Exhibit 10.1
AGREEMENT
THIS
AGREEMENT is made by and between The Pension Benefit
Guaranty Corporation (“PBGC”), a United
States government corporation, and MAXXAM, Inc.
(“MAXXAM”), a Delaware corporation (collectively,
“the Parties”).
WITNESSETH
:
WHEREAS,
MAXXAM’s wholly-owned subsidiary, The Pacific Lumber
Company (“Palco”), filed for protection under
Chapter 11 of the U.S. Bankruptcy Code on January 19, 2007
(the “Palco Bankruptcy Proceedings”);
and
WHEREAS,
Palco is the Contributing Sponsor (as defined below) of The
Palco Retirement Plan (the “Plan”), a defined
benefit pension plan insured by PBGC; and
WHEREAS,
the Plan has Unfunded Benefit Liabilities (as defined below),
measured on a termination basis as of April 30, 2007, of
approximately $24 million; and
WHEREAS,
PBGC filed estimated contingent claims in the Palco Bankruptcy
Proceedings against Palco and each of its co-debtors for the
Plan’s Unfunded Benefit Liabilities (as defined below);
and
WHEREAS,
MAXXAM is a member of Palco’s Controlled Group (as
defined below); and
WHEREAS,
as a member of Palco’s controlled group, MAXXAM is
jointly and severally liable for all required contributions to
the Plan and, upon termination of the Plan, the Plan’s
Termination Liability (as defined below), and the Termination
Premium (as defined below); and
WHEREAS,
the Parties desire that the Plan remain ongoing after Palco
emerges from the Palco Bankruptcy Proceedings;
NOW,
THEREFORE, in consideration of the mutual covenants contained
herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Parties
agree as follows:
Section I
Definitions
When
used herein:
“Benefit
Liabilities” has the meaning ascribed thereto in ERISA
§4001(a)(16), determined as of a specified
date.
“Contributing
Sponsor” has the meaning ascribed thereto in ERISA
§4001(a)(13).
“Controlled
Group” has the meaning ascribed thereto in ERISA
§4001(a)(14).
“Effective
Date” means the last date on which a Party signs this
Agreement.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended, 29 U.S.C. §§1001 et seq ., and all
regulations issued thereunder. References to
sections of ERISA shall be construed to refer to any successor
or substantially related sections of similar import, and the
regulations applicable thereto.
“IRC”
means the Internal Revenue Code of 1986, as amended, and all
regulations thereunder. References to sections of
the Internal Revenue Code shall be construed to refer to any
successor or substantially related sections of similar import,
and the regulations applicable thereto.
“Palco”
means The Pacific Lumber Company as Contributing Sponsor (as
defined above) of the Plan or any new entity formed as a
result of Palco’s emergence from protection under
Chapter 11 of the U.S. Bankruptcy Code that is a Contributing
Sponsor of the Plan.
“Termination
Date” has the meaning ascribed thereto in ERISA
§4048.
“Termination
Liability” means the liabilities to PBGC described under
ERISA §4062(b).
“Termination
Premium” means the liability that arises under ERISA
§4006(a)(7) for premiums due and payable by a
Contributing Sponsor and each member of its Controlled Group,
upon the termination of a pension plan under circumstances set
forth in ERISA §4006(a)(7)(A).
“Unfunded
Benefit Liabilities” has the meaning ascribed thereto in
ERISA §4001(a)(18) and its implementing
regulations.
Section II
Obligations &
Procedures
2.01
Termination
Liability Guaranty and Termination Premium Guaranty
.
In the event that the Plan
is terminated in a distress termination under ERISA
§
4041(c) or in a PBGC-initiated termination under ERISA
§
4042 during the term of this Agreement, MAXXAM guarantees to
PBGC the payment of the Unrecovered Termination Liability and
the Unrecovered Termination Premium, as described in sections
(a) and (b) below.
(a) The
Unrecovered Termination Liability is the Plan’s
Unfunded Benefit Liabilities as of the Termination Date, less
the Controlled Group Termination Liability Recovery Amount
(as described below), plus Assessable Interest (as described
below), calculated from the date of PBGC’s demand for
payment under section 2.02(b). The Controlled
Group Termination Liability Recovery Amount means the present
value of the amounts, if any, that PBGC received or arranged
to receive from the Contributing Sponsor and each member of
the Contributing Sponsor’s Controlled Group (with the
exception of MAXXAM) for payment of the Plan’s
Termination Liability.
(b) The
Unrecovered Termination Premium is the total, three-year
Termination Premium due PBGC under ERISA §4006(a)(7),
less the Controlled Group Termination Premium Recovery Amount
(as described below), plus Assessable Interest (as described
below), calculated from the date of PBGC’s demand for
payment under section 2.02(b). The Controlled
Group Termination Premium Recovery Amount shall mean the
present value of the amounts, if any, that PBGC received, or
arranged to receive, from the Contributing Sponsor
and each member of the Contributing
Sponsor’s Controlled Group (with the exception of
MAXXAM) for payment of the Plan’s Termination
Premium.
(c) Assessable
Interest shall arise only after PBGC issues a demand under
section 2.02(b). Assessable Interest shall be
calculated using an annual rate of interest equal to the
annual short-term applicable Federal interest rate under IRC
§1274 in effect on the date PBGC issues its demand under
section 2.02(b).
(d) For
purposes of calculating the Controlled Group Termination
Liability Recovery Amount and the Controlled Group Termination
Premium Recovery Amount, PBGC shall value any in-kind payments
at their fair market value and shall determine the present
value of any deferred payment amounts under any payment
agreements using the same rate PBGC used to determine Benefit
Liabilities for the Plan. The fair market value of
in-kind payments and the present value of deferred payment
amounts shall be established as of the Termination Date of the
Plan.
2.02
Conditions and
Procedure for Making a Demand for Unrecovered Termination
Liability and Unrecovered Termination
Premium.
(a) Before
issuing a demand under paragraph (b) of this section, PBGC
shall provide MAXXAM with:
(1) Notice
that PBGC has received a distress termination notice pursuant
to ERISA § 4041 (this notice shall be provided within
twenty (20) days of PBGC’s receipt of the distress
termination notice); or
(2) Notice
that PBGC has decided in accordance with its administrative
procedures (by issuing a Notice of Determination) to initiate
proceedings under ERISA § 4042 to terminate the Plan
(this notice shall be provided within twenty (20) days after
the Notice of Determination has been issued);
and
(3) Notice
of the proposed Termination Date for the Plan;
and
(4) As
to each person (with the exception of MAXXAM) described in
ERISA §4062(a) as being liable fo
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