temp agreement

September 28, 1996

AGREEMENT

WHEREAS, MAXXAM Inc. ("MAXXA M"), The Pacific Lumber Company, on behalf

I of itself, its subsidiaries and its affiliates ("Pacific Lumber," and
together with MAXXA M, the

"Pacific Lumber Parties"), the United States of America ("United States")
and the State of California ("California") (all of the foregoing
collectively, the "Parties") have been negotiating a

possible land exchange of the Headwaters Forest for valuable federal and
state considerations;

WHEREAS, Pacific Lumber desires to obtain a permit under section 10(a) of
the Endangered Species Act ("ESA");

WHEREAS, the United States Fish and Wildlife Service, an agency within the
United States Department of the Interior, and the National Marine Fisheries
Service, an agency within the United States Department of Commerce
(collectively, the "Services"), are required to comply with their
responsibilities under the ESA and the National Environmental Policy Act
("NEPA");

NOW, THEREFORE, the Parties agree as follows:

I . The Pacific Lumber Parties will not enter either the approximately 4,500
acres of Pacific Lumber's timberlands commonly referred to as the Headwaters
Forest (the "Headwaters Forest") or the approximately 1,125 acres commonly
referred to as the Elk Head Spring Forest (the "Elk Head Forest") to conduct
logging operations, including salvage logging (the "Moratorium"), provided
that the Moratorium shall terminate, unless extended by agreement of the
Parties, if within 10 months from the date of this Agreement (the
"Expiration Date") the Parties have not achieved the following items to
their respective satisfaction, such achievement to be evidenced by written
instrument(s) in form and substance satisfactory to all of the Parties. The
Parties agree to use their respective best, good faith efforts to achieve
such items:

a. Transfer of the Headwaters Forest and the Elk Head Forest to the United
States and California in exchange for (i) the Exchanged Elk River Property
(as defined below) and (ii) property and other consideration from both the
United States and California (including cash) having an aggregate fair
market value of $300 million;

b. Acquisition by the United States and California of the approximately
9,600 acre Elk River Timber Company property ("Elk River Property") to
serve, in part, as an additional buffer zone of approximately 1,845 acres
(the "Preserved Elk River Property") for the Headwaters Forest, with the
remaining approximately 7,755 acres (the "Exchanged Elk River Property") to
serve As additional consideration to be received by Pacific Lumber in
exchange for the Headwaters Forest and the Elk Head Forest under
Subparagraph 1.a., above.

c. The Parties agree to use their respective best, good faith efforts to
achieve expedited development and submission by Pacific Lumber and
processing

(i). by the United States of an incidental take permit ("Permit") under
section

10(a) of the ESA, 16 U.S.C. 1539(a), based upon a multi-species Habitat
Conservation Plan ("HCP") covering the remaining lands of Pacific Lumber,
the Elk River Property, any other timberlands or timber harvesting rights
acquired by Pacific Lumber as a result of the herein-described transactions
(collectively, the "Resulting Pacific Lumber Timber Property"), the
Headwaters Forest and the Elk Head Forest, and

(ii). by California of a Sustained Yield Plan ("SYP") covering the Resulting
Pacific Lumber Timber Property.

(iii). In order to facilitate processing of the Permit and SYP, the parties
agree to follow the procedures set forth below:

A. Development of HCP. Pacific Lumber and the Services shall
within 30 days of the date of this Agreement begin good faith
negotiations for a multi-species HCP covering all of the Pacific
Lumber Timber Property and the Elk River Property, including the
Headwaters Forest, the Elk Head Forest and any buffer. Such HCP
shall be prepared in full compliance with the requirements of the
ESA and other applicable laws and regulations and shall be
consistent with the regulations applicable to the critical habitat
designated for the marbled murrelet, 50 C.F.R 17.95(b). The HCP
shall provide for the management and harvest of the Resulting
Pacific Lumber Timber Property consistent with the requirements of
the ESA and other applicable laws and regulations. The HCP shall
be subject to the Department of the Interior's "No Surprises"
policy.

B. Submission of HCP and Application for Permit. Within 120 days

from the date of this Agreement, Pacific Lumber intends to submit
to the Services an application for a Permit and a proposed
multi-species HCP that covers the Headwaters Forest, the Elk Head
Forest and the Resulting Pacific Lumber Timber Property.

C. Review and Approval of the HCP and Permit. The Services will
expedite consideration of the application for the Permit and will
use their best efforts to review and decide upon the application
for the Permit as soon as practicable after Pacific Lumber submits
the application to the Services. The Parties recognize and
understand that the Services must make their decision on the
application for the Permit based on sound science and in full
compliance with the requirements of the ESA and all other
applicable laws and regulations.

D. Public Involvement. The Parties understand that Pacific Lumber
can, by involving the public in the HCP planning process,
facilitate early public review of the HCP and expedite development
and consideration of the HCP. The Services are responsible for
ensuring that the public involvement requirements in the ESA,
NEPA, and other applicable laws and regulations are met.

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E. NEPA Compliance. The Parties understand and agree that

issuance of an incidental take permit requires compliance with
NEPA and that the Services are responsible for this compliance. It
is Pacific Lumber's intent to submit an HCP that will not
significantly affect the quality of the human environment and to
prepare a draft Environmental Assessment ("EA") for review by the
Services. The Services will (1) assist Pacific Lumber in outlining
the type of information required for the EA, (11) independently
evaluate the environmental issues, (111) make any changes
necessary, and (IV) take responsibility for the document's scope
and content. The Services will promptly advise Pacific Lumber if,
at any point, the Services believe an environmental impact
statement ("EIS") is required. The Parties will pursue the HCP and
NEPA processes concurrently.

F. Submission Review and Approval of SYP-. Pacific Lumber will
submit to the State of California a proposed SYP which (1) covers
the Resulting Pacific Lumber Timber Property, and which the
Parties agree will be amended to include any timberlands or timber
harvesting rights received by Pacific Lumber in exchange for the
Headwaters Forest and Elk Head Forest, including Exchanged Elk
River Property, and (11) complies with terms and specifications to
be agreed upon by Pacific Lumber and California as soon as
practicable, such agreement to be evidenced by an instrument in
form and substance satisfactory to Pacific Lumber and California
(the "SYP Terms Condition"). The State of California will expedite
consideration of such SYP upon its formal submission to
California. Appropriate procedures will be followed for
submission, review and approval. Such SYP shall provide for
management and harvest, consistent with applicable and legal
requirements, of all the Resulting Pacific Lumber Timber Property
and shall be with respect to the marbled murrelet, the coho
salmon, the northern spotted owl and all other species
specifically or generally identified in the SYP (whether now or
hereafter listed as threatened or endangered under the laws of the
United States or California). The State of California shall use
its best efforts to review and approve the SYP.

d. The dismissal with prejudice at closing by Pacific Lumber of the
following pending legal actions: Pacific Lumber Co. v. United States, No.
96-257L (Fed. Cls.) and Salmon Creek Corp. v. California Board of Forestry,
No. 96-CS-1057 (Cal. Super. Ct.), such dismissals will obviate that
litigation and be evidenced by instruments in form and substance
satisfactory to each of the parties to those cases.

e. All property furnished by the United States and/or California to Pacific
Lumber pursuant to Subparagraph I.a. having been freed of all mortgages,
liens, pledges, security interests or encumbrances of any kind (other than
permitted encumbrances to be agreed upon by the Parties).

f All consents, approvals, opinions, or similar items from third parties
necessary to consummation of the transactions described in this Agreement
having been furnished.

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g. In addition to the documents and instruments specifically referenced
above, execution by the Par-ties of appropriate documents and instruments,
in form and substance satisfactory to the Parties, evidencing the
transactions described in this Agreement.

2. It is a condition to the continued effectiveness of the Moratorium that
the United States and/or California provide to Pacific Lumber, within 60
days of this Agreement, a list of property interests owned or controlled by
the United States and/or California with a good faith estimated fair market
value equal to or in excess of $300 million which are available and
acceptable to Pacific Lumber for exchange under Subparagraph I.a. above (the
"Presented Properties"). Such list shall be accompanied by sufficient
background information (including, where available, appraisals and any other
valuation information) regarding the Presented Properties as will enable
Pacific Lumber to make a determination as to the commercial viability of
such property interests and the ability to monetize such property interests;
Pacific Lumber shall also be given access to enter and inspect such
Properties. Should California and/or the United States fail to perform this
obligation within 120 days from the date of this Agreement, the Moratorium
shall terminate. if the United States and/or California do furnish the
required amount and type of Presented Properties (together with access and
sufficient information to evaluate the Properties) by such date, (a) the
Parties shall have a ten-day period of time commencing on the date that the
Presented Properties list is provided during which to agree upon the
procedures to be used in determining the fair market value of the Presented
Properties (the "Appraisal Procedure Period"), such agreement to be
evidenced by an instrument in form and substance satisfactory to all of the
Parties, and (b) Pacific Lumber shall have an additional 30-day period
following the Appraisal Procedure Period in which to evaluate the Presented
Properties (the "Evaluation Period"). If at the end of the Appraisal
Procedure Period, all of the Parties hereto have failed to execute an
instrument indicating their agreement as to the procedures to be used in
determining the fair market value of the Presented Properties, the
Moratorium shall terminate. Furthermore , if at the end of the Evaluation
Period, Pacific Lumber has failed to identify $300 million in fair market
value of Presented Properties which it finds acceptable for exchange, the
Moratorium shall terminate. The Parties further agree to supplement this
Agreement to provide for an effective exchange at closing.

3. As soon as practicable, and no later than October 4, 1996, the Parties
shall file appropriate joint ' motions to stay the litigation (the
"Litigation") referenced in Subparagraph I.d. above; provided, that each
Party shall retain and have the right, at any point after the presentation
of the Presented Properties list, to move to terminate the stay (a) at any
time when the Moratorium has terminated, or (b) if such Party has a
reasonable belief that the matters provided for under Paragraph I of this
Agreement will not be achieved. The Parties also agree to cease and desist
all activities in connection with the Litigation, except as ordered by the
court, until the motions are granted.

4. All discussions relating to, or arising from, this Agreement, including
but not limited to, all negotiations and final products shall be subject to
the Principles Governing Discussions dated

August 23, 1996, notwithstanding any stated termination date thereof

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5. The exercise by any Party of its right of termination under this
Agreement or to end the

Moratorium shall be preceded by two weeks written notice to the other
Parties.

6. It is agreed that the following shall each be a condition to closing of
the Agreement:

a. Completion of each of the matters described in Subparagraphs I.a., I.b.
and I.d. through I.g. above;

b. Approval of an HCP and SYP and issuance of a Permit, each in a form and

substance satisfactory to Pacific Lumber, such satisfaction to be evidenced
by a written

instrument executed by Pacific Lumber satisfactory in form and substance to
all of the Parties;

c. The issuance on or before the closing date by the Internal Revenue
Service and the California Franchise Tax Board of closing agreements in form
and substance sought by and satisfactory to the Pacific Lumber Parties,
setting forth acceptable federal and California income tax consequences of
the transactions;

d. The absence of a judicial decision in any litigation brought by third
parties that any Party reasonably believes will significantly delay or
impair the transactions described in this Agreement; and

e. Approval by the Boards of Directors (and any special committee thereof)
of the applicable Pacific Lumber Parties and, as appropriate, their
affiliates, of the transactions described in this Agreement.

f. The obtaining of all governmental approvals and authorizations necessary
to

consummate the transactions described in this Agreement including any
requisite approvals

under the Federal Land Policy and Management Act, 43 U.S.C. 1701 et seq.,
and other

applicable laws.

7. In the event that a claim or action is brought or threatened by a third
party challenging the legality, enforceability or validity of this
Agreement, or any portion thereof, including the HCP, Permit or SYP, the
Parties agree to cooperate and act in good faith to preserve diligently this
Agreement, HCP, Permit or SYP against such third party challenge.

IN WITNESS WHEREOF, the Parties agree to the foregoing as of September 28,
1996

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THE UNITED STATES OF AMERICA

By:______________________________________