exh10_36.htm


    Exhibit
10.36

    


    Amendment
of Tax Allocation Agreement

    Between

    MAXXAM
Inc.

    and

    MAXXAM
Group Holdings Inc.

    


    


    


    WHEREAS, MAXXAM Inc. ("MAXXAM") and
MAXXAM Group Holdings Inc. ("MGHI") executed a tax allocation agreement as of
December 23, 1996 covering all taxable years during which MGHI is included in
MAXXAM's Federal consolidated income tax returns (the "MGHI Tax Allocation
Agreement"); and

    


    WHEREAS, MGHI is currently a member of
the affiliated group within the meaning of Section 1504(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), of which MAXXAM is the common
parent corporation (the "Group"); and

    


    WHEREAS, pursuant to an Amendment of
Tax Allocation Agreement dated as of December 31, 2001, MAXXAM and The Pacific
Lumber Company, a wholly owned indirect subsidiary of MAXXAM, amended a tax
allocation agreement dated as of March 23, 1993 (the "Amended PL Tax Allocation
Agreement"); and

    


    WHEREAS, pursuant to an Amendment of
Tax Allocation Agreement dated as of December 31, 2001, MAXXAM and MGI, a wholly
owned indirect subsidiary of MAXXAM, amended a tax allocation agreement dated as
of August 4, 1993 (the "Amended MGI Tax Allocation Agreement"); and

    


    WHEREAS, MAXXAM and MGHI desire to
amend the MGHI Tax Allocation Agreement in a manner similar to the Amended PL
Tax Allocation Agreement and the Amended MGI Tax Allocation Agreement as
contemplated herein.

    


    NOW, THEREFORE, MAXXAM and MGHI hereby
agree to the following amendments to the MGHI Tax Allocation Agreement effective
for periods beginning after February 28, 1999:

    


    1.           The
first sentence of Section 4(a) of the MGHI Tax Allocation Agreement is replaced
with, and superseded by, the following language:

    


    
      	
               
      

            	
              For
      purposes of making the computations described herein, MGHI and all lower
      (with respect to MGHI) tier entities, including newly-formed Restricted
      Subsidiaries, in which MGHI has direct or indirect ownership (individually
      and collectively referred to as "MGHI Subgroup Subsidiary" or "MGHI
      Subgroup Subsidiaries") shall be treated as an affiliated group of
      corporations (the "MGHI Subgroup"), the common parent of which is MGHI,
      provided, however, that the MGHI Subgroup shall only include any MGHI
      Subgroup Subsidiary to the extent that such MGHI Subgroup Subsidiary meets
      the test of affiliation under Section 1504 of the Code as it would apply
      to the MGHI Subgroup.

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    2.           Section
4(e) is replaced with, and superseded by, the following language:

    


    
      	
               
      

            	
              For
      purposes of Section 4(c) of this Agreement, net operating losses available
      to the MGI Subgroup under the Revised MGI Agreement, as further revised by
      amendment as of December 31, 2001 (the "Amended MGI Agreement"), shall be
      available to offset income of the MGHI Subgroup in the same manner as
      under the Amended MGI Agreement. For the avoidance of doubt, net operating
      losses of MGHI Subgroup Members are available to offset Salmon Creek
      Corporation's 1999 taxable income recognized on the sale of its Headwaters
      timberlands.

            


    

    


    IN WITNESS WHEREOF, MAXXAM and MGHI
have executed this Amendment of Tax Allocation Agreement by duly authorized
officers thereof as of December 31, 2001.

    


    


    
      	 
      	
              MAXXAM
      Inc.

            
	 
      	 
      
	 
      	
              By:

            	
              /s/
      Paul N. Schwartz

            
	 
      	
              Title:

            	
              President

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              MAXXAM
      Group Holdings Inc.

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/
      Elizabeth D. Brumley

            
	 
      	
              Title:

            	
              Controller