MAXXAM INC. REVISED CAPITAL ACCUMULATION PLAN OF    1988

(As Amended and Restated December 2006)

 

WHEREAS, the Compensation Policy Committee of the Company's Board ofDirectors has been appointed as the Plan's administrative committee pursuant tothe Plan; and

 

WHEREAS, the Compensation Policy Committee believes that it is advisableto adopt certain modifications to the Plan as set forth herein;

 

ARTICLE I

 

GENERAL

 

 

(a)         "Account" means either or both of a participant's Lump Sum Account orInstallment Account established pursuant to Section 2.2.

 

 

 

 

(e)         "Company" means MAXXAM Inc., a Delaware corporation, and any successorthereto by merger, consolidation or otherwise.

 

(f)         "Compensation" for any calendar year means a participant's base salaryactually paid during that year for services as an employee of a ParticipatingEmployer, excluding by way of illustration and not limitation, bonuses, incomerealized in connection with stock options and/or stock appreciation rights, andall other forms of extra compensation. A participant's Compensation shall notinclude any salary paid (i) before the date his participation starts, determinedpursuant to Section 2.1(a), (ii) after the date the Committee (or aParticipating Employer) declares him ineligible for further participationpursuant to Section 2.1(b), or (iii) after Termination of Employment.

 

(g)        "Disability" or "Disabled" means any medically determinable physical ormental impairment which prevents a participant from engaging in any substantialgainful activity for a Participating Employer, if such condition can be expectedto result in death or can be expected to have a duration of at least 12months.

 

(h)        "Distributable Balance" has the meaning assigned to such term in Section3.1

that was vested as of December 31, 2004, plus any earnings with respectto such amount."

 

(j)         "Installment Account" has the meaning assigned to such term in Section2.2.

 

  (k)          "Key Employee" has the meaning assigned to such term under Section 409A.

 

(l)          "Lump Sum Account" has the meaning assigned to such term in Section2.2.

 

(m)       "Participating Company" means any trade or business (whether or notincorporated) which is (i) controlled by or under common control with theCompany or any successor thereto by merger, consolidation or otherwise, withinthe meaning of Section 414(b) or (c) of the Internal Revenue Code of 1986 or(ii) designated as a Participating Company by the Committee.

 

(n)         "Participating Employer" means the Company and any Participating Companythat adopts this Plan with the consent of the Company.

 

(o)         "Plan" means MAXXAM Inc. Revised Capital Accumulation Plan of 1988, asfrom time to time in effect.

 

 

(q)         "Section 409A" means Section 409A of the Internal Revenue Code of 1986,as amended, and applicable Treasury Regulations.

 

(r)         "Termination of Employment," and similar references mean a participant'sceasing to be employed by the Company and all Participating Companies on accountof retirement, Disability, or any other reason (including death).

 

 

The purpose of this MAXXAM Inc. Revised Capital Accumulation Plan of 1988(the "Plan") is to provide an incentive for individuals (a) to join and remainin the service of MAXXAM Inc. and certain Participating Companies as officers orother key employees, and (b) to maintain and enhance the long-term performanceand profitability of those companies. 

 

 

This Plan provides cash benefits to a participant when he retires,becomes Disabled, or otherwise Terminates Employment, payable in a lump sum orin installments or by a combination of a lump sum and installments. If aparticipant dies before receiving all of his benefits, survivor payments shallbe made to his Beneficiary. 

 

1.4     Plan Unfunded.

 

(a)         While this Plan refers to the crediting of amounts to a participant'sAccount from time to time, all Accounts maintained under the Plan arebook-entry, memorandum accounts only, and do not represent an interest in anytrust, fund or specific asset or property.

 

(b)         Notwithstanding any other provision of this Plan, any obligation of aParticipating Employer to pay benefits hereunder shall be an unsecured promise,and any right to enforce such obligation shall be solely as a general creditorof the Participating Employer. Without limiting the generality of the foregoing,if a Participating Employer acquires an insurance policy on the life of aparticipant as an investment to help defray, in whole or in part, the costs thatmay be incurred in connection with this Plan, neither the participant nor hisspouse nor his Beneficiary shall have any right with respect to, or claim underor against, such policy, and such policy shall not be deemed to be held for thebenefit of, or under any trust for the benefit of, the participant or his spouseor any Beneficiary, or to be held in any way as collateral security for thefulfilling of the obligations of the Participating Employers of this Plan, andsuch policy shall be, and remain, a general, unpledged, unrestricted asset ofthe Participating Employer which acquired such policy.

 

 

(a)         The Plan shall be administered by an administrative committee, which maybe the Compensation Policy Committee or any other regular committee of the Boardof Directors of the Company or a committee specially designated for such purpose(the "Committee"). The Committee shall consist of not less than two persons(each of whom shall be a director of a Participating Employer) having fullauthority to act in such capacity; provided that the Board of Directors of theCompany may, in its sole discretion, exercise any and all of the powers andauthorities of the Committee. The members of the Committee shall be appointedby, and may be changed from time to time in the discretion of, the Board ofDirectors of the Company.

 

(b)         No person shall serve as a member of the Committee if such person is thenan officer or employee of the Company or a Participating Company or was at anytime in the past five (5) years a participant under the Plan.

 

(c)         The Committee shall have the authority (i) to construe, interpret andimplement the Plan, (ii) to prescribe, amend and rescind rules and regulationsrelating to the Plan, (iii) to make all determinations necessary and advisablein administering the Plan, and (iv) to correct any defects, supply any omissionand reconcile any inconsistency in the Plan.

 

(d)         The determination of the Committee or the Board of Directors of theCompany on all matters relating to the Plan shall be conclusive and binding onall persons.

 

(e)         To the extent that the Board of Directors of the Company shall act as theCommittee hereunder, the provisions of this Plan shall apply to such Board andto its members as if the Board were the Committee.

 

ARTICLE II

 

PARTICIPATION AND ACCOUNTS

 

 

(a)         Participation in the Plan shall be extended to such officers andexecutives, managerial, technical or professional employees of the ParticipatingEmployers as the Committee shall in its sole discretion designate from time totime; provided, that no individual shall be enrolled as a participant unless hisannual rate of base salary is at least $175,000 per annum or is an officer ofthe Company or a Participating Company. Participation starts on the day on whichthe individual is so designated, unless the Committee's designation specifies(i) a later day, or (ii) an earlier day not more than three months before theday of the Committee's designation.

 

(b)         The Committee may from time to time in its sole discretion declare that aparticipant is no longer eligible to participate under the Plan, from and aftera date set by the Committee, in which event (i) the participant shall not beentitled to have the applicable salary credit made to his Account pursuant toSection 2.3 of the Plan in respect of Compensation paid on and after the date ofineligibility, and (ii) he shall continue as a participant in all other respects(and accordingly shall be entitled to have the applicable salary credit made tohis Account pursuant to Section 2.3 of the Plan in respect of Compensation paidprior to the date of ineligibility and to have his Accounts updated after thedate of ineligibility pursuant to Section 2.4) until he has no DistributableBalance remaining. The Board of Directors of any Participating Employer mayexercise the power granted to the Committee under the preceding sentence, withrespect to Compensation paid by such Participating Employer.

 

2.2        Accounts. Memorandum accounts shall beestablished on the records of the Company or a Participating Company for eachparticipant to the extent required by reason of Section 2.3(b), one designatedas the participant's "Lump Sum Account" and the other designated as his"Installment Account," each such Account to be treated as herein provided.

 

 

(a)         For each calendar year beginning on or prior to January 1, 2005, a creditshall be entered on the records of the Company or a Participating Company foreach participant, equal to 15% of the participant's Compensation paid duringthat year. For each calendar year beginning on or after January 1, 2006, acredit shall be entered on the records of the Company or a Participating Companyfor each participant equal to 2% of the participant's Compensation paid duringthat year. The credit shall be entered as of December 31 of the calendar yearfor which credited, or if earlier, the last day of the month in such year inwhich the participant Terminates Employment or is declaredineligible.

 

(b)         A participant may direct that the salary credit under Section 2.3(a) forany calendar year be allocated either to his Lump Sum Account or to hisInstallment Account, or, unless the Committee otherwise directs, in part to hisLump Sum Account and in part to his Installment Account, subject to all of the following and any otherlimitations or requirements prescribed by the Committee:

 

(i)         Different directions may be given for different calendar years, but thedirection for any year must be given prior to the first day of thatyear;

 

(ii)        Adirection becomes irrevocable on the December 31 immediately preceding thecalendar year to which the direction applies;

 

(iii)       Notwithstanding clauses (i) and (ii) above, amounts creditable underSection 2.3(a) for any later year in which an employee becomes a participantshall be allocated in accordance with the employee's direction made within 30days after the employee is designated as a participant, and such direction shallbe irrevocable upon expiration of such 30-day period; 

 

(iv)       In theabsence of a proper direction by the participant, the credit shall be made tohis Lump Sum Account; and 

 

(v)          Such direction must be made using such form as the Company orParticipating Company utilizes for such purpose.

 

2.4        Annual Account Updating. The aggregate dollaramount of each of a participant's Accounts shall be increased (a) as of eachDecember 31 prior to the calendar year in which the participant TerminatesEmployment, and (b) as of the last day of the month in which the participantTerminates Employment (each, an "Adjustment Date"). Such increase shall bedetermined as if interest were credited and compounded on his Accounts as ofeach such December 31 and such last day of the month, at such rate or rates asthe Committee may authorize from time to time; provided, that unless suchCommittee otherwise directs, the rate so authorized to be credited on anyAdjustment Date shall be the Prime Rate in effect at the end of the monthimmediately prior to the Adjustment Date as reported by the Wall Street Journal(the "Prime Rate").

 

2.5        Credits Not In Lieu of Current Compensation.Amounts credited to a participant's Accounts under Sections 2.3 and 2.4represent neither reductions of salary nor bonuses otherwise payable to theparticipant, nor amounts foregone in lieu of future salary increases or bonuses.All such credits represent additional compensation payable (except ashereinafter provided in Article III) only following the participant'sTermination of Employment and are not in any way receivable by him prior to thattime.

 

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ARTICLE III

 

PAYMENT OF BENEFITS

 

 

The "Distributable Balance" of a participant's Accounts shall be paid, bythe dates specified below, following the earlier of a) his Termination ofEmployment, or b) December 31, 2008, and every tenth (10th) December31st thereafter (December 31, 2018, et. seq.).

 

 

The "Distributable Balance" of a participant's Accounts shall be thevested portion of his Account balances (excluding any Grandfathered Amount) asof the date of payment, computed in two steps as follows:

 

(a)         Step 1: TerminationBalance. The balance of the participant's Lump SumAccount and Installment Account shall be determined as of the last day of themonth during which a Termination of Employment occurs, or as of December 31,2008, or subsequent ten (10) year distribution dates. Such balances shall bedetermined after adjusting the participant's Accounts for salary credits andAccount updating required to be made as of such date (pursuant to Sections 2.3and 2.4).

 

(b)         Step 2: Vesting. The Account balances determined underSection 3.2(a) shall be multiplied by a percentage, not to exceed 100%, equal tothe product of 10% multiplied by the number of the participant's years (andfractions of a year) of continuous employment. For purposes of the foregoing,"continuous employment" shall mean the participant's most recent continuousemployment with the Company and all Participating Companies from and afterJanuary 1, 1988, through the date of payment, rounded down to the nearest wholemonth, disregarding employment prior to the date on which his participationstarts (as determined pursuant to Section 2.1(a)). 

 

 

 

(i)         The Distributable Balance and Grandfathered Amount of his Lump SumAccount shall be paid to him in a single cash payment by no later than thefifteenth (15th) business day following the last day of the monthduring which Termination of Employment occurred; provided, however, if theparticipant is a Key Employee, the Distributable Balance of his Lump Sum Accountshall not be paid to the participant prior to a date that is six months afterthe date of the participant's Termination of Employment if such termination wasfor reasons other than Disability (or death). If payment of a participant'sDistributable Balance is delayed for six months, there shall be added to suchparticipant's Distributable Balance interest, through the date of expiration ofthe six-month period, at the rate that would have applied if payment had notbeen delayed, and 

such delayed payment shall be made no later than fifteen (15) daysfollowing, expiration of the six-month waiting period.

 

(ii)        TheDistributable Balance and Grandfathered Amount of his Installment Account shallbe paid to him in 10 equal installments, the first payment to be made no laterthan the fifteenth (15th) business day following the last day of themonth during which Termination of Employment occurred. The remaining paymentsshall be made no later than the fifth (5th) business day of each ofthe next nine calendar years beginning after the date of Termination ofEmployment. Each of the previous two sentences shall be subject to the provisothat if the participant is a Key Employee, no amount of the DistributableBalance of his Installment Account shall be paid to the participant prior to adate that is six months after the date of the participant's Termination ofEmployment if such termination was for reasons other than Disability (or death).If one or more payments of a participant's Distributable Balance are so delayed,there shall be added to such participant's Distributable Balance interest,through the date of expiration of the six-month period, at the rate that wouldhave applied if payment had not been delayed, and such delayed payment(s) shallbe made no later than fifteen (15) days following expiration of the six-monthwaiting period. After the initial installment payment, there shall be added toeach installment an amount determined as if subsequent installment paymentinterest on the undistributed portion of such Installment Account had beencredited and compounded as of the December 31 immediately preceding each suchinstallment due date, at the applicable rate for the calendar year, asdetermined in accordance with Section 2.4. If a participant dies beforereceiving all installment payments, any remaining installment payments shall bemade to his Beneficiary or Beneficiaries.

 

(b)         If a participant's Termination of Employment occurs by reason of death,the benefits otherwise distributable to him under Section 3.3(a) shall be paidto the Beneficiary or Beneficiaries designated by participant in such amounts orportions as shall have been designated by participant. Such payment(s) shall bemade (in the case of a participant's Lump Sum Account) or commenced (in the caseof a participant's Installment Account) no later than thirty (30) days after theparticipant's death; provided that in the event there is a dispute or otheruncertainty regarding a participant's Beneficiary or Beneficiaries, suchpayment(s) shall be made or commence no later than thirty (30) days after suchdispute or uncertainty is fully and finally resolved.

 

(c)         Assuming a participant has not Terminated Employment, the benefitsotherwise distributable under his Lump Sum and Installment Accounts shall bepaid to him in a single cash payment no later than fifteen (15) business daysfollowing December 31, 2008 or subsequent ten (10) year distribution dates;provided, however, that the unvested portion of a participant's Account shall becarried over as a credit and be part of the Distributable Balance thereof at thenext distribution date.

 

(d)         Any payment made after a specified payment deadline provided for herein,but within the applicable grace period permitted by Section 409A, shall beconsidered payment on the specified payment deadline for all purposes under thePlan.

 

 

A participant may designate one or more persons as a "Beneficiary" toreceive any amounts payable under this Plan by filing a written designation ofBeneficiary with the Company or Participating Company. Without limiting thegenerality of the preceding sentence, a participant's designated Beneficiary orBeneficiaries may include one or more intervivos or testamentary trusts, charitablefoundations or not-for-profit corporations; provided that if any person orentity other the participant's spouse is designated as a Beneficiary, theparticipant's spouse must consent in writing to such designation. Suchparticipant may also, in the same manner and at any time and from time to time(whether before or after benefit payments to such participant have commenced),change any Beneficiary previously designated by him, without notice to orconsent of any previously designated Beneficiary except the participant's spousein the event the newly-designated Beneficiary is other than the participant'sspouse. If any Beneficiary fails to survive the participant, the Beneficiaryshall be such alternate Beneficiary as may have been designated by theparticipant, and if all Beneficiaries fail to survive the participant, theBeneficiary shall be the participant's surviving spouse (if any), or if none,the participant's estate. If any Beneficiary shall die after the participant,any amounts remaining due to such Beneficiary under this Plan at the time of theBeneficiary's death shall, unless otherwise provided by the participant in hisdesignation of Beneficiary, be paid to the Beneficiary's estate. If thedesignated Beneficiary cannot be located for a period of one year following theparticipant's death despite mailing to such Beneficiary's last known address,and such Beneficiary has not made written claim within such period to theCommittee, such Beneficiary shall be treated as having predeceased theparticipant.

 

ARTICLE IV

 

MISCELLANEOUS

 

 

(a)         As a prerequisite to the payment of benefits in respect of a participanthereunder, such participant shall furnish the Committee or the Company with allinformation which the Committee or the Company or a Participating Company maydeem necessary or desirable to assist it in the administration of this Plan,including, without limitation, any information necessary or desirable incomputing the amount of the participant's retirement and otherbenefits.

 

(b)         Participating Employers, the Board of Directors of the Company and theCommittee may rely upon any certificate, statement, or other representation madeto them by a participant or any other person with respect to age, length ofservice, date of commencement or Termination of Employment, the existence ofDisability, marital status or other fact required to be determined under any ofthe provisions of this Plan, and shall not be liable on account of the paymentof any moneys or the doing of any act in reliance upon any such certificate,statement or other representation. Any such certificate, statement or otherrepresentation made by the participant or any other person shall be conclusivelybinding upon the participant, his spouse and Beneficiary who shall thereafter and forever be estopped from disputingthe truth and correctness of such certificate, statement or otherrepresentation.

 

4.2        Forfeiture. Notwithstanding any provision of thisPlan, if following Termination of Employment for any reason a participant isfound guilty (by a court of competent jurisdiction) of any act of fraud ordishonesty against the Company or a Participating Company, then all rights whichthe participant or his spouse or Beneficiary may have under this Plan shall beretroactively forfeited, any liability of the Participating Employers to makepayments hereunder shall terminate, and any payments previously made hereundershall be considered null and void and Participating Employers shall have theright to recover any such payments previously made hereunder. 

 

4.3        Rights to Terminate Employment. Nothing in thisPlan shall confer upon a participant the right to continue in the employ of theCompany or a Participating Company or affect any right the Company or aParticipating Company may have to terminate the participant'semployment.

 

4.4        Assignment. Neither the participant nor hisspouse nor any Beneficiary may assign, pledge or otherwise encumber any interestin this Agreement without the written consent of the Committee.

 

4.5        NoThird Party Rights. Neither a participant's spouse norany Beneficiary shall have any right to enforce the terms of this Plan prior tothe time of the participant's death, and during the participant's lifetime, thisPlan may be amended by the Company (subject to Section 4.6), notwithstandingthat such amendment may eliminate or cancel any right to benefit payments suchspouse or Beneficiary would otherwise have under this Plan.

 

4.6        Amendment and Termination. The Committee and theBoard of Directors of the Company shall have the right, in its absolutediscretion, at any time and from time to time, to waive, modify or amend, inwhole or in part, any or all of the provisions of the Plan, or suspend orterminate it entirely; provided that any waiver, modification, amendment,suspension or termination is permitted by Section 409A; and further provided nosuch modification, amendment, suspension or termination may, without theparticipant's written consent, reduce the amount of a participant's Accountbalances prior to the effective date of such modification, amendment, suspensionor termination, or adversely affect in any material respect his right to havehis then-existing Account balances updated, vested and distributed in accordancewith the provisions of Section 2.4 and Article III.

 

4.7        Limitation of Liability; Indemnification. Nomember of the Committee or of the Board of Directors of the Company shall bepersonally liable for any act or omission done or failed to be done by suchmember in the course of administering or otherwise acting with respect to thePlan, except as provided in Article Eighteenth of the Restated Certificate ofIncorporation of the Company. Moreover, each member of the Committee and theBoard of Directors shall be indemnified to the fullest extent provided for inthe Company's Restated Certification of Incorporation or Bylaws from anyexpense, liability or loss incurred or suffered by any of such persons as aresult of administering or otherwise acting with respect to the Plan.

 

4.8        Benefits Paid by Participating Employers. Theobligation to pay benefits under the Plan is to be apportioned among theParticipating Employers in accordance with the provisions of this Section 4.8. AParticipating Employer shall be obligated to pay the benefits attributable to(a) salary credits awarded under Section 2.3 for Compensation paid by thatParticipating Employer, (b) Account updatings in respect of such credits underSection 2.4, and (c) amounts credited on the undistributed portion of anInstallment Account pursuant to Section 3.3. A Participating Employer shall notbe obligated to pay benefits which are the obligation of another ParticipatingEmployer pursuant to the preceding sentence.

 

 

(a)         Neither a participant nor his spouse, Beneficiary, or any person claimingthrough any of them, shall under any circumstances have any right to requirepayments hereunder other than in accordance with the terms of thePlan.

 

(b)         Subject to Section 409A, this Plan conflicts with the terms of anindividual employment agreement between the participant and the Company or aParticipating Company, the terms of said employment agreement shall govern overthe terms of this Plan.

 

(c)         The masculine pronoun, wherever used herein, shall mean or include thefeminine pronoun.

 

(d)         Benefit payments hereunder shall be subject to withholding, to the extentrequired by applicable tax or other laws, or order of a court of competentjurisdiction.

 

(e)         The Plan shall inure to the benefit of and be binding upon the successorsand assigns of the Participating Employers and the heirs, administrators,executors and personal representatives of the participant.

 

(f)          No waiver of any breach or default hereunder shall be considered validunless in writing, and no such waiver shall be deemed a waiver of any subsequentbreach or default of the same or similar nature.

 

(g)         If any provision of this Plan is held invalid or unenforceable, itsinvalidity or unenforceability shall not affect any other provisions of thisPlan, and this Plan shall be construed and enforced as if such provision had notbeen included herein.

 

(h)         This Plan and the obligations of the parties hereunder shall beinterpreted, construed and enforced in accordance with the laws of the state ofTexas.

 

(i)          The captions contained herein are inserted only as a matter orconvenience and for reference and in no way define, limit, enlarge or describethe scope or intent of the Plan nor in any way shall affect the Plan or theconstruction of any provision thereof.