EMPLOYMENT AGREEMENT

        THIS AGREEMENT (Agreement) is entered into as of February 11, 2005, by and between Temple-Inland Inc., a Delaware corporation (the Company), and Kenneth M. Jastrow, II (the Executive).

        WHEREAS, the Executive currently serves as the Chief Executive Officer of the Company and as the Chairman of its Board of Directors (the Board);

        WHEREAS, the Company desires to continue the employment of the Executive upon the terms and conditions set forth herein; and

        WHEREAS, the Executive is willing and able to continue employment with the Company on such terms and conditions.

        NOW, THEREFORE, in consideration of the mutual agreements contained herein, the Company and the Executive hereby agree as follows:

    1.        Effective Date; Employment Period. Subject to the provisions of Section 4 hereof, the term of this Agreement shall commence as of the date hereof (such date, the Effective Date) and shall end on the third anniversary thereof, provided that, subject to Section 4 hereof, commencing on the first anniversary of the Effective Date, and on each anniversary of the Effective Date thereafter, the term of this Agreement shall automatically be extended for an additional year unless, not later than one year prior to each such date, the Company or the Executive shall have given notice not to extend the term of this Agreement. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the term of this Agreement shall survive such expiration. All periods during which the Executive is employed hereunder shall hereinafter be referred to as the Employment Period.

    2.        Positions and Duties.

    (a)        Position and Reporting. During the Employment Period, the Company will employ the Executive, and the Executive agrees to serve and accept employment, as the Chief Executive Officer of the Company (Chief Executive Officer), reporting directly to the Board. As Chief Executive Officer, the Executive shall perform the customary duties of such position, subject to the direction and control of the Board, and shall perform such other duties, not inconsistent with such position, as the Board may require.

    (b)        Board Membership. The Company agrees to use its best efforts (including, without limitation, the solicitation of proxies) to cause the Executive to be reelected to the Board during the Employment Period and to be reappointed as Chairman of the Board. The Executive agrees to assist in such efforts and to serve if elected or appointed, as the case may be. Upon any termination of his employment with the Company, the Executive shall immediately resign from the Board.

    (c)        Other Activities. During the Employment Period, the Executive shall devote all of his working time to his duties hereunder, shall devote his best efforts to advance the interests of the Company and shall not engage in any other business activities, as an employee, director, consultant or in any other capacity, whether or not he receives any compensation therefor, without the prior written consent of the Board; provided that the Executive may serve on up to three corporate boards (other than the Board) with the approval of the Board, which approval shall not be unreasonably withheld; and provided further that the two (2) corporate boards on which such service is approved as of the Effective Date are identified on Appendix A hereto. Notwithstanding the foregoing provisions of this subsection (c), it shall not be a violation of this Agreement for the Executive to serve on civic or charitable boards or committees to the extent that such service does not interfere with his duties under this Agreement.

    (d)        Place of Employment. The Executive shall perform his services hereunder principally at the Companys headquarters in Austin, Texas; provided that the Executive shall perform services in other locations as may be reasonably required for the performance of his duties hereunder.

    3.        Compensation. In consideration of the performance by the Executive of his duties hereunder, during the Employment Period the Company shall pay or provide to the Executive the following compensation and benefits, which the Executive agrees to accept in full satisfaction for his services, it being understood that all standard Company deductions shall be withheld from such compensation:

    (a)        Base Salary. The Executive shall receive a base salary equal to nine hundred twenty-five thousand dollars ($925,000.00) per annum (the Base Salary), which Base Salary shall be paid in accordance with the Companys normal payroll practices. The Base Salary shall be reviewed for adjustment by the Board (on or about each anniversary of the Effective Date) taking into account the recommendation of the Management Development and Executive Compensation Committee of the Board (the MDECC); provided that any adjustment shall be made in the Boards sole discretion; and provided further that the Base Salary shall not be reduced to a lesser amount. The term Base Salary as used herein shall be deemed to refer to any such amount as it may be increased from time to time.

    (b)        Bonuses. The Executive shall be eligible for an annual performance-based cash bonus on terms established in the discretion of the MDECC, but on a basis substantially no less favorable than that applicable in respect of the Executive while serving as Chief Executive Officer before the Effective Date.

    (c)        Employee Benefits. The Executive shall be entitled to participate in the retirement, health and life insurance and other welfare and fringe benefit plans and programs of the Company on a basis (to the extent permitted by applicable law) substantially no less favorable than that applicable in respect of the Executive while serving as Chief Executive Officer before the Effective Date.

    (d)        Equity Grants. The Executive shall be eligible for annual grants of equity incentive compensation as determined in the discretion of the MDECC, provided that grants shall be made on a basis substantially no less favorable than that applicable in respect of the Executive while serving as Chief Executive Officer before the Effective Date. The terms and conditions of equity grants to the Executive (whether made before, on or after the date hereof) shall be determined pursuant to the terms and conditions of the plans and agreements under and subject to which they are or were made; provided that, in the event of the Executives termination of employment with the Company for any reason, the Company in its discretion may require the Executive to surrender, for their mutually agreeable fair value, some or all of the stock options and other stock-settled awards then held by him that remain outstanding upon such termination.

    (e)        Executive Compensation Plans. The Executive shall be eligible to participate in any executive compensation plans that are not the subject of the preceding provisions of this Section 3 on a basis (to the extent permitted by applicable law) substantially no less favorable than that applicable in respect of the Executive while serving as Chief Executive Officer before the Effective Date.

    (f)        Certain Other Benefits.

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