**Exhibit10.14**

**AGREEMENTFOR LUMP SUM PURCHASE OF COMPANY TIMBER**

This AGREEMENT FOR LUMP SUM PURCHASE OF COMPANY TIMBER (this"Agreement") is entered into asof January 10, 2006 between SCOTIA PACIFIC COMPANY LLC, a Delaware limitedliability company ("Seller") andMAXXAM GROUP INC., a Delaware corporation ("Purchaser").

**Background**

B.           The Seller is a party to that certain Indenture dated as of July 20, 1998between the Seller and U.S. Bank National Association (successor-in-interest toState Street Bank and Trust Company) (the "Trustee" and/or "Collateral Agent"), as modified by that certainFirst Supplemental Indenture dated July 16, 1998 and that Second SupplementalIndenture dated July 20, 1999 (as so modified, the "Indenture").

C.           The Seller's obligations under the Indenture are secured, *inter alia*, by a lien on the Specified CompanyTimber (the "Trustee Lien").

D.           So long as certain conditions set forth in the Indenture have beensatisfied, the Indenture permits the Seller to sell the Specified Company Timberfree of the Trustee Lien or to grant rights to harvest the Specified CompanyTimber which are prior to the Trustee Lien.

E.           The Seller desires to sell, and the Purchaser desires to purchase, theSpecified Company Timber, free of the Trustee Lien in accordance with the termsand conditions set forth in the Indenture and in accordance with the terms andconditions set forth herein.

NOW THEREFORE, in consideration of the foregoing recitals, the mutualagreements contained herein and for other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the parties heretohereby agree as follows:

**I**

**DEFINITIONS**

1.1          Definitions. For all purposes of this Agreement,unless the context otherwise requires, all capitalized terms which are used butnot defined herein shall have the meaning set forth in Schedule A to theIndenture, which is incorporated by reference as if fully set forthherein.

**II**

**PURCHASE**

2.1          Purchase of Specified Company Timber. Effectiveupon Closing (as herein defined) and subject to all conditions and other termscontained in this Agreement, the Seller shall sell, convey, transfer and assignto the Purchaser all of the timber rights described on Exhibit A attached hereto (the foregoing areherein collectively referred to as the "Specified CompanyTimber"). Title to the Specified Company Timber shallpass to the Purchaser at Closing.

 

 

 

 

2.2          Unadjusted Purchase Price. The UnadjustedPurchase Price shall be $2,340,030.42 (the "UnadjustedPurchase Price"). The Unadjusted Purchase Price wascalculated using the prices established by the California State Board ofEqualization for the first half of 2006 for the relevant species, size codes andestimated mbf amounts shown on Exhibit B hereto.

2.3          Final Purchase Price. It is the intent of theSeller and the Purchaser that the final purchase price for the Specified CompanyTimber reflect the actual species, size codes, and mbf amounts contained in thelogs actually harvested by Purchaser before the deadlines specified inSection 6.3 below. Accordingly,after the earlier of (i) December 31, 2006 or (ii) all of the Specified CompanyTimber having been scaled in accordance with ArticleV hereof, the final purchase price for the SpecifiedCompany Timber (the "Final Purchase Price") shall be determined using the prices established for the first half of2006 by the California State Board of Equalization for the relevant species,size codes and mbf amounts, determined by the results of scaling the logsactually harvested from the Specified Company Timber by such date. If the FinalPurchase Price exceeds the Unadjusted Purchase Price, the Purchaser shall paysuch excess to the Seller, and if the Unadjusted Purchase Price exceeds theFinal Purchase Price the Seller shall pay such excess to the Purchaser. Anyamount owing pursuant to the foregoing sentence from the Purchaser to theSeller, or from the Seller to the Purchaser, as the case may be, shall be paidwithin 45 days following the determination of the Final Purchase Price.

**III**

**TIMBER HARVESTING PLANS AND RELATED MATTERS**

3.1          Harvesting. All harvesting of the SpecifiedCompany Timber hereunder shall be conducted pursuant to a valid TimberHarvesting Plan.

3.2          Compliance with Laws. All harvesting of SpecifiedCompany Timber and other related activities conducted by the Purchaser underthis Agreement shall be conducted in all material respects in accordance withall applicable Environmental Laws, Timber Laws, and General Laws, including,without limitation, those relating to streams, waterways, wildlife habitat andendangered species, and shall be conducted in all material respects inaccordance with the terms, provisions, restrictions and conditions of eachapplicable Timber Harvesting Plan, sustained yield plan, habitat conservationplan, or similar plan or permit and all federal, state and local laws, rules andregulations relating to or incorporated into any Timber Harvesting Plan,including laws relating to streams, waterways, wildlife habitat and endangeredspecies. Notwithstanding the foregoing, any and all reforestation obligationsassociated with the harvesting of the Specified Company Timber, including anyreforestation obligations imposed by any Timber Harvesting Plan or habitatconservation plan, shall remain the obligation of the Seller and are notobligations of the Purchaser.

**IV**

**REPRESENTATIONS AND WARRANTIES**

4.1          Purchaser's Representations and Warranties. ThePurchaser hereby represents and warrants to the Seller as follows:

(a)          The Purchaser has been duly incorporated and is validly existing as acorporation in good standing under the laws of the State of Delaware, with fullcorporate power and authority to own its properties and conduct its business aspresently conducted, and is duly qualified to do business as a foreign corporationand is in good standing under the laws of each jurisdiction material to theperformance of its obligations under this Agreement.

 

 

 

(b)          This Agreement has been duly authorized, executed and delivered by thePurchaser and constitutes the valid and legally binding agreement of thePurchaser enforceable against the Purchaser in accordance with its terms, exceptto the extent such enforceability may be limited by Bankruptcy Law or generalprinciples of equity; and the Purchaser has full corporate power and authorityto enter into and perform its obligations under this Agreement.

(c)          No consent, approval, authorization or order of any GovernmentalAuthority is required for the execution and delivery by the Purchaser of thisAgreement.

(d)          The execution, delivery and performance by the Purchaser of thisAgreement does not violate, conflict with, result in a breach of, or constitutea default (or an event which with the giving of notice or the lapse of time orboth would be reasonably likely to constitute a default) under the charter orby-laws of the Purchaser, or any General Law, Timber Law or Environmental Lawapplicable to the Purchaser and in effect on the date hereof, or the terms ofany bond, debenture, note or any other evidence of indebtedness or any agreement,indenture, lease or other similar instrument to which the Purchaser is a party orby which it or any of its properties is subject.

(e)          There is not pending or, to the knowledge of the Purchaser, threatened,any action, suit, proceeding or investigation involving the Purchaser (and, tothe knowledge of the Purchaser, no basis for any such action, suit, proceedingor investigation exists) before any Governmental Authority which couldreasonably be expected to have a material adverse effect upon this Agreement orthe ability of the Purchaser to perform its obligations hereunder.

4.2          Seller's Representations and Warranties. TheSeller hereby represents and warrants to the Purchaser as follows:

(a)          The Seller has been duly organized and is validly existing as a limitedliability company in good standing under the laws of the State of Delaware, withfull limited liability company power and authority to own its properties andconduct its business as presently conducted, and is duly qualified to dobusiness as a foreign limited liability company and is in good standing underthe laws of each jurisdiction material to the performance of its obligationsunder this Agreement.

(b)          This Agreement has been duly authorized, executed and delivered by theSeller and constitutes the valid and legally binding agreement of the Sellerenforceable against the Seller in accordance with its terms, except to theextent such enforceability may be limited by Bankruptcy Law or generalprinciples of equity; and the Seller has full limited liability company powerand authority to enter into and perform its obligations under thisAgreement.

(c)          No consent, approval, authorization or order of any GovernmentalAuthority is required for the execution and delivery by the Seller of thisAgreement.

(d)          The execution, delivery and performance by the Seller of this Agreementdoes not violate, conflict with, result in a breach of, or constitute a default(or an event which with the giving of notice or the lapse of time or both wouldbe reasonably likely to constitute a default) under the charter or limitedliability company agreement of the Seller, or any General Law, Timber Law orEnvironmental Law applicable to the Seller and in effect on the datehereof, or the terms of any bond, debenture, note or any other evidence ofindebtedness or any agreement, indenture, lease or other similar instrument towhich the Seller is a party or by which it or any of its properties issubject.

 

 

 

(e)          There is not pending or, to the knowledge of the Seller, threatened, anyaction, suit, proceeding or investigation involving the Seller (and, to theknowledge of the Seller, no basis for any such action, suit, proceeding orinvestigation exists) before any Governmental Authority which could reasonablybe expected to have a material adverse effect upon this Agreement or the abilityof the Seller to perform its obligations hereunder.

(f)           All of the Specified Company Timber is covered by valid Timber HarvestingPlans, which Timber Harvesting Plans are listed in Exhibit A hereto; and a full and complete copy ofeach such Timber Harvesting Plan has been furnished to or otherwise been madeavailable to the Purchaser.

(g)          The Seller has good and marketable title to the Specified Company Timber,and after giving effect to the release described in Section 9.3(a)(iii) hereof, the Specified CompanyTimber will upon Closing be free and clear of the Trustee Lien and all othermonetary liens or encumbrances.

**V**

**SCALING AND RELATED MATTERS**

5.1          Scalers. The Purchaser shall be responsible forall scaling and measuring of logs purchased pursuant to this Agreement. ThePurchaser shall, at its own expense, furnish one or more qualified scalersacceptable to the Seller. Notwithstanding the foregoing, the Purchaser shall bepermitted to subcontract such functions to Pacific Lumber in a manner consistentwith Article VIII hereof. Anyscalers used in connection with this Agreement may be employees of PacificLumber.

5.2          Method. Scaling shall be done as soon aspracticable upon delivery of logs to Pacific Lumber's log deck according to theNet Short Log Scribner Scale methodology of scaling. Notwithstanding theforegoing, the Purchaser may, at its option, utilize the weight equivalencymethodology of scaling. In such event, the Purchaser shall scale in accordancewith the requirements of the California State Board of Equalization (or anysuccessor agency) for the weight equivalency methodology of scaling, as ineffect from time to time. In accordance therewith, the Purchaser shall scaletruckloads of logs from time to time upon request of the Seller according to theNet Short Log Scribner Scale methodology, and shall appropriately adjust theassumptions used in its weight equivalency methodology on an ongoing basis toreflect the results of such scaling. Notwithstanding the foregoing, Purchaserwill utilize Net Short Log Scribner Scale methodology of scaling or will utilizethird party scalers, as applicable, if the Seller is obligated to exercise itsrights to require Pacific Lumber to utilize such methods pursuant to the lastsentence of Section 4.12 of the Indenture. 

5.3          Verification. The Seller may, upon reasonablenotice to the Purchaser, at the Seller's option and cost, at any time or fromtime to time utilize independent scalers from the Northern California LogScaling and Grading Bureau (or any successor organization) or any otherrecognized third party log scaling and grading bureau to verify the scaling bythe Purchaser. The Purchaser shall cooperate fully in any such verification bythe Seller. The Seller shall utilize independent scalers for at least twoconsecutive Business Days in each six month period, upon reasonable notice tothe Purchaser. The Purchaser shall appropriately adjust the results of itsscaling on a prospective basis to reflect the results of such third partyscaling.

 

 

 

**VI**

**HARVESTING**

6.1          Removal of Timber. The Purchaser, at its ownexpense, agrees to cut and remove the Specified Company Timber in a mannerconsistent in all material respects with prudent business practices which, inthe reasonable judgment of the Purchaser (i) are consistent with then currentapplicable industry standards and (ii) are in compliance in all materialrespects with Section 3.2 hereofand all applicable Timber Laws, Environmental Laws and General Laws.Notwithstanding the foregoing, the Purchaser shall be permitted to subcontractsuch functions to Pacific Lumber in a manner consistent with Article VIII hereof.

6.2          Residual Parts. Provided that Pacific Lumber isthe Services Provider under the New Services Agreement, the Purchaser shall beentitled, at its option and at no additional cost to the Purchaser (a) toharvest and retain for its own use, any and all hardwood trees which arepermitted to be harvested pursuant to any Timber Harvesting Plan applicable tothe Specified Company Timber, (b) to remove for its own use, any and allresidual parts of trees harvested pursuant to any Timber Harvesting Planapplicable to the Specified Company Timber, including, but not limited to,breaks, limbs and tops, and (c) to remove for its own use gravel and rock fromthe Company Timber Property in connection with the harvesting of the SpecifiedCompany Timber.

6.3          Timing. The Purchaser shall complete harvestingof the Specified Company Timber within the applicable time period set forth inthe applicable Timber Harvesting Plan (inclusive of any extensions thereof);provided that the Purchaser shall have no right to harvest the Specified CompanyTimber after December 31, 2006.

6.4          Access. Seller grants Purchaser such access overSeller's timberlands as Purchaser may reasonably require in order to harvest theSpecified Company Timber and otherwise exercise its rights hereunder. Subject toSections 1(b) and 9(b) of that certain New Reciprocal Rights Agreement datedJuly 20, 1998 among Seller, Pacific Lumber and Salmon Creek, Seller also grantsPurchaser the right to construct roads over Seller's timberlands as Purchasermay reasonably require in order to harvest the Specified Company Timber andotherwise exercise its rights hereunder. By their execution hereof, PacificLumber and Salmon Creek also grant Purchaser such access and road constructionrights in respect of their timberlands.

**VII**

**INDEMNIFICATION, INSURANCE**

7.1          Indemnity. The Purchaser shall be liable for, andshall indemnify, protect, defend and hold harmless the Seller, the Trustee andthe Collateral Agent, their respective subsidiary and affiliate companies andtheir respective agents, employees, managers, directors, partners, officers,servants and representatives against, any and all claims, demands, causes ofaction, expenses or liabilities (including reasonable attorneys' fees anddisbursements) of every kind and character (whether known or unknown, fixed orcontingent, liquidated or unliquidated, secured or unsecured, choate orinchoate, accrued, absolute or otherwise), suffered or sustained, arising from(i) the breach by the Purchaser of any of its representations, warranties,covenants and agreements set forth in this Agreement, (ii) actions or omissions of the Purchaser in connection with its obligationshereunder and (iii) failure of the Purchaser to have complied with the terms andconditions of approved Timber Harvesting Plans in connection with the SpecifiedCompany Timber or any other Timber Laws, Environmental Laws and General Lawsapplicable to such operations, as then in effect. The Seller shall notify thePurchaser promptly of any claim for which it may seek indemnity. The Purchasershall have the right to defend the claim, and the Seller shall cooperate in thedefense. If the Purchaser does not defend such claim, the Seller may haveseparate counsel and the Purchaser shall pay the reasonable fees and expenses ofsuch counsel.

 

 

 

7.2          Insurance. The Purchaser shall at all timesmaintain comprehensive general and automobile liability insurance against claimsfor personal injury, death or property damage with limits of liability of notless than $10,000,000 per occurrence and deductibles of up to $3,000,000 peroccurrence and (ii) all such worker's compensation or similar insurance as maybe required by applicable laws, provided that the Purchaser may self-insure anyor all worker's compensation liabilities. To the extent that any of theinsurance required by this Section 7.2 is not or ceases to be available at commercially reasonable rates, thePurchaser may maintain insurance coverage in accordance with the prudentstandards then being followed by other companies engaged in the same or similarlines of business or having comparable properties.

**VIII**

**INDEPENDENT CONTRACTOR STATUS, USE OF PACIFIC LUMBER AS LICENSED TIMBEROPERATOR**

8.1          Purchaser as Independent Contractor. ThePurchaser, either directly to the extent permitted by applicable law, orindirectly through Pacific Lumber as described in Section8.2 below, shall harvest the Specified Company Timberand perform its other obligations hereunder as an independent contractor. Thenumber of employees, the selection and retention of such employees, the hours oflabor and the compensation for services to be paid to any and all such employeesof the Purchaser or Pacific Lumber shall be determined by the Purchaser orPacific Lumber, as the case may be. All employees, agents, contractors andsubcontractors hired by the Purchaser or Pacific Lumber to perform anyobligations of the Purchaser hereunder shall not be deemed to be the employees,agents, contractors and subcontractors of the Seller, and all salaries andcompensation payable to them shall be the exclusive responsibility of thePurchaser or Pacific Lumber, as applicable.

8.2          Delegation to Pacific Lumber. The parties agreethat Pacific Lumber will continue to be the licensed timber operator withrespect to each Timber Harvesting Plan relevant to the Specified Company Timber,and agree that Pacific Lumber will (either directly, or though itssubcontractors to the extent permitted by applicable law) perform all of thefunctions of a licensed timber operator with respect to the Specified CompanyTimber. The parties further agree that Pacific Lumber may perform, on behalf ofthe Purchaser, all of the Purchaser's obligations set forth in Articles V and VI hereof, provided however, that any failure byPacific Lumber to perform such obligations shall not relieve the Purchaser ofany of its obligations hereunder.

**IX**

**CLOSING**

9.1          Closing. The consummation of the transactionscontemplated by this Agreement, including the execution and delivery of thedocuments identified in Section 9.3 hereof (the "Closing"),shall take place no later than January 13, 2006 at the offices of FirstAmerican Title Company at 1034 Sixth Street, Eureka, California 95501, at 1 p.m.local time, or on such other date and time as the Seller and the Purchaser maymutually agree in writing.

 

 

 

(a)          Seller's Conditions to Closing. The obligationsof the Seller to consummate the Closing are conditioned upon the satisfaction orwaiver in writing (subject to applicable law), on or prior to the Closing, ofeach of the following conditions:

(i)           This Agreement shall not have been terminated in accordance withSection 10.1 hereof;

(ii)          The representations and warranties of the Purchaser contained inSection 4.1 hereof shall be trueand correct as at the date hereof and at Closing;

(iii)        Allof the conditions and requirements set forth in the Indenture with respect tothe sale of the Specified Company Timber free of the Trustee Lien shall havebeen satisfied; and

(iv)         The Purchaser shall have delivered to the Seller the items set forth inSection 9.3(b) hereof.

(b)          Purchaser's Conditions to Closing. Theobligations of the Purchaser to consummate the Closing are conditioned upon thesatisfaction or waiver in writing (subject to applicable law), on or prior tothe Closing, of each of the following conditions:

(i)           This Agreement shall not have been terminated in accordance withSection 10.1 hereof; 

(ii)          The representations and warranties of the Seller contained inSection 4.2 hereof shall be trueand correct as at the date hereof and the Closing; and

(iii)        TheSeller shall have delivered to the Purchaser the items set forth inSection 9.3(a) hereof.

(a)          Seller's Closing Deliveries. At the Closing, theSeller shall deliver to the Purchaser the following:

(i)           One or more duly executed bills of sale conveying the Specified CompanyTimber to the Purchaser, each substantially in the form attached hereto asExhibit C; 

(ii)          One or more duly executed instruments of conveyance, suitable forrecording, conveying the Specified Company Timber to the Purchaser, eachsubstantially in the form attached hereto as ExhibitD; and

 

 

 

 

 

(iii)         One or more partial reconveyances of mortgage releasing the TrusteeLien.

(b)          Closing Deliveries by Purchaser. At the Closing,the Purchaser shall deliver to the Seller the following:

(i)           The Purchaser shall deliver the Unadjusted Purchase Price to the Sellerby wire transfer of immediately available funds to such account as may bedesignated in writing by the Seller. 

9.4          Closing Costs. The closing costs associated withthe transactions contemplated by this Agreement shall be borne by the partieshereto as follows:

(a)          The Purchaser and the Seller shall each bear one-half of any recordingfees, escrow fees and delivery charges associated with the transactionscontemplated by this Agreement.

(b)          The Seller shall bear the cost of (i) the timber yield tax imposed on theSpecified Company Timber (ii) the real property transfer tax (if any) imposed byreason of the transactions contemplated by this Agreement, and (iii) anyendorsements to the Title Insurance Policy required by the Indenture.

(c)          The Purchaser shall bear the cost of any title insurance issued in favorof Purchaser with respect to the Specified Company Timber.

**X**

**MISCELLANEOUS**

10.1       Termination. This Agreement may be terminatedonly as follows: (a) the Seller and the Purchaser may terminate this Agreementby mutual written consent at any time prior to Closing, and (b) if the Closinghas not occurred by January 20, 2006, either party hereto may terminate thisAgreement by written notice to the other party. In the event of the terminationof this Agreement pursuant to this Section10.1, all obligations of the parties hereunder willterminate without any liability or obligation of either party to the other underthis Agreement; provided that no party shall be released from liabilityhereunder if this Agreement is terminated by reason of the failure of such partyto have performed its obligations hereunder. This Section10.1 shall survive any termination of thisAgreement.

10.2       Amendments. This Agreement may be amended by anagreement in writing signed by the Seller and the Purchaser.

10.3       Notices. All notices and other communicationsrequired or permitted hereunder shall be in writing and, unless otherwiseprovided in this Agreement, shall be deemed to have been duly given whendelivered in person or by mail or when dispatched by telegram or electronicfacsimile transfer (confirmed in writing by mail simultaneously dispatched) tothe addressee at the address specified below:

 

 

 

 

 

 

1330 Post Oak Boulevard, Suite 2000

Houston, Texas 77056-3058

Fax: 713-267-3702

Attention: General Counsel

125 Main Street, Second Floor

Scotia, California 95565

Fax: (707) 764-5001

Attention: Vice President, Finance and Administration

10.4       Limitations on Assignment. Except as specificallyset forth in Article VIII hereof,neither the Purchaser nor the Seller shall assign or transfer any of its rightsor obligations under this Agreement without the prior written consent of theother party.

10.5       Governing Law. This Agreement shall be governedby the internal laws of the State of California without regard to principles ofconflict of laws.

10.6       Counterparts. This Agreement may be executed inany number of counterparts, each of which when so executed shall be deemed anoriginal but all of which together shall constitute one and the sameinstrument.

10.7       EntireAgreement. This Agreement constitutes the entireagreement of the parties with respect to the subject matter hereof.

10.8       Headings. The section headings of this Agreementare only for the purpose of reference and shall not affect the meaninghereof.

10.9       Successors and Assigns. The provisions of thisAgreement shall be binding upon and inure to the benefit of each party heretoand their respective successors and permitted assigns.

10.10     Further Assurances. After the Closing each partyhereto will from time to time, at the reasonable request of the other party,execute and deliver, or cause its affiliates to execute and deliver, such otherinstruments of conveyance and transfer and such other instruments, documents andagreements, and will take such other actions as such other party may reasonablyrequest in order to more effectively or more expeditiously consummate any of thetransactions contemplated hereby and to vest in Purchasers the Seller's right,title and interest in, to and under the Specified Company Timber; provided thatthe requesting party will at its cost prepare such additional documents andinstruments and will handle any submittal, applications, processing, recordingand registrations with respect thereto.

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                IN WITNESS WHEREOF, the parties hereto have executed this Agreement forLump Sum Purchase of Specified Company Timber as of the date first abovewritten.

 

PURCHASER:

 

MAXXAM GROUP INC.

SELLER:

 

SCOTIA PACIFIC COMPANY LLC

ACKNOWLEDGED AND AGREED:

THE PACIFIC LUMBER COMPANY

 

 

 

ACKNOWLEDGED AND AGREED for the

Limited purposes set forth in Section 6.4 of this

Agreement:

 

SALMON CREEK LLC