Exhibit 10.1

EXECUTION VERSION

AGREEMENT

THIS AGREEMENT, dated as of April 21, 2006, by and among: (i) PW Eagle, Inc., a
Minnesota corporation (the “Company”); (ii) Pirate Capital LLC, a Delaware
limited liability company (“Pirate Capital”); and (iii) Jolly Roger Fund LP, a
Delaware limited partnership and an investment fund, Jolly Roger Offshore Fund
LTD, a British Virgin Islands company and an investment fund, and Jolly Roger
Activist Portfolio Company LTD, a Cayman Islands exempted company and an
investment fund (together, the “Jolly Roger Funds”).

WHEREAS, Pirate Capital and Thomas R. Hudson Jr. filed a Schedule 13D dated
February 28, 2006 with regard to securities of the Company held by the Jolly
Roger Funds (the “Pirate Capital Schedule 13D”);

WHEREAS, the Pirate Capital Schedule 13D and letters to the Company dated
March 9, 2006 indicated Pirate Capital’s intention to make certain nominations
and proposals at the Company’s 2006 annual meeting of shareholders (the “Annual
Meeting”) with the purpose of, among other things, effectuating a change in the
majority of the Board of Directors of the Company (the “Board”);

WHEREAS, in view of the Pirate Capital Schedule 13D and other considerations,
including a Schedule 13D filed by another shareholder independent of Pirate
Capital, the Jolly Roger Funds and Thomas R. Hudson Jr. (collectively, the
“Pirate Parties”), the Board has determined that it is in the best interests of
the Company and its shareholders to effectuate certain changes with regard to
the Board and other agreements of the Company by entering into this Agreement;

WHEREAS, each of Denver Kaufman, Richard W. Perkins, Bruce A. Richard and
William H. Spell has submitted his written irrevocable resignation from the
Board effective as of the election of directors at the Annual Meeting, and Harry
W. Spell has notified the Board in writing that he has irrevocably determined
not to stand for re-election at the Annual Meeting, copies of which have been
provided to Pirate Capital, and each such director has determined that it is in
the best interests of the Company and its shareholders for him to take such
action and for the Company to enter into this Agreement and to consummate the
transactions contemplated hereby; and

WHEREAS, the Company has delivered to Pirate Capital a Secretary’s Certificate
certifying to the adoption and effectiveness of resolutions, copies of which are
attached to such certificate, duly approved unanimously by the Board, that
(i) authorize and direct the Company to enter into this Agreement and consummate
the transactions contemplated hereby, (ii) approve each of the matters set forth
herein and contemplated hereby, (iii) accept the resignation of each of Denver
Kaufman, Richard W. Perkins, Bruce A. Richard and William H. Spell and the
decision of Harry W. Spell not to stand for re-election, (iv) nominate each of
the individuals identified in Section 3 hereof for election to the Board at the
Annual Meeting, (v) resolve to propose and recommend at the Annual Meeting that
the shareholders of the Company approve the by-law amendment set forth in
Section 1 hereof, (vi) set the record date, meeting date, time and location for
the Annual Meeting, and (vii) determine that each of the foregoing matters is in
the best interests of the Company and its shareholders.

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NOW, THEREFORE, the parties hereto agree as follows:

1. Amendment to By-laws. The Board shall propose for adoption at the Annual
Meeting, and recommend that the Company’s shareholders approve, an amendment of
Section 3.2 of the Company’s by-laws to eliminate the Company’s staggered board
of directors, which shall read as follows:

“Section 3.2 of the Company’s by-laws is hereby deleted in its entirety and
replaced with the following:

‘3.2) Number, Term and Qualifications. The Board of Directors shall consist of
one or more members. At each regular meeting, the shareholders shall determine
the number of directors; provided, that between regular meetings the authorized
number of directors may be increased or decreased by the shareholders or
increased by the Board of Directors. Each director shall serve for an indefinite
term that expires at the next regular meeting of shareholders, and until such
director’s successor is elected and qualified, or until such director’s earlier
death, resignation, disqualification, or removal as provided by statute.’”

2. Size of Board of Directors. The Board shall propose for adoption at the
Annual Meeting, and recommend that the Company’s shareholders approve, a
resolution setting the size of the Board at seven (7) directors.

3. Nominations for Board of Directors. The Board shall nominate for election to
the Board by the shareholders of the Company at the Annual Meeting, and
recommend that the Company’s shareholders elect, each of the following
individuals and only such individuals: Jerry A. Dukes, Martin White, Thomas R.
Hudson Jr., Zachary R. George, Todd Goodwin, Lee D. Meyer and Stephen M.
Rathkopf. Pirate Capital has determined, based on information provided by such
individual, that Todd Goodwin meets the qualifications of financial
sophistication as set forth in the second sentence of Rule 4350(d)(2)(A) of the
Marketplace Rules of the National Association of Securities Dealers, Inc.
Notwithstanding any provision of this Agreement to the contrary, if at any time
prior to the election of directors at the Annual Meeting any of Thomas R. Hudson
Jr., Zachary R. George and Todd Goodwin is unable or unwilling to stand for
election as a director at the Annual Meeting or to serve as a director if
elected, then Pirate Capital shall designate a replacement for such person and
this Agreement shall apply with respect to such replacement as if such
replacement was named in the first sentence of this Section 3, any such
replacement to be reasonably acceptable to the nominating committee of the
Board. The election of directors shall be the last item of business at the
Annual Meeting, with the possible exception (if the Company so chooses) of
ratification of the appointment of the Company’s auditors. Notwithstanding any
provision of this Agreement to the contrary, if at any time prior to the
election of directors at the Annual Meeting any of Jerry A. Dukes, Martin White,
Lee D. Meyer or Stephen Rathkopf is unable or unwilling to stand for election as
a director at the Annual Meeting or to serve as a director if elected, then the
nominating committee of the Board shall designate a replacement for such person
and this Agreement shall apply with respect to such replacement as if such
replacement was named in the first sentence of this Section 3.

 

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4. Vote on Options. The Company has indicated to Pirate Capital that the Board
may propose for approval at the Annual Meeting, and recommend that the Company’s
shareholders approve, an amendment to the Company’s 1997 Stock Option Plan
increasing the number of shares reserved for issuance under the plan from
2,200,000 to 2,700,000. The Company represents, warrants and covenants that the
most recent grant of stock options or other Company securities, pursuant to such
plan or otherwise, was as of the date hereof, and shall be as of the Annual
Meeting, the grant on December 13, 2005 of 184,000 stock options pursuant to
such plan, all of which were issued only to current management and employees of
the Company.

5. Vote on Restricted Stock Grants. The Company has indicated to Pirate Capital
that the Board may propose for approval at the Annual Meeting, and recommend
that the Company’s shareholders approve, restricted stock grants made by the
Company on March 6, 2003, September 30, 2003 and April 3, 2006 consisting of an
aggregate of 90,500 shares of the Company’s common stock. The Company represents
and warrants that all of such shares were issued only to current management and
employees of the Company or pursuant to the express informed approval of the
Board pursuant to Section 302A.255 of the Minnesota Business Corporation Act.

6. Annual Meeting; Voting Agreement; SEC Filings.

(a) The Company shall call and hold the Annual Meeting as soon as reasonably
practicable following the execution of this Agreement, and shall file the
Company’s proxy statement with respect to the Annual Meeting no later than
April 28, 2006 and hold the Annual Meeting no later than 35 days following
notification from the SEC of no review (or, if no such notification is given,
then following passage of the 10-day review period without notification from the
SEC of its intent to review), or in the event of a review, notification that the
SEC has no further comments. The Company shall, with respect to the Annual
Meeting, solicit proxies in favor of each of the items of business described in
Sections 1-3 of this Agreement in a reasonable and timely manner, in accordance
with applicable laws, rules and regulations, and shall cause all valid proxy
cards timely received to be voted as indicated thereon or, if no indication is
made thereon, then in favor of each of the items of business described in
Sections 1-3 of this Agreement and against any other item of business to come
before the Annual Meeting (other than the items of business described in
Section 4 and 5 of this Agreement and any routine matters such as the
ratification of the appointment of the Company’s auditors and those incident to
the conduct of the meeting). The Company may, with respect to the Annual
Meeting, in its discretion, solicit proxies in favor of each of the items of
business described in Sections 4 and 5 of this Agreement in a reasonable and
timely manner, in accordance with applicable laws, rules and regulations.
Provided that the Board and the Company take all of the actions required thereof
in this Agreement, Pirate Capital shall vote all of the Company’s common stock
beneficially owned by it on the record date for the Annual Meeting in favor of
each of the items of business set forth in Sections 1-3 hereof, and, if proposed
as set forth above, the items of business set forth in Sections 4 and 5 hereof,
at the Annual Meeting. Neither Pirate Capital, the Company nor any of their
respective affiliates or associates (as those terms are defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)),
will, and they will not assist or encourage others (including by providing
financing) to, directly or indirectly, with respect to the Annual Meeting,
propose a competing slate of directors, or solicit votes of the shareholders of
the Company in opposition to the slate of directors to be nominated

 

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as set forth herein or in opposition to any of the items of business described
in Sections 1-5 hereof. Neither the Company nor the Board shall propose or
support any other item of business to be conducted, or any other director to be
elected, at the Annual Meeting other than as set forth in Sections 1-5 of this
Agreement and any routine matters such as the ratification of the appointment of
the Company’s auditors and those incident to the conduct of the meeting.

(b) The Company shall provide Pirate Capital with a copy of the preliminary and
definitive proxy statements and any additional solicitation materials with
respect to the Annual Meeting at least five (5) days (in the case of any proxy
statement) and at least two days (in the case of any additional solicitation
materials) in advance of the earlier filing or dissemination of such documents
and shall incorporate into such documents any revisions thereto reasonably
requested by Pirate Capital within such time period. The Company shall promptly
deliver to Pirate Capital a copy of any comments of the Securities and Exchange
Commission or its Staff (the “SEC”) regarding any documents filed with the SEC
and of any request from the SEC for amendments or supplements to any such
documents or for any additional information. The Company shall provide Pirate
Capital and its outside counsel with a reasonable opportunity (in no event less
than one business day) to review all responses to such comments and requests,
including any documents to be filed in response thereto, in each case in advance
of their being provided to the SEC, and shall incorporate into such documents
any revisions thereto reasonably requested by Pirate Capital within such time
period. Additionally, the Company shall promptly and fully inform Pirate Capital
and its outside counsel with respect to all communications with the SEC,
including all meetings and telephone conferences, relating to such documents,
the preliminary or definitive proxy statements, any additional solicitation
materials, this Agreement or any of the transactions contemplated hereby.

7. Expense Reimbursement. The Company agrees to reimburse Pirate Capital for its
reasonable fees and expenses (including those of its counsel) incurred in
connection with (i) the Annual Meeting, including all actions taken prior to or
after the date hereof in furtherance of Pirate Capital’s contemplated proxy
solicitation with respect to the Annual Meeting, and (ii) this Agreement,
including the negotiation and execution hereof and the transactions contemplated
hereby, subject to an aggregate cap of $200,000. Such reimbursement payments to
be made within five (5) business days of delivery of the applicable invoices or
other documentation.

8. Representations and Warranties.

(a) Each of the Company, Pirate Capital and the Jolly Roger Funds hereby
represents and warrants with respect to itself as follows:

(i) Authority Relative to this Agreement. It has the full legal right and power
and all authority and approval required to enter into, execute and deliver this
Agreement and to perform fully its obligations hereunder. This Agreement has
been duly authorized, executed and delivered by it and this Agreement
constitutes the valid and binding obligation of it enforceable against it in
accordance with the terms hereof.

(ii) Absence of Conflicts. Its execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and its performance
hereunder in

 

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accordance with the terms and conditions hereof do not and will not: (i) require
the approval of any third party, including its shareholders or investors,
(ii) violate, conflict with or result in a breach of any provision of its
articles of incorporation, by-laws or comparable governing documents,
(iii) violate, conflict with or result in a breach of any provision of or
constitute a default (or an event that, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in the creation of any lien,
charge, penalty or encumbrance under, any contract or other agreement to which
it is a party or by or to which it is bound or subject, or (iv) violate any
judgment, ruling, order, writ, injunction, award, decree, statute, law,
ordinance, code, rule or regulation of any court or foreign, federal, state,
county or local government or any other governmental, regulatory or
administrative agency or authority that is applicable to it.

(b) Pirate Capital represents and warrants that the Pirate Parties are acting
independently of any third party, and not pursuant to an agreement, arrangement,
relationship, understanding or otherwise for the purpose of acquiring, owning,
holding, voting or disposing of any shares of the Company, and the Pirate
Parties do not constitute a single person with any third party for purposes of
the definition of an “Acquiring Person” in Section 302A.011 Subd. 37 of the
Minnesota Business Corporation Act or “Beneficial Ownership” in Section 302A.011
Subd. 41(c) of the Minnesota Business Corporation Act and do not constitute a
“group” with any third party within the meaning of Rule 13d-5 under the Exchange
Act.

(c) The Company represents and warrants that each of the following individuals
have irrevocably agreed with the Company (but not with each other), in their
capacity as shareholders, not to take any action opposed to or inconsistent with
this Agreement and the transactions contemplated hereby: Denver Kaufman, Richard
W. Perkins, Bruce A. Richard, Harry W. Spell, William H. Spell and Dobson West.
Any amendment or waiver of such agreement or failure by any such person to so
act shall constitute a breach by the Company of this Agreement.

9. Amendment. No amendment or waiver of any provision of this Agreement shall be
effective unless in writing and signed by all of the parties hereto.

10. Severability. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.

11. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of each party.

12. Execution in Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which counterparts taken together shall constitute one and the same
instrument.

 

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13. Further Assurances. Each party agrees to take or cause to be taken such
further actions, and to execute, deliver and file or cause to be executed,
delivered or filed, such further documents and instruments, and to obtain such
consents, as may be reasonably required or requested by another party in order
to effectuate fully the purposes, terms and conditions of this agreement.

14. Notice. All notices, requests and demands to or upon a party hereto, to be
effective with respect to this Agreement, shall be in writing, and shall be sent
by certified or registered mail, return receipt requested, by personal delivery
against receipt, by overnight courier or by facsimile and, unless otherwise
expressly provided herein, shall be deemed to have been validly served, given,
delivered or received immediately when delivered against receipt, three
(3) business days’ after deposit in the mail, postage prepaid, one (1) business
day after deposit with an overnight courier or, in the case of facsimile notice,
when sent with respect to machine confirmed, addressed as follows:

 

If to Company:     

PW Eagle, Inc.

1550 Valley River Drive

Eugene, Oregon 97440

Attention: Scott M. Long

Facsimile No.: (541) 686-9248

With a copy to:     

Fredrikson & Byron, P.A.

200 South Sixth Street, Suite 4000

Minneapolis, MN 55402-1425

Attention: K. Lisa Holter

Facsimile No.: (612) 492-7077

If to Pirate Capital and the Jolly Roger Funds:     

Pirate Capital LLC

200 Connecticut Avenue, 4th Floor

Norwalk, CT 06854

Attention: Christopher Kelly, Esq.

Facsimile No. (203) 854-5841

With a copy to:     

Schulte Roth & Zabel LLP

919 Third Avenue

New York, NY 10022

Attention: Marc Weingarten, Esq.

Facsimile No.: (212) 593-5955

or to such other address as each party may designate for itself by notice given
in accordance with this Section 14.

15. Time of Essence. Time is of the essence with respect to this Agreement.

16. Entire Agreement. This Agreement embodies the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements, understandings and inducements, whether
express or implied, oral or written, with respect to the subject matter hereof.

 

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17. Interpretation. No provision of this Agreement shall be construed against or
interpreted to the disadvantage of any party hereto by any court or other
governmental or judicial authority by reason of such party having or being
deemed to have structured or dictated such provision. Each party hereto
acknowledges that it has had the benefit of legal counsel of its own choice and
has been afforded an opportunity to review this Agreement with its legal counsel
and that this Agreement shall be construed as if jointly drafted by the parties.
Any breach by or nonperformance of any provision of this Agreement that calls
for action to be taken by the Board shall constitute a breach of this Agreement
by the Company. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning of terms contained
herein. Unless the context of this Agreement otherwise requires, as used herein:
(i) words of any gender shall be deemed to include each other gender; (ii) words
using the singular or plural number shall also include the plural or singular
number, respectively; (iii) the words “hereof”, “herein” and “hereunder” and
words of similar import refer to this Agreement as a whole and not to any
particular provision of this Agreement; (iv) the word “including” and words of
similar import mean “including, without limitation”; (v) “or” is not exclusive;
and (vi) provisions apply to successive events and transactions.

18. Governing Law and Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA (WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE). EACH PARTY HEREBY
CONSENTS AND AGREES THAT ANY FEDERAL OR STATE COURT LOCATED IN HENNEPIN COUNTY,
MINNESOTA SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN THE COMPANY ON THE ONE HAND AND THE PIRATE PARTIES ON THE OTHER
HAND PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO
THIS AGREEMENT. EACH PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND HEREBY
WAIVES ANY OBJECTION WHICH IT MAYHAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS. EACH PARTY HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR
SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAYBE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT THE ADDRESS SET
FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON
THE EARLIER OF SUCH PARTY’S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO AFFECT THE RIGHT OF ANY PARTY TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY ANY PARTY OF
ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER
THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.

 

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19. Injunctive Relief. Each of the Pirate Parties, on the one hand, and the
Company, on the other, acknowledges that a party will suffer irreparable harm if
any other party breaches this Agreement. Accordingly, a non-breaching party
shall be entitled, in addition to any other rights and remedies that it may
have, at law or at equity, to an injunction, without the posting of a bond or
other security, enjoining or restraining any other party from any violation of
this Agreement. Each party hereby consents to the other parties’ right to the
issuance of such injunction.

20. Public Announcements. Any public announcement or similar publicity with
respect to this Agreement may be issued, at such time and in such manner as the
parties shall agree in advance; provided, however, that (i) the Pirate Parties
shall be permitted, in their discretion, to amend the Pirate Capital Schedule
13D to reflect this Agreement or otherwise, and to make any other disclosure
required by applicable law, and (ii) the Company shall be permitted to disclose
this Agreement on Form 8-K, and to make any other disclosure required by
applicable law, after Pirate Capital is provided with a reasonable opportunity
to review and comment on any such disclosure.

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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
AGREEMENT to be duly executed and delivered as of the date first above written.

 

      PW EAGLE, INC.       By:  

/s/ William Spell

      Name:   William Spell       Title:   Co-chairman JOLLY ROGER FUND LP    
PIRATE CAPITAL LLC By:   Pirate Capital LLC       Its:   General Partner     By:
 

/s/ Thomas R. Hudson Jr.

      Name:   Thomas R. Hudson Jr.       Title:   Managing Member By:  

/s/ Thomas R. Hudson Jr.

      Name:   Thomas R. Hudson Jr.       Title:   Managing Member       JOLLY
ROGER OFFSHORE FUND LTD     JOLLY ROGER ACTIVIST PORTFOLIO COMPANY LTD By:  
Pirate Capital LLC     By:   Pirate Capital LLC Its:   Investment Advisor    
Its:   Investment Advisor By:  

/s/ Thomas R. Hudson Jr.

    By:  

/s/ Thomas R. Hudson Jr.

Name:   Thomas R. Hudson Jr.     Name:   Thomas R. Hudson Jr. Title:   Managing
Member     Title:   Managing Member