Waiver Letter Agreement



 Exhibit 4.1 
  

					
	 	 	 	 	Selco Service Corporation
	 	 	 	 	 c/o Key Equipment Finance

	 	 	 	 	 66 South Pearl Street

	 	 	 	 	 Albany, NY 12207


  
 October 31, 2005

  
 VIA FACSIMILE TRANSMISSION 
  
 Pope & Talbot, Inc. 
 1500 S.W. First Avenue 
 Portland, Oregon 97201 

	Attn:	Richard Atkinson 


	 	Vice	President & Chief Financial Officer 

  

	 	Re:	That certain (i) CLO2 Participation Agreement and (ii) Facility Lease, both as defined in Annex I to that certain Amended and Restated Participation Agreement dated as of
December 27, 2001 among Pope &Talbot, Inc., the Owner Participant and the Owner Trustee among others (the “Participation Agreement”) 

  
 Dear Mr. Atkinson: 
  
 Reference is hereby made to the CLO2 Participation Agreement and the Facility Lease, as modified by that certain amendatory letter agreement dated
December 13, 2002. All capitalized terms used herein and not defined herein shall have the meaning ascribed to such terms in the Participation Agreement. Reference is also made to that certain letter dated October 4, 2005 from the
undersigned to you concerning the subject matter hereof (the “10/4 Waiver Letter”). As used herein, “Covenants” shall have the meaning given such term in the 10/4 Waiver Letter. Pursuant to the terms of the 10/4 Waiver Letter,
Pope & Talbot, Inc. (“P&T”) acknowledged, represented and warranted to the Owner Participant that P&T shall comply with the Covenants as of October 31, 2005, such determination to be based on unaudited interim
financial statements signed by the chief financial officer of P&T for the month and period ending October 31, 2005 to be delivered by P&T to the Owner Trustee and the Owner Participant as soon as available but in any event not later
than November 30, 2005. You as the Chief Financial Officer of P&T and on behalf of P&T have advised the Owner Participant that P&T will be unable to comply with the Covenants for the month and period ending October 31, 2005 and
have requested the Owner Participant waive compliance with the Covenants for the period ending October 31, 2005. Subject to the terms and provisions of this letter, Selco Service Corporation, as Owner Participant, hereby waives compliance with
the Covenants for the month and period ending October 31, 2005. In 











 Pope & Talbot, Inc. 
 October 31, 2005 
 Page 2 
  

 
connection with this waiver, P&T, by acceptance of this letter, hereby acknowledges, represents, agrees with and warrants to Selco Service Corporation
that: 
  
 A. The waivers herein contained are specifically limited
to the Covenants and are not a waiver of any other term or condition contained in the CLO2 Participation Agreement, the Facility Lease, the other CLO2 Operative Agreements or the other Operative Agreements (such non waived provisions including, but
not limited to, the obligations contained in Section 18 (Financial Statements and Reports; Inspection and Certificates) of the Facility Lease), nor to be considered an indication that the Owner Participant would be willing to waive the
Covenants, any other financial covenants or any other covenants or provisions set forth in any of the CLO2 Operative Agreements, the Operative Agreements or otherwise in the future. 
  
 B. As of the date hereof each of the CLO2 Operative Agreements and each of the Operative Agreements is in full force and
effect without offset, defense or counterclaim of any type. 
  
 C.
As of the date hereof and after giving effect to this waiver there exists no event which with the passage of time, the giving of notice, or both, would constitute an Event of Default under any of the CLO2 Operative Agreements or the Operative
Agreements. 
  
 As a condition to (i) the Owner Participant executing and
delivering this letter agreement executed by the Owner Participant and the Owner Trustee and (ii) the effectiveness hereof, (a) P&T shall remit a waiver fee to Selco Service Corporation in the amount of $150,000.00, (b) the CLO2
Note Purchasers, the Note Purchasers, the CLO2 Indenture Trustee and the Indenture Trustee shall waive compliance with the Covenants in a form acceptable to the Owner Participant in its discretion and (c) P&T shall reimburse the Owner
Trustee and the Owner Participant for the reasonable costs and expenses and any reasonable legal fees (including their outside counsel) incurred in connection with this letter and these agreements. 
  
 This waiver letter may be executed in one or more counterparts, each of which
when so executed shall be deemed an original and when taken together shall constitute one letter agreement. 










 Pope & Talbot, Inc. 
 October 31, 2005 
  Page
 3
 

  
 Please acknowledge your
agreement to the foregoing by signing and returning a copy of this letter. 
  

			
	 Very truly yours,

	
	 SELCO SERVICE CORPORATION

		
	 By:
	 	 /s/ Donald C. Davis

	 Name:
	 	 Donald C. Davis

	 Title:
	 	 Vice President



  

			
	 Read, Acknowledged, Accepted and Agreed to:

	
	 POPE & TALBOT, INC.

		
	 By:
	 	 /s/ Richard K. Atkinson

	 Its:
	 	 Vice President and CFO












 Pope & Talbot, Inc. 
 October 31, 2005 
  Page
 4
 
  

 The Owner Trustee does hereby grant and issue a waiver of the Covenants as defined in and under the same terms and
conditions as set forth in the foregoing letter. 
  
 WILMINGTON TRUST COMPANY,

 not is its individual capacity but 
 Solely as Owner Trustee 
  

			
		
	 By:
	 	 /s/ Robert P. Hines, Jr.

	 Name:
	 	 Robert P. Hines, Jr.

	 Title:
	 	 Assistant Vice President