Document:

First Amendment to Fourth Amended and Restated Loan and Security Agreement

  
 Exhibit 10.2

  
 FIRST AMENDMENT TO FOURTH AMENDED 
 AND RESTATED LOAN AND SECURITY AGREEMENT 
  
 THIS FIRST AMENDMENT TO FOURTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (“First Amendment”) is made as of the 15th day of March, 2005 by and among PW
Eagle, Inc., a Minnesota corporation (“Borrower”), the lenders who are signatories hereto (“Lenders”), and Fleet Capital Corporation, a Rhode Island corporation (“FCC”), as agent for Lenders hereunder (FCC, in such
capacity, being “Agent”). 
  
 W I T
N E S S E T H: 
  
 WHEREAS,
Borrower, Agent and Lenders entered into a certain Fourth Amended and Restated Loan and Security Agreement dated as of October 25, 2004 (said Fourth Amended and Restated Loan and Security Agreement is hereinafter referred to as the “Loan
Agreement”); and 
  
 WHEREAS, Borrower desires to amend and modify certain
provisions of the Loan Agreement and, subject to the terms hereof, Agent and Lenders are willing to agree to such amendments and modifications; 
  
 NOW THEREFORE, in consideration of the premises, the mutual covenants and agreements herein contained, and any extension of credit heretofore, now or hereafter made by
Agent and Lenders to Borrower, the parties hereto hereby agree as follows: 
  
 1. Definitions. All capitalized terms used herein without definition shall have the meaning given to them in the Loan Agreement. 
  
 2. Applicable Margin. Notwithstanding the provisions of the definition of Applicable Margin, the adjustment to the
Applicable Margin scheduled to have occurred on May 1, 2005 shall be deemed to have occurred on April 1, 2005 so long as Borrower shall have delivered to Agent the financial statements required by subsection 8.1.3(ii) for the fiscal period ended
March 31, 2005 on or prior to April 30, 2005. 
  
 3. Additional
Definitions. The following definitions of “Covenant Election” and “First Amendment” are hereby inserted into Appendix A to the Loan Agreement: 
  
 “Covenant Election – an election made by Borrower with respect to any fiscal quarter and
the twelve month fiscal period then ended to reduce the covenant levels of Minimum EBITDA and Interest Coverage Ratio contained in Exhibit 8.3. Borrower may only exercise a Covenant Election and such Covenant Election shall only remain
effective if (x) on each day from the date on which the Covenant Election is exercised until the date on which Borrower delivers to Agent the financial statements required by subsection 8.1.3(ii) for the last month of the fiscal quarter immediately
succeeding the fiscal quarter for which the Covenant Election is to apply Availability equalled or exceeded $8,000,000, (y) Borrower has not exercised a Covenant Election for more than six consecutive fiscal quarters and (z) Borrower has not
exercised a Covenant Election for more than eight fiscal quarters within the Term. In order to make a Covenant Election, Borrower must notify Agent in writing as provided in Section 12.8 of such election no later than thirty days after the end of
the fiscal quarter to which the Covenant Election is to apply. By way of example of the period described in clause (x) above, if Borrower wishes to make a Covenant Election for the fiscal quarter ended 12/31/05, then Borrower must notify Agent of
such Covenant Election on or prior to January 30, 2006 and must maintain Availability greater than $8,000,000 for each day from the date of the Covenant Election until the date on which the financial statements for the fiscal period ended March 31,
2006 are delivered to Agent. 
  

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 * * * 
  
 First Amendment – that certain First Amendment to Fourth Amended and Restated Loan and Security Agreement dated as of March
15, 2005 by and among Borrower, Agent and Lenders.” 
  
 4.
Distributions. Section 8.2.7 of the Loan Agreement is hereby deleted and the following is inserted in its stead: 
  
 “8.2.7 Distributions. Declare or make, or permit any Subsidiary of Borrower to declare or make, any Distributions;
provided, however, that: (i) Borrower may make repurchases of Common Stock from its stockholders or may pay dividends on its Common Stock not in excess of an aggregate amount of $500,000 during any fiscal year or $125,000 in any fiscal
quarter, in each case, provided (v) Borrower shall have Availability over the 60 days prior to such repurchase, on average, and immediately after giving effect to any such repurchase or dividend, of at least $18,000,000, (w) the Fixed Charge
Coverage Ratio for the most recently ended twelve month period equals or exceeds 1.10 to 1; (x) EBITDA for the most recently ended twelve month period equalled or exceeded $15,000,000, (y) Borrower’s total Money Borrowed as of the last day of
the most recently ended fiscal month equals or is less than $114,000,000, and (z) no Default or Event of Default shall have occurred and be continuing; (ii) Borrower may make repurchases of Common Stock from its stockholders or may pay dividends on
its Common Stock not in excess of an aggregate amount of $1,000,000 during any fiscal year or $250,000 in any fiscal quarter, in each case, provided (v) Borrower shall have Availability over the 60 days prior to such repurchase or dividend,
on average, and immediately after giving effect to any such repurchase, of at least $21,000,000, (w) the Fixed Charge Coverage Ratio for the most recently ended twelve month period equals or exceeds 1.10 to 1; (x) EBITDA for the most recently ended
twelve month period equalled or exceeded $20,000,000, (y) Borrower’s total Money Borrowed as of the last day of the most recently ended fiscal month equals or is less than $102,000,000, and (z) no Default or Event of Default shall have occurred
and be continuing; (iii) Borrower may make repurchases of Common Stock from its stockholders or may pay dividends on its Common Stock not in excess of an aggregate amount of $2,000,000 during any fiscal year or $500,000 in any fiscal quarter, in
each case, provided (v) Borrower shall have Availability over the 60 days prior to such repurchase or dividend, on average, and immediately after giving effect to any such repurchase, of at least $25,000,000, (w) the Fixed Charge Coverage
Ratio for the most recently ended twelve month period equals or exceeds 1.10 to 1; (x) EBITDA for the most recently ended twelve month period equalled or exceeded $22,500,000, (y) Borrower’s total Money Borrowed as of the last day of the most
recently ended fiscal month equals or is less than $89,000,000; (iv) Borrower may make repurchases of Common Stock from its stockholders or may pay dividends on its Common Stock not in excess of an aggregate amount of $4,000,000 during any fiscal
year or $1,000,000 in any fiscal quarter, in each case, provided (v) Borrower shall have Availability over the 60 days prior to such repurchase or dividend, on average, and immediately after giving effect to any such repurchase, of at least
$28,000,000, (w) the Fixed Charge Coverage Ratio for the most recently ended twelve month period equals or 

  

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exceeds 1.15 to 1; (x) EBITDA for the most recently ended twelve month period equalled or exceeded $25,000,000, (y) Borrower’s total Money Borrowed as
of the last day of the most recently ended fiscal month equals or is less than $82,000,000 and (z) no Default or Event of Default shall have occurred and be continuing and (v) Borrower may make a Distribution to its stockholders and certain holders
of warrants to purchase shares of Borrower’s capital stock of shares of capital stock of PW Poly or of cash proceeds received from any sale of the capital stock of PW Poly. The foregoing notwithstanding, Borrower shall make no Distribution if
the making of such Distribution is prohibited by the terms of the 2004 Subordinated Note Documents.” 
  
 5. Capital Expenditures. Subsection 8.2.8 of the Loan Agreement is hereby deleted and the following is inserted in its stead: 
  
 “8.2.8 Capital Expenditures. (a) Make Capital
Expenditures (including, without limitation, by way of capitalized leases) which, in the aggregate, as to Borrower and its Subsidiaries during any fiscal year (or other period) of Borrower exceeds the amount set forth opposite such fiscal year (or
other period) in the following schedule: 
  

				
	 Fiscal Year Ending

	  	Permitted Capital Expenditure

	 December 31, 2004 and each December 31 thereafter
	  	$	2,000,000

  
 (b)
The foregoing notwithstanding, if for any fiscal year Borrower incurs less than the maximum amount of permitted Capital Expenditures permitted hereunder (such difference is hereinafter referred to as the “Capital Expenditure Carryover”),
then Capital Expenditures incurred within the first six months of the next fiscal year up to an amount equal to the lesser of $750,000 (or $1,500,000 as provided below) and the Capital Expenditure Carryover, shall be treated, for purposes of this
Section 8.2.8, as incurred in the prior fiscal year. 
  
 (c) The foregoing notwithstanding, if Borrower’s EBITDA for a fiscal year was $13,000,000 or more but less than $15,000,000 and Availability as of each day within the applicable fiscal year equalled or exceeded $8,000,000, then for
such fiscal year permitted Capital Expenditures shall be increased to $3,000,0000. 
  
 (d) The foregoing notwithstanding, if Borrower’s EBITDA for a fiscal year was $15,000,000 or more but less than $20,000,000 and
Availability as of each day within the applicable fiscal year equalled or exceeded $8,000,000, then for such fiscal year permitted Capital Expenditures shall be increased to $4,000,000 and the Capital Expenditure Carryover shall be increased to
$1,500,000. 
  
 (e) The foregoing
notwithstanding, if Borrower’s EBITDA for a fiscal year was $20,000,000 or more and Availability as of each day within the applicable fiscal year equalled or exceeded $8,000,000, then for such fiscal year permitted Capital Expenditures 

  

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shall be increased to $6,000,000 and the Capital Expenditure Carryover shall be increased to $1,500,000.” 
  
 6. Financial Covenants. As of the “First Amendment Effective
Date” (as defined in Section 5 of the First Amendment), Exhibit 8.3 to the Loan Agreement is hereby deleted and Exhibit 8.3 attached hereto and incorporated herein is incorporated into the Loan Agreement in its stead. 

 
 7. Amendment Fee. In order to induce Agent and Lenders to enter
into this First Amendment, Borrower agrees to pay to Agent, for the ratable benefit of Lenders, an amendment fee equal to $25,000. Said amendment fee shall be deemed fully earned and non-refundable and shall be due and payable on the First Amendment
Effective Date. 
  
 8. Conditions Precedent. This First
Amendment shall become effective upon satisfaction of each of the following conditions precedent: 
  
 (A) Borrower, Agent and Lenders shall have executed and delivered to each other this First Amendment; 
  
 (B) Borrower and the lenders under the 2004 Subordinated
Note Documents shall have entered into an amendment to the Subordinated Note Documents in form and substance acceptable to Agent; 
  
 (C) Borrower shall have delivered to Agent the PVC Resin Supply Agreement (together with all amendments thereto) between Borrower and Oxy
Vinyls, LP dated as of January 1, 2005 and the terms and conditions of such PVC Resin Supply Agreement (and such amendments) shall be acceptable to Agent in its reasonable discretion; and 
  
 (D) Borrower shall have paid to Agent for the ratable
benefit of Lenders the amendment fee referred to in Section 7 of this First Amendment. 
  
 The date on which all of the foregoing conditions precedent are satisfied shall be called the “First Amendment Effective Date.” 
  
 9. Miscellaneous. 
  

	(a)	This First Amendment is limited as specified and shall not constitute an amendment, modification or waiver of any other provision of the Loan Agreement or any other Loan Document.

  

	(b)	This First Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which counterparts when executed and
delivered shall be an original, but all of which shall together constitute one and the same instrument. 

  
 10. Continuing Effect. Except as otherwise specifically set out herein, the provisions of the Loan Agreement shall remain in full force and effect.

  

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 (Signature Page Follows) 
  

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 (Signature Page to
First Amendment to 
 Fourth Amended and Restated Loan and Security Agreement) 
  
 IN WITNESS WHEREOF, this First Amendment has been duly executed as of the day and year
specified at the beginning hereof. 
  

			
	PW EAGLE, INC., (“Borrower”)
		
	By:	 	 /s/ Scott Long

	 	 	 Name: Scott Long

	 	 	 Title: Chief Financial Officer

	
	FLEET CAPITAL CORPORATION, as Agent and as a Lender
		
	By:	 	 /s/ Brian Conole

	 	 	 Name: Brian Conole

	 	 	 Title: Senior Vice President

	
	 WELLS FARGO BUSINESS CREDIT, INC.,
 as a Lender

		
	By:	 	 /s/ Mona M. Krueger

	 	 	 Name: Mona M. Krueger

	 	 	 Title: Vice President

	
	 THE CIT GROUP/BUSINESS CREDIT, INC.,
 as a Lender

		
	By:	 	 /s/ Anthony Alexander

	 	 	 Name: Anthony Alexander

	 	 	 Title: Vice President

  

  
 EXHIBIT 8.3

  
 FINANCIAL COVENANTS 
  
 Consolidated Net Income means, with respect to Borrower and its Subsidiaries
(other than PW Poly) for any fiscal period, the net income (or loss) of Borrower and its Subsidiaries for such period taken as a whole (determined in accordance with GAAP on a consolidated basis), but excluding in any event: (a) any gains or losses
on the sale or other disposition of Investments or fixed or capital assets or from any transaction classified as extraordinary under GAAP, any taxes on such excluded gains and any tax deductions or credits on account of any such excluded losses; (b)
the proceeds of any life insurance policy; (c) net earnings and losses of any business entity, substantially all the assets of which have been acquired in any manner by Borrower, realized by such business entity prior to the date of such
acquisition; (d) net earnings and losses of any business entity which shall have merged into Borrower earned or incurred prior to the date of such merger; (e) net earnings of any business entity (other than a Consolidated Subsidiary) in which
Borrower has an ownership interest unless such net earnings shall have been received by Borrower in the form of cash distributions; (f) earnings resulting from a reappraisal, revaluation or write-up of assets; (g) any charge to net earnings
resulting from the amortization of the value of stock options given to employees to the extent required by FASB 25; (h) any increase or decrease of net income arising from a change in Borrower’s accounting methods; (i) any gains resulting from
the forgiveness of Funded Debt or the retirement of Funded Debt at a discount; (j) any gain arising from the acquisition of any Securities of Borrower; (k) any reversal of any contingency reserve, unless the provision for such contingency reserve
shall have been made from income arising during the fiscal period in question; and (l) any charge to earnings resulting from the write-off of deferred loan costs and/or debt discounts in connection with repayment of the 1999 Subordinated Notes and
the Obligations under the Original Loan Agreement and the ETI Loan Agreement. 
  
 EBITDA With respect to any fiscal period, the sum of Borrower’s Consolidated Net Income plus amounts deducted in determining Consolidated Net Income in respect of: (a) any provision for (or less any benefit from) income
taxes whether current or deferred; (b) amortization and depreciation expense; (c) Interest Expense for such period; and (d) the amount, if any, deducted from Consolidated Net Income (and not otherwise added back pursuant to clause (a), (b) or (c) of
this definition) paid to Oxy Vinyls, LP in connection with Section 5.5 of the new PVC Resin Supply Agreement referred to in Section 8(c) of the First Amendment. For purposes of this Section 8.3 and Exhibit 8.3, EBITDA, for fiscal periods
ending on or prior to December 31, 2004, shall not include restructuring charges of up to $1,000,000 which were incurred in fiscal year 2003, but were expensed in fiscal year 2004 and up to $400,000 of expenses which have been or will be incurred in
connection with the PW Poly spin-off contemplated by Section 8.2.7(v). 
  
 Fixed Charge Coverage Ratio - With respect to any period of determination, the ratio of (i) EBITDA of Borrower for such period minus income taxes paid in cash and non-financed Capital Expenditures during such period to (ii)
Fixed Charges. 
  
 Fixed Charges - For any period of determination,
the sum of (a) scheduled principal payments of Funded Debt (including the principal portion of scheduled payments of Capital Lease Obligations), (b) Interest Expense paid in cash included in the determination of Consolidated Net Income, (c)
dividends paid on, or repurchases or redemptions of, Borrower’s capital stock and (d) the amount of the reduction in the Fixed Asset Maximum Amount occurring within such period of determination. 
  
 Interest Coverage Ratio - With respect to any period of determination, the
ratio of (i) EBITDA for such period to (ii) Interest Expense paid in cash for such period, all as determined in accordance with GAAP. 
  
 Interest Expense - With respect to any fiscal period, the interest expense incurred for such period excluding interest income as determined in accordance
with GAAP, including, without limitation (whether or not such amount is included within interest expense pursuant to GAAP), the amounts payable to Oxy Vinyls, LP under Section 5.5 of the new PVC Resin Supply Agreement referred to in Section 8(c) of
the First Amendment. 
  
 Interest Coverage Ratio - Borrower shall
not permit the Interest Coverage Ratio as of the last date of the period set forth below to be less than the ratio set forth opposite such period below: 
  

			
	 Period

	  	 Ratio

	Three months ended December 31, 2004	  	0.15 to 1
		
	Six months ended March 31, 2005	  	0.60 to 1
		
	Nine months ended June 30, 2005	  	1.60 to 1
		
	Twelve months ended September 30, 2005 and each December 31, March 31, June 30 and September 30 thereafter	  	1.80 to 1; provided that if Borrower has properly made a Covenant Election with respect to the last fiscal quarter of the applicable twelve month period, then Minimum Interest Coverage
Ratio shall be decreased to 1.00 to 1.

  

 Minimum EBITDA – Borrower shall achieve EBITDA of $15,000,000 or more for the twelve month period
ending December 31, 2004 and each twelve month period ending each March 31, June 30, September 30 and December 31 thereafter; provided that if Borrower has properly made a Covenant Election with respect to the last fiscal quarter of the
applicable twelve month period, then the Minimum EBITDA for such twelve month period shall be decreased to $10,000,000.First Amendment to Senior Subordinated Note Purchase Agreement

 Exhibit 10.3 
  
 FIRST AMENDMENT TO SENIOR SUBORDINATED NOTE PURCHASE 
 AGREEMENT AND JUNIOR SUBORDINATED NOTE PURCHASE AGREEMENT 
  
 THIS FIRST AMENDMENT TO SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT AND JUNIOR SUBORDINATED NOTE PURCHASE AGREEMENT (“First Amendment”) is made
as of the 15th day of March, 2005 by and among PW Eagle, Inc., a Minnesota corporation (“Company”) and Churchill Capital Partners IV, L.P., a Delaware limited partnership (“Note Purchaser”). 
  
 W I T N E S S E
T H: 
  
 WHEREAS, the Company and Note Purchaser
entered into that certain Senior Subordinated Note Purchase Agreement dated as of October 25, 2004 (the “Senior Subordinated Agreement”) and that certain Junior Subordinated Note Purchase Agreement dated as of October 25, 2004 (the
“Junior Subordinated Agreement” and, together with the Senior Subordinated Agreement, the “Note Purchase Agreements”); and 
  
 WHEREAS, the Company desires to amend and modify certain provisions of the Note Purchase Agreements and, subject to the terms hereof, Note Purchaser is
willing to agree to such amendments and modifications; 
  
 NOW
THEREFORE, in consideration of the premises, the mutual covenants and agreements herein contained, and any extension of credit heretofore, now or hereafter made by Note Purchaser to the Company, the parties hereto hereby agree as follows:

  
 11. Definitions. All capitalized terms used herein
without definition shall have the meaning given to them in the Loan Agreement. 
  
 12. Additional and Amended Definitions. Section 1.1 of each of the Note Purchase Agreements is hereby amended by adding or amending, as applicable, the following definitions: 
  
 “Capital Expenditure Carryover” shall have
the meaning specified in Section 7.7. 
  
 “Debt to EBITDA Ratio” shall have the meaning specified in Section 7.5(b) 
  
 “EBITDA” shall mean with respect to any fiscal period, the sum of Consolidated Net Income for such period plus amounts
deducted in determining such Consolidated Net Income in respect of: (a) any provision for (or less any benefit from) income taxes whether current or deferred; (b) amortization and depreciation expense; (c) Interest Expense for such period; and (d)
the amount, if any, deducted from Consolidated Net Income (and not otherwise added back pursuant to clause (a), (b), or (c) of this definition) paid to OxyVinyls, LP in connection with Section 5.5 of the new PVC Resin Supply Agreement referred to in
Section 7(C) of the First Amendment. For purposes of Schedule 

  

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6.5, EBITDA for fiscal periods ending on or prior to December 31, 2004, shall not include restructuring charges of up to $1,000,000 which were incurred in
fiscal year 2003, but were expensed in fiscal year 2004 and up to $400,000 of expenses which have been or will be incurred in the PW Poly Spinoff. 
  
 “First Amendment” shall mean that certain First Amendment to Senior Subordinated Note Purchase Agreement and Junior
Subordinated Note Purchase Agreement dated as of March 15, 2005 by and between the Company and Note Purchaser.” 
  
 “Interest Expense” means, with respect to any fiscal period, the interest expense incurred for such period excluding
interest income as determined in accordance with GAAP, including, without limitation (whether or not such amount is included within interest expense pursuant to GAAP), the amount payable to Oxy Vinyls, LP under Section 5.5 of the new PVC Resin
Supply Agreement referred to in Section 7(C) of the First Amendment. 
  
 13. Additional Definitions. 
  
 (a) Section 1.1 of
the Senior Subordinated Agreement is hereby amended by adding the following definition: 
  
 “Covenant Election” shall mean an election made by the Company with respect to any fiscal quarter and the twelve month
fiscal period then ended to reduce the covenant levels of Minimum EBITDA and Interest Coverage Ratio contained in Schedule 6.5. The Company may only exercise a Covenant Election and such Covenant Election shall only remain effective if (x) on
each day from the date on which the Covenant Election is exercised until the date on which the Company delivers to Note Purchaser the financial statements required by subsection 6.2(b) for the last month of the fiscal quarter immediately succeeding
the fiscal quarter for which the Covenant Election is to apply Availability equaled or exceeded $9,000,000, (y) the Company has not exercised a Covenant Election for more than six consecutive fiscal quarters and (z) the Company has not exercised a
Covenant Election for more than eight fiscal quarters within the term of this Agreement. In order to make a Covenant Election, the Company must notify Note Purchaser in writing as provided in Section 10.4 of such election no later than thirty days
after the end of the fiscal quarter to which the Covenant Election is to apply. By way of example of the period described in clause (x) above, if the Company wishes to make a Covenant Election for the fiscal quarter ended December 31, 2005, then the
Company must notify Note Purchaser of such Covenant Election on or prior to January 30, 2006 and must maintain Availability greater than $9,000,000 for each day from the date of the Covenant Election until the date on which the financial statements
for the fiscal period ended March 31, 2006 are delivered to Note Purchaser. 
  

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 (b) Section 1.1 of the Junior Subordinated Agreement is hereby amended by adding the following
definition: 
  
 “Covenant
Election” shall mean an election made by the Company with respect to any fiscal quarter and the twelve month fiscal period then ended to reduce the covenant levels of Minimum EBITDA and Interest Coverage Ratio contained in Schedule
6.5. The Company may only exercise a Covenant Election and such Covenant Election shall only remain effective if (x) on each day from the date on which the Covenant Election is exercised until the date on which the Company delivers to Note
Purchaser the financial statements required by subsection 6.2(b) for the last month of the fiscal quarter immediately succeeding the fiscal quarter for which the Covenant Election is to apply Availability equaled or exceeded $8,100,000, (y) the
Company has not exercised a Covenant Election for more than six consecutive fiscal quarters and (z) the Company has not exercised a Covenant Election for more than eight fiscal quarters within the term of this Agreement. In order to make a Covenant
Election, the Company must notify Note Purchaser in writing as provided in Section 10.4 of such election no later than thirty days after the end of the fiscal quarter to which the Covenant Election is to apply. By way of example of the period
described in clause (x) above, if the Company wishes to make a Covenant Election for the fiscal quarter ended December 31, 2005, then the Company must notify Note Purchaser of such Covenant Election on or prior to January 30, 2006 and must maintain
Availability greater than $8,100,000 for each day from the date of the Covenant Election until the date on which the financial statements for the fiscal period ended March 31, 2006 are delivered to Note Purchaser. 
  
 14. Distributions. 
  
 (a) Section 7.5(b) of the Senior Subordinated Agreement is hereby deleted and
the following is inserted in its stead: 
  
 Notwithstanding the
foregoing, (i) the Company may effect the PW Poly Spinoff; (ii) the Company may make repurchases of its common stock from its stockholders or may pay dividends on its common stock not in excess of an aggregate amount of $500,000 during any fiscal
year or $125,000 in any fiscal quarter, in each case, provided (u) the Company shall have delivered the financial statements required by Section 6.2(a) or (b), as applicable, for the fiscal year ending December 31, 2005 or for any fiscal quarter or
fiscal year ending thereafter, and such financial statements and the Compliance Certificate delivered in connection therewith show compliance with the covenants set forth on Schedule 6.5, (v) the Company shall have Availability over the 60 days
prior to such repurchase or dividend, on average, and immediately after giving effect to any such repurchase or dividend, of at least $18,000,000, (w) the Fixed Charge Coverage Ratio for the most recently ended twelve month period computed on a pro
forma basis (assuming such repurchase or dividend had occurred during such twelve month period) equals or exceeds 1.05 to 1; (x) EBITDA for the most recently ended twelve month period equaled or exceeded $15,000,000, (y) the ratio of (A) the sum of
the Company’s average amount of Funded Debt over the twelve month period prior to the date of such repurchase or dividend plus the amount of the dividend or the repurchase to (B) EBITDA for the most recently ended twelve month period (such
ratio hereinafter referred to as the “Debt to EBITDA Ratio”) equals or is less than 7.00 to 1, and (z) no Default or Event of Default shall have occurred and be continuing; (iii) the Company may make repurchases of its common stock from
its stockholders or may pay dividends on its common stock not in excess of an aggregate amount of $1,000,000 during any fiscal year or $250,000 in any fiscal quarter, in each case, provided (u) the Company shall have delivered the financial
statements required by Section 6.2(a) or (b), as applicable, for the fiscal year ending December 31, 2005 or for any fiscal quarter or fiscal year ending thereafter, and such financial statements and the Compliance Certificate delivered in
connection therewith show compliance with the covenants set forth on Schedule 6.5, (v) the Company shall have Availability over the 60 days 

  

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prior to such repurchase or dividend, on average, and immediately after giving effect to any such repurchase or dividend, of at least $20,700,000, (w) the
Fixed Charge Coverage Ratio for the most recently ended twelve month period computed on a pro forma basis (assuming such repurchase or dividend had occurred during such twelve month period) equals or exceeds 1.05 to 1; (x) EBITDA for the most
recently ended twelve month period equaled or exceeded $20,000,000, (y) the Company’s Debt to EBITDA Ratio equals or is less than 4.50 to 1, and (z) no Default or Event of Default shall have occurred and be continuing; (iv) the Company may make
repurchases of its common stock from its stockholders or may pay dividends on its common stock not in excess of an aggregate amount of $2,000,000 during any fiscal year or $500,000 in any fiscal quarter, in each case, provided (u) the Company shall
have delivered the financial statements required by Section 6.2(a) or (b), as applicable, for the fiscal year ending December 31, 2005 or for any fiscal quarter or fiscal year ending thereafter, and such financial statements and the Compliance
Certificate delivered in connection therewith show compliance with the covenants set forth on Schedule 6.5, (v) the Company shall have Availability over the 60 days prior to such repurchase or dividend, on average, and immediately after giving
effect to any such repurchase or dividend, of at least $24,300,000, (w) the Fixed Charge Coverage Ratio for the most recently ended twelve month period computed on a pro forma basis (assuming such repurchase or dividend had occurred during such
twelve month period) equals or exceeds 1.10 to 1; (x) EBITDA for the most recently ended twelve month period equaled or exceeded $25,000,000, (y) the Company’s Debt to EBITDA Ratio equals or is less than 3.00 to 1, and (z) no Default or Event
of Default shall have occurred and be continuing; (v) the Company may make repurchases of its common stock from its stockholders or may pay dividends on its common stock not in excess of an aggregate amount of $4,000,000 during any fiscal year or
$1,000,000 in any fiscal quarter, in each case, provided (u) the Company shall have delivered the financial statements required by Section 6.2(a) or (b), as applicable, for the fiscal year ending December 31, 2005 or for any fiscal quarter or fiscal
year ending thereafter, and such financial statements and the Compliance Certificate delivered in connection therewith show compliance with the covenants set forth on Schedule 6.5, (v) the Company shall have Availability over the 60 days prior to
such repurchase or dividend, on average, and immediately after giving effect to any such repurchase or dividend, of at least $27,000,000, (w) the Fixed Charge Coverage Ratio for the most recently ended twelve month period computed on a pro forma
basis (assuming such repurchase or dividend had occurred during such twelve month period) equals or exceeds 1.25 to 1; (x) EBITDA for the most recently ended twelve month period equaled or exceeded $25,000,000, (y) the Company’s Debt to EBITDA
Ratio equals or is less than 2.00 to 1 and (z) no Default or Event of Default shall have occurred and be continuing; and (vi) the Company may repurchase the Warrants or the Warrant Shares (as defined in the Warrant Agreement) allocated to the Notes
pursuant to Schedule 2.2 to the Warrant Agreement. 
  
 (b) Section
7.5(b) of the Junior Subordinated Agreement is hereby deleted and the following is inserted in its stead: 
  
 Notwithstanding the foregoing, (i) the Company may effect the PW Poly Spinoff; (ii) the Company may make repurchases of its common stock
from its stockholders or may pay dividends on its common stock not in excess of an aggregate amount of $500,000 during any fiscal year or $125,000 in any fiscal quarter, in each case, provided (u) the Company shall have delivered the financial
statements required by Section 6.2(a) or (b), as applicable, for the fiscal year ending December 31, 2005 or for any fiscal quarter or fiscal year ending thereafter, and such financial statements and the Compliance Certificate delivered in
connection therewith show compliance with the covenants set forth on Schedule 6.5, (v) the Company shall have Availability over the 60 days prior to such repurchase or dividend, on average, and immediately after giving effect to any such repurchase
or dividend, of at least $18,000,000, (w) the Fixed Charge Coverage Ratio for the most recently ended twelve month period computed on a pro forma basis (assuming 

  

 4 

 
such repurchase or dividend had occurred during such twelve month period) equals or exceeds 1.05 to 1; (x) EBITDA for the most recently ended twelve month
period equaled or exceeded $15,000,000, (y) the ratio of (A) the Company’s average amount of Funded Debt over the twelve month period prior to the date of such repurchase or dividend to (B) EBITDA for the most recently ended twelve month period
(such ratio hereinafter referred to as the “Debt to EBITDA Ratio”) equals or is less than 7.00 to 1, and (z) no Default or Event of Default shall have occurred and be continuing; (iii) the Company may make repurchases of its common stock
from its stockholders or may pay dividends on its common stock not in excess of an aggregate amount of $1,000,000 during any fiscal year or $250,000 in any fiscal quarter, in each case, provided (u) the Company shall have delivered the financial
statements required by Section 6.2(a) or (b), as applicable, for the fiscal year ending December 31, 2005 or for any fiscal quarter or fiscal year ending thereafter, and such financial statements and the Compliance Certificate delivered in
connection therewith show compliance with the covenants set forth on Schedule 6.5, (v) the Company shall have Availability over the 60 days prior to such repurchase or dividend, on average, and immediately after giving effect to any such repurchase
or dividend, of at least $20,700,000, (w) the Fixed Charge Coverage Ratio for the most recently ended twelve month period computed on a pro forma basis (assuming such repurchase or dividend had occurred during such twelve month period) equals or
exceeds 1.05 to 1; (x) EBITDA for the most recently ended twelve month period equaled or exceeded $20,000,000, (y) the Company’s Debt to EBITDA Ratio equals or is less than 4.50 to 1, and (z) no Default or Event of Default shall have occurred
and be continuing; (iv) the Company may make repurchases of its common stock from its stockholders or may pay dividends on its common stock not in excess of an aggregate amount of $2,000,000 during any fiscal year or $500,000 in any fiscal quarter,
in each case, provided (u) the Company shall have delivered the financial statements required by Section 6.2(a) or (b), as applicable, for the fiscal year ending December 31, 2005 or for any fiscal quarter or fiscal year ending thereafter, and such
financial statements and the Compliance Certificate delivered in connection therewith show compliance with the covenants set forth on Schedule 6.5, (v) the Company shall have Availability over the 60 days prior to such repurchase or dividend, on
average, and immediately after giving effect to any such repurchase or dividend, of at least $24,300,000, (w) the Fixed Charge Coverage Ratio for the most recently ended twelve month period computed on a pro forma basis (assuming that such
repurchase or dividend had occurred during such twelve month period) equals or exceeds 1.10 to 1; (x) EBITDA for the most recently ended twelve month period equaled or exceeded $25,000,000, (y) the Company’s Debt to EBITDA Ratio equals or is
less than 3.00 to 1, and (z) no Default or Event of Default shall have occurred and be continuing; (v) the Company may make repurchases of its common stock from its stockholders or may pay dividends on its common stock not in excess of an aggregate
amount of $4,000,000 during any fiscal year or $1,000,000 in any fiscal quarter, in each case, provided (u) the Company shall have delivered the financial statements required by Section 6.2(a) or (b), as applicable, for the fiscal year ending
December 31, 2005 or for any fiscal quarter or fiscal year ending thereafter, and such financial statements and the Compliance Certificate delivered in connection therewith show compliance with the covenants set forth on Schedule 6.5, (v) the
Company shall have Availability over the 60 

  

 5 

 
days prior to such repurchase or dividend, on average, and immediately after giving effect to any such repurchase or dividend, of at least $27,000,000, (w)
the Fixed Charge Coverage Ratio for the most recently ended twelve month period computed on a pro forma basis (assuming that such repurchase or dividend had occurred during such twelve month period) equals or exceeds 1.25 to 1; (x) EBITDA for the
most recently ended twelve month period equaled or exceeded $25,000,000, (y) the Company’s Debt to EBITDA Ratio equals or is less than 2.00 to 1 and (z) no Default or Event of Default shall have occurred and be continuing; and (vi) the Company
may repurchase the Warrants or the Warrant Shares (as defined in the Warrant Agreement).” 
  
 15. Capital Expenditures. Subsection 7.7 of each of the Note Purchase Agreements is hereby deleted and the following is inserted in its stead: 
  
 “Section 7.7 Capital Expenditures. 
  
 (a) The Company will not make or permit any of its Subsidiaries to make any Capital Expenditure (including,
without limitation, by way of capitalized leases) for any fiscal year that exceed in the aggregate the amount set forth opposite such fiscal year in the following schedule: 
  

				
	 Fiscal Year Ending

	  	Permitted Capital
Expenditure

	 December 31, 2004 and each
	  	$	2,000,000
	 December 31 thereafter
	  	 	 

  
 (b)
Notwithstanding the foregoing, if for any fiscal year the Company incurs less than the maximum amount of Capital Expenditures permitted hereunder (such difference is hereinafter referred to as the “Capital Expenditure Carryover”), then
Capital Expenditures incurred within the first six months of the next fiscal year up to an amount equal to the lesser of $750,000 (or $1,500,000 as provided below) or the Capital Expenditure Carryover, shall be treated, for purposes of this Section
7.7 as incurred in the prior fiscal year. 
  
 (c)
The foregoing notwithstanding, if the Company’s EBITDA for a fiscal year was $13,000,000 or more but less than $15,000,000 and Availability as of each day within the applicable fiscal year equaled or exceeded $8,000,000, then for such fiscal
year permitted Capital Expenditures shall be increased to $3,000,0000. 
  
 (d) The foregoing notwithstanding, if the Company’s EBITDA for a fiscal year was $15,000,000 or more but less than $20,000,000 and Availability as of each day within the applicable fiscal year equaled or exceeded
$8,000,000, then for such fiscal year permitted Capital Expenditures shall be increased to $4,000,000 and the Capital Expenditure Carryover shall be increased to $1,500,000. 
  
 (e) The foregoing notwithstanding, if the Company’s EBITDA for a fiscal year was $20,000,000 or more
and Availability as of each day within the applicable fiscal year equaled or exceeded $8,000,000, then for such fiscal year permitted Capital 

  

 6 

 
Expenditures shall be increased to $6,000,000 and the Capital Expenditure Carryover shall be increased to $1,500,000.” 
  
 16. Financial Covenants. 
  
 (a) As of the “First Amendment Effective Date” (as defined in
Section 8 of the First Amendment), Schedule 6.5 to the Senior Subordinated Agreement is hereby deleted and Schedule 6.5(a) attached hereto and incorporated herein is incorporated into the Senior Subordinated Agreement in its stead.

  
 (b) As of the First Amendment Effective Date, Schedule 6.5 to
the Junior Subordinated Agreement is hereby deleted and Schedule 6.5(b) attached hereto and incorporated herein is incorporated into the Junior Subordinated Agreement in its stead. 
  
 17. Amendment Fee. In order to induce Note Purchaser to enter into this First Amendment, the Company agrees to pay to
Note Purchaser, an amendment fee equal to $12,500. Said amendment fee shall be deemed fully earned and non-refundable and shall be due and payable on the First Amendment Effective Date. 
  
 18. Conditions Precedent. This First Amendment shall become effective upon satisfaction of each of the following
conditions precedent: 
  
 (A) The Company and
Note Purchaser shall have executed and delivered to each other this First Amendment; 
  
 (B) The Company, Agent and Senior Creditors shall have entered into an amendment to the Senior Credit Agreement in form and substance
acceptable to Note Purchaser; 
  
 (C) The Company
shall have delivered to Note Purchaser the PVC Resin Supply Agreement (together with all amendments thereto) between the Company and Oxy Vinyls, LP dated as of January 1, 2005 and the terms and conditions of such PVC Resin Supply Agreement (and such
amendments) shall be acceptable to Note Purchaser in its reasonable discretion; and 
  
 (D) The Company shall have paid to Note Purchaser for the ratable benefit of Lenders the amendment fee referred to in Section 7 of this
First Amendment. 
  
 The date on which all of the foregoing
conditions precedent are satisfied shall be called the “First Amendment Effective Date.” 
  
 19. Miscellaneous. 
  

	(a)	This First Amendment is limited as specified and shall not constitute an amendment, modification or waiver of any other provision of the Note Purchase Agreements or any other Note
Document. 

  

 7 

	(b)	This First Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which counterparts when executed and
delivered shall be an original, but all of which shall together constitute one and the same instrument. 

  
 20. Continuing Effect. Except as otherwise specifically set out herein, the provisions of the Note Purchase Agreements shall remain in full force
and effect. 
  
 (Signature Page Follows) 

 

 8 

 (Signature Page to First Amendment to Senior Subordinated Note Purchase Agreement

 and Junior Subordinated Note Purchase Agreement) 
  
 IN WITNESS WHEREOF, this First Amendment has been duly executed as of the day and year specified at the beginning hereof.

  

					
	PW EAGLE, INC.
		
	By:	 	 /s/ Scott Long

	 	 	 Name:
	 	 Scott Long

	 	 	 Title:
	 	 CFO

	
	CHURCHILL CAPITAL PARTNERS IV, L.P.,
	 a Delaware limited partnership

	
	By CHURCHILL CAPITAL IV, L.L.C.,
	 its General Partner

	
	By CHURCHILL CAPITAL, INC.,
	 as Managing Agent

		
	 By:
	 	 /s/ Mark McDonald

	 	 	Its Partner

  

 SCHEDULE 6.5(a) 
  
 FINANCIAL COVENANTS 
  
 The Company (inclusive of the Subsidiaries) will comply with the following financial covenants (all of which will be calculated excluding PW Poly): 
  
 (a) The Company shall not permit its Interest Coverage Ratio for any period
set forth below to be less than the ratio set forth opposite such period below: 
  

			
	 Period

	  	 Minimum Interest Coverage Ratio

	Three months ended December 31, 2004	  	.14 to 1
		
	Six months ended March 31, 2005	  	.54 to 1
		
	Nine months ended June 30, 2005	  	1.44 to 1
		
	Twelve months ended September 30, 2005 and each December 31, March 31, June 30 and September 30 thereafter	  	1.62 to 1; provided that if the Company properly made a Covenant Election with respect to the last fiscal quarter of the applicable twelve month period, then Minimum Interest Coverage Ratio
shall be decreased to .90 to 1 for such twelve month period.

  
 (b) The Company shall
not permit its EBITDA to be less than $13,500,000 for the twelve month period ending December 31, 2004 and each twelve month period ending March 31, June 30, September 30 and December 31 thereafter; provided that if the Company has properly made a
Covenant Election with respect to the last fiscal quarter of the applicable twelve month period, then minimum EBITDA shall be decreased to $9,000,000 for such twelve month period. 
  
 (c) The Company shall not permit at any time during each period set forth below its Availability to be less than the amount
set forth opposite such period below: 
  

				
	 Period

	  	Availability

	 December 31, 2004 to April 30, 2005
	  	$	900,000
		
	 May 1, 2005 through the term of the Senior Credit Agreement
	  	$	1,800,000

  

 SCHEDULE 6.5(b) 
  
 FINANCIAL COVENANTS 
  
 The Company (inclusive of the Subsidiaries) will comply with the following financial covenants (all of which will be calculated excluding PW Poly): 
  
 (a) The Company shall not permit its Interest Coverage Ratio for any period
set forth below to be less than the ratio set forth opposite such period below: 
  

			
	 Period

	  	 Minimum Interest Coverage Ratio

	Three months ended December 31, 2004	  	.12 to 1
		
	Six months ended March 31, 2005	  	.49 to 1
		
	Nine months ended June 30, 2005	  	1.30 to 1
		
	Twelve months ended September 30, 2005 and each December 31, March 31, June 30 and September 30 thereafter	  	1.46 to 1; provided that if the Company properly made a Covenant Election with respect to the last fiscal quarter of the applicable twelve month period, then Minimum Interest Coverage Ratio
shall be decreased to .81 to 1 for such twelve month period.

  
 (b) The Company shall
not permit its EBITDA to be less than $12,150,000 for the twelve month period ending December 31, 2004 and each twelve month period ending March 31, June 30, September 30 and December 31 thereafter; provided that if the Company has properly made a
Covenant Election with respect to the last fiscal quarter of the applicable twelve month period, then minimum EBITDA shall be decreased to $8,100,000 for such twelve month period. 
  
 (c) The Company shall not permit at any time during each period set forth below its Availability to be less than the amount
set forth opposite such period below: 
  

				
	 Period

	  	Availability

	 December 31, 2004 to April 30, 2005
	  	$	800,000
		
	 May 1, 2005 through the term of the Senior Credit Agreement
	  	$	1,600,000

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