Document:

exh10_37.htm

    
      Exhibit
10.37

      

      MAXXAM
INC.

      TAX ALLOCATION AGREEMENT
WITH

      MAXXAM GROUP
INC.

      OF AUGUST 4,
1993

      

      This Agreement is made as of August
4, 1993, between MAXXAM Inc. ("Parent"), a Delaware corporation, and MAXXAM
Group Inc. ("MGI"), a Delaware corporation.

      

      WHEREAS, MGI 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 Parent is the common
parent corporation (the "Group"); and

      

      WHEREAS, pursuant to a tax allocation
agreement dated as of May 21, 1988 (the "May 88 Agreement"), Parent and certain
of its then existing subsidiaries, including MGI, The Pacific Lumber Company
("Pacific Lumber"), a Delaware corporation, MAXXAM Properties Inc. ("MPI"),
a.
Delaware corporation, Yosuba Farms (“Yosuba”), a California corporation, and KLU
Holdings, Inc. (“KLU”), a Delaware corporation, established a Tax Allocation
Method, as hereinafter defined. As used herein, the term "Tax Allocation Method"
shall mean a method for allocating the consolidated tax liability of a group
among its members and for reimbursing the group's parent for the payment of such
liability; and

      

      WHEREAS, pursuant to a tax allocation
agreement dated as of July 3, 1990, Parent and Britt Lumber Co., Inc. ("Britt"),
a California corporation, established a Tax Allocation Method (the "Britt
Agreement"); and

      

      WHEREAS, pursuant to a tax allocation
agreement dated as of March 23, 1993, Parent and Pacific Lumber amended the May
88 Agreement with respect to Pacific Lumber and established a Tax Allocation
Method with respect to certain Pacific Lumber subsidiaries (the "PL Agreement");
and

      

      WHEREAS, on August 4 1993, MGI issued
$100,000,000 of its Senior Secured Notes due 2003 and $126,720,000 of its Senior
Secured Discount Notes due 2003 (collectively, the "Notes"); and

      

      WHEREAS, from time to time, MGI or
any of its Restricted Subsidiaries (as hereinafter defined) may incorporate a
Restricted Subsidiary which may become a member of the Group; and

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      WHEREAS, Parent and MGI desire to
further amend the May 88 Agreement solely with respect to MGI consistent with
the amendments each agreed to make in connection with the issuance of the Notes
and to establish  a Tax Allocation Method which includes any
newly-formed Restricted Subsidiary, as of the time that it becomes a member of
the Group.  Parent and MGI agreed to make amendments such that MGI and
its subsidiaries, excluding Salmon Creek Corporation, will ultimately pay Parent
Federal income taxes as if they filed on a consolidated basis with respect to
periods post issuance of the Notes, subject to the terms set forth
herein.

      

      NOW, THEREFORE, in consideration of
the promises and of the mutual agreements and covenants contained herein, Parent
and MGI hereby agree as follows:

      

      1.             Section
2 of the May 88 Agreement is amended such that MGI shall cause any Restricted
Subsidiary, at the time that it becomes a member of the Group, to agree to be
included in Parent's consolidated Federal income tax return for all taxable
years during which such Restricted Subsidiary is eligible to be included in
Parent's consolidated Federal income tax return.  Restricted
Subsidiary shall mean a Restricted Subsidiary as defined in the indenture dated
as of August 4, 1993 by and between MGI and Shawmut Bank, N.A., as Trustee, for
the Notes (the "Indenture").

      

      2.             Section
3 of the May 88 Agreement is amended such that MGI shall cause any Restricted
Subsidiary which becomes a member of the Group to execute any consents and other
documents as are necessary in connection therewith.

      

      3.             Except
with respect to any payments to Parent that are required under this Agreement,
the May 88 Agreement, the Britt Agreement, or the PL Agreement, Parent shall
indemnify MGI and each MGI Subgroup Subsidiary (as hereinafter defined) and hold
them harmless against all Federal income. tax liabilities relating to taxable
years of MGI and each MGI Subgroup Subsidiary during which MGI and each MGI
Subgroup subsidiary is or was a member of the Group.

      

      
        	
                4.

              	
                (a)

              	
                 

              	
                For
      purposes of making the computations described herein, MGI and all lower
      (with respect to MGI) tier entities, including newly-formed Restricted
      Subsidiaries but excluding Salmon Creek Corporation, Kaiser Aluminum
      Corporation and its subsidiaries and corporations formed and distributed
      to Parent in connection with the Forest Products Group Formation,
      (individually and collectively referred to as "MGI Subgroup Subsidiary" or
      "MGI Subgroup Subsidiaries") in which MGI has direct or indirect ownership
      shall be treated as an affiliated group of corporations (the "MGI
      Subgroup"), the common parent of which is MGI, provided, however,
      that-
      the MGI Subgroup shall only include any MGI Subgroup Subsidiary to the
      extent that such MGI Subgroup Subsidiary meets the test of affiliation
      under Section 1504 of the Code as it would apply to the MGI Subgroup. MGI
      and each MGI Subgroup Subsidiary shall sometimes be referred to as "MGI
      Subgroup Members".

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        	
                 
      

              	
                (b)

              	
                The
      computation of the Federal income tax liability of MGI under Section 5 of
      the May 88 Agreement shall be amended effective January 1, 1993, as per
      the provisions of this section 4, such that the payment required of MGI
      shall be equal to MGI's Tentative Tax Liability (as hereinafter defined)
      minus the aggregate tax amounts computed for each MGI Subgroup Subsidiary
      under the May 88 Agreement, the Britt Agreement, the PL Agreement and this
      Agreement (the "Aggregate Amounts").  For purposes of this
      Section, any amounts paid to MGI Subgroup Subsidiaries by Parent as a
      consequence of net operating loss or other carrybacks to post 1992 taxable
      periods shall be given effect by treating such amounts as a negative
      payment to be included in the Aggregate
Amounts.

              

      

      

      
        	
                 
      

              	
                (c)

              	
                The
      computation of the Federal income tax liability of MGI shall take into
      account the taxable income, loss, credits and other tax attributes of each
      MGI Subgroup Subsidiary as if MGI filed a consolidated return solely with
      each MGI Subgroup Subsidiary (taking into account all applicable
      limitations under the Code) ("MGI's Tentative Tax Liability"). In
      calculating such liability, all intercompany transactions between MGI
      Subgroup Members shall be treated consistent with the consolidated return
      Treasury Regulations. Taxable income of any MGI Subgroup Subsidiary
      recognized on or before August 4, 1993, shall not be offset by losses,
      other than those generated by such MGI Subgroup
  Subsidiary.

              

      

      

      
        	
                 
      

              	
                (d)

              	
                To
      the extent that MGI's Tentative Tax Liability is less than the Aggregate
      Amounts, Parent shall pay the amount of such difference to
      MGI.

              

      

      

      
        	
                 
      

              	
                (e)

              	
                Any
      gain recognized by MGI, MPI or KLU under Section 311(b) of the Code
      resulting from distributions made contemporaneously with, or subsequent
      to, the offering of the. Notes to effectuate the Forest Products Group
      Formation, as discussed in the prospectus dated July 28, 1993. for
      the Notes, shall not be taken into
account.

              

      

      

      
        	
                 
      

              	
                (f)

              	
                For
      purposes of Section 4(c) of this Agreement, MGI's separate company net
      operating loss carryforwards existing under the May 88 Agreement as of
      December 31, 1992 shall be available only to offset taxable income of GI.
      This limitation shall also 1apply to MGI's losses incurred in 1993 through
      August 4, 1993.

              

      

      

      
        	
                 
      

              	
                (g)

              	
                For
      purposes of Section 4(c) of this Agreement, net operating loss
      carryforwards of any MGI Subgroup Subsidiary existing under its respective
      tax allocation agreement as of December 31, 1992 shall be available only
      to offset taxable income of such MGI Subgroup Subsidiary. This limitation
      shall also apply to losses incurred in 1993 through August 4,
      1993.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        	
                 
      

              	
                (h)

              	
                If
      the calculation of MGI's Tentative Tax Liability in Section 4(c) results
      in a net operating loss that can be carried back to a prior taxable period
      or periods with respect to which MGI Subgroup Members made payments to
      Parent under their respective tax allocation agreements, then, in that
      event, Parent shall pay MGI an amount equal to the tax refund to which the
      MGI Subgroup would have been entitled consistent with this Section 4. For
      this purpose, any loss which is otherwise available for a carryback to
      offset income recognized on or before August 4, 1993, shall only be
      available to offset income of the entity which generated the
      loss.

              

      

      

      
        	
                 
      

              	
                (i)

              	
                If
      the calculation of MGI's Tentative Tax Liability in Section 4(c) results
      in a net operating loss that cannot be carried back pursuant to the
      preceding subsection (h), then, in that event, such net operating loss
      shall be a net operating loss carryover to be used by the MGI Subgroup in
      computing its Federal income tax liability pursuant to the preceding
      subsection (c) for future taxable periods, under the law applicable to net
      operating loss carryovers in
general.

              

      

      

      
        	
                 
      

              	
                (j)

              	
                The
      tax computation under this Section for 1993 is intended to approximate the
      tax computation that would have resulted had an interim closing of the
      books and records occurred on the date the Notes were
    issued.

              

      

       

      5.             Except
with respect to section 4(b) with respect to any Restricted Subsidiary, this
Agreement shall be effective for the Group's 1993 taxable period and all
subsequent taxable periods (excluding any period of time prior to the date upon
which such Restricted Subsidiary joined the Group) until the date on which (i)
such Restricted Subsidiary ceases to be a member of the Group, (ii) the Group no
longer remains in existence within the meaning of Treasury Regulation
§1.1502-75(a), or (iii) the Group is no longer eligible to file, or is no longer
eligible to join in the filing of, a consolidated return for Federal income tax
purposes. Prior to or upon termination of this Agreement, the parties may enter
into a new agreement, consistent with the provisions of this Agreement, taking
into account, among other things, to the extent applicable, the manner in which
such Restricted Subsidiary ceased to be a member of the Group, the reason that
the Group is no longer in existence, or the reason that Parent and or such
Restricted Subsidiary can no longer join in the same consolidated
return.

      

      6.             This
Agreement is entered into by the parties solely in recognition of the mutual
benefits resulting from filing a Federal (or state or other local) consolidated
or combined tax return. The respective amounts of tax liability allocated to
each MGI Subgroup Member for purposes of computing such corporation's earnings
and profits for Federal (or any other) income tax purposes may differ from those
determined in accordance with this Agreement. Furthermore, any amount treated
for Federal (or state or other local) income tax purposes, on account of such a
difference, as a contribution to capital or a distribution with respect to
stock, or a combination thereof, as the case may be, shall be treated as a
contribution to capital, a distribution with respect to stock, or a combination
thereof, solely for Federal (or state or other local) income tax
purposes.

       

      
        7.             This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.

        

          
            
               

            

            
               

              
                

              

            

            
               

            

          

      

      IN WITNESS WHEREOF,  Parent
and MGI have executed this Agreement by authorized officers thereof as of the
date first above written.

      

      
        	
                MAXXAM Inc.

              	 
      	 
      
	 
      	 
      	 
      
	
                By:

              	
                /s/
      John T. LaDuc

              	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                MAXXAM
GroupInc.

              	 
      	 
      
	 
      	 
      	 
      
	
                By:

              	
                /s/
      Ronald L. Remanexh10_38.htm

    Exhibit
10.38

    

    Amendment
of Tax Allocation Agreement

    Between

    MAXXAM
Inc.

    and

    MAXXAM
Group Inc.

    

    

    

    WHEREAS, MAXXAM Inc. ("MAXXAM") and
MAXXAM Group Inc. ("MGI") executed a tax allocation agreement as of August 4,
1993 covering all taxable years during which MGI is included in MAXXAM's Federal
consolidated income tax returns (the " MGI Tax Allocation Agreement");
and

    

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

    

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

    

    
      	
              1.

            	
              The
      first sentence of Section 4(a) is replaced with, and superseded by, the
      following language:

            

    

    

    
      	
               
      

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

            

    

    

    
      	
              2.

            	
              Sections
      4(h), (i), and (j) are redesignated as Sections 4(i), (j), and (k),
      respectively.

            

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              3.

            	
              Section
      4 is amended by adding the following language as new subsection
      (h):

            

    

    

    
      	
               
      

            	
              For
      purposes of Section 4(c) of this Agreement, net operating losses of MGI
      Subgroup Members arising after August 31, 1993 are available to offset
      Salmon Creek Corporation's 1999 taxable income recognized on the sale of
      its Headwaters timberlands.

            

    

    

    
      	
              4.

            	
              Section
      4(j), as redesignated, is amended by changing the reference contained
      therein from "subsection (h)" to "subsection
  (i)."

            

    

    

    

    IN WITNESS WHEREOF, MAXXAM and MGI 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/
      Gary L. Clark

            
	 
      	
              Title:

            	
              Vice
      President

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