(302) 654-1888
Attorneys for Defendants William C.
Leone, Stanley D. Rosenberg, and
John M. Seidl
MORRIS, NICHOLS, ARSHT & TUNNELL
By: /s/ A. Gilchrist Sparks, III
A. Gilchrist Sparks, III
R. Judson Scaggs, Jr.
1201 N. Market Street
P.O. Box 1347
Wilmington, Delaware 19899
(302) 658-9200
Attorneys for Defendants Charles E.
Hurwitz, Barry Munitz, and
Federated Development Company
YOUNG, CONAWAY, STARGATT & TAYLOR
<PAGE>
By: /s/ David C. McBride
David C. McBride
Rodney Square North
P.O. Box 391
Wilmington, DE 19899
(302) 571-6639
Attorneys for Nominal Defendants
MAXXAM, Inc. and MCO Properties,
Inc.
DATED: October 24, 1997
