Financial Covenants letter



 Exhibit 10.2 
 POPE & TALBOT LTD. 
 1500 S.W. First Avenue, Suite 200 
 Portland, Oregon 97201 
 May 30, 2006 
 Wells Fargo Financial Corporation Canada 
 55 Standish Court, Suite 400 
 Mississauga, Ontario L5R 4J4 
 Ableco Finance LLC 
 299 Park Avenue 
 Floors 21-23

 New York, NY 10171 
  

	 	Re:	FINANCIAL COVENANTS LETTER 

 Ladies and Gentlemen: 
 Reference hereby is made to (i) that certain Commitment Letter, dated May 30, 2006 (the “Commitment Letter”), among Pope & Talbot,
Inc., a Delaware corporation (the “Parent”), Pope & Talbot Ltd., a Canadian corporation (the “Borrower”), Wells Fargo Financial Corporation Canada, a Nova Scotia unlimited liability company
(“WFFCC”), and Ableco Finance LLC, a Delaware limited liability company (“Ableco”), and (ii) the Draft Credit Agreement referred to in the Commitment Letter (the “Credit Agreement”). 
 The parties hereto hereby agree that Schedule 7.1 to the Credit Agreement shall be in form and substance as set forth on Schedule I hereto. 

This letter agreement may be executed in any number of counterparts and by different parties on separate counterparts. Each of such counterparts shall
be deemed to be an original, and all of such counterparts, taken together, shall constitute but one and the same agreement. Delivery of an executed counterpart of this letter by telefacsimile or electronic mail shall be equally effective as delivery
of a manually executed counterpart. 
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 This letter agreement is the financial covenants letter referred to in the Commitment Letter and shall be
construed under and governed by the laws of the State of New York. 
  

			
	Very truly yours,
	
	POPE & TALBOT, INC.
		
	By:	 	 /s/ Richard K. Atkinson

	Name:	 	Richard K. Atkinson
	Title:	 	Vice President and Chief Financial Officer
	
	POPE & TALBOT LTD.
		
	By:	 	 /s/ Richard K. Atkinson

	Name:	 	Richard K. Atkinson
	Title:	 	Vice President and Chief Financial Officer


 Accepted and agreed to 
 as of the date first above written: 
  

			
	 WELLS FARGO FINANCIAL CORPORATION
 CANADA

		
	By:	 	 /s/ Nick Scarfo

	Name:	 	Nick Scarfo
	Title:	 	Vice President
	
	ABLECO FINANCE LLC
		
	By:	 	 /s/ Dan Wolf

	Name:	 	Dan Wolf
	Title:	 	SVP








 Schedule I to Financial Covenants Letter 
 SCHEDULE 7.1 
 Financial Covenants 
 1. Consolidated EBITDA. Permit Consolidated EBITDA of the Parent and its Subsidiaries for: 
 (a) the four consecutive fiscal quarters of the Parent ending June 30, 2006 and September 30, 2006, to be less than $0; 
 (b) the four consecutive fiscal quarters ended on December 31, 2006 to be less than $25,000,000; and 
 (c) the preceding four consecutive fiscal quarters calculated at the end of each fiscal quarter set forth in the table below, beginning with the end of
FQ1 2007 of the Parent, to be less than the applicable amount set forth below: 
  

			
	 Fiscal Quarter
	  	 Amount

	 FQ1 2007
	  	$25,000,000
	 FQ2 2007
	  	$35,000,000
	 FQ3 2007
	  	$35,000,000
	 FQ4 2007
	  	$45,000,000
	 FQ1 2008
	  	$45,000,000
	 FQ2 2008
	  	$52,500,000
	 FQ3 2008
	  	$52,500,000
	 FQ4 2008
	  	$60,000,000
	 FQ1 2009
	  	$60,000,000
	 FQ2 2009
	  	$65,000,000
	 FQ3 2009
	  	$65,000,000
	 FQ4 2009
	  	$70,000,000
	 FQ1 2010
	  	$70,000,000
	 FQ2 2010
	  	$70,000,000
	 FQ3 2010
	  	$70,000,000
	 FQ4 2010
	  	$70,000,000
	 FQ1 2011
	  	$70,000,000
	 FQ2 2011
	  	$70,000,000
	 FQ3 2011
	  	$70,000,000
	 FQ4 2011
	  	$70,000,000
	 FQ1 2012
	  	$70,000,000
	 FQ2 2012
	  	$70,000,000

 2. Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio for the preceding
four consecutive fiscal quarters calculated at the end of each fiscal quarter of the Parent and its Subsidiaries ending on or after December 31, 2009 to be greater than 2.75 to 1.00.