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| 6. | (a) |   | There      shall be computed a Federal income tax liability for Pacific Lumber for      any taxable period covered by this Agreement (the "Applicable Period") as      if (i) Pacific Lumber and all lower (with respect to Pacific Lumber) tier      entities, including newly-formed subsidiaries and Britt, (individually and      collectively referred to as "Pacific Lumber Subgroup subsidiary" or      "Pacific Lumber Subgroup Subsidiaries") in which Pacific Lumber has direct      or indirect ownership are treated as an affiliated group of corporations      (the "Pacific Lumber Subgroup"), the common parent of which is Pacific      Lumber, provided, however, that the Pacific Lumber Subgroup shall only      include any Pacific Lumber Subgroup Subsidiary to the extent that such      Pacific Lumber Subgroup Subsidiary meets the test of affiliation under      Section 1504 of the Code as it would apply to the Pacific Lumber Subgroup.      Pacific Lumber and each Pacific Lumber Subgroup Subsidiary shall sometimes      be referred to as "Pacific Lumber Subgroup  Members". |
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|   | (b) | The      computation of the Federal income tax liability of Pacific Lumber shall      take into account the taxable income, loss, credits and other tax      attributes of each Pacific Lumber Subgroup Subsidiary as if Pacific Lumber      filed a consolidated return including each Pacific Lumber Subgroup      Subsidiary (taking into account all applicable limitations under the Code)      ("Pacific Lumber's Tax Liability"). In calculating such liability, all      intercompany transactions between Pacific Lumber Subgroup Members shall be      treated consistent with the consolidated return Treasury      Regulations. |
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|   | (c) | If      the foregoing calculation results in a Federal income tax liability for      Pacific Lumber with respect to the Applicable Period, then, in that event,      Pacific Lumber shall pay such computed income tax liability to Parent in      such amounts and at such times as Pacific Lumber would have been required      to pay to the Internal Revenue Service if it were an unaffiliated      corporation making separate estimated tax payments and filing a separate      tax return. |
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|   | (d) | For      purposes of Section 6.(b) of this Agreement, any net operating loss      carryforwards or other tax attributes (e.g., minimum tax credits or      charitable contributions carryovers) available to the Pacific Lumber      Subgroup as of December 31, 2003 under the May 88 and Amended March 93      Agreements shall be available to offset income of the Pacific Lumber      Subgroup in the same manner as under the May 88 and the Amended March 93      Agreements. |
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|   | (e) | If      the calculation of Pacific Lumber's Tax Liability in Section 6.(b) results      in a net operating loss that can be carried back to a prior taxable period      or periods with respect to which Pacific Lumber made payments to Parent      under this Agreement, then, in that event, Parent shall pay Pacific Lumber      an amount equal to the tax refund to which Pacific Lumber would have been      entitled consistent with this Section4. |
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|   | (f) | If      the calculation of Pacific Lumber's Tax Liability in Section 6.(b) results      in a net operating loss that cannot be carried back pursuant to the      preceding subsection (e), then, in that event, such net operating loss      shall be a net operating loss carryover to be used by the Pacific Lumber      Subgroup in computing its Federal income tax liability pursuant to      preceding subsection (b) for future taxable periods, under the law      applicable to net operating loss carryovers in  general. |
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| 7. | (a) |   | There      shall be computed a Federal income tax liability for Britt for any taxable      period covered by this Agreement (the "Applicable Period") as if Britt had      filed a separate return for such period and all prior Applicable Periods      (taking into account all applicable limitations under the Code) ("Britt's      Tax Liability"). In calculating such liability, the separate return shall      be prepared by taking into account all intercompany transactions,      including those eliminated or deferred by reason of the consolidated      return Treasury Regulations. |
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|   | (b) | If      the foregoing calculation results in a Federal income tax liability for      Britt with respect to the Applicable Period, then, in that event, Britt      shall pay such computed income tax liability to Pacific Lumber in such      amounts and at such times as Britt would have been required to pay to the      Internal Revenue Service if it were an unaffiliated corporation making      separate estimated tax payments and filing a separate tax      return. |
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|   | (c) | For      purposes of Section 7.(b) of this Agreement, any net operating loss      carryforwards or other tax attributes (e.g., minimum tax credits or      charitable contributions carryovers) available to the Pacific Lumber      Subgroup as of December 31, 2003 under the May 88 and Amended March 93      Agreements shall not be available to offset income of Britt for any period      prior to the effective date of thisAgreement. |
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|   | (d) | If      the calculation of Britt's Tax Liability in Section 7.(b) results in a net      operating loss that may be carried back to a prior taxable period or      periods with respect to which Britt made payments to Pacific Lumber under      this Agreement or to Parent under the July 90 Agreement, then, in that      event, Pacific Lumber or Parent, as the case may be, shall pay Britt an      amount equal to the tax refund to which Britt would have been entitled      consistent with this Section 7. |
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|   | (e) | If      the calculation of Britt's Tax Liability in Section 7.(b) results in a net      operating loss that cannot be carried back pursuant to the preceding      subsection (d), then, in that event, such net operating loss shall be a      net operating loss carryover to be used by Britt in computing its Federal      income tax liability pursuant to preceding subsection (b) for future      taxable periods, under the law applicable to net operating loss carryovers      in general. |
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| 8. | The      foregoing principles shall apply in similar fashion to any consolidated      state or other local income tax return which the Group or the Forest      Products Group may elect or be required to file. For state or other local      income tax returns where the Forest Products Group is the reporting group,      payments pursuant to this Agreement shall be made to  MGI. |
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| 9. | This      Agreement shall be effective for the Group's 2004 taxable period and all      subsequent taxable periods until the earliest date on which (i) Pacific      Lumber ceases to be a member of the Group, (ii) the Group no longer      remains in existence within the meaning of Treasury      Regulationss.1.1502-75, (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, or (iv) Britt ceases to be a member of the      Pacific Lumber Subgroup. 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 Pacific Lumber ceased to be a member of      the Group, the reason that the Group is no longer in existence, the reason      that Parent and/or Pacific Lumber can no longer join in the same      consolidated return or the manner in which Britt ceased to be a member of      the Pacific Lumber Subgroup. |
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| 10. | 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 Pacific Lumber 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. |
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| 11. | This      Agreement shall be binding upon and inure to the benefit of the parties      hereto and their respective successors and  assigns. |
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| MAXXAM      Inc.       |                               | The      Pacific Lumber Company |
|------------------------|------------------------------------|---------------------------------|
|                   |                               |                            |
| By:                    | /s/      Elizabeth D. Brumley      |                            | By: | /s/      Robert E. Manne |
| Name:                  | Elizabeth      D. Brumley          |                            | Name: | Robert      E. Manne |
| Title:                 | Vice      President and Controller |                            | Title: | President      and Chief Executive Officer |
|                   |                               |                            |
| MAXXAM      Group Inc. |                               | Britt      Lumber Co., Inc.     |
|                   |                               |                            |
| By:                    | /s/      Bernard L. Birkel         |                            | By: | /s/      Gary L. Clark |
| Name:                  | Bernard      L. Birkel             |                            | Name: | Gary      L. Clark |
| Title:                 | Secretary                          |                            | Title: | Vice      President – Finance andAdministration |

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