DEFERRED COMPENSATION AGREEMENT


     THIS AGREEMENT, dated as of ____________________________, is by and
between MAXXAM INC., a Delaware corporation (the "Company"), and
_______________________ (the "Employee"), currently residing at
_________________________________________________________________.

                                WITNESSETH:

     WHEREAS, the Employee currently serves as a[n] __________________ of
the Company and receives compensation from the Company in that capacity;
and

     WHEREAS, the Employee desires to enter into an arrangement providing
for the deferral of salary and/or bonus compensation; and

     WHEREAS, the Company is agreeable to such an arrangement;

     NOW, THEREFORE, it is agreed as follows:

     1.   The Employee irrevocably elects to defer receipt, subject to the
provisions of this Agreement, of [select A or B]:

     A.   _____ percent of gross salary per pay period otherwise
          payable to the Employee during calendar year ________, not
          to exceed $_________ for the year [may not exceed 20%]; and

     B.   _____ percent of any bonus which may otherwise become
          payable to the Employee for the calendar year _____, not to
          exceed $___________ for the year [may not exceed 20%]; and

which relate to services performed in a calendar year that commences after
the date hereof.  Such election shall continue in effect with respect to
any salary and/or bonus which may otherwise become payable to the Employee
for any calendar year subsequent to the dates of this election unless,
prior to January 1 of such year, the Employee shall have delivered to the
Vice President - Chief Personnel Officer a written revocation of such
election with respect to salary and/or bonus for services performed in a
calendar year that commences after the date of such revocation.  Until such
time as the election made under this paragraph is revoked, the percentages
specified above shall apply on each occasion on which salary or bonus would
otherwise be paid to the Employee.  Salary and/or bonus amount with respect
to which the Employee shall have elected to defer receipt are hereinafter
referred to as "Deferred Compensation."

     2.   The Company shall credit the amount of Deferred Compensation to a
book account (the "Deferred Compensation Account") as of the date such
salary or bonus amount would have been paid to the Employee had this
Agreement not been in effect.

     3.   Earnings shall be credited to the Deferred Compensation Account
as follows:

     The balance credited to the Deferred Compensation Account as of
     the last business day of each quarter shall be increased by an
     amount reflecting interest on such balance for such quarter
     calculated using one-quarter of (i) the sum of the Prime Rate
     plus (ii) 2 percent on the first day of such quarter.  For this
     purpose the "Prime Rate" shall mean the highest prime rate (or
     base rate) reported for such date in the Money Rates column or
     section of The Wall Street Journal as the rate in effect for
     corporate loans at large U.S. money center commercial banks
     (whether or not such rate has actually been charged by any such
     bank) as of such date.  In the event The Wall Street Journal
     ceases publication of such rate, the "Prime Rate" shall mean the
     prime rate (or base rate) reported for such date in such other
     publication that publishes such prime rate information as the
     Company may choose to rely upon.

     4.   The Company shall provide an annual statement to the Employee
showing such information as is appropriate, including the Deferred
Compensation, earnings and aggregate amount credited to the Deferred
Compensation Account, as of a reasonably current date.  If amounts which
are a part of the Deferred Compensation Account which, prior to payment of
such account to the Employee, are determined to be taxable to the Employee,
such taxable amounts shall be immediately paid to the Employee less
required withholding taxes.

     5.   The Company's obligation to make payments from the Deferred
Compensation Account shall be a general obligation of the Company and such
payments shall be made from the Company's general assets.  The Employee's
relationship to the Company under this Agreement shall be only that of a
general unsecured creditor, and this Agreement (including any action taken
pursuant hereto) shall not, in and of itself, create or be construed to
create a trust or fiduciary relationship of any kind between the Company
and the Employee, his or her designated beneficiary or any other person, or
a security interest of any kind in any property of the Company in favor of
the Employee or any other person.  The arrangement created by this
Agreement is intended to be unfunded and no trust, security, escrow, or
similar account shall be required to be established for the purposes of
payment hereunder.  However, the Company may in its discretion establish a
"rabbi trust" (or other arrangement having equivalent taxation
characteristics under the Internal Revenue Code or applicable regulations
or rulings) to hold assets, subject to the claims of the Company's
creditors in the event of insolvency, for the purpose of making payments
hereunder.  If the Company establishes such a trust, amounts paid therefrom
shall discharge the obligations of the Company hereunder to the extent of
the payments so made.

     6.   Deferred Compensation, including all earnings credited to the
Deferred Compensation Account pursuant to paragraph 3, shall be paid in
cash to the Employee or his or her designated beneficiary as soon as
practicable following the date the Employee ceases for any reason to be an
Employee of the Company.  Payments shall be made:

          / /  in a lump sum; or

          / /  in ____________________ annual installments (not to exceed
               10).

Each annual installment payment shall be made as of March 31 and shall be
an amount equal to the balance credited to the Deferred Compensation
Account as of that date divided by the number of installments (including
the one then due) remaining to be paid.

Amounts credited to the Deferred Compensation Account during the period in
which installments are paid shall be adjusted to reflect the crediting of
earnings in accordance with paragraph 3.

     7.   Payments hereunder shall be made to the Employee except that:

          (a)  in the event that the Employee shall be determined by a
               court of competent jurisdiction to be incapable of managing
               his financial affairs, and if the Company has actual notice
               of such determination, payment shall be made to the
               Employee's personal representative(s); and

          (b)  in the event of the Employee's death, payment shall be made
               to the last beneficiary designated by the Employee for
               purposes of receiving such payment in such event in a
               written notice delivered to the Secretary of the Company;
               provided, that if such beneficiary has not survived the
               Employee, or no valid beneficiary designation is in effect,
               payment shall instead be made to the Employee's estate.

The Company shall deduct from any payment hereunder any amounts required
for federal and/or State and/or local withholding tax purposes.

     8.   Any balance credited to the Deferred Compensation Account shall
not in any way be subject to the debts or other obligations of the Employee
and, except as provided in paragraph 7(b), shall not be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, garnishment or other legal or equitable process.

     9.   This Agreement shall not be construed to confer on the Employee
any right to be or remain in the employ of the Company or to receive any,
or any particular rate of, Compensation.

     10.  Interpretations of, and determinations related to, this
Agreement, including any determinations of the amount credited to the
Deferred Compensation Account, shall be made by the Compensation Committee
of the Board of Directors of the Company and shall be conclusive and
binding upon all parties.  The Company shall incur no liability to the
Employee for any such interpretation or determination so made or for any
other action taken by it in connection with this Agreement in good faith.

     11.  This Agreement contains the entire understanding and agreement
between the parties with respect to the subject matter hereof, and may not
be amended, modified or supplemented in any respect except by a subsequent
written agreement entered into by both parties.

     12.  This Agreement shall be binding upon, and shall inure to the
benefit of, the Company and its successors and assigns and the Employee and
his or her heirs, executors, administrators and personal representatives.

     13.  No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be an estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party
charged with such waiver or estoppel.  Any waiver by either party hereto of
a breach of any provision of this Agreement by the other party shall not
operate or be construed as a waiver by such party of any subsequent breach
thereof.

     14.  In the event that any provision of this Agreement is declared
invalid and not binding on the parties hereto on a final decree or order
issued by a court of competent jurisdiction, such declaration shall not
offset the validity of the other provisions of this Agreement to which such
declaration of invalidity does not relate and such other provisions shall
remain in full force and effect.

     15.  This Agreement shall be governed and construed in accordance with
the laws of the state of Texas, without regard to principles of choice of
law, except to the extent preempted to the Employee Retirement Income
Security Act of 1974, as amended, or other applicable federal law.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officer, and the Employee has
executed this Agreement, on the date first written above.

ATTEST:                            MAXXAM INC.


____________________________
Nawasa Lafferty, Assistant         By:___________________________
     Secretary                          Byron L. Wade, Vice
                                             President,
                                        Secretary & Deputy
                                             General Counsel

                                   ______________________________
                                        [Employee]



                      DESIGNATION OF BENEFICIARY(IES)



                                   Dated as of ____________________________

To the Vice President - Chief Personnel Officer of MAXXAM Inc.:

     In accordance with the provisions of the Deferred Compensation
Agreement dated as of ________________ ___, 199__, between the undersigned
Employee and MAXXAM Inc., I hereby designate _____________________________
_____________________________________________________* currently residing
at ______________________________________________________________________,
whose Social Security number(s) is (are)____________________________, as
my beneficiary(ies) to receive payments thereunder in the event of my death
before payments due thereunder have been made in full.  In the event that
the said beneficiary(ies) predecease(s) me, I hereby designate ____________
________________ currently residing at ___________________________________,
whose Social Security number(s) is (are) ___________________, as my
beneficiary(ies) thereunder.

     I intend that my execution and delivery of this Designation of
Beneficiary(ies) form shall revoke any and all prior designation(s) of
beneficiary(ies) that I may have made under the Agreement.

                                   EMPLOYEE:



                                   ______________________________


                                   ______________________________
                                        [Printed Name of
                                             Employee]



---------------

     *If more than one beneficiary is to be designated, list the
beneficiaries and specify the percentage of each payment to be received by
each beneficiary.