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| 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". |
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|   | (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 AggregateAmounts. |
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|   | (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. |
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|   | (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. |
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|   | (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 intoaccount. |
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|   | (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. |
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|   | (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. |
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|   | (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. |
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|   | (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 ingeneral. |
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|   | (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. |
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| MAXXAM Inc.     |                     |   |
|-----------------|--------------------------|--------|
|            |                     |   |
| By:             | /s/      John T. LaDuc   |   |   |
|            |                     |   |   |
|            |                     |   |   |
| MAXXAMGroupInc. |                     |   |
|            |                     |   |
| By:             | /s/      Ronald L. Reman |   |   |

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