SECOND AMENDMENT TO AMENDED AND RESTATED
                              CREDIT AGREEMENT


     THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the
"Amendment") dated as of October 9, 1997, is entered into by and between
THE PACIFIC LUMBER COMPANY (the "Company") and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION (the "Bank").

                                  RECITALS

     A.  The Bank and the Company are parties to an Amended and Restated
Credit Agreement dated as of November 10, 1995 pursuant to which the Bank
has extended certain credit facilities to the Company.  This Credit
Agreement, as amended by a First Amendment to Amended and Restated Credit
Agreement dated as of February 10, 1997 and as in effect as of the opening
of business on the date of this Amendment is referred to in this amendment
as the "Credit Agreement".

     B.  The Company has requested that the Bank agree to certain
amendments of the Credit Agreement.

     C.  The Bank is willing to amend the Credit Agreement as set forth and
subject to the terms and conditions of this Amendment.


     NOW, THEREFORE, for valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:

1.   Defined terms.  Unless otherwise defined in this Agreement,
     capitalized terms shall have the meanings (if any) assigned to them in
     the Credit Agreement.

2.   Amendments to Article I and II.

     (a)  Section 1.01 of the Credit Agreement is amended as follows:

          (1)  The last paragraph of the definition of "Acceptable
               Inventory" is amended in its entirety to provide as follows:

               "The value of Acceptable Inventory shall be the lesser of
               the Company's cost (determined under GAAP) or the Bank's
               independent determination of the resale value of such
               inventory in such quantities and on such terms as the Bank
               may reasonably deem appropriate.  Until further written
               notice from the Bank to the Company, the Bank agrees that
               the value (y) of the lumber component of Acceptable
               Inventory shall be determined by the resale value of such
               inventory in such quantities and on such terms as the Bank
               may reasonably deem appropriate and (z) of the log
               component of such Acceptable Inventory shall be determined
               by the Company's cost (determined under GAAP) of such
               inventory."

          (2)  Clause (a) of the definition of "Acceptable Receivable" is
               amended by deleting "$500,000" in the two places in which
               such amount appears and replacing it with "$2,000,000".

          (3)  Clause (a) of the definition of "Revolving Termination Date"
               is amended in its entirety to provide as follows:

               "(a)  May 31, 2000; and"

          (4)  Clause (a) of the definition of "Term Credit Termination
               Date" is amended in its entirety to provide as follows:

               "(a)  June 30, 1999; or"

     (b)  Subsection 2.01(b)(2) of the Credit Agreement is amended in its
          entirety to provide as follows:

          "(2) After the issuance or amendment of a Standby Letter of
          Credit, the aggregate of (y) the Outstanding Letters of Credit
          and (z) the Letter of Credit Obligations shall not exceed
          $20,000,000."

     (c)  Subsection 2.08(a) of the Credit Agreement is amended by
          replacing "June 30, 1998" in clause (1) and clause (2) of such
          subsection with "June 30, 1999".

3.   Representations and Warranties.  The Company hereby represents and
     warrants to the Bank as follows:

     (a)   No Default or Event of Default has occurred and is continuing.

     (b)  The execution, delivery and performance by the Company of this
          Amendment have been duly authorized by all necessary corporate
          and other action and do not and will not require any registration
          with, consent or approval of, notice to or action by, any Person
          (including any Governmental Authority) in order to be effective
          and enforceable.  The Credit Agreement as amended by this
          Amendment constitutes the legal, valid and binding obligations of
          the Company, enforceable against it in accordance with its
          respective terms, without defense, counterclaim or offset.

     (c)  All representations and warranties of the Company contained in
          the Credit Agreement are true and correct.

     (d)  The Company is entering into this Amendment on the basis of its
          own investigation and for its own reasons, without reliance upon
          the Bank or any other Person.

4.   Effective Date.  This Amendment will become effective as of October
     9, 1997 (the "Effective Date"); provided that each of the following
     conditions precedents is satisfied on or before such date:

     (a)  The Bank has received from the Company a duly executed original
          of this Amendment.

     (b)  The Bank has received from the Company a copy of a resolution
          passed by the board of directors of the Company, certified by the
          Secretary or an Assistant Secretary of the Company as being in
          full force and effect on the date hereof, authorizing the
          execution, delivery and performance of this Amendment.

     (c)  The Bank has received from counsel to the Company an opinion in
          form and substance satisfactory to the Bank stating, among other
          matters, that this Amendment and the Credit Agreement as amended
          by this Amendment is a legal and binding obligation of the
          Company, enforceable against the Company in accordance with its
          terms.

     (d)  All representations and warranties contained herein are true and
          correct as of the Effective Date.

5.   Miscellaneous.

     (a)  All terms, covenants and provisions of the Credit Agreement as
          amended by this Amendment are and shall remain in full force and
          effect and all references therein to such Credit Agreement shall
          henceforth refer to the Credit Agreement as amended by this
          Amendment.  This Amendment shall be deemed incorporated into, and
          a part of, the Credit Agreement.

     (b)  This Amendment shall be binding upon and inure to the benefit of
          the parties hereto and thereto and their respective successors
          and assigns.  No third party beneficiaries are intended in
          connection with this Amendment.

     (c)  This Amendment shall be governed by and construed in accordance
          with the law of the State of California.

     (d)  This Amendment may be executed in any number of counterparts,
          each of which shall be deemed an original, but all such
          counterparts together shall constitute but one and the same
          instrument.  Each of the parties hereto understands and agrees
          that this document (and any other document required herein) may
          be delivered by any party thereto either in the form of an
          executed original or an executed original sent by facsimile
          transmission to be followed promptly by mailing of a hard copy
          original, and that receipt by the Bank of a facsimile transmitted
          document purportedly bearing the signature of the Company shall
          bind the Company, with the same force and effect as the delivery
          of a hard copy original.  Any failure by the Bank to receive the
          hard copy executed original of such document shall not diminish
          the binding effect of receipt of the facsimile transmitted
          executed original of such document which hard copy page was not
          received by the Bank.

     (e)  This Amendment may not be amended except in accordance with the
          provisions of Section 9.01 of the Credit Agreement.

     (f)  If any term or provision of this Amendment shall be deemed
          prohibited by or invalid under any applicable law, such provision
          shall be invalidated without affecting the remaining provisions
          of this Amendment or the Credit Agreement, respectively.

     IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Amendment as of the date first above written.

THE PACIFIC LUMBER COMPANY              BANK OF AMERICA NATIONAL
                                        TRUST AND SAVINGS
                                        ASSOCIATION

By:      /S/ GARY L. CLARK              By:     /S/ MICHAEL J. BALOK
Name:  Gary L. Clark                    Name:  Michael J. Balok
Title:  Vice President--Finance         Title:  Managing Director
         and Administration